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Leandro's avatar
$131.2m follower assets
$ADBE + Figma from an Expert
(All the screenshots below are from Alphasense where you have a two-week free trial to read and download all the transcripts you want (no CC required). You can use this link for your free trial.)

Recently read an expert call with a the former $ADBE VP of Business Development and Product Operations.

They think that the acquisition of Figma was 80% defensive. The high price tag might come from a bidding war with $CRM and Canva (merge):

The integration between Figma and $ADBE will probably be more significant than $CRM + Slack:

According to the expert, the Canva threat is more significant for $ADBE than Figma was, but instead of eliminating it with M&A, they are investing behind Express:

The battle between Express and Canva will not be about functionality (where $ADBE is expected to excel) but of usability (where there are challenges):
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In American football they say the best offense is a good defense.

Curious to see if this applies to M&A. 😂
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Ryan Henderson's avatar
$20.5m follower assets
September Idea Comp - Wix.com (WIX)
I’ll discuss the business quickly for anyone whose unfamiliar, but the bulk of this write-up will focus on the current situation and, in my opinion, stock mispricing.

Wix provides a no-code (or in some cases low-code) website building platform for both individuals (Editor) as well as businesses (EditorX). That means virtually anyone can easily design and assemble the website they want, then to take it public with their preferred URL and Wix’s hosting and security capabilities, they have to select from a range of terms and prices. Between the platform’s ease of use and versatile applicability, Wix has been eating share among CMS providers over the last decade.

But it isn’t just pay once then goodbye. Wix’s cohort analysis points to high retention among its user base. Once you’ve spent time creating and iterating on your website for a year or more, it’s unlikely that you’ll want to completely rebuild and reacclimate yourself (or your team) to a new system. Instead, more often than not, users would rather just renew the hosting subscription, even if it’s at a higher price.

The Last 2 Years

Wix has made several capital allocation decisions as of late that have hurt profitability and, in turn, discouraged investors. Here are the 3 biggest ones:

  1. Development of EditorX - Historically, Wix has struggled to get agencies to join their platform. This has limited their growth primarily to the DIY category. However, during the last couple of years, Wix developed and launched a custom-built platform for agencies that seems to have been met with a positive reception. In Q2 of this year, Wix generated $85 million in partner revenue, up 143% from the same period two years ago.

  1. Investments in Business Solutions - Over the last two years, Wix has acquired a number of companies in an attempt to build out its business solutions offering (any additional products or services beyond a premium subscription). These have included SpeedETab, Modalyst, and RiseAI to name a few. The goal here appears to be to help merchants drive real transactions through their Wix website instead of just using it as a landing page. So far, the results have looked ok as business solutions now comprise almost a quarter of bookings, but I still question whether the spend was warranted.

  1. Increasing customer support staff - During COVID, demand for website building surged. In order to service the increased demand, Wix increased their customer support staff. Shortly after, the trend sharply reversed and growth in active websites shrank (see the chart below). According to management, they’re now in the process of reining in these costs.

Due to these increased investments, Wix’s last 12-month OCF margin has compressed from its high of ~18% in Q3 of 2020 to less than 1% in its most recent quarter.

What now?

During the company’s May investor day, Wix laid out its financial plan for the next three years. In short, the company believes they’ll be able to reach 20% free cash flow margins by 2025 and there are a few things that I think need to happen to make that possible.

  1. Moderating Costs: Yes, obvious, I know. But management has already stated that this is in the cards. In the company’s guidance, they expect operating expenses as a percentage of revenue to shrink by ~1,000 basis points and the capex associated with their HQ buildout in Tel-Aviv to subside over the next 3 years.

  1. 7%+ subscriptions growth: Though it might not happen immediately, I expect active websites will return to their historical growth rate at some point in the next three years. This + the continued momentum in EditorX should put Wix’s subscriptions growth back on track. By my estimates, premium subs have compounded at 17%+ annually over the last 5 years so this feels attainable.

  1. 3%+ pricing growth: Since 2018, the cost per subscription has grown by 4% per year. Though there may be some discounting in the coming year that offsets pricing, I suspect the long-term trend here will continue.

In addition, Wix recently received Israeli-court approval for a $500 million buyback program. This should cover any SBC that comes over the next 3 years. At Wix’s current price of $73.80, its EV stands at ~$3.5 billion. Assuming Wix meets the estimates above, it should be able to generate $400 million in free cash flow by 2025. Applying a mid-teens cash flow multiple, there is clear upside for the stock over the next 3 years.
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I studied Wix and the growth story is definitely there. Thanks for the write up. Let me know what you think about my post :)
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Jared Watson's avatar
$19.1m follower assets
1 of 10
Stronghold Digital Mining $SDIG: The ESG/Bitcoin/Value Opportunity (Sept Idea Comp)
Since I'm limited to 750 words, let's not waste any time and jump right into it. In this piece on Stronghold Digital Mining I'll cover:
  • Company Background
  • Investment Thesis
  • Valuation
  • My Trades

Company Background
$SDIG is an environmentally beneficial and vertically integrated Bitcoin miner. That means unlike traditional Bitcoin miners who purchase the energy required to power their miners from the grid, Stronghold owns and operates coal reclamation power plants, as well as owning and operating their data centers and mining fleet.

Without getting too granular, coal reclamation is classified by Pennsylvania as a Tier II alternative energy resource (same tier as large-scale hydropower), meaning that the company receives both Coal Refuse Energy and Reclamation Tax Credits and Pennsylvania Tier II Alternative Credits to incentivize reclamation.

The takeaway from this section is that Stronghold Digital Mining is an opportunistic Bitcoin miner, and Bitcoin mining will absolutely be a part of the company's future. However, this company's core competency is environmentally friendly power generation through their two Pennsylvania power plants, Scrubgrass and Panther Creek. And this niche, core competency alongside vertical Bitcoin integration provides a unique financial flexibility that is being significantly underappreciated by the stock market.

Investment Thesis
If you've paid any attention to the crypto market over the last 9 months, you know that Bitcoin price has crashed from ATH of $68,789.62 to sub-$20,000, killing the profitability of mining company peers such as $HUT, $RIOT, and $MARA.

$SDIG is no exception to this industry-wide decline in revenue. However, the company has taken full advantage of the aforementioned financial flexibility to reap the benefits of both the declining Bitcoin market and booming power market.

To highlight the actions that Stronghold has taken this quarter, the company:
  • Eliminated all debt outstanding with NYDIG nearly $70 million in exchange for 26,200 Bitcoin miners with an approximate value of $50 million
  • Extinguished approximately $11 million of principal from convertible notes by reducing the strike price on warrants
  • Extended current financing with WhiteHawk from 14 months to a secured 36-month note, reducing near-term principal payments, and added $20 million of borrowing capacity to opportunistically purchase miners

To summarize, Stronghold reduced principal amount of debt outstanding by ~$79mm, and reduced principal and interest payments by ~$113mm through YE 2023. They also opened up 25k miner slots in the process.

Cool, they significantly reduced their debt. But they had to return 2/3 of their miner fleet? How is this a good thing?

This is where the business model flexibility of $SDIG comes into play. Grid prices have been surging both in Pennsylvania and throughout the United States, and Stronghold was already toggling between the grid and mining (using proprietary software that allows them to take advantage of intraday power price movement) before the miner sale. As shown in the chart/tables below, historical and forward grid prices have consistently been at the equivalent of $20-25,000 Bitcoin price, and ascending to as high as $100,000+.

As you can see, power generation is an appealing market to be a part of in the foreseeable future, especially with (1) winter coming and (2) Stronghold opting out of their capacity agreement, which provided the company with a ~$7mm payment annually, but capped their profits at peak time.

Valuation
On September 26, at a share price of $1.05, $SDIG trades at a market cap of $53.11 million. This looks low, but let's compare it to power generation and Bitcoin peers, the upside of which Stronghold captures on both sides.

First let's look at valuation for Bitcoin mining companies using TTM EV/Sales:

Now let's look at a few power and utility companies:
  • $SO trades at 5.3
  • $D trades at 7.3
  • $NEE trades at 13.1

After the post-Q2 debt elimination and recent private placement, $SDIG trades at .95.

To touch on the private placement, on September 13, 2022 Stronghold entered into a securities purchase agreement with an institutional investor and the Company’s CEO, Greg Beard, to purchase 5,000,000 and 602,609 shares of Class A common stock at a purchase price of $1.60 and $1.66, respectively.

Every investor likes insider purchases, and the CEO just put his money where is mouth is with $1mm, or 2% of the company, at a price that's ~50% higher than the current stock price.

My Trades
Thank you for reading! Feel free to ask any questions, and enjoy my trades confirmed by the amazing @commonstock platform.
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SLT Research's avatar
$17.3m follower assets
SLT Core Portfolio: Olaplex ($OLPX) - Long Version
OLPX was our pick for the September Idea Competition, and to thank everyone who upvoted or commented our contribution, we decided to post a longer version of our analysis of the company. We also wanted to take advantage of this post to congratulate the finalists and all participants for their great work.

Without further ado, below is the full analysis we have performed and used to write our contribution to the competition.

Thesis

  • Unique brand with relatively low awareness, supported by loyal stylists and customers.
  • Growth driven by increased penetration and "premiumization" of the market. Significant whitespace to fill with adjacencies and new geographies.
  • Unique combination of robust top-line growth and solid profitability, fueled by an asset-light operating model and experienced management.
  • Attractive absolute/relative valuation.

Company Description

OLPX was founded in 2014 after two chemists, Eric Presley and Craig Hawker, discovered its patent-protected active ingredient: bis-aminopropyl diglycol dimaleate (“bis-amino”). It works on a molecular level to dramatically improve hair from within by protecting, strengthening
and repairing disulfide bonds in hair that break when damaged.

Through a concentrated network of third-party manufacturers and suppliers, OLPX produces and retails a suite of premium hair care products (11 in total) that are designed to promote hair health through a regimen of treatment, maintenance and protection.

Since OLPX products are relatively new and not very well-known to the general investor, we thought it would be interesting to explain briefly the technology behind each product, which is one of the main reasons why OLPX is disrupting its industry. Our hair contains millions of disulfide bonds and these bonds give the hair its structure, strength and stability. When disulfide bonds are broken, it results in damage and generates an unstable sulfate group, which usually pairs with three oxygen molecules and causes a negative reaction. OLPX’s key ingredient works to prevent the latter scenario, as it pairs with the single sulfur hydrogen molecule faster than the three oxygen molecules in order to prevent the negative reaction.

The company sells its products via three channels:
  • Professional (43% of 2021 sales): first channel launched in 2014 using external distributors such as SalonCentric and Beauty Systems.
  • Specialty Retail (29% of 2021 sales): sales through Sephora, SpaceNK, Douglas, and ULTA.
  • Direct-to-Consumer “DTC” (28% of 2021 sales): sales generated on OLPX own website and Amazon.

With regard to geographic exposure, the company derived 58% of 2021 sales from the US.

One of the most unique features of the OLPX business model is the company's asset-light operating model. As mentioned above, the distribution is mainly performed by third-party distributors. From a production standpoint, the company sources its key inputs of bis-amino
(developed by a contract manufacturer using OLPX’s patented formula), essential oils and specialty chemicals from third-party suppliers. From there, OLPX enlists third-party contract manufacturers to produce, label and bottle all products and utilizes third-party logistics providers for warehousing and distribution.

Competitive Moat

Patent-Protected Technology: OLPX is the only company offering a product able to repair hair on a molecule level and not simply mask hair damage. The company currently has a portfolio of 100+ patents, with c.80 protecting current OLPX’s key ingredient. Interestingly it includes not only hair but applications to new segments like nails and skin care. Remaining patents cover an alternative formulation to bis-amino that holds further opportunity for OLPX existing and future products.

Community: Loyal stylist community is an underappreciated asset and contributes to the competitive moat. Over a short period of time OLPX created a strong community and what we believe is a smart overlooked strategy. Since the beginning, the company focused on and turned to the professional stylists. The community consists of more than 262k stylists in OLPX-led communities on Facebook. Its TikTok videos count more than 1.1bn views. The company has more than 2.3m followers on Instagram where almost 14m posts referring to OLPX products have been published.
  • Where the competitive advantage stands is that, to the question “what sources do you rely on for information about hair products and tips?”, more than 60% of the respondents said that recommendations from stylists are a leading factor in haircare purchasing decision.

To summarize, the company strategically gathered professional stylists in order to create an unpaid network of advertisers that increase awareness and build credibility for the brand.

Asset-light operating model: compared to most of competitors, OLPX operating structure gives it a competitive advantage, especially at its stage of the business cycle. Here are the reasons why:
  • Focus on R&D and Customer: the business model is created in such a way that the company can focus on developing new products after having collected customer and professional feedbacks. The execution part of the business is then passed on to other service providers.
  • Financial Flexibility: another important feature of the asset-light business model is the relentless focus on de-risking the business model by reducing operating leverage. Asset light businesses are famous for turning every fixed cost into a variable cost. Even if hair care is pretty stable, OLPX is operating solely in the premium end of the market, hence financial flexibility might turn out to be a nice feature to have.
  • Faster Response Times: one of the most important characteristic features of asset-light business models is the ability to quickly respond to customer requests and changing demands.

Sustainable Growth

Global hair care represented a $82bn opportunity in 2021, but OLPX operates only (at the moment) in a subset of the hair care market which is prestige hair care. It represents a $13bn category and accounts for just 16% of the overall hair care market globally, but this is expected to change with OLPX being a driving force behind the “premiumization” of the market, a phenomenon already observed within the makeup and skincare segments for example.

Taking a look at the current per capita spend on prestige hair care compared to prestige skin care demonstrates a strong market potential. Simplistically, the global prestige hair care market today is $13 bn in size and per capita spend is $1.70 (only 24% the spend of skin care),
In other words, if per capita spend for prestige hair care shift toward the one observed in skincare, it would significantly increase the prestige hair care TAM. In addition, this market is pretty fragmented with the top 3 players representing less than one third of retail sales. Consumers have been looking for more differentiated products and given OLPX unique products, coupled with their ability to digitally engage with stylists and final user, the company is exceptionally well-positioned to consistently grow its share of the market.

More interestingly, the company still has a lot of room to grow, as its penetration of specialty retailers and professional distributors, and aided awareness are still very low.

Source: company data

Accordingly, the company estimates that 45% of prestige hair consumers have aided awareness of the OLPX brand, which compares to the median 69% for its competitors. We expect brand awareness to rise, and given strong conversion rate (8% penetration at Sephora with just 11% of aided awareness), its represents OLPX greatest near-term upside opportunity, especially given OLPX impressive repeat sales rate of 17%, way higher than hair care peers (4-6%).

Longer-term, the company has multiple options to support sustainable double digits growth:
  • International: new avenues for growth derived from entering markets where the company does not currently have a presence. OLPX mentioned that it expects roughly half of its growth to come from outside of the US in the medium- long-term. At this stage, the developed markets should offer the most tangible near-term international opportunity. European countries accounted for six of the top ten countries by per capita spend in the premium hair care category in 2020. However, China and Latin America are expected to be the main long-term growth drivers.

  • New products: Despite having a suite of 11 products, there are still plenty of premium hair care sub-segments the company does not address currently. The main one being hair color where OLPX is completely absent. Another opportunity resides in adjacent products. As already mentioned, the company’s patents portfolio includes application of its key ingredient to skin and nail care. Regarding the major beauty sub-categories in the premium segment, skin care has generally been the fastest growing sub-category in recent years and is expected to maintain its growth leadership through 2025. Global skin care represents a $155bn opportunity and it’s worth mentioning that an OLPX’s survey showed that 82% of consumers familiar with the brand would like to see a skin care line from OLPX and 51% would switch out their current skin care brand for an OLPX skincare line.

Financials

Since the company is pretty recent and only IPO'd a year ago or so, we will focus on 2021 numbers but mainly on the outlook.

Fiscal Year 2021 compared to Fiscal Year 2020:

Net sales increased 112.0% to $598.4 million
  • Net sales increased 131% in the United States and increased 91% internationally.
  • Professional increased 65.8% to $259.0 million, or 43.3% of net sales.
  • Specialty Retail grew 246.6% to $176.0 million, or 29.4% of net sales.
  • Direct-To-Consumer rose 117.1% to $163.0 million, or 27.3% of net sales.

Net income increased by 462.1% and adjusted net income increased by 110.2%. Diluted EPS was $0.32 for fiscal year 2021, compared to $0.06 for fiscal year 2020. Adjusted Diluted EPS was $0.40 for fiscal year 2021, compared to $0.21 for fiscal year 2020.

From a liquidity point of view, current assets represent 4.6x current liabilities, mainly due to IPO proceeds in 2021. As of Q2 2022, the company has enough cash to cover more than 2x total current liabilities. From a solvability perspective, OLPX level of debt is reasonable given its growth profile. As per latest earnings, the net debt represents 68.57% of total equity, down 141.5% YoY. Given the company’s ability to generate cash and high margin profile, we believe OLPX will quickly delever its balance sheet, and it is confirmed with the downward slopping gearing trend observed YoY. 2021 EBIT was at a level able to cover more than 5x the company’s interest expense. The Altman’s Z-Score way above 3 (17.6) shows that OLPX probability of bankruptcy is close to 0. Global solvability is good.

The company is FCF positive and stock based compensation represented only 2% of the 2021 FCF. The company went public a year ago and so logically, has not repurchased shares and has a retention ratio of 1.
Outlook:

Revenue grew exponentially over the last few years and is expected to reach $1.5bn by 2025,
growing at an implied c.25% CAGR from 2021 sales. As already explained in the above section and given OLPX multiple upside paths, we believe this growth rate is more than achievable.
OLPX currently operates with an attractive margin structure thanks to its asset-light business model (almost 80% of gross profit margin in 2021). OLPX is not expected to bring manufacturing in house however, consensus expects COGS to increase due to its international expansion (negative supplier mix) and inflation. When we couple OLPX's relatively leaner cost structure with the company's premium positioning allowing from strategic pricing across the portfolio and favorable channel mix shift impacts as the company grows (DTC exhibits
higher margins), we believe the company can maintain gross profit margins in the high 70s.

Even if gross profit margin is comparable (slightly higher) to competitors, OLPX differentiates
itself with relatively low operating expenses:
  • SG&A: OLPX operates an extremely lean organization of 100+ employees with no corporate headquarters. The company generated c.$6mn of revenue/employee (around 6x more productive than Estee Lauder or L'Oréal for example). Another interesting feature is the low sales expenses. As previously mentioned, community based marketing is at the core of OLPX low customer acquisition cost. With OLPX word of mouth advertising and combined with increased brand awareness, we believe the company will be able to maintain relatively low SG&A expenses, around 20% of revenue over time.
  • R&D: Research and Development costs were surprisingly (almost) non-existent during the last years. We expect, especially given OLPX attractive cost structure, the company to invest in R&D in order to stay ahead of the innovation curve. We would like to see R&D representing between 4-5% of total sales in the coming years.

The below graph is inspired from a Barclays Research report and, in our opinion, represents easily and visually, the company's unique margin profile. OLPX margins rival not just those seen across Consumer Staples, but likely place the company in the top tier of all companies in the S&P500. Even still, after assuming incremental investments as the business further scales, we can observe below that OLPX EBITDA margin is expected to be 2.5x higher than best-in-class beauty peer (Estee Lauder), and even further above the average Consumer Staples
company.

Source: SLT and Barclays Research estimates.

Management and ESG Considerations

OLPX scores average following our company’s management assessment checklist. However
it is important to note that the stock performance and buybacks items impacted negatively the score but are not really representative since the company went public only a year ago.

Management has strong industry experience. CEO Jue Wong joined OLPX almost three years ago after departing Moroccanoil, a competitor offering hair and body care products. CFO Eric Tiziani joined OLPX in August 2021 and previously occupied a similar position at Unilever North America. COO & Chief Legal Officer Tiffany Walden is part of OLPX since 2016 where she occupied different positions.

To support our words, below is a tweet from Justin B.

The company historically made smart strategic decisions and the one that stand out to us is
the decision to go from the professional channel to DTC. The professional channel is highly strategic for the company as it effectively serves as a customer acquisition tool given professional stylists help to build and reinforce the brand’s credibility with consumers. DTC is a critical channel for OLPX going forward as it commands the highest margin as the company is able to price at retail value, offers the company timely insights on consumer trends, and
positions the company well in light of the structural consumer shift to e-commerce. Ultimately management created a synergistic omnichannel distribution strategy to drive consumer engagement.

ESG: Across the broader beauty market, ESG characteristics are increasingly being factored in consumers’ purchase decisions, and ultimately becoming an important brand loyalty consideration. This trend can be particularly observed in the buying behaviors of younger consumers, which make up 56% of OLPX’s consumer base, per the company’s estimates.

Valuation

The company is trading at a more than 30% discount vs. average historical and well below -1
standard deviation. However, given OLPX short history as a publicly traded company, we believe it is more relevant to look at OLPX valuation on a relative basis compared to Beauty
peers, accounting for growth perspective differences:

Interestingly, when we take a closer look at the relationship between future growth expectations for these companies vs. current valuation, multiples suggest that OLPX’s valuation is very attractive vs. its Beauty peers. OLPX trades at a PE ratio similar to L’Oréal but has its expected growth is significantly higher. When we compare OLPX to Estee Lauder which can be considered as its closest competitor, we can see that currently the company trades at a significant discount, using both PE and EV/EBITDA, while as we have seen before, OLPX is expected to post EBITDA margins 2.5x higher and to grow at a 3.1x higher rate.

Risks
  • Competition: OLPX operates in the competitive beauty/hair care industry. We are confident with OLPX patents portfolio protecting its technology however, massive competitors like L'Oréal, Estee Lauder and Coty are investing massively in science-based products and if it reaches the same level of efficacity as OLPX products, it is likely to put downward pressure to OLPX margins.
  • Lack of business diversification: OLPX currently operates with one brand in one category.
  • Supplier concentration risk: OLPX's finished products are currently manufactured by just three third-party manufacturers. Cosway Company accounted for 70%+ of OLPX revenue.

As always, thanks for reading. We hope you have enjoyed this analysis. Please don't hesitate to upvote the post, and feel free to drop a comment if any further clarifications are needed.
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ParrotStock's avatar
$266.4m follower assets
Refineries becoming a bargain again
I feel a bit like a broken record, talking about nothing but energy (and mostly refining) the last few months. I guess I'm a bull at heart, and that's about the only bright side to my portfolio as of late.

Anyway, refineries are well off their high for this cycle, and are down the last couple of weeks as well.

That made sense a week ago as margins continued to compress. The landscape has changed though, with healthy margins returning last week and looking to stabilize if not creep higher.

We've had a refinery go down due to a fire/explosion, a hurricane targeting the continental US, and shutdown season right around the corner. These are all bullish signs for margin expansion.

This could be a good time for an entry into your favorite refining names if you've been looking for a spot to start.

I'm in the field this week, so my time will be limited here, but I'll be nibbling more refineries in my O&G portfolio.

Have a great week my friends!

🦜
sam stribling's avatar
$116.2m follower assets
Hold the damn phone.
Believe it or not.. $HWIN aka hometown international, a NJ based single location deli is a FRAUD!! I am shocked that a company with $27k in revenue isn’t actually worth $200M in market cap! 🤣 who knew??
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I can’t type lol my bad. Leaving it up because I’m not perfect but meant to say: the day AMC and GameStop are both at Pennies is when markets will have bottomed
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Giuliano's avatar
$2.1m follower assets
Accenture FY 2022
Accenture released their fiscal Q4 earnings, here a visual that contemplates ACN's whole year.
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Solid company hitched to the whole digitalization movement. FY 2023 revenue outlook without acquisitions - which $ACN does a lot - is in the HSD zone....not sure if they are being extra conservative amidst macro headwinds, or they are getting dragged down by their legacy businesses which continue to shrink. I always look at $EPAM $GLOB $DAVA for comparisons
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Paul Cerro's avatar
$36.5m follower assets
Inflation is driving digital grocery growth in the US, but there’s more to the story
Since May 2022, online grocery prices have risen faster than those of any other ecommerce category, per Adobe’s Digital Price Index. In July, the year-over-year price change for online grocery reached 13.4%, a record high for the year.

Inflation will be the primary cause of digital grocery sales growth in the near term, but long-term growth will be sustained by consumer shopping habits that continue to shift toward buying essential household goods online.

Digital Grocery Makes Up a Bigger Piece of the Pie

While the pandemic-driven ecommerce boom has subsided, consumers continue to buy household goods online, nudging digital sales upward in several categories. And it’s not just food and beverage. Ecommerce makes up a growing share of sales in the health and personal care category (which includes household products like toiletries) and pet food, both of which fall under the grocery umbrella.

Despite a Slight Dip, Digital Grocery Becomes Common Practice

In 2021, the number of digital grocery buyers surpassed 144 million, meaning that more than half of the US population ages 14 and older made at least one grocery purchase online. This year, their ranks will decrease 0.5%.

This contraction has several causes, none of which will be a threat to long-term sales growth. Some consumers shopped for groceries online strictly due to pandemic health concerns and have since returned to stores. Others might have tried digital grocery as a novelty but did not make it a regular practice. Inflation may play a role as well, driving away consumers unwilling to pay the additional delivery and service fees.

The slight course correction will pave the way for future growth. The number of digital grocery buyers grew more than 55% over the first two years of the pandemic, pulling adoption forward by several years. While 2022 will be a correction year, digital grocery adoption has not yet reached a ceiling. Strong growth continues at the end of our forecast window, with more than 7 million consumers joining the cohort in 2026.

Future sales growth will come from increased shopper frequency, not new adoption. The majority (91%) of US consumers who shop for groceries do so at least once a week, according to a March 2022 study from PowerReviews. But the same survey found that far fewer (40%) shop for groceries online at the same rate.

In the coming years, we expect that more consumers will shop more frequently for groceries online, which in turn will boost their average annual spend—from $977 per digital grocery buyer in 2022 to $1,450 in 2026.

What’s Driving Digital Grocery Growth?
In addition to inflation, the increasing popularity of click and collect and the continued success of third-party delivery apps, particularly Instacart, are driving sales growth in 2022. But delivery via retailers will remain the leading mode of digital grocery fulfillment through 2024.
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Sagar Vensi's avatar
$221.7k follower assets
Texas Instruments $TXN Citigroup 2022 Global Technology Conference:
  1. 75% of our portfolio- multiple customers across multiple markets.
  2. It’s a slightly different cycle- PCs was a pretty miserable quarter and automotive, there was no change.
  3. Our competitors won't build their own internal manufacturing.
"Corporate America is fretting over Taiwan risks, regulatory filings show" -FT
On this platform, I've talked about the high likelihood of China's invading Taiwan in the near future. According to the Financial Times, it seems like Corporate America shares my concerns.

This chart, which can be found in the article, should catch people's attention. it shows a huge jump in mentions about Taiwan in the 10-K risk factors section.

Even if the chip shortage seems to be waning, it's important to note that "[t]he median US company had only had five days’ worth of chip inventories in 2021, down from 40 in 2019, according to a study the Department of Commerce."

In other words, this chip shortage could get a lot worse if China does decide to invade Taiwan.

Meanwhile, US Banks have recently prepared themselves for exiting China if ever the country faces a wave of sanctions, similar to what Russia endured, in the case of an invasion.

Typhoon season in the pacific is near an end. The seas of the Taiwan Strait are going to be calm for a month. China's window of opportunity for taking over Taiwan is near a close.

Out of all the sectors of the economy, the tech sector will be hit the hardest if China does invade Taiwan. With tensions between China and Taiwan being at a historic high, it's no wonder why insiders in the tech sector are scared of buying the dip in their company's shares.

Except for $INTC, because they are positioned to benefit the most from a war between China and Taiwan as their fabs will take over the majority of chip production and they're investing the most in building more chip production capacity outside of Taiwan.

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Is $NKE a bellwether stock?
That's what Yahoo Finance is saying. At first, I was surprised because I never considered Nike to be a company whose financial results provide economists with information on whether the economy is doing well or not.

During the middle of this year, Target and Walmart reported earnings that displayed a bloated inventory issue. Many other retailers like Nike displayed similar conditions. To see whether that issue is being resolved broadly across retail, better to look at Target or Walmart's earnings instead of Nike's in my view.

With Nike sourcing 55% of its revenues from wholesale (i.e. revenues from $FL and other shoe sellers), I can see why economists will call Nike a "bellwether" company. If Target canceled over a billion dollars worth of inventory, it wouldn't be surprising if Nike sees its revenues decline because its wholesale clients like Footlocker stopped ordering shoes from Nike

It will be intriguing to see how Nike performs after they report earnings. Seeing that the stock continues to make a new 52-week low repeatedly over the past couple days, I wouldn't be surprised if the stock plunges even more.

$NKE is probably highly representative of overall (and global) consumer spend, given that its products touch on every demographic and cover both online + offline channels
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Amrit Rupa's avatar
$2m follower assets
The most useful SEC Filings
There's a growing amount of part-time retail investors here, so I hope this helps them.
SEC Filings on listed companies are a great source of information for investors.
As a retail investor however, it's a little challenging to keep up with the latest updates. We're currently working hard on a new update to Wall St. Rank that hopes to solve this by condensing all the latest filings into a minimalistic visual representation.
In the meantime, here are 10 of the most important filings a retail investor should be paying attention to, and why 👉 https://www.wallstrank.com/learn/what-are-sec-filings-investing-basics
Cameron McFarlane's avatar
$16.7m follower assets
Took Profits on $SQ This Morning
Sold completely out of $SQ. Price action hasn’t been great and continues to make 52 week lows. Similar to what I have done with $NVDA, hold the cash on the sidelines and wait for better price action
Final re-post: September Idea Competition - CMC Markets
September Idea Competition - CMC Markets
Please check out my September Idea Competition - CMC Markets

Below is the link to my earlier post just in case anyone has missed out on my short analysis on CMC Markets for the Sept Idea Comp.

DISCLOSURE: This is not a financial advice. This material has been
distributed solely for informational purposes only and is not a solicitation or
an offer to buy any security or to participate in any trading strategy. The material may include projections or other forward-looking statements regarding future events, targets or expectations. Past performance is no guarantee of future results. There is no guarantee that any opinions, forecasts, projections, risk assumptions, or commentary discussed herein will be realized or that an investment strategy will be successful. All expressions of opinions are subject to change without notice. Investors should seek financial advice regarding the appropriateness of investing in any security or investment strategy discussed in this presentation.
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Economic Update
Stocks are mixed to begin the week. The DJIA and S&P are lower today, while the Nasdaq is higher. The British pound fell to a record low before recovering some after the U.K. announced the biggest tax cuts in 50 years.

The lone data release today, the Chicago Fed National Activity Index, fell to a 0.0 reading in Aug. 55 indicators out of 85 were worse month-over-month. The 3-month average rose to 0.01, up from -0.08.

Treasury yields are higher, with the 2-year T yield up 0.8 basis points to 4.22%, the 5-year T yield up 5.7 basis points to 4.04%, and the 10-year T yield up 7.8 basis points to 3.77%. Advance rates are higher throughout most of the curve today.
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Rich Excell's avatar
$16.5m follower assets
Chart of the Day - worried.
We had our annual Ryder Cup like event this weekend. I was on Team USA & unlike real-life, we did not win. A fun aspect of the event is that you can socialize with a number of people that you might not normally over the course of the year. They run the gamut from C-suite to fincl advisors to experts in real estate or logistics. I wrote about this in my Substack blog this week (Anecdotal evidence - stayvigilant.substack.com) & suffice it to say, they were all very worried.

These people are not the only ones that are worried. BAML has consistently pointed out that cash balances are very high. We see from the Committment of Traders that leveraged or speculative accounts are short the most economically sensitive futures markets. NYSE short interest is back to levels last seen in 2008. Emerging Mkts are failing. Currency traders see a series of rolling devaluations.

Which of these has you most worried though? We can start with the equity mkt. It is, after all, a leading indicator of the economy, & we surmise that via wealth effects, the performance of stocks impacts consumption. The blue line is the rolling 12 month yoy performance, we can see SPX is down 17% yoy, slightly less than YTD. People are feeling these losses. That is worrying in itself.

The pink line is the dollar wrecking ball (not sure who coined the term but I like it). The $ has been on a one-way train higher, leaving damage in its wake. There are $12 trillion of USD loans overseas. The higher dollar crushes those borrowers. The higher dollar is contributing to the pain we are seeing in EMs, in China, in Europe & in the UK. Saw someone on LinkedIn joke that the British currency is now being quoted in ounces & not pounds. Quite clever. Also see the new meme that 1 Bitcoin = 1 Bitcoin, an attempt to say 'focus on the number of coins you hold and not the price' but implicitly telling all that the dollar is crushing even crypto. Remember when we were worried that too many dollars were printed and the dollar would be debased? I am sure the dollar has some worried.

Commodities are in yellow & while they peaked earlier this year, the yoy is coming lower. Worried, but maybe becoming less worried if the trend continues. Gas prices are lower in the US even if food is not. Stay tuned.

The chart that has me the most worried is the green line, the yoy change in the US Treasuries. We are off to the worst start in 50 yrs in the bond mkt. These securities are a core part of every portfolio, particularly those in retirement that are no longer earning & can't afford to lose. Treasuries are also the underpinning of the pricing of all assets - corp credit, other soverign debt, equities & futures. Treasuries becoming unhinged, breaks all mkts. The inability to catch a bid here has me the most worried.

Hate to be so negative, but there are times when risk management is more important than return expectation.

Stay Vigilant
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