God! I am tired of this hyperactive, ADD, ADHD market.
O.k. The DDOG sale worked out in that it ended the day slightly lower than my sell point. I did not buy anything with the proceeds. Certainly good that I didn’t roll the dice on AFRM. And it would have been a roll of the dice because the issue is “never” how the business is doing. It is about forecast and expectations and understanding (or lack thereof) of the factors that go into the forecast. And, all this can be trumped by some idiot fat-fingering a twitter tweet an hour early. Someone needs to be fired, probably in Investor Relations. Get an F’ing set of clocks. One with Eastern Standard F’ing time. Inexcusable. (Though it has happened before tho I can’t recall exactly when or what company).
Anyway, AFRM had outstanding results, business booming. And my secondary concern is Upstart, and it crumbled exactly at the same time as AFRM did due to the fat-fingering. So, two things. The Gross Merchandise Value increased 115% Y-o-Y and 64% Q-o-Q. Ex-Peloton the GMV increase was 152%. Take away/analysis. Last year was Peloton year. Peloton had supply chain problems. Therefore, the seasonal variation in GMV was evened out. The tissy-fit now is that they are forecasting lower GMV in Q3 and Q4 than Q2 (Q2 is 4th quarter of calendar year, i.e., Christmas). So they have added all these big box retailers and a gazillion smaller merchants, and Peloton sales are down, and guess what? AFRM now has a normal seasonal retail profile. Yes, average transaction value is down but number of users is off-the-chart up. What sort of GMV would make an investor happy. 70% Y-o-Y increase would satisfy most growth investors, no? Well, the forecast for Q3 and Q4 is 60% and 52%. The actual would have to be $3.9 B versus 3.7B forecast, and $4.3B versus $3.8B. Reasonably possible, I would think.
And what about UPST? Hard to extrapolate AFRM’s GMV growth due to its platform adoption by so many retailers to UPST’s loan growth–particularly with its slower growth in adopting banks and CU’s. But I don’t see any indication of slowing consumer spending or reliance on some form of financing. I think the market is mis-interpreting the forecasted lower GMV for AFRM, assigning it to lower spending due to inflation and higher interest rates. Inflation is cost of labor and supply/demand on material. Cost of labor is more cash in the pockets of consumers. Consumers consume. They buy now, pay later.
Enough! The sub-2% cash stays in cash for now. Have to think hard about GLBE. Watch the price. Inclined to buy by Tuesday if there is an opportunity.
KC