Happy President's Day Weekend.
Given the holiday weekend, you’re receiving the Week in Review today, and you’ll be getting The Investing Week Ahead in your inbox tomorrow.
Stonk Market Madness:
Stonk Madness is a free 64 stock bracket-style tournament where you can win real prizes (like an Apple Vision Pro) for correctly predicting head-to-head stock matchups in March.
Full rules, prizes, and schedule are all on the website here: stonkmadness.com.
Created by the team behind AfterHour, a social finance app that lets you follow real trades by real people for real alpha. With over $200M of connected portfolios, they are the only app with ridiculously-transparent trade data (with real numbers), 24/7 stock chats, and real-time signals to help investors discover alpha within a community of verified gurus and traders.
I’m really excited to build out my own bracket before the madness begins and highly encourage all of you to do the same! Once I build out my own, I’ll be sharing it with you all the following week — stay tuned.
Portfolio Updates:
The Dividend Growth Portfolio is moving along nicely year-to-date, up nearly +8% in aggregate compared to my dollar-cost-averaged return on the S&P 500 of only 5%.
As you all know, I invested $19K this month in Tesla to double my position — it’s now sitting at 200 shares.
As explained during the covered call webinar, I use my Tesla stock as collateral when writing covered call option contracts. Since September, I’ve been able to generate over $6,500 in premium income against these shares — more than offsetting the negative return shown above. I’ll continue to roll these option contracts forward throughout the year to generate more income inside of my portfolio.
After Bitcoin’s insane run-up this last week or so, the cryptocurrency section of this portfolio is now in the six-figures — nearly $36K in unrealized profit on this investment category over the last 12-months. It’s of my opinion that Bitcoin will continue to trend up and to the right (by the tens of thousands) over the coming months.
I believe we’ll hit new all-time-highs before the end of the calendar year and experience another “blow off top” in price as everyone and their mother tries to ride the rollercoaster.
However, you’ve been following me for a while — you know I’ve been encouraging y’all to allocate some portion of your portfolio to this stuff for over a year now. We won’t fall victim to the “hype” around it this go around — we’ll be prepared and have an exit strategy.
With that being said, expect volatility this week in the markets — especially as Nvidia reports earnings. Every shareholder, including myself, is bracing for impact as we hope the third largest company in the world by market cap can continue to deliver exceptional results.
Week in Review — Too Long, Didn’t Read:
DraftKings acquires Jackpocket for $750M, Shopify’s GMV sees continues momentum, Monday.com is adding enterprise customers quickly, Nvidia is the 3rd most valuable company in the USA, Bill Gates unloads all of his stock, Inflation came in too hot, and Retail Sales / Consumer Spending came in too cold.
Key Earnings Announcements:
DraftKings acquires Jackpocket for $750M, Shopify’s GMV sees continues momentum, and Monday.com is adding enterprise customers quickly.
DraftKings (DKNG)
Key Metrics
Revenue: $1.2 billion, an increase of +44% YoY
Operating Loss: -$43.8 million, compared to -$232.2 million last year
Net Loss: -$44.6 million, compared to -$242.7 million last year
Earnings Release Callout
“DraftKings ended 2023 with excellent performance across customer acquisition, retention and engagement as well as structural sportsbook hold percentage despite the worst stretch of sport outcomes we have seen as a public company in the fourth quarter.
Looking ahead to 2024 and beyond, our focus remains on disciplined execution against our core value drivers, an unwavering commitment to customer centricity, and fulfilling our product roadmap to consistently differentiate ourselves competitively.”
My Takeaway
As you all might remember from this post a few weeks ago, DraftKings is a “No Brainer” for my 2024 portfolio — and this the above metrics illustrate that!
The company increased revenue by +42%, monthly unique players by +37%, and average revenue per player by +22%. I will admit — I was surprised to see the company miss their adj. EBITDA guidance this quarter. With that being said, they missed expectations not because of their own wrongdoing, but instead because of customer-friendly sport outcomes. Their customers were unusually lucky during Q4 — if this didn’t happen, the company would have beat their guidance by a wide margin. Again, not this miss was not operationally-based — and isn’t usual.
DraftKings announced their $750M acquisition of Jackpocket, a digital lottery platform. This acquisition is smart for two reasons — 1) it helps diversify DraftKings’ revenue away from seasonal sports, and 2) allows them to now cross-sell Jackpocket users to become sports-betters.
Jackpocket is also only up and running in a few states, whereas DraftKings is all over the country. It will be easy for DraftKings to rollout Jackpocket into new markets quickly.
This quarter’s unusual miss on adj. EBITDA expectations doesn’t change my investment thesis in the company — I still believe DraftKings will continue to inch closer to profitability over the coming years, propelling their stock price higher in the process.
Shopify (SHOP)
Key Metrics
Revenue: $2.1 billion, an increase of +24% YoY
Operating Income: $289.0 million, compared to -$188.0 million last year
Profits: $657.0 million, compared to -$623.0 million last year
Earnings Release Callout
“Our GMV growth accelerated in Q4 and for all of 2023, which powered Shopify’s strong financial results. In Q4 we delivered year-over-year revenue growth of 24%, which represents 30% growth when adjusting for the sale of our logistics businesses, and achieved an operating income margin of 13% and a free cash flow margin of 21%.
For 2024, we look to build on the momentum that we achieved in 2023 and continue to deliver a strong combination of both top-line growth and profitability.”
My Takeaway
Shopify doing what Shopify does best! You all might remember me sharing my strong conviction for the company back in mid-October during a webinar with Katie Stockton — specifically because of their free cash flow and profitability efforts. The stock price is up +52% since!
Diving into the results — the strong quarter was catalyzed by better-than-expected gross merchandise volume (GMV) and merchant growth, pushing revenue, EBIT, and FCF ahead of Wall Street’s expectations. Their GMV outperformance was attributed to by a stable economic backdrop and resilient consumer spending.
Shopify Plus is also seeing substantial momentum — with GMV in this category accelerating by +28% in the States and +40% in the AMEA region. Shopify Plus monthly recurring revenue (MRR) now makes up 31% of their $149M in MRR, up +$6M sequentially.
Additionally, the company’s headcount remains flat now for the 5th quarter in a row — a good thing in my opinion as the company focuses on profitability. I’m very pleased with these results and will continue to build my position in Shopify.
Monday.com (MNDY)