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- NativePath | February 27th, 2024
NativePath | February 27th, 2024
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Today’s report is brought to you by NativePath, restore your skin, hair, nails, bones, & joints with Grass-Fed Collagen.
[ good morning ]
Here’s everything you need to know today
With a little more inflation data set to print on Thursday, the market is allowing itself a little more confidence as more firms post strong revenue beats while longtime losers are finally turning a corner.
Even if interest rates are held higher for longer—investors are showing a lot of confidence in a market full of firms rapidly transforming their operations into leaner, more profit-focused shops.
The only question right now is if consumer spending can stay strong while wages rush to catch up with higher prices. Sure, there are some signs that U.S. consumers are running out of steam, but critical expenses like gasoline are continuing to stay low enough to give them a fighting chance.
So, investors are shifting back to their classic focus on winners and losers. Some names hit a critical inflection point today and the market is ready to buy in droves. Meanwhile, other retail names still can’t generate the results investors need to stay on board long-term. Let’s take a look at some of the trends powering today’s price action and try to get a more granular understanding of where investors are rushing to today.
Markets at a Glance
*Market data based on standard trading hours and calculated close to close
[ retail ]
Macy’s Defies Activists with Bold New Promises
After an entire year of losing—can the retail OG actually pull off a turnaround?
BREAKING NEWS
Macy’s still hasn’t managed to get their revenue growth back on track and now the company has announced a massive transformation planned for 2024. Will this be enough to bring investors back to the stock before activists mount a takeover?
WHAT HAPPENED
Despite an entire year of declining revenue, Macy’s has managed to get costs under control enough to net a 58% stock price recovery in the last 6 months. Despite that, Macy’s revenue and profit results for Q4 came back pretty disappointing.
Macy’s generated a strong $2.45 EPS from $8.12 billion in revenue for the holiday season. While Macy’s crushed earnings expectations—revenue came in just shy of what The Street wanted to see. More importantly, revenue fell 1.7% YoY. That adds up to an entire year of revenue declines.
KNIVES OUT
Macy’s read the writing on the wall here and made their entire Q4 earnings presentation about all the changes the company will make to boost revenue and recover even more profits through 2024.
Basically, Macy’s will close 150 underperforming stores and prioritize the expansion of their luxury brands like Bloomingdale’s and Bluemercury. Regular consumers simply aren’t buying enough from Macy’s locations and the brand needs a big change. Macy’s also plans to streamline operations as they push further into digital-first and consolidate their fulfillment centers. While Macy’s Q1 guidance came back weak as well—the cost savings they are hoping to pull off in 2024 can definitely slow the bleeding here.
WHY IT MATTERS
There is a tremendous amount of activist pressure on Macy’s stock right now with Arkhouse still pushing for board seats along with an offer to fully take the firm off the public market. Macy’s has to put out bold plans like this or their shareholders will gladly welcome and vote for a change in ownership. While these Q4 results are disappointing, they do signal that Macy’s has a real plan to survive and thrive through 2024. Will it be enough? Right now, investor views are mixed. Despite dropping nearly 2% in premarket action, Macy’s stock is now leveling out as The Street digests their new plan. The price action here is about to get a lot more interesting.
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Sectors at a Glance
| Sector | Day | Month | Year |
|---|---|---|---|
| Communications | -1.46% | 1.18% | 46.49% |
| Consumer Disc. | 0.31% | 5.71% | 24.99% |
| Consumer Stap. | -0.40% | 2.27% | 1.94% |
| Energy | 0.35% | 2.54% | 1.69% |
| Financials | -0.50% | 4.07% | 11.42% |
| Health Care | -0.51% | 5.52% | 13.85% |
| Industrials | -0.15% | 5.93% | 18.24% |
| Materials | -0.60% | 4.68% | 5.63% |
| Real Estate | -1.14% | -0.52% | -1.01% |
| Technology | 0.10% | 1.73% | 49.49% |
| Utilities | -1.97% | -0.83% | -9.26% |
*Market data based on standard trading hours and calculated close to close
[ healthcare ]
Hims & Hers Soars on Profit Projections
The DTC health champ is proving a more personalized model
BREAKING NEWS
Telehealth standout Hims & Hers shocked the markets by posting a slim profit for Q4 and predicting a profitable year in 2024. How did they pull it off?
WHAT HAPPENED
Hims & Hers has finally pushed back to positive growth after a tumultuous 2022 and 2023. The telehealth company has begun to drive a lot of great revenue growth thanks to offerings like Ozempic and Wegovy on their platform. Hims and Hers smashed expectations by generating $1.25 million in net income from $246 million in revenue. Those revenue numbers crushed The Street’s projections and represent 47% YoY growth. More importantly, Hims & Hers also managed to boost their subscriber base 48% YoY to 1.5 million members.
MORE TREATMENTS FOR MORE PEOPLE
Hims & Hers is only going to expand on those efficiencies in 2024 as they continue to develop a more personalized strategy for bringing new medicines to their subscribers. It’s not just hair loss, ED, and weight management driving growth at the telehealth titan—soon it will be everything from food replacements to tailored supplements. All of this will be mediated by a scaled tech platform that allows cheaper access to various health products.
WHY IT MATTERS
Right now—the whole ballgame in this market is focused on margins. Hims & Hers has established a profitable process that now can compound growth by adding more products to their pipeline. Management now projects that they’ll have a fully profitable year in 2024 as growth continues to accelerate. While other DTC names from the 2010s have collapsed without a constant influx of cheap capital—Hims & Hers has kept operations tight and is experiencing strong organic growth. Wall Street believes in that growth—causing Hims & Hers stock to surge over 15% in early trading.
[ communications ]
Zoom Pops on Earnings Beat
Can the COVID King carve out a new niche in the hybrid workforce?
BREAKING NEWS
After a complete rollercoaster in the last year, Zoom managed to post a revenue and earnings beat that finally has a critical mass of investors ready to believe again. Let’s break down the details:
WHAT HAPPENED
Zoom generated a $1.22 EPS from $1.15 billion in revenue. Finally, Zoom is back on a yearly growth path. Last year, Zoom burned through a $104 million net loss generating slightly less revenue. So, the market is mainly reacting to a more efficient shop as investors pile back into the stock.
PROVING THE TURNAROUND
Zoom management stated that revenue would have grown faster if it wasn’t for small inefficiencies stemming from a complete sales reorganization the company completed in Q4. This reorg has transformed Zoom’s cost basis and has them on the path to consistent profitability. Sure, revenue growth for Q1 and the full 2024 year is still only projected to hit single-digit growth, but this is a massive improvement. While Zoom will never achieve anything like their miracle run in 2020 where the firm experienced 5 consecutive quarters where their revenue more than doubled —the communications firm still has a lot more growth on the table.
WHY IT MATTERS
During this latest period of bull sentiment, Zoom has been one of the rare software names to decline. This latest proof of profitability is all Zoom needs to calm the volatile price action that has plagued the stock since they peaked in 2021. Zoom probably won’t revisit those highs ever again—but enough investors are now convinced that this is a real company with real long-term growth prospects. Zoom stock popped 8% in early trading as a result.
Extra Moby Snacks
Bitcoin is breaking away from the wider market—surging to over $56,000 per token in early trading. That’s an 11% rise this week alone. After a more gradual rise in the last month, BTC hit a critical $53k level yesterday afternoon. This caused a surge of trading volume on most Bitcoin ETFs, which made the rally even more parabolic.
It is just not a good time in the gaming industry as Sony added to a recent wave of layoffs and delays by cutting 8% of its Playstation workforce—or just over 900 workers. These cuts are despite Sony outperforming the likes of Microsoft and Nintendo in recent quarters. Efficiency comes even for the winners in this market.
TOGETHER WITH
Today’s report is brought to you by NativePath, restore your skin, hair, nails, bones, & joints with Grass-Fed Collagen.