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- 👉 Trump's (Partial) Tariff Rollback & TikTok's Deadline
👉 Trump's (Partial) Tariff Rollback & TikTok's Deadline
Dollar Tree, GameStop, Lululemon
Austin Hankwitz
24 Mar
Together with Betterment
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Let’s dive in.
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Key Earnings Announcements:
Chewy, Dollar Tree, GameStop, Lululemon and Oklo are the headliners this week.
Monday (3/24): Oklo
Tuesday (3/25): Canadian Solar, Core & Main, GameStop, McCormick, Rumble
Wednesday (3/26): Cintas, Chewy, Concentrix, Dollar Tree, Jeffreies, Petco
Thursday (3/27): Lululemon
Friday (3/28): N/A
What We’re Watching:
GameStop (GME)
Source: GameStop 10Q
GameStop reports its Q4 fiscal 2024 earnings tomorrow (3/25) before the bell. Shares hover around $25, after spiking past their 200-day average on Feb. 10. The rally followed CEO Ryan Cohen’s photo with Michael Saylor, sparking speculation about a crypto pivot for the company. However, GME remains -70% off its $120.75 peak from 2021.
Analysts continue to question the potential Bitcoin holdings and everyone is waiting to see if Cohen will comment during the earnings call.
Holiday sales and $4.6B in cash could drive an EPS beat. Q3’s $0.06 EPS substantially surpassed -$0.03 estimates — but Wedbush’s ‘underperform’ and $10 target highlight Wall Street skepticism. Revenue results have been less than stellar ($860M last quarter), and volatility always seems to be around GME.
Do I care to invest in GME — not at all. However, it’s always worth watching the results of this stock because it’s considered the ultimate meme stock. If we are truly going to get another leg up in this bull market (especially for crypto), a lot of retail investors believe that GME would surge.
GameStop Corp (GME), Stock Performance, 5-Year Chart, Seeking Alpha
Lululemon (LULU)
Source: Lululemon Investor Relations
Lululemon reports Q4 fiscal 2024 earnings on Thursday (3/27) after market close. Shares have slid from $423 in January to ~$325, down -23% YTD, despite a January outlook of $3.56B - $3.58B (+11-12% growth).
CEO Calvin McDonald called Black Friday 2024 the “biggest day” ever for Lululemon — fueling hopes for a beat this week. The company’s performance in China is also in the spotlight (+33% revenue in Q3) — hoping that it can continue to offset U.S. softness (-2% comps). Analysts flag competition from Alo Yoga, but a $1B buyback has helped boost some investor confidence. Margins rose to 58.5% last quarter, and a lift in guidance could be exactly what LULU investors need to see in this week’s report.
“Our performance in the third quarter shows the enduring strength of lululemon globally, as we saw continued momentum across our international markets and in Canada. Looking to the future, we are pleased with the start to our holiday season, and we remain focused on accelerating our U.S. business and growing our brand awareness around the world. Thank you to our dedicated teams for continuing to deliver for our guests and stakeholders.”
Lululemon, Inc. (LULU) Stock Performance, 5-Year Chart, Seeking Alpha
Investor Events / Global Affairs:
CoreWeave begins trading, more tariff talks, and rebuilding TikTok in America.
CoreWeave IPO
Source: The Information
CoreWeave (CRWV) — an Nvidia-backed hyperscaler — aims to raise up to $2.7B in its IPO. The company will begin trading on the NYSE this Thursday (3/27). The range sits at $47-$55 per share, scaled back from earlier hype. Revenue rocketed from $15.8M in 2022 to $1.9B in 2024 — but some analysts worry that the company is too reliant on it’s relationship with Nvidia.
Nvidia’s $100M stake and $300M/year GPU rentals tie CRWV to the AI boom, but a hedge fund manager noted in the Financial Times that “No one knows where it’s going to be in three years’ time. Uncertainty is also the devil of all good investments.” Some analysts are calling CoreWeave the “WeWork of AI Data Centers” over lease risks, despite 250K+ GPUs across 32 sites. With $13B in debt and 17% margins, this is a company that I’ll likely need to watch for at least a few quarters before considering a position.
“Public companies are growing revenue at a much slower rate than CoreWeave’s latest annual rate of 737%. That rate is likely unsustainable, but it helps explain why the company is seeking such a high valuation in what is shaping up to be a slow year for IPOs.
One historical comparable for investors to consider is Snowflake, which made its debut in the hot IPO market of late 2020. At the time, the cloud firm was growing revenue at 174% a year. The company’s IPO was priced at 20 times sales.
According to Jay Ritter, a finance professor at the University of Florida Warrington College of Business, the median price-to-sales ratio for tech IPOs in the last 10 years varied from 4.2 in the slow IPO year of 2016 to 15.2 in the brisk 2021 market, when 121 tech companies went public. Those figures still pale in comparison to IPOs during the heyday of the dot-com bubble. In 1999, there were 370 tech IPOs. They went public with a median price-to-sales figure of 27.”
More Tariff Updates
The White House is narrowing its planned tariffs set for April 2, focusing on reciprocal levies targeting nations with significant trade imbalances while delaying sector-specific tariffs. President Trump has labeled April 2 as “Liberation Day,” aiming to impose tariffs that match those of U.S. trading partners, but the administration has now opted for a more selective approach.
The targeted nations, referred to as the “dirty 15,” will face particularly high tariffs, though specific country names have not been confirmed. While Canada and Mexico were initially mentioned for potential tariffs due to fentanyl trafficking, their status remains unclear. Trump’s team may implement the tariffs immediately using emergency economic authority, although final decisions are still pending. Industry officials and corporate executives have struggled to secure exemptions, with the administration signaling little willingness to grant them. Despite some flexibility hinted by Trump, businesses remain uncertain — eager for clarity as the deadline approaches.
Regardless of what’s coming next — it’s clear that the market is ready to move upward if Trump continues to back off from at least some of the tariffs.
SPDR S&P 500 ETF Trust (SPY), YTD Performance, Seeking Alpha
“Every member of the Trump administration is aligned on finally levelling the playing field for American industries and workers. President Trump has assembled the best and brightest trade team in modern American history to reignite American Greatness, and they are hard at work following the same playbook — President Trump’s playbook — to deliver for the American people.”
Perplexity Wants to Buy TikTok
Source: Perplexity
AI startup Perplexity, backed by Nvidia (NVDA, $121.67), threw its hat in on Friday — aiming to snag TikTok before its April 5 ban deadline. Valued at $18B, it’s pitching a $40B-$50B deal to rebuild TikTok’s algorithm from scratch in U.S. data centers, with open-source logistics and transparency at the forefront. “Perplexity is singularly positioned to rebuild the TikTok algorithm without creating a monopoly,” it boasts in a blog post.
Facing giants like Oracle and Microsoft, Perplexity’s bid — first floated in January — leans on a “Little Tech” angle opposed to “Big Tech.” Trump’s push for a 50% U.S. stake aligns with Vice President Vance’s confidence in a pre-deadline deal (which could be this week). Analyst’s see it as a long shot, but a win could juice NVDA ties and create an interesting twist to $2.95T path moving forward. If ByteDance resists, their $10B+ of U.S. sales will be entirely at risk.
“TikTok’s "For You" feed is personalized to each user and building a real-time recommendation system is vital to keeping a short video platform fresh and fun to use. Perplexity would start by building these basic systems to ensure users maintain a seamless experience. This infrastructure would be developed and maintained in American data centers with American oversight, ensuring alignment with domestic privacy standards and regulations”
Major Economic Events:
The Fed’s preferred inflation gauge and a final GDP reading.
Monday (3/24): S&P Flash U.S. Manufacturing PMI, S&P Flash U.S. Services PMI
Tuesday (3/25): Consumer Confidence, New Home Sales, Philly Fed Manufacturing Survey, S&P Case-Shiller Home Price Index
Wednesday (3/26): Durable-Goods Orders, St. Louis Fed President Alberto Musalem Speaks
Thursday (3/27): Advanced Retail Inventories, Advanced U.S. Trade Balance in Goods, Advanced Wholesale Inventories, Initial Jobless Claims, GDP (second revision), Pending Home Sales, Richmond Fed President Tom Barkin Speaks
Friday (3/28): Consumer Sentiment (final), Core PCE Index, PCE Index, Personal Income, Personal Spending
What We’re Watching:
Core PCE
The Core PCE Price Index, the Fed’s key gauge excluding food and energy, rose +0.3% MoM in January, matching forecasts and up from December’s +0.2%. The annual rate dipped to +2.6% — down from +2.8% — but is still well above the Fed’s +2% target. Sticky services inflation (think housing, healthcare) is keeping the heat on.
Core PCE is expected to come in at +0.3% MoM and +2.7% YoY this week. If both of these data points are lower — then it could lift the market higher.
"Inflation remains the big hurdle for consumers, and we forecast some sticky price pressures in the February data.”
GDP Growth Rate
The US economy grew at a +2.3% annualized rate in Q4 2024, down from Q3’s +3.1% and the weakest in three quarters — with final data due Thursday (3/27). Consumer spending most recently rose +4.2% — the highest since Q1 2023 — driven by goods (+6.1%) and services (+3.3%). Exports slipped -0.5%, and imports eased.
Shoppers have helped keep the economy afloat but growth lags 2024’s +2.8% pace. A softer print could boost Fed rate odds higher. The odds of a rate cut in May are currently at 65%. The GDP revision this week is expected to also be +2.3% — which will be one of the key data points for the entire week.
“Annual GDP growth in the United States is projected to slow from its strong recent pace, to be 2.2% in 2025 and 1.6% in 2026.”
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Cover image source: Perplexity
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