322.31 -0.67 (-0.21%)
After hours: 7:47PM EST
|Bid||322.31 x 1400|
|Ask||322.86 x 1200|
|Day's Range||310.35 - 325.83|
|52 Week Range||117.64 - 409.61|
|Beta (3Y Monthly)||1.17|
|PE Ratio (TTM)||N/A|
|Earnings Date||Feb 10, 2020 - Feb 14, 2020|
|Forward Dividend & Yield||N/A (N/A)|
|1y Target Est||361.58|
With turkey day around the corner, investors are shopping the Street for Black Friday deals. Black Friday falls on November 29 and is the biggest shopping event of the year for U.S. consumers, seeing bargain price tags being placed on countless items.That being said, Black Friday is also an important event for investors as it marks the start of the holiday shopping season. As searches using the phrases “reward apps” and “Black Friday deals” are up 200% this year according to a study from Google, it’s no wonder all eyes are on the market.Taking this into consideration, how can investors find out which names are set to deliver the goods ahead of this shopping extravaganza? We recommend turning to TipRanks. The Stock Screener tool helped us identify 3 must-watch stocks ahead of Black Friday, all of which are Buy-rated. Ulta Beauty (ULTA)Ulta is the largest beauty retailer in the U.S., with its 1,213 stores located across the country. While shares have certainly struggled recently, investors are waiting to see if Black Friday can drive a turnaround.Part of the issue has been the impact of the lack of innovation within the cosmetics segment itself, which accounts for 51% of Ulta’s sales. However, its additions to its makeup offerings could paint a prettier picture. New products including Florence by Mills (Millie Bobby Brown), KKW Beauty by Kim Kardashian West, Pattern by Tracee Ellis Ross, The Ordinary, Sunday Riley and Kylie Skin by Kylie Jenner were all released during the beauty company’s third quarter. This could set the stage for huge fourth quarter sales.Guggenheim analyst Steven Forbes commented, “The consensus model appears relatively reasonable and results should improve sequentially as we enter the 4Q.” Not to mention Forbes expects Ulta to make several key investments back into the business. “Based on our conversations, these investments will likely be associated with the company's a) e-commerce/digital and b) supply chain initiatives—note, ULTA is currently slated to open a new Fast-Fulfillment Center (FFC) in Jacksonville, FL in 2020,” he explained.Based on all the above factors and its ability to capitalize on its relationships with vendors, Forbes is keeping Ulta in his shopping cart. Along with his Buy rating, the 5-star analyst set a $300 price target, which implies about 22% upside from current levels. (To watch Forbes’ track record, click here)The rest of the Street’s take is more varied when it comes to Ulta. 12 Buy ratings and 9 Holds assigned in the last three months add up to a ‘Moderate Buy’ consensus. In addition, its $285 average price target suggests shares could rise 16% in the next twelve months. (See Ulta Beauty stock analysis on TipRanks) Shopify (SHOP)Shopify offers a complete e-commerce platform with everything vendors need to sell online, on social media or in person. Even though a modest sell-off followed strong quarterly results, one analyst says that investors should get their hands on SHOP shares.Canaccord's David Hynes wrote in a note to clients that this sell-off implies that “the bar is set awfully high for high-valuation stocks this earnings cycle – particularly those will little or no cash profits”. He added, “We like the idea of owning this stock into a Q4 period in which holiday-driven GMV strength provides upside optionality to the model, and long term we continue to believe that SHOP has the makings of a $100B market cap business at some point in the next 6-8 years.”SHOP has become a stand-out thanks to its ability to execute against its major quarterly initiatives like increasing its international and plus contribution, its fulfillment center build-out as well as its Shopify Capital expansion. On top of this, live merchants reached more than 1 million in September, up from 820,000 at the start of the year. However, it will be important to watch gross payment volume as adoption has slowed over the last year.Nonetheless, Hynes is staying with the bulls. The five-star analyst kept his bullish call and $385 price target, indicating that shares could surge 23% over the next twelve months. (To watch Hynes’ track record, click here)Looking at the consensus breakdown, opinions on SHOP are more split. The bulls come in slightly ahead, with 9 Buys compared to 7 Holds received over the previous three months. The upside potential lands at 19% as a result of its $372 average price target. (See Shopify stock analysis on TipRanks) Foot Locker (FL)The shoe retailer has faced a degree of skepticism from Wall Street, as questions linger regarding how Foot Locker can compete given the weak mall-based environment. Bearing this in mind, investors want to know where FL stands ahead of the holiday shopping season.Some analysts are confident that FL can meet its guidance thanks to footwear product launches. There has been additional access to Yeezy products year-over-year as well as impressive holiday lineups from Nike, Adidas, Puma and Vans. Additionally, it has opened new power stores offering immersive capabilities for customers, localized product with exclusive and limited releases, dedicated women’s and kids’ spaces, digital lockers so customers can pick up online orders and connected inventory. Management’s goal is to have over 200 power stores that reflect local communities.Deutsche Bank analyst Paul Trussell tells investors that FL is still an important destination in the sneaker market. He cites the ability for customers to compare new footwear across a number of brands, mix and match the wardrobe across brands and consult with store employees as giving it the competitive advantage.“The company sees itself as the main destination for the young male customer and expects the new loyalty program and Power Stores to create locations where consumers will hang out,” he noted. To this end, the four-star analyst reiterated his Buy rating and $58 price target. This means that shares could climb 27% higher in the next twelve months. (To watch Trussell’s track record, click here)All in all, cautious optimism circles this retail chain, as TipRanks analytics exhibit Foot Locker as a Buy. Out of 13 analysts polled in the last 3 months, 8 are bullish on FL, 4 remain sidelined, and only one is bearish on the stock. With a return potential of nearly 7%, the stock’s consensus stock-price forecast stands at $48.77. (See Foot Locker stock analysis on TipRanks)
Shopify (NYSE:SHOP) reported reasonably strong third-quarter results on Oct. 29. Unfortunately, investors didn't like the higher-than-expected adjusted loss of $33.6 million. As a result, SHOP stock fell over the next week.The good news for the owners of Shopify stock is that most of those losses have been reversed in recent trading. The bad news is that SHOP stock has still lost 15% of its value over the past three months.InvestorPlace contributor Thomas Niel believes investors should patiently wait for a better entry point in SHOP stock because of Shopify's nosebleed valuation SHOP has a huge enterprise value-to-sales (EV/Sales) ratio of 24.InvestorPlace - Stock Market News, Stock Advice & Trading TipsBut I believe an EV/Sales ratio of 24 will look cheap in three to five years if the company continues to successfully add more merchants to its platform,Here's why.1 Million Merchants and CountingIn conjunction with the Q3 results, Shopify CEO Tobi Lutke announced triumphantly that, as of the end of Q3, over 1 million merchants were on the platform. That target was thought to be unreachable 15 years ago when the company's first store opened."This is kind of blowing my mind right now," Lutke said."I had an investor who ended up not investing because they told me that the worldwide market for online stores was about 40,000 stores," the CEO added.I guess that investor feels pretty silly right about now.One negative mentioned by many in the media is the fact that Shopify's revenue last quarter grew 45% year-over-year, slower than the 58% top-line growth in Q3 of 2018 and the 72% jump in Q3 of 2017.What the pundits failed to mention is that it's natural for business' growth rates to fall. It's a lot easier for a business with $200 million in quarterly revenue to grow 72% than it is for a business wit $400 million in revenue.But the growth of Shopify's monthly recurring revenue (MRR) did not slow that much. MRR is defined as the number of merchants multiplied by the average monthly subscription fee in effect at the end of the quarter. That metric went from $26.8 million in Q3 of 2017 to $37.9 million in Q3 of 2018 to $50.7 million last quarter.Shopify's MRR grew 41.4% from 2017 to 2018. The increase slowed slightly to 33.8%, from 2018 to 2019.MRR grew $12.8 million from 2018 to 2019, versus an $11.1 million increase between 2017 and 2018. The Bottom Line on SHOP StockAs long as MRR continues to grow by double-digit percentage levels, Shopify will be in growth mode. Once that metric starts to fall into the single digits, then we can talk about a maturing business. Until then, I'm not sure the valuation of SHOP stock is excessive. SHOP stock definitely isn't cheap, but it's still worth holding for the long-haul. Shopify took 19 months to go from 600,000 subscribers to 1 million subscribers. That's a compound annual growth rate of 37%. If it continues growing at a compound rate of 25%, it will reach 2 million subscribers within a few years.Not even SHOP's CEO knows what the ceiling is for the number of merchants on its platform. Someone thought 40,000 was a best-case scenario. Shopify's current total is at least 25 times that now. Here comes 2 million. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Silver and Gold Stocks to Buy That Offer Contrarian Upside * 7 Earnings Reports to Watch Next Week * 5 Online Retail Stocks to Buy on the Dip The post Shopifyas Growth Makes SHOP Stock Worth Buying appeared first on InvestorPlace.
Salesforce (NYSE:CRM) stock continues to remain in place amid company growth and acquisitions. It began the year with a quick recovery from the fall 2018 bear market in tech stocks. However, after returning to levels near the 2018 highs, Salesforce stagnated. As a result, it has traded in a range for most of the year.Source: Bjorn Bakstad / Shutterstock.com However, valuations remain elevated even as profit growth hits a temporary slowdown. Moreover, other companies have entered the software-as-a-service business. CRM stock should return to double-digit growth in the near future. However, with the company maturing and choices for SaaS increasing, I see little incentive for investors to take the multiple, and by extension, the stock price to higher levels.At a forward price-to-earnings ratio of 56, CRM stock remains overvalued. However, unlike other value-rich stocks such as Twilio (NYSE:TWLO) or Shopify (NYSE:SHOP), it lacks one critical element of this type of equity -- movement. CRM stock trades at about the same level as it did in early February.InvestorPlace - Stock Market News, Stock Advice & Trading TipsThis is not to say I have gone negative on CRM stock. Salesforce pioneered the SaaS industry as founder Marc Benioff left Oracle (NYSE:ORCL) and founded this company. As a result, the firm is a "force" not just in sales, but across the entire tech industry. Hence, its high valuations of the recent past are not hard to understand. CRM Faces Multiple CompressionHowever, at $140 billion, Salesforce has grown well beyond the startup phase. This has begun to evolve into a mature company. Over the long run, I also expect valuations to "mature." As I pointed out during the summer, CRM stock moved little despite buying Tableau and forming a partnership with Alibaba (NYSE:BABA).Increased competition has become an increasingly important factor in the company's valuation. Justifying a 100-plus P/E ratio is one thing when a company holds a virtual monopoly. However, consumers now have alternatives. Peers such as Oracle, Microsoft (NASDAQ:MSFT) and Adobe (NASDAQ:ADBE) have become competitive threats. All of these companies also trade at a lower multiple. * 7 Beverage Stocks to Stock Up On I would not expect this process to play out quickly. Thus, I agree with InvestorPlace's Thomas Niel when he recommends against shorting CRM stock. Profit growth may have fallen into the single digits. Still, when analysts predict that a profitable company will increase revenues by 27% in the current year and 24.1% the next, it typically makes for a weak short candidate. Regardless of where CRM stock moves, I expect Salesforce to continue to prosper as a company.Also, the CRM stock price has twice bounced back from the low $140 range. Despite my "overvaluation" assertion, it will need more than a high P/E ratio to inspire a massive downward catalyst. Unless we see an overall bear market that compares to the one in the fall of 2018, I do not expect a significant selloff in Salesforce stock.However, those who ride out the maturing process will see CRM stock either stagnate or decline as the process of multiple compression plays out. Investors need to ask themselves if they want to stick around for this. My Concluding Thoughts on CRM StockDespite the bright future for Salesforce as a company, falling multiples and increased competition could hold CRM stock over the near term. Despite a temporary slowdown in profit growth, CRM's forward P/E ratio remains over 50. This has occurred in an environment of rising competition and slow maturation.To be sure, CRM stock remains a long-term winner. I think once valuations fall, Salesforce stock will again become a buy. However, until the P/E ratio compares well to its main peers, I see CRM remaining in its current range for the foreseeable future.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Sell Before They Roll Over * 5 Beaten-Up Stocks to Buy That Could Be Saved By An Acquisition * 4 Startup Stocks Getting Smashed The post Salesforce Stock Remains on a Path to Continued Stagnation appeared first on InvestorPlace.
The facility will pack and ship items ranging from toys to small electronics, the company said. In September, the company announced it will open its sixth fulfillment center in Ontario. Rival Shopify Inc has also been strengthening its delivery network and has earmarked $1 billion for its fulfillment centers.
Square (NYSE:SQ) had an intriguing bull case heading into its earnings release on Wednesday afternoon. Coming out of the Q3 report, Square stock admittedly still has that bull case.Source: Jonathan Weiss / Shutterstock.com The problem, however, is that earnings don't look quite strong enough to be the huge catalyst for which bulls were hoping.So far, SQ stock has avoided the fate which befell it after the last three quarters. But an 8% rally seems to price in the news for the quarter -- which means hoping for a rally back to 2018 highs of $100 might be too much to ask for.InvestorPlace - Stock Market News, Stock Advice & Trading Tips SQ Stock Holds up After EarningsFrom a headline perspective, earnings would seem bearish for SQ stock, at least if history is any guide. Both adjusted earnings per share (by 5 cents) and revenue (by a little over $5 million) came in ahead of analyst estimates. But guidance for the fourth quarter was below consensus on both lines. * 7 Stocks to Sell Before They Roll Over That's exactly how the last three quarters played out. And each time, Square stock plunged, falling 14% after the Q2 release, 8% after Q1, and 6% (over three sessions) following the Q4 report at the end of February.This time, however, SQ stock actually gained 1.3% in after-hours trading. And the differing response does make some sense. For one, investors may finally have realized that Square guides conservatively. Second, the company's sale of Caviar to DoorDash is having a larger effect on revenue than projected, which explains the soft top-line outlook for the fourth quarter.This time around, the combination of an earnings beat and soft guidance has moved SQ stock up some 8%. That's a nice gain in context: fellow growth name Roku (NASDAQ:ROKU) had a seemingly spectacular quarter and saw its shares plunge in after-hours trading. At least in terms of the initial reaction, investors seem at least content with Square's report. The Details Look MixedIt's also possible that investors are looking beyond the headline numbers -- and there were some interesting developments in the quarter.On the positive side, Square gave yet more detail on its Cash App product. Cash App seems to be competing well against PayPal Holdings' (NASDAQ:PYPL) Venmo, and apparently it still is.According to figures from the Q3 shareholder letter, Cash App revenue excluding bitcoin in the quarter was $159 million. PayPal said after its Q3 that Venmo had reached an annual revenue run rate just shy of $400 million -- or less than $100 million a quarter.Cash App thus seems to be outperforming Venmo. Square is seeing profits on that revenue too, with gross margins near 80%. Meanwhile, Square is adding new functionality to the app including fractional stock ownership, allowing it to compete with well-known start-up Robinhood and traditional discount broker Charles Schwab (NYSE:SCHW), which itself is launching fractional ownership.Cash App performance seems like good news. But initial preliminary guidance for 2020 might shake investor confidence. Square said its EBITDA margins for 2020 would be roughly flat to the ~18% it expects this year.Combined with a guided revenue increase in the "low 30s" on a percentage basis, that suggests EPS growth next year likely below current Street estimates, which project a 41% increase.That projected revenue growth is about in line with expectations (the consensus estimate is for 33% growth). But part of the pressure on SQ stock, which still is down 38% from 2018 highs, has come from increasing fears that competition is catching up.Square management positioned the lower margins as due to sales and marketing spend needed to drive growth -- an investment that will pay for itself in a matter of quarters. But some investors may worry that the spend is what's needed to differentiate the company in an increasingly crowded space. The Bottom Line on Square StockAgain, Square stock is cheaper, but one concern at the moment is that it isn't necessarily cheap. The 2020 consensus EPS still suggests a 60x forward multiple, and next year's estimates may come down after this quarter's commentary.Even backing out cash, price to 2020 revenue is over 4x on a GAAP basis, and around 8x using the company's 'adjusted' figure which will be discontinued after Q3. Adjusted revenue excludes transaction costs and bitcoin revenue, both of which offer minimal gross profit. In fact, Square made just $2 million in gross profit on bitcoin sales in the quarter.In the market of the last few years, those multiples don't necessarily stand out. But clearly investors have had some worries about SQ's valuation of late -- and those worries have spread to other growth stocks. Shopify (NYSE:SHOP), to which SQ stock often is compared, trades 25% below late August highs. Formerly high-flying cloud names have pulled back as well.For that reason, I argued ahead of earnings that the relatively flat trading in Square stock was bullish. It certainly seemed to give Square an opportunity to deliver an earnings release that could re-ignite optimism toward its stock. An 8% rally suggests that case did play out. The problem is that I'm skeptical there's enough in Q3 to keep that rally going.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Sell Before They Roll Over * 5 Beaten-Up Stocks to Buy That Could Be Saved By An Acquisition * 4 Startup Stocks Getting Smashed The post A One Day Earnings Rally Might Be All Square Stock Will Get appeared first on InvestorPlace.
U.S. stocks keep cruising higher. All three broad market indices closed Thursday at all-time highs. It's not hard to see why.Source: Shutterstock Earnings season impressed, with Disney (NYSE:DIS) the latest major company to deliver an impressive report. Trade war negotiations are heading in the right direction. The "risk-on" trade has returned, as lower-risk treasuries and gold both sit a three-month low.But as Friday's three big stock charts show, a rising market tide doesn't always lift all boats. These three names all have charts that suggest near-term downside risk -- and all have fundamental questions. Broad market strength could reverse recent trading, but at least for now, investors should exercise caution.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Shopify (SHOP)As a business, Shopify (NYSE:SHOP) continues to impress. Q3 earnings, despite a headline miss caused by a one-time tax miss, were solid. Revenue grew a staggering 45% year-over-year.But as a stock, SHOP is in trouble, as the first of our big stock charts shows: * Thursday's 3% decline sent the stock just below support. Meanwhile, SHOP stock already has reversed below the 20- and 50-day moving averages, and it's fast approaching the 200DMA. If SHOP falls through that support level, the declines can not only continue, but accelerate. * Again, the sell-off is coming amid a market clearly willing to take on risk. But it's also a market that seems more focused on valuation. Roku (NASDAQ:ROKU), which along with SHOP stock had been one of the two best large-cap stocks of 2019, started falling at the same time. Its bounce, too, has faded, and ROKU shares declined 16% on Thursday despite what looked like a blowout report. That response, and the concurrent decline in Shopify stock, suggest that valuation concerns persist. * Those concerns aren't close to being mitigated. SHOP stock has pulled back 30% from its highs. It's still more than doubled so far this year, and still trades at 23x trailing twelve-month revenue. Increasingly, it looks like the days of investors paying any price for growth have ended. If that's the case, SHOP stock could bust through support and continue its reversal. Ameren (AEE)Lower treasury prices mean higher yields -- and thus usually ofter demand for safe, dividend-paying utility stocks like Ameren (NYSE:AEE). The pullback in AEE stock seems likely driven at least in part by the decline in treasuries -- but whatever the cause, the second of our big stock charts shows a stock that needs a reversal: * AEE stock clearly has fallen out of its uptrend, and through all three moving averages. The support line around $74 is the next key test; if AEE falls through that level, the declines could accelerate. * Click to EnlargeMeanwhile, the industry's ETF, the Utilities Select Sector SPDR Fund (NYSE:XLU) is pulling back after a bearish double top formation. Sector pressure thus could continue on AEE stock, and potentially push it through support. * Ameren stock is reasonably attractive on a fundamental basis. And utilities are less volatile than the broader market, so downside risk is manageable. But amid the sector-wide sell-off, there are other options. American Electric Power (NYSE:AEP), for instance, has a stronger chart and a higher dividend yield. Investors looking to buy the dip in utilities thus might want to look elsewhere. Becton Dickinson (BDX)From a long-term perspective, there's probably not much need to worry about medical supplies manufacturer Becton, Dickinson and Company (NYSE:BDX). Becton Dickinson has been a phenomenal value creator over time: shares of the Dividend Aristocrat have tripled in roughly seven years. Healthcare end markets provide protection against macro swings, and the company's enormous scale limits competitors' ability to undercut it on pricing.That said, BDX stock clearly has stalled out. And the third of our big stock charts suggests that this attractive business might soon be available at a cheaper price: * Thursday's 2.5% decline suggests a reversal out of a bearish rising wedge pattern. BDX stock is testing support at $245, with another potential level at $240, which acted as support earlier this year and resistance in the spring. At the least, it wouldn't be a surprise to see the stock slip to that $240 level -- which will provide a key test. * BDX stock already has fallen below moving averages. Volume has been moderately higher than usual in recent sessions as well. Both factors generally bode poorly for near-term performance. * Meanwhile, the recent selling has come in response to the company's fiscal fourth quarter this week -- which looks a bit soft. Notably, fiscal 2020 earnings per share guidance of $12.50-$12.65 was below Street consensus of $12.71. Here, as with the chart, there isn't necessarily cause for panic. But the market's reaction so far -- BDX stock is down 6% since earnings -- does suggest that investors were looking for more. They might not get it until at least next year.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Stocks to Sell Before They Roll Over * 5 Beaten-Up Stocks to Buy That Could Be Saved By An Acquisition * 4 Startup Stocks Getting Smashed The post 3 Big Stock Charts for Friday: Shopify, Ameren, and Becton Dickinson appeared first on InvestorPlace.
Current ratio is a popular way for investors to assess the health of a stock’s balance sheet. Current ratio is a measure of a company’s ability to pay its current liabilities and obligations due within ...
Roku (NASDAQ:ROKU) stock could produce one of the more notable earnings reports of the season. The company will announce on Wednesday, Nov. 6, after the market closes. Past earnings reports have produced an extreme reaction in the stock. Given the volatility ROKU has seen since the last release, investors can expect more post-earnings fireworks no matter how traders react.Source: Michael Vi / Shutterstock.com For the company's third quarter, Wall Street forecasts a loss of 28 cents per share. That represents a decline from year-ago levels when the company reported losses of only 9 cents per share. However, analysts also predict consensus revenues of $256.1 million. The streaming firm brought in $173.4 million in the third quarter of 2018.ROKU has a history of massive swings following its quarterly announcements. It rose by almost 21% the day after releasing its second-quarter report. It has also seen similar moves, both up and down, in past quarters. In the case of Q3, the volatility continued during the quarter. In September, Roku stock fell from highs above $170 per share to below $100 per share as competing offerings from Comcast (NASDAQ:CMCSA) and Facebook (NASDAQ:FB) rattled investors. However, seeing the fears as overdone, traders bid the equity back above $150 per share in October.InvestorPlace - Stock Market News, Stock Advice & Trading Tips ROKU Leaves No Viable Choices Pre-EarningsStill, at current levels, predicting where ROKU goes will likely remain difficult. Valuations have proven useless at predicting this stock's behavior. While the current price-to-sales ratio of 18 points to significant overvaluation, it has dramatically exceeded average multiples since its IPO. Though the earnings report could trigger a drop, betting on such a decline has burned many investors. * These 7 Stocks to Buy Were Big Winners This Earnings Season Still, Bank of America Merrill Lynch analyst Ziv Israel initiated the stock as a "buy." He believes the company benefits from more market entrants. InvestorPlace's Chris Lau sees a "strengthening platform" for this same reason.However, InvestorPlace's Vince Martin worries the equity could get "slammed" after earnings. In his argument, he compares it to a more overvalued stock, Shopify (NYSE:SHOP). He also noticed that Shopify and Roku seemed to fall in tandem. SHOP stock fell after its earnings report, but only by about 3.8%.This makes betting on the unpredictability itself an even more risky bet. Many might look at investing via a straddle option. This involves buying both a call and a put option hoping the volatility yields a profit. At the current Roku stock price of about $140 per share, buying both a call and a put option that expires on Friday, Nov. 8 will come to a combined cost of about $21. This means the stock must move by 15% in either direction to earn a profit.Admittedly, history indicates ROKU is the one stock where such a trade might work. However, the relatively muted reaction in SHOP stock following earnings should give investors pause. Given the high cost of these pre-earnings options, the risks outweigh the potential rewards. The Bottom Line on Roku StockROKU remains too risky to buy before its earnings report. With the overvaluation, speculation drives Roku stock. However, with regard to the bull case, betting that an overvalued stock will move much higher often burns investors. Moreover, the volatility in ROKU since the last earnings report may point to a downward move.Still, investors often ignore bad news, particularly with stocks in emerging industries such as video streaming. The extreme reactions following past earnings announcements may convince some traders to try a straddle. Still, the high cost of a straddle comes with elevated risk levels.Given the history or Roku stock, I would expect a more modest loss than predicted, and probably higher-than-expected revenues as well. Still, when considering the choices, either buying or shorting the equity appear too dangerous at this time.As of this writing, Will Healy did not hold a position in any of the aforementioned stocks. You can follow Will on Twitter at @HealyWriting. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * These 7 Stocks to Buy Were Big Winners This Earnings Season * 5 Cheap Stocks Welcoming Insider Buying * 7 Earnings Reports to Watch Next Week The post Roku Stock Is Too Dangerous to Touch Before Reporting Earnings appeared first on InvestorPlace.
Outside of the investment community, few consumers are aware of Shopify, and this was done by design, Finkelstein said during a "Barron's Roundtable" discussion on Fox Business. Shopify's core purpose more than 10 years ago was to help online businesses create a "beautiful" online store, the COO said. E-commerce giant Amazon.com, Inc. (NASDAQ: AMZN) also facilitates online sellers reaching clients, but Shopify stands out in one important way, Finkelstein said.
Roku (NASDAQ:ROKU) is back to its old ways. The ROKU stock price plunged over 40% in a matter of weeks in September. But support held right around $100, and Roku stock subsequently bounced 50%.Source: JHVEPhoto / Shutterstock.com That puts ROKU in an interesting position ahead of its earnings report on Wednesday afternoon. The simplistic assumption might be that Roku stock will sink after the report. After all, ROKU's market value has increased by over $5 billion in a month. That, in turn, has to mean that investors' expectations have increased.But for years, growth stocks have looked expensive. Then growth companies report strong earnings, and their stocks still look expensive. Selling, let alone betting against, tech companies with good outlooks, based on valuation has been a fool's errand.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Triple-A Stocks to Buy in November And so the reaction to Roku's report might well come down to one factor: is this the same market that it's been in recent years? Roku seems likely to post another strong quarter, and its growth no doubt will be impressive. The one risk might be that, this time, that won't be enough. Why ROKU Fell So FarIt's worth trying to understand why Roku stock plunged in September before predicting where it will go in November. To be honest, even in retrospect it's difficult to understand the sharp pullback.The simple narrative, one pushed by a Bank of America Merrill Lynch analyst last week, is that streaming offerings launched by Comcast (NASDAQ:CMCSA) and Facebook (NASDAQ:FB) were to blame. Those potential competitive threats spooked investors and led to the reversal of ROKU stock price.I'm highly skeptical that new competition was much of a driver, however. As Bank of America itself noted, Comcast's device requires users to pay a monthly modem rental fee, limiting its usefulness to cost-conscious cord cutters. Facebook has had little success so far in hardware or streaming.Meanwhile, ROKU has racked up impressive market share, even though it's competing against the likes of Amazon.com (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOG,NASDAQ:GOOGL). It's hard to believe an investor would pay $150 for the shares of a company that's competing with those giants, only to sell at a lower price because two new, less threatening, rivals entered the space.I think ROKU had just rallied too far. Its strong Q2 earnings report may have driven a short squeeze that outran underlying demand for the shares. Whatever the cause, ROKU simply ran out of buyers. The Parallels Between Shopify and RokuIt hardly seems like a coincidence that Shopify (NYSE:SHOP) started plunging at almost exactly the same time as ROKU. The two companies are obviously very different. But the two stocks have a lot in common (and still do). Both stocks are among the biggest gainers of 2019. Among 712 stocks with a market capitalization over $10 billion, ROKU has had the best 2019, and SHOP is fifth.Both have attractive underlying stories. And both wound up at nosebleed valuations. As investors fled formerly "hot" sectors like SaaS (software-as-a-service) and unprofitable recent IPOs. SHOP and ROKU, with their high valuations and tremendous gains, unsurprisingly felt the pressure as well. The Key QuestionObviously, the 50% rebound of ROKU suggests investors are back to focusing on growth over valuation. Other growth stocks have rallied recently as well, though the gains of SHOP and enterprise SaaS plays have been much more muted.But that rebound also got ROKU back to where it was, even if the actual ROKU stock price remains 15% below its September peaks. In other words, its valuation is questionable again. Excluding cash, ROKU trades for about 15 times analysts' average 2019 revenue estimate. And as I noted ahead of the Q2 report, about one-third of those sales come from the company's players, which remain unprofitable.Obviously, the company's outlook remains strong. But, as skeptics have asked about so many stocks recently, at what valuation is its positive outlook fully priced into the shares? ROKU and SHOPAgain, the answer for years almost always has been that the valuation of growth stocks can rise further. And so ROKU stock certainly could rally after its earnings.The company's report is likely to be strong. Roku really never has missed Street estimates since its 2017 initial public offering. (Its earnings per share were below analysts' average outlook in its first report, but one-time effects related to the IPO were to blame.)Streaming demand is only going to rise. Disney (NYSE:DIS), Comcast, and AT&T (NYSE:T) are launching new services -- and are likely to spend ad dollars on the Roku platform to promote them. Investors are going to want to own Roku stock.Will that be enough on Wednesday? Not everyone is convinced. Options markets are projecting significant volatility, pricing in a whopping 15% move between now and next Friday. And I'd note that SHOP stock actually fell modestly after its Q3 report on Tuesday.That report did feature a headline EPS miss -- but the reported loss, excluding certain items, was driven solely by a one-time tax issue. Shopify did what it always does: it grew faster than average Street estimates, beat its operating profit guidance and raised its full-year outlook. It wasn't enough to keep SHOP stock from falling.The obvious worry is that Roku stock will react to its results like SHOP stock did to its earnings. But given ROKU's far sharper climb into earnings, the selloff could be even more severe.As of this writing, Vince Martin has no positions in any securities mentioned. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Buy-and-Hold Stocks to Play Investing's Biggest Trends * 7 Stocks to Buy in November * 5 Strong Buy Stocks Under $5 With Massive Upside Potential The post Roku Stock Could Get Slammed After Earnings appeared first on InvestorPlace.
(Bloomberg) -- Pinterest Inc.’s third-quarter revenue fell short of analysts’ projections, held back as the digital search-and-scrapbooking company added users primarily in less-lucrative international markets. Shares dropped as much as 21% in extended trading.Revenue was $279.7 million, below the $282.1 million average analyst estimate compiled by Bloomberg. The San Francisco-based company added 22 million users in the third quarter, and now has 322 million users overall, it said Thursday in a statement. That surpassed the 310.9 million monthly average users expected, according to a Bloomberg MODL consensus estimate, but 73% of the total is now outside the U.S.The company said the user gains were driven by “double-digit growth in nearly all international countries,” though Pinterest’s overseas users generate less revenue than those in the U.S. -- on average, domestic users brought in $2.93 each in the recent period, while each international user accounted for just 13 cents. Just 2 million of Pinterest’s 22 million new users in the quarter were in the U.S.Pinterest said sales growth came mostly from new advertisers. The company added advertising in nine countries in the quarter, bringing the total to 28. Pinterest sold ads in just seven markets at the end of 2018. The company also said it’s expanding shopping ads and working with more commerce platforms, such as Shopify Inc., to help merchants sell on its site.Pinterest also said its third-quarter loss widened to $124.7 million, or 23 cents a share, from $18.9 million, or 15 cents, a year earlier. Excluding certain items, including expenses related to stock-based compensation, it posted a profit of 1 cent a share.The stock tumbled as low as $19.75 in extended trading following the report, after closing at $25.14 in regular New York trading. At the close, the shares were up about 32% from the $19 per-share price in an April initial public offering.Pinterest shares had steadied prior to Thursday’s report after a volatile period following its IPO. The stock immediately soared, climbing more than 64% in the first two weeks, then crashed on weak guidance during the company’s first earnings report in May. Shares rebounded in August with the company’s better-than-expected second quarter, climbing as high $36.56.(Updates with net loss in the fifth paragraph.)To contact the reporter on this story: Kurt Wagner in San Francisco at email@example.comTo contact the editors responsible for this story: Jillian Ward at firstname.lastname@example.org, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Bloomberg News is hosting the Sooner Than You Think conference in New York, exploring what’s next in technology, Wednesday at The Weylin in Williamsburg, Brooklyn. Speakers are discussing topics such as how companies can restore trust in the tech sector; how new frontiers like AI create new obligations for business and governments; the best ways to protect your data in the age of cybersecurity attacks; the antitrust probes of Big Tech and more.Watch LIVE. All times are local New York.Via Sees Big Money in Buses (5:45 p.m.)Daniel Ramot, chief executive officer of ride-sharing company Via Transportation, Inc., sees big money in buses.New York-based Via is often characterized as a smaller competitor to Uber Technologies Inc. and Lyft Inc. But Ramot sees those companies as disrupting the cab and limo market, while Via is focused on public transportation. In fact, 95% of Via rides are shared, he said. Via also sells software to public transportation systems to improve efficiency, with nearly 100 partners worldwide.Ramot puts the public mobility market -- which includes city buses, school buses, university shuttles and similar types of transportation -- at a half-trillion-dollar industry, which he sees as a big opportunity, larger than the taxi and ride-hailing space.And environmental concerns will boost demand for these options.“There’s always going to be private cars, people riding around by themselves,” he said. “But my hope is that increasingly we will look at people riding around by themselves in a car a little bit the way we might think about someone walking into a kindergarten and smoking.”Compass Says It’s Not Like WeWork (5:23 p.m.)The chief executive officer of SoftBank-backed real estate brokerage Compass said his company had already moved away from a strategy of rapid growth before WeWork’s scuttled initial public offering.Compass has raised $1.5 billion in venture capital, and like WeWork, it tapped SoftBank Group Corp.’s Vision Fund. Skeptics in the real estate industry say the brokerage lacks a disruptive technology or business model, and has relied on deep coffers of venture funding to buy growth.But Compass had stopped expanding into new geographic areas by the beginning of this year, CEO Robert Reffkin said. The company is already profitable in many markets and is under no pressure to go public, he added.Reffkin enumerated other advantages. He said the company’s strategy of treating real estate agents as its primary customers would help recruiting efforts in the event of a recession. And unlike video-streaming sites or car-hailing services, Compass hasn’t attracted imitators.“Seven years in, there hasn’t been one copycat,” he said.California Privacy Law Does More Harm Than Good, Industry Executives Say (4:00 p.m.)California’s data privacy law does more harm than good for consumer privacy, said Michael Beckerman, president and chief executive officer of the Internet Association, and Mignon Clyburn, former commissioner of the Federal Communications Commission.The first data privacy law in the country takes effect Jan. 1, 2020, but the representative from the industry group that represents big technology and the former federal official argued the California Consumer Privacy Act needs to be replaced with a federal law. They worry that other states will follow California’s lead and pass their own regulations, creating a possible patchwork of varying standards across the country.Companies will struggle to comply with multiple laws, Beckerman said.“They got so much wrong, and what they did do will make people less private,” he said. “It makes no sense that one state can set the rules, leaving the rest of the country to pivot.”Clyburn agreed, but said a federal law to pre-empt state regulations is unlikely until after the 2020 presidential election.Former DHS Adviser Says Trump Ukraine Server Allegation ‘Completely Debunked’ (3:30 p.m.)Tom Bossert, a former Homeland Security adviser to President Donald Trump, called the “conspiracy theory” that Trump has pursued, in which there is a Democratic National Committee server in Ukraine, has been “completely debunked.”Bossert said he expects more countries to get involved in attempting to influence the next U.S presidential election. “Buckle up, because it’s about to get started in a bigger and larger scale, in my view,” said Bossert, who now works as the chief strategy officer at Trinity Cyber. “The trend that we will see when we look back on this 2020 election is the entrance of China, Iran, North Korea, maybe 10 or 12 nation-state actors that are highly sophisticated.”Brittany Kaiser, co-founder of the Digital Asset Trade Association, said she’s not sure “that we’ve really learned enough about all of the problems from 2016. Facebook’s policy of allowing political campaigns to lie in campaign ads could allow them to conduct voter suppression, she said. “We don’t actually have oversight over what these campaigns are saying.”Yasmin Green, director of research and development at Jigsaw, warned that those looking to influence elections have become more skilled. “Defenses are better and the threat is more sophisticated,” Green said. “So looking to 2020 the question mark for me is, are we going to say domestic disinformation doesn’t really feel like on par with state sponsored, cross border election meddling.”Simon Ventures Head Says WeWork Shows ‘Inconsistent’ Valuations (3:30pm)WeWork, the work-sharing real-estate startup, created a “ highly dsyfunctional” capital structure as it moved toward an initial public offering, said Natalie Hwang, managing director and head of Simon Ventures, the venture capital arm of Simon Property Group, Inc., the largest shopping mall and retail center owner in the U.S. Simon Ventures passed on the opportunity to invest in WeWork a few years ago. “In the case of WeWork, the public markets ultimately disagreed with private company valuations and I would expect for companies to be valued at increasingly inconsistent fashion.”WeWork was valued at as much as $47 billion before its IPO collapsed and the company’s value fell to an estimated $8 billion in a bailout plan. Jason Illian, managing Director of Koch Disruptive Technologies, the venture and growth arm of Koch Industries, Inc. said WeWork won’t be the last example of a private company’s valuation being overhyped.Foursquare Chief Says GDPR Needs to Better Protect Location Data (2:30 p.m.)Europe’s General Data Protection Regulation doesn’t go far enough to protect consumers from abuse of their location data, Foursquare Labs Inc. Chief Executive Officer Jeff Glueck said.Glueck said regulators should enact laws to protect consumers’ location data, and make sure they consent to what they share. Glueck said his company supports the European privacy law, but it needs to go further, and the U.S. needs a national privacy law as well.“There is no rule today about how to use location data or what is informed consent,” he said. “Consumers should not be judged to have consented to anything because of a 200-page ‘Terms and Conditions.’”Glueck, in effect, is calling for regulation on his own company. Foursquare, which began as a social-media app letting a user broadcast their location to friends, now builds location-data systems for other companies including Uber Technologies Inc. and Airbnb Inc.Companies should be legally responsible to use consumer’s real-time location data in the user’s best interest, similar to an accountant’s fiduciary duty. Regulations should ensure “competition can continue but with a high ethical bar,” he said.Google Rival DuckDuckGo Makes ‘Ton of Money’ From Private Search Engine (1 p.m.)DuckDuckGo, a privacy-focused search engine provider, makes “a ton of money” without resorting to the personalized, targeted advertising that Google uses, according to Megan Gray, the company’s top lawyer and policy chief.There are many reasons for transferring personal information between companies, but with online search it doesn’t need to be that way, Gray said during a discussion about privacy-focused product design. After you search for a little black dress and then lipstick, companies don’t need to follow you around the web with similar ads, she added.“That’s only what you see. There’s a lot more behind the curtain in terms of how you are being categorized by the searches you have done,” Gray said.Gray and other speakers called for an enforceable “Do Not Track” law in the U.S. that would help people easily prevent technology and digital-advertising companies from collecting personal data and following users around the web.Smartphone settings could have a simple “don’t track me” setting, Gray explained. There are technical ways to do some of this already, but an enforcement mechanism is needed, she said.The idea that a Do Not Track law would destroy the online ad industry is “a bit of a bluff,” said Elizabeth Zalman, chief executive officer of strongDM, which makes software for securely managing databases and computer servers.Andrew Farah, CEO of startup Density, said everyone would have to activate such a Do Not Track setting for the digital ad business to be really damaged.The panel ended with a question about Silicon Valley and whether there are the right incentives in place for entrepreneurs to think about privacy and do the right thing when they’re starting companies.“Do you want me to get to raise my next round of funding?” Zalman said, prompting laughter from the crowd. Leaders of tech startups should treat data records as real humans and lock down that information, she added. “I don’t know if it’s necessarily baked into the venture capital route.”WeWork’s Failed IPO Was a Case of Corporate Greed, Former Snap Exec Khan Says (12:45p.m.)WeWork’s aborted initial public offering is a case of “corporate greed,” said Imran Khan, co-founder and chief executive officer of e-commerce company Verishop. Khan was previously involved in high-profile public offerings, as chief strategy officer at Snap Inc. and as a managing director at Credit Suisse Group AG, where he helped internet companies, including Chinese e-commerce giant Alibaba, list on the stock market.Khan said that whenever an investor gives someone money, they are giving trust, and the recipient has a responsibility to live by that trust.“At WeWork we saw the gross negligence of this trust,” Khan said. It was a degree of irresponsibility he hadn’t seen since 1999 or 2000, he added.We Co. was valued at $47 billion at its peak earlier this year, but that dropped to only about $8 billion as part of the aborted IPO and bail-out plan.Generally, Khan said that while the private market in many cases results in inflated valuations, he can see why investors like it. “You don’t have to worry about day to day volatility,” he said.“If you want to build a business for the long term, to be honest with you it’s difficult to do that in the public market these days,” Khan said. “I think it’s getting more and more challenging.”Earlier this year, Khan launched Verishop, which sells lifestyle products which sells a curated offering ranging from clothing to sustainable household items and non-toxic toys.Ohio AG Wonders if Current Antitrust Law is Sufficient For Big Tech (12:30 p.m.)Ohio Attorney General Dave Yost questioned whether existing antitrust law is sufficient to police Big Tech. “What is the right way to regulate or limit, or separate the power that is being gathered?” Yost said. “I’m not entirely sure that the antitrust jurisprudence we have is adequate.”Yost described three historic phases of power accumulation: First governments, which were split up into separate branches; then, old economic monopolies, which the federal government broke up; and now, large technology platforms. “Today there’s this third wave of power,” he said. “Power is always antithetical to individual freedom.”Yost said he is still trying to frame questions about how to restrain that power. He didn’t offer pointed solutions.Two groups of state attorneys general are investigating Facebook Inc. and Google for abuses of power. Those cases are in their early stages. The attorneys general haven’t publicly articulated a clear legal case against these tech giants and Yost did not offer one Wednesday.Instead, he asked whether the existing laws were sufficient to deal with the tech giants’ newfound power. “The piece that is proceeding under traditional antitrust principles is probably distinguished by fact patterns and business models of each case. The overall debate question that I’m posing is, is this really about the aggregation of power?” he said. “There’s been tremendous change driven by these big tech platforms -- there’s almost nothing that hasn’t been touched in our lives and impacted, in many, many ways for the better.”Yost indicated that he was taking a measured approach. “I’m not with the pitchfork and torch crowd, OK?. But we do need to think about the potential outcomes here, and are there things that we want guardrails from?”Kerry Washington Talks About Changing the Narrative in Hollywood (12:00 p.m.)Kerry Washington is best known as Olivia Pope, the star of the ABC drama “Scandal.” But now she is starring in a new film called “American Son” on Netflix, and is hoping its message starts a conversation. In the film, which debuts Friday, she looks for her missing son at a police precinct. It’s a timely show in light of several police killings of black Americans. “Whether you’re a man or woman, black or white, it makes you think,” she said. “People who wouldn’t normally watch this are watching this and learning something.”Washington shared the stage with Pilar Savone, who produced “Django Unchained” and heads development for Washington’s production company, Simpson Street. Savone said the film was originally a play. Now that it’s on Netflix, it can reach a much larger audience.“It’s such an important story for people to see and not everyone has access to Broadway,” Savone said.Both women said Hollywood is starting to think more about hiring women and minorities -- in front of the camera and behind it. When Simpson Street shoots a pilot, “we want to make sure our candidate pool is diverse,” Washington said.Washington has also invested in The Wing, a woman-focused co-working space. She described the startup as “a sisterhood” where women are “having a lot of conversations on a lot of levels.” She also gave out her phone number, saying it would help her fans connect with her on Community.com, a communications startup. Community, she said, “allows me to engage more with fans on one-to-one basis” and “have a real conversation.”Washington said she was going to knock on doors this weekend in Michigan and Virginia to encourage people to register to vote. Asked who she’s backing in the presidential race, she demurred. “My candidate is the American people,” she said.Shopify CEO Lutke Says He’s Helping Others Compete With Amazon (11:19 a.m.)Shopify Inc. Chief Executive Officer Tobi Lutke said the Canadian e-commerce company isn’t competing with Amazon.com Inc., but helping other people do so. “Amazon wants to be an empire,” he said. “At Shopify, we are arming the rebels.” Lutke said he didn’t think the economy would be healthy if there were five mega-corporations employing everyone, and that the world needs millions of businesses to employ millions of people.Shopify recently announced it had reached 1 million merchants using its platform around the world.The Ottawa-based company is spending $1 billion dollars to set up a network of fulfillment centers in the U.S. to help merchants using its platforms deliver products. The company processes millions of individual sales by hundreds of thousands of merchants each year, and could potentially pool shipments from different online stores together. “If you put a lot of lights together you end up with a sun,” said Lutke.“What will that do for margins? Well, it’s going to be expensive,” Lutke said of the 10-figure investment. He added that Shopify is “a growth investment.”Shopify is one of Canada’s best performing stocks, having gained about 130% this year as investors reward the company’s fast growing sales. But the company reported an unexpected quarterly loss earlier this week due to higher spending as it expands its customer network and building out the fulfillment centers.Two Sigma’s David Siegel Talks About the New Rules For Tech (10:40 a.m.)David Siegel, co-founder of the Two Sigma Investments hedge fund, said if giant tech companies began self-regulation as concerns over privacy mount it might prevent the government from enacting more severe controls.“The industry participants themselves understand what’s possible and what isn’t possible better than maybe a government agency would,” Siegel said. “If the industry could get together and work collaboratively to set rules of the road, then maybe we will all be happier.”Siegel, who has been outspoken about the benefits and dangers associated with artificial intelligence, said industries like finance and medicine had very little oversight in their early days, and that didn’t lead to good outcomes. He finds it hard to understand why tech leaders would think that their industry would work perfectly without regulations.“I think having regulation in finance is a good thing,” Siegel said. “So I’ve never seen regulation as being a particularly big deal.”Siegel pointed out the trade-offs that come with regulations. Some people want privacy, but if the control of personal data is absolute, that might lead to unintended consequences, like making it harder for authorities to solve criminal activity.“So we might be willing to have a great level of abuse in our society, maybe it would lead to more violence, maybe it will lead to more financial fraud but maybe you’re all ok with that trade-off because you value privacy so much,” he said. “Or maybe you’re not.”New York-based Two Sigma, a quantitative hedge fund firm that deploys machine learning in its strategies, had $60 billion in assets in August.One of Tech’s Biggest Critics Takes on The Role of Technology in Society (9:45 a.m.)Tristan Harris is a former Google employee who has turned into one of the highest-profile critics of Big Tech. His job at Alphabet Inc.’s Google was to make sure ethics were taken into account when new products were designed, but he left years ago to try and push that mission from the outside. Harris, who is the co-founder and executive director at the Center for Humane Technology, says human minds are no match for the sophisticated attention-grabbing algorithms built by Facebook Inc., YouTube and Twitter Inc. and that these companies’ entire business models need to change. “We’re all trapped inside this system,” Harris said.As long as the goal of these companies is to maximize our time spent on their platforms so they can sell more ads, misinformation, outrage and conspiracy theories will continue to proliferate, simply because they’re more engaging than the truth in many cases, he said.The recent trend of employees at these companies banding together to try and force changes from within is the fastest way to get these companies to alter their practices, he said. Recent examples of this from Google and Facebook give him hope.(Updates with comments from Compass CEO)\--With assistance from Gerrit De Vynck, Vincent Bielski, Eric Newcomer, Gerry Smith, Candy Cheng, Alistair Barr and Kartikay Mehrotra.To contact the reporters on this story: Patrick Clark in New York at email@example.com;Kiley Roache in New York at firstname.lastname@example.orgTo contact the editors responsible for this story: Jillian Ward at email@example.com, Molly Schuetz, Andrew PollackFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
Shopify released its third quarter earnings report Wednesday. While it topped one million merchants, it posted a loss on earnings per share. Yahoo Finance's Adam Shapiro, Julie Hyman and Emily McCormick talk to Harley Finkelstein, Shopify Chief Operating Officer.