Earnings Previews for UBER, HOOD, RIVN, BLDE, DIS, CART, and SMR

Last week the markets had their best week all year. Many stocks were way oversold coming into November and we were positioned to capitalize on this bounce with our calls on Tesla (TSLA), Gold (GLD), Google (GOOG), STMicroelectronics (STM), Texas Instruments (TXN). We sold many of those calls last week as mentioned in the trade alert and exercised a few in-the-money calls that remained. We think there is more room to the upside for many of our stocks and are holding tight for now.

We have another busy week of earnings ahead of us with a handful of our small caps reporting so we wanted to preview our thoughts and positioning for each stock before they report. Here’s what’s on deck:

Tuesday, November 7th, Before the Open:

Uber (UBER) – Uber is one of the best-performing stocks in the portfolio in 2023, up nearly 90% year to date and up about 54% since we upped our Revolutionary rating and released our deep-dive on the stock on February 1, 2023. Our fundamental analysis of the company remains unchanged since we wrote the report and the company has only increased its dominance over Lyft (LYFT) (down 38% since February 1), its only ride-hailing competitor, since then. Analyst estimates for topline growth have come down a lot this year, from about 17% y/y in March to only 11% now. The stock has performed remarkably considering this downtrend in consensus growth estimates and the resilience of the stock price is attributable to Uber’s focus on profitability. Consensus EPS estimates for this fiscal year are $0.32 when they were only $0.01 only 90 days ago. In two years we think Uber could be cranking out $2/share in earnings or more and still should be growing in the high teens. UBER remains one of our largest positions and we own a few in-the-money calls expiring next week that we will probably trim if the stock pops tomorrow.

Tuesday, November 7th, After the Close:

Robinhood Markets (HOOD) – Robinhood is another one of our largest positions at the moment. Like Uber, the near-term focus for this stock is also on profitability. Analysts are expecting the company to break even this year and any positive news on profitability would likey send this stock higher. We expect trading revenues will be down again as so many retail investors are cash-poor and not trading nearly as frequently as they once were. On the other hand, we think Robinhood’s retirement business is probably starting to kick in and we are anxious to see the level of net deposits brought in by Robinhood’s revolutionary matching program. The company has lots of levers it can pull to drive growth and the level of innovation at Robinhood continues to impress us. We are holding our common position tight for now.

Rivian Automotive (RIVN) – Owning Rivian has been a wild ride since we started buying it earlier this year between $12 and $14 per share. The stock is extremely volatile and we have been opportunistic in trimming it when it was in the mid $20s. We already know what Rivian’s deliveries looked like for last quarter and the company reaffirmed its full-year target of 52,000 units, so we are not expecting any major changes in the guidance. Any update on Rivian’s next-generation vehicle or the status of its Georgia factory could be potential catalysts for the stock. We remain worried about the Cybertruck threat to Rivian and therefore this is not a big position for us and we do not have any calls on it at the moment. We would probably trim some more common stock if it gets a big jump following earnings.

Wednesday, November 8th, Before the Open:

Blade Air Mobility (BLDE) – Blade’s stock has been hit hard this year along with many other small/micro caps that the market is worried will not survive without 0% interest rates. Blade is probably oversold right here as the company still has about $150 million in net cash on the balance sheet and its market cap is only $164 million, meaning you are essentially buying a business with $190 million in annual revenue for $14 million. That said, Blade is not profitable yet and is burning about $10 million per quarter. Also, Blade would probably take a hit if the economy pulls back as ride-sharing helicopter services are definitely a luxury that would be easy to cut out as consumers become more cost-conscious. We are holding our relatively small position in Blade tight for now and want to see how management is executing this quarter before deciding on what to do with the stock.

Wednesday, November 8th, After the Close:

Disney (DIS) – We’ve traded Disney a couple of times this year and are buying some in- and out-of-the-money calls ahead of earnings with expirations in November and December. This is not a big bet but we think the stock is oversold down here. There are a lot of moving parts with Disney, between the parks business, the Hulu deal, etc., and there is certainly some risk to owning this stock. However, Disney is still a great franchise and with the stock at 9-year lows, we like the risk/reward setup here.

Instacart (CART) – This will be the first earnings report from Instacart as a public company. The stock sold off hard following the recent IPO so we like this stock as a trade here after we started buying it around $26. We also like the fact that Instacart is somewhat reasonably priced, is turning profitable, and just added $420 million on the balance sheet with the IPO, adding to the $2 billion in cash it already had. And despite competition from UberEats, DoorDash, Walmart, Target, and others, Instacart still commands about 70% of the US grocery delivery market. We have a small common stock position in CART right now.

NuScale Energy (SMR) – We are not expecting a lot from NuScale this quarter as the company is still essentially pre-revenue and is in the process of signing customers and building its first reactors. A short seller recently put out a report claiming that one of NuScale’s newest customers, Standard Power, was a crypto mining data center fraud. While we think Standard Power definitely looks suspicious, that is not the reason we invested in the stock and if the company is willing to pay NuScale for small nuclear reactors, that is great for NuScale even if Standard Power has issues. NuScale’s other existing customer include the Carbon Free Power Project (CFPP) which is a consortium of municipalities and utilities across the Western US that are investing in NuScale reactors, along with $1.4 billion in funding from the US Department of Energy. We hope management will announce continued success and cooperation with the CFPP and potentially some new customers as well. We are holding our common stock position tight for now and would like to see the stock price stabilize and/or rise before adding to our position. As we have mentioned before, NuScale will almost certainly need to raise more money in the next year or so and that can be really hard to do if the company’s equity keeps losing value. If NuScale can secure funding on reasonable terms and start producing and installing its reactors around the world, NuScale could be a $100 billion company or more which keeps us in the stock. Again, this is certainly a risky investment and as with any stock, we could lose 100% of our capital if the company doesn’t make it to the other side.

That’s it for now folks. We are heads down and will update you on each of these companies and our trades as we process the reports this week.