Microsoft licenses its operating systems to manufacturers of computers back in the day. Today, the name Microsoft is synonymous with PCs and laptops. Just like Microsoft is synonymous with PCs and laptops, Roku is synonymous with smart TVs.
Roku was founded in 2002 is taking advantage of the cord cutting trend. According to Roku’s most recent shareholders’ letter, “roughly 50% of U.S. cord cutters are Roku customers.
Roku offers an easy way to access all the top streaming services. Roku estimates that more than a third of all smart TVs sold in the U.S. have Roku’s operating system built in. The list right now includes TCL, Insignia, Sharp, Hisense, Hitachi, RCA and Philips. Roku’s free channel has also secured a partnership with Samsung.
Roku is well-positioned for the streaming war. As the streaming war rages between Netflix NFLX, Amazon AMZN, Disney DIS and others and more people spend more time streaming their favorite shows on more services, Roku makes more money. So no matter which streaming service comes out on top, Roku should benefit.
It’s the reason why Roku was up as much as 400% this year at one point. In just under a year, Roku went from a small/mid cap stock to a large-cap. The firm’s sales growth has been accelerating with year-over-year growth of more than 50% for the past 3 quarters. In addition, Roku just reported its 8th straight top and bottom-line earnings beat. However, on the news the stock sold off. Wall Street will tell you their valuation got to rich, but a month ago I talked about where the chart suggested the Sellers were.
Although I thought the weekly demand would have been a better buy, price reacted to the monthly demand at $95. Thus, the chart suggests price will rise to the daily supply at $148.
It’s not a coincident, price sold off at the daily supply at $148, the news just served as a catalysts. Just another example of why the Markets are not random.
So where does Roku go from here?
Highlighting how well the company is monetizing its platform, Roku’s average revenue per user over the trailing 12 months is 40% higher than Netflix’s most expensive streaming plan. What’s particularly surprising, however, is that current trends indicate there’s still plenty of upside left for this metric to move even higher.
In Roku’s third-quarter update, management said its ARPU was $22.58. With 32.3 million active accounts (1.7 million of which were added in Q3 alone), this robust ARPU has helped Roku deliver $633 million in trailing-12-month platform revenue.
While Roku does benefit from subscriptions to third-party streaming services on its platform, advertising is the company’s most important growth driver. In fact, monetized ad inventory on its platform more than doubled year over year in Q3 — a trend that has been consistent with recent quarters.
Looking ahead, Roku believes this is just the beginning when it comes to advertising spending on its platform. Only 3% of TV advertising budgets are currently spent on connected TV, yet connected TV accounts for 29% of U.S. viewing, Roku’s general manager of platform business, Scott Rosenberg, noted in Roku’s third-quarter earnings call, citing research firm Magna Global.
Fossil Group, Inc. designs, develops, markets, and distributes consumer fashion accessories in the United States, Europe, Asia, and internationally. Its principal products include men’s and women’s fashion watches and jewelry, smartwatches, handbags, small leather goods, belts, and sunglasses.
Although Fossil sales other things beside watches, their bread and butter and what they are known for are their watches. However, watches are a tough business these days in the era of smartwatches.
Thus, Fossil has been expanding its smartwatches and wearable portfolio. This holiday season, Fossil is selling their most advanced hybrid smartwatch, featuring text messages, alerts, caller ID, heart rate and activity tracking and a two-week battery life, but the smartwatch market continues to be dominated by Apple.
Fossil reported earnings this past week. The stock tanked after a surprise quarterly loss and said its sales fell 11%. Fossil said it lost $26 million, or 51 cents a share, in the third quarter, versus earnings of $5 million, or 10 cents a share, in the third quarter of 2018. Sales also declined to $539.5 million from $609 million.
Among the challenges that Chief Executive Kosta Kartsotis outlined on the earnings call, according to a FactSet transcript: a tough consumer environment, difficult sales trends at wholesale channels in developed markets, and lack of interest in traditional watches. “Based on these factors, we’ve lowered our sales expectations for Q4,” he said. “[G]iven the trends we saw in the third quarter, we think it’s prudent to plan our sales number assuming these trends don’t change near term.
Earlier this year, Fossil announced that they were sell technology related to its high-end watches to Google. Google paid $40 million to Fossil in exchange for intellectual property needed to make the watches.
Fitbit was the pioneer in fitness trackers and was doing well, that until the smartwatches were also able to track fitness activities. And at the point this was the beginning of the end for Fitbit. And after years of struggling and trying to remain relevant, they finally waved the white flag and sold to Google. Google was seen as a potential suitor for Fitbit prior to the deal announcement, as the two companies struck a partnership last year and have vested interests in the health space.
So why would Google buy Fossil. Googles mission for its Wear OS is to create “a diverse set of devices” for their smartwatch platform. Fossil owns and licenses 14 brands, including popular names like Kate Spade, Michael Kors, Armani, DKNY, and Diesel. Each of these brands already have their own Wear OS watch in its own signature style. Thus, buying Fossil would be in alignment with Googles mission for Wear OS.
If Google is going to buy Fossil, the chart suggest, to wait for price to hit the monthly demand at $5, which would represent a 44% discount from the current price.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Barrick Gold Corporation explores for and develops mineral properties. The company primarily explores for gold, copper, and silver deposits.
According to Oilprice.com Barrick Gold Corp is one of most promising gold miners in 2020. Barrick Gold made headlines earlier this year when they attempted to acquire Newmont Mining which would of created the world’s largest gold producer. Barrick wanted Newmont Mining because of their adjoining assets in Nevada.
Needless to say, Barrick eventually pulled its $18 billion offer for Newmont Mining Corp and agreed to form a joint venture in Nevada with Newmont Mining.
The world’s second largest gold producer reported earnings yesterday and said it would be at the top end of its production targets for the year and the lower end of cost estimates.
Thanks to the rise in gold prices over the last year and gold production increasing to 1.31 million ounces from 1.15 million ounces over the last 12 months, profits rose to $264 million, or 15 cents per share, in the quarter ended Sept. 30, from $89 million, or 8 cents per share, a year earlier.
And if that news wasn’t good enough, Barrick also announced that its Board of Directors declared a dividend for the third quarter of 2019 of $0.05 per share, a 25% increase on the previous quarter’s dividend.
Although the Newmont Mining deal didn’t materialize, Barrick’s late founder Peter Munk vision of building the world’s largest gold producer remains on the table. The latest talk on the Street is now combining with Freeport-McMoran.
Freeport-McMoRan (NYSE: FCX) engages in the mining of mineral properties in the United States, Indonesia, Peru, and Chile. The company primarily explores for copper, gold, molybdenum, silver, and other metals, as well as oil and gas.
Barrick Gold Corp.’s chief said there’s a logic to combining with Freeport-McMoran Inc. as a way to expand into copper, but isn’t committing to any deals yet.
A tie-up with Freeport could bolster Barrick’s U.S. presence, where it already operates gold mines in Nevada, said Chief Executive Officer Mark Bristow, who cautioned that it’s not something currently being considered.
“Everyone has been fingered as a potential suitor of Freeport,” said Bristow, when asked if he was interested in a combination. “There’s a bit of work for us to do before we can get our head around broadening our scope.”
In general, the mining stocks do better than gold when the price of the metal rallies. Although gold prices have pulled back, I think it’s just part of any normal uptrend, in the cause of gold, a longer term uptrend that started in late 2018.
So where is the price of Barrick headed next, lets go to the charts go to long on the pull back to the weekly demand at $15.30 with a target right before the weekly supply zone.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
There was this huge base at $2.00 on the monthly chart going back 18 years. In September, I noticed a monthly hammer candle had formed in August. If you are aware of the common candle stick patterns, a hammer candle usually occurs at the bottom of a down trend. However, what confirmed the end of the downtrend was on the daily chart, price has formed a demand zone, on top of a demand zone. I call a zone on top of a zone, a level on level and is one of the most powerful formation when trading supply and demand zones. Thus, the chart suggest to go long a pull back to the daily demand levels and go long with a target at $2.700.
Please note, there are typically two seasons for the U.S. gas market: Summer (April-Oct) and Winter (November-March). Gas is injected into the ground in Summer and gas is withdrawn in Winter to meet demand that rises well above production. Please note, today is November 6th.
Natural gas prices surged higher on Monday climbing nearly 4% after rising 5.25% for the week. Short-covering by funds should continue. The weather is expected to remain cooler than normal through most of the eastern portion of the United States over the next 6-10 and 8-14 days.
Hedge fund traders reduced some of their short position in futures and options and added to longs, but remain exposed to a short-squeeze. According to the most recent commitment of trader’s report released for the date ending October 29, 2019 managed money reduced short position in futures and options by 21.5K contracts while increasing long positions in futures and options by 11K contracts. The current net short position at 299K contracts is nearly 3X the open interest that is short futures and options, providing the backdrop for a short-squeeze.
Overall, the Smart Money is still net short natural gas, but are being forced to recover the positions due to being short squeezed. In this case, the short squeeze is occurring because of the excess in demand for the contract and lack of sellers. Since price has moved up rapidly, the short sellers are covering to preserve some of their gains and/or cap their losses, resulting in additional buying, which is causing price to move higher.
So where are prices headed next, the chart suggests price is heading to the weekly supply at $3.100.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Santander Consumer is one of the largest subprime auto lenders in the market. Delinquencies for auto loans in general, including both prime and subprime, have reached their highest levels this year since 2011.
Santander Consumer had $26.3 billion of subprime auto loans as of June 30 that it either owned, or bundled into bonds, According to a report from S&P Global Ratings, Santander Consumer has more than $25 billion in subprime auto loans which is almost 50% of the company’s total managed loans.
Today, I want to introduce another auto lender, Credit Acceptance Corporation
Credit Acceptance Corporation provides financing programs, and related products and services to independent and franchised automobile dealers in the United States. The company advances money to dealers in exchange for the right to service the underlying consumer loans; and buys the consumer loans from the dealers and keeps various amounts collected from the consumers.
Don Foss is known as the pioneer of the subprime auto loan market. Back in the days, General Motors and Ford would only lend money to folks with good credit. So Don started selling cars on credit to people with shaky finances. Don was charging customers crazy high interest rates and could because nobody else was issuing loans to this particular population with bad credit. So in 1972, Foss founded Credit Acceptance (CACC) to handle financing and debt collection for his used car business. Today, CACC is a major player in the U.S. subprime auto loan market and its market cap is a little under $8 billion.
Credit Acceptance Corporation’s CACC third-quarter 2019 earnings of $8.73 per share missed the Zacks Consensus Estimate of $9.13. However, the bottom line was up 12.6% year over year.
Provision for credit losses increased 37.9% from the year-ago quarter to $19.3 million. Moreover, allowance for credit losses at the end of the third quarter was $509.1 million, up from $461.9 million as of Dec 31, 2018.
Credit Acceptance is well poised for growth in revenues, given the continued rise in consumer loans. However, persistently increasing expenses and deteriorating asset quality are near-term concerns.
So as the economy slows, companies hire less and layoff more, customers’ confidence decline, the more sub-prime auto loans default. And when this chain reaction fully materializes, CACC’s stock will crash.
At the moment, there is a nice band of support/resistance at the $450 level.
However, because this band of support/resistance was breached last month, the chart suggests to short price at the weekly supply at $460.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Santander Consumer USA
Holdings Inc., a specialized consumer finance company, provides vehicle finance
and third-party servicing in the United States. Its products and services
include retail installment contracts and vehicle leases, as well as dealer
loans for inventory, construction, real estate, working capital, and revolving
lines of credit.
The company also offers
financial products and services related to recreational and marine vehicles;
originates vehicle loans through a Web-based direct lending program; purchases
vehicle retail installment contracts from other lenders; and services
automobile, and recreational and marine vehicle portfolios for other lenders.
Santander Consumer (SC)
reported earnings this past week and their quarterly earnings of $0.67 per
share beat Wall Street estimates of $0.66 per share. This compares to earnings
of $0.64 per share a year ago. Over the
last four quarters, the company has surpassed consensus EPS estimates three
times. But don’t let the numbers fool
you.
Santander Consumer is one of the largest subprime auto lenders in the market. Delinquencies for auto loans in general, including both prime and subprime, have reached their highest levels this year since 2011.
Prior to the Great Recession, banks were approving just about any applicant regardless of their income or ability to pay the mortgage. The banks didn’t care as they just packaged the loans as CDOs and sold them to Wall Street. All kinds of debt were repackaged and resold as collateralized debt obligations. As housing prices declined, many homeowners found they could no longer pay their mortgage resulting in mass defaults.
Santander Consumer does
the same thing today. The package these
auto loans and sell them to bond investors.
But in Santander Consumer’s case, if the debt can’t be paid back Santander
Consumer is often obliged to buy the loans back, which ends up being a loss on
their books.
Santander Consumer had
$26.3 billion of subprime auto loans as of June 30 that it either owned, or
bundled into bonds, According to a report from S&P Global Ratings, Santander
Consumer has more than $25 billion in subprime auto loans which is almost 50%
of the company’s total managed loans.
Are you thinking what I’m thinking…the stock is setting up for a short. Based on the monthly chart, the chart is suggesting two targets.
With the first testing being the level at $23.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
Cotton has been used in textile production for 1000s of years and used in providing thousands of products like apparel, but even gunpowder. The US, India and China produce over 65% of cotton used by citizens of the world. A bale of cotton weighs about 500 lbs and can produce over 1000 T-shirts. Harvesting cotton begins in July until late November and is grown in about 15 states such as, but not limited to North Carolina, South Carolina, Tennessee and Virginia.
Georgia produces about
20% of cotton in the US, which is also its leading crop. The climate and
environment in Georgia facilitate the high-quality cotton growth which textile
mills worldwide desire.
In 2018, President Trump
put tariffs on Chinese goods coming into the United States earlier this year,
and the Chinese retaliated. The US is the top producer and exporter of soybeans
with China purchasing about 25% of what the US produces U.S. annual soybean
crop. China is the largest importer of
soybeans in the world. However, China
has canceled all shipment of beans from the U.S. causing the prices in the
soybean futures market to drop to the lowest price in a decade.
So what did farmers do, at least those located in the Southeast region of the US, they planted more and more cotton?
Recently on AgDay TV, Tyne Morgan spoke with David Hudson, an economist at Texas Tech University, about the trade war’s impact on cotton.
He says increased acres are part of that equation.
“As soybean prices fell more acres shifted over to cotton in year two and so now we’re seeing the effects in year two of this pretty substantial drop in cotton price,” says Hudson. “That is a trade effect, but it’s a delayed effect.”
Hudson even the strong MFP payments for cotton won’t be enough to offset falling prices in 2019.
“We’re talking about nearly a 40% decline in prices, year over year,” says Hudson.
Leon Howard aka “The Wallstreet Trapper” was born and raised in New Orleans. At the age of 9 he saw his mother get shot right before his eyes. At the age of 16, he went to prison for 10 years for attempted murder and armed robbery. But it was in jail that he met a white who told him black people are playing the wrong game. You see the white guy was in jail for embezzling millions of dollars from his job. But what he told Leon is wealthy people don’t trade time for money. Think about that for a second, wealthy people don’t trade time for money. Another way of saying this, in the famous words of Warren Buffett, “if you don’t find a way to make money while you sleep, you will work until you die.”
It was during this conversation that the white guy told Leon about the stock market. And for the rest of his time in jail, he read every book he could about the stock market, how banks work, etc. And before the other prisoners would get up to watch TV, he would get up before them and turn the channel to CNBC. And then a fellow prisoner, who read the USA Today, would give Leon the financial section every day.
The slang word trap has numerous definitions, but is mostly used to refer to any place where drugs are being exchanged. A trap can be anywhere, it can be an open spot where cops don’t frequent or a house which dealers typically refer to as a trap house.
Leon defines “Trap” as “a state or condition of a people being financially trapped, unable to find the path to financial freedom no matter how many jobs or side hustles worked.”
And so when he got out of jail his mission and targeted market was the people he knew on the streets because he knew the game they were playing and wanted to expose them to a different game. Leon committed to showing Black America a very different hustle, moving “From The Trap To Wall Street” one stock share at a time.
He’s a smart dude, because he is conquering Wall Street, but because he knows how to break down the financial literacy in a language that’s digestible. He tells people, you may possess the clothes on your back or the call you drive, but you don’t really own it because you don’t have any stake in the company. Do you remember how I talked about wealthy people don’t trade time for money. Leon is very big on that. So I want to salute Leo by sharing with you an article I read on Motley Fool about 3 stocks that pay dividends every months.
Pembina Pipeline (NYSE:PBA) currently pays its shareholders a dividend yield of just over 5% per year. While the Canadian company may offer some volatility for U.S. investors, given that its payouts are in Canadian dollars, it’s still one of the better dividend stocks in the oil and gas industry.
Strong free cash flow during the year also came in at more than CA$1 billion, although that was still below the CA$1.2 billion paid out in 2018. Even so, the company has been increasing its dividend payments. Five years ago, the stock was paying CA$0.145 every month; that figure is now up to CA$0.20. That’s a 38% jump, averaging a compound annual growth rate of 6.6%.
Apple Hospitality REIT (NYSE:APLE) operates in a much more stable industry, and its portfolio of 235 hotels gives investors a great opportunity to benefit from the tourism industry. With many upscale rooms in 34 states across the country, Apple Hospitality has a diverse cross-section of properties that includes big names like Hilton and Marriott.
The stock pays investors a dividend yield of 7.3%. Although the company isn’t one that investors have come to expect dividend increases from, with that high of a yield, shareholders would probably be happy if it were to simply remain intact.
LTC Properties (NYSE:LTC) is another REIT that investors in search of cash flow can add to their portfolios. With a focus on healthcare — in particular, senior living facilities providing long-term care, thus the name LTC — LTC has a much safer mix of properties in its portfolio than Apple Hospitality.
Like Pembina, LTC has increased its payouts over the years, although they haven’t been nearly as significant. From monthly payments of $0.17 five years ago, they’ve grown to $0.19 today, for a much more modest increase of 12%, which comes in at a CAGR of just 2.2%.
However, with a solid yield and a payout ratio that’s below 100%, LTC could be a great option for long-term investors.
These are just three of many well run companies that offer dividends on a monthly, quarterly, semi-annual and annual basis Dividends are really no different than interest earned on bonds…now look at me, now I’m sounding like “The Wallstreet Trapper.”
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
I first experience with Garmin was probably with my first job out of college. I went on a business trip, had to rent a car and noticed this big bulky looking portable screen. I recognized the name “Garmin” right away due to my venture into becoming rich through the stock market, specifically through tech stocks (no, I’m not rich yet). And so I was eager to test it out. I remember the map on the screen being very crisp and this dot moving along a green road and every turn I made, the street would reappear on the screen. It was a pretty cool device. That was probably my first and last time using a Garmin as in the years that would eventually come, I would have no need for the device. To be honest, I completely forgot about Garmin until eight months ago, when I questioned why/how were they still in business.
Garmin, the maker of full-featured GPS navigation systems that take the doubt out of driving as you make your commute or vacation. However, with the introduction of smart phones and navigation apps, I was sure Garmin was going out of business. But just like Madonna, who has been in the business for almost 30 years mastered the art of reinventing herself. And that’s exactly what Garmin did. Garmin got into the activity tracking and smartwatch business.
And when they crushed earnings for the fourth quarter of 2018, despite the stock at the time rising more than 15%, the charts were suggesting there was more room to grow…by a lot.
However, there were a couple of speed bumps in the way in the form of daily supply zones. Since that time price did react to the first one in April and pulled back about $8.
But this is a company that can’t be stopped at the moment. On Wednesday, Garmin reported third quarter earnings. Not only did the company smash earnings estimates again, but raised their full year guidance.
Staying true to their core competencies, Garmin has been working in the lab on a product for about 10 years that’s going to compliment the personal air vehicles era called Autoland. Autoland is the first soon-to-be certified automatic landing system that will control and land a plane, by itself, in the event of an emergency. I know, we don’t even have mass self-driving cars yet, so their first market for this product will be commercial aircraft market.
“The technology will translate across a lot of areas of aviation,” Straub said. “It will be interesting to see how it responds to the nascent urban air mobility environment, where there’s electric vertical takeoff and landing and where autonomy is a big part of what they want to do.”
Pemble said Garmin always has viewed the company in the long term and envisions its autonomous technologies in many segments, such as commercial, the government and the military — markets where Garmin already has traction.
“What we’ve done all throughout our history is approach an opportunity step by step, proving our capability and collecting wins, while building upon those successes,” Pemble said.
I was one who doubted Garmin with the invention of Smart Phones, but now I realize I can never count out Garmin due to their DNA, which is the idea of persistence. The chart suggests the next target is the daily supply at $103.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
After watching the financial news yesterday, I just realized Beyond Meat and Grubhub have a lot in common. Both are in the food industry, both are in burgeoning markets, both had “first to market” head starts over the competition and both companies saw their stock price rise like a Tesla rocket and…well read the rest of the post.
Convenience, accessibility and just pure laziness are major factors driving the global online on-demand food delivery services market.
GrubHub was at once upon a time the world’s leading online and mobile food ordering company. Despite competition from the likes of Uber, DoorDash, Postmates, Square and Amazon, GrubHub controlled 50% of the U.S. food delivery market just under two years ago.
The way the business model works is restaurants do not have to pay anything up-front or any subscription fees, just a commission fee for every order the platform generates.
However, the valuation was crazy. Grubhub was a first to market mover and shares of Grubhub returned 5X from 2016 to 2018 and in 2018 even went as high as $140. The valuation got out of hand. At one point, the P/E was over 80.
But then the competition started coming and their market share went from 50% to 34%, quick fast. So order to stay ahead of the competition, Grubhub grew in other cities, which meant increasing their customer acquisition cost, which meant lower margins. While that was happening, many of Grubhub’s critical metrics like initial diner spend and peak diner spend were all decreasing because customers were using the services of the competition as well. Wall Street started to smell the blood.
Jim Chanos is an American investment manager and currently serves as president and founder of Kynikos Associates, a New York City registered investment advisor who is focused on short selling said Grubhub was a short just last month.
“Right now, GrubHub is making almost no money per order — it’s something like 15 cents,” Chanos said. “There’s just no margin in this business.”
“We believe that this pressure is occurring at both ends of the spectrum for the delivery companies,” Chanos said. “Not only are we seeing pressure on the labor side with the California law, we believe that the labor arbitrage — calling these guys contractors — works in insidious ways.
Chanos said that the company can’t afford to be as aggressive as Uber, which has its own food delivery service Uber Eats, because it doesn’t have the “financial wherewithal.” Competing with Uber, Chanos said, is like being “locked in a cage with a psychopath with an ax.”
And while there’s competition, Chanos said growth in the restaurant business itself has been stagnant.
“The restaurant business is a tough business,” he said. “Even if this all works, and all four of these delivery companies grow to 20 or 25% of all meals, you are growing into a no growth business.”
Yesterday, GrubHub short-sellers made $504 million when shares of the company fell 42% after announcing their third-quarter earnings according to data from financial-analytics provider S3 Partners.
GrubHub received five downgrades, including double downgrades from both Bank of America Merrill Lynch and Oppenheimer following its disappointing third-quarter results.
The food delivery company missed on revenue and posted a fourth-quarter forecast well below Wall Street’s expectations and received five downgrades, including double downgrades from both Bank of America Merrill Lynch and Oppenheimer.
I don’t know where the bottom is, although there is some demand on a smaller timeframe at $30. However, this is a no touch stock in my opinion.
Beyond Meat priced its initial public offering at $25 and now the stock is up more than 200% in less than a week. Beyond Meat, a maker of plant-based meat products is the new IT THING on Wall Street and sold at a supermarket and restaurant near you.
Beyond Meat is also trailblazing a new secular movement away from animal protein.
So yes, although plant-based meats in the U.S. rose 23% last year, it still represents only 1% of the total meat sales in the US. So yes, because Beyond Meat controlling about 10% of the plant based meat market in 2018, what you have is FOMO in the stock price.
But Beyond Meat is beyond over-valued. For example, with $80 million in sales last year, you get a sales to price ratio of 44 vs. Hormel Foods and Conagra with a sales to price ratio of 2.3 and 1.6, respectively.
Beyond Meat priced its initial public offering at $25 and skyrocket 800% in less than four months. Beyond Meat, a maker of plant-based meat controls about 10% of the plant based meat market. And because they have achieved “first to market” status, they are the new IT THING on Wall Street.
Beyond Meat is also trailblazing a new secular movement away from animal protein. Although plant-based meats in the U.S. rose 23% last year, it still represents only 1% of the total meat sales in the US, with Beyond Meat controlling about 10% of the plant based meat market in 2018.
But there valuation is beyond ridiculous. Their valuation was at one point higher than roughly 25% of the companies in the S&P 500 index. For example, with $80 million in sales last year, you get a sales to price ratio of 44 vs. Hormel Foods and Conagra with a sales to price ratio of 2.3 and 1.6, respectively.
But now the competition is coming.
Kellogg (K) introduced “Incogmeato,” which is a plant-based meat alternative made from non-GMO soy. Kellogg’s plant-based burger patties, Chik’n tenders, and Chik’n nuggets which go on sale in early 2020.
Kroger said they will sell a new line of branded plant-based burgers, other meatless products like dips, pasta sauces and cookie dough in the coming months under their Simple Truth Plant Based label.
Hormel Foods once a piece of the action too and announced its plant-based meat substitute called “Happy Little Plants” is available at select retailers.
Then there is Impossible Foods which launched the Impossible Burger through Burger King in August and now have product along Beyond Burger on the shelves in supermarkets.
Yesterday, Beyond Meat announced third quarter earnings.
Beyond Meat, which has a market value of about $6.4 billion, on Monday topped analysts’ expectations for its fiscal third-quarter earnings and revenue. The company reported earnings of 6 cents on revenue of $92 million, while analysts forecast earnings of 3 cents on revenue of $82.2 million, according to Refinitiv. Beyond Meat saw sales grow across both its grocery and restaurant divisions, as its meatless products drew in more customers and kept existing customers coming back.
“Despite solid results the likelihood of early stage investors cashing out on a stock which is still up about 4x since its IPO, remains a drag in coming trading sessions,” said Barclays analyst Benjamin Theurer in a note to clients Tuesday.
Tuesday is the first time since the IPO that insiders can sell the stock, which could cause short-term pressure, analysts said. Roughly 75% to 80% of the outstanding stock is available to trade after the lockup expiration.
So is the weekly demand at $81 the time to get in, the chart suggests so, but I think this stock is a no touch as well.
As you can see, Grubhub and Beyond Meat are almost like twins. The question now becomes can both companies remain twins in the form of a comeback story?
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.
