Thursday's Headlines: Peloton Inks Deal with Amazon
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Farfetch (FTCH) +21.3%
Peloton Interactive (PTON) +20.4%
StoneCo (STNE) +5.9%
Bill.com (BILL) +5.0%
Nautilus (NLS) +4.9%
Moving Down ⬇️
Nordstrom (JWN) -20.0%
Duluth Trading (DLTH) -2.3%
Adobe Inc. (ADBE) -1.2%
Arista Networks (ANET) -1.0%
Here are the stories that you need to know ahead of market-open today, Thursday the 25th of August.
Peloton Inks Deal with Amazon 🚴♀️
Shares of Peloton (PTON) soared 20% yesterday after the company announced plans to start selling its connected fitness products on Amazon. Until now, Peloton has only sold its products through its website or physical stores. The move comes as new CEO Barry McCarthy tries to restore investor confidence in the flailing company.
Peloton will shortly start selling its original Bike and its new strength training product, the Peloton Guide, on Amazon. It’s more expensive Bike+ and Tread will not be part of the tie-up. The company’s Chief Financial Officer Kevin Cornils said that over half a million searches for Peloton happen on Amazon every month, and that the company would explore similar deals with other retailers.
Customers will also have a “self-assembly” option rather than scheduling time with a Peloton installer.
Peloton shares surged during the COVID-19 pandemic as consumers looked for novel ways to work out during the lockdown. That demand failed to carry over as lockdown measures eased, with the company facing inventory issues and rising costs. CEO Barry McCarthy has committed to making the company's products and content more accessible in a post-COVID environment. Earlier this month, the company announced fresh cost-cutting measures that included layoffs and price hikes.
McCarthy is a veteran of Netflix and Spotify, and has identified the company's subscription business as its key growth driver over the coming years. He recently said he still believes the company can achieve 100 million subscribers, a target set by co-founder and former CEO John Foley back in 2020. Last quarter, the company reported about 7 million members.
Shareholders Sour on Salesforce ⛈
Despite beating analyst estimates for both revenue and earnings, Salesforce (CRM) finds itself down over 6% today in pre-market trading as weakened outlooks for the current quarter and full year take their toll.
The San Francisco-based software company posted adjusted earnings per share of $1.19 on revenue of $7.72 billion — outpacing analyst estimates of $1.02 per share and $7.69 billion respectively. Revenue rose 22% year-over-year, but net income was down over 87% on the year-ago quarter following outsized gains on investments in that period.
Looking ahead, Salesforce was forced to cut its guidance for the quarter and year ahead. The company is expecting a significant negative foreign exchange impact of up to $800 million for the year when compared with previous forecasts. This, coupled with more reserved spending from businesses, has led to Salesforce adjusting its forecast.
“Nearly everyone I’ve talked to is taking a more measured approach to their business. We expect these trends to continue in the near term, and we’ve reflected this in our guidance,” explained co-founder and co-CEO Marc Benioff.
Salesforce is currently down just under 30% year-to-date, outpacing the losses of the S&P 500 as investors continue to be wary of previously high-flying tech stocks. However, with a suite of sought-after services, and a crown jewel in the form of Slack, Salesforce should have everything necessary to survive the current market.
Farfetch Strikes an Important New Deal ⌚️
Shares of Farfetch (FTCH) spiked more than 20% yesterday and remain up in pre-market trading this morning after the company announced that it would be acquiring a 47.5% stake in the online fashion retailer, YOOX Net-A-Porter (YNAP).
The all-stock deal will see Farfetch buy the majority stake in YNAP from Swiss company Richemont, the owner of luxury brands like Cartier, IWC, and Montblanc. Richemont, in turn, will get as much as 58.5 million Farfetch shares, as well as a further $250 million worth of shares five years after the deal is completed. Richemont will also start using Farfetch’s platform for its own omnichannel sales.
The confusingly-named YOOX Net-A-Porter is a multi-brand online e-commerce site that was formed in 2015 by the merger of the Italian Yoox Group and the English Net-A-Porter. Richemont took a majority stake in the business back in 2018 as a way to break into the e-commerce landscape, but despite heavy investment over the years, it has remained unprofitable.
This deal is a big boost for Farfetch, however. Although it does not fully own YNAP, it is effectively adding the brands associated with both Richemont and YNAP to its marketplace, becoming the undisputed leader in the luxury fashion industry.
Farfetch was founded in 2007 and went public on the NYSE in 2018, gaining a $1.4 billion valuation. The company operates primarily as an e-commerce marketplace where brands and designers can list their items, but it also owns its own luxury brands like Browns and Stadium Goods.
Like so many other tech stocks, Farfetch has struggled in recent times, with its stock down more than 70% since the start of the year.