Why Is RH Up 9%?

Why Is RH Up 9%?

Happy Friday folks! 

As you can tell from the market-movers, an increase in Delta variant cases, coupled with an expected slow down in growth for the upcoming quarter, is having varying effects on some of the stocks in our shortlist. 

If short-term swings and red marks in your portfolio are getting you down, make sure to refresh your investing mindset to remind yourself what game you’re playing. For some insights, give our recent article a read: What Game Are You Playing?

Here were the biggest movers in the MyWallSt shortlist this week:

Moving Up ⬆️

RH (RH) +9.4%

Etsy (ETSY) +8.3%

DraftKings (DKNG) +5.9%

iRobot (IRBT) +5.4%

Ulta Beauty (ULTA) +5.4%

Moving Down ⬇️

Wix (WIX) -21.6%

2U (TWOU) -8.2%

Lemonade (LMND) -6.3%

Nautilus (NLS) -5.9%

Roku Inc. (ROKU) -5.6%

What investors need to know 

RH (RH) +9.4%

Growth and tech stocks took a back seat as recovery plays shone thanks to this week’s report which showed that U.S. inflation did not increase in July. Housing-related retailers like RH and Home Depot (HD) are expected to benefit as long as inflation keeps interest costs down. Notably, RH also covers both sides of the COVID-19 play. If the economy does not reopen as quickly as expected, RH has a strong e-commerce service to rely on, and if pandemic restrictions fade fully, its flagship design studios will bring in more customers looking for luxurious furnishings.

Etsy (ETSY) +8.3%

With Delta variant cases rising, e-commerce stocks are starting to look attractive again. As the seven-day average infection rate in the U.S. has jumped to more than 100,000 cases, e-commerce firms are expected to triumph as consumers shy away from in-store shopping. After reporting Q2 earnings last week, Etsy stock fell due to the company estimating a slowdown in growth. However, the recent drop represented an ideal buying opportunity this week for investors wanting to take advantage of the dip. The vintage reseller now has a great opportunity to assert its position as the one-stop-shop for all things original in the thriving e-commerce space.  

DraftKings (DKNG) +5.9%

Acquisition news caused DraftKings shares to spike this week after the sports betting company declared its plans to snap up Golden Nugget Online Gambling for an eye-popping $1.56 billion. With the purchase, not only will DraftKings have access to Golden Nugget’s 5 million customers but will also be put in front of a new type of audience — casino gamblers. Last Friday, DraftKings also reported an impressive earnings beat, recording a 320% jump in revenue and boosting full-year guidance, which the market reacted to favorably this week too. 

Nautilus (NLS) -5.9%

Following a pandemic-fueled boom, investors are now concerned that Nautilus is all out of growth potential. Despite topping analysts’ estimates and reporting gross profits of $55.5 million, (up 17% year-over-year), shareholders were not impressed with the firm saying it expects lower direct sales in the next quarter. If we focus on the big picture, there were some positive outcomes from the report. For example, Nautilus welcomed 40,000 new customers in Q1 and its total sales increased 62%, its highest quarterly result ever. 

Roku Inc. (ROKU) -5.6%

Valuation concerns are starting to appear after Roku reported that total streaming hours fell by 1 billion YoY in Q2. Currently, the brand-agnostic streaming service is being valued at around 23x its trailing 12-month revenue, which is making investors question how much the company can continue to grow post-pandemic. On a positive note, Roku announced this week that it is adding 23 new shows to its ‘originals’ collection to attract more advertisers and boost revenue. The debate on its short-term valuation might be spooking investors, but that should not take away from Roku being a great long-term play as the streaming industry grows. 

NicoleNicole

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