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Wish stock tanks, SoFi profit outlook disappoints, Honest misses on revenue

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Myles Udland, Brian Sozzi, and Julie Hyman break down some of Friday’s early market movers, which include: Wish suffering a quarterly loss and drop in revenue due to a slowdown in growth, SoFi lowering its outlook despite doubling its revenue for its latest quarter, 23andMe posting its first quarterly earnings that saw the company expand its customer database to 11.6 million, and Honest’s stock plunging after missing estimates on revenue.

Video Transcript

[MUSIC PLAYING]

JULIE HYMAN: Well, the opening bell coming here in just a few seconds on this Friday the 13 morning, as we set up potentially for more records for the major averages, or the S&P and the Dow at least. And interesting as I look at the calendar for who's ringing the opening bell this morning. It's a SPAC. And not a company that's being bought by a SPAC, but an actual SPAC. We haven't seen one of those in a little while. It's slowed down. It's called World Quantum Growth Acquisition Corporation, and Xavier Rolet is the CEO. He is ringing the bell there this morning. Guys, did you miss, did you miss all the SPACs ringing the bell?

BRIAN SOZZI: That sounds exciting, very exciting.

[BELL RINGING]

JULIE HYMAN: Sure.

MYLES UDLAND: I don't know.

BRIAN SOZZI: Growth company.

MYLES UDLAND: Still doin' this?

JULIE HYMAN: We're still doin' it.

MYLES UDLAND: Is there anything to buy?

JULIE HYMAN: All right, listen.

MYLES UDLAND: What are they going to buy?

JULIE HYMAN: I can't wait to find out. Let's get to some movers, shall as, we get underway this morning, some more movers. We talked about the biggies at the top of the show. Disney, Airbnb, DoorDash. But there's some others that bear mentioning, and we've got sort of a combination, speaking of SPAC, so sort of new issues, meme stocks. Wish definitely catching my eye, because this has been a meme stock periodically. And look at those results, guys. Earnings per share missing by a pretty wide margin, or I should say the loss coming in wider than expected. Revenue missing by a wide margin as well.

And I think my favorite comment this morning, this is an e-commerce company. My favorite comment this morning came from an analyst over at Credit Suisse. The analyst there, Stephen Ju. He says the company is likely in for a multi-year turnaround. We don't anticipate user growth to really recover until 2023. And for MAUs to return back to 2020 levels until 2026. But my favorite thing might be that he still has an outperform rating on the stock, as he says, we hunker down for the long-term recovery. That's pretty darn long-term, 2023 and 2026.

BRIAN SOZZI: Well, you know it's going to be bad earnings day, guys, when you start off your annual your letter to shareholders as Wish did, noting demand has slowed and they're not, they're being unable to retain customers here. And really, this is not Wish, this has been a death wish stock. Ever since the company IPO'd in December 2020, the IPO priced at $24. Its first tick when it opened in December 2020, $22.75. The stock is at about $6 right now. It's been a horrible company to invest in right from the get-go. Results have not lived up to expectations. Fun fact too, Ari Emanuel, the power broker, he's on the board here. So maybe not a good day for him today.

MYLES UDLAND: Yeah, I mean, we are working hard to improve our performance and are confident that Wish will emerge as a stronger business. That's fine. There's a time for a turnaround in every business. Not every company goes up and to the right. And even the most successful companies have had these moments. But Brian Sozzi, as you mentioned, it is tough for Wish to have that so soon after having come public and so soon after having come public at evaluation about four times where the stock trades today. So sold to you, as they like to say in markets.

BRIAN SOZZI: Myles, the red flag to me when they became public, and maybe I tweeted out, I went on the site and the first thing I was presented when I went on the site was a pair of brass knuckles. I don't know why that selected it to me, but I went back to the site today and today, they're still recommending me buying a pair of brass knuckles. Except these brass knuckles are shaped like a cat. Very weird stuff. Not my type of site. Not surprised to see the stock at $6.00 and change after pricing at $24.

JULIE HYMAN: I don't even know what to say. Brass knuckles shaped like a cat. Like, who's, who's the market for that?

BRIAN SOZZI: Apparently nobody.

JULIE HYMAN: Who is it possible--

BRIAN SOZZI: But apparently me.

JULIE HYMAN: --Market for that? All right, let's move on to SoFi, shall we? That company, fintech company, coming out with also a wider loss than had been estimated for SoFi, although revenue did beat estimates. The company noting in its release that its GAAP, how did they put this? GAAP net revenue just about doubled. I know you followed this company pretty closely, Brian. What do you make of these numbers?

BRIAN SOZZI: A lot of the momentum and a lot of the stats that they have been piling up or crowing since they debuted, that for the most part, continued. So eight quarters of member growth, that was a good number in their quarter. Members were up 113% year over year. That was a good thing. Four positive quarters in a row of adjusted EBITDA profits, that is a good thing. Again, another company, just like an Airbnb, to a lesser extent Disney, but just like another Airbnb here, that the market is concerned about their forward outlook.

Not because of the COVID Delta variant. Really because of the mortgage or the refinancing market, because of the CARES Act. Not the mortgage market, the loan servicing market, which is so far its bread and butter in business. Part of the CARES Act, students are allowed to delay their loan, student loan repayments, and that is impacting SoFi's business here. And the market is saying, you know what? If it's impacting the third quarter, it could very well impact the fourth quarter and perhaps the early part of 2022.

JULIE HYMAN: All right, moving on to another one of these companies that has relatively recently come public, 23andMe. Of course, that one was a SPAC deal and came public. And the company, it's a little tricky here, because 23andMe does not have enough analyst coverage and analyst estimates yet to know how they did versus estimates. However, the revenue, as you can see there, came in at $59 million, which was a 23% increase year over year, adjusted earnings per share of $0.25.

A couple other highlights here. The company said it expanded its customer database to 11.6 million genotyped customers. And basically is offering different products that give you insight into your health based on your genetic makeup. One of them, for example, a medication insight report that helps customers understand how a particular genetic variant they have might alter their body's response to certain commonly prescribed medicines.

The company says in fiscal 2022, its revenue will be $250 million, $260 million, and will post a net loss of 210 to $225 million. Stock not doing much here, which is interesting. So I don't know if you guys have any observations here on 23andMe.

MYLES UDLAND: Well, stock doesn't need to do much. It already broke the buck.

JULIE HYMAN: Right.

MYLES UDLAND: I mean, when you're a SPAC, [AUDIO OUT] below 10, you're underwater there. I mean, look, I think it's a very cool business. I have not done 23andMe, but they were talking about their subscription product where basically they keep your DNA on record, which I'm not sure how I feel about that. That's why I haven't sent it in. But then over time, they'll continue to give you more information. They're talking about updates on cat allergies. They've got an eczema report. They've got also, they'll give you more information on you as they get it.

At the same time though, this is, they're trying to subscriptionize something that is ultimately a one-time purchase, and I think we all found out two or three years ago the holiday season, everybody bought DNA kits for family members, most of which went unused. And as we found out during their SPAC process, revenue has been declining.

And I think getting it back onto a growth trajectory with a widening; so OK, revenue's up, but the loss widens. I think some challenge is here for what the story is going to be. And again, I think SPAC peaked, well, the SPAC before it was 23andMe peaked at like $15. But when the deal was announced, it went up to $12 or $13 bucks. So we're almost cut in half from those levels. So not a ton of enthusiasm for this one.

JULIE HYMAN: Yeah, and this remember was the Richard Branson SPAC that took this thing over. Obviously, I think safe to say you're not the only one who doesn't necessarily want to send in your info to that company. And then finally, I want to mention Honest Company. It's another one that came public right relatively recently. This Jessica Alba's personal care business.

Wider loss than estimated here. Revenue missing here. Couple of things it seems like are going on at Honest Company. The company talked about a decline in demand for sanitary products. Who knows if that kind of thing will start to pick up now along with the Delta variant. Unclear, but that's not something that they talked a lot about. Household and wellness revenue down 6%. Skin and personal care was the standout to the upside. It was up 16%. Revenue in that area up 16%.

And the company also talked about that in the earlier days of the pandemic, people were hoarding things, like wipes, like diapers, for example. And so that had given a boost that they are now not seeing repeated. That is kind of smoothing out, if you will. Those Honest shares, whew, not breaking buck yet, although this was an IPO, not a SPAC, to be fair. And I don't recall their IPO price, to be perfectly honest. But the shares are down 26% in today's session. So we'll keep an eye on that one as well.