The Investing Week Ahead: 10/25/21
Join me as I highlight the most important topics to attack the investing week ahead.
Don’t forget to allocate 5-15% of your investment portfolio to cryptocurrency. I shared my favorite crypto-focused tweets and call outs in this post last week.
I’m super excited to see Bitcoin (BTC) break through $100K, Ethereum (ETH) break through $6K, and Chainlink (LINK) break through $75 in the coming months.
Massive welcome to the 117 of you who have subscribed since last Monday - text me if you have any questions!
In this post, we’ll cover:
Hot IPOs taking place this week
Quarterly financial reports worth reading
Investor events to keep an eye on
Major economic releases
If you want to learn more about the companies mentioned in this post, consider using Unhedged to conduct your research.
IPOs to Watch this Week:
A few companies you’ve likely heard of are making their public debuts this week.
The New York-based company was founded to develop specialized semiconductor manufacturing in growing markets worldwide. Their manufactured devices are directly used to power smart mobile devices, IoT, communications infrastructure and big data centers, automobiles, and PCs.
The company garnered more than 200 customers by the end of 2020 - including Qualcomm, MediaTek, NXP, AMD, and others.
$3 billion in revenue was generated during the first 6 months of 2021, with only 11% of that trickling down to gross profit. The company has lifted themselves out of a deep operating loss of -$1.3 billion in 1H20, to now only -$300 million in 1H21.
We all know just how useful and desired these products are and, despite supply chain constraints and chaos right now, I’d imagine GlobalFoundries is making money just fine. I’m not going to discard this IPO by any means, but these margins don’t make me jump out of my seat. Perhaps they’re growing pains. (AMD = 51%, TSM = 52%, etc.)
Rent the Runway (RENT):
This company is especially popular among women - it’s a subscription service that allows them to rent high-end clothing, jewelry, handbags, and even home goods for a specified amount of time.
A massive call out for this company’s growth is the fact that it’s mostly word of mouth - with 88% of their customers over the last 12 years having come from organic sources.
Gross margins are north of 70% with revenue coming in around $160 million for the year of 2021 - a notable decline from the $256 million in 2020.
I’m going to be on the sidelines here - sure, a lot of women really like this company and maybe that catalyzes them to become investors, similar to Olaplex. But, unlike Olaplex being known as the absolute authority in bond building, Rent the Runway has countless copy cats and competitors. Going to do deeper research and definitely post a video about this though! If my conviction changes, you will know.
Now this company is exciting. The California-based company was founded to develop a platform for consumers and employees to take courses in numerous languages from instructors.
Courses on just about anything.
The platform counts more than 44 million learners with access to over 183,000 courses in 75 languages in over 180 countries.
The company did $276 million in revenue in 2019, $430 million in 2020, and they’re on pace to generate $500+ million in 2021 - unfortunately with -11% adj. EBITDA margins.
The good news? Their total marketing spend in relation to total revenue generated has been decreasing steadily throughout the years - meaning their marketing is becoming more effective, or word of mouth is beginning to speed up.
I’m excited about this company because I’m a firm believer we’re in the age of information and learning - catalyzed by the pandemic. A lot of people have been exposed to learning new skills to make money, pass the time, or to fuel interests. Udemy will see the upside from this. I’ll watch this IPO closely.
Key Earnings Announcements:
The ‘theme’ this week is Big Tech - which means all of our favorite tech companies will be sharing just how much money they’ve earned this quarter by stealing our data and listening in on our conversations.
Haha, I’m joking - sort of.
October 25: Facebook (FB)
October 26: Microsoft (MSFT), Alphabet (GOOG), AMD (AMD)
October 27: Boeing (BA), General Motors (GM), Ford (F), Coca-Cola (KO), McDonald’s (MCD)
October 28: Apple (AAPL), Amazon (AMZN), Shopify (SHOP)
October 29: ExxonMobil (XOM), Chevron (CVX)
Going to have my eye on quite literally every Big Tech company - especially Facebook. Those Facebook Files did this company no favors, and it’ll be interesting to see how they formally react. Also awaiting their potential announcement of a new name to incorporate the Metaverse.
I know it’s too early to tell, but I think a massive growth lever for YouTube (GOOG) could be if they can pull off dubbing existing content into other languages. The video below inspired this thought:
Two companies in our coverage universe sharing ideas with their shareholders - one of which is under a microscope.
October 27: Datadog (DDOG) Virtual Investor Meeting
October 28: Mark Zuckerberg, CEO of Facebook (FB), presents at Facebook Connect 2021 Conference
During last year’s Facebook Connect Conference, found here - the company spent a lot of time flexing their VR tech and video games. This year around, I’d imagine they’ll double down on Metaverse explanations and advancements.
Major Economic Updates:
Getting a glimpse into just how much money people are spending.
October 27: US Durable Goods Orders for September 2021
October 29: US Personal Income & Spending Report for September 2021
Neither of these reports should really impact the market - but it certainly would be encouraging to see these reports continue to trend up and to the right. Spend spend spend!
Coming Weeks: October CPI Data
I’ll be keeping a close eye on the Consumer Price Index (CPI) data for the month of October, as supply chain issues could lead to dramatic increases for prices across the board.
There should be great disparity across the board when it comes to price increases, but I went to see Dune at an AMC Theatre this weekend and they even had a sign that said “any price increases are due to the national supply chain issues.” That’s wild to see out at a movie theatre and felt somewhat quick to me.
This led me to check out Kalshi this morning to see if there were any event offerings for CPI data. Funny enough, the trend of the contract below was heading towards “Yes - the Consumer Price Index will rise more than +0.5% in October.”
The new CPI data should be released in the second week of November and we’ll be sure to circle back around on it. It’s just felt strange to have a written notice from my local theatre regrading inflation of prices - and clearly others are seeing much of the same.
Looking forward to an awesome week with you all!
Working on publishing a Subscriber-only analysis of Bank of America’s Top 10 stock picks - should be live here in a few days. Keep your eyes peeled!
Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
Your google sheet no longer works. Where are we seeing the current portfolio? Thanks!
What about inflation ? Do you think it’s coming ? What your thoughts ?