A Precarious Time To Invest

Investors have seen worse days, but they’ve also seen better ones. Stocks moved lower today amidst concerns over the Fed Symposium and the political situation in Afghanistan. 

Investors have anxiously anticipated the Jackson Hole Fed Symposium for several weeks. Throughout the pandemic, the Fed printed trillions of dollars to help shore up businesses, the economy, and markets. The symposium will show investors what they can expect from America’s central bank in the months ahead.

However, investors did not anticipate the severity of the political situation in Afghanistan. Blasts in Kabul today killed a dozen U.S. troops and at least 60 Afghan civilians, sending a political shockwave through the markets.

Despite today’s attacks, President Joe Biden reiterated his commitment to a steadfast evacuation of the country. The President indicated that the U.S. would “respond with force and precision” to threats from ISIS-K. You can follow a liveblog of the situation here.

This perfect storm of political variables made today a rainy one for investors. 🌩️ The Cboe Volatility Index (VIX) soared 12.2%. Here’s a look at the five minute chart for today:

Peloton’s Q4 2021 earnings didn’t go all that smoothly. Investors got a bout of double-trouble as the company warned of price cuts and an accounting mistake. Oof. 

Peloton reiterated plans to slash the price of its “most popular bike” by $400. ✂️ Peloton hopes price cuts will make their products more accessible to buyers. They hope to make it up in revenue from digital subscriptions, which now accounts for roughly a third of the company’s revenue. 

The accounting flub was a little more concerning than the price cut — an accounting audit found an issue with Peloton’s inventory accounting. Although the issue didn’t require the company to file new financial statements, “accounting problems” are two words that investors don’t want to hear.

Drama aside, Peloton’s revenue rose 54% YoY to $936.9 million. 💰 About two-thirds of that revenue came from selling physical fitness machines, like bikes and treadmills. The company posted an EPS loss of ($1.05) per share, a significantly higher loss YoY. Revenue was marginally better than analysts’ expectations, but EPS estimates sorely disappointed investors. Analysts were also unhappy to see Peloton revise earnings down for the coming quarter. Some of that can be attributed to the “return to business as usual.”

The company observed significant growth in their digital subscription segment. Subscriptions more than doubled in the quarter, with Peloton’s total member count approaching 6 million. You can get into the nitty-gritty by reading the company’s whole Q4 2021 report here. 

$PTON plummeted 5.2% after hours. 

Lordstown investors have something to cheer about.. the EV company just named a new CEO. 😌

Effective this morning, Daniel Ninivaggi took over as Lordstown Motors’ CEO. Ninivaggi replaced Angela Strand, the company’s temporary replacement CEO, who filled in for Steven Burns in June.

$RIDE shares rocketed 25% on the news. 🚀 🚀 Ninivaggi is the former CEO of Icahn Enterprises, an investment conglomerate with over $33 billion in assets. He commented on his new role:

“I believe the demand for full-size electric pickup trucks will be strong and the Endurance truck… has the opportunity to capture a meaningful share of the market… I look forward to working with the talented Lordstown management team, our suppliers and other partners to bring the Endurance to market and maximize the value of our assets.”

On the not-so-bright side, Lordstown Motors is still under investigation by the SEC for its questionable SPAC merger and vehicle pre-order process. 😅

CVS announced today that it would limit purchases of rapid COVID-19 tests. The pharmacy company cited increased demand, and we can probably blame Delta for that. 🤷

Customers will be limited to just six packages of the tests when ordering online or four when ordering in pharmacies. CVS said they’re working with suppliers to ensure a steady stock of tests to “meet testing needs” amidst a period of high demand. Over-the-counter tests do not require a prescription or doctor’s order for purchase.

The Delta variant has been a key factor why reopening stocks have underperformed. However, COVID concerns might be affecting the broader economy as well. According to a study done by the Federal Reserve Bank of Kansas City, the variant may be responsible for slowing job applications. However, the U.S. labor market appeared strong in spite of the virus, according to the payrolls report earlier this month.

At the end of summer, politicians and health leaders warned that COVID could continue to evolve. Many prominent figures are echoing the need for booster shots and flu shots to avoid repeating last winter’s numbers. 💉 In some states, hospitals are already overcrowded. One report claims that the U.S. might see over 100,000 more COVID-19 deaths between now and Dec. 1 if the country doesn’t act quickly.