Never Too Late To Sell

Shares of online car retailer Carvana fell to a fresh all-time low as bankruptcy fears spread. 😱

The company reportedly signed a pact with creditors who hold roughly 70% ($4 billion) of its unsecured debt. The binding deal requires its creditors to act together in negotiations with the company. This could potentially streamline the negotiation process where Carvana can seek to restructure debt or secure new financing.

After the news broke, Wedbush analyst Seth Basham downgraded the stock from neutral to underperform. He also reduced his price target from $9 to $1. He joins the group of other analysts who continue to throw in the towel on the stock. Other analysts, however, downplayed the rumors and said the company has a sufficient short-term cushion to get through the end of 2023.

The bears remain in the driver’s seat for now, with $CVNA shares falling another 43% today… 📉

We last talked about the 200-day moving average in October, when traders and investors were looking for the bear market rally to continue. One of the key areas they were watching was the moving average used to track the stock market’s long-term trend.

Flash forward six weeks, and we’re right back there with traders now highlighting it as another important inflection point. 📝

Today’s chart making the rounds is of the S&P 500 ETF ($SPY).

In it, we can see prices recently failing to break above what technical analysts call a “confluence of resistance” comprised of:

1. A downtrend line from its January highs; and
2. The downward-sloping 200-day moving average

Bearish analysts see this as confirmation that sellers have retaken control. They claim stocks are still in a bear market, and the path of least resistance is lower as long as prices are below their recent highs. Their bullish counterparts say that the current pullback is just a shakeout and that prices will soon break above this resistance level.

Who is ultimately right remains to be seen. But rest assured, this is a chart on many people’s radars as we head into year-end. 👀

Earnings announcements remain sporadic, but there were several big movers of note today. Let’s dive in. 🤿

United Natural Foods is the country’s largest organic and natural food wholesaler. Unfortunately, its investors will be able to buy slightly less expensive food after today’s drop. 

The company’s revenue rose 7.6% to $7.53 billion, beating the $7.48 expected. However, its gross margin fell 34 bps to 14.55%, causing earnings per share of $1.13 to miss expectations of $1.15. 📉

Wholesaler’s gross margins are the key metric investor’s track. And a declining gross margin shows the company is struggling to pass along costs to its customers. As a result, its guidance for the full year also came in slightly below analyst estimates.

Overall, the lack of earnings growth despite higher food prices caused $UNFI shares to fall 15%. 🤢

Academy Sports and Outdoors, Inc. rose to a fresh all-time high after it reported better-than-expected Q3 results. 🏀

The company’s earnings per share of $1.69 beat estimates of $1.64. Revenues of $1.49 billion fell by $0.10 billion YoY and missed expectations.

On a positive note, the company updated its fiscal year 2022 earnings guidance above estimates, though revenue guidance was soft.

Overall, investors are assigning more value to the improving earnings picture than the lack of revenue growth. $ASO shares rose 15% to a new all-time high. 📈

Campbell Soup delivered a better-than-expected earnings report. 😋

The American processed food and snack company saw its sales grow 15% YoY to $2.58 billion, ahead of the $2.45 billion expected. Adjusted earnings per share of $1.02 also beat the $0.88 expected.

The company’s gross margin rose ten bps to 32.4%, with its adjusted earnings before interest and taxes (EBIT) increasing 15% YoY. Net sales in its “meals & beverages” and “snacks” segments both rose 15%. Additionally, the company raised its fiscal-year 2023 sales and earnings outlook.

The overall positive report sent $CPB shares higher by 6%. 🥫

GameStop is erasing its regular session losses after reporting third-quarter results. 

The brick-and-mortar retailer saw sales decline from $1.3 billion last year to $1.2 billion. Its net loss of $95 million was slightly less than the $105 million in the same period last year. 📉

Meanwhile, the company continues to burn through its cash, falling from $1.4 billion to $804 million YoY. With that said, it’s working to strengthen its balance sheet by cutting costs, which it hopes will prepare the company to make strategic acquisitions. It’s also struggling with a backlog of inventory, which sits at $1.13 billion. 

Regarding the NFT marketplace it launched in July, the company said it continues to progress but did not break out those results for investors. It also said it’s making any of the customers affected by its partnership with FTX whole.

Overall, the company’s turnaround story remains in progress. With that said, $GME shares are hovering near their year-to-date lows as other meme stocks give up much of their gains. 😬