Friday's Headlines: Affirm Slides on Disappointing Earnings

Friday's Headlines: Affirm Slides on Disappointing Earnings

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Pinterest (PINS) +14.1%

Baozun (BZUN) +7.8%

Roku Inc. (ROKU) +6.4%

Trupanion (TRUP) +5.6%

Lemonade (LMND) +5.4%

Moving Down ⬇️

Peloton Interactive (PTON) -18.3%

Hain Celestial (HAIN) -4.4%

Salesforce (CRM) -3.4%

ShotSpotter (SSTI) -1.0%

Nordstrom (JWN) -0.8%

Here are the stories that you need to know ahead of market-open today, Friday the 26th of August.

Affirm Slides on Disappointing Earnings 🛝

Affirm is trading 14% lower in pre-market trading at time of writing after last night’s less-than-stellar earnings report. The buy-now-pay-later pioneer took in revenue of $364 million for the final quarter of its fiscal year 2022, however, this figure was down quarter-over-quarter and management’s guide for just 28% growth for the next quarter portrays a steep drop off in the company’s growth rate.

The company remains deeply unprofitable, with its net loss widening to $186 million, and delinquencies also on the rise — an issue we have seen rear its ugly head across all lenders as interest rates and inflation wreak havoc on the industry. It was not all doom and gloom though, with gross merchandise volume (GMV) exceeding expectations, up 77% year-over-year, and the number of active consumers nearly doubling from the same period last year.

However, investors could not get past management’s conservative full-year guidance of $1.6 billion to $1.7 billion in revenue. CFO Michael Linford said the company is approaching the upcoming fiscal year “prudently… In light of the uncertain macroeconomic backdrop.”

Affirm stock is down 67% year-to-date before today’s imminent drop.

Peloton’s Comeback Ends Abruptly 🛑

Not even a day had passed since Peloton (PTON) soared by over 20%, and it was right back where it had started. The exercise equipment manufacturer slid by more than 18% as an underwhelming earnings call wiped out Wednesday’s boost from the revelation of a new deal with Amazon.

The company’s net loss widened from $1.05 per share in the year-ago quarter to $3.68 in the quarter just ended. Revenue also declined by 28% to just under $679 million. One saving grace for the firm was that higher-margin subscription revenue accounted for the largest proportion of its overall sales, however, this simply can’t offset the other damning figures.

CEO Barry McCarthy, who took over from John Foley earlier this year in an attempt to right the ship, stated:

“The naysayers will look at our financial performance and see a melting pot of declining revenue, negative gross margin, and deeper operating losses. But what I see is significant progress driving our comeback and Peloton’s long-term resilience.”

He also added that “we still have work to do.”

Indeed it does, as not only did Peloton’s financials make for difficult reading for shareholders, the company also reported declining subscription numbers. While this was to be expected following price hikes to some of its subscriptions, that foresight in no way softens the blow.

Peloton is currently down just under 70% year-to-date as it undergoes a wholesale restructure in an attempt to execute McCarthy’s sweeping changes. Following a huge pandemic spike for the business, it’s now suffering more than most as the world has reopened and left some COVID darlings behind.

Ulta Beauty Shines During Earnings 💄

Shares in Ulta Beauty (ULTA) are up over 3% today pre-market as the company posted an impressive earnings call after the bell yesterday. The beauty store chain beat Wall Street estimates for both earnings and revenue in a fantastic show of strength.

Ulta posted adjusted earnings per share (EPS) of $5.70 on revenue of $2.3 billion — outpacing the analyst marks of $4.90 per share and $2.19 billion respectively. Despite the current macro environment, company president Dave Kimbell seemed optimistic about the trajectory of the firm:

“As we look to the future, we know there will be challenges, particularly with the wide-ranging impact of rising inflation, both on our business and our guests. But we remain confident in the resilience of the beauty category and our ability to lead the beauty category and drive long-term profitable growth.”

Ulta Beauty is one of the largest beauty retailers in the U.S. It currently has over 1,300 locations across all 50 states. Despite non-essential retail often taking a hit during times of economic distress, beauty spending has been shown to be effectively recession-proof, often increasing during periods of economic turmoil.

Ulta maintains a highly personal in-store experience, allowing customers to try before they buy, while being aided by a host of experienced professionals. It also has major partnerships in place with the likes of Target, and even managed to thrive during lockdowns by investing in its online offerings, supply chain, and advertising space.