Market Movers: A Winner From The (Up)Start

Market Movers: A Winner From The (Up)Start

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Happy Saturday folks!

Like many of you, I’m sure, we’re pretty happy to be able to kick up our feet and relax, knowing that the market can’t produce any stories for us over the weekend — one hopes, at least. 

But that won’t stop us from looking back on what turned out to be yet another strange one on Wall Street. 

Let’s get to it. 

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

Moving Up ⬆️

Upstart Holdings (UPST) +39.6%

Zillow (Z) +13.1%

2U (TWOU) +12.6%

Airbnb (ABNB) +10.3%

Chuy's (CHUY) +6.9%

Moving Down ⬇️

Wix (WIX) -24.0%

Shopify (SHOP) -22.7%

Ericsson (ERIC) -16.7%

Trupanion (TRUP) -16.2%

Lovesac (LOVE) -14.8%

The Winners

Upstart Holdings (UPST) +39.6%

Bucking the trend of *subjectively* mediocre quarterly results and poor guidance amongst growth stocks, Upstart was the complete package for investors this week. The AI lending platform reported incredible revenue growth of 252% from the year-ago quarter to $305 million, while 2021 net income was $135 million — a huge jump from its $6 million in net income in 2020. And we haven’t even mentioned its guidance

No wonder investors were drooling this week, and they have every right to. Upstart has only just started tapping into the lucrative $600+ billion auto lending market at the tail end of 2021. It’s a massive opportunity that is yet to leave the crib, so the fantastic results Upstart just reported barely even consider the possibilities of this future growth potential. 

Add to this Upstart’s continued growth, soaring profits, and strong leadership, and you’ve got yourself a tasty investment sandwich — but unlike a sandwich, this could be around for the long-term.

Zillow (Z) +13.1%

Unlike its unfortunate housing rival, Redfin, things are looking pretty good for Zillow this week. And after losing almost three-quarters of its value since its early 2021 highs, a strong week was needed. Soaring off the back of its impressive Q4 earnings last week, Zillow has continued to wow investors. 

Having held up its hands at the end of 2021 and admitting that iBuying was a mistake, Zillow began wrapping up these home-flipping operations. And this is going very well, apparently, with inventory selling quicker than expected according to CEO Rich Barton:

“We’ve made significant progress in our efforts to wind down our iBuying business — selling homes faster than we anticipated at better unit economics than we projected. We feel even more confident today that exiting iBuying and eliminating the housing market balance sheet risk to our company and our shareholders was the right decision.”

With that out of the way, the business and its investors can look forward to Zillow’s bold plans of achieving $5 billion in revenue by 2025 and a 45% adjusted profit margin.

Airbnb (ABNB) +10.3%

Up roughly 25% year-to-date (YTD) and more than 30% since going public back in late 2020, Airbnb is enjoying a moment, and Q4 was the cherry on top. The company reported $1.5 billion in total revenue, an 80% increase year-over-year (YoY), and set a new record for Q4 net income, coming in at $55 million — a mighty improvement from the $3.9 billion loss it saw in the same quarter the year prior.

Since IPO’ing in 2020, Airbnb has now beat on three out of its five earnings reports, all in the midst of a global pandemic. The company has not only coped but continues to produce double-digit revenue growth while raising future guidance. Between $1.41 billion and $1.48 billion is now being projected for Q1 2022, well ahead of analyst estimates of $1.24 billion.

And things are really heating up long-term. Since the pandemic, 65% of people want to continue working from home, and 58% said they would look for new job opportunities if remote work wasn’t available to them, with 83% of people interested in relocating while having the ability to work remotely. Airbnb gives the option of “living anywhere at any time, for however long”.

Airbnb is truly one to watch right now. 

The Losers

Wix (WIX) -24.0%

“No news is good news,” as the old saying goes, but this was sadly not the case for Wix when it came to its guidance for the upcoming year. The Israeli software company declined to offer any annual outlook for some of its key financial metrics, with the firm blaming “a much higher level of volatility in demand for online services over the last year and a half due to COVID” for its measured silence.

This lack of guidance, along with underwhelming revenue figures and a slowdown in growth, has seen the company plummet by over 24% following its Wednesday earnings call. Investors, already understandably spooked by the lagging numbers, sold off in droves when the company was unable to stem the bleeding.

With what little guidance we did get, investors can expect a continued deceleration of Wix’s growth. However, the company noted that scaling back its growth investing should see its previous spending finally develop into profit-producing assets in the coming years. Wix seems to just need time, but how much of it investors are willing to give is still very much unknown.

Shopify (SHOP) -22.7%

In what seems to be a trend on Wall Street, Shopify is down almost 23% following its Q4 earnings call warning that the pandemic-related shopping spree seems to be coming to an end.

Shopify President Harley Finkelstein outlined just how good Shopify has had it over the past couple of years, labeling them as “extraordinary.” Revenue has almost tripled, and gross merchandise volume has more than doubled in a growth explosion that was never likely to be sustainable.

Investors sold off quickly following the news, leaving us wondering if this was truly the end of a remarkable run for the company. Considering just how successful it’s been since being added to the MyWallSt shortlist, we turned to our head analyst Rory to get his thoughts on the matter and to hopefully provide some calm amidst the storm.

Despite the sinking feeling experienced when seeing a loss like this in your portfolio — trust me, I know — Shopify retains a lot of its underlying value, so don’t play the death march quite yet.

JamieJamie

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