No Ad | March 8th, 2024

MARKETS AT A GLANCE

GOOD MORNING
Here’s everything you need to know today

With jobs data coming back a little hotter than the Street wanted to see, the stage is set for a blockbuster inflation print next week. The spicier print wasn't enough to completely kill yesterday's gains, but it sure isn't helping either.

Until we get concrete inflation numbers though, we're caught in a daily roller coaster where major indices close trading higher and lower in equal measure. We may have dodged a shiny new banking crisis for now, but the Street needs a lot more information before we can properly pick a direction for overall price action.

So, the zero-sum game is in full swing. Let's check out today's major winners and losers and see if we can't determine a pattern here.

ELECTRIC VEHICLES
Rivian Wins the Price War
Rivian's stock is popping thanks to the surprise announcement of two cheaper models and billions worth of cost-cuts

BREAKING NEWS
Rivian just tore every page out of the Steve Jobs playbook by stunning the market with two new affordable models. Let's unpack the euphoria that's sending the stock higher.

WHAT HAPPENED
Rivian fell in recent months thanks to declining EV demand. The company recently ramped up construction of their massive new factory in Georgia a little too fast given the current climate. In response, Rivian is now moving production of their cheaper R2 vehicles to their factory in Illinois. Rivian expects to save over $2 billion from this shift. Not only that, but their R2 vehicle will hit the market sooner now.

JUST ONE MORE THING
Rivian surprised the market by showing off one of their upcoming R2 vehicles, an SUV that will cost around $45,000 when released in early 2026. The EV company then ramped up that surprise even more by unveiling their R3 vehicle class, which is also projected to be affordable. This signals that Rivian is far ahead on their production goals and that caused their stock to erupt yesterday and today.

WHY IT MATTERS
The EV market is all about affordability and efficiency right now. Rivian might not be making the same moves that Tesla is in terms of making their cars more affordable, but everything helps right now. Rivian demonstrated responsible management and the Street projects that they can easily generate better capacity via their Georgia plant when the EV industry actually has demand that meets those production needs. The cost-savings are the biggest growth driver for Rivian right now, but a better direction for the future helps tremendously as well. Rivian stock added another handful of percentage points in early trading after the stock jumped over 13% yesterday.

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RETAIL
Costco Sounds Retail Alarm
Costco's strong profits weren't enough to offset declining revenue. How bad is it?

BREAKING NEWS
Costco stock stumbled hard after the retail giant revealed slowing revenue in Q4 2023. Are people buying less or did the Street expect too much?

WHAT HAPPENED
Costco still performed really well during the holiday season. They generated a massive $3.92 EPS from $58.4 billion in revenue for their Q4. While revenue still rose decently year-over-year, the Street expected more than $59 billion from the retailer. Companies at Costco's scale are generally easier to predict for Wall Street analysts, so even though this represents rising revenue, it's a bit of a red flag.

RARE MISS
Costco stock has been on a near-parabolic run for the last 6 months thanks to consistently outperforming Wall Street estimates. This miss can either be a sign that analysts are finally fairly rating Costco's growth prospects, or it could be the canary-in-the-coal mine for consumer spending that's starting to crack.

WHY IT MATTERS
With jobs numbers coming back a little too hot and fears that inflation will stick around long enough to force us into a recession, the Street is overly sensitive to anything related to consumer spending. Investors are going to be watching Costco's Q1 numbers way more closely now that the company has logged a rare miss on revenue like this. For now, Costco stock is simply returning to earth a little, falling over 3% in early trading after jumping 40% since September.

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FOOD
HelloFresh Loses Over $1 Billion
The meal prep king is in free fall thanks to bleak guidance

BREAKING NEWS
HelloFresh has become the latest pandemic champ to completely collapse thanks to an ever-bleaker growth outlook. Let's comb through the fallout of their over 40% crash today.

WHAT HAPPENED
HelloFresh appears to be in structural decline. The company reported EBITDA earnings of €448 million in 2023, which is a pretty sharp drop off from the €477 million they generated from operations last year. Even worse, that same number is projected to fall as low as €350 million as the company makes one last-ditch effort to reignite growth by ramping up new distribution centers. Revenue in North America was expected to offset all this risk and it simply did not deliver.

THE END IS NEAR
With food costs worldwide soaring for the past two years, HelloFresh and other meal-prep kit companies were some of the first major 'pandemic luxuries' consumers bailed on to preserve ever-tighter budgets. HelloFresh simply has not produced any efficiencies compelling enough to generate better earnings or stronger revenue. Analysts described this announcement as 'far bleaker' than anticipated. Not exactly what you want to hear from the Street.

WHY IT MATTERS
This is the single worst one-day performance ever for HelloFresh. With their annual report set for the end of next week, investors really don't see anything the company can do to arrest this decline. If HelloFresh can survive long enough to generate better revenue from these new distribution centers and higher-margin products, the stock may have a fighting chance in the long run. However, with the stock down over 90% since 2021, few investors have that kind of patience. HelloFresh shed over a billion dollars in market cap today, ending down over 40% in European markets.

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