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Palantir Technologies Inc. (PLTR), a leading data analytics company, last week announced a one-year extension of its partnership with the U.S. Army’s Program Executive Office for Enterprise Information Systems (PEO EIS) to continue powering the Army Vantage data-driven operations and decision-making platform.
The value of the contract, inclusive of options, is $155.04 million, with $97.35 million awarded and $35.60 million in initial funding. Following this news, PLTR stock briefly traded higher on Friday.
The Vantage program is a keystone in the U.S. Army’s transformative efforts to leverage data as a strategic asset, integrating data sources from within the Army and across the Department of Defense (DoD) to offer a real-time operational enterprise data ecosystem.
Under the extended agreement, PLTR will continue to provide its open data and analytics platform through the delivery of new AI-enabled capabilities and open platform infrastructures that advance the program’s evolution to the Army Data Platform vision.
Akash Jain, President of Palantir USG, said, “Building on our shared history of operational excellence and innovation, our partnership has consistently provided the Army with a decisive edge in data-driven decision-making. This extension is evidence of the value we bring to the nation’s defense, including our joint efforts to provide more commercial technology providers the opportunity to equip soldiers with the innovation they need to meet their most pressing challenges.”
Palantir, which obtains a significant portion of its revenue through government contracts, will benefit considerably from this extension of its pivotal partnership with the U.S. Army’s Vantage Program.
Following this news, BofA analyst Mariana Perez Mora maintained a Buy rating and price target of $21 on PLTR’s stock, stating that this one-year extension was unexpected.
Mora said, “The up to $115mn contract extension is in line with the annualized rate of the original contract award ($458mn), slightly below the annualized actual action obligation ($480mn) and 15% higher than Option year 2/3 average obligations. $35.6mn were obligated at the time of the award.”
“We think that PLTR has a strong position to remain a key provider of data engineering & orchestration capabilities in a growing data-centric operational strategy. The recent contract extension and the fact that PLTR can add AIP capabilities to existing offerings support our thesis,” she added.
On the contrary, William Blair analyst Louie DiPalma maintained a bearish stance on the stock, keeping an Underperform rating.
DiPalma said in a note last Friday that shares of PLTR “may start to reflect reality over the next three months once it is fully digested that the U.S. Army last night only awarded Palantir a short-term, one-year $115 million ceiling extension for Palantir’s second-largest contract on its books, the U.S. Army Vantage program.”
“When the Army originally gave Palantir the Vantage contract in December 2019, it awarded Palantir a $458 million four-year deal,” he stated. “That deal ended yesterday.”
“Not only was the duration for the new contract reduced, but the max annual run-rate was even slightly downsized from the prior $116 million revenue run-rate,” the analyst added. “Palantir will likely not even receive the $115 million as the Army announcement indicated that is just a ceiling value. The Army has a track record of only awarding Palantir less than 60% of the potential value of ceiling contracts, with Project Maven, CD1, and CD2 as prominent examples.”
PLTR’s stock has surged more than 165% year-to-date. However, the stock has plunged nearly 18% over the past month.
Let’s discuss the key factors that could impact PLTR’s performance in the near term:
Solid Last Reported Financials
For the third quarter that ended September 30, 2023, PLTR reported revenue of $558.16 million, beating analysts’ estimate of $555.92 million. This compared to the revenue of $477.88 million in the same quarter of 2022. The company’s commercial revenue rose 23% year-over-year, while its government revenue rose 12%. Its gross profit grew 21.6% year-over-year to $450.24 million.
PLTR’s customer count was 34% up year-over-year. Its U.S. commercial customer count rose 37% from the year-ago value, from 132 customers in the third quarter of 2022 to 181 customers in the third quarter of this year.
The reacceleration in the growth of the company’s U.S. commercial business is aided by the surging demand that it is witnessing from its new Artificial Intelligence Platform (AIP), which was released only months ago.  
The data analytics firm’s adjusted income from operations came in at $163.27 million, an increase of 101% from the prior year’s quarter, and represented a margin of 29%. This is the fourth consecutive quarter of expanding adjusted operation margins. PLTR’s adjusted EBITDA was $171.94 million, up 97.2% year-over-year.
Palantir’s adjusted net income attributable to common stockholders increased 864.3% from the prior year’s period to $155.02 million. The company posted an adjusted EPS of $0.07, compared to the consensus estimate of $0.07, and up 95.7% year-over-year.
Furthermore, PLTR’s free cash flow stood at $140.85 million, an increase of 285.2% from the same period last year. As of September 30, 2023, the company’s total assets were $4.19 billion, compared to $3.46 billion as of December 31, 2022.
The software maker’s third-quarter results mark its fourth consecutive quarter of profitability, meaning it is eligible for inclusion in the S&P 500. PLTR reported its first profitable quarter in February this year.
Upbeat Full-Year 2023 Guidance
After outstanding third-quarter results, Palantir raised its revenue guidance to between $2.216 billion and $2.220 billion. Also, the company increased its adjusted income from operations guidance to between $607 million and $611 million.
For the fourth quarter of 2023, PLTR’s revenue is expected to be between $599 million and $603 million. The software company anticipates its quarterly adjusted income from operations of $184-$188 million.
Revenue Growth Slowed Over Years
PLTR’s revenue grew by 47% in 2020 and 41% in 2021, with an initial forecast of at least 30% annual growth through 2025. However, in 2022, the company’s revenue growth slowed to 24%. This year, management expects a further dip with nearly 16% growth. Uneven government contract timing and other macroeconomic challenges impacted the software marker’s growth.
Benefitting From the AI Boom
In June this year, Palantir launched its Artificial Intelligence Platform (AIP), which has proven to be highly successful among corporations. This AI platform significantly enhances its existing data analytics platform along with its machine learning technologies.
Users of PLTR’s AI platform almost tripled in the July-September period, Chief Revenue Officer Ryan Taylor said.
In the five months since its launch, more than 300 organizations have signed up to use the company’s AIP. Also, Palantir is experiencing strong interest in the “bootcamps” it launched in October to provide clients access to its AI platform for one to five days, which is a positive sign for future solid demand.
According to Bloomberg Intelligence, Generative AI is expected to become a $1.30 trillion market by 2032, growing at a CAGR of 42% over the next ten years. Increasing demand for generative AI products could add around $280 billion of new software revenue.
Thus, PLTR is aggressively investing in AI to capitalize on this robust demand.
Favorable Analyst Estimates  
Analysts expect PLTR’s revenue to grow 18.5% year-over-year to $602.79 million for the fourth quarter ending December 2023. The company’s EPS for the ongoing quarter is expected to grow 89.8% year-over-year to $0.08. Additionally, the company topped the consensus revenue and EPS estimates in three of the trailing four quarters, which is impressive.
For the fiscal year 2023, Street expects Palantir’s revenue and EPS to increase 16.5% and 312.4% year-over-year to $2.22 billion and $0.25, respectively. Also, the company’s revenue and EPS for fiscal year 2024 are expected to grow 19.7% and 18.7% year-over-year to $2.66 billion and $0.29, respectively.
Mixed Profitability
PLTR’s trailing-12-month gross profit margin of 79.92% is 63.5% higher than the industry average of 48.88%. Its trailing-13-month net income margin of 3.25% is 195.5% higher than the industry average of 2.35%. Moreover, the stock’s ROCE and ROTA of 5.28% and 3.51% are considerably higher than the respective industry averages of 1.11% and 0.15%.
However, the stock’s trailing-12-month EBITDA margin of 1.71% is 64.3% lower than the 4.78% industry average. PLTR’s trailing-12-month ROTC of 0.74% is 71.5% lower than the industry average of 2.60%.
Elevated Valuation
In terms of forward non-GAAP P/E, PLTR is currently trading at 69.72x, 187% higher than the industry average of 24.30x. Also, the stock’s forward EV/Sales and EV/EBITDA of 15.57x and 54.13x are significantly higher than the industry averages of 2,89x and 15.69x, respectively.
In addition, the stock’s forward Price/Sales multiple of 16.91 is 475.8% higher than the respective industry average of 2.94. Its forward Price/Cash Flow of 66.97x is 199.7% higher than the industry average of 22.35x.
Bottom Line
PLTR beat analysts’ estimates on top and bottom lines in the third quarter of 2023. The company delivered a fourth straight quarterly profit on rising demand for its data analytics services from corporates. Moreover, the software marker’s AI offerings would aid its growth in the future.
After impressive third-quarter results, Palantir raised its revenue guidance for the full year 2023. Despite this, the company’s revenue growth slowed down over the years, from 47% in 2020 to nearly 16%, as management anticipated for this year. Also, government revenue rose 12% year-over-year in the third quarter, below the 13% recorded in the prior year.
The company blamed budgeting constraints at the government level but stated it remains optimistic about demand considering geopolitical tensions.
Recently, the data analysis firm announced that another year was added to its Vantage contract with the U.S. Army, and this extension would provide PLTR with as much as $115 million.
Following this news, analysts are divided on the impact, with William Blair analyst maintaining his long-held bearish view on the stock. On the other hand, BofA analysts maintained a Buy rating on the PLTR stock, citing that this unexpected contract extension should bode well for the company.
Given its stretched valuation, mixed profitability, and uncertain near-term prospects, it could be wise to wait for a better entry point in this stock.
 

The swift acceleration of pioneering technologies, coupled with a remarkable upswing in digital growth, has notably amplified the allure of customized hardware solutions. However, not all technology hardware firms are enjoying these benefits.
Tech behemoth Apple, Inc. (AAPL), known for revolutionizing numerous product sectors, encompassing personal computers, smartphones, and tablets – added another milestone by becoming the first company ever to surpass a market cap of $3 trillion.
In March, AAPL’s CEO Tim Cook belonged to the pioneering group of international executives to engage Beijing’s high-ranking officials following the relaxation of COVID-19 restrictions. Cook lauded the mutual enrichment of both the company and China, characterizing their relationship as “symbiotic.”
Half a year later, in September, this association was showing signs of tension. AAPL found itself navigating through new competitive challenges within China, which was its major manufacturing base and its most significant international market.
In September, AAPL experienced a stock sell-off that slashed almost $200 billion from its market cap. This followed revelations that multiple government departments had inflicted bans on AAPL product usage within government agencies and state-owned enterprises. The doubts encircling AAPL’s future production and sales in China have triggered a considerable decline in its stock value.
AAPL’s China problem could be intensifying as the Chinese government purportedly broadens its stringent measures against the iPhone. Governmental agencies and state-backed firms across at least eight provinces in China have recently directed their staff to transition away from foreign electronics and adopt local Chinese brands instead.
This shift has accelerated in the last couple of months, indicating a significant rise from the September situation. If this trend continues, it may negatively impact AAPL’s sales in China, which accounted for about 16% of its revenue in the fiscal fourth quarter that ended September 30, 2023. This situation could position AAPL’s operations, especially its key product, the iPhone, under close watch in the country.
Fueling a broader initiative by China to reduce dependency on American technology, this intensified effort promotes well-known Chinese brands such as Huawei Technologies Co. Chinese software and hardware products have steadily replaced their American counterparts over the years, including software from Microsoft, computers from Dell, and chips from Intel. However, these new regulations are now likely to affect AAPL’s market dominance within China directly.
The effects of the recent ban are reflected in AAPL’s financial results for the fiscal fourth quarter that ended on September 30, 2023. The company’s total net sales reached $89.50 billion, indicating a marginal year-on-year decline. Notably, net sales within Greater China for the quarter dipped slightly by 2.5%. Its net income grew 10.8% from the prior-year quarter to $22.96 billion.
For the fiscal year of 2023 ended on September 30, 2023, AAPL witnessed a 2.8% drop in annual revenue, standing at $383.29 billion. This represents a downward trend across the past four quarters, consistently recording a slump in sales. Additionally, the iPhone maker is trailing behind local Chinese competitors Huawei and Xiaomi, posting sales boosts of 66% and 28%, respectively.
A significant factor contributing to AAPL’s underwhelming performance is the turbulence experienced in previous quarters. The company suffered from factory disruptions that endured over several periods, with the tacit demand created by these disruptions subsequently met the following quarter, creating an anomalously high baseline effect. Amid the macroeconomic fluctuations of the September 2023 quarter, AAPL also dealt with various foreign exchange challenges.
On the brighter side, apart from cornering the premium tech market, APPL has earned its stake with one of the most substantial capital return frameworks. In fiscal 2023, AAPL repurchased $77.55 billion worth of AAPL shares. Over the past ten years, the stock buyback program has facilitated a record-breaking $604 billion.
Against the average P/E ratio of 24.49x in the tech sector, AAPL stands at 30.03x. The company continually improves its P/E ratio by consistently reducing the number of its outstanding shares.
AAPL’s share value has escalated over 11 times over the past ten years, with gross profit increasing by 2.6x since 2013, approximately 1.3x from buybacks, and threefold due to P/E multiple expansion. This growth may not be readily apparent given the already inflated multiple.
Investors can bank on the continuity of buybacks as long as the cash flow remains robust. However, it prompts a crucial question: What will become of the shares in a financially unstable year when the cash flows are disrupted, customer sentiment sours, and the company lacks the $90 billion in buybacks fortifying the share price?
Mixed Outlook
The tech giant issued a warning in November that it did not foresee any growth in annual revenue for the crucial December quarter, which represents the first complete quarter incorporating iPhone 15 sales.
For the first quarter ending December 2023, its revenue and EPS are expected to increase 1% and 11.6% year-over-year to $118.19 billion and $2.10, respectively. For the fiscal year ending September 2024, its revenue and EPS are expected to increase 3.6% and 7% year-over-year to $397.18 billion and $6.56, respectively.
Wall Street analysts expect the stock to reach $202.18 in the upcoming 12 months, indicating a potential upside of 3.8%. The price target ranges from a low of $150 to a high of $250.
Bottom Line
Investors perceive AAPL as a solid financial bastion characterized by impressive cash flow, global demand for its product portfolio, and robust shareholder return schemes despite grappling with decelerating growth and challenges in the Chinese market.
In December, the company reclaimed its $3 trillion market cap, a milestone not seen in roughly four months. Significantly outpacing the general S&P 500 index this year, the company’s shares are poised to yield their highest annual returns since 2020.
However, 2023 has presented a series of macroeconomic challenges for AAPL, particularly impacting consumer tech spending patterns. The most significant obstacle was foreign exchange headwinds, which played a considerable role in dampening the firm’s revenue during the fiscal year of 2023 that ended in September.
Nonetheless, it is worth recognizing a potential reversal of fortune. AAPL saw a 4% decrease in its revenues year-over-year for the first half of fiscal 2023; these losses tapered to only a 1% fall in the second half, signaling improving revenue trends moving forward.
The most recent actions by China signify a continuation of a long-standing campaign to eliminate foreign technology in sensitive sectors, in line with China’s ambitions to achieve self-reliance in key industries. What remains uncertain is the extent to which China intends to resist the implementation of AAPL’s products domestically.
Primarily, AAPL sources most of their iPhones from Chinese factories managed by suppliers such as Foxconn Technology Group, which employs millions of Chinese citizens. However, amid these developments aiming to control iPhone usage, AAPL has gradually shifted its production hub to alternative countries, including India, and may consider reducing its output in China further due to these new constraints.
Additionally, AAPL is expected to launch its groundbreaking Vision Pro virtual reality headset next year – its first significant computing platform since it introduced the Apple Watch in 2014. The impact of this innovation on near-term performance is yet to be determined.
AAPL, traditionally a hardware company, now faces the challenge of innovating within its lineup of smartphones, tablets, and other electronic devices. Despite these challenges, the tech giant is well-positioned to outshine its industry competitors in the upcoming year, owing to the robust performance of its services segment. This division, encompassing Apple Pay, subscription-based offerings, and licensing fees, continues to yield consistent revenue, underscoring the resilience and diversified strength of AAPL’s business model.
AAPL’s PEG ratio is 3.29x, which by standard measure is deemed to be expensive as any value surpassing 2x is considered high. Further, the Price/Cash Flow ratio is pegged at an elevated 24.76x. These metrics simply reflect an overvaluation of the company’s shares.
In conjunction with these inflated valuations, the projected growth rate over the next five years is a mere 6.14%. Such conditions could suggest inevitable losses at some stage. Those considering investment now run the risk of experiencing significant losses.
Therefore, it could be wise to wait for a better entry point in the stock.

Following the conclusion of the Consumer Price Index report and the Federal Reserve meeting, we are approaching the last major “liquidity event” of the year: the annual reconstitution of the Nasdaq 100 Index.
In the latest annual reconstitution of the index, floundering e-commerce giant eBay Inc. (EBAY) has seen its spot given to the thriving food delivery service DoorDash, Inc. (DASH). The respective removal and addition will take effect before the commencement of trading on December 18, 2023.
Inclusion within the Nasdaq-100 Index is significant for stocks as it is a reference point for numerous financial products, encompassing options, futures, and funds. Portfolio managers, maintaining portfolios synced with the index, purchase shares in the same proportion included in the index. The addition of stocks is dictated by market capitalization and trade volume. The removal indicates a shift in favor of other companies that met these criteria more closely.
The annual reconstitution aligns with another significant trading occurrence known as triple witching, a quarterly phenomenon marking the expiration of stock options, index options, and futures.
This period provides an invaluable opportunity for the trading community to transfer substantial stock quantities during the final burst of tax loss harvesting or strategically position themselves for the coming year. There will typically be a 30%-40% decrease in trading volume in the year’s last two weeks post-triple witching, with noteworthy volume largely limited to the final trading day.
While all this may seem of mere scholarly curiosity, the recent surge in passive index investing over the past two decades has heightened the importance of these events to investors.
Adjustments to these indexes, whether through additions or deletions, share count alterations, or changes in weightings to lower the dominance of large companies, initiate substantial monetary transfers into and out of mutual funds and ETFs directly or indirectly associated with these indexes.
Invesco QQQ Trust (QQQ) is emblematic of these changes due to its strategic linking with the Nasdaq-100, which lists the 100 largest nonfinancial companies on the Nasdaq. The QQQ fund ranks as the fifth-largest ETF, overseeing approximately $220 billion in managed assets.
Given this backdrop, let’s delve into an in-depth analysis of DASH and EBAY stocks and find out what’s in store for them in 2024.
DoorDash, Inc. (DASH)
DASH, a prominent American food delivery provider, has recently garnered attention for various developments attracting investor interest. A key factor is a surge in the company’s share value following an impressive earnings report, largely fueled by its deliberate extension beyond customary restaurant delivery services.
The ongoing favorable momentum has been additionally strengthened by the release that DASH is set to feature on the Nasdaq-100 Index. This indicates the company’s burgeoning prominence and fortifying position within the industry.
In the fiscal third quarter that ended September 30, 2023, the company reported a surge in revenues by 27.2% year-over-year to a whopping $2.16 billion, surpassing the consensus mark.
This considerable growth is attributed to the robust performance across total orders and Marketplace GOV, along with refined logistics efficiency and growing advertising contributions. Total orders increased 23.7% year-over-year to 543 million, while Marketplace GOV increased 23.8% from the year-ago quarter to $16.75 billion.
Looking forward to the fiscal fourth quarter ending December 2023, the company projects its Marketplace GOV to range between $17 billion and $17.4 billion. Meanwhile, the adjusted EBITDA is expected to stand between $320 million and $380 million. It is noteworthy that DASH plans significant, ongoing investments in the future as it seeks to broaden its service offerings.
After these results, DASH shares saw a rise of over 7.5% during after-hours trading, signaling investor confidence. The post-earnings rally of DASH shares bears testament to the company’s financial wellness and effective strategies to diversify its revenue sources. Its deliberate shift beyond restaurants to include delivery services for groceries, alcohol, and other items has appealed to its consumer base, attracting investors along the way.
The exceeding market expectations with its earnings report indicates that the company’s growth strategies produce measurable outcomes crucial to maintaining long-term investor trust.
For the fiscal fourth quarter ending December 2023, analysts anticipate its revenue to increase 24.1% year-over-year to $2.26 billion, while EPS is expected to come at $0.55.
In a rare and strategically significant decision, the firm transitioned from the NYSE to the Nasdaq in September 2023, signifying its positioning and businesses centered on innovative technology. DASH’s CFO Ravi Inukonda said, “We are delighted to join a community of leading technology companies with our transfer to Nasdaq.”
This momentous shift, further strengthened by the company’s recent inclusion in the Nasdaq 100, has the potential to amplify investor trust, possibly driving increased market capitalization in forthcoming years.
The Nasdaq-100 Index, encompassing some of the most prodigious and influential entities within the technology and innovation domains, has recently acknowledged DASH’s escalating prominence via its inclusion.
This inclusion is traditionally followed by a surge in the demand for the company’s shares, initiated by funds tethered to the Nasdaq-100 that are now obliged to purchase stock in DASH. Historical examples corroborate the potential for such inclusion, triggering an upswing in stock prices.
This development also endorses the recognition of DASH for its stellar scalability, incessant innovation, and adeptness at market adaptation – qualities seen as ideal for corporations represented in the technology-centric benchmark. It simultaneously alludes to a transformation in market dynamics and the arrangement of the tech industry, where DASH’s operating model aligns better with extant and prospective market trajectories.
From the investors’ perspective, such an inclusion might be interpreted as a portent of persistent growth, inciting a reevaluation of their investment portfolios. The acknowledgment from Nasdaq will likely draw a more diversified range of investors, like institutional investors, potentially augmenting liquidity and raising visibility for DASH shares.
However, investors should be aware of the stark competition and the intrinsic risks inherent to the rapidly evolving delivery market, characteristic features of which comprise regulatory hurdles and the compulsory need for uninterrupted innovation.
eBay Inc. (EBAY)
EBAY is grappling with intensified competition from e-commerce contemporaries and macroeconomic hurdles. In the fiscal third quarter that ended September 30, 2023, its profit was $1.03 per share, and sales stood at $2.50 billion, aligning with analyst estimates.
Gross merchandise volume, the value of all goods sold on EBAY, increased 1.6% to $17.99 billion in the quarter, surpassing analysts’ average estimates of $17.72 billion. The company reported 132 million active buyers in the quarter, down 2.2% year-over-year. Its advertising revenue of $366 million fell short of analysts’ estimates.
EBAY’s recent sales forecast for the upcoming holiday period has dispirited investors. Revenues for the current quarter are anticipated to be between $2.47 billion and $2.53 billion. Even though the figure seems healthy, it falls below the industry analysts’ average projections of $2.60 billion. The company expects EPS between $1 and $1.05 in the quarter ending in December, below the analysts’ $1.05 estimate.
EBAY’s gloomy revenue outlook for the traditionally profitable holiday season implies persisting struggles in maintaining customer loyalty against fierce rivalry from larger competitors. Projected U.S. online sales are expected to swell by 4.8% during the holiday period of November 1 to December 31. However, EBAY faces a steep climb in attracting consumers. To confront these obstacles, the organization intends to heighten its cost-efficiency to preserve profit margins and earnings.
The unexpected forecast shocked the financial arena, particularly unnerving EBAY investors. Following the disclosure, EBAY’s shares plummeted significantly, highlighting the extensive expectations investors harbor for the company owing to its dominant e-commerce standing.
For the fiscal fourth quarter ending December 2023, analysts anticipate its revenue to decrease marginally year-over-year to $2.51 billion, while EPS is expected to decline 4.2% year-over-year to $1.02.
Additionally, EBAY’s exclusion from the Nasdaq-100 Index indicates its diminishing influence and an uncertain long-term business outlook. The removal might weigh the company’s stock price, leading to diminished appeal and demand among investors who actively follow or invest in the index. Concurrently, index funds mirroring the Nasdaq-100 could divest their EBAY shares in favor of newly added stocks, thereby increasing selling pressure on EBAY.
The removal could reflect diminished market confidence in EBAY’s performance and growth trajectory, particularly when benchmarked against its e-commerce competitors.
However, this shift also presents EBAY with a unique opportunity for introspection and strategic reassessment. To secure its industry competitiveness, it becomes imperative for the company to acclimate to evolving market dynamics and align itself with investor anticipations.
Despite these potential impacts, the actual effect of this reconstitution might not be significantly detrimental or enduring, as EBAY’s infrastructural foundations and market positioning do not stand directly compromised by the reordering.
In addition, EBAY could potentially harness certain favorable factors to its advantage. These include an uptick in retail activity during the holiday season, the broadening reach of its managed payment service, and robust growth within its classifieds and advertising segments.

Spotify Technology S.A. (SPOT) recently announced that its CFO, Paul Vogel, will step down from his position after eight years of service at the music streaming giant. Vogel, who joined Spotify in 2016 as head of investor relations before taking over the CFO role in 2020, will exit on March 31, 2024. This news came just days after the company announced its third round of layoffs for 2023.
“Spotify has embarked on an evolution over the last two years to bring our spending more in line with market expectations while also funding the significant growth opportunities we continue to identify. I’ve talked a lot with Paul about the need to balance these two objectives carefully. Over time, we’ve come to the conclusion that Spotify is entering a new phase and needs a CFO with a different mix of experiences,” SPOT’s CEO Daniel Ek said in a release announcing Vogel’s exit.
In the announcement, Ek reiterated that the company remains on track to deliver against the targets outlined on its Investor Day.
The music streaming company launched an external search for Vogel’s successor. Ben Kung, vice president of financial planning and analysis, will take on expanded responsibilities to support the company’s financial leadership team’s realignment in the interim.
Organizational Changes
Earlier this month, SPOT announced laying off 17% of its workforce, aiming to lower its costs while focusing on its profitability.
In an email sent to employees posted on the company’s blog, Spotify’s CEO said that the job cuts are part of a “strategic reorientation.” The post didn’t specify the exact number of roles affected by the measure, but a spokesperson confirmed that it amounts to nearly 1,500 people.
The company added that it had used cheap financing to expand the business and “invested significantly” in employees, content, and marketing over the years 2020 and 2021. However, Ek indicated that Spotify got caught out as central banks began hiking interest rates last year, leading to slow economic growth. The music streaming service had to “rightsize” its costs for a new economic reality.
“Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business – one designed to achieve our goal of being the world’s leading audio company and one that will consistently drive profitability and growth into the future,” Ek said in an internal memo shared on SPOT’s website.
“While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”
Stockholm-based music streaming giant reported a loss of €462 million ($499.21 million) for the first nine months ended September 2023.
Spotify slashed 6% of its workforce, or about 600 employees, at the beginning of 2023. Then, in June, the company cut staff by another 2%, roughly 200 roles, primarily in its podcast division.  
Shortly after the latest round of layoffs was announced on December 4, SPOT’s stock surged nearly 8%.
Top Execs Continue Stock Sales
As the value of Spotify soared after the announcement of laying off almost a fifth of its workforce to cut costs, one of its top executives cashed in more than $9 million in shares.
On December 5, Paul Vogel, Spotify’s CFO, moved to sell more than $9.4 million worth of stock, according to securities filings. Also, two other senior executives cashed in approximately $1.6 million in shares, the Guardian reported.
Solid Last Reported Financials
SPOT reported a surprise profit for the third quarter that ended September 30, 2023, its first quarterly profit in a year and a half, as the music streaming platform’s price increases and cost-cutting measures began to take effect.
Spotify reported a third-quarter net income of €65 million ($70.24 million), or €0.33 ($0.36) per share, compared to a net loss of €166 million ($179.37 million), or €0.99 ($1.07) per share in the prior year’s period, respectively. It’s a significant beat, given analysts had estimated a loss of $0.21 per share. The company posted a profit, driven by “lower marketing spend and lower personnel costs and related costs.”
The company’s revenue was €3.36 billion ($3.63 billion), up 10.6% year-over-year. This is compared to the consensus estimate of $3.55 billion. Its gross profit grew 18% from the year-ago value to €885 million ($956.29 million). Furthermore, its operating income came in at €32 million ($34.58 million), compared to an operating loss of €228 million ($246.37 million) in the same quarter of 2022.
The Swedish music streaming giant raised the prices of its subscription plans earlier this year, increasing the monthly bill for users from nearly $1 to $2, depending on the plan. In its third-quarter earnings report, SPOT said “the early effects of price increases” were partially responsible for the 11% year-over-year revenue growth.
Spotify had 574 million monthly active users in the third quarter, an increase of 2% and 2 million ahead of its guidance. Also, its subscribers rose 16% year-over-year to 226 million.
Mixed Historical Growth
SPOT’s revenue has grown at a CAGR of 19% over the past three years. The company’s total assets have increased at a CAGR of 9.6% over the same timeframe, while its levered free cash flow has grown at a 138% CAGR. However, its tangible book value has declined at a CAGR of 21.6%.
Mixed Analyst Estimates  
Analysts expect SPOT’s revenue to grow 17.1% year-over-year to $4 billion for the fourth quarter ending December 2023. The company is expected to report a loss per share of $0.04 for the ongoing quarter. Additionally, the company missed the consensus revenue EPS estimates in three of the trailing four quarters, which is disappointing.
For the fiscal year 2023, Street expects SPOT’s revenue to increase 13.1% year-over-year to $14.33 billion. Also, the company’s revenue for fiscal year 2024 is expected to grow 17.3% year-over-year to $16.81 billion. However, its EPS is estimated to remain negative for at least two fiscal years.
Decelerating Profitability
SPOT’s trailing-12-month gross profit margin of 25.69% is 47.7% lower than the industry average of 49.13%. Its trailing-13-month EBITDA margin and net income margin of negative 2.84% and negative 5.74% compare to the respective industry averages of 18.71% and 5.74%.
Further, the stock’s trailing-12-month levered FCF margin of 1.35% is 82.8% lower than the 7.82% industry average. SPOT’s trailing-12-month ROCE, ROTC, and ROTA of negative 33.49%, negative 6.31%, and negative 9.64% are compared unfavorably to the industry averages of 3.41%, 3.38%, and 1.24%, respectively.
Elevated Valuation
In terms of forward EV/Sales, SPOT is currently trading at 2.57x, 44% higher than the industry average of 1.79x. Also, the stock’s forward Price/Sales and Price/Book of 2.71x and 15.53x are significantly higher than the industry averages of 1.14x and 1.82x, respectively.
Also, the stock’s forward Price/Cash Flow multiple of 90.62 is 845.7% higher than the respective industry average of 9.58.
Stock Downgrade
On December 1, Citigroup downgraded SPOT’s stock from “Buy” to “Neutral,” with its analyst Jason Bazinet citing revenue and user retention concerns. With significant changes in the company’s business model, from subscription price increases and an emphasis on developing podcasting content, there is uncertainty about the effectiveness of these strategies.
Bottom Line
SPOT’s fiscal 2023 third-quarter earnings beat analyst expectations on the top and bottom lines. Despite posting a surprise profit in the last reported quarter, the company recently announced the third round of layoffs for 2023.
Just days after mass layoffs, Spotify announced that its CFO Paul Vogel will step down after eight years of service at the company. Following a share price surge set in motion by an announcement of job cuts, top SPOT exes, including Vogel, continue to sell shares.
The recent layoffs and other cost-cutting measures align with the company’s broader strategy for financial sustainability. While several organizational changes at SPOT may prove fruitful in the long run, the company’s near-term prospects appear uncertain. Street expects the company to report losses for at least two fiscal years.
Even analysts at Citi raised questions about the effectiveness of the strategies, including major changes in SPOT’s business model, from subscription price increases to an increased focus on developing podcasting content.
Given its lower-than-industry profitability, stretched valuation, and uncertain near-term outlook, it could be wise to wait for a better entry point in this stock.

Airbnb, Inc. (ABNB) CEO and Chairman Brian Chesky sold 84,144 shares on December 5. The shares were sold at prices ranging from $132.89 to $135.68, for a total value of nearly $11.31 million. Following the sale, the CEO now owns 15.9 million shares of ABNB. The transaction was disclosed in a legal filing with the SEC.
Also, Brian Chesky made other trades recently. On November 6, he sold 30,000 shares of ABNB stock at an average price of $118.59, for a total value of approximately $3.36 million. On October 2, the CEO sold another 30,000 shares of Airbnb stock at an average price of $136.54, for a total value of nearly $4.1 million.
On September 12, Chesky sold 150,000 shares of ABNB stock at an average price of $150.06 for a total value of approximately $22.51 million.
Over the past year, of the 190 insider trades, 162 were ‘sell.’ of which 156 were sales.
The CEO’s recent stock sale has raised some eyebrows in the investment community. Insider selling is often seen as a negative sign, as it could indicate that those with the most insight into the company’s workings and growth prospects believe that its stock price is overvalued or may underperform in the future.
But at the same time, insiders may sell shares for reasons unrelated to their expectations for the company’s future performance. For instance, when insiders liquidate their shares at consistent points throughout the year, they are merely diversifying their holdings. Also, the remaining sizable position owned by the CEO demonstrates his confidence in the company’s prospects.
Shares of ABNB have gained more than 20% over the past month and nearly 14% over the last six months. Also, the stock has surged more than 49% over the past year.
However, let’s take a close look at the travel company’s fundamentals to gauge how its stock will perform in the near term:
Robust Performance in the Last Reported Quarter
For the third quarter that ended September 30, 2023, ABNB, an online marketplace for hospitality services, reported revenue of $3.40 billion, beating analysts’ estimate of $3.37 billion. This compared to the revenue of $2.88 billion in the same quarter of 2022. The total nights and experiences bookings were 113.2 million, more than the 99.7 million reported in the year-ago quarter.
The travel company’s income from operations came in at $1.50 billion, an increase of 24.4% from the prior year’s quarter. Its net income rose 260.3% year-over-year to $4.37 billion. It posted net income per share attributable to Class A and Class B common stockholders of $6.63, compared to the consensus estimate of $2.10, and up 270.4% year-over-year.
Furthermore, ABNB’s cash and cash equivalents stood at $8.18 billion as of September 30, 2023, compared to $14.86 billion as of December 31, 2022. The company’s current assets were $17.52 billion versus $14.86 billion as of December 31, 2022.
Mixed Analyst Estimates
Analysts expect ABNB’s revenue for the fourth quarter (ending December 2023) to grow 13.4% year-over-year to $2.16 billion. The consensus EPS estimate of $0.66 for the ongoing year indicates a 36.5% year-over-year increase. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
For the fiscal year 2023, Street expects Airbnb’s revenue and EPS to grow 17.3% and 198.7% year-over-year to $9.85 billion and $8.33, respectively. In addition, the company’s revenue for the fiscal year 2024 is expected to increase 11.4% from the previous year to $10.98 billion.
However, analysts expect the company’s EPS for the next year to decline 47.7% year-over-year to $4.36.
Bleak Fourth-Quarter Forecast
The home-sharing company expects fiscal 2023 fourth-quarter revenue to be between $2.13 billion and $2.17 billion, representing year-over-year growth ranging from 12% to 14%.
In a letter to shareholders, Airbnb said it is seeing enhanced volatility in the quarter after a record-breaking summer travel season during the third quarter.
“We are seeing greater volatility early in Q4, and are closely monitoring macroeconomic trends and geopolitical conflicts that may impact travel demand,” the company said. On a conference call with analysts, executives said that assessment wasn’t prompted by softness in a specific region, but rather by “broad-based” unpredictability across the board.
“It’s just a little too early to tell how much volatility we see” going into the fourth quarter, CFO Dave Stephenson told analysts.
Regulatory Challenges and Other Headwinds
On September 5, New York City implemented new short-term rental regulations, resulting in a “de facto ban” on Airbnb’s platform. This led to a sharp reduction in listings in the city, one of ABNB’s chief markets. Regulatory restrictions on room rentals are reportedly in place or may occur soon in global locales such as Florence, Paris, and Austria.
In addition, the Canadian government recently introduced new tax measures targeting short-term rentals, which will significantly target Airbnb.
Many analysts further predict an imminent U.S. housing market crash. Famous financial author Robert Kiyosaki, who wrote Rich Dad Poor Dad, reportedly declared on social media, “Airbnb to lead real estate market crash.”
Wall Street Analysts Cut Their Price Targets
Airbnb’s stock was downgraded by analysts at Jefferies Financial Group from a “Buy” rating to a “Hold” rating on November 29, citing concerns over the slowdown in booking, which increases the risk of not meeting consensus expectations. Analysts cut the stock’s price target to $140 from $155.
Also, analysts at JPMorgan Chase lowered their price target on ABNB from $130 to $118 and set a “Neutral” rating on the stock in a research note on Thursday, November 2. Needham & Company LLC slashed their price target on Airbnb shares from $160 to $150.
Elevated Valuation
In terms of forward non-GAAP P/E, ABNB is currently trading at 16.72x, 7.7% higher than the industry average of 15.52x. The stock’s forward EV/Sales of 8.27x is 590.2% higher than the industry average of 1.20x. Likewise, its forward EV/EBITDA of 23.02x is 135.4% higher than the industry average of 9.78x.
In addition, the stock’s forward Price/Sales and Price/Book multiples of 9.15 and 9.58 are significantly higher than the respective industry averages of 0.89 and 2.50. Also, its forward Price/Cash Flow of 21.60x is 127.6% higher than the industry average of 9.49x.
Solid Profitability
ABNB’s trailing-12-month gross profit margin of 82.67% is 133.1% higher than the 35.47% industry average. Moreover, the stock’s trailing-12-month EBITDA margin and net income margin of 23.59% and 56.87% are considerably higher than the industry averages of 10.91% and 4.48%, respectively.
Furthermore, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 74.47%, 14.56% and 25.47% favorably compared to the respective industry averages of 11.40%, 6.04%, and 3.99%. Also, its trailing-12-month levered FCF margin of 29.96% is 483.2% higher than the industry average of 5.14%.
Bottom Line
ABNB reported stronger-than-expected revenue and earnings in the third quarter of fiscal 2023. The last reported quarter was a record-breaking summer travel season for its business, with financial performance helped by continued solid international growth.
However, the home-sharing company provided a weak forecast for the fiscal 2023 fourth quarter as it sees greater volatility, with macroeconomic headwinds and geopolitical conflicts impacting travel demand. Further, Airbnb continues to face regulatory challenges, and a famous author declared that the company would lead the housing crash.
Insiders are continuously selling shares with the most recent sale by Airbnb CEO worth $11.3 million, indicating declining confidence in the company’s performance in the future.
Amid increased insider selling, stretched valuation, and uncertain near-term prospects, investors could hold ABNB and wait for a better entry point in this travel stock.

Last week, the leading stock in the S&P 500 was Paramount Global (PARA), as its shares soared amid mounting speculation of a potential acquisition. Content production entity Skydance Media and private equity firm RedBird Capital Partners have shown interest in acquiring PARA’s assets.
Although the acquisition process is still in its early stages, non-disclosure agreements have been signed, and a small team is currently evaluating the financial figures, there is no official process or dealbook yet.
The potential acquisition could manifest in several ways; one may involve Skydance and RedBird Capital purchasing a majority stake in PARA’s parent company, National Amusements (NAI). The Norwood, Massachusetts-based company controls 77% of Class A shares of PARA’s stock.
If RedBird and Skydance acquire shares in NAI, it could pave the way to steer the company without entirely purchasing it. This would enable the group to strategically detach underperforming assets or cultivate a partnership with a strategic ally.
RedBird and Skydance could avoid managing PARA’s KCBS-TV channel or cable networks. There could be efforts to execute a phased divestiture, dispensing CBS and TV stations and packaging some cable channels. Hence, a plausible scenario might involve targeting PARA’s intellectual property and Paramount Pictures for acquisition.
Despite Shari Redstone, President of NAI and PARA’s non-executive chair, historically asserting that her company – rooted in a drive-in cinema business originally founded by her grandfather – was not up for sale, recent activities indicate a possible change in stance.
Last month, PARA’s board of directors endorsed “golden parachute” compensation arrangements for its Chief Executive, Bob Bakish, along with other top-level executives. These moves ignited speculation around Redstone’s receptiveness to incoming offers.
As a majority stakeholder in NAI, Ms. Redstone holds the domain over the majority of the voting rights in PARA. Consequently, her ownership gives her an authoritative influence on final decision-making. However, for another party to negotiate acquiring those NAI shares from Ms. Redstone would significantly ease the path for a potential buyout of PARA.
The acquisition rumors propelled PARA’s shares to their highest level since May, placing them in positive territory for the first time this year. The stock increased by 14% late Friday trading, hiking PARA’s market capitalization to roughly $11.13 billion. This comes after the company concluded its latest quarter with nearly $15.62 billion being long-term.
The corporation recently pledged to shed its non-core assets to reduce debts and enhance its financial standing. The announcement of the sale of Simon & Schuster to investment institution KKR followed the publishing colossus’s failed acquisition by Penguin Random House in the preceding year. This $1.62 billion cash transaction was completed in October 2023. Recent speculation also suggests potential sales of additional assets like Showtime and BET Media Group.
PARA is grappling with various headwinds, specifically in its quest to establish a presence in the streaming arena. Its conventional sectors, encompassing broadcast and cable TV, are witnessing a decline, with advertising revenues from the TV Media division registering a 13.7% decrease year-over-year in the third quarter.
The buyout rumors gain credibility because PARA stock, barring fleeting moments of triumph, has substantially fallen short of stakeholders’ hopes. Its shares have marginally surged year-to-date, inclusive of the Friday pop. Over the last five years, a devastating slump of over 67% has been witnessed for PARA stock, a trend that long-term investors might anticipate reversing with the rumored acquisition.
Warren Buffet’s Involvement
Operating in a unique arsenal of the vast entertainment domain, Skydance, a prosperous enterprise, enjoys immunity from possible regulatory impediments. Established in 2010 by David Ellison, heir to billionaire Oracle co-founder Larry Ellison, Skydance’s existing partnerships with PARA have given rise to massive successes like Tom Cruise’s megahit projects Mission Impossible series and film and television adaptations of Jack Reacher, adding significant value to the speculated acquisition deal.
The Ellison family, the majority shareholder of Skydance, possesses significant financial clout for conducting a major transaction. In October 2022, the company’s market assessment surged to $4 billion following a cash infusion of $400 million. This round was led by RedBird, who endeavored co-jointly with the Ellisons, KKR, and Tencent.
Skydance’s restructuring of PARA could convert the company into an arms dealer following substantial asset liquidations. Paramount Studios’ high value could be instrumental in settling outstanding debts, signaling a revival of overall corporate growth and profitability, should Skydance merge into PARA. Such a shift will likely favor PARA’s shareholders, including Warren Buffett.
The question arises if this solution was conceptualized by Byron Trott, Buffett’s esteemed banker, after recognizing the severe financial difficulties faced by both NAI and PARA.
Earlier this year, Ms. Redstone accepted a $125 million strategic investment from merchant bank BDT & MSD Partners to alleviate some debt, reaffirming her confidence in PARA’s value proposition. Buffett’s trusted banking advisor is Byron Trott, Chairman and Co-CEO at BDT & MSD Partners.
The association continues beyond this point. Berkshire Hathaway, under the stewardship of Warren Buffett, is the largest institutional investor in PARA, holding a 19.6% stake secured initially in early 2022. This investment is noteworthy, particularly as it sits impressively above the current market value. The stake is now approximately $1.58 billion, post PARA’s recent divestments.
The interplay of power and influence here between Trott, NAI, and Berkshire Hathaway leads to an intriguing scenario. It sheds light on the indirect control Trott may exert over NAI proceedings and NAI’s influence over Buffett’s significant ownership in PARA.
The inclusion of Buffett and his financial advisor adds complexity and intrigue to the situation, making it significantly more compelling than previously perceived.
Bottom Line
PARA has historically been susceptible to instability due to its size and heavy reliance on youth-centric cable networks. Furthermore, it spent most of the preceding decade grappling with the effects of Sumner Redstone’s deterioration, unguided favoritism ensues by Viacom C.E.O. Philippe Dauman and alleged repeat offenders like Les Moonves.
Additionally, there seemed to be an overemphasis on short-term numerical targets to the detriment of long-term planning. Although PARA handled the distribution of popular franchises such as Marvel movies and Lucasfilm’s Indiana Jones, Disney ultimately had the strategic acumen and scalability to acquire these companies.
Given its relatively small size compared to its competitors, PARA has often been regarded as a potential candidate for acquisition. PARA shares are trading relatively flat for the year, noticeably lagging the approximately 17% surge for the S&P 500 index following acquisition rumors.
From an investor perspective, the hope is for a significant premium to emerge within the coming months. Investment from market giant Warren Buffett may incentivize investor uptake of PARA shares, potentially increasing stock prices.
NAI’s situation looks increasingly dire. They cut their dividend by a striking 80% earlier in the year due to decreasing TV advertisement revenues and losses incurred from streaming. They were significantly impacted even further before their $125 million issuance in May, after which they were expected to simply break even for the year and predict a loss of about $35 million in 2024, according to S&P Global. The possibility of a downward spiral seems plausible.
LightShed analyst Rich Greenfield wrote, “With over 5x leverage, Paramount is in a precarious situation. In fact, we suspect its stock price would be dramatically lower if not for investors believing that its dire situation requires a sale in the coming 12-18 months.”
Shari Redstone could accept and make a dignified departure from her father’s company if a fair proposal materializes. Transitioning voting power from NAI to another corporation won’t notably benefit common stock shareholders but would significantly favor Ms. Shari and the senior executive.
If this trajectory ensues, one could predict that long-term investors would be disadvantaged, with the bulk of benefits allotted to voters with substantial voting power. Therefore, it could be wise to watch the stock for now.
 

As the festive season ushers in, thoughts gravitate toward the traditions of exchanging gifts, feasting with family, and warming up by the fireside, all while the holiday shopping spree kick-starts with much vivacity.
The holiday period invariably translates to a considerable economic surge for retailers and related sectors, starting with “Black Friday” – a day marked in retail history for transfiguring from the “red” of losses into the “black” of profits. This year’s consumer expenditure reached an unprecedented high, with $9.8 billion splurged on Black Friday deals and an outstanding $12.4 billion on Cyber Monday.
A record-breaking 200.4 million consumers shopped during the five-day holiday weekend, extending from Thanksgiving Day through Cyber Monday, outpacing last year’s peak of 196.7 million. As per the National Retail Federation (NRF), the average spend was $321.41 on holiday-related purchases throughout the Thanksgiving weekend. Toys, electronics, and gift cards emerged as the most coveted items.
An unprecedented festive surge is projected this December as retailers anticipate record-breaking consumer expenditure. This period, often correlated with the ‘Santa Rally,’ generates a stock market surge during the concluding week of December, extending into the New Year. LPL Financial found that since 1950, a Santa Claus rally has occurred around 79% of the time.
These staggering statistics oppose the predictions of some economic analysts who warn of an imminent recession within the U.S. and expect the current equity rally to stumble as the year concludes.
The holiday period shopping traditionally elevates sales for retailers and associated businesses, resulting in potential stock price increases. The year-end rally boosts investors’ portfolios, whereas professional traders often regard it as crucial when calculating their end-of-year bonuses. There is no doubt that the Santa Claus rally this year would be broadly embraced, given the volatilities witnessed.
Investment focus is increasingly geared toward stocks providing substantial opportunities in the immediate future. Some stocks could be more profitable than others if secured before their price rise. Hence, many investors opt for Christmas stocks to capitalize on the bustling holiday shopping season.
Given this backdrop, let us delve into an in-depth analysis of Amazon.com, Inc. (AMZN), Visa Inc. (V), Walmart Inc. (WMT), and Etsy, Inc. (ETSY) now.
Amazon.com, Inc. (AMZN)
Amazon has established itself as a global behemoth, wielding substantial market dominance fostered by its vast network. As we approach the holiday season, there is strong anticipation that the retail stock will experience a considerable rise.
This prediction comes from AMZN’s record-breaking sales in November, with one billion items sold over 11 days of extended promotional deals. This impressive feat was achieved despite the “biggest ever global strike” orchestrated by Make Amazon Pay, an activist campaign that advocated for improved pay and better working conditions for laborers.
According to AMZN, customers purchased more than 500 million products via independent sellers during the holiday shopping festivities and an exponential growth in Prime membership signups throughout this period was witnessed.
The company has disclosed that shoppers saved nearly 70% more on their purchases than the previous year, with promises of “millions more deals” being made available until December 24.
The company attributes much of its success to a large, loyal customer base, who trust the brand and greatly value its services. AMZN’s variety of client benefits during the festive season – expeditious delivery, discounts, enticing deals, streamlined return and refund policies, and rewards, enhance repeat purchases and encourage referrals.
With recent inflationary pressures easing, consumer sentiments are showing signs of improvement, bolstering the potential for increased spending. Combining these factors, December could be a highly profitable month for AMZN.
For the fiscal fourth quarter ending December, its revenue is expected to grow 11.2% year-over-year to $165.85 billion, while EPS is expected to increase significantly year-over-year to $0.76.
Wall Street analysts expect the stock to reach $177 in the next 12 months, indicating a potential upside of about 20%. The price target ranges from a low of $145 to a high of $210.
Visa Inc. (V)
V, a leading fintech corporation, is commanding in the global credit and debit card markets. Acting as an essential intermediary between purchasers and vendors, V conducted over 192 billion transactions in 2022 across 160 nations.
The company’s significant role has generated substantial profits for V and its shareholders. For the fourth fiscal quarter of 2023, the firm reported revenues of $8.61 billion, a 10.6% year-over-year increase. Its income amounted to $4.68 billion, with earnings per share at $2.27.
V’s unique business model allows consumers desiring to postpone their holiday expenses with minimum risk and maximum benefit. V profits whenever individuals make higher charges on their cards, with both transaction value and quantity contributing to the income. As V does not offer direct loans to consumers, the impact of defaulting is substantially lower.
Expressing high hopes for the company’s future, V’s CEO Ryan McInerney stated, “There is tremendous opportunity ahead, and I am as optimistic as ever about Visa’s role in the future of payments.”
However, America faces a mounting credit card debt crisis. As of September 2023, the total card balance reached a record high of $1.08 trillion. Strikingly, the average credit card interest rate touched 27%, representing the highest figure in nearly three decades.
As we enter the holiday season, consumer spending on credit cards is expected to rise. Deloitte reports that the average holiday shopper anticipates expending $1,652 this year, the most considerable amount seen in the past three years. Much of this spending will be charged to cards. In an October survey of 1,036 consumers by CardRates.com, 38% indicated that they anticipated carrying holiday credit card debt into the new year.
Although increased consumer debt translates into more risks for V, the potential spending slowdown also threatens the company as it has fewer tools for growth. Despite the company’s valuation not being as high as in the past, this could represent an excellent opportunity for those aiming to take advantage of the inevitable credit card spending surge over the festive season.
Analysts expect V’s revenue and EPS for the quarter ending December 2023 to increase 7.7% and 7.3% year-over-year to $8.54 billion and $2.34, respectively. Moreover, Wall Street analysts expect the stock to reach $277.47 in the next 12 months, indicating a potential upside of 8.9%. The price target ranges from a low of $243 to a high of $295.
Walmart Inc. (WMT)
WMT has evolved into a powerful force within the omnichannel market. Strategic acquisitions of companies like Bonobos, Moosejaw, and Parcel and collaborative partnerships with industry heavyweights like Shopify and Goldman Sachs bolstered this transformation. Further expansion efforts, including implementing delivery systems Walmart + and Express Delivery, and investing in Flipkart – a renowned e-commerce platform – are a testament to this ongoing evolution.
The innovative strategies have consolidated WMT’s position within the turbulent retail market, enabling it to remain resilient and competitive in an ever-changing industry landscape. WMT ensures its sustainability and competitiveness in this evolving ecosystem by continually adapting and initiating changes.
The retail giant experienced increased customer footfall and elevated spending throughout the third quarter, alongside improvements in operating margin and cash flow. These constructive developments in WMT’s performance indicate ample liquidity to invest in growth and reinforce its dominating market presence.
As WMT approaches the holiday season with substantial customer traffic, it stands poised to generate profitable returns. For the quarter ending January 2024, its revenue is expected to increase 3.9% year-over-year to $169.09 billion, while EPS is anticipated to reach $1.64. Further enhancing its appeal, the company currently offers a dividend yield of 1.49%, making its stock a more attractive option to potential investors.
Wall Street analysts expect the stock to reach $180.79 in the next 12 months, indicating a potential upside of about 18%. The price target ranges from a low of $163 to a high of $210.
Etsy, Inc. (ETSY)
Esteemed as an online destination for unique handcrafted and vintage goods, ETSY is the perfect marketplace for customers searching for original gift ideas, especially during the active winter holiday season. The extensive assortment of products on ETSY – encompassing everything from jewelry and apparel to toys and home décor – caters to its impressive 97.3 million active users through 8.8 million dynamic sellers.
Operating under a distinctive business model that leverages network effects and switching costs generates intrigue. However, sustained growth is crucial in maintaining investor enthusiasm. Despite firmly standing by its unique market position within a vast potential landscape, ETSY’s obstacles in augmenting gross merchandise sales (GMS) post-pandemic suggest a potential limitation in product demand.
For the fiscal fourth quarter ending December, its revenue and EPS are expected to increase 1.8% and 17.1% year-over-year to $821.75 million and $1.34, respectively.
With a focus on unique gifts and crafts, ETSY is well-positioned to experience significant stock elevation during the seasonal gifting period, complimented by the ongoing market recuperation and declining inflation trends.

Semiconductor powerhouse NVIDIA Corporation (NVDA) delivered extraordinary quarterly figures last month, surpassing its revenue guidance and analysts’ projections. The firm’s revenues tripled to $18.12 billion, and net income soared 13.6 times to $9.24 billion. Its non-GAAP EPS of $4.02 comfortably exceeded estimates, registering a 6.9x year-over-year surge.
Due to an early commitment to AI, NVDA has positioned itself as an undisputed market leader in the AI semiconductor industry. It has effectively positioned the company years ahead of its competitors, offering an all-encompassing platform that represents a holistic solution for all AI demands, from chips and processors to intricate software systems.
In its latest earnings cycle, NVDA’s persistent dominance in the AI chips marketplace was notable, demonstrated by Data Center revenues increasing 278.7% year-on-year to $14.51 billion. The company maintained robust non-GAAP gross margins at 75%, resulting in a 380 basis points rise quarter-over-quarter.
Amid mounting competition from rivals boosting their AI capabilities, NVDA owns a remarkable 80% share of the AI chip market. The company’s foresight to invest heavily in AI innovation years ahead of others now positions the company to capitalize on the industry’s exponential growth.
Furthermore, NVIDIA continues to spark innovations in the competitive AI scene, as evidenced by the development of GH200, the next iteration of Grace Hopper Superchip. Notably, the Santa Clara-based chipmaker also reported significant growth in the networking business, bolstered by advancements in InfiniBand technology.
Given the exceptional third-quarter performance, there is little surprise over Wall Street’s widespread upward revision in the revenue and EPS estimates. Analysts expect NVDA’s EPS for the fiscal year ending January 2025 to reach as high as $19.72 from the $12.30 expected in fiscal 2024 (ending January 2024).
For the fiscal year ending January 2024, NVDA’s revenue is expected to reach $58.86 billion, up 118.2% year-over-year, while for the fiscal year 2025, analysts expect its revenue to reach $89.70 billion. For the fourth quarter, the company expects its revenue to be $20 billion, plus or minus 2%.
NVDA responded to all the widespread speculation regarding its potential to deliver impressive results, prompting analysts to revise their already lofty price targets upward. Goldman Sachs’ analyst Toshiya Hari increased the price target to $625 due to robust demand and an improving chip supply chain.
JPMorgan’s analyst Harlan Sur hiked the target to $650, citing the “massive demand pull” for NVDA’s data center products, while Morgan Stanley’s Joseph Moore forecasts a price target of $603 due to anticipated reduced supply chain lead times next year.
Bank of America and Bernstein analysts upgraded their price expectation to $700 because of the expected rise in AI adoption, which they believe will counterbalance regulatory challenges associated with China. Wall Street analysts expect the stock to reach $661 in the next 12 months, indicating a potential upside of 42%. The price target ranges from a low of $560 to a high of $1,100.
Nevertheless, after earnings and optimistic projections were released, NVDA stock experienced a dip, correlating with a moderate rise in market skepticism. This downward movement can be attributed to concerns about the company’s sustained dominance amid challenges like the potential impact of President Joe Biden’s administration’s advancement of a chip export ban to China. Management indicated that this policy decision could have detrimental effects on NVDA.
The U.S. chipmaker faces a risk of a setback worth $5 billion due to the export ban. These orders were placed for 2024 by leading Chinese tech giants, including Alibaba, ByteDance, and Baidu. If the U.S. government fails to issue the necessary delivery licenses, NVDA may have to forgo these lucrative contracts.
Moreover, there are broader concerns about the extent to which speculative investment can continue to propel NVDA stock. With a year-to-date gain of more than 218%, NVDA easily takes the lead as the most aggressive-performing stock in the S&P 500.
Bottom Line
NVDA secured a distinguished position in the $1 trillion club this year following an impressive surge in its revenue guidance, mainly due to the substantial order volume from the burgeoning generative AI industry. This achievement is particularly noteworthy given the company’s size.
The substantial rise in the company’s valuation is primarily attributed to significant interest in NVIDIA’s advanced chip technology, which is currently experiencing increased demand because of a mounting focus on AI and ML capabilities across various sectors.
Despite a slump in its price, the trading volume of NVIDIA’s shares skyrocketed to 86 million on November 21, compared to a daily average of 26 million, indicating a heightened interest in the stock.
Investors are unlikely to buy the stock solely for its $0.04 per share quarterly dividend, particularly given that the stock recently surpassed the $500 benchmark and currently trades at over $450 per share. Thus, it can be reasoned that investors acquiring the stock at these elevated levels assume the stock has further upsides left.
Undeniably, NVDA’s robust growth is commendable, and management continues to uphold a confident picture of the company’s future. However, the firm is not without risk. For instance, questions arise over the impact the AI bubble pop could have on chip prices and, consequently, profit margins.
Moreover, with NVDA’s shares trading at 19.5x sales and 38x earnings, any stumble can impact the stock significantly. Considering the current market volatility, associated headwinds, and lackluster price momentum, it may be prudent to wait for a better entry point in the stock.

Broadcom Inc. (AVGO), a leading semiconductor and infrastructure software company, recently completed its acquisition of VMware, Inc., a provider of multi-cloud services, for $69 billion. This acquisition, first announced in May last year, formally closed on November 22, 2023. The deal received regulatory clearance from various countries, including the U.S., United Kingdom, and China.
Hock Tan, President and CEO of Broadcom, said, “We are excited to welcome VMware to Broadcom and bring together our engineering-first, innovation-centric teams as we take another important step forward in building the world’s leading infrastructure technology company.”
“With a shared focus on customer success, together we are well positioned to enable global enterprises to embrace private and hybrid cloud environments, making them more secure and resilient. Broadcom has a long track record of investing in the businesses we acquire to drive sustainable growth, and that will continue with VMware for the benefit of the stakeholders we serve,” he added.
AVGO’s main focus is to allow enterprise customers to create and modernize their private and hybrid cloud environments. As a result, the company will invest in VMware Cloud Foundation, the software stack that serves as the foundation of private and hybrid clouds.
In addition to Broadcom’s investment in VMware Cloud Foundation, VMware will provide a list of services to modernize and optimize cloud and edge environments like VMware Tanzu to help accelerate the deployment of applications, Application Networking (Load Balancing) and Advanced Security services, and VMware Software-Defined Edge for Telco and enterprise edges.
Wall Street analysts believe AVGO’s stock will increase following the VMware acquisition.
On December 4, Oppenheimer analyst Rick Schafer presented a positive outlook for Broadcom by maintaining an Outperform rating and revising his price target to $1,100.
Also, on November 24, KeyBanc Capital Markets analyst John Vinh raised his price target on AVGO by 20% from $1,000 to $1,200. Also, the analyst maintained his “Strong Buy” rating on the stock. In a note to clients, Vinh expects the acquisition to be immediately accretive to the company’s earnings and gross margin.
John Vinh commented that KeyBanc is “constructive on the acquisition because it is highly complementary to Broadcom’s infrastructure and semiconductor franchises.”
Further, according to Evercore ASI analyst Matthew Prisco, Broadcom’s software sales will increase to nearly 40% of its total revenue in the first year after the acquisition closes. Prisco rated AVGO’s stock as Outperform with a price target of $1,050.
Shares of AVGO have gained more than 15% over the past six months and nearly 66% year-to-date. Also, the stock has surged approximately 74% over the past year.
Now, let’s discuss some of the factors that could impact AVGO’s performance in the near term:
Solid Financial Performance in the Last Reported Quarter
For the third quarter that ended July 30, 2023, AVGO reported net revenue of $8.88 billion, beating analysts’ estimate of $8.86 billion. This compared to net revenue of $8.46 billion in the same quarter of 2022. Its non-GAAP gross margin grew 3.7% year-over-year to $6.67 billion.
Broadcom’s non-GAAP operating income came in at $5.54 billion, an increase of 6.5% from the prior year’s quarter. Its adjusted EBITDA rose 7.9% from the year-ago value to $5.80 billion. The company’s non-GAAP net income rose 8.4% year-over-year to $4.60 billion. It posted non-GAAP net income per share of $10.54, compared to the consensus estimate of $10.43.
Furthermore, net cash provided by operating activities increased 6.7% year-over-year to $4.72 billion. AVGO’s free cash flow stood at $4.60 billion, up 6.7% from the same period last year.
Upbeat Fiscal 2023 Fourth-Quarter Guidance
“Broadcom’s third quarter results were driven by demand for next generation networking technologies as hyperscale customers scale out and network their AI clusters within data centers,” said CEO Hock Tan. “Our fourth quarter outlook projects year-over-year growth, reflecting continued leadership in networking for generative AI.”
After solid third-quarter earnings and confidence in continued business progress, AVGO expressed an optimistic view on the fiscal 2023 fourth quarter ended October 29, 2023. The company expects its fourth-quarter revenue to be nearly $9.27 billion, an increase of around 4% from the previous year’s period. AVGO’s adjusted EBITDA is expected to be approximately 65% of projected revenue.
“We generated $4.6 billion in free cash flow in the third quarter, and expect cash flows to remain solid for Q4,” said Kirsten Spears, CFO of Broadcom.
Impressive Historical Growth
Over the past three years, AVGO’s revenue and EBITDA grew at CAGRs of 15.2% and 24.7%, respectively. The company’s EBIT improved at a CAGR of 61.4% over the same period. Moreover, its net income and EPS increased at CAGRs of 77.6% and 83.2% over the same timeframe, respectively.
Also, the company’s levered free cash flow grew at a 6.9% CAGR over the same period.
Positive Recent Developments
On November 30, AVGO introduced the industry’s first switch with an on-chip neutral network, NetGNT (Networking General-purpose Neutral-network Traffic-analyzer), in its new, software-programmable Trident 5-X12 chip. The new Trident 5-X12 will double bandwidth, reduce power by 25%, and add a neutral network to enable next-generation telemetry, security, and traffic engineering.
 On October 17, Broadcom announced the availability of Qumran3D, the next-gen of the StrataDNX family of single-chip routers. Qumran3D will accelerate the transition to merchant silicon routers by considerably reducing carrier and cloud operator TCO with unprecedented scale.
This new single-chip router will raise the bar for carrier and cloud operator solutions by delivering high-performance, low-power, and security-rich networking. It will meet growing bandwidth and security demands faced by service providers amid increased AI, mobile edge, and other high data deployments.
Also, on September 26, AVGO’s division, Symantec, partnered with Google Cloud to embed generative AI into the Symantec Security platform in a phased rollout that will provide customers a technical edge for detecting, understanding, and remediating sophisticated cyberattacks.
“Our partnership with Google Cloud is part of that continuing journey to put the most innovative security solutions possible into user hands. Our engineers have simplified the process in ways that will enable customers to be much more productive and effective. This is just the beginning of a great collaboration that will help to kickstart the benefits of AI throughout the broader security ecosystem,” said Adam Bromwich, CTO and Head of Engineering, Symantec Enterprise Division, Broadcom.
Broadcom’s Commitment To AI
On October 10, AVGO showcased its vision for AI acceleration and democratization at the 2023 Open Compute Project Global Summit. The company’s commitment to unleashing the AI potential at scale is achieved through a combination of ubiquitous AI connectivity, innovative silicon, and open standards.
This also reflects Broadcom’s commitment to its standardization work toward an open hardware ecosystem for AI workloads.
“Today, AI is pushing technology to its boundaries. Broadcom is focused on innovating to interconnect the key components of an open AI platform within the data center. Our goal is to partner with hyperscalers and enterprise OEMs to build leading-edge AI products and solutions,” said Charlie Kawwas, Ph. D., President, Semiconductor Solutions Group, Broadcom.
AGVO will witness growing demand for its products from companies developing AI capabilities. As per a report by Bloomberg Intelligence (BI), the generative AI market is expected to reach $1.30 trillion over the next ten years from a market size of just $40 billion in 2022, expanding at a CAGR of 42%.
Favorable Analyst Estimates
Analysts expect AVGO’s revenue for the fourth quarter (ended October 2023) to grow 3.9% year-over-year to $9.28 billion. The consensus EPS estimate of $10.96 for the same period indicates a 4.9% year-over-year increase. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
For the fiscal year 2023, Street expects AVGO’s revenue and EPS to grow 7.8% and 11.7% year-over-year to $35.80 billion and $42.03, respectively. In addition, the company’s revenue and EPS for the fiscal year 2024 are expected to increase 22.7% and 46.2% from the previous year to $52.33 billion and $45.49, respectively.
Attractive Dividend
AVGO pays an annual dividend of $18.40, which translates to a yield of 1.98% at the current share price. Its four-year average dividend yield is 3.04%. Also, the company’s dividend payouts have increased at a CAGR of 21.3% over the past five years. Broadcom has raised its dividends for 12 consecutive years.
Robust Profitability
AVGO’s trailing-12-month gross profit margin of 74.27% is 52.6% higher than the 48.67% industry average. The stock’s trailing-12-month EBIT margin of 45.7% is 874.3% higher than the 4.69% industry average. Likewise, its trailing-12-month net income margin of 39.25% is significantly higher than the 2.20% industry average.
Moreover, the stock’s trailing-12-month ROCE, ROTC, and ROTA of 64.57%, 16.63%, and 19.44% are considerably higher than the industry averages of 1.01%, 2.60%, and 0.26%, respectively. Its trailing-12-month levered FCF margin of 38.97% is 375.16% higher than the industry average of 8.20%.
Bottom Line
Broadcom surpassed analyst estimates on the top and bottom lines in the last reported quarter. The company’s outstanding third-quarter performance was driven by robust demand for next generation networking technologies.
In addition, AVGO’s long-term outlook appears promising, propelled by continued leadership in networking for generative AI, strategic investments, and partnerships. Recently, the chipmaker completed its acquisition of VMware, enabling it to accelerate its adoption of cloud technologies. AVGO’s stock has surged more than 65% year-to-date on the back of the VMware deal closing and AI wave.
Given its solid financials, high profitability, and rosy growth prospects, it could be wise to invest in AVGO now.

The popularity of snow sports like skiing and snowboarding has significantly increased in recent years. This trend is poised to continue following last year’s record-breaking snowfall and several expansions at multiple resorts this holiday season. With the advent of the winter, ski resorts across the state are churning out snow and preparing for the forthcoming 2023-24 holiday season.
Vail Resorts, Inc. (MTN), owning and operating 41 high-end resorts worldwide, has forged a robust foothold in the ski industry bolstered by its strategic locations and superior guest offerings. MTN demonstrates its substantial corporate strength with a market cap of $8.44 billion, thereby solidifying its stature within the buoyant business landscape.
The company is set to unveil the financial results for its fiscal first quarter 2024, which ended on October 31, 2023, after market close on Thursday, December 7, 2023. Analysts expect MTN’s revenue to decline 2.4% year-over-year to $272.89 million, while its EPS is projected to remain in the red at $4.63, plunging 36.2% year-over-year.
However, the fiscal 2024 forecast presented by MTN has seemingly piqued investor curiosity. The firm anticipates “meaningful growth” for the period, with a robust Resort EBITDA margin. Net income attributable to MTN is estimated to be between $316 million and $394 million, with Resort Reported EBITDA for fiscal 2024 between $912 million and $968 million.
Moving forward, several dynamic factors are poised to impact MTN’s operational performance in the foreseeable future, requiring closer attention and analysis.
MTN agreed to acquire Switzerland’s Crans-Montana Mountain Resort, marking its 42nd ski location and extending its global operations. This move is seen as the company’s latest effort to increase its international appeal by boasting various outdoor activities complemented by breathtaking alpine views. The Crans-Montana deal signifies MTN’s second Swiss ski acquisition within two years, having procured the Andermatt-Sedrun resort in 2022.
The new business deal demonstrates an 84% stake in the resort’s lift operations and 80% ownership in a key ski school associated with the site, thus portraying the company’s influential global reach and enhancing the allure of Crans-Montana Mountain Resort.
Cementing its dominance, MTN places the transaction value at CHF 118.5 million, signifying substantial potential for growth. Although immediate revenue generation from the acquisition is not expected, projections suggest that Crans-Montana will contribute approximately CHF 5 million EBITDA in its fiscal year ending July 31, 2025, marking its debut full year following the scheduled completion later in fiscal 2024.
MTN projects long-term EBITDA growth from the Alpine resort’s incorporation into MTN’s Epic Pass offerings, synergies within the company’s broader network, and investments geared toward enhancing guest experiences.
In line with its unwavering commitment to delivering superior guest experiences, the company has announced plans to roll out cutting-edge technology at its U.S.-based resorts for the 2023-24 ski season. The company places significant emphasis on bolstering offerings at its resorts, including the ongoing efforts to expand capacity through initiatives focused on lift facilities, ski terrain, technological advancements, and food and beverage options.
MTN closed its fiscal year on a subdued note. In the fiscal fourth quarter that ended July 31, 2023, its total net revenue stood at $269.77 million, up about 1% year-over-year, with the resort’s net revenue reaching $269.67 million. Its loss from operations widened 63.2% year-over-year to $160.10 million.
Net loss attributable to MTN surged to 128.57 million, or $3.35 per share. These statistics are not unexpected, considering the large concentration of MTN’s assets in the Northern Hemisphere, which experiences the summer season during the company’s fiscal fourth quarter.
Diminished demand for mountain travel destinations and weather-related operational disruptions significantly affected the company’s performance. Moreover, the ancillary business’s underperformance and inflating costs further contributed to the decline.
Even though its revenue surged by an impressive 14.4% annually for the full year, expanding expenses have negatively impacted bottom-line figures.
As of July 31, 2023, its net debt increased to $2.26 billion, which was 2.7 times trailing-12-months total reported EBITDA. Considering the high-interest rate environment, the obligation of interest payments may significantly strain the company’s financial health. With the company’s EBITDA persistently trailing downward, managing such immense debt could be as challenging as delivering a hot soup on a unicycle.
MTN’s annualized dividend rate of $8.24 per share translates to a dividend yield of 3.72% on the current share price. Its four-year average yield is 2.07%. Its dividend payments have grown at CAGRs of 32% and 8.2% over the past three and five years, respectively.
Moreover, the stock has lost about 18% over the past three years and is trading below the 100- and 200-day moving averages. The stock could potentially rally amid favorable weather for the ski resort. Nevertheless, looming uncertainties are yet to be mitigated.
Investors may have to weigh their options carefully. Would it be prudent to embrace the risk for a dividend yield of 3.72% when the seemingly “risk-free” one-year US Treasury bonds offer a yield of over 5%?
Bottom Line
The post-pandemic travel surge is expected to maintain momentum through the upcoming holiday season. Driven by an amplified desire for relaxation and leisure activities, more and more American holidaymakers are drawing up travel plans.
Despite this positive trend, consumers and the tourism industry face price pressures as hotel rates climb an additional 0.8% higher in October than in 2022.
Today’s skiing culture exudes luxury, apparent through upscale shopping and gourmet dining experiences at the base of pristine, well-maintained slopes. Resort launches understandably hinge on financial backing and weather conditions beyond our control.
However, not even inflation and shifting climate can hinder the expansion of ski resorts or deter the passionate influx of visitors. Economic stability remains a concern amid rising inflation rates and continued geopolitical unrest. Despite these external factors, the ski property market persists in its resilience.
A look at MTN’s financial metrics reveals that the company may struggle to leverage the positive industry trends. Considering these factors, it would be wise to wait for a better entry point in the stock.