Chipotle Makes a Comeback
Catch up with this week’s Five on Friday!
Chipotle shareholders received good news this week as the company reported earnings that beat expectations on both the top and bottom line, demonstrating the continuing efficacy of CEO Brian Niccol’s leadership.
What does this mean?
The company’s stock has been on an incredible run since the appointment of Niccol to the top job and has more than doubled in the last 12 months. The former Taco Bell CEO has been focusing on driving digital sales, launching a brand new loyalty program and investing heavily in online payments and delivery. Digital sales doubled this quarter and now account for over 15% of total sales. Just last month, Chipotle launched a new points-based loyalty program, signing up over one million members in the first week. The program now has over three million members according to management. It’s true that Chipotle is still haunted by its notorious food safety crisis from a couple of years back — indeed, shares dropped yesterday when it was revealed the company had received a new subpoena from US federal prosecutors requesting information regarding diseases traced back to its restaurants. However, under Niccol’s management, the company is steering its way towards a comeback, and is already nearly back at 2015’s all-time highs.
Beyond Meat — the makers of the meat-free Beyond Burger — is looking to raise as much as $184 million in its stock market debut.
What does this mean?
Releasing its S-1 filing on Monday, the company said that it expects to offer 8.75 million shares priced between $19 and $21 a piece in the IPO. The higher end of this price range would give it a market value of about $1.2 billion. Founded in 2009, Beyond Meat has gained publicity for its Beyond Burger — a patty made purely from plant proteins that has the “look, cook and taste” of ordinary ground beef. The company has collected some very high-profile backers to date, including Bill Gates, Leonardo Di Caprio, and the largest processor of meat in the US — Tyson Foods. In the filing, we can see that losses have shrunk at the company to $29.9 million in 2018, while revenue doubled to $87.9 million. On top of that, Beyond Meat products have made their way to the shelves of more than 35,000 outlets, including major restaurants and grocers such as Kroger, Whole Foods, and TGI Friday’s. It seems that the ‘bloodless revolution’ is well underway.
Ford Motor announced this week that it is investing $500 million into electric vehicle startup Rivian.
What does this mean?
It’s certainly noteworthy that Ford — whose iconic brand is synonymous with the early days of carmaking — should bet so heavily on the future of electric vehicles. Although there are still relatively few purely electrified cars on the road, the decision reveals the ambition on the part of traditional automakers to keep up with modern-day technological advances as cars increasingly become understood as “hardware.” In the case of Rivian — a decade-old company which recently raised $700 million in an investment round led by Amazon — it’s likely that Ford intends to make use of the startup’s unique battery architecture, especially in its own budding portfolio of EVs. Indeed, in yesterday’s better-than-expected earnings report, Ford posted strong results in its North American businesses, but reaffirmed its ambition to invest in newer models. The deal will be a major boost to Rivian, too. While rival startups such as Tesla and Nio have struggled to scale up operations to meet demand, Rivian will enjoy the high loyalty rate and global reach of the old Detroit giant.
Earnings season is back upon us, and so are all the market fluctuations that come with it. To get you up to speed, sit back, relax, and enjoy ‘The Earnings Overview’:
The Good 😁
Align Technology — Thanks to high demand for its products, the Invisalign-maker not only beat Wall Street’s expectations for the quarter, but surpassed its own guidance figures.
Amazon — Despite slow revenue growth, the e-commerce empire smashed expectations on earnings and posted its highest-ever quarterly profit of $3.56 billion.
Boston Beer — An increase in product shipments drove the craft beer company to success in the quarter, with revenue jumping 32% year-on-year to $251.7 million.
Chipotle Mexican Grill — The fast-casual chain took in $1.31 billion for the quarter bolstered by 9.9% same-store sales growth.
Coca-Cola — The beverage giant had a very healthy quarter, reporting earnings and revenue that outpaced Wall Street’s expectations.
Facebook — The social media giant exceeded revenue expectations and matched user growth estimates while disclosing that its ‘Stories’ feature now enjoys 500 million users.
Ford Motor — The automaker delivered better-than-expected first-quarter earnings, thanks to strong results in its core North American businesses.
Hasbro — Shares jumped 5% after the toymaker reported earnings and revenue that surpassed Wall Street expectations, thanks mostly to surprise growth in its franchise and gaming segments.
Microsoft — Shares soared after the software giant easily beat earnings and revenue expectations, pushing its market cap across the $1 trillion valuation line for the first time.
PayPal — The payments company had a better-than-expected quarter and finally revealed user numbers for its popular service Venmo (a very healthy 40 million).
Silicon Valley Bank — The bank reported strong results from its first-quarter of 2019 last night, beating analyst expectations on both the top and bottom lines.
Twitter — The social network posted better-than-expected adjusted earnings of 37 cents per share on revenue of $787 million, and reported strong growth in its monetizable user base.
The (Not) Bad 😐
Gentex — The maker of dimmable mirrors saw only 1% net sales growth in the quarter, though this was reported positively in the context of an overall decline in global light vehicle production.
iRobot — The robotics company saw sales rise 8.5% year-on-year to $237.7 million while profits jumped 9% to $22.5 million but the sales figure fell short of analysts’ expectations.
ServiceNow — The software firm beat expectations on adjusted earnings and revenue but posted an overall loss of $1.5 million for the quarter.
Starbucks — Strong growth in China helped the coffee giant to beat analyst expectations on earnings and same-store sales, though it fell short of estimates on revenue.
The Ugly 🙃
Tesla — Although CEO Elon Musk warned investors that this would be a slow quarter, the carmaker delivered fewer cars and generated less revenue than analysts had expected.
Elon Musk announced this week that he expects Tesla to put as many as one million robotaxis on the roads in 2020. “I feel very confident predicting autonomous robotaxis for Tesla next year,” the billionaire said during the Tesla Autonomy Investor conference on Monday. While he admitted that the company’s biggest obstacle will be getting regulatory approval, he also said that he was “confident we will have at least regulatory approval somewhere, literally next year.” Elsewhere, Musk promised that Tesla will be making vehicles without pedals or steering wheels by 2021, though he also warned investors, “Sometimes I am not on time, but I get it done.” This last statement was met with a little suspicion by the press, with one journalist calling the statement “desperate,” and another referring to the Silicon Valley icon as “just another car salesman.”
What does this mean?
While Musk has indeed managed to prove his detractors wrong in the past, notably with his SpaceX venture, it remains to be seen if he can bring his ‘robotaxi’ vision from promise to reality.
The Week In Numbers
in losses was posted by Slack Technologies today ahead of its highly-anticipated IPO.
is how much PayPal will invest in Uber in the run-up to its IPO this year.
has been set aside by Facebook this quarter to deal with fines related to privacy violations.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in Align Technology, Amazon, Boston Beer, Chipotle, Coca-Cola, Facebook, Ford, iRobot, Microsoft, ServiceNow, Starbucks, Tesla, and Twitter.