Ambastha Financial LLC

By Kuldip K. Ambastha

The past trading week was a big one for the initial public offering (IPO) market sector. Airbnb, Inc. (ABNB), C3.ai, Inc. (AI), and DoorDash Inc. (DASH) all had massive IPOs. Airbnb is an online marketplace for rental properties, C3.ai is an enterprise artificial intelligence software-as-a-service applications provider, and DoorDash is a technology-based restaurant food delivery service provider.

Airbnb’s first day of trading was Thursday, December 10, 2020, and the pre-set IPO price was $68.00 per share. Airbnb opened at $146.86 (making for a +116.0% immediate gain), and then closed at $144.71 (delivering a +112.8% return for the day). C3.ai’s first day of trading was Wednesday, December 9, 2020, and the pre-set IPO price was $42.00 per share. C3.ai opened at $100.00 (making for a +138.1% immediate gain), and then closed at $92.49 (delivering a +120.2% return for the day). DoorDash’s first day of trading was Wednesday, December 9, 2020, and the pre-set IPO price was $102.00 per share. DoorDash opened at $182.00 (making for a +78.4% immediate gain), and then closed at $189.51 (delivering a +85.8% return for the day).

Based on the numbers quoted here, investors are bullish on the future prospects of these three companies. However, only time will tell if the companies can deliver upon what investors are expecting. Technology-focused companies such as the ones noted here can make life easier for people, but maintaining viable companies over time is still tough. Earnings, revenues, profits, and other key metrics will all have to be strong going forward so that investors have continued confidence in these three companies.

Keywords – Airbnb, Inc., Airbnb, ABNB, C3.ai, Inc., C3.ai, AI, DoorDash Inc., DoorDash, DASH, initial public offering, IPO, online, Internet, technology, tech, earnings, revenues, profits, key metrics, future, long-term, short-term.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in ABNB, AI, or DASH.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

On Thursday, December 3, 2020, CrowdStrike Holdings, Inc. (CRWD) had a +13.6% return for the day. The company delivered a $0.08 adjusted earnings per share figure for 3Q2020, well above the expected consensus estimate of $0.00. The cybersecurity company CrowdStrike Holdings has been successful during the current global coronavirus pandemic era. The quarterly revenue figure of $232.5 million during 3Q2020 surpassed the 3Q2019 figure by 86%. For 4Q2020, revenue of $245.5-$250.0 million is expected and this range is above the $230.0 million consensus estimate. As people move more and more to cloud computing due to a need to work from home due to the pandemic, there is more and more of a need for strong cybersecurity such as what CrowdStrike offers. CrowdStrike sees this trend as sustainable going forward (given a wide variety of data the company has collected and researched), and not a one-shot opportunity which will go away after the pandemic is over.

CrowdStrike Falcon is a cybersecurity offering that is well-positioned to protect work documents saved to the cloud. Aside from cybersecurity, the company has vulnerability management, intelligence, and many other modules to offer to potential clients. New client onboarding, cross-selling into the existing client base, and net retention figures have all been strong for the company in 2020. At Fal.Con, the company’s user conference, corporate management announced the launch of a new module called CrowdStrike Falcon Horizon. This module analyzes a client’s security posture and ensures that misconfigurations are not present. CrowdStrike Falcon Horizon is yet another module which is well-positioned to add value to clients. CrowdStrike Holdings may have a bright future ahead, if the current trend is sustained going forward.

Keywords – CrowdStrike Holdings, Inc., CrowdStrike Holdings, CrowdStrike, CRWD, 3Q2020, 4Q2020, technology, tech, cybersecurity, security, cloud computing, earnings per share, EPS, revenues, consensus estimate, module, product, service, CrowdStrike Falcon, Fal.Con, CrowdStrike Falcon Horizon, sustainable trend, data analysis, global, coronavirus, COVID-19, pandemic.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in CRWD.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

The Gap, Inc. (GPS) is a prominent American company in the clothing and accessories retail sector, with store locations worldwide. The company was founded in 1969 by Donald Fisher and Doris F. Fisher, and is headquartered in San Francisco, CA. On Wednesday, November 25, 2020, the company’s stock had a -19.6% loss for the day. The global coronavirus pandemic has been causing damage in the retail sector, and the company missed its 3Q2020 earnings forecast target. The Gap, Inc.’s 3Q2020 sales were flat, at about $4 billion, compared to the same quarter in the prior year. The company owns several fashion brands. Old Navy and Athleta did quite well during 3Q2020, while Gap and Banana Republic struggled mightily in contrast.

Online sales were strong during the quarter, while in-store sales were weak. High shipping costs ate into the profit margin related to online sales. In aggregate, earnings per share (EPS) for 3Q2020 came in at $0.25, which is lower than the $0.37 figure from 3Q2019. For 3Q2020, the average analyst EPS forecast had been $0.32. Missing the EPS forecast by $0.07 led to the -19.6% loss noted above. The management team of The Gap, Inc. expects more tough times ahead. Given the uncertainty seen around the world, The Gap, Inc. did not give any guidance for what should be expected in 4Q2020. High shipping costs for online sales, coronavirus-related public safety costs, and large marketing expenditures are expected by The Gap, Inc. in the near future. These factors may detract from the stock’s performance post-3Q2020.

Keywords – The Gap, Inc., Gap, Inc., GPS, Donald Fisher, Doris F. Fisher, clothing, accessories, retail, stores, online, Internet, San Francisco, SF, California, CA, global, coronavirus, COVID-19, pandemic, Old Navy, Athleta, Gap, Banana Republic, earnings per share, EPS, 3Q2020.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in GPS.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

On Wednesday, November 18, 2020, Target Corporation (TGT) had a +2.3% return for the day. The prominent general merchandise retailer with a motto of “Expect More. Pay Less.” announced strongly positive 3Q2020 results which drove the return seen on that day. 3Q2020 adjusted earnings per share came in at $2.79, surpassing various consensus estimates. Target has been successful in its transition from a brick & mortar retailer into a multi-channel retail entity.

The company has reaped massive rewards through investing in technology, improving website and mobile app user experiences, and modernizing the supply chain to be competitive with purely e-commerce retailers. Even with the global coronavirus (COVID-19) pandemic which has been present for most of 2020, Target has performed well. Customers and investors have clearly been impressed with Target.

Keywords – Target Corporation, Target Corp., Target Corp, Target, TGT, general merchandise retailer, e-commerce, Expect More. Pay Less., adjusted earnings per share, earnings per share, EPS, technology, tech, user experience, supply chain, global, coronavirus, COVID-19, pandemic.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in TGT.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

Quidel Corporation (QDEL) is an American company in the diagnostic healthcare product space. Its offerings are sold worldwide. On Friday, May 8, 2020, the company received emergency use authorization for a COVID-19 antigen test from the U.S. Food and Drug Administration. (Emergency use authorization is a new public health testing category created within the current coronavirus pandemic era.) On Monday, November 9, 2020, the shares of Quidel Corporation had a significant -28.1% loss. That trading day saw a big spike in daily volume of buy and sell activity (4.6 million shares traded on the day, versus the 1.2 million shares 90-day average ending Friday. November 13, 2020).

Executives have been buying and selling the stock over time in trading activity that has been noticed by other parties. In the last three months, corporate insiders have bought 17,300 shares (valued at $3.3 million) and sold 20,353 shares (valued at $5.5 million). The company’s market capitalization is $8.4 billion. While $3.3 million and $5.5 million are small numbers compared with $8.4 billion, the net selling activity of corporate insiders still seems to be a cause for concern in the capital markets along with several upgrades and downgrades of the stock seen from equity research professionals.

Keywords – Quidel Corporation, Quidel Corp., Quidel, QDEL, diagnostic, healthcare, products, Food and Drug Administration, FDA, COVID-19, coronavirus, pandemic, public health, emergency use authorization, corporate insiders, buy, sell, upgrades, downgrades, equity research.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in QDEL.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

LendingTree, Inc. (TREE) is a well-known online loan marketplace operating in the USA. On the trading day of Thursday, November 5, 2020, the company’s stock had a -15.4% loss due to 3Q2020-related news. During 3Q2020, a quarterly loss figure of -$0.26 per share was seen. In contrast, one year ago during 3Q2019 a quarterly earnings figure of +$2.25 per share was seen. For 4Q2020, company executives have provided revenue and earnings guidance which disappointed Wall Street. Specifically, a $200-$215 million estimated revenue range and $13-$18 million estimated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) range were disclosed for 4Q2020. Both of these ranges show that the shorter-term outlook for the company has been affected by lessened demand due to the coronavirus pandemic. Fewer consumers are seeking out loans from lenders via LendingTree. Thus, the stock is currently struggling and has an unclear future at this time despite its past successes.

Keywords – LendingTree, Inc., LendingTree, TREE, COVID-19, COVID, coronavirus, pandemic, online loan marketplace, consumers, lenders, loans, financing, fee income, revenues, earnings, EBITDA, Earnings Before Interest, Taxes, Depreciation, and Amortization, Wall Street, United States, United States of America, USA.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in TREE.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

SAP SE (SAP) is a German software company in the enterprise software sector, focused on business operations and customer relations. The company operates in many countries around the world and has well-known enterprise resource planning (ERP) capabilities. SAP stands for “Systems, Applications, and Products in Data Processing.”

On Monday, October 26, 2020, the company’s stock had a -23.2% return for the day.

In this current global coronavirus pandemic era which has more people working from home, increased demand for SAP cloud-based products has been negative for the company’s profitability. In the past, SAP had generated most of its revenues and profits by selling long-term licenses to its software offerings. With such a scenario, earnings can be booked immediately, support revenue is seen over time, and a contract renewal a few years later allows for the sale of an updated software offering.

More recently, SAP has shifted to a cloud-based subscription model in which costs are spread out over the term of a contract (typically three years). From an accounting perspective, the cloud-based subscription model affects short-term revenue and profits more significantly, since such a new setup brings new costs. Furthermore, SAP has had to invest heavily to make sure SAP’s product offerings can all work properly with each other, since in the past the company did not prioritize the integration of various product offerings gained from mergers & acquisitions. Such integration efforts are also a drag on profitability.

Costs incurred today by SAP may lead to profitability later on, but for now profits and revenues have suffered.

Keywords – SAP SE, SAP, Systems, Applications, and Products in Data Processing, SAP AG, technology, tech, software, cloud, enterprise resource planning, ERP, COVID-19, coronavirus, pandemic, profits, revenues, costs, expenses, mergers, acquisitions, mergers & acquisitions, integration.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in SAP.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

During this past trading week, the energy sector saw announcements of industry consolidation. ConocoPhillips (COP) will be buying Concho Resources Inc. (CXO) while Pioneer Natural Resources Company (PXD) will be buying Parsley Energy, Inc. (PE). ConocoPhillips will buy Concho Resources Inc. in an all-stock deal valued at $9.7 billion. Pioneer Natural Resources Company will buy Parsley Energy, Inc. in an all-stock deal valued at $4.5 billion.

Due to troubled and highly volatile current times in the oil & gas sector, companies are looking to cut costs and gain geographic advantages via merger and acquisition activities. Furthermore, investors are looking for value creation and higher returns, items which merger and acquisition activities can help with for energy companies.

The industry consolidation noted here will help with ConocoPhillips and Pioneer Natural Resources Company potentially profiting more from U.S. shale play exposure. All four companies had their worst daily return of the trading week on Wednesday, October 21, 2020. On that day of the trading week, the returns were as follows – ConocoPhillips: -6.0%, Concho Resources Inc.: -6.0%, Pioneer Natural Resources Company: -6.1%, and Parsley Energy, Inc.: -8.4%.

Keywords – ConocoPhillips, COP, Concho Resources Inc., CXO, Pioneer Natural Resources Company, PXD, Parsley Energy, Inc., PE, energy, oil, gas, shale, industry, consolidation, merger, acquisition, M&A.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in COP, CXO, PXD, and PE.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

During this past trading week, Fastly, Inc. (FSLY) had a -27.2% return on Thursday, October 15, 2020. Fastly is a technology company in the content delivery network, cloud provider, and edge computing arenas. After Fastly issued a 3Q2020 revenue warning which was inconsistent with the strong growth story of the company in the recent past, the stock price dropped sharply. Some of the weakness is due to geopolitical (U.S. / China) tensions related to Fastly’s exposure to TikTok’s ultimate owner ByteDance.

However, other, undisclosed customers may also account for decreased revenues to Fastly in 3Q2020. Little information is currently known about who the other customers are in relation to Fastly. It may be the case that this growth-oriented, tech stock will be under continued pressure going forward until the revenue outlook improves. Fastly has revenues and sales but no earnings, and its stock is still trading at high valuations even with the -27.2% return of Thursday, October 15, 2020.

Keywords – Fastly, Inc., Fastly, FSLY, technology, tech, growth, customers, TikTok, ByteDance, USA, U.S., China, valuations, 3Q2020, revenues, sales, earnings.

Disclosure – The principals and clients of Ambastha Financial LLC have no positions in FSLY.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.

By Kuldip K. Ambastha

Morgan Stanley (MS) and Eaton Vance Corporation (EV) were in the news prominently in this past trading week. In a deal of cash plus stock, Morgan Stanley will be buying Eaton Vance Corporation for $7 billion. James Gorman, head of Morgan Stanley, announced this deal on Thursday, October 8, 2020. (On this day, the stock of Morgan Stanley rose a little by 0.6%, while the stock of Eaton Vance Corporation rose a lot by 48.1%.)

During 2020, the stock of Morgan Stanley has outperformed its Wall Street peers. James Gorman has mentioned that the 38% premium being paid to acquire Eaton Vance’s assets under management (AUM of about $500 billion) is worth paying in order to enhance Morgan Stanley even further.

After this acquisition is completed, Morgan Stanley Investment Management (MSIM) will have roughly $1.2 trillion of AUM plus more than $5 billion in revenues. The acquisition will most likely close in 2Q2021, and may help in the executive search for an able successor to James Gorman as the head of Morgan Stanley in his Chairman and Chief Executive Officer (CEO) roles.

Keywords – Morgan Stanley, MS, Eaton Vance Corporation, Eaton Vance, EV, banking, financial services, investment management, asset management, mergers & acquisitions, M&A, mergers, acquisitions, deal-making, deals.

Disclosure – The principals of Ambastha Financial LLC have a long equity position in MS plus a short option position in MS, and no positions in EV. The clients of Ambastha Financial LLC do not have any positions in MS and EV.

Disclaimer – No recommendations are being made via this post. Past performance is not an indicator of future performance. As an investor, you should do your own research and seek professional advice from a Registered Investment Adviser (RIA). You can lose money by investing in stocks and other instruments. Ambastha Financial LLC does not assume any responsibility (legal or otherwise) for any losses that may occur as a result of actions taken based on this post. All content copyrighted © 2020 – Ambastha Financial LLC.