DOW	36,231.66	-0.01%
S&P 500	4,677.03	-0.41%
NASDAQ	15,592.19	-1.10%
BITCOIN	$42,460.35	+3.67%

 

Time is Money for Hour Loop’s IPO

There was a lot of hype on Wall Street Friday after online retailer Hour Loop (HOUR) conducted its first day of trading on the Nasdaq. No one could be more hyped than CEO and VP (who are lovers, aka husband and wife) as the stock closed at $7.99, well above their initial offering of $4.50 a share. HOUR essentially acts as a middleman for Amazon and Walmart.com, buying in bulk directly from manufacturers, paying the big digital storefront fees, and then foisting them off onto American consumers. Basically, they’re a domestic Wish.com that mostly peddles its wares through Bezos’ Silk Road.

• The IPO transaction included an underwriter’s over-allotment option for an additional 225K shares and hit an intraday high of $10.33.
• HOUR reports that they experienced a profit of $2.3M and $31.4M in revenue through September 30th. This compares to their 2020 profit of $3.8M for $38.7M in revenue. Good thing Americans have such a penchant for cheap plastic crap.

The single-day growth of HOURs stock is definitely eye-catching but one has to wonder if this short-term hype will actually persist for the retailer as they stay on the market. HOUR currently sells products on Walmart.com and their own website, but sales on a little-known bookstore called Amazon make the bulk of their profits. That is all well and good, as Amazon isn’t going anywhere, but it does appear that HOURs margins are dropping. With that in mind, my thinking is that the stock might not be the best long-term commitment, especially when considering there isn’t much that HOUR does to stand out from the crowd.

 

Mixed Bag Madness: The December Jobs Report

To really put the lid on the awesome… year that was 2021, the Department of Labor has released its jobs report for the month of December. In a now well-established tradition, it turns out that analysts had been too optimistic about payroll growth for the month as they rose only 199k (contrast that to the Dow Jones estimate of 422k). While that number may have disappointed, the overall unemployment rate fell to 3.9%, a rapid decline from 5.6% back in June. Looks like J Pow has even less excuses to not raise interest rates.

• Revisions from the previous two jobs reports showed that an additional 141K jobs had been added to the economy over previous estimates. Maybe some of those analysts weren’t too optimistic…
• The share of people ages 25 to 54 (AKA almost everyone in the US) working in December was up to 79%. For context: in the before-times of February 2020, that number was 80.5%.
• Job creation was highest in hospitality with 53K jobs added to payroll, followed by professional and business services, and manufacturing with 43K and 26K added respectively.

With the big miss on jobs things don’t look great at face value, but the massive dip in unemployment rate combined with the employment rate for 25-54 year olds indicate that there’s light at the end of the tunnel. At the very least these numbers are the evidence the Fed needed to maintain its course for tapering in the new year, which should be good news for everyone. That being said, the data in this report was recorded largely before Omicron made its impact on the US so we’re not out of the woods just yet.

 

Gamblers Anonymous NYC Taking Reservations Now

Shares of licensed online sports betting operators, save for Fanduel which finished down 1%, were up between .5%-5.5% during Friday’s trading session. Why? Oh just some news that the New York State Gaming Commission will allow online sports betting in the Empire State starting on Sunday. Draftkings (DKNG), Caesars (CZR), Fanduel (SRAD), and Rush Street Interactive (RSI) could commence operations in the state no earlier than January 9th at 9am, while Bally’s (BALY), Bet MGM (MGM), and others will be approved on a rolling basis.

• Up until this point, New Yorkers could only place sports bets in person at casinos, or feel like even bigger degenerates by crossing state lines into New Jersey just to place a bet on their phone.
• Speaking of Jersey, it’s estimated that 90% of their wagers are placed online, thus allowing Jersey Shore types to gamble from the comfort of their own tanning beds.
• Sports betting in New York will be taxed at 51%, and they’ve estimated that $482M in annual tax revenue will eventually come from mobile sports wagers.

This isn’t the poker craze of the early 2000s, which eventually dwindled in popularity due to fraud and other regulatory actions… and resulted in a great song by O.A.R. As more and more states accept mobile sports betting and iGaming, shares of DKNG, PENN, and others should continue to see their revenue increase. I will be keeping gaming stocks on my watchlist as news of additional state approvals could lead to volatility and, thus, trading opportunities.

Share of the OG meme stock Gamestop (GME) went all ‘new year, same me’ last week, skyrocketing in after-hours trading Thursday and opening Friday’s session up more than 20%. The initial spike in the stock price, resulting in a 7.34% on Friday, came in response to a report that the company would be launching a marketplace for NFTs. Chairman Ryan Cohen previously hinted at this strategy during last June’s annual company meeting, while CEO Matt Furlong mentioned plans involving NFTs and crypto in the company’s last earnings call.

• Gamestop and other meme stocks have seen their stocks decline in recent months as the Fed has taken a more hawkish stance on interest rates.
• Several months ago, “internet sleuths” (read: adults still living in their parents’ basements) started noticing job postings for the company that contained words such as NFT, Web 3.0, and “used video games”.
• The turnaround plans for Gamestop have yet to show any significant results as its loss has increased year-over-year despite increasing revenue.

Since last January’s short squeeze in GME which saw the stock hit an ATH of $483, shares of the company are down over 70%. This is eerily reminiscent of the late 90’s when any stock that had “.com” associated with it would double or triple in value overnight. Most of those companies now cease to exist, and while the ending to the GME story has yet to be written, the company’s stock performance over the last year certainly does not inspire confidence.

Sinclair Broadcast Group (SBGI) announced Friday (hopefully via a tweet) that they had secured $600M to launch a direct-to-consumer (DTC) streaming app. The company also stated that they were nearing a deal with the NBA that would give them streaming rights to the 16 NBA teams that currently air their games on Sinclair’s regional sports networks (RSNs). Shares of SBGI closed Friday’s trading session up 7.57%.

• Sinclair also owns the streaming rights to 12 NHL teams and 4 MLB teams. Granted one of those MLB teams is the Tigers, so really only 3.
• Pricing for the streaming service will most likely vary by region with all signs pointing towards a “gambling centric” type app.
• If successful, Sinclair’s DTC streaming app could change the way sports are consumed and give leagues an improved revenue stream moving forward.

Shares of SBGI maintained key support in the $26-$27.50 range for most of 2021, before breaking support and making a low of $22.41 on November 30th. Friday’s announcement moved the stock back above the $27.50 level and will be the key point I will be looking for when considering a long position.

Other News Link Roundup

• Elon Keeps Austin Weird – Tesla’s Austin Factory is About to Kick off (link)

• Robots on the Range – John Deere Reveals Self-Driving Tractor (link)

• Pay No Attention to the Swedes Behind the Curtain – Swedbank got Caught up with some Dirty Money (link)

• It Pays For Itself – Tesla Owner uses Vehicle to Mine Crypto (link)

• Semiconductor Screw Up – Chinese Semiconductor Startups Flounder (link)

“When lambo?”, via @thecryptoles

DOW	36,236.47	-0.49%
S&P 500	4,696.05	-0.09%
NASDAQ	15,080.87	-0.13%
BITCOIN	$43,152.12	-0.35%

 

Let’s keep things civil

Hearing aid producer Eargo Inc turned up the volume yesterday thanks to an announcement that the DOJ’s criminal investigation has been closed and referred to its civil division. $EAR (of course it is) rose 85% in premarket trading before leveling off to a 59.65% gain on the day. Eargo’s stock tanked 68% in a single day back in September when the criminal investigation was initially announced, so this jump is just playing catch-up.

• They’re still hurting… bad. Even with this rebound, Eargo’s stock hovers around a pitiful 10% from its February 2021 glory days of $76.52/share. And after news broke that the DOJ was getting their Sherlock Holmes on, the company laid off 25-30% of its workforce due to the resulting dropoff in demand for its products.
• The exact details of the probe are unclear, but they concern roughly $44M of insurance money Eargo received from the federal government on behalf of its customers covered by the Federal Employee Health Benefits program. It seems that some of this money might have disappeared.

It ain’t over till it’s over. A probe in the DOJ’s Civil division is still a probe, albeit a less ominous one, which injects some inherent noise from a market standpoint. Granted, they can just turn their hearing aids down if they don’t want to hear it. Listening device jokes aside, Eargo’s fundamentals are still strong and before all this probe business, their growth prospects were too. If Eargo ever gets fully out of the woods in the legal department, then to my eyes and ears their potential is there.

 

Tech takes a tumble

It’s been a rough week for tech stocks. The past few days have seen the most intense market selloff since the 2008 financial crisis, with the Nasdaq incurring its worst daily and two-day drops in nearly a year. Though losses were widespread, the vast majority hit tech as hedge funds continued their December practice of shedding high-growth, high-value assets (i.e software, chip stocks).

• The driving force behind this overdue correction is likely the Fed’s announcement that they’ll move up the rate hike timeline, potentially beginning as early as March.
• But among this sea of red, there’s still some good news. Treasury yields rose for the fourth consecutive day Wednesday, causing the 10-year Treasury yield to briefly hit 1.751%, its highest point in two years.

Some sources believe that like all selloffs, this one creates an excellent buying opportunity. In this case, those sources would be playing the long game, because stocks are likely to fall when the rate hikes hit and would only recover after quelled inflation fears improve market sentiment. If I decide to go that route, the lowest-risk options are probably my mainstays with excellent recent growth records, like Apple and Microsoft.

 

Gonna go to Home Depot, maybe Bed Bath

& Beyond if there’s time

Bed Bath & Beyond (BBBY) had itself a nice little Thursday. The company missed revenue and earnings estimates, reported that supply chain disruptions cost them $100M and they struggled to keep items on shelves and that the challenging environment would continue into 2022. So naturally, the stock was…checks notes, up 8% on the day. It appears that those crazy Reddit kids are up to their shenanigans again.

• BBBY lost $2.78 per share vs. analysts’ expectations of a breakeven quarter, and sales of $1.88B fell well short of the estimated $1.95B.
• The WallStBets crowd expressed enthusiasm for the company online and might have been working their magic in their Robinhood accounts as the stock was up 23% at one point during the day.
• I would make a boxing analogy to describe the fight between fundamentals and meme-ability, but the current state of the sport is Youtubers fighting D-List celebrities and former athletes, which may in fact be an appropriate comparison after all.

The Reddit army may be closing in on its next short squeeze target, but BBBY has a lot of short-term and long-term headwinds and a shrinking cash position, so traders may have a ball with the big price swings. On the bright side though, yours truly used an expired 20% off coupon the other day on a wooden pizza paddle to go with my sweet new Ooni pizza oven.

Good news, the country must be out of serious problems because Congress is going to devote time and energy to studying the environmental impact of Bitcoin mining. Computers using electricity to solve math problems is apparently a threat to the Republic, so the Oversight and Investigations Committee in the House will hold hearings to really get to the bottom of things as only they can.

• The witness list is still being determined and a date for the hearing has not been announced, but late January is expected.
• Last month Senator Elizabeth Warren sent the CEO of a New York mining firm a letter expressing concerns about energy use, which was undoubtedly sternly worded. Senator Warren also expressed concern that the punch at the homecoming dance was spiked when she was in high school.

Bitcoin has had a rough few weeks and has been on a downward trend lately, hovering around $43K. Increasing regulatory attention is something that traders should pay attention to since Congress is definitely, absolutely, 100% concerned about the environmental impacts of Bitcoin mining and not the potential for competition with the U.S. Dollar.

The CW Network, which you probably have to look hard for to find in your channel listings, could be up for sale. Current owners AT&T (T) and ViacomCBS are exploring a sale of the jointly owned network and Nexstar Media (NXST) could be the buyer. AT&T has been dismantling its media empire to focus on core internet and phone businesses and The CW could be the next piece to go.

• The CW is known mainly for its DC comic book properties such as Arrow and The Flash, which we’re told are watched by real human beings. Who knew?
• Nexstar owns 199 TV stations across the country and operates its own networks such as Newsnation, Antenna TV, and Rewind TV.
• Other parties may be interested in The CW, but talks with Nexstar are thought to be the farthest along.

This news comes on the heels of AT&T’s deal to combine WarnerMedia with Discovery so media looks to be a hot sector for M&As in 2022. If you hadn’t heard of Rewind TV, a solid few minutes of thorough investigative internet research tells us that it shows classic sitcoms from the 80s and 90s such as Family Ties, Who’s the Boss, and Growing Pains, all of which had absolute bangers for theme songs.

Other News Link Roundup

• Memestocks get memerocked – GameStop, AMC, and others slump in the new year (link)

• Tricky dick – Richard Clarida’s shady financial dealings are worse than he initially admitted (link)

• 5G apocalypse delayed two weeks – Verizon and AT&T agree to postpone 5G rollout amidst fears that interference will cause flight delays, crashes (link)

• Let’s run it back – Banks set to repeat 2021’s M&A boom (link)

• Funemployed – jobless claims rose to 207k on week ended Jan 1 (link)

• “I guess The Daily Setup isn’t selling yet” – The NY Times buys The Athletic (link)

 

How you should treat work today, via @sunday.scaries

DOW	36,585.06	+0.68%
S&P 500	4,796.56	+0.64%
NASDAQ	15,832.80	+1.20%
BITCOIN	$46,283	-2.22%

 

Genprex is besties with the FDA

The Doctor is In Genprex Inc (GNPX) traded seriously high on Monday after the company announced they had received FDA Fast Track Designation (FTD) for their primary asset, REQORSA. This is really great news for the gene-therapy company, but less good news for Merck & Co (MRK) since Genprex has been approved to test REQORSA in non-small cell lung cancer patients whose disease progressed after treatment with MRK’s own Keytruda. If they pull this off, GNPX could be laughing all the way to the bank as they move with confidence into their Acclaim – 2 Trials for REQORSA.

• The stock saw +167% growth by market close on Monday, the most growth since February 2021.
• GNPX is looking to be the FDA’s golden boy as this is the second time they’ve received FTD for REQORSA. Previously they had received FTD to follow up on the shortcomings of Astrazenaca’s Tagrisso treatment in patients with unresectable stage III.
• FDA Fast Track Designation status also indicates that Genprex has a closer connection to the administration and that if they see success with their REQORSA trails, further developmental milestones and possibly its approval could be fast-tracked as well.

There is no doubt that the news of gaining their second FDA Fast Track Designation puts the wind into Genprex’s sails, signaling there’s confidence in REQORSA’s ability to tackle niche cancers. With that in mind, Genprex’s stock history does reveal a series of rises and dips so of course nothing is a guarantee. That being said, receiving their second FTD is a serious milestone in their development and could signal a healthy future for the company.

 

Elon adds a record number of

fanboys

Shares of Tesla (TSLA) rallied 13.53% on Monday following a record Q4 delivery report that blew away analysts’ estimates by more than 17%. Big numbers aside, quarterly delivery reports are a strong gauge of the company’s financial health and performance. While Tesla is the most well-known, Chinese EV makers NIO, XPEV, and LI also reported record delivery numbers in the fourth quarter.

• Tesla’s Q4 deliveries came in at 308,600 vehicles vs. the average analyst estimate of 263,000.
• The quarterly delivery numbers include all Tesla models and have increased in six consecutive quarters.
• While vehicle manufacturers across the globe felt the impact of chip shortages, and not the kind my kids cry about when there’s no more Cool Ranch Doritos in the pantry, Tesla reprogrammed software to use less scarce chips like Pringles…I assume.

Tesla could continue to see growth as their Austin and Berlin factories ramp up with new technology and teams in 2022. That said, the increase in competition from other startup EV makers as well as old stalwarts like GM and Ford could cause a slowdown in that growth. TSLA took a hit starting in early November when Elon started selling a 10% stake in the company but has quickly rebounded over the last two weeks. The stock’s ATH of $1243.49 put in on November 4th is within sight and could be a pivotal price for both buyers and sellers alike.

 

Eden 2.0 – Apple Hits 3T Market Cap

It may have been for just a fleeting moment but during Monday trading, Apple (APPL, if you didn’t already know) became the first US company to hit a market cap of $3T. “Tim Apple” must be laughing on a throne of melted blackberries (RIP In Peace) as Apple beats Microsoft, Amazon, and Google all to the punch. This moment reveals how big tech has emerged from the Covid years as the biggest leaders in the market.

• Apple has always been treated as a safe investment (at least in the 21st century) but their sales growth in Q4 of 2021 was seriously robust. The iPhone franchise has maintained its relevance and their services have grown exponentially with 25% growth YoY, delivering over $18B in Q4.
• Investors are also potentially bullish on Apple’s ability to grow into new markets, with their plays for the VR/AR and EV markets hopefully bearing fruit as those technologies become the standard.

While hitting $3T market cap for an instant is largely symbolic, this does demonstrate Apple’s dominance in tech while heralding the staying power in the face of market uncertainty (no duh). Sure, the Fruit is facing some of the biggest regulatory pressure in its history and significant competition in VR and EVs, but they’re freakin’ Apple… unless the iPhone becomes the most hated phone in the world, they’ll still be on top.

In case 2021’s growth of non-fungible tokens (NFTs) wasn’t bizarre enough for you, 2022 is looking to offer you real estate in the metaverse. You hear that millennials…. You can finally own property.

Let’s first back up and make sure we’re all on the same page. NFTs are, “a unit of data stored on a digital ledger, called a blockchain, which can be sold and traded.” One example would be a collection of sh*tty drawings from a 10-year old that somehow has made them a millionaire and has caused my self-esteem to sink even lower than it already was. The metaverse is, “defined as a unified 3D virtual world where users can conglomerate via their digital selves (i.e., avatars that are more attractive than they really are) and perform complex interactions.”

• The idea of virtual real estate isn’t new, but has gained in popularity since Facebook rebranded itself as Meta.
• Investors will be able to deploy their money to purchase land in the metaverse via NFTs.
• According to DappRadar, sales of virtual land since the start of December have garnered $105M. Gaming platform Sandbox led the charge by bringing in $86M of that total.
• The most popular tokens to buy land in the metaverse are Ether, Axie Infinity, Sandbox, Gala, Enjin Coin, and Decentraland. Curious naming on the last one…

The old tried and true methods of investing have been turned on their head over the last few years. We can all be cynical and say that digital currency, NFTs, and the metaverse will all fail. However, I think it’s time to recognize that while many companies, tokens, etc associated with NFTs and the metaverse will indeed go by the wayside, there will be plenty that will thrive. Have no fear because we at The Daily Setup will continue to keep you apprised of all things related to this new frontier.

Jana Partners, the activist investor that has been stirring sh*t up with Macy’s and Nordstrom, was back on their bullsh*t Monday with customer service platform Zendesk (ZEN). ‘New year, same me’ I suppose. On November 2nd, we wrote about Zendesk’s plans to buy Momentive Global (MNTV), noting that it was possible for both companies to finish lower on the news because investors either felt that the deal did not make sense or was too expensive. Well, yesterday Jana Partners told us how they really feel about the deal.

• Jana criticized Zendesk for deciding to issue equity at an “artificially depressed” price prior to reporting strong earnings.
• They believe if the deal goes through, the payoff would be minimal and would add a “meager 1% to Zendesk’s top line growth and about 10% to (its) future stock price”
• Jana expects shareholders to eventually vote against the deal and has asked for the company to terminate the deal immediately so they can focus on more profitable opportunities.

Zendesk and Momentive are both down roughly 8% since the deal was announced nearly 3-months ago. In response to the Jana news, Zendesk fell by 0.73%, while MNTV gained 0.43%. Based on its successful track record, it seems that what Jana Partners wants, Jana Partners gets. The question is, if the deal is terminated, do both companies go on an extended rally just as they went on an extended selloff following the October announcement? Keep both ZEN and MNTV in your watchlist as we wait for clarity on the situation.

Other News Link Roundup

• Bad Medicine – Bayer Investors Begin $25B Class-Action (link)

• Soaring to New Heights – Airline Stock Surges Despite Canceled Flights (link)

• Thanks Obama – Obama-Era Labor Policies to Return (link)

• “I’m MEEEEELTING” – Gold Hits New Lows (link)

• Fifty-Fifty – 50% Chance There’s a Rate Hike in March 2022 (link)

•  

Be careful what you buy, via @loganbartlett