B.I.G. Tips – Death by Amazon – 2/9/24

Feb 9, 2024

In this note we update performance of our “Death By Amazon” and “Amazon Survivors” indices. The index of stocks that are exposed to Amazon’s business model have traded more or less in lock step with the market over the past two years. That’s a big contrast with the prior decade when they either outperformed or underperformed pretty dramatically.

The same can’t be said for our “Amazon Survivors” names which are intended to capture stocks which are resilient to the rise of Amazon’s monster e-commerce business despite competing with it. This index has generally outperformed the market as a whole.

Both flavors of index have outperformed Amazon significantly over the past five months or so. During that period, the market has broadly rallied even though large tech names like Amazon have sunk to the lowest levels of the equity bear market.

Our “Death By Amazon” index was created many years ago to provide investors with a list of retailers we view as vulnerable to competition from e-commerce.  In 2016, we also created our “Amazon Survivors” index which is made up of companies that look more capable of dealing with the threat from online shopping.  To see how the two indices have been performing lately and view the full list of stocks that make up the indices, please read our newest report on the subject available to Bespoke Premium and Bespoke Institutional members.

To unlock our “Death By Amazon” and “Amazon Survivors” indices, login or start a two-week free trial to either Bespoke Premium or Bespoke Institutional.

B.I.G. Tips – Q4 Seasonal Earnings

Jan 22, 2024

In last week’s Bespoke Report, we provided a rundown of the just-started earnings season.  As discussed, the pace of earnings ramps up significantly this week as there are over 100 members of the Russell 1,000 scheduled to report including the first of the mega-caps.  In the table from last Friday’s report below, we show those Russell 1,000 members with market caps over $100 billion that are scheduled to report this week.  The two largest of these are Tesla (TSLA) and Visa (V) which are due to report on Wednesday and Thursday after the close, respectively. Of the list below, there are several interesting seasonal earnings trends in which the current Q4 reporting period has historically been the best or worst quarter of the year for stock price reactions.

Starting with the good news, below is a screenshot from our Earnings Explorer tool for the “N” in FAANG: Netflix (NFLX). The streaming giant has typically averaged declines in reaction to Q1, Q2, and Q3 earnings, but then Q4 is the lone quarter where the stock has averaged a gain on its earnings reaction day. It hasn’t been a small gain either, averaging over 9% for the full day.  Of course, it is worth mentioning that overall NFLX has historically been one of the most volatile stocks on earnings with an average absolute move of 12.18% for all quarters.  This week’s report is on the back of a Q3 earnings report in October that saw the stock rally an impressive 16% in response. Amazingly, that only ranks as the 14th strongest reaction on record!

Before NFLX reports Tuesday night, Raytheon (RTX) will kick things off Tuesday morning.  Like NFLX, RTX has not been a particularly strong stock in reaction to earnings except for the response to its Q4 report.  As shown below, over the past four years since Raytheon merged with United Technology, RTX has risen in reaction to every single Q4 report for an average gain of 2.41%.

There are several other stocks in which Q4 is the best or worst quarter for earnings.  Sign up for a 14-day free trial to Bespoke Institutional today to view the rest of this list.  In addition, you’ll gain full access to the entirety of our research catalog including the Earnings Explorer tool, the Morning Lineup, B.I.G. Tips reports, the Closer, and much more.