Walmart's Walright

ttps://invest.realpha.com/?utm_source=rgarealphalandingpage&utm_medium=partnership73_02-15&tnames=partnership73_02-15 February 18, 2022 Good morning traders! Welcome back to The Daily Setup. Markets were down yesterday over fears (again) of a Russia invasion in Ukraine, with the Dow having its worst day of the year. Here’s what’s on the docket today: - Amplitude falls on light guidance - Walmart crushes earnings - Hasbro has an activist on their hands Let’s send some emails and get to the weekend. The boys at HQ are off Monday, but we’ll be back to our regularly scheduled programming Tuesday morning. See ya then. Nick How’d the markets look? Market Outlook 👀 DOW 4,312.03 -1.78% S&P 500 4,380.26 -2.12% NASDAQ 13,716.72 -2.88% BITCOIN $40,648.34 -7.74% ADVERTISEMENT Revolutionizing Short-Term Rental Investing ReAlpha Airbnb has made real estate investing more lucrative than ever. However, traditional real estate investing is inaccessible, stressful, and expensive. 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Raging Bull has been or will be paid $2,500 in cash indirectly by the issuer ReAlpha through publisher Ridge GrowthX to run this advertisement and expects to be paid an additional $2,500 in cash indirectly by the issuer through publisher Ridge Growth X each time it runs the advertisement. Amplitude, Walmart, and Tesla BIGGEST MOVER Amplitude gets leveled Amplitude saw its stock drop [58.90%]( yesterday after the behavioral analytics firm posted strong Q4 earnings but light guidance. The SF-based company said that it expects to bring in [$50M-51M]( in revenue in Q1, just a tad short of the expected $51.3M. 2022 full-year revenue should come in around [$226-$234M](, lower than Wall Street’s projected $235.1M. That shockwave big enough for you? - Just to be clear, the firm’s Q4 2021 numbers were good. Amplitude outperformed on revenue and suffered smaller-than-expected losses, reaching [-$0.05/share on revenue of $49.4M]( instead of -$0.08/share on $47M. Full-year revenue of $163.7M was up 63% YoY as well. - And customer count grew [by over half]( to 1,597, with customers spending more on Amplitude’s services on average. Spending on sales and marketing roughly doubled, but hey-- it got results. - ...Which is why many analysts think that the enormous selloff is overblown. It’s only Amplitude’s second quarter reporting earnings, after all, and it’s a company in a burgeoning high-growth sector in just about the worst time to be small and vulnerable in that sector. Many call the stock a buy. I agree with the analysts. Amplitude’s got strong fundamentals and growth prospects. I think this huge blow is an overreaction that says more about investors’ fickleness and fear than anything to do with Amplitude itself. While in the long run I’m not sure whether Amplitude will recoup these losses entirely, In my opinion, I think the stock will make a significant recovery fairly soon. Walmart’s Walright The W’s are silent. Shares of the country’s biggest retailer by revenue rose [4.01%]( yesterday following solid Q4 earnings that ate rampant inflation for lunch. While supply chain costs were [$400M]( higher than expected, Walmart’s enormous customer base enabled the company to bully suppliers into lower prices and thereby grow earnings by even more than those margins. The company ended with a profit of [$3.56B]( and an EPS of [$1.53]( over analysts’ expected $1.50. The beast grows. - Inflation actually helped the retailer, since it makes people on every rung of the socioeconomic ladder more cost-sensitive- and cost is Walmart’s strong point. Walmart expects to continue benefiting from this, forecasting sales growth of [over 3%]( this year. - Walmart’s grocery and health & wellness categories did especially well as customers got their vaccines there and foot traffic began to outpace online shopping. - But the company’s got big plans to expand beyond stores, like a [fintech startup](, a [last-mile delivery service]( for other retailers, and a push to [stock more third-party products](, which are more profitable than Walmart’s own products. Better than Walmart? Impossible! Walmart is hella robust. Unstable economic conditions (and customers) have benefited this retailer and will continue to do so, and the company’s in-store shopping numbers are staggering. The only question going forward is whether Walmart’s e-commerce and expansion efforts will allow the company to compete with Amazon-- its main rival-- on every front. Regardless, both Walmart and Amazon will probably continue to grow as their extremely low prices crush the little guys. I just love capitalism. Phantom of the Brake Pads Another day, another spat with a government agency for Tesla ([TSLA](). The National Highway Traffic Safety Administration has [launched a probe]( of Joe Biden’s least favorite EV maker after receiving 354 complaints about phantom braking, which happens when a car’s brakes activate unexpectedly and without the driver pushing the pedal. Still, it’s probably safer [than letting Billy Joel drive](. - NHTSA is looking into 416,000 Model 3 and Model Y vehicles from the 2021 and 2022 model years. - This isn’t Tesla’s first run in with NHTSA, as [other recalls]( include a feature called “Boombox”, which allows drivers to play sounds such as a fart noise out of their cars while driving. The Feds didn’t like this because it could interfere with a mandatory pedestrian warning system. I’m firmly Team Elon on this one and always bullish on farts. - Musk is also battling other government agencies, such as the SEC... He recently had his lawyer send a letter [accusing the Commission of harassment]( via their ongoing investigations of him. He’s also battling our friends up North, as he compared [Justin Trudeau to Adolf Hitler]( yesterday (via a meme of course) before deleting the tweet. Tesla shares were down 5% on Thursday in response, granted you’d think investors would be used to management’s (read: Elon’s) constant sparring with the government by now. I for one think that Tesla will sell more vehicles in future years than they do currently, so dip buying opportunities are always welcome. If I ever buy a Tesla car, I would certainly be willing to pay extra for the Boombox feature. Sequoia Branches Out Token Talk I guess you’re officially considered an asset class once the big VC firms do a capital raise for a new venture fund. Congratulations are in order for the crypto space since Sequoia Capital is trying to [round up $500-$600M]( for an industry dedicated fund. Sequoia is transitioning (not like in the Bruce/Caitlyn way) away from the traditional VC structure of a 10 year time horizon for limited partners and now runs everything through the Sequoia Fund, an open ended vehicle that allocates capital to closed ended sub-funds. Sounds like an awesome deal for investors from a fee structure perspective. - The fund is going to have a “full stack” focus and invest in several areas within the crypto realm such as liquid tokens, NFTs, DeFi applications, Web3, and gaming. - Sequoia has previously dipped its toes in the crypto waters, as they have existing investments worth about $7.5B across existing funds. - The company dedicated 20% of its 2021 investments to crypto so they view the sector as a major area for growth. This new fund follows on the heels of recent dedicated crypto funds spun up by [Andreesen Horowitz]( and [Paradigm]( of $2.2B and $2.5B respectively. While most individual investors won’t have access to VC backed funds, this is a trend worth watching to see if retail firms try to create vehicles that give investors exposure to tokens, NFTs, and related equities such as miners all in one place. Maybe the legal braintrust at TDS should get cracking on that? Spin the Dragon Thing Off You Nerds Deals and Rumors Hasbro ([HAS]() is being [bullied by an activist investor]( who wants the company to spin off the Wizards of the Coast unit in order to unlock value. Wizards of the Coast (which sounds like a meetup group for nerds at Laguna Beach) is the business line that includes Dungeons and Dragons and shareholder Alta Fox Capital thinks a spinoff could be worth $100 per share, which is a bold claim considering HAS is trading at $99.08 as of Thursday’s close. I was legitimately surprised that D&D was still a thing, as I thought it was just some game back in the 80s for the weird kids who didn’t like G.I. Joe or He-Man. - Alta Fox owns 2.5% of HAS shares and has nominated a slate of 5 directors to the company’s 11 member board. - Wizards of the Coast contributed $1.29B in revenue to the company’s 2021 total sales of $6.42B, so orcs and ogres and whatnot are a key strategic asset. - In my opinion, the true wizards of the coast are the good people who transform grapes into Merlot, Malbec, and Zinfandel. Activist investors can be distracting pests for management, but in this case they have a point. HAS shares have gone nowhere for the past 5 years and even though the company [reported a solid quarter]( last week, the market doesn’t think much of the future prospects. People are no longer stuck at home playing Monopoly, which in some families can be considered a contact sport. A spinoff could be a nice catalyst for the Wizards piece, but probably not so much for the rest of the company. Alta Fox’s board push is something to keep an eye on in the coming months. Link Roundup 📿 Other News Other News Link Roundup - Will silver take the gold? – Global demand for silver may bring a surge in prices for the precious metal ([link]() - There’s no refunding dignity – Dept. of Education to cancel $415M of student loan debt from for-profit colleges ([link]() - How much for the empty parking space? – Supply crunch means half the cars rolling into dealerships have already been sold ([link]() - The Shack has been Shook – Shake Shack sees Omicron hurting its sales ([link]() - I blame the weed and the outdoors – Newly Denver-based Palantir tumbles on big earnings miss ([link]() Meme of the day: Happy Tax szn, [via @thechive]( Questions or concerns about our products? 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