Roughly 90% of S&P 500 companies have released their first-quarter results, among which the majority beat consensus estimates. However, Coinbase (COIN), Wayfair (W), Allbirds (BIRD), Beyond Meat (BYND), and Paysafe (PSFE) reported disappointing first-quarter earnings. So, we think these stocks are best avoided now. Read on.
The stock market has rebounded slightly from its sharp decline last week. The Dow Jones Industrial Average gained 431.17 points to close the last trading session at 32,654.59, while the S&P 500 and the Nasdaq Composite jumped 2% and 2.7%, respectively, to end the session at 4,088.85 and 11,984.52.
The markets have experienced intense selloffs over the last few weeks due to fears of aggressive interest rate hikes by the Federal Reserve to tame surging inflation and a potential economic slump. According to FactSet, as of May 6, 2022, 87% of the companies in the S&P 500 had reported their first-quarter earnings, among which 79% have reported EPS above estimates. Although this is above the 77% five-year average, the S&P 500 has witnessed a six-week losing streak, its worst since 2011.
Despite the above-average positive EPS surprises, some companies reported disappointing earnings results. The recent results from Coinbase Global, Inc. (COIN), Wayfair Inc. (W), Allbirds, Inc. (BIRD), Beyond Meat, Inc. (BYND), and Paysafe Limited (PSFE) disappointed investors. So, we think these stocks are best avoided now.
Coinbase Global, Inc. (COIN)
San Francisco-based COIN is a financial technology company that provides end-to-end economic infrastructure and technology. The company offers the primary financial account in the crypto economy for retailers, a marketplace with a pool of liquidity for transacting in crypto assets for institutions, and technology and services that enable an ecosystem of partners to build crypto-based applications and securely accept crypto-asset payments .
On May 17, 2022, COIN announced that it would slow down its hiring due to the market downturn. The company had previously announced that it wanted to triple its size. COIN’s President and Chief Operations Officer Emilie Choi said that the company would temper hiring and instead focus on integrating the employees it has already hired.
COIN’s net revenue for its fiscal first quarter, ended March 31, 2022, declined 27% year-over-year to $1.16 billion, falling short of Wall Street’s $1.50 billion estimate. The company’s net loss came in at $429.65 million, compared to $771.46 million in net income in the year-ago period. Also, its loss per share was $1.98, compared to EPS of $3.05 a year ago. Its loss per share missed analysts’ 24 cents estimate of earnings per share.
Analysts expect COIN’s EPS for the quarter ending Sept. 30, 2022, to decrease 211.1% year-over-year to $1.80. Its revenue for the quarter ending June 30, 2022, is expected to decline 44.3% year-over-year to $989.10 million. Over the past six months, the stock has declined 79.8% in price to close the last trading session at $70.
COIN’s weak fundamentals are reflected in its POWR Ratings. It has an overall D rating, which equates to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an F grade for Growth, Stability, and Sentiment. It is ranked #123 out of 157 stocks in the F-rated Software – Application industry. Click here to see the other ratings of COIN for Value, Momentum, and Quality.
Wayfair Inc. (W)
W in Boston, Mass., is engaged in the e-commerce business. The company provides approximately 33 million million products for the home sector under various brands. It offers online selections of furniture, décor, housewares, and home improvement products through its sites, including Wayfair, Joss & Main, AllModern, Birch Lane, and Perigold brands.
For the fiscal first quarter, ended March 31, 2022, W’s total net revenue decreased 13.5% year-over-year to $2.99 billion. The company’s adjusted EBITDA loss came in at $113 million, compared to an adjusted EBITDA of $206 million in the year-ago period. Also, its net loss was $319 million, compared to $18 million in net income in the year-ago period. In addition, its adjusted loss per share was $1.96, compared to an adjusted EPS of $1 in the year-ago period, which was higher than analysts’ estimate of a $1.56 loss.
For the quarter ending Sept. 30, 2022, W’s EPS is expected to decline 1,200% year-over-year to $1.54. Its revenue for fiscal 2022 is expected to decrease 5% year-over-year to $13.03 billion. Over the past year, the stock has gained 81.7% in price to close the last trading session at $55.17.
W’s POWR Ratings reflect this weak outlook. It has an overall D rating, which equates to a Sell in our proprietary rating system.
It has an F grade for Sentiment and a D grade for Growth, Momentum, Stability, and Quality. Within the Specialty Retailers industry, it is ranked #41 out of 44 stocks. To see the other rating of W for Value, click here.
Allbirds, Inc. (BIRD)
BIRD manufactures and sells footwear and apparel products for men and women. It offers shoes, such as running shoes, everyday sneakers, high-tops, slip-on, boat shoes, flats, weather repellent shoes, and sandals. The New York City company’s apparel products include activewear, tops, bottoms, dresses, sweaters, underwear, and socks.
BIRD’s net loss widened 61.7% year-over-year to $21.87 million for the first quarter, ended March 31, 2022. The company’s adjusted EBITDA loss widened 77.9% year-over-year to $12.21 million. Also, its loss per share came in at $0.15, which was higher than the analysts’ estimate of a $0.12 loss.
Analysts expect BIRD’s EPS for its fiscal 2022 to remain negative. Its EPS is expected to decrease 15.2% per annum over the next five years. Over the past six months, the stock has declined 80% in price to close the last trading session at $4.93.
BIRD’s POWR Ratings are consistent with this bleak outlook. It has an overall F rating, which translates to a Strong Sell in our proprietary rating system.
Beyond Meat, Inc. (BYND)
BYND in El Segundo, Calif., is a food company that offers plant-based meats. The company’s product offerings include Beyond Burger, Beyond Sausage, Beyond Beef, Beyond Meatballs, Beyond Breakfast Sausage Patties, Beyond Breakfast Sausage Links, Beyond Beef Crumbles, and Beyond Italian Sausage Crumbles. It sells plant-based products across the three leading meat platforms of beef, pork, and poultry.
For its fiscal first quarter ended April 2, 2022, BYND’s loss from operations widened 296.1% year-over-year to $97.62 million. The company’s net loss widened 268.4% year-over-year to $100.45 million. Also, its loss per share widened 267.4% year-over-year to $1.58, which is higher than analysts’ expectation of a $0.98 loss. In addition, the company’s revenue increased 1.1% year-over-year to $109.46 million but missed the $111.60 million consensus estimate.
For the quarter ending June 30, 2022, BYND’s EPS is expected to decline by 267.7% year-over-year to $1.14. Moreover, its EPS for its fiscal 2022 and 2023 are expected to remain negative. It failed to surpass the Street’s EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has declined 77% in price to close the last trading session at $26.96.
BYND’s weak fundamentals are reflected in its POWR Ratings. According to our rating system, it has an overall rating of F, which translates to Strong Sell.
Paysafe Limited (PSFE)
Based in Hamilton, Bermuda, PSFE is a specialized payments platform. The company aims to enable businesses and consumers to connect and transact through various capabilities in payment processing, digital wallet, and online cash solutions. Its products include Direct Debt, Digital Wallets, Integrated Payments, Online Payments, and Publishers Marketplace. It serves education, field services, and financial services industries.
PSFE’s revenue for its fiscal first quarter, ended March 31, 2022, declined 2.5% year-over-year to $367.67 million. The company’s net loss widened by 1,831.1% year-over-year to $1.17 billion. Also, its adjusted EBITDA decreased 8.1% year-over-year to $103.96 million.
Analysts expect PSFE’s EPS for its fiscal 2022 to decrease 705.3% year-over-year to $1.21. The company’s revenue for the quarter ending June 30, 2022, is expected to decline 2% year-over-year to $376.52 million. Over the past year, the stock has declined 77.5% in price to close the last trading session at $2.48.
PSFE’s POWR Ratings reflects its poor prospects. The stock has an overall D rating, which translates to a Sell in our proprietary rating system.
It has a D grade for Stability and Quality. It is ranked #43 of 48 stocks in the D-rated Consumer Financial Services stocks. Click here to see the additional ratings of PSFE for Growth, Value, Momentum, and Sentiment.
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COIN shares fell $2.80 (-4.00%) in premarket trading Wednesday. Year-to-date, COIN has declined -73.37%, versus a -14.84% rise in the benchmark S&P 500 index during the same period.
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.