Showing posts from 2019

Aurora Cannabis: Broken In Several Ways

Aurora Cannabis broke recent strong support above $7. The large cannabis player announced a new business model of growing cannabis at outdoor sites. The move combined with Canopy Growth news suggests the adjusted EBITDA positive target isn't maintainable. The stock appears poised to retest the $4s. With a couple of recent disasters in the Canadian cannabis sector, Aurora Cannabis (ACB) will likely return to the recent lows. The sentiment shift in the cannabis sector will impact all stocks and a subtle signal of a new business model is problematic. The investment thesis continues to tilt negative until a lot of the hype is stripped from the cannabis sector and the desire to add new production ends.
Read the full article on Seeking Alpha.  More commentary on WhoTrades Disclosure: No position. Please review the disclaimer page for more details. 

Sprint, T-Mobile Merger Back On Hold

Seeking Alpha provided this snippet where the T-Mobile (TMUS)/Sprint (S) merger is on hold again.

T-Mobile (TMUS-1.9%) and Sprint (S-3.6%) are sliding off a new Wall Street Journal report that merger talks have slowed, over conditions around the involvement of Dish Network (DISH+0.5%) in the deal. Talks are ongoing, but the two wireless carriers are planning to extend their merger agreement beyond its July 29 deadline to buy more time, according to the report -- a second extension of a deal that has dragged out more than a year.
A big part of the merger holdup is the requirement of the DOJ for a 4th viable wireless carrier to exist. For this reason, my prediction has long held that the merger will get blocked. Dish doesn't appear ready to step-up to the plate without major handouts and T-Mobile doesn't want the merger, if the end result is to create a strong 4th competitor.

The prediction still remains that the merger gets blocked and Sprint dips to $3.

More research on the su…

e.l.f. Beauty - A Great Lesson

A prime example of investors getting too negative on a stock is e.l.f Beauty (ELF). The affordable cosmetics stock leading the selfie generation plunged from a high above $30 at the end of 2016 following a successful IPO to end up below $7 early this year. The market got far too negative when the market cap dipped to only $350 million.  The reliable P/S multiple kicked into full gear with e.l.f having a revenue target of $250 million. The stock has now doubled and JPMorgan turned bullish on the stock today.  Now probably isn't the time to chase the stock, but ELF provides a great example of investors leaving a big gain on the table with the double off the lows. When the P/S multiple has a 1x figure, any stock outside of a company at risk for bankruptcy gets appealing. 
More commentary on WhoTrades
Disclosure: No position. Please read the disclaimer page for more details. 

Twitter Might Hit $40 Before Earnings

Nice rally for Twitter (TWTR) today has the stock breaking the recent downtrend. The stock clearly wants to test the $40 highs again. 

More commentary on WhoTrades

Disclosure: Long TWTR. Please read the disclaimer page for more details. 

Acreage: This Canopy Doesn't Protect

Acreage Holdings is down substantially despite the future merger right from Canopy Growth. The corporate upheaval at Canopy Growth places the merger at risk and raises the prospects of failed math used to consume the deal. Avoid the stock until Canopy Growth gets on stronger financial footing. The Canopy Growth (CGCfiring of the founding CEO and the related market ramifications aren't going to help Acreage Holdings (OTCQX:ACRGF) shareholders. The original merger was heralded as a big premium for Acreage shareholders, but the stock hasn't fared well and the risk is to the downside unless the merger dissolves. Read the full article at Seeking Alpha. 
Disclosure: No position mentioned. Please review the disclaimer page for more details. 

LendingClub: Not All Reverse Splits Are Bad

LendingClub announced the reverse split will be effective when the stock opens for trading on July 8. Historically, reverse splits are bad for shareholders with stocks underperforming the market by a wide margin. The stock remains perplexingly cheap at an EV/S multiple of 1x and EV/EBITA of 6.5x. Use any reverse split-related weakness to own LendingClub. For multiple reasons, reverse splits don't typically work out well for shareholders. The news that LendingClub (LC) is pursuing a 1-for-5 reverse split followed a 10% gain during the trading day. Investors shouldn't necessarily stray away from the fintech on this news due to the perplexing value in the stock.
Read the full article on Seeking Alpha.  More commentary on WhoTrades Disclosure: Long LC. Please review the disclaimer page for more details. 

Canopy Growth: Not Going Well

Canopy Growth continues to prep for markets that aren't ready for its cannabis products. The company forecasts current quarter harvests of 34,000 kg will nearly quadruple the December quarter levels while demand has soured. Canopy Growth reported a massive C$97 million adjusted EBITDA loss that shocked the market. Money-losing stocks aren't likely to maintain a rich EV/S multiple of 11x FY21 revenue estimates (numbers analysts are likely to cut). On the path to inevitable success, Canopy Growth (CGC) continues to hit bumps in the road. The stock fell 8% following the release of outdated March quarterly results, in another sign that the leading cannabis company and the sector just aren't ready for prime time yet. My bearish investment case remains intact. Read the full article on Seeking Alpha.  July 3 Update CEO Bruce Linton was fired and the stock is no trading solidly below $40.  Check out WhoTrades for timely updates on the subject. 
Disclosure: No position mentioned. Pl…

Under Armour: Innovation Recovery

Under Armour continues to make progress in innovating new products that will return the company to the premium market. The company remains on path to boost gross margins to 48%. The stock is in an uptrend with the initial target to overtake the P/S valuation multiple of Nike with a long-term target of Lululemon at over 5x sales estimates. Some hints at new product innovation should have investors taking another look at Under Armour (UAUAA). A lot of investors want a money maker now, but the value in the stock is based on the future opportunity in the premium global athletic apparel and footwear sector. The stock is looking solid with strong resistance broken at $24. Read the full article at Seeking Alpha.  More commentary on WhoTrades Disclosure: Long UA. Please see the disclaimer page for more details. 

Rite Aid: Disaster Continues

As investors were warned, Rite Aid (RAD) was only going to head lower following the 1-for-20 reverse split. The company provided the following financial targets for FY20:
Sales to be between $21.5 billion and $21.9 billion in fiscal 2020 Same store sales expected to range from an increase of 0.0 percent to an increase of 1.0 percent over fiscal 2019.Net loss is expected to be between $170.0 million and $220.0 million.  Adjusted EBITDA is expected to be between $500.0 million and $560.0 million.  Adjusted net (loss) income per share is expected to be between a loss of $0.01 and income of $0.04.
These are not the numbers investors want to see in a competitive environment where Walgreens (WBA) and CVS Health (CVS) are already dealing with competitive impacts from Amazon (AMZN) entering the pharmacy space. The likelihood of Rite Aid recovering isn't very high. Avoid or short the stock that keeps hitting new lows including the $6s in after-hours trading.
More info on WhoTradesDisclos…

Facebook: Watch This

Facebook has a new product with far more potential than a digital coin. Facebook Watch now has a MAU base of 720 million that far tops other social platforms. The video streaming service is forecast to top $5 billion in annual revenues. The stock has already rallied $30 off the monthly lows suggesting an ideal entry will come after a pause. While the market is focused on the digital coin hype, Facebook (FB) has a hot new product that is already generating substantial revenues. The key to success in the large-cap tech space has traditionally centered around products that keep the company true to their core. Facebook has hit on a winner with Facebook Watch, which is a similar ad-supported product that is boosting growth. Read the full article on Seeking Alpha. 
Disclosure: No position mentioned. Please review the disclaimer page for more details.

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.