5 Stocks Facing A Huge 2023
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At its peak in October 2021, MATCH traded at around 50 times Adjusted EBITDA. Fast forward to today, and that multiple, based on guidance, is only 14 times and the stock has dropped 70%
Much of that multiple compression can be attributed to a drastic cut in profit growth to only 5%. And an unofficial outlook puts revenue growth at only 5-10% for 2023. That’s a significant reduction in growth and some of Match’s legacy brands like Plenty of Fish appear to be in decline.
But Hinge is still growing and Match continues to drive margins over 70%.
Straddle pricing in the options market suggests a move of over 40% in 2023. So whatever happens, it looks like Match Group has a big year ahead.
2022 was a banner year for theme parks but Six Flags badly underperformed. A lot of this stems from a change in business strategy. New CEO Selim Bassoul said the parks had become day centers for teenagers.
Some customers have literally been making TikToks on how to live off the Six Flags dining pass. So Bassoul created a new premiumization strategy in which Six Flags gets fewer guests paying higher prices and in theory a better experience.
But customers, and employees, are up in arms about the changes with complaints flooding in. And with activist investor Land & Buildings entering the fray it's easy to see the potential for movement in Six Flags stock. This is a crucial year where Six Flags simply needs to show progress towards its goals.
When Shopify reported first quarter results in May last year the stock dropped 30%. But the stock has traded sideways since and that suggests the market hasn’t quite figured out what comes next.
After all, how many small and medium sized businesses on the Shopify platform are going to survive over the coming year? And can Shopify’s expansion into international markets take hold?
In Q3, Shopify discussed a merchant list that included Panasonic, Cole Haan, Converse and Greenies Pet Treats, hardly blue chip names.
And can Shopify really compete with Amazon, particularly on logistics? It’s a huge task but Shopify occupies a growing niche and a good brand.
Whatever happens it’s going to be a huge year for Shopify. The options market implies a move of more than 50% by January 2024 and that sounds about right.
THESE ARE PERSONAL OPINIONS NOT FINANCIAL ADVICE. I OWN SHARES IN SIX STOCK.
#stocks #investing #overlookedalpha #stockstobuy #stockstowatch #finance #stockmarket
At its peak in October 2021, MATCH traded at around 50 times Adjusted EBITDA. Fast forward to today, and that multiple, based on guidance, is only 14 times and the stock has dropped 70%
Much of that multiple compression can be attributed to a drastic cut in profit growth to only 5%. And an unofficial outlook puts revenue growth at only 5-10% for 2023. That’s a significant reduction in growth and some of Match’s legacy brands like Plenty of Fish appear to be in decline.
But Hinge is still growing and Match continues to drive margins over 70%.
Straddle pricing in the options market suggests a move of over 40% in 2023. So whatever happens, it looks like Match Group has a big year ahead.
2022 was a banner year for theme parks but Six Flags badly underperformed. A lot of this stems from a change in business strategy. New CEO Selim Bassoul said the parks had become day centers for teenagers.
Some customers have literally been making TikToks on how to live off the Six Flags dining pass. So Bassoul created a new premiumization strategy in which Six Flags gets fewer guests paying higher prices and in theory a better experience.
But customers, and employees, are up in arms about the changes with complaints flooding in. And with activist investor Land & Buildings entering the fray it's easy to see the potential for movement in Six Flags stock. This is a crucial year where Six Flags simply needs to show progress towards its goals.
When Shopify reported first quarter results in May last year the stock dropped 30%. But the stock has traded sideways since and that suggests the market hasn’t quite figured out what comes next.
After all, how many small and medium sized businesses on the Shopify platform are going to survive over the coming year? And can Shopify’s expansion into international markets take hold?
In Q3, Shopify discussed a merchant list that included Panasonic, Cole Haan, Converse and Greenies Pet Treats, hardly blue chip names.
And can Shopify really compete with Amazon, particularly on logistics? It’s a huge task but Shopify occupies a growing niche and a good brand.
Whatever happens it’s going to be a huge year for Shopify. The options market implies a move of more than 50% by January 2024 and that sounds about right.
THESE ARE PERSONAL OPINIONS NOT FINANCIAL ADVICE. I OWN SHARES IN SIX STOCK.
#stocks #investing #overlookedalpha #stockstobuy #stockstowatch #finance #stockmarket
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NewsTranscript
00:00 Here are 5 stocks facing a huge 2023
00:03 Number 1, Match Group At its peak in October 2021, Match traded
00:07 at around 50x adjusted EBITDA. Fast forward to today and that multiple based on guidance
00:12 is only 14x and the stock has dropped 70%. Much of that multiple compression can be attributed
00:19 to a drastic cut in profit growth to only 5%. An unofficial outlook puts revenue growth
00:24 at only 5-10% for 2023 as well. That's a significant reduction in growth and some of
00:30 Match's legacy brands like Plenty of Fish appear to be in decline. But Hinge is still
00:36 growing and Match continues to drive margins over 70%.
00:40 Straddle pricing in the options market suggests a move of over 40% in 2023 for Match stock.
00:46 So whatever happens, it looks like Match Group has a big year ahead.
00:50 Number 2, Six Flags Stock 2022 was a banner year for theme parks but
00:54 Six Flags badly underperformed. A lot of this stems from a change in business strategy.
01:00 New CEO Selim Basul said the parks have become day centres for teenagers. Some customers
01:05 have literally been making TikToks on how to live off the Six Flags dining pass. So
01:10 Basul created a new premiumisation strategy in which Six Flags gets fewer guests, paying
01:15 higher prices and in theory a better experience. But customers and employees are up in arms
01:21 about the changes with complaints flooding in.
01:23 And with activist investor Landon Buildings entering the fray, it's easy to see the
01:28 potential for movement in Six Flags stock. This is a crucial year where Six Flags simply
01:33 needs to show progress towards its goals.
01:36 Number 3, Shopify. When Shopify reported first quarter results in May last year, the stock
01:41 tanked 30%. But the stock has traded sideways since and that suggests the market hasn't
01:46 quite figured out what comes next. After all, how many small and medium sized businesses
01:51 on the Shopify platform are going to survive the coming year? And can Shopify's expansion
01:56 into international markets take hold?
01:58 In Q3, Shopify discussed a merchant list that included Panasonic, Cole Haan, Converse and
02:03 Greenies Pet Treats. Hardly blue chip names. And can Shopify really compete with Amazon,
02:09 particularly on logistics? It's a huge task but Shopify occupies a growing niche and a
02:14 good brand. Whatever happens, it's going to be a huge year for Shopify. The options
02:19 market implies a move of more than 50% by January 2024 and that sounds about right.
02:25 Number 4, the LoveSac company. LoveSac began as a manufacturer of bean bag chairs before
02:30 pivoting towards modular couches called Sanctionals. A 2018 IPO saw LoveSac close at $24 but it
02:37 ended 2022 just above $22. In other words, the stock's gone nowhere. But revenue at
02:42 LoveSac continues to increase at a rapid pace. Revenue grew 37% through the first three quarters
02:48 of 2022. Yet, that has a lot to do with store expansion. Store count increased 40% over
02:54 the same period. Meanwhile, margins have been crushed. Adjusted EBITDA margins have fallen
02:59 from 7.8% in 2021 to just 2.9% in 2022. There's a question whether this can be a real business.
03:08 After all, LoveSac opened more than 60 stores before and it filed for bankruptcy in 2005.
03:13 Yes, LoveSac is a different business now but profit margins likely need to improve. The
03:19 stock still has a high amount of short interest, indicating that traders remain sceptical.
03:24 Number 5, Spectrum Brands. To anyone paying attention, 2023 is a pivotal year for Spectrum
03:29 Brands as the company will see the resolution of its planned sale of its hardware and home
03:34 improvement business to Sweden's Assa Abloy. The deal, valued at around $4.3 billion, faces
03:40 an antitrust lawsuit from the US Department of Justice. But news since the announcement
03:44 indicates there's every chance the deal goes ahead. In December, Assa Abloy sold its
03:49 Emtek and Smart residential brands in order to assuage competition concerns and Spectrum
03:54 itself remains resolute that competition concerns are absolved. But Spectrum as a company is
03:59 facing inflationary pressures, Q4 earnings badly missed and that indicates potential
04:04 downside if the deal falls through. Overall, there's still a case for buying Spectrum
04:08 Brands but the risk/reward is not as good as it once was.
04:11 So that's 5 stocks to look out for in 2023. For more detailed investing ideas, visit our
04:16 website overlookedalpha.com and all the best for the new year.