No More Bounce | The Daily Peel | 9/30/22

Market Snapshot

Idk what dog person came up with “dead cat bounce,” but it looks like that’s what happened yesterday.

After a nice lil bump Wednesday, stocks resumed their downward spiral. Tech stocks led the way down, dragged especially by Apple, which is having an uncharacteristically terrible month.

The yield curve has been inverted since early July, and the 10-2 year yield spread currently sits at about -0.35%.

The last time the gap was that big was 2000. Make of that what you will.

At the close, the Dow sank 1.54%, the Nasdaq nosedived 2.84%, and the S&P fell 2.11%.

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Let’s get into it.

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What's Ripe

Wix.com ($WIX) — Wall Street is all over Wix right now.

After a flurry of upgrades, the average price target sits at $118 (it ended the day at $80).

That huge implied growth has gotten the attention of short sellers, which have been taking increasingly large positions against the stock.

We’ll see who comes out on top, but today was a bad one for the shorts.

At the end of the session, $WIX gained 3.98%.

Vail Resorts ($MTN) — The ski-hill operator beat earnings estimates yesterday, sending the stock higher.

Australian resorts performed well in the quarter, complemented by strong summer performance at North American resorts.

The biggest focus going forward will be the winter ski season—are consumers too pinched to go on a ski vacation this year?

$MTN is up 2.57% in the past week.

What's Rotten

CarMax ($KMX) — CarMax got an F on its earnings report, which sent shares plummeting Thursday.

Used-car sales have continued falling as consumers prioritize other things. Inflation is eating into budgets, and a car upgrade isn’t high on the priority list.

The Street will now try to digest whether this is a broader sign of U.S. consumer weakness or if the problems with used cars are more insulated.

$KMX plummeted 24.5% by the end of the session.

Peloton ($PTON) — Once Peloton shares hit their pre-C-19 mark, investors probably hoped the bottom was in.

It’s not.

$PTON seems to be admitting defeat in its direct-to-consumer push after announcing a partnership with DICK’s Sporting Goods.

This comes just days after a top marketing exec dipped out, adding to the bad vibes around the company

By the end of the day, $PTON was down 14.44%.

Thought Banana

The Path Forward for ESG — People have been slinging arrows at Wall Street for decades, lamenting the perceived greed and selfishness of fat cats in the sector.

But in the last few years, they’ve started putting their money where their mouth is. Or rather, demanding that their investment managers do so.

Larry Fink runs the world’s biggest asset manager and arguably one of its most influential companies, Blackrock. We’re not talking about measly billions—this guy “manages” over $8 trillion.

He sparked a broader ESG conversation a few years ago when he challenged businesses to think about how they could be viable in a net-zero economy. 99% of businesses have no idea how they’d do that, but when a company that big is saying it, you’d better perk up.

Since then, ESG has had a PR problem. Companies are frustrated with constantly-changing guidelines and seemingly impossible propositions, like measuring all their Scope 3 emissions (emissions throughout their supply chain, etc.).

One of the biggest questions is this: should ESG rules be mandated by the SEC so that everyone has to follow them?

Or should it be a qualification that companies can meet and attract capital that prefers those investments?

It’s definitely worth paying attention to how the conversation evolves over the next few years. Gensler and the SEC will have their ears to the ground.

Wise Investor Says