Below is a chart and brief excerpt from today's Early Look written by Retail analyst Jeremy McLean.
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Some short-term stock moves make less sense. For example, a growth company like Wayfair (W) guiding down upcoming Q revenues by 20% and the stock rallies. Maybe the risk was previously “over signaled” by other ecommerce names, or maybe the market preferred big cap ecommerce name as it tends to do in Quad3. Regardless, I go back to reviewing what’s changed through those lenses if anything. The chart of the day shows the sudden divergence of the W sales multiple vs the revenue growth rate. The only similar divergence came in Feb 2019, which turned out to be a great W short opportunity. As a note, historically Wayfair does well in Quad3, underperforms in Quad2, and basically crashes in Quad4. |
