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- The Investing Week Ahead: 11/15/21
The Investing Week Ahead: 11/15/21
Highlighting the most important topics to attack the investing week ahead.
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In this post, we’ll cover:
Hot IPOs taking place this week
Quarterly financial reports worth reading
Investor events to keep an eye on
Major economic releases
If you want to learn more about the companies mentioned in this post, consider using Unhedged to conduct your research.
The Investing Week Ahead - Too Long, Didn’t Read:
Sweetgreen isn’t Chipotle 2.0, a lot of our favorite traditional companies are reporting their earnings this week, Bakkt’s CEO is going to be incredibly busy, and retail sales data is shared with us on Tuesday.
IPOs to Watch this Week:
Debuting this week is a data and analytics company, as well as one of my favorite fast casual eateries.
Braze (BRZE):
This New York-based company founded to “assist organizations in automating and analyzing their customer communications and engagement efforts,” is planning to raise $460 million this week through an IPO.
The company generated $132 million in 2019, $169 million in 2020, and is on track to rake in $370 million in revenue this year - with roughly 67% gross profit margins. Sales and marketing as a percent of total revenue has generally declined throughout the years, but experienced a well-understood bump in 2021 as the company more than doubles its revenue.
The company is not yet cash flow positive, is on track to lose -$50 million in earnings this year, and has a laundry list of competitors.
I’m not too intrigued here - but, will keep an eye on them this week as always. I’d be interested in Wall Street’s opinion once the company is publicly traded. Nothing here looks glamorous in my opinion.
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Sweetgreen (SG):
This California-based (and Washington DC-founded) company was created by three Georgetown undergrads when they were frustrated by the unhealthy and uninspiring food options around them. The friends raised $300K to “develop a restaurant concept that focuses on healthy food choices in a fast casual setting.” 14 years later - the company is planning to raise $300 million through an IPO. Incredible.
The company generated $274 million in revenue in 2019, $221 million in 2020, and is on track to rake in $305 million in revenue this year - with roughly 40% gross profit margins. To put that in perspective, Chipotle (CMG) is also hovering around the 38-40% gross profit margin range.
Sales and marketing expense as a percent of total revenue is back to 2019 levels, after spiking from 32% to 45% in 2020, we’re now hovering back around 32% for YTD 2021 - an incredible thing if you think about it. Spend the same amount of money to drive business, all while the business that your money drives has increased by +11%.
The company is not yet cash flow positive and will lose nearly -$90 million in earnings this year. Despite their 2021 losses being more than 2019’s, their cash flow from operations are generally in line with 2019’s figures - showing signs of getting back to pre-pandemic levels of financial performance.
If you haven’t tried Sweetgreen before, it’s similar to Chipotle but is “farm to table” salads instead of a Mexican grill. Here’s their menu, as it’s about lunch time now.
I compared this company to Chipotle, but I want to be clear - when Chipotle IPO’d in 2007 they had 704 locations with over $1 billion in revenue. Sweetgreen’s $305 million is similar to Chipotle’s 2003 figures - of which they only lost -$7 million in earnings vs. Sweetgreen’s -$90 million. People love this restaurant and I think the IPO will be successful, I just want to set the narrative that I don’t think this will be Chipotle 2.0.
Key Earnings Announcements:
This week we have a lot of the traditional names reporting their quarterly financials - including some in our own coverage universe.
November 15: Lucid Group (LCID), Advance Auto Parts (AAP)
November 16: Home Depot (HD), Sea Limited (SE), Walmart (WMT)
November 17: Nvidia (NVDA), Target (TGT), Bath & Body Works (BBWI)
November 18: Alibaba (BABA), Applied Materials (AMAT), Macy’s (M)
November 19: Foot Locker (FL)
Especially excited for Sea Limited to report their earnings as well as Nvidia, Target, and Walmart - I think we’ll finally begin to see some meaningful growth around Walmart+ for the last 12 months or so.
Also excited about Applied Materials and their commentary regarding how they’re maneuvering the supply chain crisis.
Investor Events:
Big investor conferences this week - especially for our crypto-powering friends.
November 16:
Palo Alto Networks (PANW) Ignite 2021 Investor Hour
Bakkt’s (BKKT) CEO presents at Citi’s 2021 FinTech Virtual Conference
Marqeta’s (MQ) management presents at Citi’s 2021 FinTech Virtual Conference
November 18:
Teledoc Health (TDOC) Investor Day
Bakkt’s (BKKT) CEO presents at Oppenheimer’s Blockchain & Digital Assets Summit
Five9 (FIVN) Virtual Analyst Day
Squarespace (SQSP) Virtual Investor Day
Remember, Marqeta (MQ) is the company that’s pulling the strings behind the scenes for Bakkt in relation to their card processing. Let’s see if any positive comments made by their CEO move the stock this week.
Also - seems like a few cybersecurity companies are hosting discussions. Tomorrow morning I’ll publish an updated deep-dive analysis into Cybersecurity as a secular growth trend, name off a dozen or so stocks doing well in the space, and specify 5 that I believe are worth investing into today.
Major Economic Updates:
Generally a slow week from this side of things.
November 16: US Retail Sales for October 2021 from the Census Bureau
November 17: US Building Permits for October 2021 from the Census Bureau
We want to see both of these numbers trend up and to the right.
In case you missed my detailed Week in Review post breaking down the earnings results of PayPal, Roblox, Coinbase, DoorDash, Disney, SoFi, Affirm, Opendoor, Amplitude, Marqeta, Palantir, and Upstart - click below.
Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
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