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A Tough Time for Peloton

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Good evening, y’all! It’s already mid-week and the market is worn out. 😪

Stocks got slammed for a second straight day. The Russell 2K plummeted 1.60% and closed the day’s low. The tech-heavy Nasdaq gave up 1.15% and the S&P 500 surrendered 0.97%.🔪 #carnage

SoFi Technologies soared 13.7% after the fintech company received its regulatory license to become a national bank. 🥂 $SOFI is still down 13.22% YTD. Here’s the daily chart:

Consumer staples and utilities were the only sectors to escape the market’s wrath today. $XLP improved 0.63% and $XLU rose 0.45%. Consumer discretionary decreased 1.80% as the weakest sector.

Precious metals were poppin’ all over the place. 🍿 Platinum exploded, silver took off 2.88%, and gold gained 1.47%. 

Unilever’s stock jumped 7.75% today after the company refused to raise its $68 billion bid for GlaxoSmithKline’s healthcare division. More on this in the bullets below.

$ZGNX zipped 65.73%, $VALN vaulted 45%, and $IMTE increased 8.45%.

Here are the closing prices: 

S&P 500 4,532 -0.97%
Nasdaq 14,340 -1.15%
Russell 2000 2,062 -1.60%
Dow Jones 35,028 -0.96%

Stocks

Peloton Preps Layoffs

Peloton is reportedly planning to cut 41% of its sales and marketing staff, according to a report first released by Business Insider. Peloton has even supposedly given its pet project a name: Project Fuel.

According to Protocol, Peloton will let go of employees working in 15 retail stores and on the company’s e-commerce biz. The company will reportedly cut low performersfrom its recent talent review. With that being said, Peloton is also hiring a consulting firm to review its cost structure.

These layoffs are a decisive turnaround for the embattled at-home fitness company, which grew tremendously during the pandemic. 🚲 Peloton hired more than 3,000 employees in the thick of the pandemic, which spoke to unprecedented growth. Peloton now refers to that growth as “undisciplined.”

Undisciplined growth” is one of the leading reasons why the company decided to implement a hiring freeze in November, which also came with a reduction in outlook. Peloton cut its FY 2022 outlook by nearly a billion dollars — now Peloton says that it doesn’t expect to be EBITDA profitable until FY 2023. 😬

Leading up to the stock price’s cratering last year, insiders sold more than $500 milion in Peloton stock. Some users on Stocktwits and on Twitter did not shy away from scrutinizing leadership for jumping ship with riches, leaving hundreds of employees in the dust with lost livelihoods. 

Ultimately, layoffs = cost cutting = more profits. That’s why the news of the layoffs excited investors today, sending shares of $PTON rising by 5.3%. Although investors are jazzed, Peloton’s employees indicate that the company’s morale is extremely low — that’s a far cry from where morale supposedly was this time last year. 

$PTON is down 80% in the past year. As of today, it’s valued at $10.4 billion.



Stocks

SoFi Secures Bank Charter 🎉

SoFi Secures Bank Charter 🎉 Featured Image

After a years-long wait, fintech giant SoFi has finally secured approval from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve to become a bank holding company. 🥳

SoFi acquired a community bank last February in a bid to accelerate the process. The bank, Golden Pacific Bancorp, will operate as the parent company for SoFi Bank. SoFi will immediately see improved economics and fewer middlemen. That’s one reason investors are jazzed about this announcement — shares rose more than 13% since afterhours yesterday. 👏

The approval of the bank charter will also bring on more regulatory oversight, but SoFi will make up for that with the flexibility to issue loans directly and reduce accessory costs. SoFi, already a giant in the student loans and refi business, has turned its attention to products catering to HENRYs (High Earning, Not Rich Yet). In the last year, the company has launched a mortgage business in more than a dozen countries — SoFi also added a credit product in the form of the SoFi 2% Credit Card. 💰

SoFi stock has fallen 13% YTD (and 39% in the past year.) However, with analysts forecasting a five-year revenue growth rate of 28%, you might not have to worry. In fact, with growth of +28%, there might be a lot to look forward to. 😁

$SOFI stock closed at $13.71 (+13.68%) today.


Earnings

P&G Posts Strong Earnings, Warns Prices Will “Keep Rising”

P&G Posts Strong Earnings, Warns Prices Will “Keep Rising” Featured Image

Proctor & Gamble reported earnings today and beat estimates. Unfortunately, the company’s guidance suggests price hikes are here to stay (thanks inflation!)

P&G posted EPS of $1.66, beating estimates of $1.65. The company also beat on revenue — P&G reported $20.95 billion in revenue compared to estimates of $20.34 billion. Net sales saw a 6% boost.

P&G can thank the pandemic for some of its stronger segments, like fabric and home-care. Demand for cleaning products has generally increased post-pandemic, and that demand pushed P&G’s sales +8% for products like Mr. Clean or Febreze. The company also experienced a +20% boost for products like Vicks and ZzzQuil during cold/flu season. 🤒

These figures demonstrate a strong performance, but P&G’s earnings report warns of continued price increases in 2022. More specifically, P&G expects to increase the price of products like Tide Detergent and Downy Dryer Sheets in late February. Personal hygiene products will also see price increases come Spring. Lastly, the company’s strong performance in sales for razors, feminine products, diapers, and toilet paper was largely due to price hikes. 🤷

$PG traded 3.36% higher today.


Earnings

Earnings Today

UnitedHealth Group increased 0.33% today after exceeding both earnings and revenue expectations. Thanks to a strong 2021, $UNH also raised full-year earnings expectations to $18.10-18.60/share, up from $17.15-17.65/share.

$UNH | EPS: $4.48 (vs. $4.30 expected) | Revenue: $73.74 billion (vs. $73 billion expected) | Link to Report

Bank of America gained just 0.40% today after opening up 4.7% higher this morning. Profit in Q4 grew 28% to $7.01 billion while revenue increased 10%.

$BAC | EPS: $0.82 (vs. $0.76 expected) | Revenue: $22.1 billion (vs. $22.2 billion expected) | Link to Report

Morgan Stanley reported larger-than-expected Q4 earnings after minimizing expenses. The firm achieved record revenues for the full year 2021. 💪

$MS | EPS: $2.01 (vs. $1.93 expected) | Revenue: $14.5 billion (vs. $14.6 billion expected) | Link to Report


Bullets

Bullets from the Day

Unilever walks from GSK Consumer Buyout. Unilever’s deal with GlaxoSmithKline fell through — the company has made 3 separate offers to acquire GlaxoSmithKline, a consumer-healthcare business, to add Glaxo’s pharmaceutical segments to Unilever’s already-vast repertoire of products. Glaxo rejected Unilever’s latest $68 billion offer, however, claiming Unilever’s offers are not representative of the company’s ‘true value.’ Unilever ($UN) stock closed up 7.73% today after the company abandoned its Glaxo deal. Glaxo ($GSK) dumped 2.41%. Read more in WSJ.

5G C-Band launch goes off without a hitch. Yesterday, we touched on the delayed launch of AT&T and Verizon’s C-band 5G over concerns about aircraft safety. Today, the telecom companies finally launched their new 5G technology despite airlines warning of “catastrophic disruptions.” You’d think (based on airlines’ description of impending 5G doom) that flipping the switch on 5G would have been like Y2K… but as it turns out, the launch went just fine. The Wall Street Journal faulted the FAA’s delays and poor planning for this whole disaster in an editorial published today.

Local media turn to non-profit models and consolidation. Chicago Public Media, the owners of public radio station WBEZ, voted to acquire the Chicago Sun-Times in a “no cash acquisition” on Tuesday. The deal will see the Sun-Times pivot to a non-profit news org, which aligns with a growing trend taking place among media companies in the U.S. Read more about the trend in Axios.