🍨 Daily Scoop: Bold and Flawless!
By Thu, Sep 26, 2019
Hey Scoopers,
The stock market returned to a happy mode and ended the day in the green. Also, bold advertisements and flawless execution are working very well for one company in China. In contrast, one recent IPO is forced to stop smiling. And, a potential future IPO CEO was forced to step down (guess, who?).
For those stories and more, scroll down to the “Overall Market,” “What’s up?” and “What’s down?” sections to learn more.
MARKETS
- U.S. markets: It was about time to see some green in the stock market, and all three indices agreed with it. Scroll to the Overall Market section to learn more.
- Cryptocurrency: Bitcoin’s price continued in the $8,000 per coin level. An interesting analysis on Twitter pointed to the fact that the majority of Bitcoin futures contracts on CME (leading derivative market) are expiring soon, and institutional investors are losing interest for now. That can be the reason for the decline.
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OVERALL MArket
No news is good news!
What happened on Wednesday?
The Consumer Cyclical and the Technology sectors finished Wednesday almost 1% higher than where they started. The overall stock market also agreed with those two sectors.
Why did the market rebound?
There wasn’t any significant progress in China-U.S. trade talks, neither there was an announcement about major economic indicators. So what happened?
The market took no news and good news and resumed its usual trading business. It also appears that the talk of impeachment temporarily feared investors, on Tuesday. But the fear is behind investors now. Well, this is not a political scoop, so let’s park that topic aside until it impacts the market. For now, the business was as usual for one more day in the market.
WHAT’S UP
Just Do It!
So, what happened?
Despite the U.S. and China’s trade disagreements, and while most companies blame China’s slowdown as a reason for their slower growth, one company has found a way to buck the trend. Powered by its strong brand, flawless execution, and bold advertisements, Nike (Ticker: NKE) is a rare company that is still growing in China at a repaid pace. During its Q1 2020 quarterly earnings, Nike announced a 27% growth in Chinese sales compared to the same quarter, last year. Nike is just doing it!
WHAT’S DOWN
Stop smiling, SmileDirectClub!
So, what happened?
Shares of SmileDirectClub (Ticker: SDC), maker of invisible teeth aligners with a direct-to-consumer model were down more than 7%. The company recently went public, and unlike most other IPOs, the stock is gradually gliding down.
On Wednesday, a group of orthodontists and consumers filed a putative class-action lawsuit against the company in the company’s headquarter city, Nashville. Orthodontists are typically not in favor of SmileDirectClub, because the company eliminates the need to visit a doctor on a regular basis and reduces orthodontists’ potential earnings by its direct-to-consumer business model. Under the shadow of regulatory concerns about the company’s claims, and by having the dental professionals and associations on the wrong side, the stock doesn’t seem to be appealing to Wall Street yet. Overall, the direct-to-consumer model is an interesting new trend in the healthcare industry that is worth monitoring.
WATER COOLER
Bye Bye, the mission of elevating the world’s consciousness!
So, what happened?
So, what happened?
We’ve covered several IPOs and have read way too many S1 Documents. None have ever come close to WeWork’s debacle. Even crazier, no one CEO and founder, has ever come anywhere close to Adam Neumann, the dear leader of WeWork.
On Tuesday, the news broke that Adam stepped down as a CEO. It looks like the company and its investors are still wanting to go public and Adam’s attitude and drama were not welcomed.
Beyond the leadership change, we’d want to see WeWork show a feasible path to a sustainable business model. As it stands today, the company’s gross margin is higher than its topline revenue. This means the company spends more money to make money. This may sound familiar, but most tech companies that are unprofitable have a very impressive gross margin but spend too much on the rest of their operations. In other words, their gross margin is positive, but the net margin is negative. WeWork is nowhere close to such status. WeWork is still behaving like a start-up that hasn’t found a way to make money.
We will be watching it as the story folds. One thing for sure, the mission to “elevate the world conciseness” is most likely out the door. This is still the company’s official mission from its S1 document. You can’t make these things up!
About the Author
The authors of this Scoop are the editorial team at Stock Card, led by Hoda Mehr. Hoda Mehr is CEO and Co-founder of Stock Card and the host of Renegade Investors podcast. She runs a community of 40,000 stock market investors and manages Stock Card's successful flagship portfolio, Roll with Our CEO, on Stock Card Portfolio Store. Hoda is an Economist with an MBA from Concordia, John Molson School of Business. She applies behavioral economics, data journalism, and storytelling to all aspects of her work. Before starting Stock Card, Hoda worked as a strategy and insights lead at technology companies including Symantec, Aimia and Sony. Create a free account to do your stock market research easily and mistake-free: Stock Card Stock Card
