UPCOMING EVENTS 10/26 – 10/30
TWILIO – $TWLO
At Tiger Wolf Capital, TWLO has become a fan favorite amongst investors and we are very eager to see what their earnings report will look like, which is being reported on Monday after market close. We are very bullish on the results as we stated in ourresearch report published back in late September.
Twilio streamlines businesses to client communication through the power of AI and cloud-based services. By using Omnichannel customer service, Twilio enables businesses to connect with their clients through WhatApp, SMS, or WebChat, powered by automated routine customer inquiries with conversational IVRS and chat box to reduce wait.
We see great value and long-term growth potential for this product as more companies are switching over to remote work and the need to provide greater customer satisfaction and increase brand loyalty are increasing significantly.
On Friday afternoon we purchased TWLO 330 and 335 call options with the expiration date of 11.20.20 at a price of $11.20 and $10.75 per contract.
We have a price target of $350 for TWLO.
UPCOMING EARNINGS 10/26 – 10/30
Twilio – We are bullish on TWLO earnings and the stock in general long-term as we stated in our research report. Although they are not yet profitable, the stock has performed well, and we find great value with this communications company poised to continue to thrive during this pandemic and the work from home shift beyond it.
Alphabet – Parent company of Google presents an interesting earnings case. Google is being sued by the U.S. DOJ for anticompetitive practices and the first quarter with decreased advertising revenue for the first time in 22 years. Their cloud business however is poised to make healthy gains in the future.
Advanced Micro Devices – Predicted to have a strong earnings performance despite the miss and weak forecast of rival Intel. The increase in work from home trends saw PC CPU, consoles along with steady server share gains suggest upside for AMD through earnings.
Microsoft – They are expecting growth in EPS as well as revenue. This is expected to happen at a slower rate year over year. Microsoft Teams is serving as an interesting alternative to zoom that could bode well for Microsoft’s future with 75 million daily users, an increase of 62 million since July 2019.
United Postal Services – We expect the surge in e-commerce demand amid the current pandemic situation to boost UPS’ third-quarter results. The impending release is likely to reflect the significant increase in home deliveries amid the ongoing coronavirus outbreak. Higher demand for residential delivery is expected to have contributed to the performance of the U.S. Domestic Package segment, which accounts for the bulk of the top line. With expected revenue at $19.95 billion, up 8.9% from a year-ago quarter.
Twitter – After SNAP reported a strong earnings growth last week, we expect Twitter to do as well. Twitter generates the majority of revenue from ad spending, which has gone down drastically the past quarter in response to political unrest over the pandemic and civil rights issues. However, as elections come to an end, we expect a focus on business ad spending to increase as companies reopen. We also look to see how Twitter users’ time on the app has increased and a possible increase in revenue from revenue from users.
Penn – While faced with year over year decline in revenue, $PENN has several promising factors on the horizon. They’ve taken several expansion strategiesincluding the barstool sportsbook app for online sports betting and is now the #1 app on the market. Several states (Michigan, Tennessee, Virginia) are expected to legalize sports betting soon. While already legalized markets have received a boom in revenue with the return of sports, Pennsylvania leading the charge with just shy of $500 million in September along from the return of the NFL. Access to these new markets and with sports returning to bet on, $PENN has an optimistic outlook.
Apple – is a difficult case to reach a conclusion on in regards to earnings. The rollout of their new highly anticipated smartphone has been delayed due to the pandemic and as such pushes out their earnings forecast. As well we do not see Apple having a “wow factor” in store for us this earnings season.
Boeing – Boeing, unsurprisingly, is not expected to perform well this earnings quarter with a decline in revenue and only more bad news. The stock has been performing poorly all year since the two fatal crashes of their 737 max. Revenues are expected to be $14.14 billion down 29.2% from the year-ago quarter with multiple airlines demanding deferrals on their reception of the 737 max and many renegotiating their contract prices as well which Boeing is allowing due to their failure to meet expectations according to Boeing’s CEO.
Amazon – Wall street is expecting a year over year increase in earnings on higher revenues. That does not necessarily mean they will beat earnings as it’s hard to tell if consensus EPS will be inflated. Amazon has beaten the consensus EPS estimates two times out of the last 4 quarters. U.S. retailers online were up to 68% year over year growth in revenue, and 146% in all online retail orders. Online conversion rates were also up just shy of 10%, a frequency level typically seen around Cyber Monday. Stay at home orders coupled stimulus checks amid the pandemic sparked growth in retail therapy and E-Commerce has been reaping the rewards.
EVENTS & TALKS
ALIBABA TO BUY A FIFTH OF SHARES IN ANT GROUP’S MEGA IPO
Alibaba Group has agreed to purchase more than a fifth of shares in Ant group’s upcoming IPO on October 27th.
Ant group is a Chinese fintech company that serves as the parent company to Alipay, a digital payment processor used by millions of Chinese.
Some key points about Alipay
a third party payment platform, their primary service being a digital wallet (Aliwallet), that has been deemed practically essential for any business looking to reach a critical mass of Chinese shoppers.
Alipay reports over 500 million monthly active users and twice that in daily transactions as the Chinese head towards a cashless future.
For reference, Apply Pay has 127 million users globally despite coming preinstalled in every iPhone.
92% of the people in China’s top cities use mobile pay as their primary payment method.
Mobile payments have grown into a $16 Trillion dollar industry in China over the past 15 years, with Alibaba on the forefront.
Alibaba is buying 730 million of approximately 1.67 billion of Class A shares. As a result, Alibaba is poised to own about 32% of Ant Groups affiliate shares, which is currently in speculation to receive a valuation in the region of 280 billion USD. This valuation would make Ant Group worth more than nearly every financial or fintech stock currently listed in the United States other than JPMorgan, Visa, or Mastercard.
CONSUMER CONFIDENCE INDEX 10 AM NEXT TUESDAY
In the United States of America, the U.S. consumer confidence index (CCI) is an economic indicator of optimism. This indicator allows us to understand the habits of American consumers and the likely spending of US households. If a V-shaped recovery is viable, the CCI increasing from pandemic lows is vital. The last index reported that consumer confidence was up to a reading of 101.8 from a reading of 86.3 in September, an almost 20% increase in reported consumer confidence.
In an economy when economic uncertainty is at its highest, consumer confidence was extremely low. Households not only spend less, but even in the event of no change in income overall, spending is likely to decrease and savings are likely to peak.
This was the case in April of 2020 when savings rates reached all-time highs in the American economy. A stark change from a country and economy that prides itself on being robust and encouraging constant consumer spending and consumption at every turn. As consumer confidence trends up and returns pre-corona levels we are likely to see an increase in American consumption and the two sectors that will likely benefit from this are retail and travel. Volume of travel will likely return as Americans return to partaking in activities of leisure, but volume is heavily dependent on progress made on the medical front of the virus such as the availability of PPE and the development of treatments. Retail also shares similar challenges to the travel sector but as income rises and spending increases shoppers may begin flocking back to commercial spaces such as malls. While COVID-19 alters the retail, landscape companies that have adapted to online sales and venues have outdoor segments where social distancing is easier will have edge over firms where primary revenue derives from in-person sales.
INITIAL JOBLESS CLAIMS 8:30 AM NEXT TUESDAY
With last week’s report for unemployment benefits we saw unemployment claims drop to a record low since the coronavirus took the toll it has on the U.S. economy in March. This is unprecedented news and a significant sign of recovery for the economy. We look forward to seeing if there is a continued decline in that area.