Market Movers (Issue #4)
Our coverage of major stock movements.
Welcome to the fourth edition of Market Movers, our coverage of companies making big splashes in the stock market.
We’ve updated the nomenclature of our Market Movers segment. To avoid misrepresenting a company’s value, we’ve replaced “winners” and “losers” with “uppers” and “downers.” The former set of labels unintentionally implied that certain stocks were either good or bad investments, but that’s not always the case. Winners could be overpriced while losers could represent bargains.
“Uppers” represent stocks that recently experienced upward price momentum, while “downers” have faced downward price pressures.
Uppers
PLBY Group (PLBY), formerly known as Playboy Enterprises, is out to prove that sex still sells. The legacy print magazine company has transformed into a global consumer products brand with an emphasis on apparel and sexual wellness.
PLBY is up 171% since February, when its business combination with Mountain Crest Acquisition Corp closed and the stock started trading on the Nasdaq.
Why are investors so excited about Playboy?
For starters, the company’s FY20 revenue shot up 89% year-over-year to $148 million. More recently, Playboy announced a partnership with Nifty Gateway, an online NFT marketplace. Although Playboy stopped printing physical copies of its titillating magazine last March, the company still has a deep portfolio of photographs — which it plans to monetize through non-fungible tokens, or NFTs.
PLBY Group took advantage of its rocketing share price by issuing more shares at $46 per share. While this helped the company raise over $200 million, the issuance dilutes shareholder value, which drove the company’s share price down.
Shares of PLBY closed at $36.10 on Thursday.
RAPT Therapuetics, Inc. (RAPT) is a biopharmaceutical company that focuses on oncology and inflammatory diseases.
Shares of RAPT skyrocketed by 37% on Monday. Why?
Because the company announced positive topline results from its clinical trial of RPT193 — an oral treatment for atopic dermatitis (AD). The treatment produced marked improvements relative to the placebo group. RPT193, which is intended to be a therapeutic alternative to injectable drugs, will now proceed to a phase 2b study.
Coincidentally, RAPT announced an upcoming issuance of $125 million of common stock, resulting in a pullback of the company’s share price.
Shares of RAPT closed at $33.40 on Thursday.
Restoration Hardware Holdings, Inc (RH) is an upscale home-furnishings company based in California. Unlike the majority of companies, RH thrived during the pandemic, as affluent customers upped their coffee table supply and added decorative accents (like these four-figure sculptures) to their homes.
In 2020 alone, the share price of RH appreciated by 109%.
The story hasn’t changed this year. Last week, RH released Q1 earnings — and operations are still booming. RH generated $861 million of revenue in the first quarter of 2021 compared to $483 million in 1Q20. The company’s EPS landed at $4.89 — compared to $1.27 last year. These surprises drove RH to an all-time high of $733.05.
Shares of RH have since pulled back from their high after the Q1 announcement, closing at $656.55 on Thursday. That’s still good for a 48.5% YTD return.
Downers
Sunrun Inc. (RUN) is a provider of residential solar panels and home batteries and is based in San Francisco, California. Renewable-energy sources like solar lit a fire in the bellies of investors last year.
However, in 2021, investors lost some of their appetites.
After peaking at a hair under $101 in January, RUN receded all the way back to $37.42 in May, before rebounding over the last month. Beyond a widespread sell-off to capture gains, there are also market concerns around rising interest rates and supply chain shortages. However, Sunrun management expressed that its supply chain is insulated from bottlenecks hampering other solar companies.
In positive news, Morgan Stanley raised its price target for Sunrun from $86 to $91 on Wednesday, which gave the share price a nice boost. The bullishness doesn’t stop there — 15 of 17 analysts rate RUN as a Buy.
Shares of RUN closed at $52.16 on Thursday.
Vertex Pharmaceuticals, Inc (VRTX) is a biopharmaceutical company based in Boston, Massachusetts. Unlike RAPT Therapeutics, Vertex has not had much success in its clinical trials lately.
In October, Vertex halted its development of an experimental therapy that was intended to treat Alpha-1 antitrypsinase deficiency (AATD), which can cause lung and liver disease.
Last week, Vertex faced yet another setback when a separate treatment for people with AATD fell short too.
Investors aren’t too pleased. Shares of VRTX have steadily declined 38% from its 52-week high of $303 last July. However, analysts are still optimistic that VRTX will bounce back thanks to its lucrative cystic fibrosis business.
Maybe third time’s the charm?
Shares of VRTX closed at $188.36 on Thursday.
Kinaxis (KXSCF) is a supply chain management and sales and operation planning software company based in Ottawa, Ontario. Although the pandemic wasn’t kind to Kinaxis, it also wasn’t mean — from a performance perspective.
When the company reported Q4 results in March, Kinaxis’s revenue actually increased by roughly $5 million (or 9%) year-over-year. However, Kinaxis’s first operating loss in its eight-year history as a publicly traded company prompted investors to lose confidence. That week, shares of KXSCF dropped almost 26%.
But there’s good news. Analysts love the stock. Barron’s even featured the company in its last issue, which may have prompted this week’s 2.6% gain.
Shares of KXSCF closed at $123.94 on Thursday.
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