Friday's Headlines: No Love for Lovesac
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Farfetch (FTCH) +6.2%
Zillow (Z) +6.1%
Chegg (CHGG) +5.9%
Teladoc (TDOC) +5.9%
Roku Inc. (ROKU) +5.7%
Moving Down ⬇️
Lovesac (LOVE) -12.4%
Baozun (BZUN) -6.0%
Calavo Growers (CVGW) -4.4%
ShotSpotter (SSTI) -2.9%
Copart (CPRT) -1.6%
Here are the stories that you need to know ahead of market-open today, Friday the 9th of September.
No Love for Lovesac 💔
Shares in everyone's favorite couch manufacturer The Lovesac Company (LOVE) fell by more than 12% on Thursday after it reported results for the second quarter of fiscal 2023. The market’s reaction is somewhat of a shock to fans of the brand as most key performance indicators looked pretty positive.
Coming into the quarter, management had guided for 25% to 30% revenue growth but Lovesac blew this figure out of the water, delivering 45% sales growth year-over-year representing $148.5 million. Lovesac also reported earnings-per-share (EPS) of $0.45, down slightly from the same period last year, but this was due to changes in the company’s taxes rather than a decrease in profitability.
The sharp decline in the company’s stock price must then be chalked up to management’s elusive guidance for the upcoming quarter. Executives refused to give hard numbers but said they expected around 15% year-over-year net sales growth.
Additionally, analyst Camilo Lyon at BTIG lowered his price target for Lovesac from $100 per share to $80 per share. However, this still leaves plenty of upside for the stock at its current price.
All that being said, Lovesac CEO Shawn Nelson seems undeterred by short-term headwinds and the punishing market. During the company’s earnings call he stated:
“The significant runway we have with our strategic initiatives combined with our focus on disciplined execution gives me confidence in our ability to drive our share gains in any type of macro environment while also accelerating our growth investments as we continue to scale the business.”
Investors Cheer DocuSign’s Strong Outlook
DocuSign (DOCU) stock is up massively in premarket trading this morning after the company reported an excellent second quarter, while also raising expectations for the current quarter.
In its earnings call last night, the e-signature pioneer posted a 22% jump in revenue compared to the same period last year. Of that total sales figure of $622.2 million, more than 97% came from subscriptions, indicating the importance of recurring customers to the business.
On the bottom line, DocuSign reported a profit of $0.44 per share (excluding some items), which was better than analyst estimates of $0.42 per share.
The past year has been a tough one for Docusign. Since November 2021, the stock price has fallen some 80% as workers returned to their offices and the so-called ‘stay-at-home’ stocks lost some relevance. Last December, for example, the stock plummeted more than 40% in one day after management forecast revenue growth that came in well below what investors had expected.
At the time, CEO Dan Springer acknowledged, “while we had expected an eventual step down from the peak levels of growth achieved during the height of the pandemic, the environment shifted more quickly than we anticipated.” Springer has since resigned and the company is being led by interim CEO Maggie Wilderotter.
While there are still some macroeconomic challenges for DocuSign, however, the company raised its expected full-year subscription revenue guidance to between $2.405 - $2.417 billion, prompting the jump in stock price.
Rivian Teams Up With Mercedes-Benz 🤝
Rivian shares got a substantial boost yesterday and remain up in pre-market trading this morning after the EV-maker announced it is planning a joint venture with Mercedes-Benz in Europe.
In the statement published yesterday, the two automakers said that they will build large, electric commercial vans on a shared assembly line. Both brands will get their own model and they expect to reduce production costs by sharing technology, suppliers, and other components in the manufacturing process.
The companies will build the new facility at an existing Mercedes-Benz site in Europe, so production is not expected to start for another few years.
Mercedes-Benz is a well-established European manufacturer that has been producing commercial vehicles for decades. Rivian, on the other hand, only began building its own EV pickup trucks earlier this year, and more recently, started production of EV delivery vans for Amazon.
Announcing the deal, Rivian CEO RJ Scaringe said, “We believe that together we will produce truly remarkable electric vans which will not only benefit our customers but the planet.”