Showing posts from 2019

Glu Mobile: Huge Overreaction To Guidance

Glu Mobile plunges despite solid Q1 numbers and 2019 bookings. The company forecasts Q2 bookings of $101 million that would be a new company record. The stock is insanely cheap at under 3x 2020 revenue forecasts. A lot of times the initial reaction to earnings results are wrong. In the case of theQ1 resultsforGlu Mobile(GLUU), the initial selloff is clearly a stock market misguided by the interpretation of the crucial bookings guidance. The stock remains incredibly cheap as the company boosted guidance. Read the full article on Seeking Alpha.  More commentary - WhoTrades Disclosure: Long GLUU. Please read the disclaimer page for more details. 

Twitter: No Turning Back

Twitter appears to have hit an inflection point with mDAUs. Investors need to not get caught up in perceived weak revenue guidance. My prediction is that revenue growth will push back above 20%. The stock has plenty of upside potential at $40 as analysts raise estimates. Myprevious researchfocused on how the market was far too bearish onTwitter(TWTR). The social-media company has consistently grown daily average users (DAUs) by ~10% while the market has been too focused on revenue guidance. TheQ1'19 resultsproved this thesis leaving the stock in a position to test 52-week highs at $48. Read the full article at Seeking Alpha.  More commentary - WhoTrades  Disclosure: Long TWTR. Please review the disclaimer page for more details. 

Qualcomm Wireless Leadership Wins Out

Qualcomm settles long lasting patent disputes with Apple. The new deal will immediately boost EPS estimates. The stock remains cheap with reasonable $7 EPS targets and a $70 stock price. In no big surprise to investors following ourinvestment researchonQualcomm(QCOM), the company was able to obtain asettlementwithApple(AAPL) over their wide disputes on patent royalties. The wireless technology giant had already garnered settlements in China and South Korea along with recent admission from Japan regulators that Qualcomm was not a monopoly. Along with constant signs that Apple was struggling to obtain a viable 5G modem by 2020, the expected outcome was a settlement that would send the stock soaring. Outside of unexpected financial terms, Qualcomm heads higher. Read the full article on Seeking Alpha.  More commentary on WhoTrades
Disclosure: Long AAPL, QCOM. Please read the disclaimer page for more details.

Avoid These Reverse Mergers

Typically, a reverse merger is a sign of a company facing troubling finances, though I'll be the first person to tell investors that this isn't always the case. Each stock in the process of a reverse merger needs the merits of its individual case reviewed by an investor. In the case of Rite Aid (RAD) and Novavax (NVAX),  these reverse mergers are signs that these stocks face incredibly difficult times ahead and the stocks are likely headed even lower.

Rite Aid got approval by shareholders for a reverse split that needs to happen by the end of June to cure NYSE requirements for a $1 listing. At $0.57, the stock would trade at $11.40 on a 1:20 split to take place on April 22. The problem is that Rite Aid continues to face more pressure from Amazon in the pharmacy space and stronger competitors that are already struggling. At a price over $10 after the split, Rite Aid is likely to face even more selling pressure. Analysts have the retail pharmacy earning around bre…

AMD: Untold Margin Story

AMD takes a hit from $30 despite a bullish analyst call with a $35 target. Most analysts continue to under estimate the gross margin upside for the chip company. The 2020 base case is the average analyst estimates for $8.25 billion in revenues and $1 EPS. The EPS upside is $2-plus based on higher margins from market share gains. The market continues to underestimate the margin improvements in the works at Advanced Micro Devices (AMD) that will drive substantial improvement in profits and hence profits per share. The shift to 7nm chips will lead the company to a technological position it hasn't held in comparison to Intel (INTC) in a long time, allowing for better pricing scenarios and substantial margin improvements. At $28, AMD isn't the great deal the stock was at the end of 2018, but AMD still has more upside in 2019. Read the full article on Seeking Alpha.  More commentary - WhoTrades Disclosure: No position. Please review the disclaimer page for more details. 

Entering A New Age Of Beverages

New Age enters 2019 with a new business and a large cash balance. The company forecast $30 million in CBD-infused beverage orders. The stock below $5 offers a tantalizing value with all of the potential catalysts. The management team must shake off negative sentiment by beating Q1 revenue forecasts that appear conservative. New Age Beverages(NBEV) hit lows below $5 as the market has clearly lost confidence in the company entering the CBD space before the general market. The company is entering a new age with the closing of theMorinda dealand a level of liquidity that would've help prevent the 2018 inventory issues. Despite a lot of known concerns, New Age is a play on a market shift to wellness and CBD-infused drinks that doesn't necessarily need success in order for the stock to rally. Read the full article on Seeking Alpha.

Vote on CBD sales

Disclosure: No position. Please review the disclaimer page for more details. 

Tesla: Autonomous Fleet Of The Future

Investors negative onTesla (TSLA)are possibly too focused on quarterly delivery numbers. Telsa has a potentially bright future in an autonomous fleet that earns owners money when they aren't using the vehicle. At least, Elon Musk sees such a future as a competitor againstLyft (LYFT)andUber (UBER).

Lyft: Sold To You

Lyft priced their IPO at $72, above the original price range. The stock ended the first day nearly $9 below the opening price of $87.24. Lyft continues to follow the negative path of the Snap IPO. TheLyft(NASDAQ:LYFT) IPO came out like a gangster and ended with a thud. Turns out that myprevious predictionsof a repeat of theSnap(SNAP) IPO was far too positive on Lyft with the stock ending $9 below the initial trading price. This is a bad sign that the stock is headed even lower and retail investors could end up holding the bag. Read the full article on Seeking Alpha.  Daily commentary: Out Fox The $treet - April 1
Disclosure: No position mentioned. Please read the disclaimer page for more details. 

HEXO: Trending Up

HEXO Corp. is playing several favorable trends that should lead the cannabis stock to rally further in the next few months. The uplisting to the NYSE American stock exchange is a major catalyst that is still playing out. The Newstrike Brands deal gives the company the scale needed to attract more institutional investors. The stock is cheap on a P/S ratio in comparison to industry peers. The market loves the growth offered by the cannabis sector, andHEXO Corp.(HEXO) is the next company to offer that expansion profile that the market eats up. The combination of an uplisting to a major U.S. stock exchange and a large merger positions the stock for a big breakout to new highs, typical of the sector. Read the full article on Seeking Alpha.  More commentary - WhoTrades Disclosure: No position. Please review the disclaimer page for more details. 

Stitch Fix: Big Beat Wasn't A Surprise

Stitch Fix (SFIX) is now up 20% in after-hours trading following a monster beat in FQ2. The market was fearful about active clients growth in the typically weak holiday quarter. Investors need to focus more on the 18% YoY growth with the big growth period outside of the busy holidays were people are focused on gifts for other people.

The company boosted FY19 guidance to $1.545 billion for growth in excess of 25%.

With 103 million shares outstanding, the stock trades at only about 2x sales estimates based on 103 million shares outstanding and a $32 stock price. Stitch Fix traded all the way up to $50 and these numbers support a return to the previous highs.

More commentary - WhoTrades

Disclosure: No position. Please review the disclaimer page for more details

Aurora Cannabis: $8 Isn't Likely Enough

The market wants to push Aurora Cannabis towards previous highs. Cowen placed a $10.50 target on the stock while the previous high of $12.50 is on the radar. The Canadian cannabis market is about to become flooded with legal supply as the illegal supply undercuts prices. The best projection is that weak prices causes Aurora Cannabis to miss revenue targets this year, ultimately crushing the stock towards year end. My investment thesis on Aurora Cannabis (ACB) has long held that the cannabis stock might have another rally left based on sector momentum. In the short term, the market cares more about price than fundamentals and a move above $8 has been a signal for another test of previous highs. A big analyst call sealed the likely rally in the stock.

Updated 3/13
The hiring of Nelson Peltz doesn't signify anything, but Nelson getting richer per the huge option grant to him. Regardless, the stock was big buy for this break above $8.

Option Grant
In consideration for the Services to be…

Ambarella: Never Ending Decline

After the close, Ambarella (AMBA) reported FQ4 quarterly results that beat estimates. The guidance for FQ1 just shows how the CV chips can't gain traction. After reporting FQ4 revenues of $51.1 million, the company gave horrible guidance for the current quarter.

GreenSky: Absurdly Cheap Fintech

GreenSky (GSKY) is up about 12% in mid-day trading following solid Q4 results in comparison to expectations.The stock is still down over 50% from last year as the fintech reset EBITDA expectations from very high levels.

Novavax: Too Bullish

For a stock trading at $0.63, Novavax (NVAX) sure has a lot of bullish investors. According to sentiment on StockTwits, investors are still still 85% bullish on the stock.

Novavax Fails Again

Before the bell, Novavax (NVAX) released results on the latest Phase 3 test for RSV for infants that failed to meet desired results. The failure follows similar results with the RSV for older results a couple of years ago.
The study failed to sufficiently separate from placebo as measured by the incidence of RSV lower respiratory tract infection (LRTI) through 90 days of life, the primary endpoint. In the treatment group, the incidence of medically significant RSV LRTI was 39% (placebo incidence not provided). Other trial highlights provided in the presentation.

The stock is being hammered down 67% to $0.69. Cowen slaps a $0.25 target on the stock has Novavax has again failed to get a drug approved while spending millions on drug testing. My long frustration with the company is that they constantly shift focus on vaccines without any results while burning cash left and right. The lack of partnerships for their promising vaccines has always been a telling story since the sm…

Fitbit - Q4 Earnings

After reporting Q4 results, Fitbit (FIT) is down substantially. In not a huge surprise, the wearables company failed to satisfy the market with 2019 guidance after the stock had a big run up to nearly $7.

Wayfair: Back To $150

Despite reporting another large loss, Wayfair (W) surged back to all-time highs around $150. The stock that offered a appealing entry point in the $80s isn't nearly as appealing up at $150.

Cannabis Coverage

Despite all the excitement over cannabis stocks, the sector has generally traded flat since mid-September. My research has consistently shown that the industry can too easily add supplies to meet and actually far exceed market demand.

LendingClub: Still A Stumbling Grower

After the close on Tuesday, LendingClub (LC) reported results that again disappointed the market. The stock is down about 7% to $3.35 providing an incredible value assuming the management team ever figures out how to impress the market with 20% growth.

Will You Buy Bausch Dip (Number Crunch Inside)

Bausch is "selling on the news."
Revenue growth slowed in the quarter. Debt payments tided up the balance sheet, albeit slightly.

Would you buy the dip? the stock is on sale for ~10%.
The outlook looks good. BHC said it is banking on the 7 products to drive growth:

Read more (value stock play inside).

Freeport-McMoRan: Let It Run

As copper prices rebound, Freeport-McMoRan (FCX) will soar back to previous highs. The stock hit near $20 last year as copper prices headed to the mid-$3 range before the Chinese trade war hit demand.

Buy Apple Stock Before the Next Quarter

Apple shares consolidated and will double from here.
Markets think iPhone unit sales drive revenue. It does. And as iPhone XR, XS models get a price cut of ~ 5%, hardware sales will jump by more than that.
... EPS will continue its upward path:

Number crunch the fair value on Apple Stock.

Canopy Growth Q4'18 Earnings - Live Updates

In the much anticipated and long delayed Q4 earnings release, Canopy Growth (CGC) likely trades like a dude similar to Aurora Cannabis (ACB). The company generated massive growth, but the opening up of the recreational cannabis market in Canada has as many questions as answers.

Yelp Q4'18 Earnings - Live Updates

After the close, Yelp (YELP) reported Q4 numbers that beat estimates. In addition, the company established these 2023 goals.

Twilio Q4'18 Earnings

Twilio (TWLO) just reported a quarter where revenues grew 77%, yet the guidance suggests 2019 revenue growth of only 35%. Part of the issue is the inclusion of slower growing SendGrid (SEND) in the 2019 results.

Simple Reason To Own Under Armour

The market has fought owning Under Armour (UA, UAA) for years now, but a simple reason exists to own the stock. As long as the company has a relevant brand in turnaround mode, wise investors will utilize the P/S multiple to derive value.

Aurora Cannabis Q4'18 - Live Updates

Aurora Cannabis (ACB) reported results after the close providing the first official view of Canadian cannabis companies following the legalization of adult-use cannabis on October 17. Updates from the earnings report, earnings call and after-market reactions will be continuously updated here.

Avoid Electronic Arts and Buy Puts

Electronic Arts $EA is in big trouble. Its BF5 is a wannabe version of Fortnite. And consumers are not buying it.

The weak ER affirms the business is deteriorating.
The following day, news that Apex Legends grew faster than Fortnite on launch sent the stock up 16%. The registration is of course high: it's free to play.

EA earnings nothing from free registrations.
Short EA stock or buy Puts if the stock continues its rally.

Twitter Q4'18 Earnings - Live Updates

Twitter (TWTR) is down 10% due in part to disappointing Q1 guidance and possibly concerns over the reporting shift from MAUs to mDAUs. The move is personally a good one, but the social-media company would be better off to keep reporting the MAUs, as well.

Chipotle Q4'18 Earnings - Live Updates

After the close, Chipotle Mexican Grill (CMG) reported earnings that dazzled the market. Yet, the restaurant stock is still recovering from the health scare juicing comp sales for a highly expensive stock

Snap Q4'18 Earnings - Live Updates

Snap (SNAP)reports better than expected numbers, but the numbers are still very weak. The stock won't hold this rally.  Q4 Non-GAAP EPS of -$0.04 beats by $0.03.Revenue of $389.82M (+36.4% Y/Y) beats by $12.83M.DAUs - 186M vs 184M.  The key number is that Snap is still losing money and the guidance for Q1 is rather weak.  The social messaging service had negative FCF of $149 million and a similar net loss of $158 million.  When a company is losing a sizable amount, the stock won't hold gains based on beating estimates. Snap has to show a more legitimate path to profits, than the CEO saying it while the CFOs keep leaving. Another adjusted EBITDA loss in Q1 of $150 million is another ugly start to another year.  Q1 2019 Outlook - Revenue is expected to be between $285 million and $310 million, or grow between 24% and 34% compared to Q1 2018.- Adjusted EBITDA is expected to be between $(165) million and $(140) million, compared to $(218) million in Q1 2018. Do not chase Snap on th…

Glu Mobile Q4'18 Earnings - Live Updates

Glu Mobile (GLUU) initially plunges following what appear to be solid Q4 numbers and 2019 guidance:Bookings $98.2m versus estimates of $95.6MEPS of $0.062 2019 Bookings guidance $435 to $445 million versus estimates of $442 million

Alphabet Q4'18 Earnings - Live Updates

Alphabet reports a big revenue beat and as usual the earnings numbers are complex to dechiper since the company moved away from non-GAP numbers.

Post IPO Seloff Opportunities

One of the best opportunities in the market is to buy stocks beaten down post their IPO. Following big rallies immediately after the IPO, a lot of stocks go through periods where the market loses interest or the lockup expiration causes irrational losses.

Renaissance Capital provides this handy list of the top IPO winners and losers. Investors might want to review the top losers for a potential investment in the future.

Some interesting stocks this week are Carvana (CVNA) and Huya (HUYA). Both stocks are down over 50% from the highs prior to the lock-up expiration that took place around November for both stocks.

Carvana is a leading e-commerce platform for buying used cars is generating 100% revenue growth, the company continues losing money. The oncoming autonomous vehicles has investors concerned that the company might not have a bright future. Definitely a stock to watch as the market beats down the stock that priced the IPO at $15 last April.

Disclosure: No position. Pleas…

Canopy Growth: Heartburn Ahead

Seeking Alpha Top Trending Article

Canopy Growth expects to report FQ3 results after the market close on February 14. The report will include the first numbers from the adult-use market in Canada that was legalized staring October 17. Building a global operation from scratch in a short period should lead to massive operating costs. The stock has hit resistance again around $50. The Canadian cannabis market along with global cannabis market remains one of the most difficult markets to analyze in history. The markets are replacing illicit activities via converting the cannabis industry into legal means. Therefore, existing illegal supply is being replaced with massive legal production facilities and distribution networks while that illegal supply isn't necessarily being taken out of the market. All of the new companies have limited operating history to judge the management teams effectiveness and ability to distribute new product on a global scale while establishing strong brands fo…

Rite AId: Sentiment Too Bullish

Following the announcement of a planned reverse split, Rite Aid (RAD) continues to fall further below $1. The company now needs to complete a 1-20 split in order to get the stock to $15 post split.

Facebook: That Was Easy

After the close, Facebook (FB) reported Q4 results that smashed estimates. The stock is up 12% in initial after-hours trading and will likely stay above $150 for good now.

AMD: Mixed Results Are Good Enough

Following weak numbers from both Intel (INTC) and Nvidia (NVDA), mixed numbers from Advanced Micro Devices (AMD) aren't a huge surprise. The chip company had better than expected Q4 numbers and rather weak Q1 guidance.

Novavax: Always Happens

Novavax (NVAX) surged as Wainwright slapped a $6 target on the $2 stock, but guess what happened to the small biotech stock.

Rite Aid: Ugly Reverse Split Ahead

After the close, Rite Aid (RAD) announced the intent to vote on a reverse split at a special meeting on March 21. The stock trades below $1 and the company needs to regain compliance with the NYSE so the move isn't surprising.

CenturyLink: Absurd 14.5% Yield

Since Jeff Story took over the CEO role last year, CenturyLink (CTL) has done everything to raise free cash flows. The stock continues heading lower based on irrational fears due to 5G broadband and dividend concerns.

Apple: Health Matters

Wearables have the potential of moving the needle at Apple. Adding health monitoring to AirPods expands the potential shift to medical devices. Medical device stocks trade at much higher valuations. Anything driving sales higher is a plus for a stock only trading an EV/S multiple of 10x. For a company with a revenue base of over $250 billion,Apple(AAPL) struggles to find opportunities that will move the needle. One potential revenue source is in medical devices as the tech giant moves into wearables that function as tech devices and health monitors. Myinvestment thesis remains bullish on the stock around $150. Read the full article at Seeking Alpha. 
Disclosure: Long AAPL, FIT. Please review the disclaimer page for more details. 

Lam Research: $5 Billion Reasons To Buy

Lam Research (LRCX) reported a strong quarter after the close and the stock is up about 5% in initial trading. The company provided the market with $5 billion reasons to own the stock.

IBM: Next Step

Along with reporting Q4 results, IBM (IBM) reported the next step in returning to growth. The stock never belonged below $120.

Alphabet: Unhealthy Appetite

Alphabet made a small smartwatch technology purchase. The company has a long history of hardware failures and a smartwatch push will likely be no exception. Alphabet continues losing substantial amounts of money on Other Bets and generates low margins on hardware. The stock is incredibly cheap based on ex-cash, 2020 non-GAAP EPS estimates of up to $71. On Christmas Eve, myprevious researchextolled the benefits of buyingAlphabet(GOOG,GOOGL) despite doubts that the company would successfully transition to material hardware sales. The company appears to have an unhealthy appetite for hardware with the latest purchase suggesting another losing push into smartwatches. Regardless, the stock remains a buy even after a $115 rally in under a month to over $1,100. Read the full article on Seeking Alpha. 
Disclosure: Long AAPL, FIT. Please review the disclaimer page for more details. 

Village Farms: Flooding The Cannabis Market

Village Farms International (VFF.CA) filed an application to be listed on the NASDAQ under the symbol VFF. The company is a prime example of the problem lurking in the cannabis sector as they ramp up an incredible amount of capacity in a limited time.

Peak Social Media

Recode has a nice graph slowing the sudden slow down in US and Canada social media users on Facebook (FB), Twitter (TWTR) and Snap (SNAP). All 3 major platforms saw users decline during 2018. The question is whether any of these stocks offer investment opportunities in 2019.

Aurora Cannabis: Animal Spirits

Aurora Cannabis continues rallying after another premium deal. The company not providing financial details of acquisitions and quarterly operating losses in press releases is a major red flag. Momentum traders on Robinhood are very bullish on the stock. Aurora Cannabis has the potential to improve the investment picture via more detailed financials on the FQ2 report with more details of the path to an EBITDA-positive FQ4. The company is still making the wrong deals. My previous research has been critical of Aurora Cannabis (ACB) making too many deals and aggressively expanding cannabis production into the inevitable sector crash. Instead of making strategic partnerships and looking to sell production facilities at premium prices, the company continues down the path of massive shareholder dilution that will eventually wreck the stock. Read the full article on Seeking Alpha.

Netflix: Subs Versus Cash Flow Burn

Netflix (NFLX) remains on a path to generate record subscriber additions for the year which should send the stock back to previous highs. As the year progresses, the free cash flow burn will become a huge problem as new streaming competition from Disney (DIS) and WarnerMedia (T) comes online.