GE is breaking up 💔

November 10, 2021 GE is breaking up 💔 Good morning traders, Welcome back to The Daily Setup. Markets were seeing red yesterday, as all three major indices fell over 0.30%. Here’s what’s on the docket today: - GE is breaking up - Roblox gains over 40% - New Relic gains 38% QUICK REQUEST: If you found this email in your “promotions” tab in Gmail or junk folder, that’s because we just switched our email platform. - Gmail users: If you’re on your phone, hit the 3 dots (…) at the top right corner and click “Move to” then “Primary”. If you’re on desktop, drag & drop this email into the “Primary” tab. - Apple mail users: tap on our email address at the top of this email and click “Add to VIP” Lastly, we’ll be taking Thursday off in observance of Veterans Day, but will be right back in your inbox Friday morning. Now that we’ve got that out of the way, let’s dive right in. Jeff Roblox, GE, and Luminar BIGGEST MOVER This One’s for the Kids Roblox (RBLX), a video-game company that offers a platform for its users to design and interact in a virtual world, skyrocketed Tuesday after releasing earnings that beat both top and bottom line estimates. The company’s stock, which has been trading between $70-$90 over the past 3-months, jumped [43.79% to close the day at $110.72](. - [Adjusted Q3 EPS]( came in at a loss of $0.13/share on $637.8M in revenue vs. analysts’ estimates of a loss of $0.14/share on $636.5M - Roblox is one of the world’s most popular gaming sites for children - Daily active users grew [31% to 47.3M during the quarter]( - Users spent 11.2B hours on the platform, of which 11B of that was spent by my 7-year old son. - Between October 28-October 31, the platform experienced a [widespread outage]( that lasted roughly 70 hours, will cost the company approximately $31M in Q4, and left my son in a catatonic state that was a bit touch and go over the Halloween weekend. As the term “metaverse” gets thrown around a lot these days as some new concept, it’s worth noting that Roblox, according to CFO Michael Guthrie, “has been a pure-play company focused on connected virtual worlds for 17 years.” This fact alone makes the company a potential frontrunner in the race to create an actual metaverse, or at the very least, be positioned to continue capitalizing on the concept. Next time you’re at your local ice cream shop, ask a group of kids which company they are more familiar with, Roblox or Meta? On second thought, don’t do that…it’s creepy. Just know that a company that appeals to millions upon millions of kids has a good chance to continue to grow as they themselves grow older. I think it’s best if we go our separate ways General Electric (GE) made headlines Tuesday by sharing plans to [split up into three separate companies](. The three musketeers, errr, businesses, will focus on aviation, healthcare, and energy. After building GE into a conglomerate powerhouse in the 80s and 90s (and laying off thousands of employees), Jack Welch turned the reins over to successor Jeff Immelt, whose 16 year tenure was marked by nothing noteworthy at all. But current head honcho H. Lawrence Culp Jr., whose name reeks of “do you know who my father is,” decided that it was time for a change. - The news was greeted favorably by Wall Street as shares initially popped 6% but faded over the day to close up 2.65% - GE plans to slow play the breakup, with a 2023 spinoff target for healthcare and 2024 for energy. - Shares have lost approximately 2% per year since 2009, which is what you like to see from a company business schools tout as a model for management framework. Analysts and traders will now have some reference points to compare the [new business units](, which should make their lives easier. Siemens may make for a good case study as well, since it underwent a similar breakup. Imagine a world where GE can be evaluated on the basis of making and selling products to customers rather than buying disparate companies, mashing them together, then selling them off again years later. What a time to be alive. So My Self Driving Car Won’t Crash? Luminar Technologies (LAZR) scored a big win Tuesday when the company announced that they were selected by Nvidia to provide their lidar technology for Nvidia’s autonomous driving platform. Shares of Luminar rallied almost 50% in extended trading hours Monday prior to gaining a respectable [14.6%]( during trading Tuesday. - Lidar, which is short for [Light, Detection and Ranging](, is a remote sensing method or laser-based radar that is used mostly by airplanes and helicopters. This would be helpful in cars because cars tend to crash when nobody is driving them. - Automakers believe that [lidar is needed for self-driving cars](, and the data coming in from lidar sensors needs to be understood and processed by the car’s computer, which is what Nvidia’s products will provide. - Luminar is going all-in on the autonomous driving market and announced that they will become the [standard provider to Volvo Cars]( for its yet to be released electric XC90 SUV. Great, now Volvo owners are going to start acting like Tesla owners. Society just can’t catch a break. Luminar reports their earnings after the close tomorrow. The stock is down 35.8% year-to-date. It will be interesting to see if the company’s earnings announcement can pair some of this year’s losses and give investors a taste of what’s to come. Keep LAZR in your watchlist because earnings could create volatility and volatility could create opportunities. Twitter, Palantir, and New Relic Other News You’re My Boy Blue Twitter (TWTR) is rolling out a [subscription service]( called Twitter Blue that will allow users to undo tweets and access ad-free articles from 300 news sites, just not articles behind paywalls. So it’s basically a delete tweet button and a web browser with an ad blocker. Simply revolutionary. - The service is rolling out in the U.S. and New Zealand markets and will cost $2.99 per month. - Another feature of Blue is the ability to customize the Twitter icon, which is apparently something people asked for. - Twitter is in search of different revenue streams since advertising makes up 89% of revenue according to the Q3 earnings report. Maybe they can figure out a way to monetize [Elon’s poll questions](? Palan-tears Despite a Q3 earnings report with strong revenue, cash flow, and sales growth, data-analytics firm Palantir saw their shares slide [9.3%]( on Tuesday, and not just because everyone hates Peter Theil. While PLTR’s business is generally growing, their government business for the quarter was [surprisingly weak](, which matters when you rely on them for, oh, I don’t know, [$823M contracts](. - This is tied to a more long-term structural issue. Palantir’s commercial business hasn’t been growing any faster than their government business and as long as that’s true, PLTR will be [valued as a defense company]( rather than a general-purpose tech company. For why the latter is better, see [Tesla](. - That said, PLTR’s fundamentals were still strong. Q3 revenue ($392M) was up 36% from a year ago, and they expect a 40% increase next year to [$418M.]( Also, while it’s not 100k electric cars (again, [see Tesla](), Palantir is adding clients for its commercial business. New Relic, new rules Cloud-based software developer New Relic blasted off Tuesday after posting Q3 earnings, with shares up over [38%]( from Monday’s close. It helped that NEWR crushed revenue expectations with $196M over a projected $182.2M and undercut an expected loss of [$0.13/share]( with $0.10/share. - More, you ask? Ok… New Relic also adjusted its outlook for fiscal year revenue to the $780M range up from the $730M ballpark. Damn, Big Data, we knew you were hot, but not that hot. - Well, there’s more behind the numbers than that. New Relic’s forecast is so sunny because they’ve decided to change their revenue model by charging customers based on the number of employees using the software rather than by subscription ([sorry, China](). That model will tend to work when [80% of your 14,300 customers]( suddenly have to pay a premium. [Image] RagingBull, LLC 62 Calef Hwy. #233, Lee, NH 03861 [Unsubscribe from all RagingBull emails]( Questions or concerns about our products? 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