👀 Tech Tumbles 👀

January 24, 2022 Good morning traders! Welcome back to The Daily Setup. Markets were down worse than your best friend going through a breakup. Here’s what’s on the docket today: - Netflix’s projected subscribers miss the mark - The Nasdaq continues its decline - Kohls receives an acquisition offer Let’s get off to a good start this week. Nick How’d the markets look? Market Outlook 👀 DOW 34,265.37 -1.30% S&P 500 4,397.94 -1.89% NASDAQ 13,768.92 -2.72% BITCOIN $38403.42 -10.12% Netflix, Intel, and the Nasdaq BIGGEST MOVER Netflix Does its Best Titanic Impression Netflix (NFLX) told Peloton to “hold my beer” during Friday’s trading session. The world’s leading streaming service released their 2021 Q4 earnings, and while its revenue and EPS were mostly in line with estimates, the company’s forward guidance sent its shares lower [by roughly 22%]( during trading. The stock made lows not seen since April 2021, had its worst day on a percentage basis since 2012, and dragged down the Nasdaq for the fourth day in a row (but more on that later). Netflix’s direct competitors Disney ([DIS]() and Roku ([ROKU]() were also affected, falling 6.94% and 9.1% respectively. - For Q4, [Netflix EPS came in at $1.33/share on $7.7B in revenue]( vs. Wall Street’s estimates of $0.83/share on $7.7B in revenue. So, what’s the problem then? - The company projected that it would add 2.5M new subscribers in Q1 2022 compared to Refinitiv’s estimate of 5.9M. We at The Daily Setup haven’t seen guidance that bad since, well, Peloton the day before. - [Co-CEO Ted Sarandos said](, “COVID âcreated a lot of bumpiness’ that made it hard to project subscriber numbers, but all the fundamentals of the business are pretty solid.” Pretty solid? Teddy, investors may want you to elaborate on that a little. Look, I’m as excited as anyone for the new season of Ozarks, but with increasing competition and prices, and the world slowly starting to return to normal (whatever the hell that means), growth expectations don’t look like they will be reaching pre-pandemic levels in the near future. That said, there was major [price resistance in the $385 area in 2019]( that was taken out the following year. The stock made a low Friday of $379.99 before closing at $397.50. I’m keeping NFLX on my radar as I will be looking for support to build in the $385 area before taking a shot to the upside. Intel Chose Ohio for its New Factory? Intel (INTC), one of the largest semiconductor manufacturers in the world, announced late Friday that it plans to [spend $20B to build two semiconductor chip factories]( in New Albany, Ohio. The company’s ambitious plan could cost up to $100B, create 3,000 jobs, and eventually lead to the creation of six to eight chip plants on the designated 1,000 acre plot. Shares of INTC closed unchanged on the day, making it one of the few bright spots in what was otherwise another dark and gloomy day for components of the NASDAQ. - The company’s investment in the Buckeye State will be its first step in the hopes of regaining the title as the world’s largest semiconductor vendor from Samsung. - [Intel CEO Pat Gelsinger said]( the investment in Ohio could make it, “the largest semiconductor manufacturing location on the planet," and dubbed it the Silicon heartland. I know when I think of other locales with Silicon Valley qualities, I think [of New Albany, Ohio.]( - In order to rapidly increase chip production, the Biden administration is expected to ask Congress to push through a bill approving $52B in subsidy funding. INTC is trading in the middle of some [key price areas](. The stock has shown resistance in the $56 area over the last two months, while price support has come in around the $44 range dating back to September 2018. I will be keeping Intel on my watchlist but will stay patient for one of those key areas to be tested before I decide on entering a trade. The Great Nasda-ssacre For us mortals, there are supposed to be four horsemen of the apocalypse, but for the markets this week there were two, and their names are Netflix (NFLX) and Peloton (PTON). The major stock indexes experienced a steep decline on Friday, with the Nasdaq winning the award as the biggest loser, dropping -2.72% in its steepest drop since March 2020. The catalyst for this bearish turn was PTON and NFLX, which both failed to meet Q4 targets, causing speculation that Big Tech’s tear through the markets in 2020 and 2021 is slowing as the wall-of-death that is the Fed’s monetary policy looms on the horizon. It’s not all gloom-and-doom however as the coming week should include the Q4 reports from investor-darlings like [Microsoft and Apple](, so the current downturn may be assuaged if those guys pull through. - Peloton reported preliminary Q4 results after a CNBC report alleged they are halting bike production to control costs as subscriber counts [fall short of expectations.]( Netflix followed suit with them expecting to have added 2.5M subscribers, well below analyst estimates of 6.93M. Both companies experienced a -14% and -20% drop, which isn’t surprising considering Peloton is trying to sell exercise to Americans. - The buck didn’t stop with Peloton and Netflix, as tech companies across the Nasdaq took some serious hits. Spotify (SPOT) saw a -6.29% decline while Roblox (RBLX) and Amazon (AMZN) dropped -8.58% and -5.94% respectively. Semiconductor companies also dipped with AMD, Qualcomm (QCOM), and Nvidia (NVDA) all [dropping over 12%](, emphasizing how comprehensive the sell-off of tech stock was. Ok, so apocalypse analogies aside, Friday’s performance is not entirely indicative of the end. Sure those quarterly reports were... less than ideal, but this bump in the road is likely just the market adjusting as two years of Fed-juicing comes to an end. The pandemic allowed for bullish investment across the tech sector and as society gradually claws its way out from under the virus, investors have to ruminate on [who has had the success]( to meet expectations. Add the incoming rate hikes, and it’s understandable that people are a touch more cautious. We still have those earnings reports this week for companies like Tesla, and unless Elon reveals that he’s actually a lizard-person, then things could still turn out ok. BTC Misses the Moon and Crashes down to Earth Token Talk [Mercedes Benz Animation GIF by Weltenwandler - Find & Share on GIPHY]( If you thought the Nasdaq getting smacked was a tragedy, the solemn tale of Bitcoin is sure to bring you to tears. Friday was a bleak day in the world of crypto as almost [$800M worth of tokens was liquidated]( within 24 hours. Bitcoin itself took the biggest hit with nearly $175M in liquidated contracts, creating a cascading effect for the rest of the market. Friday’s crash has a number of supposed influences, ranging from the Nasdaq smackdown to proposed policy measures from both Russian and American governments creating a perfect storm of shenanigans. Declines since November have wiped out more than $600B in market value with $1T being lost from the aggregate crypto market. You can hear the screams of Bored-Ape Twitter avatars all the way from here. - Naturally, crypto related-stocks took a big hit, Coinbase (COIN) for example dropped over 16% at one point. The biggest loser though has to be MicroStrategy (MSTR). Fresh off of a [stern talking-to from the SEC]( regarding their accounting practices, the business intelligence company saw an -18% drop in stock value. I guess that’s what happens when you hold 124,391 BTC as your primary method of capital allocation... - In a shocking [moment of agreement]( it appears that the governments of the US and Russia are coming down on crypto. While the Biden Administration contemplates its strategy regarding digital assets, Russia has taken a much more, well... Russian approach, by proposing an outright ban on crypto mining within their territory. Considering that Russia is the world’s third largest BTC mining country it’s no surprise that some investors are ducking out. There actually seem to be a fair amount of parallels between the recent stock market downturn and the decline of crypto over the past couple of months. Of course the elephant in the room is the high likelihood of multiple rate-hikes on the horizon making riskier/volatile investments less attractive for the time being. What sets this crash apart are the additional factors of government regulation which, unfortunately, was bound to happen with time (looks like Russian ransomware hackers will need to find alternate forms of payment). That being said, BTC itself likely isn’t going anywhere and this decline could be the market figuring out its place as the geriatrics in Congress finally realize Bitcoin is more than funny money that Timmy uses on his computer. Is the offer in Kohls Cash? Deals and Rumors [Kohls Cash GIF by Kohl's - Find & Share on GIPHY]( Kohl’s (KSS) must have felt like the prettiest girl at the prom after receiving an [unsolicited offer for $9B]( to go private under the ownership of Hedge Fund, Starboard Value LP. This isn’t even the first time that the department store had been courted by activist investors and short sellers, settling in 2021 with [Macellum Investors GP]( to appoint new members to their board. Kohl’s has been on the receiving end of investor vitriol for a while now as their stock is worth less today than two decades ago and revenue is still down compared to 2019, causing potential buyers to smell blood in the water. - To buy Kohl’s will mean buying their debt, which is in the ballpark of $6.5B. Add that to Starboard’s proposed price of $9B and the value of the chain [nears $16B.]( However, a serious chunk of that debt consists of capital lease obligations, basically rent that Kohl’s is obligated to pay, lowering the value closer to $11.2B. - Starboard is proposing a purchase at a 37% premium on Kohl’s Friday stock price of $46.84 a share. But here’s the thing: There is actually [a huge amount of real estate value]( in Kohl’s and if Starboard were able to leverage that, they could actually grab the company on sale. Of course, this is far from a done deal. Kohl’s itself has yet to make a statement regarding Starboard’s proposal and it’s not like they haven’t grappled with outside pressure before. What this does do however is put the ball in Kohl’s court. While not hitting 2019 levels of sales, revenue has been increasing and they’re poised to repurchase $1.3B of stock in the current fiscal year. This current deal also shows that there’s demand for their acquisition and other potential buyers are taking note. As we speak [Sycamore Partners]( has thrown its hat in the ring, showing that the Kohl’s story is far from over. Link Roundup 📿 Other News Other News Link Roundup - Wells Fargo Clearly Long AAPL – Apple Stock Gets a Target Price Boost Pre-Earnings ([link]() - Covid Booster...You Done Good – CDC Says Booster Doses Reduce Hospitalization from Omicron ([link]() - The Hood’s Soft Release – Robinhood Rolls Out Crypto Wallet to 1,000 Users ([link]() - Toyota Got the ‘Vid – Toyota Halts Production at 11 Plants Due to Covid ([link]() - Serbia Tells Rio Tinto to Take Ball and Go Home – Serbia Pulls Plug on Rio Tinto Lithium Project ([link]() Memes, and reading The Daily Setup of course, [via]( [@ParikPatelCFA]( [Unsubscribe from all RagingBull emails]( Questions or concerns about our products? Call or text us on your mobile: 1.800.123.4567 © Copyright 2020, [RagingBull]( - [Refund Policy]( - [Privacy Policy]( - [Terms & Conditions]( DISCLAIMER: To more fully understand any Ragingbull.com, LLC ("RagingBull") subscription, website, application or other service ("Services"), please review our full disclaimer located at [(. FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. Any RagingBull Service offered is for educational and informational purposes only and should NOT be construed as a securities-related offer or solicitation, or be relied upon as personalized investment advice. RagingBull strongly recommends you consult a licensed or registered professional before making any investment decision. RESULTS PRESENTED NOT TYPICAL OR VERIFIED. RagingBull Services may contain information regarding the historical trading performance of RagingBull owners or employees, and/or testimonials of non-employees depicting profitability that are believed to be true based on the representations of the persons voluntarily providing the testimonial. However, subscribers' trading results have NOT been tracked or verified and past performance is not necessarily indicative of future results, and the results presented in this communication are NOT TYPICAL. Actual results will vary widely given a variety of factors such as experience, skill, risk mitigation practices, market dynamics and the amount of capital deployed. Investing in securities is speculative and carries a high degree of risk; you may lose some, all, or possibly more than your original investment. RAGINGBULL IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Neither RagingBull nor any of its owners or employees is registered as a securities broker-dealer, broker, investment advisor (IA), or IA representative with the U.S. Securities and Exchange Commission, any state securities regulatory authority, or any self-regulatory organization. Employees, owners, and other service providers of [RagingBull.com](, LLC are paid in whole or in part by commission based on their sales of Services to subscribers. WE MAY HOLD SECURITIES DISCUSSED. RagingBull has not been paid directly or indirectly by the issuer of any security mentioned in the Services. However, Ragingbull.com, LLC, its owners, and its employees may purchase, sell, or hold long or short positions in securities of the companies mentioned in this communication. [Unsubscribe from all RagingBull emails](