Mid-Morning Look

Wednesday, November 10, 2021

U.S. stocks posting a massive bounce off morning lows, surging despite the highest CPI inflation reading in over 30-years, as investors take yesterdays modest pullback as a buying opportunity off morning lows. After yesterday’s higher PPI reading, the Consumer price index (CPI) surged 6.2% in October, worse than expected and the highest since December 1990 as fuel prices soared 12.3% for the month, part of a 59.1% increase over the past year. Energy prices overall rose 4.8% in October and are up 30% for the 12-month period. U.S. Oct CPI food +0.9%, housing +0.7%, owners’ equivalent rent of primary residence +0.4%. Meanwhile, overnight in Asia, China PPI printed at +13.5% YoY, its highest since 1995 (so inflation concerns globally). Stocks opened sharply lower on fears it could mean the Fed will up its timeline to raise rates to counter stubbornly high inflation (that does not appear to be transitory). Inflation hedges such as Gold, silver and Bitcoin all seeing early buying momentum on the data (Bitcoin reached as high as $68.7K). There are several pockets of strength early (software) after better earnings, but all eyes on yields, inflation, and what it means for stock markets that are one day removed from all-time highs.

Economic Data

·     Inflation data “hotter” than expected as headline Oct consumer price index (CPI) rising +0.9% MoM topping the +0.6% estimate and on a YoY basis, jumped +6.2% above the +5.8% estimate; on a core basis (ex: food & energy), CPI MoM rose +0.6%, above the +0.4% estimate and jumped +4.6% on a YoY basis, beating the +4.3% estimate; U.S. Oct CPI food +0.9%, housing +0.7%, owners’ equivalent rent of primary residence +0.4%

·     Weekly jobless claims fell to 267K in latest week vs. est. 265K and down from prior week of 271K; the 4-week moving average fell to 278,000 from 285,250 prior; continued claims rose to 2.160M from 2.101M prior week; the U.S. insured unemployment rate unchanged at 1.6%

Sector Movers Today

·     Bitcoin, FinTech & Payments; shares of Bitcoin leveraged stocks again outperform amid the surge in crypto assets following the higher CPI inflation reading (RIOT, MSTR slides from record highs the day prior after Q3 revenue falls short of consensus ($1.24B vs. est. $1.58B), reflecting reduced activity in the cryptocurrency market and was down from $2.03B in Q2 and Q3 MTUs of 7.4M slips from 8.8M in Q2 2021; MOGO Qtrly total revenue increases 58% year over year to $15.4M and 126% YoY growth in q3 subscription and services revenue to $9.5M; MARA out with quarterly earnings; PAY top and bottom line beat and follow through on guidance with 70.6 million transactions which was up 45% Y/Y, beating SMBC modeled 66mm considerably

·     Consumer Finance; UPST shares tumble after Q3 EPS and revs topped consensus but Q4 adjusted EBITDA guidance and adjusted net income indicate declines from the prior quarter as now sees adj Ebitda $51M-$53M vs. $59.1M in Q3 and Q4 adj net income of $48M-$50M vs. $57.4M QoQ; MA announces further expansion of Mastercard Installments, its unique Buy Now Pay Later (BNPL) program that delivers greater choice of flexible, digital-first payment options at checkout, both in-store and online; FOUR Q3 revs miss $377.8M vs est. $399.5M and mid-point of year guidance below views (FY2021 revenue $1.3-1.4B vs est. $1.38B), while Q3 payment volume $13.5b, +90% y/y and Q3 gross revs $377.8M, +76% y/y; GLBE Q3 revenues jumped 77% year-over-year to $59.1M, above the consensus of $55.66M while Q3 GAAP EPS loss of $0.19 was $0.03 above the estimates; LPRO better Q3 results while narrows year rev outlook

·     Media & Telecom movers; Dow component DIS with earnings tonight; FUBO slides despite beat as Q21 revenue of $156.7M was up 156% y/y and adj EBITDA Loss of $81.3mm was down 71% y/y on better EPS while raised its guidance again, for the 4th quarter in a row and added 263,000 subs during 3Q21, about 2x higher than Needham 136,000 sub est.; VMEO to acquire WIREWAX, a leader in interactive and shoppable video, and Wibbitz, a leading enterprise video creation suite; Frndly TV, founded two years ago by former DISH executives, said it had signed a deal with A+E Networks to carry seven of its networks

·     Consumer Staples & Restaurants; COTY slips after announces sale of KKR’s remaining 2.4% ownership stake, as PE firm converts preferred shares into approx 20 mln common shares and sells at $10.50 per share; PFGC posted Q1 adj EPS 43c vs est. 42c on revenue $10.39B vs est. $10B, sees Q2 sales $12.7-12.9B vs est. $12.79B, FY22 sales $49.5-50.5B vs est. $49.3B; WEN Q3 adj EPS and revenue nearly matched consensus but its domestic same-store sales +2.1% missed est. +4.09% and margin 14.4% missed est. 16.6% due to higher labor costs, and it narrowed its full-year adj EPS range to 79-80c from 79-81c and fully below est. 82c; TWNK Q3 EPS adj EPS 21c vs est. 20c on revenue $288M vs est. $279.3M, raised FY revenue outlook to +9%-10% from +7.5%-9%; DNUT Q3 adj EPS in-line 6c on revs $342.8M vs. est. $337.7M; SKIN Q3 EPS ($1.68) vs est. ($0.02) on sales $68.1M vs est. $57M, raised full-year sales forecast to $245M-$255M from $230M-$240M, adj. EBITDA to ~$30M from ~$25M; GO Q3 EPS 17c and revs $768.9M missed consensus with comp sales -4.3% vs +9.1% last year, authorized a $100M share repurchase program, and sees Q4 comps falling 2.5-3.5%; TAST Q3 adj EPS (16c) vs est. (17c) on sales $421.7M vs est. $418M, comp sales for its Burger King restaurants +2.7%, Popeye’s -3.2%
NBEV Q3 EPS loss was narrower than expected but sales missed estimates; HSY acquired Dot’s Homestyle Pretzels and Pretzels, Inc. with the two deals totaling $1.2B

·     Consumer Finance; UPST shares tumble after Q3 EPS and revs topped consensus but Q4 adjusted EBITDA guidance and adjusted net income indicate declines from the prior quarter as now sees adj Ebitda $51M-$53M vs. $59.1M in Q3 and Q4 adj net income of $48M-$50M vs. $57.4M QoQ; MA announces further expansion of Mastercard Installments, its unique Buy Now Pay Later (BNPL) program that delivers greater choice of flexible, digital-first payment options at checkout, both in-store and online; FOUR Q3 revs miss $377.8M vs est. $399.5M and mid-point of year guidance below views (FY2021 revenue $1.3-1.4B vs est. $1.38B), while Q3 payment volume $13.5b, +90% y/y and Q3 gross revs $377.8M, +76% y/y; GLBE Q3 revenues jumped 77% year-over-year to $59.1M, above the consensus of $55.66M while Q3 GAAP EPS loss of $0.19 was $0.03 above the estimates; LPRO better Q3 results while narrows year rev outlook

Stock GAINERS

·     DASH +13%; on stronger 3Q21 results and sustained momentum into 4Q21 and after signed an $8 billion deal to buy Finnish startup Wolt to grab a slice of the European market

·     FVRR +16%; posts Q3 beat with Q3 EPS $0.19 vs est. ($0.01) and revs $74.3M beating the est. $71.1M with higher Q4 rev guidance $74.5-77.5M vs est. $72.8M, citing YoY growth in number of active users as well as price spent per active user

·     GOCO +16%; analysts lower tgt price and Barclays downgraded, but shares rebound following the mixed quarter

·     PFE +3%; after a German advisory panel said people aged under 30 should only receive the BNTX COVID-19 vaccine as it causes fewer heart inflammations in younger people

·     PUBM +22%; delivered across its platform growing impressions +100% with record NRR of 157% – strong with revenue and EBITDA well above expectations

·     RNG +28%; as delivered a strong 3Q with $21M in rev upside vs. cons and $31M of ARR upside vs. KeyBanc est. as ARR accelerated to 39% y/y (from 37% in 2Q21) led by Enterprise at 63% y/y (from 61%)

·     SAIL +25%; as reported strong 3Q21 results, beating the high-end of guidance by 5.9%, highlighted by 71% Y/Y growth in SaaS revenue (27% of total)

·     VALN +23%; after saying that the European Commission has approved an agreement pursuant to which Valneva would supply up to 60 million doses of VLA2001, its inactivated COVID-19 vaccine candidate, over two years including approximately 27 million doses in 2022

Stock LAGGARDS

·     COIN -9%; shares tumble from record highs the day prior after Q3 revenue falls short of consensus ($1.24B vs. est. $1.58B) and was down from $2.03B in Q2 and Q3 MTUs of 7.4M slips from 8.8M in Q2 2021

·     EOG -2%; early weakness in energy stocks (COP, BKR, OXY among top decliners in the S&P)

·     FTCI -13%; as Q3 revenue fell and loss per share widened; both missing ests while also lowers its 2021 revenue forecast to $239M-4249M, from its previous forecast of over $310M citing an abrupt delay of customer purchase order decisions from Q4 into 2022

·     MRNA -3%; after a German advisory panel said people aged under 30 should only receive the BNTX COVID-19 vaccine as it causes fewer heart inflammations in younger people than the MRNA

·     POSH -27%; as reported disappointing 3Q results and guided 4Q revenue and adj. EBITDA below prior forecasts as headwinds from IDFA impacted results to a greater degree than expected

·     PRGO -13%; lowered its year EPS view to $2.00-$2.10, down from prior view of $2.50-$2.70 a share citing challenges including higher input costs and supply-chain disruption, and labor shortages

·     PRPL -20%; several analysts downgraded after its disappointing Q3 included a quarterly loss despite an expected profit and a revenue miss with guidance below consensus

·     TROW -3%; as asset managers slip after monthly AUM data

·     UPST -17%; after Q3 EPS and revs topped consensus but Q4 adjusted EBITDA guidance and adjusted net income indicate declines from the prior quarter as now sees adj Ebitda $51M-$53M vs. $59.1M in Q3 and Q4 adj net income of $48M-$50M vs. $57.4M QoQ

·     WEN -8%; Q3 adj EPS and revenue nearly matched consensus but its domestic same-store sales +2.1% missed est. +4.09% and margin 14.4% missed est. 16.6% due to higher labor costs

Syndicate:

·     Avenue Therapeutics (ATXI) 1.947M share Secondary priced at $1.34

·     Bluejay Diagnostics (BJDX) 2.16M share IPO priced at $10.00

·     Carlyle Group (CG) 2M share Block Trade priced at $58.25

·     Chinook Therapeutics (KDNY) 7.83M share Secondary priced at $14.00

·     CI&T (CINT) 13.044M share IPO priced at $15.00

·     Coty (COTY) 20M share Block Trade priced at $10.50

·     Expensify (EXFY) 9.731M share IPO priced at $27.00

·     Helius Medical (HSDT) 1.204M share Secondary priced at $8.00

·     Rivian Automotive (RIVN) 153M share IPO priced at $78.00 as the deal size was increased to 153M shares from 135M and priced above the recently raised $72.00-$74.00 range