Out Fox The $treet

Aurora Cannabis announced a major reorg which includes the CEO retiring and cutting over 50% of operations expenses. The company guided to substantial revenue misses for FQ2/FQ3 and provided no indication Cannabis 2.0 products are meeting sales goals. The cannabis company plans to launch a value brand. Even at $1, Aurora Cannabis would still trade at 3x updated sales targets for FY21. Following news  Aurora Cannabis  ( ACB ) was planning to cut 10% of the workforce, the company came out on February 6 with the announcement of a  major reorganization . The Canadian cannabis company has finally made a move to rationalize the business with the market realities, but the cuts are so massive that my  investment thesis  is still on hold due to the risks of meeting updated loan covenants and limited cash balances to execute a complicated corporate pivot. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclai...

Aurora Cannabis is attempting to sell a facility once planned to produce 105,000 kg of cannabis. The major Canadian cannabis stocks don't trade at distressed levels. The stock has a legitimate reason for trading at $1 per share or 2x FY21 sales estimates. My constant warning on Aurora Cannabis ( ACB ) has been the risks associated with the stock still trading on elevated expectations. Despite large declines, most of the Canadian cannabis stocks don't trade at distressed levels. The stock could very easily hit the  $1 price target  prescribed by Piper Sandler last week. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

CrowdStrike dipped following strong quarterly results, as the stock is still too expensive at over 17x FY21 sales. The looming venture fund sales will cap stock gains in the short term. Investors need to assume the stock breaches recent lows and touch the IPO price. When a company is worth more than 10x forward sales, execution has to be flawless for the stock to rally. In the case of  CrowdStrike Holdings  (NASDAQ: CRWD ), a stock trading closer to 20x forward sales has to virtually print money to reward shareholders. For this reason, my  investment thesis  remains very negative on this cybersecurity stock despite trading near the lows with the next strike of lockup expiration looming. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details. 

Ambarella beat FQ3 results, but the management team suggested revenues of $10 million were pulled forward. After years of spending, the company still can't disclose any needle moving CV chip deals with automotive customers. The stock is likely to retest $40 with revenue estimates for FY20 and FY21 declining. Despite all of the promises of computer vision chips and the huge stock rally this year,  Ambarella  (NASDAQ: AMBA ) still hasn't generated anywhere near the results and forward expectations warranting the stock rally this year. Investors should expect the stock to come back down to earth based on my  previous research  due to falling expectations for the next couple of years consistent with the past of this chip company and risks of basically operating in China. Read the full article on Seeking Alpha.  Disclosure: No position. Please review the disclaimer page for more details. 

Square beat Q3 estimates. The company will quit reporting adjusted revenues due to communication from the SEC. The end result is a focus on bottom line metrics pointing towards the stock trading at a max value. Square trades at 63x '20 EBITDA guidance. Along with the  Q3 report ,  Square  ( SQ ) offered a lot for investors to absorb. The fintech saw the core business beat estimates while the removal of weak Caviar made the comparisons difficult. All while the company is moving away from reporting adjusted revenues due to SEC guidance causing further confusion. My  investment thesis  still has the stock overvalued based on the $31 billion market cap and adjusted revenues of $2.5 billion, suggesting investors should let all of the revenue confusion shake out before finding the stock interesting. Read the full article on Seeking Alpha.  More commentary - WhoTrades Update - November 26 Macquarie's Dan Dolev starts Square with an Outperf...

Intel beat the Q3 revenue estimates due to luck from sales pulled forward and the immaterial nature of a competitor's ramp so far. Analysts are only forecasting the chip giant grows revenues in the 1% range while market share losses to AMD and Qualcomm will make this minimal target difficult. The stock trades at 12.3x forward EPS estimates while investors should expect estimate cuts. Intel  ( INTC ) has failed repeatedly over the last couple of years, yet the chip giant managed to  crush analyst estimates  in Q3. The company continues to prove it is better to be lucky than good as a prime competitor isn't able to ramp up supply of new chips fast enough to take meaningful market share in the near term. My  investment thesis  remains negative on the stock at the yearly highs despite the big quarterly beat. Read the full article on Seeking Alpha.  Disclosure: No position mentioned. Please review the disclaimer page for more details.  ...

Pinterest dipped 20% following investor disappointment over Q3 results. The company actually generated strong revenue and MAU growth showing the existence of a good business. The market remains partially offside on Pinterest by not using the fully diluted share count of 651 million shares. Based on the other social stock valuations, my ideal target remains ~$15. The general impression from the Q3 results for  Pinterest  ( PINS ) was a solid quarter. The stock fell up to 20% following the report as the problem was the valuation was priced for perfection. Even strong revenue growth wan't enough to keep the stock valuation above $15 billion and investors shouldn't expect much upside with the stock still at $20. Read the full article on Seeking Alpha.  More commentary - WhoTrades Disclosure: Long TWTR. Please review the disclaimer page for more details. 

Snap (SNAP)  soared the day prior to earnings as the new Lightshed Partners slapped a $20 target on the stock. The market got excited about the call but need to remember that Rich Greenfield had the same target on the stock at his previous firm, BTIG. Rich Greenfield ✔ @RichLightShed Snapping Back: Initiating Snap at BUY with $20 Price Target $ SNAP @ Snap @ Snapchat https:// lightshedtmt.com/2019/10/21/sna pping-back-initiating-snap-at-buy-with-20-price-target/  … Snapping Back: Initiating Snap at BUY with $20 Price Target - LightShed Partners Google and Facebook dominate mobile advertising, but there is plenty of room for other “winners” as mobile time spent continues to scale (link). Brands and advertisers are looking for more ways to... lightshedtmt.com 31 7:59 AM - Oct 21, 2019  ·  Valley Stream, NY Twitter Ads info and privacy See Rich Greenfield's other Tweets ...

Hedge funds have built large positions in the stock. The average analyst has remained bullish on the stock for over a year now. Twilio is priced for perfection at nearly 12x '20 revenue estimates. The importance of paying the right price has hardly ever been more important than in the current stock market. The recent market has consistently overpaid for growth and gotten burned. In the case of  Twilio  ( TWLO ), the market had no business  paying over $90  for the stock last November, and those buying on the surge to over $150 have already taken a beating.  Read the full article on Seeking Alpha.  Vote on the stock reaching $90 - WhoTrades Disclosure: No position mentioned. Please review the disclaimer page for more details. 

After a crazy rally to $18, Snap (SNAP) is finally coming back to earth in early October. Even worse for shareholders, the stock hit a double top as big competitor Facebook (FB) releases a new app targeted at their market. Whether or not Threads works long term is probably irrelevant to this stock story. The key is that Snap can't afford any more hiccups in their business model with the stock having a $20+ billion valuation with targets for adjusted EBITDA to still stay very negative. The Q3 guidance was for a $72.5M EBITDA loss. While in the process of still battling it out with the much larger Facebook, the stock trades at the highest P/S multiple in the sector. Throw in the BoA analysis that app downloads slowed in Q3 and the stock is likely headed back to the sub-$10 billion range. More commentary - WhoTrades Update - October 4 Morgan Stanley upgraded the stock to an Equal Weight today with a $17 price target. No rally on a big rally in the market is a su...

Aurora Cannabis traded below $5 on Friday. Management is out of tune with market realities in the cannabis space. A move similar to Canopy Growth in the U.S. would signal a desperate company. The stock isn't likely to hold $5 with a market valuation of over 10x lowered FY20 revenues estimates. The case for owning  Aurora Cannabis  ( ACB ) at $5 turned weaker following  FQ4 results . The stock traded below this key price target on Friday and the MKM Partners  Sell call  is unfortunately correct based on the numbers and the commentary from management. My previous  investment thesis  called for supply rationalization to make the stock a Buy at $5 and the company has gone further over the edge into global production growth. Read the full article on Seeking Alpha. Update - October 1 Aurora Cannabis breaks $4. No end in site so don't try to time the bottom here. Update - September 26 The approval of the SAFE Banking Act by the Ho...

Aurora Cannabis reported solid FQ4 preliminary numbers including a move towards positive EBITDA. Health Canada data doesn't support these healthy numbers with industry inventory levels soaring. The company likely only sold 50% of inventory available for sale. The $7 billion market cap is not a relative value in the cannabis sector. Before the open on August 6,  Aurora Cannabis  ( ACB ) updated the market with a positive  pre-announcement  on FQ4 results for the period ending in June. Apparently, the company remains on track to positive adjusted EBITDA targets by reaching revenue growth not supported by Health Canada sales data. Investors are urged to remain cautious on the stock with mounting cannabis inventories in the Canadian market over shadowing short-term results. Read the full article on Seeking Alpha. More commentary - Out Fox The $street - August 7 Disclosure: No position mentioned. Please review the disclaimer page for more details....

The Justice Department agreed to a settlement with T-Mobile and Sprint, removing another hurdle from closing the merger. Thirteen state attorneys general are still suing to block the merger. Dish remains in no position to effectively launch at viable 5G network. The risk/reward equation on Sprint heavily tilts towards high downside risk. As  Sprint  ( S ) surged to $8 based on a  DOJ approval clearance  of the combination with  T-Mobile  ( TMUS ), a large risk still exists the merger will fail to obtain all the necessary regulatory approvals. The stock is not correctly priced for the binary outcome with large downside risk highlighted in  previous research  from a failure to close the merger while the upside gains are now limited. Read the full article on Seeking Alpha.  Update - August 2  1st Republican state joins the lawsuit to block the merger. The deal is still not guaranteed to obtain approval placing Sprint ...

Are these numbers good? For Q2,  Snap ($SNAP)  reported numbers that beat analyst estimates, but the social messaging company still had a free cash flow loss of $103 million.  With the after-hours rally above $16, the stock now has a market cap of $25 billion and trades at about 12x 2020 revenues. Investors are getting too aggressive on Snap with the company still burning massive amounts of cash for a company with less than $400 million in quarterly revenue.  More research: Snap: Irrational Respect More commentary on WhoTrades .  Disclosure: No position. Please  review  the  disclaimer  page for more  details . 

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. 

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 k...

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 si...

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.

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, co...