Author: AnswerStock

On Wednesday, Uber hit a new 52-week low after its lockup period ended.

It seems like Uber Technologies just can’t catch a break as news surrounding the company keeps going from bad to worse. The company went public last May, and its IPO was generally considered a flop. And other than a brief uptick in June, the stock hasn’t done too well since then. 

This week, the company released its third-quarter earnings, and overall, they beat Wall Street’s forecasts. But the earnings report didn’t do enough to ease investors’ fears, and the stock slumped nonetheless. Then on Wednesday, the company’s shares hit a new all-time low when the company’s post-IPO lockup expired.

Uber’s lockup period ends 

On Wednesday, Uber hit a new 52-week low after its lockup period ended. Once the post-IPO lockup expires, early investors are free to sell their shares. This only added to the volatility surrounding the stock.

As of Wednesday morning, roughly 90% of Uber’s shares are available for sale. If a large number of investors sell their shares, this will put a great deal of short-term pressure on Uber stock. 

However, Uber does have one saving grace, which is that many investors will be unwilling to sell their shares since the stock is currently underwater. Uber’s IPO price was $45, and as of this writing, the company’s shares are currently trading at $26.96 per share. 

Investors will be watching closely to see if any of Uber’s biggest buyers start selling their shares. These investors include companies like PayPal, SoftBank, Morgan Stanley, and more.  

Final thoughts

What’s interesting is that out of the 27 analysts reviewing the stock, not a single one recommends selling. An analyst from Raymond James recently reiterated his buy rating on the stock. The analyst said that once the company gets through the post-IPO lockup, he expects the stock to perform much better in 2020.

Investors may be freaked out about the future of Uber, but most Wall Street analysts are still pretty positive when it comes to the company. The company is currently considered a strong buy, with a potential upside of 77%. Time will tell if Uber investors can capture some of this optimism. 

This week, Peloton released its first earnings report as a publicly-traded company.

Peloton has been a divisive stock ever since the company first announced it was going public. The company is the epitome of extremes; it experienced massive growth over the last few years, as well as significant losses. The company’s subscriber base continues to grow, while at the same time, it’s been hurt by ongoing legal challenges. 

With that in mind, it’s no surprise that the company’s first earnings report as a publicly-traded company was just as divisive. Initially, investors reacted favorably to the earnings report, and the stock jumped 6% in pre-market trading. But by mid-morning, the stock lost these gains and fell an additional 6%. 

Let’s look at four things you need to know about the Peloton’s first-quarter earnings report. 

1. The company’s revenue doubled

During the first quarter, Peloton’s revenue reached $228 million, which is more than double what the company earned a year earlier. It also exceeded Wall Street’s forecasts of $199 million in revenue. 

Peloton’s full-year revenue guidance was just as ambitious. The company expects its revenue to fall between $1.45 billion and $1.5 billion. 

2. Peloton’s subscriber base is growing

Peloton’s revenue continues to grow by leaps and bounds because of its strong base of customers. At the end of the first quarter, the company had 560,000 customers, which is up from 277,000 customers a year earlier. For the full year, the company expects its customer base to fall between 885,000 and 895,000. 

3. The company’s losses are widening

In spite of Peloton’s strong growth, investors continue to focus on the company’s widening losses. The company lost $49.8 million during the first quarter, as opposed to $26.3 million a year earlier. And the company’s operating expenses grew by 46%. 

These losses are partly because Peloton began offering a 30-day trial of its connected fitness equipment. The company will deliver the exercise bike or treadmill for free and pick it up if the customer decides they don’t want to keep it. 

Peloton’s connected fitness equipment costs $2,000, which is a big investment for most customers. So while a free trial could help them see the benefits of such a large expense, it will cut into the company’s profitability. 

4. Peloton is investing heavily in growth

And finally, Peloton’s expenses are widening because the company is investing heavily in further growth. The company continues to invest in new products, opening new Peloton studios, and becoming an international brand. 

On the earnings call with investors, CEO John Foley stated that the company could become profitable if it were willing to cut back on growth. But ultimately, that’s not something Foley or Peloton’s board of directors are willing to do. 

Foley summed this up by stating, “We believe the global opportunity is so big that we’re on the right balance of investing for future growth.”

Shares of Starbucks are up 29% year to date after a lackluster 2018 performance. 

Last week, Starbucks released a solid fiscal fourth-quarter earnings report. The coffee giant’s earnings and revenue were mostly in line with what investors were expecting, although the guidance was a bit lower than what Wall Street was calling for.

Starbucks stock is up 41% from a year earlier, but its shares are down slightly from its summer high of $99.72 per share. The recent drop is partly due to concerns over ongoing competition from Luckin Coffee in China, which is one of Starbucks’ most important markets. 

Let’s look at an overview of Starbucks’ fourth-quarter earnings, and what this means for the company going forward.

Starbucks reports solid Q4 results

During the fiscal fourth-quarter, Starbucks earned 70 cents per share, which was in line with what analysts were expecting. The company’s revenue reached $6.7 billion, which beat Wall Street’s forecasts of $6.67 billion.

But best of all, the company’s comparable sales were up in the U.S. and China. The company’s comparable sales grew by 6% in the U.S. and 5% in China. Overall, the company’s global comparable sales increased by 5%. In contrast, the company’s comparable sales grew by 3% in the fourth quarter of 2018.

Starbucks also grew its global stores by 7% over the past year. The company plans to open an additional 2,000 stores worldwide.

Going forward, the company’s guidance was a bit lower than what Wall Street was calling for. Starbucks expects its full-year earnings to fall between $3 and $3.05 per share, as opposed to the $3.07 analysts were calling for. But investors seemed pleased with the earnings report nonetheless. 

What’s next for the coffee giant?

In spite of the solid performance, shares of Starbucks haven’t moved too much in the days following the earnings report. In fact, as of this writing, the shares are trading down slightly. However, this doesn’t seem to be anything to be concerned about. 

Wall Street reacted favorably to the earnings report, with three analysts reiterating a buy rating on the stock. And a Jefferies analyst praised the company for maintaining a firm hold on its market in China. Overall, Starbucks is considered a moderate buy. 

Starbucks should continue to do well thanks to its strong customer loyalty, the innovative new partnership with Nestle, and impressive performance from its loyalty program.

Pinterest shares fall to their lowest levels since the company’s April IPO. 

On Friday, Pinterest hit a new 52-week low after its shares fell more than 20%. Investors were disappointed when the company fell short on its third-quarter earnings report. And unfortunately, the company’s full-year outlook was just as grim.

Here is an overview of Pinterest’s third-quarter earnings results:

• Earnings: 1 cent, as opposed to a forecasted loss of 4 cents
• Revenue: $279.7 million, as opposed to $280.6 million forecasted
• Monthly active users: 322 million users, as opposed to 311 million forecasted
• Full-year guidance: Between $1.1 billion and $1.115 billion, as opposed to $1.12 billion forecasted

An overview of Pinterest’s Q3 results

At first glance, Pinterest’s third-quarter earnings don’t seem too bad. Pinterest’s sales grew 47% from a year earlier, and the company is starting to take market share from companies like Facebook and Google. 

And the company continues to find new ways to improve the user experience on its site and grow its monthly active users. According to CEO Ben Silbermann, the company recently redesigned its website “to make the service more intuitive.”

And these improvements seem to be paying off because the company’s monthly active users grew 28% year over year. And its average revenue per user increased 14% year over year, which was slightly below analyst estimates. 

The company did fall short on its revenue, and its full-year guidance was below what most analysts were calling for. These issues may seem small, but investors were expecting much bigger results from the company. 

What’s next for Pinterest

The company’s third-quarter results were good, but they weren’t as good as what Wall Street was hoping for. Even still, there’s a lot to be optimistic about when it comes to Pinterest. 

Although it is a much smaller company, it’s growing at a faster pace than Google and Facebook. And its user base continues to grow, which means more people are finding value from the company’s platform. 

Pinterest’s shares are currently trading at their lowest levels since the company went public last April. This drop could present an excellent buying opportunity for interested investors.

The company’s shares are up 43% year to date.

Shares of Facebook are trading a bit higher after the company released better-than-expected third-quarter earnings. The social media giant’s earnings, revenue, and user growth all topped Wall Street forecasts. And the company’s outlook for the fourth quarter was upbeat as well.  

Here is an overview of Facebook’s third-quarter earnings and what we can expect from the company going forward:

• Earnings: $2.12, as opposed to $1.91 forecasted
• Revenue: $17.65 billion, as opposed to $17.37 billion forecasted
• Daily active users: 1.62 billion, as opposed to 1.61 forecasted

What Facebook did well during Q3

During the third quarter, Facebook’s revenue reached $17.65 billion, which is a 29% increase from a year earlier. The majority of the company’s earnings continue to come from its ad revenue. 

Advertising is becoming an increasingly competitive space, but Facebook is finding new opportunities through its Stories feature on both Facebook and Instagram. Mobile ad revenue currently accounts for 94% of the company’s total revenue. And the company’s average revenue per user increased by 19%. 

And Facebook continues to grow its daily and monthly active users. The company boasts 2.8 billion users across its entire family of apps. Facebook also continues to gain more users across both the U.S. and Europe. 

In many ways, it’s unsurprising that Facebook’s financials remain so strong. The biggest issue surrounding the company is its ongoing regulatory problems. However, these issues were largely sidestepped during the company’s earnings report. 

Instead, CEO Mark Zuckerberg released a statement saying simply, “We had a good quarter, and our community and business continue to grow.” 

What’s next for Facebook? 

At this point, it seems unlikely that the company’s regulatory issues will derail Facebook. Wall Street is bullish when it comes to the stock, and the company is considered a strong buy. The average price target for Facebook is $235.93, giving it a potential upside of more than 25%.

During the fourth quarter, management does expect the company’s revenue to decelerate slightly. However, it expects revenue growth to pick back up in 2020.

The company’s revenue fell short due to increased competition from competitors.

On Tuesday, GrubHub reported its third-quarter earnings, and the results weren’t pretty. The company’s revenue, earnings, and guidance all fell below Wall Street expectations. 

As a result, five different analysts downgraded the company. Some analysts, like Bank of America and Oppenheimer, gave the stock a double downgrade. This means they went from recommending to buy shares of Grubhuh to giving it a sell rating. 

Here is an overview of the company’s third-quarter earnings and what we can expect from Grubhub going forward.

What happened to GrubHub during Q3?

During the third quarter, GrubHub’s revenue rose 30% to reach $322 million. Unfortunately, investors were expecting the company’s revenue to surpass $330 million. Earnings did fall in line with Wall Street expectations at 27 cents per share.

GrubHub’s orders decreased by 15% from a year earlier, which is bad news for a meal delivery app. And this is in addition to the 11% it fell during the second quarter.

But for investors, the real kicker was the company’s fourth-quarter guidance. Going forward, management expects revenue to fall between $315 and $335 million. This is well below the forecasted guidance of $388 million.

And the company expected its adjusted EBIDTA to expected to fall between $15 million and $25 million. This would represent a substantial decline from a year earlier.

According to a Bank of America analyst, the problem is that there’s no real sense of customer loyalty when it comes to meal delivery apps. Companies continue to flood the market, and consumers pick the service that offers them the best discounts and promotions. 

What’s next for GrubHub?

In a note to investors, GrubHub CEO Matt Maloney said that the company has a plan for dealing with rising competition. Going forward, the company plans to focus on adding non-partner restaurants and expanding its national chain integrations. 

Maloney says the company will be trying a number of different strategies over the next year to see what will work. However, it remains to be seen whether this will help GrubHub regain the competitive edge it held in the past. 

The company’s shares fell more than 20% in spite of positive earnings and guidance.

On Monday, Beyond Meat reported its fiscal third-quarter earnings, and the results were everything investors could have hoped for. The company exceeded Wall Street’s expectations on earnings and revenue. 

And Beyond Meat continues to form new partnerships with grocery stores and restaurants, which is a strong indicator of continued growth. The company is currently testing out partnerships with McDonald’s, Subway, and KFC.

In spite of all this good news, Beyond Meat’s stock fell more than 15% midway. The company did recoup some of these losses, only to have its shares fall more than 20% on Tuesday. 

Understanding the stock’s recent volatility

Beyond Meat has been a very volatile stock since it first went public last May. The shares immediately took off, and at one point, reached a 52-week high of $239.71. That’s quite a jump from the company’s IPO price of $25 per share. 

According to Barron’s, this makes the company one of the most heavily shorted stocks on the market. Beyond Meat has grown so quickly, and its valuation is so high, most investors believe a drop is inevitable. 

And to add to this uncertainty, millions of the company’s shares will come out of lockup this week. As of Tuesday, insiders can sell the stock for the first time since the company went public. This adds an additional layer of pressure, as many investors anticipate a big wave of trading.  

However, there is one person who won’t be selling their shares, and that’s Beyond Meat’s CEO Ethan Brown. Brown has already stated that he has no plans to sell any of his shares, and is focusing his efforts on growing the company.

The future is bright for Beyond Meat

In spite of the recent stock volatility, there is a lot to be excited about when it comes to Beyond Meat. The company continues to grow at a rapid pace, and its net sales are up 250%. And the company continues to thrive, in spite of increased competition in the marketplace.

On a conference call with investors, Brown largely dismissed concerns over increased competition. He pointed out that competition is inevitable, and that the company has been preparing for this for years. 

Brown is focused on building Beyond Meat to an international company and bringing the company’s revenue to $40 billion. And if this latest earnings report is any indication, there is a strong possibility that could happen.

Walgreens stock is down 26% from a year earlier.

On Monday, Walgreens Boot Alliance reported its fiscal fourth-quarter earnings before market open. The company’s earnings and revenue beat Wall Street expectations, causing the stock to rise slightly mid-morning.

During the fiscal fourth quarter, the company’s revenue came in at $33.95 billion, as opposed to the $33.89 billion forecasted. Adjusted earnings were $1.43 per share, as opposed to forecasts of $1.41.

But even though these numbers were better than expected, Walgreens still has a long road ahead. The company continues to lay off employees and close down more stores, which has significantly affected its profitability. 

Walgreens: The good, the bad, and the ugly

In addition to reporting its fourth-quarter earnings, Walgreens also gave investors a look at its fiscal year 2019 results. During the fiscal year, Walgreens’ adjusted earnings came to $5.99, which slightly beat Wall Street’s estimates of $5.97.

During the fourth quarter, the company’s retail pharmacy sales grew by 2.1%. This growth was mostly due to an increase in drug prices.

Walgreens’ comparable non-pharmacy store sales have been down recently, mostly because the company is scaling back on its tobacco products. Earlier this month, the company stopped selling e-cigarette products due to public health concerns. 

Overall, investors seemed pleased with the earnings report, and the company’s shares rose slightly. Walgreens CEO Stefano Pessina said he’s proud the company was able to meet its earnings goals in spite of the “challenging operating environment.” 

Can the company turn things around?

Looking ahead, Walgreens expects its revenue to be mostly flat for fiscal 2020. This stagnation is partly due to the company’s cost-cutting program, named “Save to Invest to Grow.” The company plans to cut $1.8 billion by fiscal 2022. 

Walgreens plans to do this by continuing to close stores across the U.S. and the U.K. And just last week, Walgreens laid off some of its corporate employees, though the company declined to say how many people lost their jobs. According to CFO James Kehoe, this restructuring won’t affect any store positions or locations.   

Walgreens has many headwinds that it needs to overcome, but the company does seem to have a plan for how it will deal with them. Time will tell whether the company’s efforts will be successful.

The company blamed technology issues for its lackluster earnings.

This week, shares of Twitter dropped after the company’s third-quarter earnings report fell short of Wall Street expectations. The company blamed the earnings miss on technology problems related to its Mobile Application Promotion (MAP) products.  

The MAP products allow advertisers to promote mobile apps on Twitter’s platform. Twitter accidentally used confidential information when it delivered ads to them. And unfortunately, this wasn’t a one-time lapse but a problem that could affect the company well into 2020. 

Let’s learn more about what happened to Twitter to the third-quarter and where the company goes from here. 

An overview of Twitter’s Q3 earnings

During the third quarter, Twitter’s revenue reached $824 million, which is a 9% increase year over year. However, it fell below Wall Street’s estimates of $874 million. Non-GAAP earnings also fell short on estimates and came in at 5 cents per share, instead of the forecasted 20 cents per share.

Twitter was affected by multiple headwinds during the third quarter, but the biggest issue was with the company’s MAP technology. Bugs in the technology impacted the device’s ability to target ads and share data with its ad partners. 

In a letter to shareholders, Twitter explained the steps it was taking to remedy the problem. The company is working on an updated version of MAP but doesn’t know when it will be ready. 

However, it wasn’t all bad news for the company. Twitter did see its monetizable daily active usage increase to 145 million, which is up 17% year over year. And the company’s total U.S. user base reached 30 million, which is up four million from a year earlier.

How will this affect Twitter going forward?

During the third quarter, Twitter was affected by other headwinds outside of the technology issues. Revenue is down in part because the company experienced a slow season over the summer months. And the company also saw its revenue in Japan drop by 1%. 

Going forward, the company lowered its guidance for the fourth quarter. It expects revenue to fall between $940 million and $1.01 billion, which is below Wall Street’s estimates of $1.06 billion. It also expects its operating income to fall between $130 and $170 million.

Tesla’s shares jumped more than 20% after the company showed that it’s finally becoming profitable.

This week, Tesla released its third-quarter earnings report, and the results were much better than investors were expecting. The company’s free cash flow, gross margin, and profitability all improved during the third quarter.

As a result, the company’s shares were up more than 20% in after-hours trading on Wednesday. Here is a brief overview of Tesla’s third-quarter earnings:

• Revenue: $6.30 billion, as opposed to forecasts of $6.45 billion
• Earnings: $1.86 per share, as opposed to forecasts of -$0.24 
• Deliveries: 97,000, as opposed to forecasts of 95,000 to 100,000
• Gross margin: 18.9%, as opposed to forecasts of 17.7%

What is behind Tesla’s Q3 comeback?

Tesla’s revenue actually fell during the third quarter, in spite of an increase in vehicle deliveries. This was because the company began offering a leasing option on the Model 3, which wasn’t available last year. The company’s net income was also down from a year earlier.

However, investors didn’t seem too bothered by the drop, since the company showed surprising profitability during the third quarter. Investors were expecting Tesla to lose money, but the company’s non-GAAP earnings were $1.86. This was quite a change from the second quarter when the company reported losses of $1.12 per share.

Plus, the company’s gross margins improved substantially. And free cash flow reached $371 million, which far surpassed forecasts of $32 million. 

Looking ahead, Tesla believes it is still on track to deliver between 360,000 and 400,000 vehicles in 2019. And most importantly, the company believes it will continue to be profitable from here on out. 

What’s next for Tesla?

It’s safe to say that this is one of Tesla’s best quarters yet, but the company is looking ahead to the next milestone. Going forward, the company is focused on completing its Shanghai plant. 

CEO Elon Musk said that the Shanghai plant is in the trial production phase and will be ready in the next couple of months. This is an important next step for Tesla since this facility will allow the company to boost its international sales at a lower price point.

Tesla is also making preparations for the release of its newest vehicle, the Model Y. The Model Y is the company’s crossover vehicle and will be built on the same platform as the Model 3. The company expects the Model Y to be ready in the fall of 2020.