TFT #65: Starbucks Soars Beyond $100, Disney's Magical Turnaround, eBay at a Crossroads, Uber's Profitability Soars and More
Hello Reader,
In this issue, we cover Starbucks brewing success in Q4, Disney's magical turnaround, eBay at a crossroads, Uber profitability soars, and more.
Let’s get into it.
Starbucks Soars Beyond $100: Brewing Success in Q4 and Beyond
In a caffeine-fueled resurgence, Starbucks ($SBUX) has surged past the $100 mark, propelled by a stellar Q4 performance and bullish forecasts for FY24. The coffee giant's upbeat Q4 report reveals a 30% YoY spike in adjusted EPS to $1.06, exceeding expectations for the third consecutive quarter. With revenues soaring to $9.37 billion and U.S. same-store sales reaching record highs with an 8% surge, Starbucks is proving its resilience in a dynamic market.
International regions contribute to the success story with double-digit revenue growth, showcasing the global appeal of the Starbucks brand. Despite a slight adjustment in the FY24 comp outlook, Starbucks maintains a robust 10-12% revenue growth projection, reflecting confidence in its ability to navigate an uncertain global business environment.
In a surprising twist, Starbucks announces enhanced employee benefits, including accelerated vacation accrual and competitive pay increases. These investments, totaling more than $1 billion since last year, have contributed to a positive shift in hourly turnover rates, now below pre-pandemic levels.
Starbucks concludes a volatile year on a high note, and as we head into FY24, the aroma of success lingers. The coffee giant's ability to adapt to evolving consumer trends and prioritize employee well-being positions it as a beacon of resilience and innovation in the competitive market. Investors and coffee enthusiasts alike are toasting to Starbucks' continued success and anticipating a strong performance in the year ahead.
Technically, SBUX is a 200 SMA breakout. If this level continues to hold and price is able to move back above $105, it will try testing upper resistance areas at $111, $116 and possibly go as high as $123.
(Disclaimer: SBUX is one of the stocks/ETFs we are currently trading/investing)
Robinhood Hits a Snag: Q3 Revenue Miss Overshadows Growth and Overseas Expansion Plans
Robinhood Markets ($HOOD) faces turbulence in Q3, reporting a revenue miss that dents its recent streak of achievements. Despite a 29.4% YoY revenue increase to $467 million, the company fell short of analyst expectations and registered its first revenue miss since 4Q22. The dip is partly attributed to a 16% YoY and 5% sequential decline in monthly active users (MAUs) to 10.3 million. Transaction-based revenue also slipped 4% sequentially due to lower crypto volumes. However, amid challenges, net deposits surged to $4.0 billion, showing an 18% annual growth rate. As Robinhood gears up for European expansion and emphasizes its Gold membership program, the missed revenue mark raises concerns about its path back to sustained profitability.
Disney's Magical Turnaround: Streaming Surges, ESPN Holds Steady, and Cost-Cutting Boosts Profitability
In a storybook twist, Disney ($DIS) reveals a promising turn in its Q4 earnings call, transitioning from a fixing phase to a building phase in its turnaround journey. With each operating segment experiencing significant year-over-year growth, the CEO, Bob Iger, emphasizes a positive trajectory. Notably, the Direct-to-Consumer streaming business, once a profitability concern, significantly reduced operating losses through cost-cutting and Disney+ price hikes, aiming for profitability in Q4 2024. Disney+ subscriber growth rebounds, and ESPN remains resilient amid cable challenges. The strategic review hints at potential divestment of the cable TV business, while the Experiences segment sees robust international park performance, signaling Disney's evolving magic. Though not fully turned around, Disney's journey promises a more enchanting future.
Datadog's Bounce Back: Q3 Surges, Optimizes, and Forecasts Strong Growth
After a momentary stumble in August, Datadog ($DDOG) is back on the growth trajectory, with a remarkable 27% surge today. The observability and security platform experienced a widespread revival across all end markets in Q3, putting concerns to rest. Adjusted EPS skyrocketed almost 100% YoY to $0.45, marking the first double-digit beat since 1Q22. The company's focus on optimizing cloud costs resulted in a notable 7-point improvement in non-GAAP operating margins.
In Q3, revenue soared 25.4% YoY to $547.54 million, surpassing estimates, and customer growth with at least $100K in annual recurring revenue increased by 20% to around 3,310. The moderation of crowd optimization activity and stabilization trends observed in Q2 persisted into Q3, sparking investor enthusiasm.
With Q4 earnings and revenue projections ahead of consensus, Datadog's confidence in sustained stabilization trends and robust new customer acquisition paints a positive picture. The anticipation of continued meaningful growth across industries and sizes positions Datadog as a standout player in the tech landscape. Notably, JPMorgan upgrades Datadog to Overweight, setting a price target of $115, while Goldman Sachs raises its price target to $125 from $114. Datadog's resurgence and forward-looking optimism resonate well with investors and industry peers alike.
DraftKings Beats Q3 Expectations, Boosts Outlook, and Earns Upgraded Price Targets
In a dazzling fiscal performance, DraftKin($DKNG) has surpassed expectations with a Q3 loss of $0.61 per share, outshining projections by $0.08. Boasting a 57.4% YoY revenue surge to $789.96 million, the company cements its dominance in online sports betting. Elevating confidence, DraftKings revises its FY23 outlook to anticipate revenues between $3.67 billion to $3.72 billion, a robust increase from the earlier projection of $3.46 billion to $3.54 billion. Looking ahead to FY24, the company issues a bullish forecast, envisioning revenues between $4.50 billion to $4.80 billion, exceeding the anticipated $4.3 billion.
Adding to the optimism, TD Cowen raises DraftKings' price target to $39 from $35, while Argus adjusts it to $40 from $34, and Oppenheimer sets an even higher target at $44 from $40. DraftKings continues to defy expectations, making waves in the dynamic landscape of online gaming and sports entertainment.
Planet Fitness Pumps Up: Cost Cuts and Confidence Boost Propel Stock 13%
Planet Fitness ($PLNT) flexed its financial muscles this week, lifting shares by 13%, outpacing the S&P 500. Despite year-to-date losses of 20%, the fitness giant initiated a rally, driven by robust Q3 results and a strategic cost-cutting plan. Operating profit soared to $72 million, constituting 26% of sales, as same-store sales spiked by 8.4%. The company's push for efficiency amidst slower membership growth echoes in lowered store opening targets. However, optimistic about future stability, Planet Fitness raised its 2023 sales and earnings forecasts, signaling resilience in the fitness industry amid consumer spending concerns. As the fitness giant prioritizes returns and navigates potential headwinds, investors eagerly await signs of a membership rebound.
Trade Desk Faces Holiday Headwinds: Q3 Earnings Impact and Analyst Sentiment
Trade Desk ($TTD) experiences a significant -15% drop after its Q3 report on Friday, revealing robust revenue growth of 25% to $493.3 million. Despite beating Q3 expectations, cautious Q4 guidance prompts concerns. Analysts question the "at least $580 million" revenue projection without an upper range, leading to interpretations of a guide down. While Q4 is crucial for ad companies, TTD acknowledges some advertisers' caution, affecting sectors like automotive and consumer electronics. Analysts, including Jason Helfstein from Oppenheimer, suggest buying the dip on temporary ad headwinds, believing in TTD's long-term growth trajectory. Despite lowered price targets, sentiment remains bullish, seeing the setback as a speed bump rather than a structural issue. The stock's dip could present a buying opportunity, hinting at oversold conditions after the outlook-driven decline.
Technically, TTD is a breakdown below the 200 SMA. However price is currently getting a bounce off the channel bottom, somewhere near $60. If this level continues to hold, we could expect price to recover some of the lost ground and test upper resistance areas at the 200 SMA (~$68), $71 and $76. On the other hand, if price fails to move back above the 200 SMA and breaks below 60, it will roll over even further to test the next support areas at $56 and $53.
Roblox Continues to Dominate: Q3 Performance, Opportunities, and Challenges
In its Q3 report, Roblox Corp ($RBLX) showcased resilience, beating earnings estimates with a loss of $(0.45) per share. The platform reported a 19.6% YoY increase in bookings, reaching $839.45 million, exceeding expectations. Impressively, daily active users (DAUs) surged by 20% to 70.2 million, underlining robust user engagement. Monthly unique payers and average bookings per monthly unique payer also saw positive YoY growth.
Despite these successes, a recent SWOT analysis highlights challenges for Roblox, including escalating costs impacting profitability. The report emphasizes opportunities in international expansion and innovation to attract diverse demographics. However, the competitive landscape poses threats, demanding continuous innovation to stay ahead. Navigating economic uncertainties and regulatory complexities further adds to the hurdles. As Roblox maintains its strong market presence, addressing these challenges will be crucial for sustained growth.
Technically RBLX is a breakout above the $100 price level. If this area continues to hold, price will try testing upper resistance levels at $108, $115 and $123.
(Disclaimer: RBLX is one of the stocks/ETFs we are currently trading/investing)
TripAdvisor's Earnings Drive a Cruise Control Surge: Viator Segment Steals the Show
TripAdvisor ($TRIP) is on a victory lap this week, surging 9.7% on the heels of stellar earnings. Beating expectations with Q3 earnings of $0.52 per share and revenues soaring 16.1% YoY to $533 million, TRIP's performance is stealing the spotlight. The Tripadvisor Core segment outperformed predictions, with a 2% YoY revenue increase, while Branded Hotels revenue showed improvement with a 4% decline, up from last quarter's 7%. Globally, strong pricing growth for TC overshadowed a slight lag in volumes compared to last year.
The true star of the show is TRIP's Viator segment, focusing on tours, activities, and attractions, witnessing a remarkable 41% revenue jump (+39% CC) – significantly surpassing internal expectations. TheFork, primarily outside the US, also delivered robust growth, up 20% (+14% CC), driven by a dynamic mix of volume and pricing expansion. Adding to the momentum, TripAdvisor's Board of Directors greenlit a $250 million share repurchase program, showcasing confidence in the company's trajectory. TripAdvisor is not just riding the waves; it's navigating them with finesse.
Uber's Profitability Soars, Overcoming Revenue Miss – Eyes on Lyft's Response in the Rideshare Battle
In a surprising twist, Uber ($UBER) dazzles with robust profitability, beating EPS expectations for the fourth consecutive quarter. Adjusted EBITDA sees a remarkable 110% year-over-year surge to $1.1 billion, reaching an all-time high margin of 3.1%. Despite falling short of revenue estimates, Uber showcases resilience amid consumer spending concerns. Uber Eats steals the spotlight, with adjusted EBITDA soaring by 128% year-over-year, defying past skepticism about sustained profits. Uber's strategic focus on higher profits and strong Gross Bookings guidance for Q4 instill confidence in its leadership. As Lyft (LYFT) gears up to report, the rideshare battle intensifies, with Uber's solid quarter setting the stage for a competitive landscape.
eBay at a Crossroads: Challenges Mount Amid Economic Headwinds and Holiday Hopes Dim
This week, eBay ($EBAY) finds itself navigating stormy waters as economic pressures at home and abroad lead to a gloomy Q4 sales forecast. Despite eking out its third straight earnings beat in Q3, the platform faces headwinds from a challenging consumer environment in the U.S., U.K., and Germany. While Q3 showcased resilient numbers, including adjusted EPS of $1.03 and revenue growth to $2.5 billion, the Q4 outlook reflects the impact of rapidly changing economic dynamics. Disappointing trends in GMV and shifting consumer preferences towards lower-priced goods hint at tougher times ahead. With eBay projecting adjusted EPS of $1.00-1.05 and revenues of $2.47-2.53 billion for Q4, the e-commerce giant faces a bumpy road as it anticipates a challenging holiday quarter.
Upwork Powers Up: Q3 Surges with Strong Financials, AI Enhancements, and Enterprise Expansion
Upwork Inc ($UPWK) is riding high on a wave of success, unveiling robust Q3 2023 results that surpass expectations. With earnings of $0.21 per share and revenues surging by 10.8% YoY to $175.73 million, the world's work marketplace is outperforming. Notably, GAAP net income witnessed a remarkable turnaround, reaching $16.3 million from a net loss of $(24.8) million in Q3 2022. Bolstered by strategic AI initiatives, Upwork is becoming a go-to destination for AI-related talent, evidenced by a 10x increase in the AI Services hub's monthly visitors. Enterprise growth is also notable, with 23 new clients added in Q3, including Dropbox and Moderna. The financial outlook is bullish, with raised guidance for 2023 and a $100 million share repurchase program in play. Upwork's success story is not just about numbers; it's about shaping the future of work.
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