PeloJohn is PeloGone

February 9, 2022 Good morning traders! Welcome back to The Daily Setup. Markets were up yesterday. Here’s what’s on the docket today: - Amazon invests in Velodyne - Peloton cans its CEO - Softbank shops an Arm IPO So have a cup of coffee, read through the newsletter, and let’s make today a good one. Nick How’d the markets look? Market Outlook 👀 DOW 35,462.78 +1.06% S&P 500 4,521.54 +0.84% NASDAQ 14,194.45 +1.28% BITCOIN $44,390.00 +0.33% ADVERTISEMENT GREEN WAVE STOCK REPORT North America Pot Companies Analysts believe that Flora Growth Corp. ([NASDAQ: FLGC]() stock could be surprisingly undervalued with a 5x upside potential. The market for C-B-D products is projected to grow into a $20 billion opportunity by 2024, and the growth of that market is expected to largely come from beverages and edibles. [READ MORE NOW!]( *This is an advertisement by a party that is unaffiliated with Raging Bull. Raging Bull does not in any manner recommend or endorse any stock, investment or service that is the subject of this advertisement. Raging Bull has been or will be paid $5,000 in cash indirectly by the issuer Flora Growth Corp. through publisher Life Water Media to run this advertisement and expects to be paid an additional $5,000 in cash indirectly by the issuer through publisher Life Water Media each time it runs the advertisement. SelectQuote, Peloton, and Amazon BIGGEST MOVER SelectQuote: falling, in style SelectQuote Inc. (SLQT), the direct-to-consumer platform that allows users to shop for insurance by comparing policies from multiple insurers, had a worse Taco Tuesday than you did. How much worse? [47.55%]( worse, to be exact. The company reported earnings after the close Monday that missed expectations by a wide margin revised their FY2022 revenue down, and were downgraded by Citi. The stock closed Tuesday’s session at $3.42, which is a far cry from the company’s May 2020 IPO price of $20/share. - [The company blamed the disastrous results]( on “hiring delays, CMS marketing review, less shopping amid greater plan parity, and lower persistency ( the number of policyholders that continue to pay their renewal premium).” - SelectQuote reported a fiscal Q2 [loss of $0.84/share on $195M in sales](. This pales in comparison to Q2 2021 which saw sales of $357.57M. That’s a 45% drop for those keeping score at home. - [FY2022 guidance]( was reduced to somewhere in the ballpark of $810-$850M. This equates to an expected net loss of $236M-$255M. No Bueno. Shares of SLQT are down [90%]( from their all-time high of $33 reached in April 2021. There’s not much one can do when a company’s stock is this close to zero. I personally do not like to catch falling knives, but if you were interested in taking a long position believing the stock will bounce back, I would be using August 2021’s low of $7.72 as an upside target. Pelogone In a move that should come as a surprise to absolutely no one, [John Foley, CEO of Peloton (PTON), has announced]( that he will be stepping down (i.e. he’ll get paid a sh*tload to step aside). Barry McCarthy, former CFO of Spotify and Netflix, will take the reins as CEO and President while also getting a seat on the board. Mr. Foley will stay on board as executive chairman for the time being. I say for the time being as activist investor Blackwells Capital has called for Foley’s head on a stake and the company to be sold. Shares of PTON, which rallied to start the week on rumors that Amazon, Nike, and even Apple may be interested in purchasing the company, continued their move higher Tuesday to the tune of [25.1%](. Investors clearly approve of the change up top and additional cost-cutting measures laid forth. - The company plans to [cut approximately 2,800 employees](, which is roughly 20% of their corporate positions. Peloton’s instructors and content will not be affected. Thank god because Sarah’s 45-minute disco-themed ride on Tuesday mornings gives me life. - Peloton will also be reducing its warehouse space and expanding delivery agreements with 3rd-party providers. These two steps alone could save the company [$800M annually]( - [Fiscal year 2022 revenue guidance]( was slashed from an expected $4.4B-$4.8B down to $3.7B-$3.8B. According to the company, “[Layoffs begin Tuesday]( and affected employees will receive a 1-year digital subscription to Peloton as part of their severance.” I so want to know what else is in their severance package. Perhaps a couple of pairs of lycra biking shorts? PTON was trading below its 2019 IPO price of $29 for the last couple of weeks before the acquisition rumors and cost-cutting measures came into play. While Tuesday’s rally is enticing to jump in on the long side, I am going to be patient and watch for support to build above the IPO level before taking this stock for a ride higher. See what I just did there? I’ll be here all week. Amazon Takes a Bite Out of Velodyne Lidar In true empire-building fashion, Amazon (AMZN) seeks to spread their influence through political marriage, this time with Lidar tech company Velodyne Lidar (VLDR). AMZN [will acquire roughly]( 39.6M shares in the sensor-maker… Such a deal couldn’t come at a better time for Velodyne Lidar after its [80% loss in value in 2021](, which was mostly due to internal conflict and the resignation of CEO Anand Gopalan. - The warrant Velodyne [filed with the SEC]( gives AMZN the right to buy VLDR stock at $4.18 a share. The deal vests over time-based on a discretionary payment to Velodyne of up to $200M, and provides AMZN with a board observer once their shares top 12.3M. - The news boosted shares in VLDR up 58% in after-hours trading on Monday, and stabilized by market close Tuesday for a 7.16% gain. The effect was felt for [other Lidar stocks](: Luminar Technologies (LAZR), AEye (LIDR), and Innoviz (INVZ), gained +5.3%, +4.5%, and +3.5% respectively. This is great news for the folks at Velodyne Lidar but the question remains: Why would Amazon want to invest in a company so fraught with internal issues that’s bleeding money? Well the SEC filing isn’t that helpful, stating: AMZN will use VLDR tech “to continue to improve customer experience”, which is really nice and vague. That being said, Lidar is laser-based radar, a technology which basically provides machines with "sight". It could already be applied to Amazon’s warehouse robots, a future self-driving delivery vehicle, or perhaps AMZN sees the investment as paying off once autonomous vehicles become ubiquitous. That or they’re quietly plotting to build a robot army to force a Prime membership on us all. NFTs Hit the Road with Alfa Romeo Token Talk When you were a kid what did you think the future would look like? Jetpacks? Laser-guns? How about automobiles linked to the blockchain? Italian luxury car brand Alfa Romeo announced that its new [Tonale SUV]( will integrate NFTs, a move that literally nobody asked for. The car doesn’t come with a complimentary crypto punk, but rather it will use NFTs to store its maintenance records, bucking the trend for the industry which usually relies on 3rd parties to track this kind of data. Who knows if this move will prove to be successful for Alfa Romeo, but you definitely won’t have to worry about someone right-clicking to save your shiny new vehicle. - While this seems like a reasonable use of NFT technology, don’t expect your average mechanic to be tinkering with the blockchain for you. Alfa Romeo has already made it clear that only a [certified dealer]( will be able to record the data. On which blockchain? We don’t know, as Alfa Romeo hasn’t announced that yet... - Alfa Romeo is currently owned by Stellantis (STLA) and hasn’t had the best time since returning to the US market in 2014. For context: Alfa Romeo has been selling less than [19k units per year]( for the past three years. Meanwhile, competitor Mercedes-Benz sold 60k in Q4 2021 alone. Honestly, the fact that it was Alfa Romeo announcing this use of NFTs is pretty much incidental. The bigger implication for the future is the rise of NFTs with a utilitarian use case. We’re already seeing the blockchain being used to [mint housing deeds](, and this move actually seems like a reasonable use of the technology. It’s likely that we’ll see similar uses continue to proliferate and eventually that wild-west era of Bored Apes and other expensive JPGs could be a funny (yet baffling) historical footnote. Softbank Wants Arm Out the Door Deals and Rumors Like a jilted lover, Masayoshi Son is walking away from the failed marriage between Nvidia (NVDA) and Arm Ltd... only to play the field by proposing to take the chip-designer public. As you probably know, the $80B deal would have been the largest semiconductor sale on record, but those prudish regulators had to [get involved](, leaving it dead in the water. Now Softbank’s (SFTBF) fearless leader is running around town telling everyone “Arm is really cool, and it’s gonna do gangbusters... seriously!” in an effort to make something of his $32B investment in the company. If he stays true to his word, we can expect an Arm IPO to be listed on the NASDAQ around March 2023. - We joke but Arm is actually doing [alright for itself](. It’s on track for $2.5B in revenue this fiscal year, up from $1.98B in 2021. Their operating budget also grew to be around $900M. - Similarly, Arm’s model of designing chips and selling its IP rather than manufacturing semiconductors themselves has made their product ubiquitous. [Noted customers](, Apple (APPL), Samsung, and Qualcomm (QCOM) are all packing Arm tech. The tale of an Arm IPO is really more of a story about Masayoshi and Softbank than the semiconductor industry. 2020 through 2022 has been all over the place for the Japanese conglomerate, which makes Son’s desire to push Arm out the door a lot more understandable. Not only has the failure of the NVDA deal left SFTBF wanting, but China’s recent crackdown on its major tech companies hurt their most valuable investment: Alibaba (BABA). A successful Arm IPO could help cushion the blow (especially as their IP is likely to be used in growing sectors like EVs and cloud-computing), but there’s no way it will fill that $80B-shaped hole in Masayoshi’s heart. Link Roundup 📿 Other News Other News Link Roundup - GM Has Problems Adjusting – GM Shares Fall on Downgrade and Guidance ([link]() - Brings New Meaning to Tap That A** – Apple Announces Tap to Pay Feature ([link]() - It’s Not Easy Laundering $3.6B – Justice Dept. Seizes $3.6B Bitcoin Stolen in Hack ([link]() - Stablecoins to Be Discussed By People that Don’t Understand Stablecoins – Stablecoin Regulation Discussed at House Hearing ([link]() - AMEX Getting Its Bank On – American Express Launches First Digital Checking Account ([link]() Meme of the Day: I love the Olympics, [via @WallStMemes]( Questions or concerns about our products? 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