Earning Szn Going Strong ??

In this issue of the Peel:

• ?? Big Tech is proving Newton’s Law by going up and coming down.
• ?? The Sun is really raking it in for investors...
• ?? Amer Sports pushed its IPO after tussling with investors.

Market Snapshot ??

Banana Bits ??

• Amer Sports raised $1.3bn in this year’s biggest IPO
• Peloton’s CEO predicted another sales decline
• Lewis Hamilton is ditching Mercedes for a sleek new Ferrari
• Zuckerberg will be making another $700mn after Meta's new dividend

Don’t get KO’d by a Shitty VDR

If you’re still using a shitty old VDR, there’s a good chance your deals will go down for a full 10-count. That’s why it’s important to keep your gloves up, and by that, we mean having a cutting-edge VDR like CapLinked.

With features like advanced activity tracking to let you anticipate your target’s next swing, CapLinked’s VDR gives you all the tools you need to float like a butterfly and sting like a bee through deals. So what are you waiting for? Your CapLinked VDR is ready to jump in the ring.

Macro Monkey Says ??

The Big Tech Brigade

Forget about FAANG—that’s gone way out of style. It’s all about MAMAA now (That’s FAANG with Microsoft included instead of the streaming giant).

Just one day after dragging everything down to hell, Big Tech roared back with a vengeance. The market rebounded from having one of its worst days of the year to having one of its best, and it’s all thanks to these beautiful behemoths. Let’s dig in:

Earnings Roll Call

Amazon: CEO Andy Jassy is making Jeff Bezos proud. Amazon seems to be hitting home runs on the daily now. They reported another strong quarter of earnings, with revenue hitting $170bn, growing double the pace of costs after Jassy’s cost-cutting measures were put into action.?

Unfortunately, part of that cost-cutting included 35,000 jobs to improve their competitive positioning against the likes of TikTok. Amazon has also cut lots of slack in its ailing Prime Video division. What was once a cute pet project quickly became a major cost drain on the business.

Source ?

Meta: Next up at bat is Meta, which not only reported a 25% gain in sales and a tripling of profit but also one-upped Amazon with the announcement of a $50bn stock buyback along with its first-ever dividend.

Cash is King

There is a lot to unpack here. Meta investors just got a triple-hitter of good news. Strong revenue is enough to wake up even the sleepiest of stocks. On top of that, companies buying back their stock is a great sign that they believe the price is undervalued and a positive signal to the market.?

But Meta went a step further and issued a dividend, which is not often seen at tech companies. Investors in big tech are essentially paying for growth and, as a result, are generally fine with not receiving a dividend so that the company can invest that cash back into the business.

However, Meta has so much cash on its balance sheet ($63bn to be exact) that Mark Zuckerberg is throwing out a dividend to reward faithful investors. What a stand-up fella. Oh, but also, since he happens to be one of the largest shareholders, he will receive a massive dividend check, too.

Source

Apple: Apple is what we would call “the least of these.” iPhone sales were generally better than expected, but China continues to be a sore spot for the company. Sales declined 13% in the region, marking Apple’s weakest quarter in China since the beginning of the panini (that’s a Gen Z word for pandemic).

Still, investors decided to ignore that for the time being and focus on Apple’s strong sales otherwise. Plus, Apple is ushering us into the future with a new VR headset, the Apple Vision Pro, for a cool $3.5k. So, expect sales to rebound pretty soon.

Source

What's Ripe ??

Nextracker Inc. (NXT) ??24.8%

• Nextracker’s stock absolutely crushed it—a win for solar panels across the globe! Nextracker operates in a very niche part of the industry, creating measuring machines for solar panel companies.
• Since going public last year, the stock has been a Wall Street Darling. They just delivered another solid quarter of earnings despite elevated expectations, and their backlog looks even plumper.
• Nextracker’s competitive advantage comes from the fact that it is one of the few machinery operators in a very high-demand solar industry, which gives it massive economies of scale.

SunPower Corp. (SPWR) ??22.3%

• We might as well stick with the solar industry since it’s having its day in the sun. SunPower climbed the most in three years after receiving an extra $20mn in backing from two of its largest shareholders.
• While that’s not an eye-popping number on the surface, it is a heaven-sent for a company that has been getting crushed due to lower sales and higher interest rates. The company also got into some legal trouble last year after breaching a contract with creditors.
• The company is lucky to have not lost all of its backers at this point. The investment from TotalEnergies SE and Global Infrastructure Partners is a sigh of relief as it shows that backers aren’t jumping ship just yet.

What's Rotten ??

Peloton, Inc. (PTON) ??24.3%

• This stock just can’t catch a break. Peloton should be highlighted as the poster child for companies that briefly timed the short-lived market perfectly. Their machines were all the rage throughout the pandemic. Now you’ll find Peloton owners giving those things away to whoever will take it.
• CEO Barry McCarthy disappointed investors, bracing them for yet another sales decline. The company has been trying to combat a slowdown through different initiatives, such as a subscription program and reaching Gen-Z through a TikTok partnership... No takers.
• Not only that, but the company is running low on cash and failed to break even on free cash flow for the year. This makes me feel bad and gives me the urge to go out and buy a Peloton to show my support.

Rocket Lab USA (RKLB) ??17.3%

• Rocket Lab—the company whose name implies going to the moon—is doing the complete opposite and crashing disastrously back down to Earth.
• Take notes because Rocket Lab pulled one of the greatest bait-and-switch maneuvers of all time. After closing in on a deal to raise $275mn from investors, the company also announced that the postponement of an Electron Rocket launch will impact revenue next quarter.
• The launch, which was set to take off before the end of 2023, caused the stock to hit a 9-month low. Note to self: Only tell investors bad news after they’ve already cut the check.

Thought Banana ??

Amer Sports IPO

Amer Sports, the Chinese-backed company behind popular brands like Wilson tennis rackets and Salomon ski boots, went public.

The company raised $1.3bn to help fund future growth. After pricing at $13.00, shares rose as much as 6.2% during the day before ending the day at 3.1%.

However, a classic, western-style showdown happened between investors and management prior to the deal getting across the finish line.

During the roadshow (the schmooze-fest where companies try to convince everyone that their company is going to save the world) bankers initially pitched the stock between $16-$18. Investors said thanks but no thanks, forcing the company to drop the price below the range, finally settling at $13.

Once all of that got sorted, Amer Sports completed the largest IPO of 2024 so far. The deal was anchored by several large institutions.

These anchor investors included names like Tencent, Anta Sports, and Anamered Investments (Lululemon founder Chip Wilson’s investment firm), who all agreed to buy several hundred million dollars worth of the deal.

Anchor/Cornerstone Investors…

Are used when companies are selling a large equity stake during the IPO. These long-term holders support the deal by helping to stabilize the price.

While a 3.1% gain isn’t the IPO pop generally associated with these deals, investors didn’t lose money, and there’s gotta be something to that.

A lot was riding on this deal after BrightSpring Health Services, which IPO’d last week, completely dropped a turd on the market. Investors were apprehensive to purchase shares in another large IPO, but Amer did its part in trading decently well.

?? The Big Question ??: Are you buying this stock? How high/low do you think this stock will go over the next year or so?

Banana Brain Teaser ??

Yesterday ??

On a scale drawing of a triangular piece of land, the sides of the triangle have lengths 5, 12, and 13 centimeters. If 1 centimeter on the drawing represents 3 meters, what is the area, in square meters, of the piece of land?

Answer: Since 52 + 122 = 132, it’s a right angled triangle

Therefore, ?(15*36)= 270 meters

Today ??

When a rectangular vat that is 3 feet deep is filled to two-thirds of its capacity, it contains 60 gallons of water. If 7.5 gallons of water occupies 1 cubic foot of space, what is the area, in square feet, of the base of the vat?

Send your guesses to [email protected]

Wise Investor Says ??

“Missing the bottom on the way up won’t cost you anything. It’s missing the top on the way down that’s always expensive...” — Peter Lynch

How Would You Rate Today's Peel??

??All the bananas ? ? ? ? ? ? ? ? ? ? ? ? ???Meh ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ??Rotten AF

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Happy Investing,

David, Vyom, Jasper & Patrick