A Zoom Without A View, Dick’s New Tricks & Best Buy Battered ‘N Fried

Pandemic With and Without Zoom Castaway Wilson Meme

Zoom For A Change Of Atmosphere

Situation no win. Zoom Video Communications (Nasdaq: ZM) for a change of atmosphere. ZM stock can’t go on, so I give in. Gotta get myself right outta here…

Big Audio Dynamite, anyone?

The pandemic proved to be a kingmaker for many work-from-home companies, and few benefitted more from the rolling lockdowns than Zoom Video Communications.

Personally, I loved the memes that popped up from Zoom meetings. Suit on top, pajamas on the bottom … you know who you are.

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But now that the lockdowns are over and people are returning to the office — nature is healing! — Zoom finds itself in a “situation no win,” and it shows.

On the surface, last night’s quarterly report appeared to be solid.

Earnings rose 12% to $1.11 per share, while revenue soared 35% to $1.05 billion. User growth was also strong, rising to 2,507 customers spending $100,000 each annually, up from 2,278 customers last quarter.

But the road doesn’t go on forever, and the party does end. Sorry, Robert Earl Keen.

Zoom’s big stumbling block is maintaining its pandemic momentum in a post-pandemic world. Last night’s report did Zoom no favors on that front. In fact, the company failed to provide full-year 2022 guidance.

This has made a lot of people very angry and has been widely regarded as a bad move.

Remember the lines to buy toilet paper back at the beginning of the pandemic? Yeah, Zoom’s downgrade line looked a lot like those. Deutsche Bank, BTIG, Baird, Guggenheim, Wells Fargo, Stifel, UBS, Piper Sandler and KeyBanc — wow, what a list! — all slashed their ZM stock price targets.

What’s more, all of them said that they liked Zoom’s potential in key growth areas but that slowing revenue and growth were a problem. Clear as mud, right?

Let’s hear from Deutsche Bank:

While we’re positive on Zoom’s strategic initiatives and investments in key growth areas, we find it tougher to like a stock with more sharply decelerating growth and incremental pressure on profitability.

Yeah, that about sums it up. The basic gist of Wall Street’s concern is uncertainty.

We all know that the work-from-home movement isn’t dying. There’s no way you’re forcing that cat back into the bag now that it’s been out for nearly two years. But we clearly won’t see the same flood of video conferencing that we saw during the lockdowns.

Finally, Zoom isn’t helping with Wall Street’s anxiety. I mean, if you know analysts are uncertain about your growth prospects post-pandemic, you have to expect a flood of negativity when you don’t provide any guidance at all. Even low guidance would’ve been better than no guidance.

That’s the real reason ZM stock was down more than 20% heading into last night’s report, and why the shares plummeted 16% today.
You know what I think Zoom should do? Get into the metaverse now! You could be virtually at your desk all day while still being at home. Two birds, one technology. Or something like that.

For now, though, I expect ZM stock to remain locked in its bearish downtrend until the company has some kind of outlook — literally any kind of outlook — for the post-pandemic market.

Until then, don’t get too high and keep your feet on the ground. Rush for a change of atmosphere…

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Great Stuff Good Better Best

Good: XPeng Pong

Morpheus Matrix Xpeng Gonna Give It To Ya Meme

OK, Great Ones … you have an “I told you so” coming. More than a few of you have written in this year to let me know I should pay closer attention to Chinese EV maker XPeng (NYSE: XPEV), and you were right.

This morning, XPeng released an impressive quarterly report. Revenue skyrocketed 187% year over year to $887.7 million, beating Wall Street’s estimate by $67.82 million. XPeng also said that it delivered 25,666 EVs last quarter, up nearly 200% from last year.

Earnings were mixed, depending on how you look at them — either beating by $0.06 per share on a non-GAAP basis or missing by $0.06 per share on a GAAP basis. (GAAP stands for generally accepted accounting principles, in case you were wondering.)

But with revenue and deliveries growing nearly 200%, no one’s looking at earnings. Nor should they, with XPeng being a startup EV company still in the prime of its growth phase.

Speaking of which, XPeng also put fourth-quarter revenue at between $1.1 billion to $1.2 billion. That’s a gain of 149% to 163% from the year prior and well above the 104% growth rate Wall Street expected.

No wonder XPEV stock rocketed to a 14% gain on the open. I’m gonna have to keep a close eye on this one, Great Ones. Yeah, yeah … you told me so.

Better: The Best Of Buys?

Best Buy Doggo RAM on a Budget Meme

I almost feel sorry for Best Buy (NYSE: BBY) investors today.

The retail renegade is down over 15% despite reporting strong third-quarter earnings results … and not because it still can’t stock PS5 or Xbox consoles on its shelves, either.

By all accounts, Best Buy stock should’ve been in the green today. Revenue hit $11.91 billion, versus estimates for $11.58 billion. Earnings also came in at $2.08 per share, versus analysts’ $1.91 per-share expectation.

Adding insult to injury, Best Buy said that same-store sales rose 2% in the U.S., which came in 22.6% higher than a year ago. For context, that exceeded Best Buy’s own expectations of same-store sales being flat to down 3% this quarter.

So, why the long face?

You guessed it: Supply chain hiccups and semiconductor production delays have investors concerned that Best Buy could have barren shelves this holiday season.

To top it all off, analysts are worried that we might experience weaker demand for consumer electronics heading into the fourth quarter … when people tend to splurge on all kinds of gadgets they can’t justify buying during the rest of the year. (I never said the math checked out.)

Now, I’m not saying that supply chain issues and electronics shortages aren’t a real concern. They are. But I also believe investors have gone overboard on their negativity at this point.

If you like Best Buy and you’ve been looking for a good entry price, now might be a good time to pick up some shares. After all, BBY stock was up big before the company stepped into the earnings confessional … and none of its whispered “sins” justify this kind of profit-taking.

Today’s sell-off is mainly just fearmongering, and I expect BBY stock will rise again once the holiday hoopla gets underway.

Best: Sportin’ A Goodie

Dick's Sporting Goods Trampoline Wall Street Meme

Ah, I see Dick’s reported earnings last night. Surely, Great Stuff will report the details with no childish commentary or pun-based tomfoolery whatsoever…

It’s like you don’t even know me! Where there’s a story on Dick’s Sporting Goods (NYSE: DKS), there’s a million possible ways to make everyone uncomfortable, so … we’re just moving on.

Where there’s a confident retailer, there’s Dick’s. And where there’s a double-beat-and-raise report, there’s a rip-roarin’ rally right behind it … right?

Wrong. Dick’s reported one of its best quarters this year — a year already filled with many such “best” quarters — and yet DKS still sank 10% today.

Per-share earnings totaled $3.19 and absolutely pummeled analysts’ estimates for $2.06. Revenue soared like a shotput up to $2.75 billion and handily topped expectations for $2.5 billion.

Dick’s grew its same-store sales 12.2% on the quarter, whereas Wall Street worrywarts only predicted a 3.5% rise. (Take that, Best Buy.)

Supply chain issues? Never heard of ‘em… Or, at least, Dick’s stayed tight-lipped about any potential holiday-season shipping hurdles and kerfuffles: “As we said before, we believe this will be the most transformational year in our history, and we expect to continue this transformation into 2022,” says Dick’s Executive Chairman Ed Stack.

That’d sure be convenient — then Dick’s can brag up how next year is the most transformational year ever, and the year after that, and the year after that too. Dick’s is just … infinitely transformational, year in, year out. Hey Ed, nice Stack!

So why is Dick’s down 10% today? Well … why not?

DKS shares have been pumped up like an overfilled basketball all pandemic long, and it was only a matter of time before all of that investor air escaped in a burst of profit-taking. So she goes, Dick’s investors. So she goes.

Quote of the week

When Canadian cannabis laws evolve to include delivery, options like Uber Eats are expected to help decrease impaired driving and improve safety on the road.

Public First, U.K. consulting company

Cannabis users in Ontario, Canada, are living the dream, Great Ones. Not only do they have easy access to a plethora of cannabis products, but they can also get those products delivered right to their door.

Well … that’s the dream, anyway. And that dream may not be all that far away, thanks to a partnership between Canopy Growth (NYSE: CGC) and Uber (NYSE: UBER).

Tokyo Smoke, a cannabis store with 56 locations, is owned and operated by Canopy Growth. The company just announced a partnership with Uber Eats to provide online ordering for pot and pot accessories for lucky Ontarians.

So, despite Uber Eats’ ability to deliver those cannabis products right to your door, you’ll still have to leave your house to get your smoke on. Federals laws … am I right?

According to Uber Eats Canada, this is still a boon for consumers:

By combining a streamlined ordering process through the Uber Eats app with Tokyo Smoke’s in-person pickup service, we’re creating a new end-to-end experience for responsible cannabis ordering across the province.
Canada U.S. Pot Smokers Let Me In Meme

But the idea of door-to-door cannabis delivery is there. The potential is there. And Canada might just be crazy enough to allow cannabis delivery to actually happen.

After all, you can already have alcohol delivered right to your door in much of Canada. Why not pot?

And if it’s legal, the last thing you want is stoners driving to the store to refill their stash … much in the same way you don’t want anyone drinking alcohol and driving.

But this is an investment rag, not a sociopolitical e-zine … so, we’re not going too deep into that one. I’ll let you guys handle that, and if you have anything in particular on that front you want to rant about, let me know at GreatStuffToday@BanyanHill.com.

All I’m saying is that the investment potential is there.

Cannabis growers could make a ton of money with door-to-door delivery … and so could Uber Eats. Imagine ordering your pot and your munchies from the same app and having them both delivered at the same time!

Canopy and Uber Eats? Now that is a business tie-up I can get behind.

Y’all already know what’s on my mind, but I’m dying to know what you think about cannabis delivery.

Tell me what’s on your mind this week: GreatStuffToday@BanyanHill.com. We’d love to hear from you!
In the meantime, here’s where else you can find us:

Regards,
Joseph Hargett. Editor of Great Stuff

Joseph Hargett
Editor, Great Stuff

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