A bloodbath for Meta’s stock

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Meta received a harsh treatment from Wall Street after issuing a disappointing revenue forecast, leading the stock to plunge by about 12% after the bell. This showed investors’ current focus. They are watching guidance carefully. Stocks are trading at lofty valuations (in some measures), so companies must justify them with strong earnings growth down the road. If Meta is any indicator, investors are ready to punish companies for weak guidance. - “For the market overall, we’ll be watching guidance,” said Matt Palazzolo at Bernstein Private Wealth Management. - “While it’s good to know how companies did from January to March — it’s more important now to have a sense for managements’ expectations for the balance of the year.” Matt Palazzolo at Bernstein Private Wealth Management (Photo: LinkedIn) Today, we will receive the latest GDP reading. Economists expect the growth to slow down to around 2.5% in the first quarter. It’ll be tough to analyze the data because a strong reading could be good for earnings but may have inflationary effects. On the other hand, a poor reading might mean rate cuts happening sooner than expected. - “Tomorrow’s pivotal GDP report comes as market participants hope for a soft number that would lead to rate cuts sooner rather than later,” said Jose Torres at Interactive Brokers. “We expect a stronger-than-projected figure. It would be great for revenue growth prospects, but bad for the timing and extent of rate cuts.” Wholesale inventories and initial jobless claims will also be out today. As for earnings, Microsoft and Alphabet will report their results. Investors, of course, will pay attention to see if the AI frenzy has delivered strong profit growth for these companies. Tomorrow, we will get personal income and spending, PCE deflator, and University of Michigan consumer sentiment. The inflation data will also attract major attention, as investors will try to use it to gauge the Federal Reserve’s interest rate strategy. This Software Company Is Largely Unknown But Boasts Powerful Growth Engine Today’s Stock Pick: Vertex, Inc. (VERX) There is a major pain point for global companies related to taxes. Listen, “indirect tax” revenue is approximately 3.1x bigger than income tax revenue. They include taxes for sales, imports, exports, payrolls and so on. They add up to $4.4 trillion, while corporate income tax revenue is just $1.4 trillion. (Source: Vertex) Now, imagine that you are a major corporation with interests in dozens of countries. That means you’ll need to account for wide-ranging tax policies around the world in real-time. (Source: Vertex) Clearly, that’s a complicated matter which Vertex comes into the picture to offer solutions for this. Vertex offers end-to-end use cases where companies use its software for every step for anything related to indirect taxes. (Source: Vertex) How big could this market be? Well, Vertex estimates it to be a $22 billion TAM with less than 10% software adoption. That’s right. There’s a plenty of growth runaway ahead. (Source: Vertex) Many top leaders in different business categories use Vertex’s software. This shows that Vertex is the leader in this expanding category — with plenty of opportunities ahead. (Source: Vertex) There’s one key theme about Vertex — operating leverage. The company has a perfect ecosystem that is designed to turn first-time customers into bigger customers. Thanks to its land-and-expand model, the company can grow revenue without incurring higher expenses to finance the growth. (Source: Vertex) This is powerful. Why? Vertex has a long track record of revenue growth. It never failed to grow since 2005. You can see the remarkable revenue growth in the graphic below: (Source: Vertex) Meaning? Operating leverage is poised to amplify earnings growth for many years to come. Take this year as an example. The company expects to post about $655 million in revenue — or a 14% growth. Not bad, right? However, its operating leverage enables adjusted EBITDA to grow by about 30% from $100.8 million in FY2023 to $130 million in FY 2024. (Source: Vertex) Bottom line: Vertex is very unknown in the software space. It is remarkable because its growth track record is one of the best in any industry. With its powerful operating leverage, the company is poised to be a winner for many years to come. [EARN WHILE YOU LEARN! JOIN OUR FREE LIVE TRADING SESSION!](       © All Rights Reserved, Trade Alliance [Unsubscribe]( | [Manage Preferences](