A humorous look at the companies that caught our eye, for better or worse, this week
How to make money disappear: 1) Douse it with gasoline and light it on fire; 2) Lend it to your brother-in-law with an online gambling addiction; 3) Invest it in Shopify. Shares of the e-commerce software developer continued their disastrous plunge after the company’s first-quarter revenue and earnings missed expectations, underlining the struggles online shopping stocks are facing as the COVID-19 pandemic fades and consumers return to physical stores. With the shares down about 78 per cent from their November peak, it’s been an ugly drop for SHOP.
“Honey, are we having the ‘tender chicken accented with carrots and leafy spinach’ for dinner? Or should we try the ‘salmon … with spinach, cranberries, blueberries and sweet potatoes’”?
“That’s the dog food, dear.”
Freshpet’s refrigerated pet foods sound delicious – even to humans – but investors have lost their appetites for the shares. Even as first-quarter sales jumped 41.5 per cent, the company’s net loss widened to US$17.5-million amid higher costs for labour, ingredients and additional capacity. With Freshpet also announcing a US$350-million share offering, the stock is leaving investors with a foul aftertaste.
Estée Lauder (DOG)
It’s been said that if a butterfly flaps its wings in China, it can influence the weather halfway around the world. It’s also true that if women in China stop using makeup, it can affect the stock price of cosmetics giant Estée Lauder. Citing the weeks-long COVID-19 lockdowns in China and Russia’s invasion of Ukraine, the company whose brands include Clinique and Bobbi Brown slashed its sales forecast for the 12 months ending in July. With the stock down 35 per cent this year, it will take investors a long time to makeup their losses.
Now that pandemic restrictions have eased, people are using ride-hailing apps again. Problem is, there aren’t enough drivers. Shares of ride-hailing service Lyft plunged after the company posted a 44-per-cent surge in first-quarter revenue but said it plans to invest more in subsidies to attract drivers, who have been scared off by sharply higher gasoline prices. What about offering environmentally-friendly piggyback rides instead?
Sprouts Farmers Market (DOG)
True or false? When grocery prices are soaring, people tend to buy more items. Answer: false. Just ask Sprouts Farmers Market. Shares of the U.S. retailer – which specializes in organic, plant-based and gluten-free foods – wilted after its chief financial officer said “customers continue to put one to two fewer items in their baskets” because of inflation. Sprouts is trying to protect its profit margins by passing along cost increases to consumers, but the company warned that same-store sales in 2022 will be at the low end of its previous guidance for growth of zero to 2 per cent. Judging by the stock’s big drop, investors are having serious doubts about Sprouts.
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