Up is Down in Today's Wacky World of Investing

[Qs Laptop]

I'm a fundamental investor, not a technical investor. I favor companies with good growth, momentum, good margins, good cash flow, with a disruptive and patented product. I have several stock screeners I rely on that have given me good results in the past.

I came across a company with these attributes:

Quarterly revenue growth (y-o-y) = 49.2%
Quarterly earning growth (y-o-y) = 47.6%
Gross margin = 85%
Operating margin =39%
Current ratio = 7.3
Total debt/equity ratio = 0.22
Operating cash flow = $65M
Free cash flow = $42M

and last week I purchased some shares. Company is INMD.

They announced their yearend numbers yesterday:

* Record quarterly revenues of $75.2 million, an increase of 60% compared to the fourth quarter of 2019.

* Record GAAP net income of $36.1 million, compared to $19.0 million in the fourth quarter of 2019

* Record GAAP diluted earnings per share of $0.85, compared to $0.46 in the fourth quarter of 2019

* GAAP gross margin for the fourth quarter of 2020 was 86%, compared to a gross margin of 87% in the fourth quarter of 2019

* Earnings per share increased 104.35% over the past year to $0.94, which beat the estimate of $0.75.


In reaction to this outstanding financial news, the stock has gone down -6.3%.

Meanwhile stocks with garbage numbers but lots of hype are gaining. It's a topsy-turvy investing world.

 

[audreyh1]

Typical!

 

[SecondCor521]

Looking at a 1Y chart, it's probably buy the rumor, sell the news. Standard short term stock market behavior.

 

[copyright1997reloaded]

Looking at a 1Y chart, it's probably buy the rumor, sell the news. Standard short term stock market behavior.

THIS.

In another thread I mentioned one of my investing mistakes being not wanting to buy something that had moved up a lot. INMD is such a beast (that I messed up on). I was looking at this stock in the high 30's, but foolishly passed because it had run up. Now, even with the negative earnings reaction, it is sitting at $67.27. I still have that problem on this one, do I buy in at 67? It is so hard to do, but ....

 

[Qs Laptop]

ROKU released earnings after the close yesterday. Looks like great news to me.

Streaming video platform Roku late Thursday smashed Wall Street's sales and earnings targets for the fourth quarter. The company earned 49 cents a share in the latest quarter, far better than the net loss of five cents analysts had penciled in. Sales of $649.9 million were up 58% year over year, while Wall Street had expected $619 million. In the year-earlier period, Roku lost 13 cents a share on sales of $411.2 million.

ROKU stock is down 1% today!

 

[Qs Laptop]

ROKU stock is down 1% today!

At the end of the market day ROKU was up 3.2%.

 

[mpeirce]

Is there a good (or bad) reason they declined to provide guidance?

That might have something to do with it.

 

[foxfirev5]

Look up Roku CEO Anthony Wood's recent stock sales. I'd provide a link but I feel everyone should do their own due diligence.

 

[copyright1997reloaded]

ROKU released earnings after the close yesterday. Looks like great news to me.

Streaming video platform Roku late Thursday smashed Wall Street's sales and earnings targets for the fourth quarter. The company earned 49 cents a share in the latest quarter, far better than the net loss of five cents analysts had penciled in. Sales of $649.9 million were up 58% year over year, while Wall Street had expected $619 million. In the year-earlier period, Roku lost 13 cents a share on sales of $411.2 million.

ROKU stock is down 1% today!

Up 3+ % today and more importantly up almost 270% in the last one year period.

1% down on the earnings news is meaningless in the scope of things, and a LOT of expectations are built into a 270% run.

Wish I bought it (long ago). Now, for better or worse, my psychological issues with successful trading (i.e. quirks) prevent me from buying it up so much.

 

[Qs Laptop]

Here's a strange one. Churchill Capital Corp, CCIV, is a SPAC company that was looking to merge with an EV company. The leading candidate was Lucid Motors, a USA based company. For most of 2020 Q4 CCIV languished in the $9 to $10 range. As rumors of a merger built up the stock price started moving. Rumors reached a crescendo last week and the stock was climbing rapidly, got into the $50's. Yesterday the announcement came that the merger was official.

CCIV stock dropped over 40%.

 

[Markola]

Here's a strange one. Churchill Capital Corp, CCIV, is a SPAC company that was looking to merge with an EV company. The leading candidate was Lucid Motors, a USA based company. For most of 2020 Q4 CCIV languished in the $9 to $10 range. As rumors of a merger built up the stock price started moving. Rumors reached a crescendo last week and the stock was climbing rapidly, got into the $50's. Yesterday the announcement came that the merger was official.

CCIV stock dropped over 40%.

I read that, in response, Tesla cut he price of the Model S, so maybe that hurt CCIV’s price.

 

[copyright1997reloaded]

Here's a strange one. Churchill Capital Corp, CCIV, is a SPAC company that was looking to merge with an EV company. The leading candidate was Lucid Motors, a USA based company. For most of 2020 Q4 CCIV languished in the $9 to $10 range. As rumors of a merger built up the stock price started moving. Rumors reached a crescendo last week and the stock was climbing rapidly, got into the $50's. Yesterday the announcement came that the merger was official.

CCIV stock dropped over 40%.

This one is easy to diagnose. There are (were?) gads of rapid CCIV fans on stocktwits, twitter, et al. Anyone suggesting that CCIV at 50, 60 was overpricing what Lucid would be worth was ridiculed and verbally accosted. The deal announcement was delayed and delayed, while CCIV kept rising.

At $60, Lucid was being priced at $72 BILLION, which would make it worth almost as much as General Motors...with no vehicles available and delays when they would be.

Then the deal news hits, and a look at the investor presentation: https://www.lucidmotors.com/files/lucid-investor-deck-february-2021.pdf shows a $2.5 billion PIPE @ $15/share, which is a $1 billion increase over the original plan. That's right, CCIV/Lucid did an additional $1 billion PIPE at $15 while the suckers (retail buyers) were paying $60.

No wonder it was like a car driving over a cliff.

Note: I missed this one on the way up, but once this thing was crazy trading in the 40's (4x the original SPAC amount) there was no way I was going anywhere near it...even if it continued to rocket higher.

 

[MRG]

This one is easy to diagnose. There are (were?) gads of rapid CCIV fans on stocktwits, twitter, et al. Anyone suggesting that CCIV at 50, 60 was overpricing what Lucid would be worth was ridiculed and verbally accosted. The deal announcement was delayed and delayed, while CCIV kept rising.

At $60, Lucid was being priced at $72 BILLION, which would make it worth almost as much as General Motors...with no vehicles available and delays when they would be.

Then the deal news hits, and a look at the investor presentation: https://www.lucidmotors.com/files/lucid-investor-deck-february-2021.pdf shows a $2.5 billion PIPE @ $15/share, which is a $1 billion increase over the original plan. That's right, CCIV/Lucid did an additional $1 billion PIPE at $15 while the suckers (retail buyers) were paying $60.

No wonder it was like a car driving over a cliff.

Note: I missed this one on the way up, but once this thing was crazy trading in the 40's (4x the original SPAC amount) there was no way I was going anywhere near it...even if it continued to rocket higher.

+1

I saw it happen on Reddit. A guys DD was telling these people how undervalued it was. There was same dissent, but not enough. Sad to know some of these people lost money they couldn't afford to. It's one thing for the places know for longshots pimping these names nut the other subs pick up on it.

I recently suggested to a person they should understand how margin works before they used it. They didn't appreciate my comment.

 

[Markola]

+1

I saw it happen on Reddit. A guys DD was telling these people how undervalued it was. There was same dissent, but not enough. Sad to know some of these people lost money they couldn't afford to. It's one thing for the places know for longshots pimping these names nut the other subs pick up on it.

I recently suggested to a person they should understand how margin works before they used it. They didn't appreciate my comment.

It doesn’t make me sad, anymore than someone who bets too much in Vegas, teaching them to stay away from Vegas. Some people insist on learning the hard way to spur them to make the transition from gambler to investor.

 

[target2019]

Cruise-line stocks, like NCLH. One of the group reports a few extra pennies, and the loss is not as great as previous guidance. So the entire group goes up 10% in a single day.

 

[Qs Laptop]

Chinese EV maker Li Auto, LI, reported fourth-quarter earnings of 2 cents per share compares to consensus for a loss of 2 cents per share.

Fourth-quarter net income came in at $16.5 million compared to a net loss of $16.6 million in the third quarter and a net loss of $3.28 billion in the year-ago period. On a non-GAAP basis, the company reported a net income of $17.7 million, up from $2.5 million in the preceding quarter.

Revenues jumped 65.2% quarter-over-quarter, or $635.5 million. It exceeded the consensus forecast of $586.51 million. The company had earlier guided fourth-quarter revenues to $457.8 million to $499.4 million.

The top-line growth was aided by a strong 64.6% sequential increase in vehicle sales to $621.9 million. Vehicle deliveries in the fourth-quarter jumped 67% quarter-over-quarter to 14,464 units.
--
LI Auto is down 8% this morning.

 

[Qs Laptop]

Inseego Corporation, INSG, a leading 5G hardware company whose products are being sold by all the major US and European telecom companies reported 4th quarter results.

* 2020 full year net revenue of $313.8 million, up 43.0% year-over-year

* Q4 2020 net revenue of $86.1 million, up 64.5% year-over-year

* Year-end cash balance of $40.0 million in the quarter with zero bank debt

* Gross profit jumped to $26.4M from $15M a year ago.

* EPS was -$0.14, analysts were expecting -$0.05.

* Next-generation 5G products account for over 30% of Q4 hardware sales.

INSG is down 25% this morning. TWENTY-FIVE PERCENT.

The stock has been on my watchlist for a couple of months. I bought 300 shares today.

 

[copyright1997reloaded]

Inseego Corporation, INSG, a leading 5G hardware company whose products are being sold by all the major US and European telecom companies reported 4th quarter results.

* 2020 full year net revenue of $313.8 million, up 43.0% year-over-year

* Q4 2020 net revenue of $86.1 million, up 64.5% year-over-year

* Year-end cash balance of $40.0 million in the quarter with zero bank debt

* Gross profit jumped to $26.4M from $15M a year ago.

* EPS was -$0.14, analysts were expecting -$0.05.

* Next-generation 5G products account for over 30% of Q4 hardware sales.

INSG is down 25% this morning. TWENTY-FIVE PERCENT.

The stock has been on my watchlist for a couple of months. I bought 300 shares today.

i own this one, bought originally @ $9.26 on 11/5/20 and $11.11 on 8/26. Sold some at $14.93 on 1/14 and $19.62 on 1/27/21. Unfortunately I also bought a bit yesterday @ $14.61 and also added some here at $10.935.

 

[Sunset]

Cruise-line stocks, like NCLH. One of the group reports a few extra pennies, and the loss is not as great as previous guidance. So the entire group goes up 10% in a single day.

Cruise line stocks amaze me.

I'm talking generalities here, so will be wrong on the exact amounts:

1. In general they all got rid of ships so now have less capacity.
2. They doubled their debt or increased it a lot, CCL went from 9 ->18 Billion debt.
3. They issued new shares so diluted the share value.
4. Canada has banned ships for 2021.
5. Who knows when they will be allowed to sail, so far not for 4 more months in US.
6. When they do sail, how full will they be allowed.
7. One Covid outbreak or any sickness on any ship will be bad news for everyone.
8. Cruising may take years to get back to normal.

So the stocks go higher

 

[Qs Laptop]

i own this one, bought originally @ $9.26 on 11/5/20 and $11.11 on 8/26. Sold some at $14.93 on 1/14 and $19.62 on 1/27/21. Unfortunately I also bought a bit yesterday @ $14.61 and also added some here at $10.935.

You're nicely ahead.

I don't understand why it's being punished so badly? Sure, a 5% drop for not making EPS expectations, but 25%? Maybe it's because a lot of investment houses have downgraded it?

I'm going to go out on a limb here and speculate that the market for 5G hardware is going to grow in the next couple years.

I've got a small holding in AXTI, which is another 5G play for me. They grow the crystal substrates for the semiconductor chips used in 5G devices.

 

[copyright1997reloaded]

You're nicely ahead.

I don't understand why it's being punished so badly? Sure, a 5% drop for not making EPS expectations, but 25%? Maybe it's because a lot of investment houses have downgraded it?

I'm going to go out on a limb here and speculate that the market for 5G hardware is going to grow in the next couple years.

I've got a small holding in AXTI, which is another 5G play for me. They grow the crystal substrates for the semiconductor chips used in 5G devices.

The earnings seem OK, but not obviously much more was expected or assumed. All I know is that my fingers are bleeding from the knife slicing through today's order. That's the trouble with trying to catch it.

I have another bottom fishing order in closer to $10, but honestly I'm not even sure that is a good idea. Probably better to wait for it to settle out for a couple/few days.

 

[Qs Laptop]

I came across a company with these attributes:

Quarterly revenue growth (y-o-y) = 49.2%
Quarterly earning growth (y-o-y) = 47.6%
Gross margin = 85%
Operating margin =39%
Current ratio = 7.3
Total debt/equity ratio = 0.22
Operating cash flow = $65M
Free cash flow = $42M

and last week I purchased some shares. Company is INMD.

They announced their yearend numbers yesterday:

* Record quarterly revenues of $75.2 million, an increase of 60% compared to the fourth quarter of 2019.

* Record GAAP net income of $36.1 million, compared to $19.0 million in the fourth quarter of 2019

* Record GAAP diluted earnings per share of $0.85, compared to $0.46 in the fourth quarter of 2019

* GAAP gross margin for the fourth quarter of 2020 was 86%, compared to a gross margin of 87% in the fourth quarter of 2019

* Earnings per share increased 104.35% over the past year to $0.94, which beat the estimate of $0.75.


In reaction to this outstanding financial news, the stock has gone down -6.3%.

Meanwhile stocks with garbage numbers but lots of hype are gaining. It's a topsy-turvy investing world.

Well, I've been vindicated. INMD is trading at $140 today; was at $67 when I originally posted this thread. So a 100% gainer in 7 months.

Also one of the financially strongest mid-cap stock I've run across lately.

 

[Luvtoride]

QS, awesome find in the highly competitive (and risky) medical device field. I wish I had been around to see your original recommendation back 7 months ago.
What else are you looking at these days?

Not to get into stock speculation here, but I own a SPAC that is merging with a robotic surgical company to bring it public next week. I think this area is a fertile one for innovation and growth.

 

[Qs Laptop]

QS, awesome find in the highly competitive (and risky) medical device field. I wish I had been around to see your original recommendation back 7 months ago.
What else are you looking at these days?

Not to get into stock speculation here, but I own a SPAC that is merging with a robotic surgical company to bring it public next week. I think this area is a fertile one for innovation and growth.

I'm looking at a lot. My watch list is crazy. I bought DQ for $57 recently. I bought HOV for $88 in June and sold at $105 about six weeks later.

Speaking of robotic surgery companies, I've bought and sold ASCX for a nice profit, then bought it again when it dipped. I'm currently slightly down on it right now.

 

[Luvtoride]

Is that symbol correct, ASCX? I couldn't find it in Fidelity. What is the company name?