BPSOX of 30? That perfect number includes buy signals from companies that have warned and lowered guidance. In addition it includes WOLF which has admitted to ongoing concerns worries. WOLF is headed towards bankruptcy in my humble opinion.
BPNDX of 82? Big number but not new Bull Market Big. In addition the number of new highs on the NDX are worrisome.
I used today's short covering as an opportunity to take some profits. Can the market go higher? Absolutely but I for one have never got hurt taking a profit.
You cannot get any better than a BPSOX of 30! That is unsustainably high. BPNDX of 82? That too is way overbought.
Chewy slides lower as CFO exit and unchanged Q1 guidance stir growth concerns (CHWY)
Chewy (CHWY) is trading lower, driven by the surprise departure of CFO David Reeder, and a reaffirm of 1Q25 guidance that's stirring up some disappointment following the company's stellar Q4 earnings report in late March. Mr. Reeder, who joined CHWY in March 2023 after serving as CFO of Global Foundries, is stepping down to assume a CEO role in the semiconductor industry, with his exit slated for after the 1Q25 results on June 11, 2025. The departure of a seasoned CFO -- particularly one who has overseen a period of robust financial performance -- introduces some uncertainty around CHWY's ability to sustain its momentum.
- Investors often view executive turnover as a potential risk to operational stability, particularly for a company navigating a competitive e-Commerce landscape and macroeconomic headwinds like tariff concerns and inflation. The absence of a named successor amplifies these worries as CHWY has only indicated that a search for Reeder's replacement is underway, leaving a leadership gap that could unsettle the market.
- Additionally, Reeder's recent stock sales -- totaling around $16 mln across February transactions -- may signal a lack of long-term commitment, further eroding investor confidence.
- In the same press release, CHWY reaffirmed its Q1 guidance, projecting net sales of $3.06-$3.09 bln and EPS of $0.30-$0.35. By failing to deliver an upward revision of its outlook, CHWY likely added to the negative sentiment, especially with shares up by 146% on a yr/yr basis. The decision to maintain guidance, despite a robust 4Q24 earnings report in which CHWY easily beat EPS expectations and returned to double-digit revenue growth for the first time since 2Q24 at +15%, suggests possible caution around consumer spending softness in discretionary pet categories.
- CHWY's improved growth in Q4 was underpinned by a return to active customer growth and enhanced customer loyalty through its Autoship program. Autoship customer sales, a cornerstone of CHWY’s recurring revenue model, surged 21% in Q4 to $2.62 billion, representing 80.6% of net sales. The reaffirmed Q1 guidance, while solid, may be perceived as conservative, failing to capitalize on the Q4 beat’s momentum.
The departure of CFO David Reeder, coupled with his significant stock sales and the lack of a named successor, has rattled investors, raising concerns about CHWY’s ability to maintain its strong financial trajectory amid a competitive and uncertain macro environment. The decision to merely reaffirm Q1 2025 guidance, despite a robust Q4 earnings beat, has further disappointed investors expecting a more bullish outlook, contributing to today’s stock price decline. While CHWY’s operational momentum remains intact, the leadership transition and conservative guidance signal near-term risks.
Monday.com crushes Q1 estimates on robust enterprise adoption, but guidance limits rally (MNDY)
Project management software company Monday.com (MNDY) has a strong track record of surpassing quarterly expectations, though it has occasionally tempered investor enthusiasm by offering conservative guidance. That trend continued today as MNDY easily beat 1Q25 EPS and revenue estimates, driven by robust demand for its multi-product platform, while its in-line Q2 revenue guidance and modestly improved revenue forecast for FY25 looks underwhelming.
Strategic investments in AI-driven features, such as the GenAI chatbot that's resolving a high percentage of customer service tickets, and a scalable MondayDB 2.0 infrastructure, are laying the foundation for MNDY's consistent top and bottom-line beats.
- Key metrics, such as net dollar retention (NDR) rate and total number of paid customers, highlight the platform's stickiness and ability to drive customer expansion. NDR for customers with more than $100,000 in ARR reached an impressive 117%, illustrating healthy upsell and cross-sell activity particularly among larger accounts. Relatedly, the total number of paid customers grew to 57,203, up 15% yr/yr, with 1,328 customers contributing over $100,000 in ARR, a 46% increase from the prior year.
- These metrics were bolstered by MNDY's multi-product strategy, which integrates work management, CRM, service management, and software development tools into a unified platform. New product launches, including MondayDB 2.0, enabling boards with up to 100,000 items, and AI advancements, like AI Assistant, have enhanced scalability and user engagement, driving higher ARR and retention by addressing diverse enterprise needs.
- Profitability continued its upward trajectory in 1Q25, with adjusted EPS soaring 80% yr/yr to $1.10 and non-GAAP operating income reaching a record $41.0 mln with non-GAAP operating margin improving by 400 bps yr/yr to 14%. These gains were driven by disciplined cost management and operating leverage, despite hefty investments in R&D (+56% yr/yr) to fuel AI and product innovation. The company’s ability to balance growth-oriented investments with profitability stems from its high gross margin of approximately 90% and a scalable SaaS model, which minimizes incremental costs as revenue expands.
- For Q2, MNDY issued revenue guidance of $292-$294 mln, aligning closely with analysts' estimates, suggesting a cautious outlook amid macroeconomic uncertainty. MNDY nudged its FY25 revenue outlook modestly higher to $1.22-$1.23 bln from its prior guidance of $1.21-$1.22 bln, but its adjusted free cash flow guidance was notably strong at $286-$289 mln, driven by robust operating cash flow and minimal capital expenditures. This outlook is further supported by MNDY’s high retention rates, growing enterprise customer base, and efficient cash conversion cycle.
MNDY's 1Q25 beat-and-raise performance was driven by strong enterprise adoption, AI-driven product enhancements, and operational efficiency. The company's resiliency and scalability were once again on display amid a volatile macroeconomic backdrop, although its conservative revenue guidance is keeping a lid on shares.
Stocks sharply higher as US and China make progress; tariff reductions greater than expected
Stocks are trading sharply higher across many sectors to start today's session following positive developments on the trade front with China. The two sides held talks in Geneva over the weekend. The broad result is that both sides have agreed to de-escalate for now as discussions are expected to continue in the coming weeks.
- The White House announced that China agreed to remove the retaliatory tariffs it announced since April 4 and will also suspend or remove the non-tariff countermeasures taken against the US since April 2. China will also suspend its initial 34% tariff on the US it announced on April 4 for 90 days, but will retain a 10% tariff during the period of the pause. The key takeaway is that China agreed to cut its retaliatory tariffs on US goods to 10% from 125%.
- On the US side, it agreed to remove the additional tariffs it imposed on China on April 8 and April 9, but will retain all duties imposed on China prior to April 2. The US will suspend its 34% reciprocal tariff imposed on April 2 for 90 days, but retain a 10% tariff during the period of the pause. The White House says the 10% tariff continues to set a fair baseline. Basically, the US will reduce its so-called Liberation Day "reciprocal" tariffs on China to 10% from 125%.
Granted, these are not final agreements and a lot can change in the next 90 days. However, the overall sentiment strikes us as the two sides making more progress than expected and the tariff reductions were more substantial than expected, especially considering this was more of a preliminary meeting.
There was real concern that the two sides would not make progress. This was not a given. There were reports last week that China was holding firm and willing to wait the US out. Also, this was only the first in-person talks between the two countries since the tariffs were announced. As such, it was difficult to gauge what might happen.
In addition to just the tariff numbers, another benefit is that the agreement provide some clarity for businesses. A common theme we heard on many Q1 earnings calls was that companies and/or their clients were pausing on investment decisions until we had more clarity on trade. While not final numbers, this deal and the UK deal last week provides a framework and we suspect it will convince business leaders that a final deal is going to be reached at some point. This should allow them to make investment/spend decisions. On a final note, it is not just stock trading higher today. The dollar is up today and gold is down sharply.
Lyft shares surge on solid guidance, buyback expansion, and proxy battle resolution (LYFT)
Lyft (LYFT) is surging to multi-month highs, driven by a confluence of positive developments despite missing 1Q25 EPS and revenue expectations. The rally is fueled by Engine Capital's withdrawal of its board nominations, ending a contentious proxy battle, LYFT's expanded $750 mln share buyback program, and a better-than-expected Q2 forecast for gross bookings and adjusted EBITDA. LYFT's downside Q1 results also come against low expectations following Uber's (UBER) disappointing Q1 earnings report on May 7 that included a slight gross bookings miss, putting U.S. demand concerns under the spotlight.
- In Q1, gross bookings reached $4.16 bln, up 13.5% yr/yr and slightly exceeding expectations, while rides hit a record 218.4 mln, up 16% yr/yr, reflecting strong demand across commute, weekend, evening, and airport trips. Enhanced driver retention via LYFT's 70% fare guarantee and rider-focused features like faster ETAs, which reduced wait times by 10% yr/yr, supported the outperformance for these metrics.
- LYFT's competitive pricing strategy, including a reduction in base fares to align with UberX pricing, boosted ride volume and active riders, indicating market share gains in key U.S. cities. However, this pricing pressure modestly crimped revenue per ride ($6.64 vs. $6.80 in 1Q24), contributing to the small revenue miss.
- Profitability continues to improve significantly for LYFT with adjusted EBITDA jumping by 59% yr/yr to $106.5 mln. The company also guided to Q2 adjusted EBITDA of $115-$130 mln, essentially matching analysts' expectations, and implying yr/yr growth of 26% at the high end of the range. Key drivers for the enhanced profitability include reduced insurance costs, higher driver hours and a healthy driver base, and cost discipline, as reflected by a manageable 10% increase in total costs and expenses.
- From a long-term perspective, LYFT's robotaxi progress remains a cornerstone of its growth strategy, although the company surprisingly didn't emphasize its robotaxi partnerships (Mobileye, May Mobility) during last night's earnings call. Instead, LYFT focused on its Q1 performance and highlighted its recent acquisition of FREENOW, a European multi-mobility app that marks the company's most significant expansion to date outside of North America. The addition of FREENOW, which has a taxi offering as its core service, will nearly double LYFT's total addressable market to more than 300 bln personal vehicle trips per year.
LYFT’s better-than-expected Q2 guidance, expanded $750 mln share repurchase program, and the resolution of Engine Capital’s proxy battle are propelling its stock sharply higher, reflecting renewed investor confidence. These tailwinds, alongside healthy gross bookings and profitability gains, position LYFT to navigate competitive pressures and capitalize on long-term opportunities like robotaxis.
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