Hold That Trigger Finger

Hold That Trigger Finger

Happy Friday folks!

Cyber Week is coming to an end and the big e-commerce firms are probably counting their cash right now. Unfortunately, the rest of the market wasn’t so lucky after news of the new Omicron variant of COVID-19 spooked investors, sending stocks plummeting.

All’s not lost though, with some familiar names amongst the winners and losers this week, so let’s tuck in.

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

Moving Up ⬆️

Chegg (CHGG) +9.8%

Zendesk (ZEN) +5.4%

Apple (AAPL) +5.1%

Huazhu Hotels Group (HTHT) +3.1%

Pure Storage (PSTG) +2.5%

Moving Down ⬇️

Stitch Fix (SFIX) -19.2%

Cloudflare (NET) -17.9%

Eventbrite (EB) -16.0%

Bill.com (BILL) -16.0%

Teladoc (TDOC) -14.8%

Moving up

Chegg (CHGG) +9.8%

It may have been a rough number of months for the EdTech leader, but investors were mighty pleased with its acquisition of online language-learning startup Busuu this week. The all-cash, $436 million deal gives Chegg access to Busuu’s more than 500,000 paying subscribers whilst also expanding its own offerings to existing Chegg users. That’s not all though, as investors reacted positively on Monday to Chegg’s announcement of an accelerated share repurchase. This is considered a strong sign of the company’s confidence as it suggests that management believes Chegg to be currently undervalued. It’s still hard to look at Chegg’s 70% decline year-to-date (YTD) though, but perhaps it can end the year on a high. 

Apple (AAPL) +5.1%

Apple investors have had a strong few days. Despite overall declines early in the week, Apple stood out as a ray of hope in an otherwise Omicron-induced red market. Without any company-specific news to buoy the Cupertino giant, investor confidence is derived from its unrivaled cash flow, which Apple can use to its advantage in holding firm through any economic slowdown and take advantage of prices as they fall. This strength, coupled with recent hype around new products in 2022 and the long-awaited Apple Car, made for a potent winning formula. Be warned though, following reports last night of slowing iPhone sales, we might be seeing a different story for Apple next week.

Moving down

Stitch Fix (SFIX) -19.2%

The market has not been kind to Stitch Fix in 2021 as its stock price has plummeted 60% YTD. The digital styling service was never going to repeat its 2020 highs, but investors are unhappy with seemingly ‘unexplosive’ growth. That’s not to say its growth hasn’t been strong, with active clients growing 18% in the last quarter and its top-line jumping 44%. The main uncertainty going forward actually lies largely with — you guessed it — supply chain issues. Supply bottlenecks have plagued retailers this year, with the backlog not expected to clear up until late 2022. Investors should keep an eye out for the company’s Q4 earnings report next Tuesday, and potentially get the stock at a discount. 

Everyone else

There is little to no company-specific news for many of the companies among this week’s losers. Much of the fear and decline simply stems from Omicron variant uncertainty and concerns of a return to lockdowns. For growth stocks, in particular, many inventors are getting agitated about the recently released minutes from the Federal Open Markets Committee's November meeting. These notes suggested that the Federal Reserve could raise interest rates sooner than expected to fight inflation. Many high-growth companies rely on debt to generate capital. Higher interest rates can result in higher interest expenses and lower profits. 

Once more, short-term pain in the stock market is causing itchy trigger fingers among investors, but that’s why we here at MyWallSt play the long game. Hopefully, we’ll be looking back on this period and say to ourselves that holding through the storm was the best financial decision we ever made.