Swaggy's Top Stonks - PTON Earnings Breakdown
Swaggy's Top Stonks - PTON Earnings Breakdown
Swaggy's Top Stonks
Together with... VIG
November 7, 2021
Welcome newcomers to Swaggy's Top Stonks and thank you for subscribing.
Today we'll break down Peloton's earnings by highlighting key points from the earnings call and get into some upcoming earnings going into next week.
There's A LOT of action happening and I might throw in a few extra editions of Swaggy's Top Stonks throughout the week. They will be very brief "run-down" versions of earnings updates and trending stocks. Keep an eye out for them mid-week shortly after market close when companies have reported numbers so I can put all the data together.
Today's Letter
Inside Peloton's Earnings
Fantasy Stocks with VIG
Earnings SZN
Upstart (UPST) DD
Trending Tickers
Inside Peloton's Earnings
Personally, I love the excitement around earnings season. It's the few times a year you can get a company's view on a great or poor quarter. Hear management speak about why things happened the way they did and listen to their insights. At that point you can make a decision on whether your own research agrees with what they are saying or if they are just blowing smoke.
At this point the news of Peloton getting WREKT on earnings is very much main stream. Heck even the two girls at Dunkin' Donuts couldn't believe the stock had dropped 35% in post-earnings trading. If you enjoy listening to the earnings calls or reading the transcripts, as I do, you'd have caught some key points from their two most recent quarters. I've under-lined them below.
From back in August on they FY 2021 Q4 call
The Synopsis: If you've been following PTON for more than just the last two quarters you'll know they had a huge bottleneck with delivery times and getting bikes out to customers. To solve this they over-invested in infrastructure to fix supply chain and spent hundreds of millions on expedited shipping. Keep this in mind as I go into the next highlights from last week's earnings call. You'll also notice from above that PTON YoY growth was only 6%. Some companies that have had extreme growth through covid love focusing on the 2-year CAGR as now they are comparing to the growth they saw through covid tailwinds which wasn't sustainable.
Last week's (Nov-4th) earnings call: FY 2022 Q1
The Synopsis: Management acknowledged they over-corrected with the steps they took to fix supply chain bottlenecks. However, what's interesting to see is that during the last two years they had quite literally won the "covid tailwinds" lottery and PTON was still unable to turn a profit.
Over-invested in supply chain infrastructure
Spent 100's of millions of dollars on expedited shipping
Lowered the price of their core product by $400
All these factors have compressed margins during a time when demand was so high they were getting bikes delivered in the quarter after they were purchased. Lastly, management has noted they are doing a hiring freeze, limiting marketing spend, as well as reducing showroom development. From my own experience of listening to earnings calls that is not something you want a growing company to be doing.
What if I said you could win real money by trading paper-stocks. Is that something you'd be interested in?
Fantasy Stocks. Real Money™
It’s finally here, VIG games are upon us. This is your chance to earn real cash prizes from playing fantasy stocks games. Strap your helmets on and get your watchlists ready because it’s time to throw down.
Here’s how it works. Go to the VIG web or mobile app and click on the controller/games icon (circled red), then select the game you want to play. You’ll need to allocate your fantasy capital to your stocks picks in your paper-portfolio before the game starts, so get on it before tomorrow morning.
If your fantasy stock picks out-perform those of your competitors for the duration of the game you can end up as one of the top 7 players “in-the-money” on the games and you’ll win that some sweet cash prizes based on where you finish.
The cash games are completely FREE to enter so head over to VIG and get started.
*This is promoted content.
Earnings SZN
Looks like many short-squeeze names are reporting this week and things could get interesting based on the results.
Monday
US Foods (USFD) - BMO
PayPal (PYPL) - AMC
AMC (AMC) - AMC (huh?)
Roblox (RBLX) - AMC
Clover Health (CLOV) - AMC
Virgin Galactic (SPCE) - AMC
Lemonade (LMND) - AMC
SmileDirectClub (SDC) - AMC
Zynga (ZNGA) - AMC
Tuesday
Palantir (PLTR) - BMO
BioNTech (BNTX) - BMO
Workhorse (WKHS) - BMO
Ocugen (OCGN) - BMO
Nio (NIO) - AMC
Coinbase (COIN) - AMC
Upstart (UPST) - AMC
FuboTV (FUBO) - AMC
Plug Power (PLUG) - AMC
Unity (U) - AMC
Wednesday
Fiverr (FVRR) - BMO
Monday (MNDY) - BMO
SoFi (SOFI) - AMC
Disney (DIS) - AMC
ContextLogic (WISH) - AMC
Affirm (AFRM) - AMC
Beyond Meat (BYND) - AMC
Root (ROOT) - AMC
Thursday
Paysafe (PSFE) - BMO
Sundial Growers (SNDL) - AMC
Blink (BLNK) - AMC
Coupang (CPNG) - AMC
Friday
AstraZeneca (AZN) - BMO
Upstart (UPST) DD
Our partner newsletter released a solid write-up on Upstart and their business model. Rumor has it some popular FinTwitter accounts have invested a good amount into the company and they don't even know the business model. Here's a sample. Read the full thing for free at TheStonksHub substack linked below.
UPST at a glance
UPST is a risk management company specialized in loans and financing. Their core product is a machine learning model which calculates risk which they tout as being more effective than traditional credit risk scores such as FICO. In an internal (biased to some degree) study, replicating the business models of three traditional banks, UPST was able to show 75% lower default rates and 173% more approvals at the same loss rate. With this core product, UPST is able to offer three services:
Personal loans: UPST offers personal loans automatically through their online platform. Anyone can apply for a loan and get automatic approval/denial. Over two-thirds of their loans are approved automatically without any need for human intervention.
Risk management score: UPST offers banks the ability to use their machine learning algorithm to perform credit worthiness assessments to either supplant or usurp FICO scores. Their lending program, when compared to traditional banks, approve 26% more borrowers and yields 10% lower average APRs for approve loans.
Auto dealership loans: With the acquisition of Prodigy, UPST offers automobile dealers the ability to really quickly offer financing options to their clients. With UPST, dealers are able to save on average 90 minutes per deal as well as achieve higher PVRs (gross income per vehicle retailed) of up to 59%.
The lending industry
Personal loans
Personal loans are individually requested loans for such things as paying off credit cards, starting a new business, refinancing vehicles, or paying off large expenses. The global personal loan market was estimated to be $47B in 2020 but to grow to $719B by 2030 with a CAGR of 31.7%. While the personal loan market slowed down during the COVID pandemic, it is expected to pick back up as the effects of COVID go away. This massive growth rate is driven in a large part by lower interest rates and higher borrowing limits especially within developing countries. In 2020, nearly 12% of all USA consumers had a personal loan and the median personal loan amount per family has more than doubled since the 1990s. As of 2021, commercial banks had given out $1.5T in consumer loans in the United States alone.
Continue Reading: Upstart (UPST - Full Analysis): A potential FAANG?
WallStreetBets - Most Mentioned Equities
Tesla was the most mentioned stock on WallStreetBets last week and for good reason. The stock has had a return of 50% over the last 30 days. For context, TSLA is now a $1.2 trillion market cap company and is trading like a micro-cap growth stock. Other popular names this week were mostly based on share price fluctuations or earnings.
Nvidia (NVDA): Huge week for NVDA as the share price rose ~20% last week.
GME + AMC: Both had great weeks with 15% returns. AMC reports earnings on Tuesday.
Peloton (PTON): No need for description here.
Ocugen (OCGN): What started off with a 30% gain by Wednesday ended up closing down 40% from the Wednesday high by Friday(!).
Disclaimer: All material presented in this newsletter is not to be regarded as investment advice, but for general informational purposes only. You are solely responsible for making your own investment decisions. Owners of this newsletter, its representatives, its principals, its moderators, and its members, are NOT registered as securities broker-dealers or investment advisors either with the U.S. Securities and Exchange Commission or with any securities regulatory authority. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest with or without seeking advice from such an advisor or entity, then any consequences resulting from your investments are your sole responsibility. Reading and using this newsletter or using our content on the web/server, you are indicating your consent and agreement to our disclaimer.