August Equity Research Insights
This month features insights on: Netflix, AMD, Nike, Vital Farms, Chipotle, SharkNinja and Cirrus Logic
Chipotle (CMG):?NielsenIQ delivered its highest Digital Revenue Estimate yet for Chipotle last quarter, matching Chipotle’s reported digital revenue figures. Q2’s positive performance was largely driven by earlier in the quarter with June seeing negative MoM and YoY changes for NielsenIQ’s Monthly Digital Sales Index. News of Chipotle’s positive earnings came around a time of heightened scrutiny over small portion sizes. On Chipotle’s recent Q2 earnings call, former CEO Brian Niccol assured investors that “Generous portions is a core brand equity of Chipotle” and that the company will be addressing portion consistency concerns through consumer surveys and employee training.?
Netflix (NFLX): Netflix experienced a high volume of subscription cancellations in the United States during the final week of July bringing overall net adds for the 3rd quarter into negative territory. The cancellation spike followed backlash from CEO Reed Hastings’s political donation to the Harris presidential campaign. After news of the donation spread, ‘#CancelNetflix’ began trending on social media. While a large number of Netflix subscribers did cancel in response to the news, the effect was only temporary, and cancellation rates have since returned to normal levels.
AMD (AMD): GfK believes AMD is in a prime position to regain share in the overall PC market, mainly at the expense of Intel. Thus far in 2024, AMD’s share has increased +1pp y/y within the SMB channel; thanks to this momentum as well as gains within the AI PC segment, AMD’s share is set to grow y/y for the first time since 1Q22.
Nike (NKE), Adidas (ADS.DE), and Skechers (SKX): Examining major sneaker manufacturers, a decline in NKE's stock performance was noticed starting in March 2024, while both ADS.DE and SKX experienced strong stock growth. NielsenIQ e-receipt data indicated that NKE demonstrated a softer YoY % decline in Average Unit Price compared to ADS.DE and SKX. The softer YoY decline at NKE may have caused consumers to switch to sneaker brands with better price cuts.
Cirrus Logic (CRUS): NIQ sell-out indicates that the mix of iPhone 15 Pro/Max accelerated q/q in 2Q, a benefit for Cirrus given its higher content in these models. Additionally, the anticipated positive content and unit trends for Cirrus in the iPhone 16 are likely to drive y/y growth in 3Q.???
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Vital Farms, Inc. (VITL): Vital Farms is a US national consumer brand that sells pasture-raised eggs and other animal products. Its stock is up +97% YTD as of Aug 8, 2024 and the company raised its FY 2024 net revenue guidance after strong Q2 24 results. NIQ US RMS data has tracked this rise in sales, with recent Q2 sell-through growth driven by unit volume gains. As the company expands supply chain capacity, RMS Distribution facts (i.e. TDP) can help to illustrate where VITL gains shelf space, and how sales subsequently trend.
SharkNinja (SN): Through the end of 2Q in GfK’s weekly data, SharkNinja continued to gain share y/y in key W. Europe countries, including markets where the brand is already established as well as countries where they are expanding their presence. Early in 3Q, GfK will be closely monitoring SharkNinja sell-out during Amazon’s Prime Day sale as the brand is expected to be heavily promotional.
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