Under Armour’s shares soared 25% on Thursday after the sportswear giant raised its annual profit forecast, citing lower input costs and effective cost-saving measures, such as reducing discounts at its stores and website.

The strong performance came after several quarters of disappointing results, prompting company founder Kevin Plank to return as CEO.

Plank’s plan to reset the business includes reducing headcount and scaling back inventory on select products.

Under Armour and Nike are working to regain market share

The company’s efforts to revamp its business align with a broader trend seen in the athleisure market, where both Under Armour and Nike are working to regain market share from emerging brands like Roger Federer-backed On and Deckers Outdoor’s Hoka.

Under Plank’s leadership, Under Armour is focusing on selling apparel and footwear at full prices to correct previous missteps involving deep discounts.

In the second quarter, full-price sales accounted for around 50% of all e-commerce revenue, a notable increase from just 30% a year ago.

This shift, along with reduced discounting, led to a 200 basis-point improvement in the company’s gross margin, which reached 49.8%.

“Success in the athleisure market requires more than just the right pricing strategy.

Creating desirable products that consumers are willing to pay full price for is essential,” said Danni Hewson, Head of Financial Analysis at AJ Bell.

Under Armour now expects an adjusted annual per-share profit of between 24 and 27 cents, up from its previous forecast of 19 to 21 cents.

The company reported earnings of 30 cents per share in the quarter, exceeding analyst expectations of 20 cents.

Despite a 10.7% drop in second-quarter net sales to $1.4 billion, Under Armour exceeded analyst predictions, which had forecasted an 11.6% decline.

According to LSEG data as reported by Reuters, analysts had expected sales to fall to $1.39 billion.

BMO Capital Markets analyst Simeon Siegel noted, “We’ve long believed that Under Armour’s focus should be on improving its health rather than pursuing growth at all costs.”

As the company continues to implement its recovery plan, investors will be watching closely to see if Under Armour can regain its competitive edge in an increasingly crowded market.

The post Under Armour shares surge 25% as company raises profit forecast on cost-saving strategies appeared first on Invezz

According to a recent Gallup poll, 62 per cent of adults in the Unites States currently own stocks, which represents the highest percentage since 2008.

While stock ownership is frequently regarded as an important component of economic participation and progress, the distribution of stock holdings tells a different tale, indicating growing wealth gaps among Americans.

The advantages of stock ownership can be enormous, allowing individuals to build their wealth over time. However, the distribution of stock ownership in the United States reveals a significant mismatch.

According to Gallup’s results, 87 per cent of people with a household income of $100,000 or more own stocks, while only 25 per cent of those with a household income of less than $30,000 do.

This gap demonstrates how wealthy people are more likely to have larger stock portfolios, compounding existing economic disparities.

Economic disparities amplified by the pandemic

The Covid-19 outbreak exacerbated already significant inequities in stock ownership and economic accumulation.

As the pandemic struck, low-income people bore the brunt of job losses and financial instability, whereas rich persons not only kept their jobs but also profited from the subsequent stock market boom.

The rapid rise of stock prices following the initial slump during the epidemic increased the wealth of rich investors, expanding the wealth gap between them and lower-income people.

Implications for economic mobility and social cohesion

The unequal distribution of stock ownership and the resulting wealth disparity can have serious consequences for long-term economic mobility and social cohesion.

As wealthier individuals continue to increase their stock market profits, the gap between affluent and lower-income households grows, thereby impeding upward social mobility for those at the bottom of the income scale.

Furthermore, such gaps may undermine social cohesiveness by exacerbating sentiments of economic marginalization and instilling animosity in underprivileged areas.

Perception and preference in American long-term investments

While 62% of Americans own stocks, a sizable proportion still see real estate as the best long-term investment option.

According to the Gallup data, 36% of people favour real estate as a long-term investment, followed by equities or mutual funds (22%).

Gold ranks third at 18%, with savings accounts or CDs picked by 13% of respondents.

According to the survey, only 4% of participants are interested in bonds, and only 3% believe Bitcoin is a good long-term investment option.

Surprisingly, the proportion of adults who choose real estate remained unchanged compared to the previous year.

However, tastes have shifted, with more people this year picking stocks or mutual funds as their top choice and fewer naming gold as the best investment.

This year, 22% of respondents chose equities, up slightly from 26% in 2021. In contrast, gold, which had a surge in popularity last year, has retreated to more normal levels in the latest study.

Addressing the disparities

To close the growing wealth gap caused by unequal stock ownership, regulators and financial institutions must look into ways to improve financial education and access to investment possibilities for low-income people.

Creating inclusive financial literacy programs, encouraging community-based investment projects, and campaigning for progressive tax laws can all contribute to a more equal allocation of wealth in society.

While stock ownership can be an effective vehicle for wealth building and economic involvement, its unequal distribution emphasizes the critical need to address wealth inequities in the US.

Taking proactive steps to promote financial inclusion and fairness in stock ownership is critical for creating a more cohesive and equitable society in which everyone has the opportunity to benefit from economic growth and success.

The post US stock ownership disparity: 62% of Americans invested, unequal distribution raises questions appeared first on Invezz

The state of Texas has initiated legal action against General Motors (GM), alleging the automaker illegally collected and sold data from more than 14 million vehicles without drivers’ consent.

The lawsuit, filed by Texas Attorney General Ken Paxton, stems from a broader investigation into the data practices of several automakers, focusing specifically on GM’s handling of driver information.

Over 1.8 million Texas drivers affected by data collection

According to the lawsuit, GM’s technology was used to gather extensive data on driver behaviours, such as speeding, abrupt braking, sharp steering, seatbelt usage, and driving during late hours.

The information, collected via GM’s OnStar diagnostic system, was reportedly used to create “Driving Scores” for over 1.8 million Texas drivers.

These scores, which assessed driving habits, were then allegedly sold to insurers and other companies.

This data, Paxton argues, could be utilised by insurers to make decisions about raising premiums, cancelling policies, or denying coverage, all without the drivers’ knowledge or consent.

The Attorney General’s office highlighted that these practices could unfairly impact drivers by influencing insurance decisions based on data they were unaware was being collected or sold.

Alleged deceptive practices during vehicle purchases

The lawsuit further accuses GM of deceptive practices during the vehicle purchase and leasing processes.

The Texas Attorney General’s office claims that GM dealers misled consumers into believing that enrolling in the OnStar diagnostic products, which collected the data, was mandatory.

This was allegedly done at a time when consumers were particularly vulnerable, having just completed the often stressful experience of buying or leasing a vehicle.

These alleged practices, according to the lawsuit, constitute a violation of the Texas Deceptive Trade Practices Act.

The state is seeking several remedies, including the destruction of the improperly collected data, compensation for affected drivers, civil fines, and other legal actions against GM.

Legal ramifications and GM’s response

This lawsuit marks a significant escalation in the scrutiny automakers face regarding their handling of consumer data.

With the increasing integration of technology in vehicles, concerns over privacy and data security have become more pronounced.

The case against GM could set a precedent for how automakers collect, store, and share driver information.

GM responded to the lawsuit by stating that they have been in discussions with the Texas Attorney General’s office and are currently reviewing the complaint.

The company emphasised its commitment to protecting consumer privacy but did not provide specific details about the allegations.

The legal action against GM highlights the growing tension between technological advancements in the automotive industry and consumer privacy rights. As vehicles become more connected, the amount of data generated and collected has surged, raising concerns about how this data is used and who has access to it.

Potential impact on the automotive industry

This lawsuit could have far-reaching implications for the automotive industry, particularly in how companies approach data collection and consumer consent.

If Texas succeeds in its case, it may prompt other states to examine the data practices of automakers, potentially leading to a wave of similar legal actions.

Moreover, the outcome of this case could influence future regulations regarding data privacy in the automotive sector.

Legislators may feel compelled to introduce stricter laws governing how automakers collect and use driver data, ensuring that consumers are fully informed and consenting participants in any data-sharing activities.

In the meantime, Texas drivers and others across the country will likely watch closely as the case unfolds.

The lawsuit underscores the importance of transparency and consent in data collection practices, particularly in industries where technology plays an increasingly central role.

As the legal battle between Texas and GM progresses, it will serve as a critical test of how privacy laws are applied in the context of modern automotive technology.

The outcome could shape the future of data privacy standards not just in Texas, but across the United States.

The post Texas sues GM for allegedly selling drivers’ data without consent appeared first on Invezz

Mars, the global family-owned confectionery giant known for brands such as M&M’s and Snickers, has announced its acquisition of Kellanova, the maker of Cheez-It and Pringles.

The deal, valued at approximately $36 billion, is set to become the largest transaction in the packaged food industry.

Mars pays 33% premium for Kellanova

Mars will pay $83.50 per share in an all-cash transaction, representing a 33% premium over Kellanova’s closing price on August 2.

This acquisition marks a significant expansion of Mars’ portfolio, bringing together a diverse range of consumer brands under one roof.

Kellanova, which separated from WK Kellogg in October 2023, has established itself in the salty snacks business and is a significant player in the cereal market outside North America.

The company reported net sales exceeding $13 billion in 2023, making it a valuable addition to Mars’ existing product offerings.

The deal follows Mars’ $23 billion takeover of Wrigley in 2008, which now appears modest by comparison.

Acquisition impacts: Kellanova joins Mars Snacking

Upon completion of the acquisition, expected in the first half of 2025, Kellanova will become part of Mars Snacking, a division led by Global President Andrew Clarke and based in Chicago.

The acquisition is anticipated to strengthen Mars’ presence in the snacking sector, complementing its existing brands such as Twix, Bounty, and Milky Way with Kellanova’s snack portfolio, which includes popular products like Pop-Tarts, Rice Krispies Treats, and Eggo frozen waffles.

Legal experts have suggested that the deal is unlikely to encounter significant antitrust hurdles, given the limited overlap between Mars’ and Kellanova’s product offerings.

This assessment is crucial for the smooth progression of the transaction, ensuring that Mars can swiftly integrate Kellanova’s brands into its operations.

Navigating a challenging market

The acquisition comes at a time when US packaged food companies are facing slower sales growth.

Companies like Kraft Heinz, Mondelez, and Hershey have observed budget-conscious consumers increasingly turning to cheaper private labels instead of premium branded items.

This trend has prompted major players in the industry to reassess their strategies, with mergers and acquisitions becoming a viable pathway for growth and market expansion.

Mars’ decision to acquire Kellanova highlights the company’s strategic focus on diversifying its portfolio and expanding its market share in the highly competitive snacking industry.

By bringing together Mars’ stronghold in confectionery and Kellanova’s dominance in snacks, the combined entity is well-positioned to navigate the evolving consumer landscape and meet the changing preferences of consumers.

Mars and Kellanova’s combined potential

The successful integration of Kellanova into Mars Snacking will be pivotal in determining the long-term success of this acquisition.

With Kellanova’s strong brand presence and Mars’ extensive distribution network, the combined entity is expected to drive significant growth in the coming years.

This strategic move also signals Mars’ commitment to expanding its footprint in the snacking sector, capitalising on the growing demand for convenient and indulgent snack options.

As the deal progresses, industry observers will be watching closely to see how Mars leverages Kellanova’s assets to enhance its product offerings and strengthen its competitive position in the market.

The acquisition not only reshapes the landscape of the packaged food industry but also sets the stage for future mergers and acquisitions as companies seek to adapt to changing market dynamics.

The post Mars acquires Kellanova for $36 billion, adds Pringles and Cheez-It to its portfolio appeared first on Invezz

nCino Inc. (NASDAQ: NCNO) received a significant boost today when Goldman Sachs upgraded its rating from Neutral to Buy, with a new price target of $42, up from $34.

This change reflects Goldman’s growing confidence in nCino’s ability to navigate recent business challenges and capitalize on new growth opportunities.

Analyst Adam Hotchkiss noted that nCino is expected to overcome headwinds such as high interest rates and peak mortgage customer churn, thanks to improving retention rates and better cross-selling efforts.

Hotchkiss highlighted nCino’s strong innovation track record and deep-rooted relationships with major financial institutions as key factors that will support growth moving forward.

Q2 earnings expectations & Q1 earnings

The upgrade comes at a critical time for nCino as it approaches its Q2 2024 earnings report, scheduled for August 30.

Analysts are cautiously optimistic, with the consensus predicting a loss per share of $0.08, an improvement from the $0.14 loss per share reported in Q2 2023.

Revenue is expected to reach $131.08 million, up from $117.2 million a year earlier.

However, it is worth noting that 10 out of 11 analysts on Wall Street who cover the company have revised their EPS estimates downward in the last 90 days, reflecting some uncertainty about nCino’s near-term performance amid a challenging macroeconomic environment.

nCino’s Q1 2024 results showcased resilience, with the company reporting a Non-GAAP EPS of $0.19, surpassing expectations by $0.06.

Revenue for the quarter was $128.09 million, representing a 12.7% year-over-year increase and exceeding analyst expectations by $1.45 million.

The company also reported a Total Remaining Performance Obligation (RPO) of $1.069 billion, up 17% from the previous year, indicating a strong backlog of future revenue.

From a fundamental perspective, nCino appears to be on solid footing.

The company has made significant strides in improving its operational efficiency, as evidenced by a reduction in GAAP operating losses and a substantial increase in non-GAAP operating income.

The Q1 GAAP loss from operations was $3.7 million, a marked improvement from the $8.6 million loss reported in Q1 2023.

Non-GAAP operating income, on the other hand, more than doubled to $24.4 million from $10.9 million in the same period.

nCino’s growth drivers

One of the primary drivers of nCino’s growth is its ability to expand its wallet share with existing customers.

The company has demonstrated a strong ability to cross-sell additional products to its customer base, which not only enhances revenue but also increases customer stickiness.

This is particularly important in the financial technology space, where switching costs can be high once a customer has integrated a platform like nCino’s into their operations.

Historically, nCino has been able to increase the annual contract value of its customers by 1.5x to 2x over the years, underscoring the effectiveness of its cross-selling strategy.

nCino’s market opportunity remains substantial as banks and financial institutions continue to invest in digital transformation. The company’s platform, which unifies various banking processes on a single platform, offers a superior alternative to point solutions that often lack seamless integration.

As banks face increasing pressure to modernize and meet the demands of a younger, tech-savvy customer base, nCino is well-positioned to capture a growing share of this market. According to research by IDC, the banking industry is expected to significantly increase its spending on cloud services, with a projected growth rate of around 20% CAGR through 2027.

Attractive valuation

Valuation is another critical aspect where nCino stands out. According to analysts, despite recent growth concerns, the company’s current valuation offers an attractive entry point for investors.

Using a forward revenue approach, some analysts expect nCino to be worth approximately $40=42 per share, which aligns closely with Goldman’s updated price target.

This valuation is based on conservative growth estimates, assuming a gradual recovery in the economy. If nCino can accelerate its growth beyond these expectations, there is potential for further upside, especially considering the industry averages for cloud technology companies.

Elevated interest rates a challenge

However, risks remain, particularly related to macroeconomic factors. Elevated interest rates and a slowdown in the mortgage industry could impact nCino’s growth trajectory.

Additionally, changes in financial regulations could pose challenges, although nCino’s robust compliance capabilities should help mitigate some of these risks. The company’s ability to navigate these external factors will be crucial in maintaining its growth momentum.

Looking ahead, the upcoming Q2 earnings report will be a key indicator of how well nCino is managing these challenges.

Investors will be closely watching the company’s revenue growth, profitability, and updates on its business pipeline. Any positive surprises in these areas could reinforce the bullish sentiment around the stock.

nCino’s recent business highlights also suggest that the company is making strategic moves to secure long-term growth.

The expansion of its partnership with M&T Bank and the addition of new clients, such as a specialist lender in the UK, highlights the company’s ability to attract and retain large financial institutions.

Now let’s transition to a technical analysis of nCino’s stock, where we will delve into the charts to better understand the stock’s price trajectory and potential upside from here.

Trading in a range

Although nCino’s stock has fallen significantly from the highs above $100 it saw after its IPO in 2020, it has found stability over the past few months. Since June last year, it has been trading in a range between $27 and $35.6.

NCNO chart by TradingView

For the stock to enter an uptrend it will have to break above the upper band of this range and give a weekly closing above it.

However, investors who are bullish on the stock can initiate a small long position at current levels around $33 and add to it if the stock gives a weekly closing above$35.6.

The stop loss for long positions must be set at $26.95.

Traders who have a bearish outlook on the stock have a low-risk entry on their hands currently. They can short the stock near $33.5 with a stop loss at $36.

If the stock continues to remain range-bound, it can again fall and find support near $27, where one can book profits.

The post Goldman Sachs upgrades nCino to Buy with $42 price target: Should you invest? appeared first on Invezz

Dell Technologies Inc. (NYSE: DELL) is in the spotlight today following Wells Fargo’s decision to reduce its price target on the company from $175 to $150, still reflecting a potential upside of 50% from its current price.

This adjustment comes amidst ongoing discussions about Dell’s AI server monetization versus margin concerns. According to Wells Fargo, while the AI server momentum is evident, persistent concerns over the AI server margin profile are casting a shadow over Dell’s near-term profitability.

The analysts also noted that Dell’s recent layoffs of 12,500 employees signify an effort to protect profitability as the company ramps up its AI contributions.

Dell’s focus on AI server monetization is crucial, especially as the company faces mixed demand signals in the traditional server market. AMD has reported positive demand signals, while Intel’s Xeon CPU server shipments declined by 22% year-over-year.

Dell’s traditional server orders, however, have grown year-over-year for two consecutive quarters, indicating some resilience in this segment.

The analysts expect Dell to highlight demand recovery in the second half of 2024, potentially leading to year-over-year revenue growth driven by its Infrastructure Solutions Group (ISG).

Views of other Wall Street firms

On August 13, analysts at Barclays upgraded Dell to an Equal-Weight rating, citing that much of the AI hype that had driven the stock’s earlier performance has now been priced out, reducing downside risk.

Despite ongoing concerns about Dell’s enterprise server and storage businesses, Barclays sees potential for AI to drive top-line growth, even though these AI-related revenues may come at lower margins.

This is particularly important as Dell navigates through a period of margin compression and strives to balance growth with profitability.

On the other hand, Bernstein remains cautiously optimistic about Dell’s potential for near-term AI server upside. In a research note published on August 12, the firm highlighted that while Dell’s first-quarter fiscal 2025 results disappointed relative to high expectations, the potential for AI server revenues to exceed expectations could help alleviate concerns about profitability.

However, there is a risk of a medium-term digestion period in AI infrastructure, which could impact Dell’s growth trajectory.

Q2 earnings expectations

As Dell prepares to report its Q2 2024 earnings on August 30, the consensus among analysts is that the company will post GAAP EPS of $0.92 on revenue of $24.11 billion. This represents an improvement from the previous year’s GAAP EPS of $0.64 on revenue of $23 billion.

However, it’s worth noting that 12 out of the 15 analysts covering Dell have revised their EPS estimates downward in the last 90 days, reflecting cautious sentiment ahead of the earnings release.

Focus on AI

Dell’s recent strategic shift towards prioritizing AI is also evident in its decision to reduce its sales team as the company refocuses its efforts on AI-driven offerings.

According to a memo obtained by Bloomberg, Dell aims to grow faster than the market by streamlining management layers and investing more in AI. This strategic pivot is seen as necessary for Dell to capitalize on the growing demand for AI capabilities in modern IT infrastructure.

From a fundamental perspective, Dell’s business is positioned at a critical juncture. The company’s focus on AI, coupled with its ongoing efforts to enhance its product offerings in the Infrastructure Solutions Group, could provide significant growth opportunities.

However, the company must also contend with challenges such as margin compression in AI servers and the competitive landscape in traditional servers and storage.

Looking ahead, Dell’s ability to navigate the cyclical nature of its business will be key. The company has faced headwinds in its Client Solutions Group, with flat sales in the first quarter of 2024 due to a more competitive pricing environment and an unfavorable product mix.

However, as the IT upgrade cycle progresses, there is potential for growth, particularly in the Infrastructure Solutions Group, where AI-related upgrades and storage demands could drive annual growth in the high teens.

Dell’s long-term growth prospects are closely tied to the broader adoption of AI and the need for data center modernization. The company is well-positioned to benefit from the expanding AI applications, with potential growth areas including hyper-converged infrastructure, software-defined storage, and AI-driven IT consulting solutions.

However, Dell must also manage risks related to economic downturns, intense competition, and supply chain disruptions, which could impact its ability to capitalize on these opportunities.

Valuation

Despite these risks, Dell’s current valuation suggests that the stock is trading near a cyclical low, offering a potential buying opportunity for investors. The company’s focus on AI and the anticipated recovery in its traditional server and storage businesses provide a solid foundation for future growth.

However, investors should remain cautious about the near-term challenges, particularly in terms of margin compression and the competitive landscape.

Despite the challenges, Dell’s forward price-to-earnings (P/E) ratio is lower than the sector median, making it a compelling investment for those who believe in the long-term potential of AI.

Dell’s cash flow positivity, dividend payments, and share buybacks further bolster its investment case, despite a heavier debt load compared to other large-cap AI players.

Now, let’s see what the charts have to say about Dell’s price trajectory and whether the technical indicators align with the fundamental outlook.

Bearish on daily charts

On the daily charts, Dell has made a classic head and shoulders pattern and broken below its neckline support, which indicates that it has entered bearish territory in the medium term.

DELL chart by TradingView

Considering that investors who have a bullish outlook on the company should refrain from buying the stock at current levels. A long position should only be considered if the stock starts trading above its 50-day moving average.

Traders who are bearish on the stock can short it at current levels near $104 with a stop loss above the recent swing high of $116.60. If the bearish momentum prevails it can again fall to its recent swing low near $86 where profits can be booked.

The post Wells Fargo reduces price target on Dell to $150: Time to hold or sell? appeared first on Invezz

Victoria’s Secret & Co (NYSE: VSCO) named Hillary Super its new chief executive on Wednesday.

Investors are cheering the news as Super is a seasoned retail executive who has previously held top positions at the likes of Savage X Genty (music star Rihanna’s fashion line) and Anthropologie.

A 20% increase in VSCO share price this morning suggests the market has confidence in its ability to accelerate growth and improve shareholder value.

Part of the rally in Victoria’s Secret stock is related to the upbeat preliminary quarterly results the lingerie retailer reported today.

Who is Hillary Super the new CEO of Victoria’s Secret?

Hillary Super will assume the top role at Victoria’s Secret on September 9th. Members of the company’s board are confident that her merchant leadership capabilities will help create value.

Martin Water – the departing chief executive will remain with the apparel and beauty retailer as an advisor through August 31st.

Financial and administrative head Timothy TJ Johnson will serve as the interim CEO of Victoria’s Secret through September 8th. According to the company’s press release today:

Now is the right time to take the next step on our journey with new merchant-operator leadership to fully capitalise on the opportunities ahead for VS&CO. The Board will work closely with TJ and the leadership team to ensure a smooth transition.

Shares of Victoria’s Secret are down more than 20% versus their high in mid-February.

Victoria’s Secret second-quarter preliminary results

Victoria’s Secret now expects its adjusted per-share earnings to fall between 34 cents and 39 cents in the second quarter. Analysts, in comparison, were at 16 cents per share only.

The New York listed firm projected up to $62 million in adjusted operating income as well – significantly above $40.7 million that experts had forecast.

VSCO attributed the strength in its second quarter to improved trends in stores as well as digital channels.

Heading into today, Wall Street had a consensus “hold” rating on Victoria’s Secret stock with an average price target of $19.17.

Shares of the retailer are already trading well above that price on Wednesday.

The post Victoria’s Secret stock opened 20% up on Wednesday: what happened? appeared first on Invezz

GoPro (GPRO) stock price collapsed to a record low this week, a tragic situation for a company that was highly popular among investors and traders. It has dropped by more than 65% this year and by over 70% in the past five years. It remains over 90% below its all-time high.

The downfall of GoPro

GoPro is a company that dominates the wearable camera industry. It is a pioneer company that changed an entire industry and is still popular among fans. 

In the past few years, however, demand for its products has waned and some analysts believe that the company could go out of business in the next few years.

To see how low GoPro has fallen, you just need to look at its income statement, which shows that its revenue dropped from over $1.19 billion in 2019 to $1 billion in 2023 and $931 million in the trailing twelve months. 

It has also moved from being a profitable company to one that made a net loss of over $393 million in the trailing twelve months. 

The most recent financial results showed that GoPro’s revenue dropped by 23% in the last quarter to over $186 million. Its net loss for the quarter was $48 million while its gross margin thinned to 30.5% from the previous 31.4%.

GoPro’s revenue dropped during the quarter even after increasing its sales and marketing spend from $39 million to $41 million during the quarter. 

GoPro’s key issues

GoPro’s business faces several issues that explain why it is in trouble. First, it is a one-product company. This means that the company makes most of its money from its Hero Black camera, which starts at $249. Its most expensive camera goes for about $600. It comes with the ability to shoot better videos than its other versions.

Therefore, while GoPro’s cameras are still in demand, most of its buyers see no need of upgrading them unless then they are broken. This is unlike other hardware companies like Apple, which are constantly releasing new versions of its smartphones. 

GoPro has tried to venture into other products in the past. For example, it launched the Karma drone a few years ago and exited the business in 2018 as it faced substantial competition from the likes of DJI and other companies like Autel Robotics, Parrot, and Skydio.

GoPro also launched products like Omni, remote controllers, GoPro Fetch, and GoPro Omni only to discontinue them.

To some extent, being a one-product company has its benefits as it lets companies to refine their strategies and boost their margins. In GoPro’s case, the main challenge is that people don’t replace them often and there are signs that demand is falling. 

GoPro has also worked on becoming a subscription company. Its Premium service costs $50 a year while Premium+ goes for $100. Plus lets users auto-upload their GoPro videos, access unlimited cloud storage for their footage, a big discount for its accessories, and synced mobile and desktop editing. 

The plus offer has all the solutions in the premium package and 500 GB of cloud storage for non-GoPro footage. There are signs that the subscription business is no longer growing as the revenue dropped by 35% in the second quarter to $49 million. 

GoPro would be a good acquisition target

Fundamentally, I believe that GoPro is a good company with beloved products and a leading market share in the industry. However, it would make a good acquisition target either by a company with more products or private equity. 

Garmin is one company that would make sense to own GoPro since it sells similar products in the sports and fitness industries. A company that buys GoPro at the current valuation would be getting it for free. 

Looking at its balance sheet, we see that GoPro has over $133 million in cash and equivalents and $97 million in inventories. Its current assets stand at over $351 million against $238 million in current liabilities, giving it a working capital of $113 million. GoPro’s total debt stands at just $92 million, which can easily be covered by its cash balances. 

The main challenge for GoPro is that it is still losing money as its loss stood at $47 million in the second quarter. In this case, there are ways to save these funds and make it profitable since the company spent $46 million in R&D, 41 million in sales and marketing, and $14.9 million in general and administration. 

Most of these funds could be cut. For example, a company like Garmin can integrate functions in R&D and G&A with its existing operations and slash its operating expenses by more than half. 

What next for the GoPro stock?

The daily chart shows that the GPRO stock price has been in a strong downward trend and is now sitting at its record low. It has remained below all moving averages and recently dropped below the key support at $1.29, its lowest swing in July. 

By moving below that level, it invalidated the double-bottom pattern. Therefore, without a buyout, the stock will likely continue falling and could crash below $1.

The post GoPro stock price is a bargain for the right buyer appeared first on Invezz

Micron stock looks relatively flat in the last year when one looks at the stock price. However, the stock has had its fair share of volatility.

At one point, it was up over 85% for the and after the peak in June, it went down as much as 40%.

The volatility wasn’t just restricted to Micron. Other tech stocks faced a similar fate, especially ones related to the semiconductor industry.

However, there was an overreaction in Micron’s case which makes it worth taking a deeper look at the stock.

Despite that volatility, there doesn’t seem to be much wrong with the fundamentals of the company.

The Q3 earnings showed a healthy performance, with the revenue nearly doubling YoY to $6.81 billion.

The sell-off was partly because of a guidance that was as per analyst estimates while most people were expecting improved guidance.

Growing with Nvidia

Nvidia’s latest Blackwell AI systems use about 33% more HBM(High Bandwidth Memory) content. This gives Micron a unique advantage as it provides the HBM to Nvidia. In other words, as Nvidia grows, Micron grows.

Micron’s 2024 capacity for HBM was already sold out a few months ago. And most of its 2025 supply is also already booked. This gives the company the pricing power to gain from future growth in the segment.

Growth in the data storage market

The worldwide data storage market is currently valued at just about $220 billion. However, thanks mainly to generative AI, this market is expected to reach $774 billion by 2032.

This is a CAGR of 17.1% and Micron is well-poised to take a good chunk of this growth.

As with any market segment providing infrastructure for AI, this growth is coming from investments in data centers.

After Covid, companies are looking at agile ways of storing their data so data centers rely on cloud storage providers for storage.

Moreover, generative AI models have prompted companies to reevaluate their storage architectures to store the vast amount of new and complex data that is created. All this investment is likely to help the data storage market grow.

Is the stock a buy?

Micron stock is down 36% from its recent highs hit just in June. The stock has certainly over-corrected, which is one reason why it is at a much more attractive valuation currently.

Source: TradingView

Nvidia stock also had a similar downturn, however, the most dominant chip stock in the industry did not take much time to recover more than half of those losses.

The over-correction puts Micron in an interesting position and even though it is not the market leader in AI, its stock is poised to surge once future investments in AI trickle down to its bottom line.

It is therefore a better buy in the current scenario than Nvidia.

The post Micron vs. Nvidia: why Micron might be the smarter AI investment appeared first on Invezz