27. January 2021 | 09:23 CET
RYU Apparel, Plug Power, Netflix - strength and weakness!
The stock market is alive and kicking. With a new app called Reddit, 2.4 million users with an affinity for stocks are currently clicking through various discussion channels and, with self-imposed herd instinct, buying new stocks on the price list. Formerly inconspicuous stocks such as AMC Entertainment, BlackBerry or Nokia then go through the roof with crazy turnovers. A humble statement from management often follows this: "We can't explain the attention in our stock!" - but even after the announcement of such words, the turnovers go down only slightly, and sometimes the price gains even build up. Hard-nosed hedge fund managers learn to fear when they sell completely overpriced stocks short and are subsequently steamrolled by the bull community. With GameStop's move yesterday, Melvin Capital was hit; the short community around Tesla has probably long since given up.
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ISIN: CA74979J4072 , US72919P2020 , US64110L1061
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
RYU Apparel - strategy rolled out, shops sold out
RYU Apparel, or "Respect Your Universe," is attracting attention as a new brand for Generation Z. The CEO Cesare Fazari takes advantage of the turn of the year, which many people are experiencing from home, to sum up his restructuring work. Through a complete reorganization, the brand relaunch in 2020 worked brilliantly, and investors were also back on the mat, paying in a total of CAD 6 million in fresh capital. Fazari intends to keep the pedal to the metal in 2021, as its long-term goal in 2030 is to establish a brand worth billions of dollars.
Looking at other newcomers from the past such as Abercrombie, Hollister or Under Armour, repeating such a brand build-up is possible in a short time. Once the hip factor has been ignited and the online community has been infected accordingly, things take off. Sometimes it's merely the right testimonial, like David Beckham for Calvin Klein back in the day. In today's categories, of course, we speak of influencers.
New at RYU is now the American wholesale, showing extreme growth rates due to the online boom. The team newly includes Grant Matzen, a seasoned sales and marketing professional with more than a decade of experience working with iconic brands in the sports and lifestyle apparel industry such as Under Armour, Vans, Quiksilver and Roxy. After building its Canadian home base, RYU is now turning its attention to building its sales and distribution teams in the US and Mexico.
New to the program is the golf division: the golf apparel design team is led by industry talent James Chapman, an expert in innovation, trends and fit with the support from cutting-edge digital 3-D design technology. Mr. Chapman is joined by Andrew Parr, as he has a diverse background in athletics. As a golfer himself, Mr. Parr has played in over 40 countries during his professional eight-year career. Mr. Parr is currently an assistant coach for the Canadian national team.
From a distance, things are going well at RYU - the times speak for the business model because even with limited movement radii, Generation Z wants to be dressed in the best possible way. In recent weeks, many hip items on the site were no longer available and out of stock. So please stock up your shelves! The RYU share also belongs in the shopping cart at CAD 0.15!
Plug Power - shorties get a raw deal
In a letter to shareholders, Plug Power comments on the current year. Apparently, in light of a massive stock rally of 1500% in 6 months, they feel obligated to provide a bit of clarity on operating expectations. On the one hand, Plug Power raises its 2021 revenue guidance, namely from USD 450 million to USD 475 million; at the same time, they also announced that 2020 went better than expected. The Company is increasing its 2024 target by more than 40% to USD 1.7 billion in total revenue. This paints a 4-year growth path on the wall.
Analysts could now start doing the math and conclude the revenue forecast, which is admittedly made without any profit statements. Plug Power is growing at a weighted revenue rate of just under 38% (CAGR). So far so good. Also calculated with a sharp pencil, the 2024 price-to-sales ratio for a current market capitalization of USD 33.4 billion is a mere 20. The Company is thus valued with a factor of 20 times sales in 4 years, or even with a factor of 72 in relation to the current day if the increased forecast is taken into account.
In 2000, it was believed that such exaggerations could never happen again, but such ratios did not even exist then. So central bank money, Robin Hood investors and momentum buyers drive fashion stocks like Plug Power into orbit and force even rational short-sellers to capitulate. Conclusion: The stock market has become a pure long-term event - the steamroller is flattening any other opinion and its representatives are successively going broke. One should look at the spectacle nevertheless to see where it leads. Unknowing is forbidden!
Netflix Inc - growth back to normality
Another representative of the online business is the media company and streaming expert Netflix Inc. Netflix beats expectations in the overall numbers with the Q4 figures, but overall growth seems to lose some steam. This was expected, as the large number of new streaming providers naturally takes a little potential out of the top dog's quiver.
Globally, some 8.5 million households signed up for a new Netflix account in the last three months of 2020. That far exceeded Wall Street analysts' expectations and the Company's forecast for the quarter. However, those exact 8.5 million net subscriber additions are roughly the same number Netflix has already added in Q4 of 2018 and 2019. In other words, the Company has simply returned to normal after some volatile previous quarters.
Speaking among partygoers, Netflix is currently having a bit of a hangover, as the return to historical growth levels suggests that Netflix has already put the pull-forward effect of pandemic subscriber growth behind it. In plain English, this means that the group will probably still be able to hold up well but will tend to move sideways without new stimulus on the strategy side. Management's forecast again calls for a net growth of 6 million subscribers in Q1. That is just as much a tick lower than in 2018 and 2019. The small discount in the share price after the announcement of the figures of 7% seems justified at the moment. After all, with revenues of USD 25 billion, Netflix also has a market capitalization of USD 250 billion.
That is easy to calculate, a factor of 10, and therefore 7 times cheaper than Plug Power. It is also easy to justify analytically: Netflix has not yet developed hydrogen TV technology. However, the broad top formation of the share between USD 480 and USD 580 since July 2020 is striking. Netflix must not announce a disappointment - otherwise, the share price is probably missing at least 25%. But maybe it will go into another Robin Hood round before that?