Market Movers (Issue #10)
Can Peloton get its second wind?
Good morning, investors!
Welcome to Market Movers, our coverage of companies making big splashes in the stock market.
“Uppers” represent stocks that recently experienced upward price momentum, while “downers” have faced downward price pressures.
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Without further ado…
Lucid Group (LCID) is an electric vehicle manufacturer that’s actually been around for quite some time. The company was founded in 2007, but it only produced EV batteries and powertrains in its early days. That remained the case until 2016, when Lucid unveiled its first vehicle concept: the Lucid Air.
Five years later, Lucid’s first car has hit the production and delivery phase — the dream is finally a reality. (Literally, the Lucid Air Dream Edition won the 2022 MotorTrend Car of the Year.) As of the company’s November earnings release, reservations for the Air had eclipsed 17,000, which indicates that Lucid is on pace to surpass Wall Street’s $1.7 billion sales estimate for 2022.
LCID is up 263.8% this year. However, shares took a bit of a tumble on Monday, as the SEC commenced an investigation into the company’s business combination (i.e., SPAC merger) with Churchill Capital Corp. IV. And an even further fall once the company announced the issuance of $1.75 billion of convertible notes.
Shares of LCID closed at $36.52 on Thursday.
Meritage Homes (MTH) is a real estate development company that primarily constructs entry-level single-family homes (around $400,000 on average), particularly in the southeast and southwest US.
Unless you live under a rock (even still, rock housing prices have probably skyrocketed too), you know the housing market has been on fire over the last year, which has cushioned Meritage’s bottom line. Through three quarters, the company’s net earnings are up 84.5% year-over-year, coming in at a hair under $500 million.
And many housing market bulls believe the hot streak could continue for another decade thanks to years of subdued construction after the 2008 crash. One analyst even set a price target at $190 for MTH.
As of Thursday’s close, shares of MTH were $118.87.
Calumet Specialty Products (CLMT) makes — you guessed it — specialty products, such as oils, pesticides, waxes, asphalt, and lubricants.
But the highly anticipated and potential breadwinner (eventually) is the company’s renewable fuels business. Last year, the company discovered that it could use its Montana plant to convert soybean feedstock into a variety of renewable fuels, like diesel and jet fuel.
Through the first nine months of 2021, Calumet’s renewables segment was up 53% year-over-year, increasing revenue from $380 million to $580 million. Wall Street analysts have upped their price targets over the last few months, as the consensus target now rests at $22.70.
After an unkind year of trading that saw CLMT drop below $1, shares have since roared back to $14.79 as of Thursday.
Peloton (PTON) is an exercise equipment manufacturer and media company, which is renowned for its internet-connected stationary bikes and treadmills.
Peloton cruised to record highs during the pandemic, as affluent home-dwellers purchased the company’s pricey workout equipment and started enrolling in online workout classes. But, despite all the peddling, investor interest has waned over the last year — and Peloton’s share price has hit the downhill cooldown.
Naturally, as society reopened and people no longer had excuses for avoiding the gym, Peloton lost some of its appeal. Supply chain issues didn’t help. Within the company’s latest shareholder letter, Peloton significantly lowered its guidance for FY22 results, dropping expected revenue from $5.4 billion to…$4.4 to $4.8 billion.
Shares of PTON opened 33% lower the next morning. Woof.
Here was the company’s justification:
The primary drivers of our reduced forecast are a more pronounced tapering of demand related to the ongoing opening of the economy, and a richer than anticipated mix of sales to our original Bike.
As of Thursday’s close, shares of PTON were $40.70.
Many notable companies have witnessed their CEOs depart this year.
Amazon. GE. American Airlines. Starbucks. Microsoft. Chipotle. Uber.
Well, you can add Twitter’s Jack Dorsey to the list, who stepped down as CEO at the end of November.
However, that’s not the catalyst behind TWTR’s recent 24% drop. Shares have taken a hit in response to the company’s earnings miss for the third quarter; Wall Street analysts collectively expected Twitter to turn a profit in Q3 (albeit, a modest one), but actual results came in at a loss.
The culprit behind the miss? In September, Twitter reached an $809.5 million litigation settlement related to a 2016 class action lawsuit regarding misleading statements about the company’s future. Although revenue was up 37% relative to Q3 2020, investors weren’t thrilled.
Although I’m biased as a Twitter user and shareholder, I think the platform still has a lot going for it. Recently, the company unveiled Twitter Blue, a low-cost subscription that grants users additional platform functionality. Less recently, but still somewhat new, Twitter incorporated its own “Clubhouse” capabilities in the form of Spaces. From what I’ve personally seen, these spaces can be huge for influencers, industry experts, thought leaders, and general discussion.
Shares of TWTR closed at $46.46 on Thursday.
Nintendo (NTDOY) is a Japanese consumer electronics company and the eldest active video game manufacturer in the world. In case you’re unfamiliar, it’s best known for the Mario franchise, as well as game consoles like the Nintendo 64, Wii, and Switch.
Like many electronics manufacturers, NTDOY has also suffered from supply chain disruption, as Nintendo expects sales to thin year-over-year from $15.5 billion in FY21 to $14 billion in FY22 — its first revenue decline since 2017.
Although shares have slid 25% this year, at least one analyst believes Nintendo shares are undervalued, primarily thanks to the Switch console’s continued demand. The consensus aligns with that sentiment, as the average price target for NTDOY is $70.78.
Shares of NTDOY closed at $58.65 on Thursday.
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