Have you seen those models? | The Daily Peel | 8/4/21



Market Snapshot


There was a lot of green yesterday as the S&P and Dow got 0.8% boosts each, while the Nasdaq followed along with a 0.6% hop. Let's get into it.


What's Ripe

Victoria's Secret ($VSCO) – Victoria's Secret models are hot. That's right, after spinning off from L Brands, analyst's DCF models far and wide were screaming "undervalued!" as the stock popped 26.6% yesterday. Wait, what models did you think I meant? Get your mind out of the gutter and into the financial statements. This highly anticipated spinoff has been building suspense for a while, as the business was the former rock of L Brands.

Robinhood ($HOOD) – Everyone's least favorite trading platform had a great day yesterday as the firm continues to find its public market footing. It seems investors got their revenge on IPO day and moved on, as the company got a solid 24.2% boost yesterday to its highest level yet. Vlad can thank Cathie Wood for the almost $10bn gain in market cap, as investors will seemingly do anything Cathie Wood says.

Under Armour ($UAA) – Under Armour is living their best life. Sales exploded on a YoY basis, shooting up over 90% and Q3 EPS guidance was updated with a massive increase, from $0.02-$0.04 to $0.14-$0.16. Likewise, shares also exploded yesterday, gaining 7.5%. Nike's little brother is well on its way back from an ~85% drop between Oct 2015 and March 2020, and despite still having a long way to go, it's safe to say they're off to a good start.


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What's Rotten

Clorox ($CLX) – Pour one out for Clorox who lost 9.4% yesterday as investors just disrespect the firm and prove the past is forgotten. What is usually a very non-volatile stock, yesterday's loss was its worst single day performance in over 20 years. The drop came from revelations around demand for their products plunging on a YoY basis. I'm wondering how anyone could be surprised by this, but guidance of a sales decline of 2%-6% really ticked off investors.

Nikola ($NKLA) – The only way I could root for Nikola to fall to pieces harder would be if I had a short position on it, so watching them fall 8.7% yesterday was an absolute privilege. The firm built upon fraud announced earnings, in which revenue grew from $0 last year to a whopping $0 this year. Revenue guidance for the year was also lowered (what is lower than zero?), destroying much of the remaining confidence in the company.

Alibaba ($BABA) – Just because America stopped doesn't mean Big Tech earnings szn is over. Alibaba, the Chinese Amazon, PayPal, and many other firms rolled into one, released quarterly earnings. Despite some decently solid numbers, the fear of what the CCP might do next weighed heavily, bringing shares down 1.5%. Revenue did miss for the first time in two years, however the firm beat on earnings and EBITDA. As tensions rise and investors' fear levels increase, the story of the CCP vs Big Tech will only heat up. We'll see if anyone disappears again soon.

Nvidia ($NVDA) – The U.K. is really pulling Nvidia's arm - literally and figuratively. The American chip-making king by market cap, shook the world last year with an announcement of plans to acquire U.K. based chip designer Arm for the disgustingly high price tag of $40bn. As of yesterday, the U.K. said that the deal failed to pass the vibe check on grounds of national security. Nvidia shares lost 4% at the most yesterday, and finished relatively chilled out with a measly rise of 0.3%.


Macro Monkey Says

You're Up, Europe – Like having your interview immediately after the MD's son, European companies were put in a tough spot, having to follow up their American counterparts on earnings. Fortunately for investors, both sides of the pond were in good shape. 55% of companies that have reported thus far have beaten on net income, while BP and Societe Generale dominated the limelight with drool-inducing beats and buyback announcements. The surprisingly solid quarters seen on both continents can be largely attributed to enhanced YoY comparisons and depressed management guidance in previous quarters. With the Stoxx 600 index at an all-time high too, it doesn't get more rosy than this.


Food for Thought:

In-fun-structure – Oh boy, making infrastructure fun is a nearly impossible task, but let's give it our best shot anyway. This past weekend, some of the final trimmings were set in the $1tn bipartisan infrastructure bill, which could be voted on as soon as week's end. Leading the conquest is Senate Majority Leader Chuck Schumer, who, while wearing a #CancelStudentDebt mask, advocated for even more government spending because who even cares anymore. The bill is expected to create a mini job boom and elevate the quality of life for Americans into the 21st century, with $65bn set aside for broadband, $110bn for roads and bridges, $73bn for clean energy, and a whole lot more. Well, I guess that could've been more boring...right?


Wise Investor Says

"I will tell you how to become rich. Close the doors. Be fearful when others are greedy. Be greedy when others are fearful."  – Warren Buffet


Happy Investing,

Patrick & The Daily Peel Team

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