From Zillow To Zilch; Kroger Sees The Beyond; ATVI Ignores The Call Of Duty
Oh, The Places You’ll Zillow
Rumors of Zillow’s (Nasdaq: Z) homebuying demise are actually … worse than we thought?
Just Monday, the home-listing turned fixer-upper announced that it would stop buying houses for the rest of 2021 … and Z’s meltdown had begun.
Yesterday, news came out that Zillow wants to offload the 7,000 houses it bought on a whim, originally planning to fix and flip said properties en masse like an HGTV fever dream. Thing is, Zillow’s not great at the “planning” part of that equation. And it shows.
What the heck? Zillow’s on blast two days in a row?
Oh yes indeed, Great Ones. And trust me: I bet Zillow wishes it could duck out of the market limelight just once this week … to go back to bed and hide under the covers.
Zillow’s earnings were so bad this past quarter — How bad were they?! — that the company is shutting down its homebuying business altogether. Just like that.
All the innovative iBuying Zillow talked up in past quarters and reports? Finito. Gone.
As it turns out, when you buy a bunch of overpriced real estate and then can’t pay contractors to fix up said houses, your earnings look like trash. Who knew?
Zillow reported a $0.95 loss per share, whereas the Street wanted a profit of $0.16 per share.
Zillow isn’t even trying to downplay its faceplant anymore: “We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated.”
Wait, you mean to tell me that house prices … like … fluctuate? And doesn’t Zillow have a handy AI algorithm for exactly this kind of home price forecasting?
Z shares are down 28% so far this week as the mess unfurls further, and the message to investors is clear: It’s back to the home-listing drawing board for Zillow.
Aside from the muck of that housing market morass, let’s see what else is floating ‘round the Street today — Quick & Dirty style.
If you’re a game developer, there’s no better time to launch a new video game than the weeks leading up to the new year.
Not only are people ravenous to spend their hard-earned dollars around the holiday season, but gamers typically reserve their end-of-the-year vacation time to play new releases — and that goes for kids and adults alike.
So you can imagine my disappointment when hearing that Activision Blizzard (Nasdaq: ATVI), America’s largest video game company, is delaying its highly anticipated Overwatch 2 and Diablo IV releases until 2022.
The news was so disheartening that it completely eclipsed Activision’s third-quarter earnings beat. You wouldn’t know it to look at ATVI’s sell-off today, but the gaming giant reported adjusted earnings that came in $0.19 higher than Wall Street’s expectations. Meanwhile, net bookings — a form of adjusted revenue — hit a healthy $1.88 billion.
While Activision is slated to launch its new Call of Duty®: Vanguard game on November 5 — which should boost sales heading into the holiday season — investors couldn’t help but focus on the company’s tepid fourth-quarter outlook. Activision’s calling for $2.78 billion in revenue to round out the year, lower than Wall Street’s $2.95 billion expectation.
If, for whatever reason, Activision’s latest Call of Duty® game flops, it might take a Christmas miracle to salvage the company’s sinking share price. ATVI is down 15% on the day, but any of you invested in ATVI should brace for more turbulence ahead.
The one good thing about investing in ATVI is that the company likes to let you down way in advance, instead of all at once like Zillow.
You ever get all the way down to the cereal aisle and realize you forgot to pick up a three-tiered chocolate fondue fountain or your … *checks notes* … Deadpool Chia Pet?
Never fear, all you grocery shoppers who hate trekking an extra two miles over to Bed Bath & Beyond (Nasdaq: BBBY).
The pointless home décor junk we know and love is coming to Kroger (NYSE: KR) stores! Now you can find BBBY’s “most sought-after” home goods and baby products on Kroger’s website or in stores. What do you mean you’re not overjoyed?
Kroger says this “strategic online collaboration and in-store pilot will provide Kroger shoppers easy access to essential home and baby products alongside their favorite grocery staples.”
I get where Kroger’s coming from here — you try to write a press release that makes partnering with BBBY sound enthralling and see how it goes. But really? Are any of BBBY’s products “essential?”
The real story here is that this partnership was just enough good news to set BBBY stock soaring 106% — short squeeze style. Bang, zoom — to the moon! I mean, upward of 27% of BBBY’s shares were sold short … and when was the last time you heard glowing news about Bed Bath & Beyond? Like, ever?
OK, I take back some of my pessimism … I really want a chocolate fondue fountain now.
Shining shimmering splendid … RVs, that is. A master of motorhomes, Camping World (NYSE: CWH) just reported bang-up earnings and had the audacity — the gall, the absolute wherewithal! — to boost next quarter’s expectations even higher. (Take note, Activision and Zillow…)
The vendor of RVs and RV accessories saw third-quarter revenue hit a new record high, growing 14% to reach $1.92 billion. That beat analysts’ targets by about $90 million, while earnings fell in line with expectations. But just like Winnebago and Thor Industries alluded to, the best might be just around the river bend.
Enough people are shedding their locked-down skins and jamming the highways like broken heroes on a last-chance power drive that Camping World lifted its fiscal 2021 EBITDA guidance — from a range of $840 million and $860 million up to $915 million and $930 million.
What about you? Are any of you Great Ones taking to the open roads RV-style? Maybe you’re a Winnebago warrior yourself, circling the RV wagons to migrate south with the snowbirds — I don’t judge anyone’s motorhome misadventures.
Either way, share what you’re up to these days: GreatStuffToday@BanyanHill.com.
And while you’re itching to hit the road, here’s the best place you could ever go:
Tomorrow, my colleague Adam O’Dell goes live with an urgent market briefing to explain the profit-making potential of the “Perfect Trading Window.”
Remember: Adam has found a smarter way to exploit the same market forces driving meme stocks to incredible heights — without all the hype or hyper-volatility. There’s already a ton of interest in this event, so please reserve your seat now before time runs out.
It’s poll time, Great Ones! Your signal the weekend’s now in sight … if you really squint.
Last week, we asked which looming market crisis keeps you from getting a full night’s sleep — unless you’re one of those lucky ducks who gets the recommended eight hours. Thank you for answering our poll!
27.9% of you are worried about the Fed’s free-money frolicking, while another 26.6% of you can’t stop biting your nails over rising inflationary fears (even if short-lived).
Supply chain holdups rounded out your Top 3 list of concerns, with 17.7% of you seemingly terrified of waiting more than two days to get your favorite Amazon accessories and home goods. I get it … that two-day shipping’s a lifesaver, especially when you wait until the absolute last minute to order your Halloween costume. Oops.
Here’s everything else that had your fellow Great Ones tossing and turning:
- 6% of you said labor “shortages” had you seeing double.
- Another 7.6% of you said: “Something, something, China” haunted your dreams.
- 3% of you are worried about soaring home prices.
- And finally, the remaining 6.3% of you haven’t forgotten about that whole pandemic thing — even if seemingly everyone else has.
I tend to get suspicious when I see repeating numbers — and you would too if you’ve ever seen the movie The Number 23 — but the math checks out, so I won’t project my pattern phobia onto you.
Now, the market’s movers and shakers are certainly worth mentioning, but only in the context of what they mean for your portfolio … and, more specifically, our very own Great Stuff Picks portfolio.
Wait … y’all have a portfolio?
Indeed! If you didn’t know that already, shame on you. It’s time you start reading our rag more regularly.
We only recommend the sharpest companies in the ol’ crayon box to you, Great Ones — including businesses that are strong enough to weather any storm (you know, like the literal deluge of market disruptors we just discussed).
Considering a near-term market correction is likely, the strength and durability of the stocks in your portfolio has never been more paramount! That’s why I’d like to know: Have you invested in any of our Great Stuff Picks yet?
Let us know in the poll below:
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Don’t forget: If you’ve got more to say than a mere poll can satisfy, by all means, speak! Make your voice heard! You might even read your raving thoughts in this week’s Reader Feedback — that’s on Friday, for those who might’ve forgotten.
GreatStuffToday@BanyanHill.com is where you can reach us best. In the meantime, here’s where you can find our other junk — erm, I mean where you can check out some more Greatness:
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Until next time, stay Great!