What Happened In The Stock Market This Week?
This week in the stock market saw retail giants such as Lowe's ($LOW), AutoZone ($AZO), and BestBuy ($BBY) release their latest earnings report. All of which are adapting and finding ways to navigate through changing consumer behavior and a challenging macroeconomic environment.
Emerging brands such as energy drink maker, Celsius Holdings ($CELH), and popular dating app, Bumble ($BMBL) release their latest earnings reports. While Celsius crushed their earnings expectations and looks to continue to climb to the top of its industry, Bumble had a disappointing earnings release, announced layoffs and looks to find ways to innovate in a industry that has been lacking innovation for close to five years now.
Last, we'll cover our small-cap highlights of the week. This week we'll cover SoundHound AI ($SOUN), an artificial intelligence company with ties to NVIDIA, and two bio-medical companies, Vani Medical ($VANI), and Envoy Medical ($COCH) that made noise with week and caught the eye of investors, volatility chasers, and short-sellers alike.
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Lowe's Companies Inc. ($LOW):
We'll start with one of the most well-known retailers in the United States; Lowe's. Shares of $LOW jumped 3% during the morning session on Tuesday after the home renovation retailer released quarterly earnings. Lowe's beat Wall Street analyst estimates for earnings and revenue, even as the company continued to see customers take on fewer home projects. The retailer was facing lower expectations for its fourth quarter after it had cut its full-year forecast in November, after CEO, Marvin Ellison said there was a "greater-than-expected pullback" on pricier items and discretionary at-home projects. Ellison went on to state in an interview with CNBC, that demand for DIY (do-it-yourself) home projects has been hit by a drop in housing turnover and a shift in consumer behavior toward spending discretionary income on services rather goods, but he did note that he believes the U.S. consumer is still in healthy shape. Company rival, Home Depot, echoed this same sentiment in its most recent earnings release. Lowe's posted better-than-expected EPS (earnings per share) and beat revenue expectations for the quarter. The company hit a 52-week high on Tuesday despite the challenges the retailer faces. Company CEO, Marvin Ellison noted, "As we look at 2024, we expect DIY demand to remain under pressure in ther near term, but we feel great about the medium to long-term outlook for our business and candidly for the home improvement industry in general."
BestBuy Co. Inc. ($BBY):
Shares of $BBY spiked more than 6% on Thursday morning after the release of the company's latest quarterly earnings report, but did drop more than 3% during the morning session on Friday. BestBuy beat Wall Street analyst earnings and revenue expectations for the holiday quarter. This comes even after the company navigated through a period of lackluster consumer demand for electronics. The company also warned of another year of soft sales figures and said it plans to lay off workers and cut other costs across its business. CEO, Corie Barry did not get into specifics, but did say that the company needed to make sure its workforce and stores match the consumers' changing shopping and spending habits. She did note that the cuts in labor and other areas will allow the company to invest back into the business and in newer areas such as artificial intelligence. She stated, "This is giving us some of that space to be able to reinvest into our future and make sure we feel like we are really well-positioned for the industry to start to rebound."
BestBuy plans to close 10 to 15 stores this year after closing 24 the previous fiscal year. Barry notd that one challenge that will affect sales in the year ahead is that the year is actually a week shorter. The company said the extra week in the past fiscal year lifted revenue by about $735 million and boosted diluted earnings per share by about $0.30. BestBuy posted earnings per share of $2.72 vs. expectations of $2.52, and posted quarterly revenue of $14.65B vs. expectations of $14.56B.
AutoZone Inc. ($AZO):
Shares of $AZO jumped more than 7% during the morning session on Tuesday after the release of the company's quarterly earnings report. AutoZone posted quarterly revenue and profit that exceeded analysts' expectations and got a lift from increased merchandise profit margins and lower supply chain expenses. The company actually rose to an all-time high in share price on Tuesday after the stellar earnings release. AutoZone reported second-quarter fiscal diluted earnings per share of $28.89, up from $24.64 for the same period from the previous fiscal year. Net income rose a whopping 8.1% to $515 million, and revenue rose 4.6% to $3.86B as same store sales increased 3% in the year-on-year comparison. CEO, Phil Daniele said the results were strong even as the company faced, "a difficult holiday comparison for both Christmas and New Year's" in sales. The company noted that they opened 19 new stores in the U.S., closed three, opened 6 in Mexico, and 4 in Brazil, for a total net addition of 26 stores. As of this month, the company has a total of 7,191 locations; 6,332 in the U.S., 751 in Mexico, and 108 in Brazil.
Bumble Inc. ($BMBL):
Shifting to emerging brands and potential growth companies, we'll start with the dating app, Bumble. Shares of $BMBL fell more than 12% during the morning session on Wednesday after the release of the company's latest earnings report during the after-hours session from the previous day. The company issued pessimistic quarterly revenue forecasting, underscoring the need for a revamp of the dating-app experience to attract newer generations seeking companionship. The company also stated that they plan to layoff about 350 workers, equaling approximately 30% of its total workforce. CEO, Lidiane Jones, aims to take on the difficult challenge of steering the company through sluggish user spending in an industry she said "hasn't seen true innovation in several years.". She announced plans to relaunch its eponymous app and refresh its Premium Plus subscription offering. This comes weeks after Tinder revealed it was updating its apps to appeal to Gen Z users and women as they also project to miss revenue in Q1 as well. Both companies hinted that they plan to begin using generative-AI to improve their app experience, but neither have detailed how the technology can drive new features. Analysts are expecting revenue growth to be slower-than-expected for Bumble as product improvements may take time to gain traction among users.
Celsius Holdings, Inc. ($CELH):
Shares of $CELH spiked more than 15% after ther release of the company's latest earnings report in which the energy drink maker reported record sales in Q4. The company reported earnings of $0.17 per share compared to a loss of $0.12 per share from the previous year. Revenue in Q4 alone spiked to a Q4 record of $347.4 million. The company did, however, miss consensus earnings forecast of $0.18 per share. On Amazon, Celsius was the highest-selling energy drink for the 14-week period ending Dec. 30, taking up a whopping 19.7% of the category. It even beat industry giants, Monster who came in slightly lower, at 19.6%, and RedBull who took 12.3% of the market share. North American sales increased 97% for the quarter to $332.8 million while international revenue jumped 68% to $14.6 million.
Envoy Medical Inc. ($COCH):
Kicking off our small-caps coverage this week, we'll start with the company that jumped by more than 500%, Envoy Medical Inc. ($COCH). Shares of $COCH are up nearly 500% on the week. The company experienced a significant surge in stock price with 2.34 million shares exchanged. The volatility actually comes at a time when the company faces legal investigations regarding potential securities claims by shareholders related to discrepancies related to a forward purchase agreement. The spike in price comes after a recent FDA approval for its Esteem fully-implanted active middle ear hearing device, which may now become a coverable benefit, potentially impacting the company's future growth and innovation trajectory. The company jumped from $1.25 per share to nearly $9 per share within 2 days, and as of Friday afternoon is trading at approximately $6.50 per share. Envoy Medical is a hearing health company that provides medical technologies for the hearing loss spectrum, including hearing aids, middle ear implants, bone conduction devices, and cochlear implants, and is headquartered in Minnesota.
Vivani Medical Inc. ($VANI):
Shares of $VANI spiked more than 400% during the morning session on Wednesday after the company released a press statement highlighting the promising preclinical results of their weight loss drug, NPM-115. This drug, which is a bi-annual implant for chronic weight management, could be a game-changer in the healthcare industry. The share price soared more than $7 per share but has since fallen to below $3.10 per share as of Friday afternoon. Vivani Medical is a clinical stage company that develops various implants which treat chronic diseases with high unmet medical need. It engages in developing a portfolio of miniature frug implants to deliver minimally fluctuating drug profiles; and implantable visual prostheses devices to deliver useful artificial vision to blind individuals. The company is headquartered in California.
SoundHound AI Inc. ($SOUN):
Concluding our Traders' Recap and our coverage of the major small-cap highlights of the week, we'll discuss SoundHound AI ($SOUN), the company with ties to NVIDIA ($NVDA). Shares of $SOUN jumped more than 30% during the morning session on Tuesday and rose day-over-day until the release of the company's latest earnings report and then fell more than 20% during the morning session on Friday from its previous close on Thursday. The company missed both revenue and earnings expectations from Wall Street analysts, along with the company pushing back the date at which it expects achieve a positive result for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). In Q4, management reaffirmed that it anticipated reaching this target in Q4, but that did not happen. In fact, that metric was negative $3.7 million in Q4. Company share prices have soared following news that AI-chip leader, NVIDIA filed an SEC disclosure that it bought a small stake in SoundHound, roughly 1% or approximately 1.73M shares. SoundHound AI, develops independent voice AI platforms that enable businesses across industries to deliver high-quality conversational experiences to their customers.
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Resources:
$LOW:
https://www.cnbc.com/2024/02/27/lowes-low-q4-2023-earnings.html
$BBY:
https://www.cnbc.com/2024/02/29/best-buy-bby-earnings-q4-2024.html
$AZO:
$CELH:
https://www.investors.com/news/celsius-swings-to-profit-breaks-out-monster-beverage-rallies/
$BMBL:
$COCH:
https://finance.yahoo.com/quote/COCH/profile
$VANI:
https://finance.yahoo.com/quote/VANI/profile/
$SOUN:
https://www.fool.com/investing/2024/03/01/soun-stock-earnings-q4-ai-stocks-nvda-owns/
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