Motley Fool Hidden Gems Investing - New Highs, “Oscar Buzz” Movies, and a Sweet IPO

Episode Date: November 19, 2021

Target and Walmart report big earnings but shares slip on margin concerns. Sweetgreen surges 85% on the salad restaurant’s first day of trading. And Intuit, Nvidia, Home Depot, and Lowe’s all hit new highs. Motley Fool analysts Emily Flippen and Jason Moser discuss those stories and discuss the latest from Axon Enterprise and Bilibili. Plus, our analysts share two stocks on their radar: Farfetch and Peloton. And corporate governance expert and film critic Nell Minow talks ESG, executive compensation, and must-see movies with Academy Awards potential. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me this week, Senior Analyst Jason Moser and Emily Flippen. Good to see you both. Hey, Chris. We've got the latest headlines from Wall Street. Nell Minow is our guest this week. And as always, we've got a couple of stocks on our radar, but we begin with big retail. Shares of Walmart down a bit this week, despite the fact that third quarter profits and revenue were higher than expected, so were their same-store sales, and they raised guidance, Jason. This is pretty much everything you would want going into the holiday quarter if you're Walmart.

Yeah, I think you're right. I think the theme going into this quarter was really all about margins and inventory, at least for investors. This is about margins and inventory. Those are the two biggest questions because we know people are shopping. People are moving forward, they're getting out there shopping, it's going to be a busy holiday season, but will there be stuff to buy? According to Walmart, yes, there will be. If you look at the most recent quarter, revenue was up 4.3%, $140.5 billion they raked in. Walmart U.S. comps grew 9.2%, transactions were up 5.7%, and they even grew e-commerce sales 8% for the quarter. Now, that's coming off of some very robust performance here over the past year and a half or so for obvious

reasons, but I think that's noteworthy, that 8%. Now, to the margin side, they are witnessing some gross margin pressure. That margin was down about 50 basis points, mostly on supply chain pressures and a higher mix of fuel sales. Operating income was down a tick as well. But in regard to this holiday season, inventory levels are up 11.5% from last year. They're in a very good spot. They raised guidance for the year. They're calling for around $6.40 in earnings per share for the year. That represents 17% growth from a year ago as well. There an interesting quote on the call that I just feel like I need to call this out here because I liked it. CEO Doug McMillan, he said, I quote, fighting inflation is in our DNA, end quote. You know what

these guys stand for. This is a team really focused on keeping costs reasonable for consumers. That may play out in margins in the near term, I think, but overall, I think it keeps traffic going for Walmart, which is ultimately what they want. Emily, just from a broader standpoint, we heard this from Macmillan, we heard this from Brian Cornell at Target, major retailers like this really sound like they are prepared from an inventory standpoint and a supply chain standpoint, they're ready for the holidays. If I can be frank, I think it's maybe a little bit presumptuous for management of both Walmart and Target to come out and say, look, we're well-prepared for the holiday season because there are so many factors that are outside

of their control. So, they've done a lot, Walmart especially, investing in their supply chain, ensuring that they have the capital and the inventory necessary to meet holiday demand. But there are so many other factors, as Vietnam proved over the past few quarters with shutdowns in that area of the world, that anything can happen. So, they've done what they can't on their part, but whether or not this ends up being a good holiday season, I think, is due to a lot of factors that are just frankly outside of their control. Last thing, Jason, you mentioned McMillan and his comments. He reminded me of Jim Senegal this week. The way that McMillan really pushed back on Wall Street saying,

no, there's only so much we're going to do to raise prices because we value that customer relationship so much. Yeah. That's very well put. I can hear Matt Greer fawning over that comment, Chris, because we know how big a fan Mac is of Mr. Senegal, and rightly so. I think taking a page out of that playbook is a very wise thing to do. Shares of Intuit up 10% this week and hitting a new all-time high. The maker of TurboTax posted first quarter profits and revenue that were both higher than expected. Emily, Intuit's guidance for 2022 looked pretty good too. Talking about raising prices, Intuit has just become a master of upselling and improving

products while retaining customers. This quarter was just a representation of what Intuit has been executing on for a number of years now. As you mentioned, revenue was up over 50% to over $2 billion. That was more than 10% higher than what analysts expected. Earnings were also significantly higher than what was expected. But the best sign for me to come out of this quarter is actually looking at how well Intuit is executing upon the acquisitions they've made over the last couple of years. The big one is obviously Credit Karma, which contributed more than 60% of the growth that Intuit experienced this quarter. There's a lot of really interesting things still coming out of Credit Karma. When you add that on

top of the Mailchimp acquisition that Intuit announced earlier this month, it makes investors really interested because we're talking about increasing revenue guidance from acquisitions that have historically been really accretive to Intuit as a parent business. Execution is a question mark, but if history has anything to say about it, they're set up well. To go back to supply chains, that's certainly less of an issue when your business is software, right? It certainly is. As I mentioned, when you look at that software and that average revenue per customer, it consistently grows and very little impact as a result of macro news, especially things like supply chain challenges.

Just like Walmart, Target's third quarter profits and revenue were higher than expected. they raised guidance for the holiday quarter, and just like Walmart, shares of Target down a little bit this week. Jason? Yeah, maybe down a little bit this week, but the three-year chart still looks really stellar for these two businesses. You're right, very similar to Walmart in regard to the theme and the questions and the results to an extent. Third quarter comp sales grew 12.7%. That was something that was essentially driven by traffic. They noted digital comps up 29%, actually same-day services. They noted the order pickup drive up and shipped, that grew nearly 60% for the quarter.

So we look at margins and we look at inventory. In gross margin, did witness some pressure there, 28% versus 30.6% a year ago. Operating margin fell a little bit as well, 7.8% versus 8.5% a year ago. they are still targeting that full-year operating margin of 8% compared to 7% a year ago. So we want to keep an eye on that. But in regard to the inventory levels, inventory levels for Target are up 17.5% from a year ago. So I agree with Emily. We need to be aware that anything can happen. It does seem like Target has put itself in a very good position for the holiday quarter, and clearly demand is still there. But yeah, I think the bigger question going forward, are these current cost pressures temporary or are they more structural? CEO Brian Cornell says it's

a little bit of both. While some of the shortage driven pressures will abate, there are product cost increases that will remain. You can't put that toothpaste back in the tube. It feels like the cost of doing business for everyone is going to be going up a little bit here over the next year plus. True. Although earlier in the week, Jason, you and I were talking about MasterCard coming out with their spending pulse report. They're predicting a boost in spending Thanksgiving week and one of the categories they pointed to that they're expecting the most out of is apparel. You think about all of the investments that Brian Cornell and his team have made in apparel at Target. It seems like that is an opportunity for them, but certainly one

to watch. Well, yeah, definitely one to watch, but you are seeing a lot of investment in apparel from businesses like Target, Walmart, and Amazon obviously has built out their own private label apparel business as well, all the way to Dick's Sporting Goods is really witnessing a lot of return on that investment. Definitely a huge potential driver and one worth watching. Two weeks ago on this show, Emily's radar stock was Axon Enterprise. This week, the company's third quarter earnings report was highlighted by revenue rising nearly 40% and shares of Axon Enterprise up 7% this week, Emily.

Axon is just an amazing business, if I can go on another tangent like I did for my radar stock a number of weeks ago. Axon is really doing something revolutionary and their founder and CEO, Rick Smith, I think has a really big vision of bringing not just their flagship product of tasers, but also body cameras, records management, dispatch software to the world. That's what we saw this quarter. While a lot of numbers looked great. Bookings, which is that forward-looking system of revenue, were up 70% in the quarter, so accelerating growth there. They absolutely crushed expectations in terms of profits on their bottom line. It was over 300% higher than what analysts expected. For me, the biggest highlight

coming out of this quarter was actually the change in their total addressable markets. I was a little bit surprised that Axon hadn't updated their guidance for their $27 billion addressable market prior to this. But in this quarter, they did add $25 billion onto that, bringing it to $52 billion in addressable market simply by expanding geographies, products, as well as customers. Where you'll find a lot of media focusing on this story is not necessarily on what a great quarter it was, but something Rick Smith said during the call, which was, hey, we're interested in bringing tasers to the consumer market, and that's a pretty big opportunity. I won't comment too much on that other than to say, I think Rick Smith

really does believe that he wants the bullet to become obsolete and this is his way of achieving that. After the break, we've got a hot IPO and a company getting ready to join the trillion dollar club. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Emily Flippen and Jason Moser. Sweetgreen went public on Thursday. The restaurant chain built on America's favorite food, salad, went public at $28 a share and ended the day at $52.50 a share. Promising start, Emily. Where does Sweetgreen go from here? Well, Sweetgreen needs to convince investors that salads are going to become the next burrito, which means that Sweetgreen needs

to prove that they can have success outside of just urban centers like New York City, which is responsible for nearly a third of their total sales. And management does have a lofty goal of doubling their store count, which is around 140 stores right now in 13 states, doubling that over the course of the next five years. That will put them in direct competition into this world of fast, casual food. Now, investors are clearly, after yesterday's rise, excited about this opportunity for the new Chipotle to come to public markets. But I will say, having grown up in suburbia myself, I think salads and burritos are a little bit more challenging, right? We're going to be talking about trying to convince audiences that are maybe not accustomed to eating salads

every day, that it is an acceptable solution and an expensive solution at that. So I'm excited by this, but interested to see where it goes. Salads are the new burritos. Boy, yeah, that's a tough sell. It was another great week for home improvement stocks. Home Depot's third quarter same-store sales were fueled by higher average tickets, and while Lowe's same-store sales were also higher than expected, the professional side of Lowe's business provided a good boost to the earnings report, both stocks hitting new highs this week. Jason, where do you want to start? Yeah. Well, let's start with something you said earlier in the week. This is a rhetorical question, I believe, but you asked if you

were making a list of no-brainer stocks, as in, of course, you should have a few shares in your portfolio and just leave them there forever. Wouldn't Home Depot and Lowe's be on that list? Yes, they absolutely would be, both of them. I think we probably shine the light on Home Depot a little bit more on this show from time to time, but over the last three years, while Home Depot has returned 145%, Lowe's has returned 180%. You know what Lowe's is that Home Depot isn't, Chris? It's a dividend aristocrat. It's a dividend aristocrats. It's something to keep in mind for you income investors out there. Looking at the results, Home Depot sales were up 9.8% from a year ago, comps up 6.1%. They did note

that the average ticket increased 12.7% and transactions fell 5.8%. Not all that surprising given that I think there was a lot of pantry stuffing going on in all shapes last year. Margins have stayed strong in the face of inflation and they're making a lot of investments their supply chain, ultimately developing a network of fulfillment centers around the country to help keep those costs and inventory levels where they want them. Lowe's, same kind of thing, really maybe just a little bit lighter on the number side. Sales just under $23 billion were up 2.5%, but comps up 2.2% total for the company and U.S. comps up 2.6%. Average ticket up 9.7%, transaction count declined 7.5%. But you noted earlier the pro customer there for Lowe's and

those investments really are paying off. Pro comps of over 16% for the quarter and on a two-year basis, 43%. We've always talked about how well Home Depot is executing on that front, really looks like Marvin Ellison's investments there are starting to pay off. That's a good thing. One last thing on the Home Depot same-store sales. Again, this is not being driven, at least in this latest quarter, by more people in the stores, by more shoppers, it's the people who are going there really spending a lot more than they had been in the past. Yeah. Well, I think there's been a lot of pent-up demand, even while we've been at home more or less for these past several quarters, there is some pent-up demand. People are ready

to undertake projects and do stuff to their homes. When you have shortages and supply chain issues like we're having, I think that also creates a little psychology for consumers where they want to get out there and get this stuff now while they feel like they still can. That could be something that's playing out on those sales numbers as well. Rough week for Bilibili shareholders. The China-based digital entertainment company had mixed results in the third quarter, disappointing guidance for Q4 and shares of Bilibili down nearly 25% this week. Emily, how bad is this? Well, I am one of those disappointed shareholders, Chris. This is actually not a terrible quarter for Bilibili. I will say their net loss, which has been a focus

for investors to this point, actually was lower than expected. But as you mentioned, that revenue and in particular revenue guidance was much less than the street was expecting. I will say we are seeing a trend amongst Chinese companies that are reporting around this time, that even issuing guidance that's in line with expectations is being pulled back by the market right now. I think a lot of the numbers in Bilibili's quarter, while less than expectations, were still pretty decent. Their average monthly users grew 35% over 267 million users. In my opinion, the most critical metric for Bilibili, which is average paying users, was up 59% in the quarter. Not all bad, but as we're seeing with all these Chinese businesses, it's a general crash and I

think some malaise amongst the concerns around regulatory changes in the country. No management team has really been providing any color about how these changes are likely to impact their business. You can tell there's a little bit of tiptoeing around the issue. With Bilibili being so active in the gaming space and as well in the live streaming space and in the e-commerce business, I think there's still a lot of question marks about what's in store for this Chinese company. Shares of Nvidia are hitting a new all-time high on Friday. Third quarter profits and revenue came in higher than expected for the chip company. Jason, Nvidia's market cap is just north of $800 billion. I know that $200 billion is a lot of

money, but it would be stunning if this was not the next company on the trillion list. I feel like it's just a matter of time. When you think of the direction the world is headed and the drivers that are taking us there, things like artificial intelligence, machine learning and gaming and automotive data centers, and yes, I'm even going to use the M word, Chris, the metaverse. Even though they didn't even mention the metaverse on their call, the metaverse is a driver here. NVIDIA is one of the key companies that's really getting us there. And so, I mean, it's no accident the stock is up 670% over the last three years. And I do feel like, yeah, it's just a matter of time to hit that $1 trillion market cap.

The numbers bear that out, though. I mean, it was a strong quarter with revenue up 50% from a year ago. Gaming revenue is up 42%. Their cloud gaming service, GeForce, is doing very well. Membership there is more than doubled to over 14 million gamers. Automotive revenue continues to perform, although it was down sequentially, but up 8% from a year ago. The data center revenue, $2.9 billion, grew 24% sequentially, 55% from a year ago. There are just so many tailwinds for this business. Calling for $7.4 billion in revenue for

the final quarter, that marks essentially 50% growth from a year ago. For Nvidia and Nvidia investors. It really looks like the good time should continue to roll. Chris Hill You're excited for the metaverse though, aren't you? Jason Moser I'm excited to see what it looks like, but I don't know that I'm going to be participating all that much, Chris, which I know is probably odd coming from the guy who runs the augmented reality and beyond service, but I'm about making money in real life, Chris, in the real world. If we got to use the metaverse to do it, so be it. Chris Hill Emily Flippen, Jason Moser,

we'll see you later in the show. Up next, we'll talk ESG investing and the business of movies with our guest, Nell Minow. Stay right here, you're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Nell Minow is the Vice Chair of Value Edge Advisors. She is also the film critic known as the movie mom. She joins me now. Now, great to see you. Thank you. Good to be back. I want to get to some things about the business of movies and sort of this time of year with Oscar buzz starting to build up. But I want to start with a couple of investing topics. And first up is a topic that's gotten a lot more attention over the past few years, and that's ESG investing. Specifically, Gary Gensler, the Chairman of the

SEC, has said that early next year, the agency is going to release proposed rules for mandatory climate risk disclosures. The goal here is to give investors consistent data. When I read this, one of the things it reminded me of is how some large employers have started raising the minimum wage that they offer to get ahead of any mandatory minimum wage increases at the federal level. It seems like an opportunity for companies to get ahead of whatever proposed rules are coming. But as someone who advises public companies, what is your advice for those that are waiting on these new rules around climate risk disclosures? Listen, the appetite for ESG information, both from regulators and from investors is way ahead of the capacity to provide it.

And so the first thing that I would say to companies is you need to be absolutely on top of the transparency of your process. Nobody knows exactly where this is going or how it's going to come out, whether you're going, whether we're going to do the SASB disclosures or the, you know, We seem to be leaning more toward the European model. I don't know. But what we want to know right now is who on the board of directors is overseeing this? What is the committee responsibility? How are you moving forward?

And what questions are you asking? And I think companies need to be prepared to disclose that right now. The SEC has actually released a sample disclosure for the time being that I think is a very good template. But I think what I hear from investors is that they want to hear how companies are going about it more than just to see a bunch of numbers. You know, I have a brokerage account. I do some trading based exclusively on Motley Fool recommendations. I've done very well. And I was on the account not long ago. And all of a sudden a thing popped up and said, do you want the ESG rating of your stocks?

And I said, sure. So why not? So they give me something that looks very metric. It's got a pie chart. It's got percentages. But where is that coming from? What is it based on? I don't know. And then it said, and we have another option for you, too. We've got a whole other social ranking. again based on what i don't know so my point is that this is what we're seeing everywhere uh it's like in the 70s where all of a sudden all the food was labeled organic and nobody knew what that meant while we wait for the government to sort it out we need companies to talk about what their process is part of the rise in esg that we've seen over the past few years is companies coming out and declaring a date in the future that they believe their business is going to achieve carbon neutrality. When you see that, what goes through your mind? Because on the surface, it seems like progress. Yeah, that's great. First question I ask is,

how is that reflected in your incentive compensation? I like to see them put their money where their mouth is. Second question I ask is, great, but now I want to see how you are managing climate risk in a much more sustainable way. In other words, it's not just whether you've got recycle bins instead of wastebaskets. I want to know what your supply chain risk is. Supply chain, the buzzword of 2021. I want to know how you are looking at not just the impact that your own company is having, but the impact that climate issues with your suppliers and other related parties are having on you. Speaking of executive compensation, as the market continues to hit new highs,

more than 50 times in this calendar year alone, the S&P 500 has hit a new high. While that is great in general for investors, it also seems like an environment where people care less about executive pay, because if the stocks are going up, they're more likely both on the individual investor side and certainly on the institutional investor side to give CEOs a pass for high pay. Am I wrong about that? I think you're right about that. But that's why I like the report that's issued every year by As You Sow, because they look at what each individual executive has actually earned versus what the market has done. And this is why I have repeatedly said that stock and option grants should be indexed to the market or to the peer group

because otherwise we're just letting everybody ride on the fang stocks or ride on whatever is outperforming. And we're not paying CEOs based on the market. We're paying CEOs based on their individual performance over the long run. And I particularly don't like seeing CEOs selling stock. And I'm seeing that now. Yeah, I know the stock is at a high, but there's a reason the SEC makes them tell you that. It's a big red flag. We got a question from a listener recently. And when I got the question, the first thought I had was, this is a great question. I also have this question. And my second thought was, I'm going to save this for the next time I talk to now Minnow. It's from Deb in Indianapolis. And she writes, every time I fill out a proxy vote,

I get outraged at how few women board members some of these companies have. I have started withholding votes for male board members and only voting for female board members if the company has fewer than one-third women on its board. I know with my few shares it won't matter, but I fantasize that someone somewhere is looking at the differences in vote counts and someday they may notice the discrepancy and think about it. Is this a terrible thing to do? And is there a better way I can express as a shareholder the need for better diversity on a board? I have the exact same thought when I get my proxy. I'm like, all right, I've got a few shares of this company. I know it's not going to matter at the highest level, but okay, I'll fill this out. I think it's a great idea. I

wish everybody would do it. She's my hero. I love hearing from people like that. I would also recommend voting against all members of the nominating committee. They're the ones responsible for this. So even if there's a woman on the nominating committee, I would vote no. And let me give you a little bit of reassurance. As you know, the NASDAQ has just adopted a new rule, which is being challenged in court, but I think it's going to stick, requiring more diversity on boards. And the state of California has a law also being challenged in court, requiring more diversity on boards. But the point is that just like ESG, this is an issue whose time has arrived. And I think we will be seeing more progress. It has been extremely slow. You know, there's a new

PwC survey of board members that's extremely upsetting. Among other things, it says that they realize that climate change is important, but they don't think that they have any capacity to understand it. Okay. Well, you know, they do have a capacity to do something about that, but it also said that they thought that diversity was important to shareholders, but they thought it was not important to them. Well, we've got the wrong people on boards then, and that's why you really got to focus on the nominating committee. And if you really got the time and energy, I'd write a letter to the chairman of the nominating committee and ask about it. Let's move on to the business of movies. And I'm curious, not necessarily what you think

the state of movie theaters is. But I'm curious if you think a year from now, we're going to be in a system where movie theaters are opened up to a greater degree, and yet some companies are still opting for streaming, but at a premium level. Just as someone who is both a Disney shareholder and someone who has Disney+, I find it odd that on the occasions Disney chooses to release a movie on its streaming service for an amount of money. The amount of money is the same regardless of the movie. I'm surprised that they haven't come out with some sort of tiered system, but that's just what I think. Where do you think this is going? Yeah, we are really in the let's try everything mode, you know, where we've got some theatrical releases are made available

for about 20 bucks for a limited time. And then I guess they'll come back for free or they'll come back for less money. I don't know. There was a movie recently that came out last year that I liked very much. I don't buy a lot of movies, but I thought I'd like to buy that. It came out around the $20 price point. I said, I don't think so. And then it dropped down to 10 a little while ago. So I bought it then. So I think they're experimenting around with that. As with regard to ticket buyers. As we always say, when we talk about this, most ticket buyers for theaters are between the ages of 15 and 30. And that's not going to change. That is the social life of people who don't have living rooms to invite people over to. And that's a very social thing. Most people

who are older than that wait for it to come on streaming or on DVD. And so I don't think that that is going to change. But yeah, I think that that same group that has been ticket buyers in the past, very eager to get back in theaters. We're heading into the holidays, which means for the movie industry, the sound of Oscar buzz is getting louder. We've got the upcoming release of movies like Kenneth Branagh's Belfast, Lin-Manuel Miranda making his directorial debut with Tick, Tick, Boom, Will Smith starring in King Richard, Jane Campion writing and directing The Power of the Dog. What are some of the movies that you're excited about? And along those same lines, what are you curious to see if it lives up to the early hype? Because some of these movies

have a lot of hype attached to them. Well, that's right. And hype coming out of festivals like Sundance doesn't always translate into the box office. I I've seen a lot of the movies that are going to be considered at Oscar time. And I think they're all very solid. The one that I think I'm the most curious about living up to the hype is gotta be, um, Steven Spielberg's West side story, because that's a pretty high bar. You know, the last time they made that movie, it got Oscars all over the place and it's a classic um and how are you going to update it uh and yet keep it true to the original so i think that one is the long shot for me in terms of oscar possibilities but yeah will smith and i think ingenue ellis who plays the venus and serena's mother uh are both

good candidates for oscar nominations belfast for sure terrific movie by the way both of those movies made by, uh, adults about their own childhoods and very loving portraits of their parents. I talked to Sir Kenneth Branagh and I said, my new goal in life is to have my children make a movie about their childhood and make me look as gorgeous as Jimmy Dornan and Katrina Balfe in that movie. Um, so, and, and of course, uh, King Richard, a love letter from Venus and Serena to their fire. Uh, so yeah, I think, um, uh, that, uh, the one I'm the most curious about is West side story, licorice pizza. Have you heard about that? I have, I've, I've seen the preview for it and, uh, I'm kind of confused. And ultimately when I'm confused by a movie trailer,

I just result to thinking, okay, this movie is probably not for me. Yeah. This movie is definitely not for everybody. This is the latest from Paul Thomas Anderson, you know director of such classics as boogie nights and uh there will be blood and again it's it's a nostalgic um throwback to uh to a childhood experience not his childhood but the screenwriter's childhood and it is definitely not for everybody but i bet it'll get some some nominations i saw mcbeth yesterday with denzel washington and francis mcdormand wow that is an amazing movie you will definitely see some nominations there. Thanksgiving is next week. And in the past, I've asked you about

films that are about Thanksgiving or films that are about families gathering or even films about food. But this year, I want to ask you about the concept of movies as comfort food, because comfort food is something we all turn to at some point. And I think for people who enjoy movies, we have those movies that are for us comfort food. And at different points of the year, it's like, yeah, I'm just going to watch this because I enjoy watching. What is a comfort food movie or two for you that you find yourself returning to? Yeah, well, of course, the pandemic has been comfort movie central. I have watched nothing but comfort movies, in addition to the ones that I have to watch to review. So my go-to is also always turn classic movies. I always start

there when I turn on the TV. But I call them flu movies because they're movies that I watch when I have the flu. And the three most frequent flu movies that I watch are Galaxy Quest. And by the way, there's a great documentary about the making of Galaxy Quest on Amazon. It's very worthwhile. Happy Texas is another one that I like a lot. And Hairspray. That's just a cheerful movie that's a real comfort food. You can read more from her online, get her thoughts on corporate Covenants, the latest movie reviews and more. Nell Minow, have a wonderful Thanksgiving. Nell Minow You too, thanks. Up next, Jason Moser and Emily Flippen return with a couple of stocks on their radar.

Stay right here, you're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again with Emily Flippen and Jason Moser. A reminder that next week is Thanksgiving, so remember, the market is going to be closed on Thursday the 25th, closing early on Friday the 26th, presumably so that the folks on Wall Street can hit those Black Friday sales. It also means that next week, it's a tradition unlike any other, it's the Motley Fool Money

Thanksgiving special. Tell your friends, tune in next week. Let's get to the stocks on our radar. Our man behind the glass, Rick Engdahl is going to hit you with a question. Jason Moser, you're up first, what are you looking at this week? Well, maybe they were just getting prepared for after the holiday season here where everybody's looking to make resolutions to get back in shape. But Peloton, ticker PTON, this is not really on my radar for a good reason, Chris. I have no horse in this race and I never will. But their $1 billion offering that they just announced this week with shares 65% off of levels from just July, just isn't ideal, particularly when you consider that given just

two weeks ago, they explicitly said in their call, explicitly said they saw no need for an additional capital raise. What changed? Something happened here. No matter what, it's just not a good look. When you look at the business itself, I understand why they're raising money. Growth is hitting a wall. They're in a current net debt position before this offering. The financials are still very unflattering and there's just a ton of competitive jockeying in the space now. I know it's a very popular name in our Foolish universe and out there in the investing world, very loyal customer base. But beyond that, it feels to me like this company is going to have have some really tough peddling ahead, I think. Rick, question about Peloton?

Jason, do you think maybe they're raising money to enter the metaverse? Because I do like the idea of virtual exercise. Well, but aren't they already in the metaverse in some way, shape, or form? I mean, all this metaverse stuff is getting me really confused. You could go to Emily. Emily Flippen, what are you looking at this week? A business that probably has nothing to do with the metaverse, and that is Farfetch. The ticker is F-T-C-H. Similar to Jason, this is on my radar because not wonderful reasons, they had a dismal earnings report this week, a mixed quarter, as demand for luxury goods fell off. This retailer of luxury goods, one of the largest in the world, had to pull back guidance

based off of a lack of demand for luxury goods. I will say though, if you're a shareholder and you believe in what Farfetch is doing, maybe you see this as a buying opportunity. Rick, question about Farfetch? Yeah, I didn't know much about them, so I looked at the website. I did not see any sweatpants, so I'm curious, do they really have their eye on today's fashion? They really do. If you don't believe me, all you have to do is look at the average order value, a number that has steadily been rising for Farfetch, but it's just under $600 right now. Just for you to get a sense about the value of the people that are shopping on Farfetch's platform. As questionable as this quarter was, I think that

is a metric that speaks loads. Chris Hilliard. Before I go to Rick, I just want to use this opportunity to remind the dozens of listeners, that's why this is stocks on our radar. For the aggregators out there who think that this is a recommendation segment of the show, it is not. As both Jason and Emily have said, sometimes the stock is on your radar for not positive reasons. So, with that in mind, Rick, what would you like to add to your watchlist? Well, the older I get, the more that I find that I need exercise and neglect fashion. So, reluctantly, I'll go with Peloton. Tough choice when you have to choose between high fashion and forced exercise.

All right, Emily Flippen, Jason Moser, thanks so much for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Fool Money. The show is mixed by Rick Engdahl. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.