The Globo Gym of Biotech? | The Daily Peel | 8/9/21

Market Snapshot

While the Dow gained 0.41% to close at a record high, the S&P eked out a 0.17% gain and the Nasdaq dropped 0.4%. Berkshire released earnings and the world is taking the day to catch up with Buffet. Let’s get into it.

What's Ripe

Robinhood ($HOOD) – Up 50% on Wednesday, down 27% Thursday, back to life with a 7% gain on Friday - apes, I really didn’t want to talk about Robinhood again but...I have to. IPOs generate a lot of volatility, but Robinhood has taken that to a whole new level. The company has been in the top 10 most traded stocks just about every day it has been public. Keep in mind that we’re looking at a semi-meme stock whose business is meme stocks, so it may be smart to prepare for an extended wild ride.

Corteva ($CTVA) – Let’s talk about agriculture, a huge industry with an even huger impact on our lives. Corteva, an industry leader with a $30bn+ market cap, just so happened to release earnings last week. The results show a strong company in a resilient industry as they beat across the board, increased guidance, and raised their dividend. The earnings call also noted that supply chain issues mixed with high product demand could lead to price increases later this year - good for earnings, bad for us. Shares jumped 8.0% on Friday.

Microvision ($MVIS) – Who knew that delivering revenue of just $750k could receive such a positive response? Well, laser scanning tech firm Microvision, or as many of you may know it, $MVIS, had a surprisingly non-sh*ty earnings call, beating revenue estimates by about $50k and falling in line with earnings. This meme stock hasn’t gotten its trip to the moon yet, but Friday’s gain of 12.2% was a solid liftoff.

What's Rotten

Novavax ($NVAX) – The Globo Gym Purple Cobras, Bill Buckner, and Novavax - the three legends of at-the-finish-line f*ck ups. Today let’s focus on $NVAX. The biotech firm that is taking its sweet time with it’s Corona vaccine, just announced a delay in authorization until at least next quarter, sending shares down 19.6%. Studies show the NVAX vaccine could be an effective booster shot for the other approved ones and they still expect to dole out 100-150mm shots a day by the fourth quarter. They’ll probably still make a ton of money.

Zynga ($ZNGA) – Zynga was very much vibing with the lockdowns, but now that we’re over that, the firm could be in a tough spot. Shares dropped 18.2% on Friday, as the fact that billions of people aren’t locked at home with nothing to do anymore, really hurt the firm’s earnings. The numbers were good, posting a surprise profit and some tasty growth numbers, but traders were shaken by the lack of national and global quarantines. Good thing Delta is here to help!

Redfin ($RDFN) – Double revenue YoY, facilitate the hottest market in America, and take your shares down 8.2% - that’s the playbook Redfin followed Friday. Despite revenue beating estimates and leaping 121% YoY to $471mm, weak figures also managed to sneak their way in. The firm lost roughly 4.5x more than it lost last year, largely related to its acquisition of RentPath.

Macro Monkey Says

NFP – Oprah Winfrey must be the new Labor Secretary because everybody’s getting a job. The U.S. added 943,000 jobs in July, the highest growth in almost a year, obliterating economists expectations. Moreover, unemployment dropped to its lowest level since that dreaded March in 2020, going from 5.9% to 5.4%. All that we’ve taken in the form of fiscal and monetary stimulus seems to be paying off, as despite the possibility of taking too much, this washboard abs economy is looking real strong.

Food for Thought:

Buffet & Berkshire's Billions – Business is booming. Warren and Charlie heard the hater’s claims that the duo had lost their touch last year, and they took that personally. In Berkshire’s Q2 earnings report released on Saturday, it was made clear that the ol’ boys still got it. The report showed a 21% jump in earnings, $6bn in buybacks, and a golden throne of $144bn cash to sit on. Considering how expansive and diverse the firm’s owned-businesses and investments are, this is a pretty solid look for the economy too. Even at a combined age of 187, the investment world’s top dawgs remain king.

Wise Investor Says

"Investors should always keep in mind that the most important metric is not the returns achieved but the returns weighed against the risks incurred. Ultimately, nothing should be more important to investors than the ability to sleep soundly at night." – Seth Klarman

Happy Investing,

Patrick & The Daily Peel Team

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