Big Surprise, $WFM has “Huge Interest” in Meal Kits

In our May post on $WFM we concluded that meal-kit subscription services like Blue Apron, HelloFresh, and Plated were eating (at least some of) $WFM’s lunch and that the company would see a significant drag on comps over the next few quarters. Last night, management mentioned the emerging threat of these meal-kit services in its Q3 earnings call.

In an excerpt from the call below, John Mackey spoke of meal kits in a competitive light, being advantaged by convenience…


..and mentioned the potential to enter the space:


In our last piece, we argued that we could see a base case comp drag of 1-1.5%, and that analyst expectations for a return to positive comps in calendar Q1 were ambitious given the rapid rise of subscription meal services. This is already coming to fruition with WFM missing comps by 40bps and posting a -2.4% qtd comp, with guidance assuming that to continue. With analysts expecting a return to comp growth in calendar Q1 (black line below) and with the stock trading >20x P/E, we still think there is material downside.


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No $LUV for Airlines: Please assume the brace position $AAL $ALK $DAL $JBLU $SAVE $UAL $HA

“If you want to be a millionaire, start with a billion dollars and launch a new airline,” Warren Buffett is fond of saying. The chronic bankruptcies and bailouts of the airline industries are widely known in the investment world – David Einhorn even did his undergraduate thesis on the topic which helped him start his investing career. However, you would not know it from the stocks – over the last five years, a quarterly rebalanced basket of major airline stocks have returned +450%, handily trouncing the S&P’s piddling +60%. Whitney Tilson put out a famous bull piece on the airline sector in 2014 summing up the zeitgeist: pricing is strong, planes are full, oil is cheap. Last week, Southwest $LUV printed record profit of $820m, up 35% year on year. Yet the stock tanked 11% on the guidance. What has changed in the airline sector and what could this mean for the rest of us?


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Bears Be Warned, Pandora $P Quite Literally Bought The Quarter

We are huge fans of Tim Westergren, who wrote the textbook on scrappy startups having founded and led Pandora through the tech implosion of the early 2000s. Doing everything to keep Pandora alive, from convincing employees to defer salaries, to maxing out personal credit cards, Tim’s vision of a Music Genome Project (US Patent 7,003,515) ultimately proved immensely valuable. But that was a decade ago.


Since then, huge competitors from adjacencies like Apple ($AAPL) and Youtube ($GOOGL), well funded entrants like Amazon ($AMZN), to startups like Spotify and Tidal, have waded into the space with new technology. Spotify today was the subject of fresh discussions around an $8bn IPO while Pandora languishes at a $3bn market cap. A combination of 1) a subscription-based business model, 2) on-demand listening and 3) curated discovery has proven extremely successful and has presented a serious threat to Pandora’s lean-back, low ad load, passive listening model.

Tim has returned to rescue Pandora once again. Pandora’s pivot is 6 years too late, but late is better than never, and they are now pulling out all the stops. In this post, we show:

  • How the Street has gotten Pandora’s modeling so very wrong – and is still doing it!
  • How Pandora is ex growth in users and in technology
  • How to track Pandora on operator metrics using our Mosaic product and ask the right questions
  • How to import custom data sets into our Plotter and answer those questions

Put your favorite playlist on, and let’s begin!

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Why Netflix ($NFLX) Will Never Raise Prices Again

On Friday we wrote a blog post predicting a deterioration in $NFLX’s domestic and international businesses after analyzing web & social data available through Sentieo’s Mosaic offering. Yesterday $NFLX did indeed miss top and bottom line numbers and lowered guidance on quarterly net additions for both domestic and international segments, with management, largely blaming ”un-grandfathering” of lower prices. Management even used Google Trends to illustrate increased awareness of Netflix price increases un-grandfathering in their presentation and blamed increased media coverage for deterring new members.


We used Sentieo to take a closer look and found a profound result- Netflix has had three previous mentions of price increases un-grandfathering and each mention has consistently led to large decelerations in consumer interest and revenue growth. Put another way, yesterday’s miss and messaging is hardly a new phenomenon and suggests this is a structural headwind, meaning Netflix has much less pricing power than bulls (and management) have hoped for.


In the chart below we track social mentions of “Netflix price increase” via both Google Trends (green) and Twitter (black) as well as YoY growth in Google Trends searches for Netflix (dark blue dashed line).


Notice the red boxes here indicate social mentions of price increases and in each case we see immediate deceleration in Google Trends growth. With “un-grandfathering” only half-way through, $NFLX will continue to face a significant membership growth headwind over several quarters, as traffic continues to be impacted by perceived price increases. This could be an even longer-term concern if, in the face of rising competition and content costs, $NFLX’s ability to raise prices is impeded.
Sentieo’s Mosaic service can be used to analyze real-time trends in a number of consumer, Tech/TMT, and healthcare companies. Using Mosaic, you can keep a real-time pulse on consumer interest for the stocks you follow, yielding better decision-making and better returns. Simply go to and sign up for a free trial. If you would like to continually receive content related to topics of interest in the markets, don’t forget to subscribe to the Sentieo Blog so that we can notify you of new posts by e-mail. 

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A list of potentially cheap stocks buying back their shares

Sentieo’s Excel plug-in (a beta version is available to subscribers) can be used as a powerful screening tool to identify companies that buy back their own shares.  One danger with screening for buybacks is that many companies destroy shareholder value with buybacks: management buys back shares at high prices and fails to buy back shares at low prices.  Fortunately, we can weed out many of these companies by looking for companies that reduced their share count from 2008-2010 (since market valuations bottomed in early 2009).  Such companies bought back cheap shares in the past so they might be doing it again.

We’ve compiled a list of 76 stocks that meet the following criteria:

  1. The company reduced its share count year-over-year by at least 2%.
  2. The company reduced its share count from 2008-2010 by at least 5%.
  3. Market capitalization is above $300M.

This universe of stocks should be a great place to look for undervalued companies buying back their shares.  4 of them are owned by Berkshire Hathaway.

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Oil & Gas Research the Smart Way with Sentieo $NFX $FANG $CLR $APC

The O&G industry reports tons of data in both volume and detail—from drilling rig and pressure pumping data to well production info. Looking for and analyzing all of this information for your investment ideas is a very necessary but time consuming process. Designed by buysiders for buysiders, Sentieo is the best tool on the market for leveraging technology to rapidly compress your research cycle and give you more time to generate true alpha insights.

In this post, I’m going to show you a glimpse into the world of oil & gas research using Sentieo—so that you can spend more time analyzing your the findings and try to come up with answers to questions such as:

Which E&P companies might be at risk of defaulting on their loan obligations?

Has an E&P operator you are following announced those new well results yet?

What would this company specific data would look if I plotted it against other metrics?

What are some ways I can use Sentieo to research industry trends?

What are companies are saying about break-even oil prices and well-economics?

How many drilled but uncompleted wells are in a company’s backlog?

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