🗞️ 10 High-Growth Stocks Down 20% This Earnings Season

Happy Sunday!

This week we’re digging into:

• Big Tech’s big spending💰️

• Starbuck’s continued struggles ☕️

• And some of the biggest drawdowns from this earnings season 📉

Let’s dive in!

Earnings Roundup:

• 📦️ Amazon: The world’s largest e-commerce company reported guidance in its Thursday earnings report that came in well below analysts expectations.

  After delivering solid top and bottom line growth across all 3 of its revenue segments (North America, International, and AWS), Amazon left investors cautious after warning that consumers are “being careful with their spend” and that the company plans to increase its spending on infrastructure in the back half of the year to support its investments in AI.

  Amazon’s stock was down ~9% this week.

• 🧑‍💻 Meta: Social media giant Meta reported earnings this week that crushed analyst’s estimates. The parent company behind some of the world’s most popular apps like Facebook, Instagram, and WhatsApp delivered $38 billion in advertising revenue for the quarter which was up 22% from the same period a year ago.

  To top off the impressive revenue growth, Meta also expanded its operating margins from 29% to 38%. Together this helped Meta grow its total earnings per share by a whopping 73%!

  After this week’s jump, Meta’s stock is now up more than 4-fold from its 2022 lows.

• ☁️ Microsoft: The world’s 2nd largest company Microsoft, reported earnings on Tuesday that came in ahead of Wall Street’s expectations. Overall revenue grew 15% compared to last year, while earnings per share grew 10%. However, a slight miss in its cloud computing division Azure left some investors a little weary.

  Microsoft has been investing heavily in AI, which is evident in its capital expenditures. This year, the company spent ~$56 billion on capital expenditures, up 75% from the year prior and Microsoft’s management team stated that they expect that cap-ex figure to grow again next year. With concerns over what the return might be on these increased expenses, Microsoft’s stock closed down more than 5% this week.

• ☕️ Starbucks: The global leader in coffee delivered a mixed bag of earnings this week as it continues to deal with declining customer traffic. Starbucks reported a 1% decline in overall revenue and a 6% decrease in earnings per share, which were both better than Wall Street’s expectations.

  Same store sales at Starbucks fell by 3% this quarter driven by a 5% decline in transactions. And perhaps the more concerning part for investors, these lackluster results aren’t isolated to a particular geography. Starbucks saw -14% comp sales in its Chinese stores, but also saw -6% transactions across its US stores. New CEO Laxman Narasimhan described the current period as a “challenging consumer environment”. Starbucks stock is down 26% over the last 12 months.

• 🚗 Carvana: The last 2 years have been a whirlwind for Carvana. From August 2021 to December 2022 shares of Carvana dropped by 99% as a difficult auto market led to worries that Carvana wouldn’t be able to pay off its debts.

  But as buying conditions improved and the leading online automotive marketplace reigned in its costs, the company began to show renewed growth and signs of sustainable profitability. And on Wednesday, those encouraging signs continued.

  Carvana reported 15% growth in revenue and an all-time high in its gross profit per unit, helping to deliver a 2nd quarter in a row of positive GAAP operating income. Since the bottom in January 2023, Carvana’s stock is now nearly a 40-bagger!

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10 High-Growth Stocks that Dropped 20% This Earnings Season

1.) Symbotic

Symbotic provides robotics and technology that helps improve efficiency for retailers and wholesalers in the US.

• Drop since earnings: -33%

• Market Cap: $2.5 billion

• EV/EBIT: N/A

2.) DexCom

DexCom makes continuous glucose monitoring (CGM) systems for people with diabetes.

• Drop since earnings: -33%

• Market Cap: $28 billion

• EV/EBIT: 40.6x

3.) NerdWallet

NerdWallet operates a digital platform that provides consumer-driven advice about personal finance through educational content.

• Drop since earnings: -30%

• Market Cap: $1.1 billion

• EV/EBIT: 189x

4.) SmartRent

SmartRent offers an integrated smart home operating system to residential property owners, operators, homebuilders, and more.

• Drop since earnings: -28%

• Market Cap: $357 million

• EV/EBIT: N/A

5.) Universal Music Group

Universal Music Group (UMG) is one of the 3 largest music labels globally. UMG has a massive catalog of artist music that it derives revenue from in a number of ways, most notably streaming.

• Drop since earnings: -24%

• Market Cap: $43 billion

• EV/EBIT: 25.2x

6.) Procore Technologies

Procore makes construction management software that helps stakeholders in the construction process communicate and stay connected with one another.

• Drop since earnings: -24%

• Market Cap: $9.8 billion

• EV/EBIT: N/A

7.) ASML

ASML designs and builds one-of-a-kind advanced ultraviolet lithography systems to manufacture semiconductor nodes and technologies.

• Drop since earnings: -24%

• Market Cap: $356 billion

• EV/EBIT: 41x

8.) ARM Holdings

ARM offers microprocessors, CPUs, GPUs, and more for semiconductor companies and equipment manufacturers.

• Drop since earnings: -23%

• Market Cap: $127 billion

• EV/EBIT: 789x

9.) Confluent

Confluent is most well known for the Confluent Cloud, a managed cloud-native service for connecting and processing data.

• Drop since earnings: -23%

• Market Cap: $6.7 billion

• EV/EBIT: N/A

10.) Pinterest

Pinterest is a visual discovery engine for things like recipes, style and home inspiration, DIY, & more. Pinterest is home to 522 million global MAUs.

• Drop since earnings: -22%

• Market Cap: $21.4 billion

• EV/EBIT: 77.8x

Meme of the week

This week, a Turkish shooter named Yusuf Dikec went viral after competing in the Olympics in the most nonchalant way possible.

After countless competitors showed up with advanced performance enhancing equipment, Dikec pulled up in a t-shirt and sweats and helped deliver a silver-medal winning performance in the 10-metre air pistol event while keeping his hand in his pocket.

Naturally, the memes started rolling in. Kudos to one of FinChat’s happy users for this one!