Author: AnswerStock

These five companies had the worst public offerings of the year.

When it comes to IPOs, 2019 has been full of ups and downs. Overall, this year’s public offerings actually outperformed the market, but there were plenty of misteps along the way. Listed below are the five worst IPOs of 2019.

1. Uber

Uber’s highly anticipated IPO was a disappointment almost right from the start. The company set its IPO price at $45 per share, and it’s currently trading well below that at $30.68 per share. 

Plus, Uber continues to lose billions of dollars, which calls into question whether the company can ever be profitable. And the ride-sharing market is quickly becoming oversaturated, making it difficult for Uber to cut costs. 

2. Lyft

Lyft is another ride-sharing company and was one of the most notable IPOs of the year. The company went public with an asking price of $72 per share and on its first day of trading, the stock was up more than 8%. But the stock has since tanked and its currently trading around $45 per share. 

3. Peloton

Peloton is an interactive fitness company that sells treadmills and bikes that cost upwards of $2,200. The company filed its preliminary prospectus in August, and went public in September. Peloton’s IPO price was $29 per share, and the company is currently trading below that at $27.19 per share. 

4. SmileDirectClub

SmileDirectClub went public in September, and it was quickly dubbed one of the worst stock market debuts of the year. The company went public with an IPO price of $23 per share, and the stock has continued to fall since. The stock is currently trading at $8.32 per share. 

5. WeWork

And finally, WeWork is one of the most notable IPO fails of the years. Although technically, WeWork never went public, though not for lack of trying. WeWork owns 529 coworking spaces across 111 different cities. The company filed its prospectus in August, and the results weren’t pretty. 

The prospectus showed the company was losing huge amounts of money, and investors began to seriously question the company’s path to profitability. In just six weeks, the company went from a $47 billion valuation to backing out of its IPO, and former CEO Adam Neumann resigned.

The company’s shares are up 34% in 2019.

On Thursday, Nike reported its fiscal second-quarter earnings, and the results were pretty positive overall. The company beat earnings and revenue expectations. This caused the company to hit a new 52-week high on Friday.

Overall, Nike has had a good year, and its shares are up 47% from a year earlier. The company’s growth is especially impressive, given some of the economic headwinds it has faced. 

Here is an overview of the company’s latest earnings report and what is next for Nike.

Nike’s Q2 earnings overview

For the second quarter, Nike reported earnings of 71 cents per share, which beat Wall Street estimates of 58 cents per share. And the company’s revenue grew 10% year over year to reach $10.3 billion. This beat analyst estimates of $10.1 billion. 

During the second quarter, the company’s footwear sales increased by 12%, its apparel sales grew by 8%, and its equipment sales were up by 6%. And the company’s digital business grew 38% this quarter.

The U.S. continues to make up the majority of Nike’s sales, but the company did see strong international growth as well. Most notably, the company’s sales grew by 20% in China. And the company’s sales were up by 13% in the Asia-Pacific region and Latin America. 

And the company’s gross margin increased 20 points year over year to reach 44%. This was caused by high average selling prices on some of the company’s most popular brands. But this figure was down slightly from the previous quarter, due to rising tariffs. 

Bottom Line

All in all, it was a pretty solid quarter for Nike, and the company’s shares are up as a result. Big changes are coming for Nike in 2020, including a new CEO. John Donahoe will be succeeding Mark Parker as CEO of Nike next month. 

Most analysts are pretty optimistic when it comes to Nike, and the company is considered a moderate buy. A  Susquehanna Financial Group analyst is hopeful about the CEO transition and said that Donahoe’s “digital chops and brand knowledge” should carry Nike to its next phase of growth.

Sales of the company’s Blue Buffalo pet food made up for falling snack and yogurt sales.

General Mills reported its second-quarter earnings this week, and the results were better than investors had expected. The company has struggled with falling sales for the past couple of years, but these latest results suggest it could be returning to growth.

The company’s sales and earnings are up from a year earlier. This increase is mostly thanks to General Mills’ pet brand, Blue Buffalo, as we’ll discuss in more detail below. Here is an overview of how the company fared during the second quarter:

• Earnings: 95 cents per share, as opposed to 88 cents per share forecasted
• Revenue: $4.4 billion, which was in line with Wall Street’s expectations

What General Mills did well during Q2

For the past couple of years, General Mills has struggled with falling snack and yogurt sales. This trend continued during the second quarter, with snack sales in the U.S. falling 2% and yogurt sales falling 4%. 

However, these losses were offset by significant gains in the company’s pet food division. General Mills purchased the pet food brand Blue Buffalo in 2018, and this decision seems to have paid off for the company. 

Pet food sales rose 16% and were highest for the company’s Life Protection Formula and Wilderness lines. Sales of the company’s cereals and frozen baked goods remained mostly flat from a year earlier. 

General Mills’ international sales continue to decline, but the rate of decline is slowing. Overall, company management expects the positive results to continue into the second half of fiscal 2020. 

What’s next for General Mills?

The company still has more progress to make in terms of growth, but these second-quarter earnings are a positive turn of events for General Mills. According to CEO Jeff Harmening, the company plans to focus on marketing and product innovation in 2020.
General Mills faces much stiffer competition in terms of snack foods and cereals, so diversifying into the pet food business was a smart move. Overall, the company’s shares are up 36% from a year earlier, and the stock is considered a moderate buy on Wall Street.

Global trade issues and Amazon weighed on FedEx’s second-quarter earnings. 

On Tuesday evening, FedEx reported its second-quarter earnings, and no one had high expectations going into the earnings call. The company has had a rough year and faced numerous headwinds that impacted its sales and profits. 

But investors weren’t expecting the company’s numbers to be as bad as they were. FedEx missed the mark on earnings, revenue, and lowered its 2020 guidance. The company’s stock dropped by more than 15% as a result.

FedEx deals with ongoing headwinds 

2019 was a challenging year for FedEx. Global trade disputes weighed on the company’s international shipping business. And the company continues to deal with the fallout of losing Amazon as a customer. 

All these factors weighed on the company’s second-quarter profits. The company reported earnings of $2.51 per share, whereas Wall Street was expecting $2.76 per share. 

FedEx’s revenue was $17.32 billion, which also fell short of the forecasted $17.58 billion. But most disappointing of all, the company lowered its full-year guidance. FedEx now expects earnings to fall between $10.25 and $11.50 per share, instead of between $11 and $13 per share. 

CFO Alan Graff Jr. didn’t beat around the bush, and acknowledged that the company’s adjusted operating profit is “horrific.” But Graff added that the company does expect to see significant improvements in the third and fourth quarters. 

Can FedEx bounce back in 2020?

FedEx’s stock is currently down more than 20% from a year earlier, and it continues to trail below the S&P 500 and the Dow Jones Industrial Average. And the company will likely continue to struggle over the next year. 

FedEx continues to experience the financial fallout of losing Amazon as a customer. And going forward, it’s going to be much harder for FedEx to keep up with Amazon’s shipping network. 

Amazon recently restricted some of its third-party sellers from using FedEx. FedEx is also struggling to keep up with UPS, which has been expanding its air shipment network and taking a lot of business from the company.

Overall, Wall Street is divided when it comes to FedEx. The company is considered a moderate buy, and some analysts believe the company can bounce back. It’s probably a good idea to wait and see whether the worst is over for FedEx. 

CEO Mark Tritton announced that six members of the senior leadership team are leaving.

This week, Bed Bath & Beyond made some major changes to its executive leadership team. Six members of the company’s senior leadership team are leaving. The company said this is part of its plan to enter 2020 with “fresh perspectives from new, innovative leaders of change.”

Could this be a new beginning for Bed Bath & Beyond? Let’s look at a few more details about the leadership transition going on within the company. 

Details on the leadership shake-up

Bed Bath & Beyond’s leadership transition really started last March when a group of activist hedge funds stepped in and demanded change. At the time, the company’s sales were declining, and its stock had been on a downward spiral for years. 

The hedge funds claimed Bed Bath & Beyond had “lost touch with modern retail,” and demanded an overhaul of the company. Former CEO Steven Temares was ousted, and the company’s board was overhauled. 

In October, the company appointed Mark Tritton as CEO. Previously, Tritton served in key roles at Target, Nordstrom, and Nike. He was seen as the right person to turn around the struggling retailer. 

And it appears that Tritton’s first order of business is to shake up the company’s leadership team. Bed Bath & Beyond’s chief merchandising officer, chief digital officer, chief marketing officer, chief brand officer, general counsel, and chief administrative officer are all leaving. 

Tritton released a statement saying that this is the first of many changes for Bed Bath & Beyond. He is also expected to revamp the company’s stores, boost its delivery capabilities, and grow its digital presence. 

Bottom line

Making such a dramatic change during the holiday season is risky, but the market reacted favorably to the news. The company’s shares jumped by more than 7%. 

Analysts seemed to be encouraged by the leadership shake-up as well. Telsey Advisory Group analyst Cristina Fernandez said that Tritton is taking “decisive and bold actions to execute a turnaround.”
Overall, the company’s stock is up 43% year to date, and the company is considered a moderate buy. Investors and analysts alike seem to be betting that a turnaround is in the cards for Bed Bath & Beyond.

Micron stock is currently up 69% year to date.

On Monday, Micron hit a new 52-week high after being upgraded by a Susquehanna Financial Group analyst. Analyst Mehdi Hosseini raised the stock from neutral to positive, and raised his price target from $45 to $85 per share. 

According to Hosseini, Micron stock should take off in the coming years as memory chip prices continue to recover. He believes the company will experience a significant turnaround starting in May 2020, which will set the company up for a strong 2021. 

Here is the backstory on Micron, and what we can expect from the company’s upcoming earnings report.

The backstory on Micron stock

Micro makes storage and memory products for consumer PCs, mobile devices, cloud servers, and graphics cards. But the company’s profits have declined over the past year due to a lower market for memory prices. 

Micron’s fiscal 2019 year ended in September, and the company’s revenue was down by more than 20% due to lower average selling prices. The company’s profits also fell by 50%.

However, this means Micron is very reasonably priced and could be considered a good long-term buy. Hosseini believes the company’s fundamentals will continue to improve in the coming years as the demand grows for both DRAM and NAND memory chips.  

What’s next for Micron?

Micron is scheduled to report its fiscal first quarter earnings this Wednesday, Dec. 18 after market close. Investors will be paying close attention to the company’s gross margins, as this will be a good indicator of how efficient the company’s spending is. 

It should be noted that Micron has significantly outperformed the S&P 500 over the past year. And overall, Micron is considered a moderate buy on Wall Street with a potential upside of 7%. Out of the 26 analysts currently reviewing the stock, only two recommend selling. 

The company’s shares soar 61% in its first day of trading on the New York Stock Exchange. 

Bill.com went public on the New York Stock Exchange today, and the results were impressive. The fintech company’s stock jumped more than 60% during its market debut. 

The company’s IPO price was $22 per share, but Bill.com ended the day trading at $35.50 per share. Here is an overview of the company’s public offering, and what’s next for Bill.com.

An overview of Bill.com’s IPO

Bill.com provides AI-based financial software that makes it easier for small to medium-sized companies to manage their back office. Roughly 55% of the company’s revenue comes from software subscription fees. The rest comes from transaction fees and interest.

The company currently has 81,000 customers that use its services, but it believes its potential reach is much larger than that. In its prospectus, management stated that it believes it has a $30 billion total addressable market.  

In the weeks leading up to the IPO, there were signs that the company believed it would go well. First, Bill.com increased its IPO range from $16 to $18 per share up to $22 per share. The company also released an additional million shares. 

In total, the company sold 9.82 million shares and raised $216 million. The public offering was led by Goldman Sachs, Jeffries, KeyBanc Capital Markets, and Bank of America. 

Bottom Line

2019 hasn’t been a great year for IPOs. Both Uber and Lyft had highly anticipated public offerings, which were mostly a letdown. WeWork’s IPO fell apart at the last minute, and the stationary bike maker Peloton had one of the worst IPOs of the year. 

And like many companies going public this year, Bill.com is not yet profitable. During its last fiscal year, the company lost 13 cents per share. But there are still many reasons to be hopeful about Bill.com. 

Bill.com is growing quickly, and its revenue increased by 67% over the past year. And the company’s large customer based proves it’s done a good job of carving out a niche for itself in the B2B finance market. It remains to be seen whether the company can continue to build on this momentum and become profitable. 

The company’s shares are currently down 42% from a year earlier.

On Wednesday, The Children’s Place reported its third-quarter earnings, and the results were not what analysts were hoping to see. The company managed to barely beat earnings expectations, but its revenue fell short of Wall Street’s guidance. 

And management painted a grim outlook for its holiday sales, saying competition from stores like Target could derail sales. This caused the company’s shares to drop more than 20% on Wednesday.

Here is a closer look at the company’s problematic third-quarter, and what we can expect from The Children’s Place going forward.

The Children’s Place misses Q3 targets

It wasn’t all bad news for The Children’s Place during the third quarter. The retailer did manage to beat earnings expectations, and the company’s revenue and comparable sales are up from a year earlier.

But that’s pretty much where the good news ends. The company’s revenue rose 0.4% to reach $524.8 million, but that’s a far cry from forecasts of $534 million. 

And while The Children’s Place saw its comparable sales rise 0.8%, this falls short of the company’s own guidance of between 3% and 4%. But the company’s low fourth-quarter guidance is the main culprit for its declining shares.

Management expects its fourth-quarter revenue to fall between $504 million and $509 million. This number is substantially lower than the previous revenue estimates of $555.1 million. 

Final thoughts

The Children’s Place CEO Jane Elfers said the company had a robust back-to-school season but blamed the revenue miss on warm weather and declining mall traffic. 

Warm weather seems like an unlikely culprit, but declining mall traffic is a very real problem for The Children’s Place. And it has the potential to derail the company’s relaunch of the Gymboree brand. 

Not to mention, the company faces stiff competition from stores like Target and Gap, which offer their own children’s clothing lines. Overall, The Children’s Place is considered a hold on Wall Street with a potential upside of 7%. 

Fiverr’s shares have lost most of their value since the company’s June IPO.

Fiverr first made its market debut in June with mixed results for investors. The company’s shares rose to a 52-week high of $44.25, which is more than double its IPO price.    

But since then, the company’s shares have steadily lost most of their value, and the stock is currently trading near its $21 IPO price. So this begs the question: Is Fiverr still worth investing in?

4 things to know about Fiverr

Investing in a newly public company is always a gamble, but the long-term rewards could be worth it. Here are four things you need to know before investing in Fiverr.

1. The company is growing quickly

During Fiverr’s most recent earnings report, the company reported year-over-year revenue growth of 42%. And this earnings report was no fluke. In 2018, the company’s revenue grew by 45% from a year earlier.

2. The gig economy is just getting started

Fiver’s success is based on the incredible growth of the gig economy. At one point, freelancers were considered just a hop, skip, and a jump away from unemployment.

But now, becoming a freelancer is seen as a viable career path for millions of people. The gig economy grew by more than 10% from 2005 to 2015. And it’s expected that the number of freelance workers will grow from 3.9 million in 2016 to 9.2 million by 2021. 

3. Fiverr’s user base continues to increase

Fiverr earns money by charging a fee for every job completed through its platform. And its revenue growth is thanks to more people using the platform and spending more money.

The company’s user base grew by 16%, and its buyers continue to spend more money. Most recently, the company expanded into Germany, which should help fuel even more growth.

4. The company is not yet profitable

It should be noted that Fiverr is not yet profitable. Like many fast-growing startups, company management is prioritizing growth over profitability. However, the company continues to exceed revenue expectations, so this may be worth it in the long run.

Final thoughts

Given the success of the gig economy and the growing number of people who want to be freelancers, Fiverr could be a great long-term investment. 

The company’s revenue growth is strong, and it continues to bring on new users and drive up the average price per gig. However, it could take a while for the company to reach profitability. 

The company’s quarterly numbers were strong, but its guidance left a lot to be desired.

2019 has been a good year for Stitch Fix, and the company’s shares are up 57% year to date. And this week, shares of Stitch Fix jumped more than 10% after the company released its fiscal first-quarter earnings report. 

The company exceeded its earnings and revenue guidance, and its active clients grew by more than 16% year over year. However, the company did lower its full-year guidance, and management announced that the company’s CFO is planning to leave.

An overview of Stitch Fix’s Q1 results

Stitch Fix’s fiscal first-quarter ended on Nov. 2, and overall, the results were pretty solid. The company’s revenue reached $444.8 million, which is up 21% from a year earlier. And Wall Street was calling for revenue between $438 million and $442 million, so Stitch Fix blew those expectations out of the water.

Investors were expecting the company to report a loss of 6 cents per share, but the company managed to break even. And best of all, the company’s active clients grew to 3.4 million, and its net revenue per active client rose by 9.5%. 

However, the company’s 2020 guidance didn’t leave investors with much to be excited about. Stitch Fix expects its full-year revenue to fall between $1.90 billion and $1.93 billion. The lower range of this guidance falls short of the $1.92 billion Wall Street was expecting. 

And the company’s second-quarter guidance left a lot to be desired. Stitch Fix expects its second-quarter sales to fall between $447 million to $455 million. In comparison, Wall Street was calling for the company to bring in $456.5 million.

Stitch Fix also announced that its chief financial officer, Paul Yee, is leaving the company to pursue other ventures. The company is also bringing on Elizabeth Spaulding to serve as President and report to CEO Katrina Lake. 

Bottom Line

Stitch Fix has had a good year, and investors have a lot to be happy about when it comes to the company. Stitch Fix continues to not only bring on new active clients but find ways to get its current clients to spend more money. According to CEO Katrina Lake, this is largely thanks to the company’s direct-buy initiatives. 

However, the company may soon have some competition in this area. Amazon is launching its own clothing service for its Prime members. 

Amazon customers can employ a team of shoppers to help them make clothing selections based on their style and shopping habits. This has the potential to disrupt Stitch Fix’s growth down the road.