BEYOND MEAT AND GRUBHUB
Those that read our reports and listen to our radio show know that we have been warning about the many “fad-like” stocks and their valuations. We have yelled about buying into all the “weed” stocks at ridiculous valuations. We warned you 2 years ago about all the “coins” in which one cannot even put a value on. We have also warned about the fake meat and the delivery services like Grubhub.
Why?
Beyond Meat is going to open just under $86 this morning, down almost $20. We had believed the stock completed a climactic move back in late July. We thought the air was finally coming out of the balloon. Let’s see. At the highs, the valuation was over $14 billion. This for a company that was going to do not even $250 million in sales. This for a company that was still losing money…though they made a wee bit this past quarter. Valuation ridiculous. But have you noticed the other side of the equation? Competition. Have you noticed how many others are making fake meat? Do you know what happens when there is a lot of competition? Price comes down. When price comes down, margins are squeezed. When margins are squeezed…..you get the hint.
Grubhub is trading down $20 to $38.50. This one is simple. Go google the words “food and restaurant delivery” and see how many companies provide this service. Go look at the generous offers because of all the competition. But then look what happens after all the generous offers. We think these delivery services charge too much and expect to see price continue to come down. While revenues grew 30% this past quarter, the company warned about a huge deceleration going forward. Duh! Repeat again…as competition picks up, prices come down.
Futures down a wee bit but for the most part, even bad earnings are being bought. GOOGLE misses the number by 3 miles just like AMAZON did. AMAZON came all the way back from it after hours drop. GOOGLE is hardly down after being up nicely yesterday.
Do not forget, the fed is lowering rates again tomorrow and is printing $60 billion/month. Markets have loved money printing for over 10 years.
12/24/18 S and P was 2350 that week the AAII members were 20% bulls. Last week with S and P at 3,000 again the number of bulls fell to 20%. what a historically great contrary indicator. Barrons this week big money poll overwhelmingly bearish tone to that survey. Wall of worry. Something like $222 billion of outflows year to date global equity mutual funds while over $350 billion net inflows into fixed income mutual funds. Yes, these figures include etf’s
and the lockup on BYND expired today?? should have bought PUTS :)
profit from insanity.