We're back in the future | The Daily Peel | 8/12/21

Market Snapshot

Mixed markets returned yesterday as big tech continued to waiver while industrials and energy names kept the ship afloat. The S&P finished up 0.25% next to the Dow's 0.62%, while the Nasdaq dropped 0.16%. Let’s get into it.

What's Ripe

Joby Aviation ($JOBY) – To start your morning off, we have probably the craziest thing you’ll hear all day; Joby Aviation, a flying car / air taxi company, went public recently via SPAC and got a solid 26.3% bump yesterday. That’s right, an actual flying car company, straight out of a 1950s futuristic movie. Obviously the company is pre-revenue, because you definitely would’ve heard about it if not, but it is backed by Uber and some other big players, with hopes of ferrying you around the skies by 2024. We live in the future, it's confirmed.

fuboTV ($FUBO) – FuboTV CEO David Gandler threw an all out rager last night after his company posted earnings that even Squidward Tentacles would be happy about. “Eye popping” and “soaring over” expectations were just a few phrases the media used to describe the company's performance, which is funny because they actually missed on EPS. But it’s 2021 and earnings have lost all meaning. Their 138% paid subscriber growth and $10mm revenue beat was enough to jack the stock up 10.9% yesterday.

Unity Software ($U) – Following in Fubo’s footsteps, Unity also knocked earnings out of the park. Beating revenue expectations, net income, and adjusted EPS, shares gained 13.0% on the day, a rare instance of a Reddit favorite actually performing well. Analysts grew extremely bullish around management’s forward guidance revision, roughly 5% greater than previous guidance. Shareholders surely had Ice Cube stuck in their head all day thinking “Today was a good day.”

What's Rotten

Canada Goose ($GOOS) – The company behind the jackets that have become the international symbol of “I’m better than you” disappointed investors in its most recent quarter, sending shares down 12.8% on the day. Revenue may have beat, but margins were simply too gross (get it?) for investors to look beyond. This comes as the firm begins a shift to a DTC business model, spooking investors even more.

Virgin Galactic ($SPCE) – Just as founder Richard Branson returned from *almost* space, shares in Virgin Galactic began heading back down as well. The space tourism company was off 12.6% yesterday as the lack of distractions, such as the CEO flying 55 miles into the atmosphere, has given investors the chance to look at its valuation. Their determination? Too high, way too high. Which is fair, considering trading at over 100x forward revenue is something even Jordan Belfort couldn’t sell.

Moderna ($MRNA) – Moderna shares have been getting crushed almost as hard as the company crushed the virus. Shares tumbled 15.6% yesterday, marking its worst day since May 2020 and pushing losses to 20.7% over the last two days. Basically, an analyst at BAML pointed out just how overvalued the firm was, and the rest of the Street said “sh*t he’s right.” The analyst called for a 75% market cap reduction, and seeing that the firm is currently worth more than 130-year-old giant Merck, this could have some merit. Sources say CEO Stéphane Bancel has been praying for a COVID-21.

Macro Monkey Says

Inflation – As the U.S. government moves closer to passing another $4.5tn in spending, inflation is watching. Fortunately, the July CPI print came in line with expectations, rising 0.5% from June and 5.4% from last year. Just to be clear, 5.4% YoY is quite high historically in the modern U.S., but considering the economic growth and recovery we are seeing, this shouldn’t be a huge surprise. JPow has been preaching that in order for the Fed to achieve their long term target inflation rate of 2% per year, we may have to run hot for a short time. What’s the word I’m looking for? Oh, yeah..."transitory."

Food for Thought:

Goliath vs Goliath – Speaking of inflation, one of the “best” hedges against inflation has been a massive disappointment (to put it nicely). Gold has tantalized humans and investors alike for thousands of years, its ability to hold value made it a shoo-in to become a top inflation hedge. But let’s check the tape: As we’ve seen higher inflation throughout 2021, the GLD ETF is down 15.2% from August 2020 and 11.3% YTD. Meanwhile, another touted inflation hedge is doing relatively well. BTC is up 57.3% this year and, despite a 50%+ stumble at one point, it’s picked up recently as inflation figures come in hot. BTC could be slowly strangling the life out of gold, just as many predicted, but this battle of the Gods will be debated for years to come.

Wise Investor Says

“There is no single market secret to discover, no single correct way to trade the markets. Those seeking the one true answer to the markets haven’t even gotten as far as asking the right question, let alone getting the right answer” – Jack Schwager

Happy Investing,

Patrick & The Daily Peel Team

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