This Aerospace Manufacturing Stock Is One to Watch

Good morning. It’s August 22nd, and today we’re going to see why Peloton is rallying while Snowflake and Urban Outfitters are tanking in premarket trade. Plus, we’ll take a look at an aerospace parts manufacturer poised for growth.

Previous Close 📈

The key indices ended yesterday in the green after minutes from the July FOMC suggested that the Fed might be inclined to lower interest rates in the September meeting.

Futures

Futures are slightly higher today. Investors are now looking forward to Fed Chairman Jerome Powell’s speech at Jackson Hole tomorrow to gather insight regarding the possibility of a rate cut next month.

What to Watch

There’s a lot to watch out for today.

NetEase, Baidu, Williams-Sonoma, and BJ's Wholesale Club Holdings will share their quarterly reports before the opening bell.

At 8:30 a.m., we’ll get the Initial Jobless Claims data for August, the S&P flash U.S. PMI for services and manufacturing at 9:45 a.m., and the Existing Home Sales data for July at 10:00 a.m.

After the market closes, watch out for Intuit, Workday, and Cava Group’s earnings statements as well.

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Fitness

Peloton Beats Estimates But Lowers Subscription Forecasts for 2025, Stock Surging By 10%

Peloton reported a modest 0.2% sales increase for its fiscal fourth quarter, marking the first time the connected fitness company has seen year-over-year revenue growth since the 2021 holiday season.

The company's results exceeded Wall Street expectations, with a loss per share of 8 cents compared to the anticipated 17 cents and revenue reaching $644 million against the expected $631 million.

The positive news is sending its stock rallying by more than 10% in premarket trade.

Despite these positive signs, Peloton issued a cautious outlook for the year ahead. The company expects lower-than-anticipated sales and subscription growth, forecasting connected fitness subscribers between 2.88 million and 2.89 million for the current quarter, below analysts' expectations of 2.96 million.

Additionally, Peloton’s full-year sales forecast of $2.4 billion to $2.5 billion is lower than the $2.7 billion expected by analysts.

Peloton’s focus appears to be shifting towards profitability and free cash flow generation, as evidenced by significant cuts to its marketing and sales spending.

During the quarter, the company reduced these expenses by $25.5 million, or 19% year-over-year, and plans to continue trimming its marketing budget throughout fiscal 2025.

Automobiles

Carlyle Group Makes $1.5 Billion Industrial Investment With Worldpac Acquisition

Carlyle Group Inc. is acquiring the Worldpac unit from Advance Auto Parts Inc. for $1.5 billion, marking its first significant industrial investment in over two years.

Worldpac, a leading wholesale distributor of original equipment replacement parts, reported approximately $2.1 billion in revenue for the 12 months ending June 30.

Advance Auto Parts has been under pressure from shareholder activists to sell Worldpac to improve its competitive standing against rivals AutoZone Inc. and O’Reilly Automotive Inc.

The company initiated the sale process for Worldpac and its Canadian Carquest business last November. The deal comes as the automotive parts industry benefits from the growing complexity of car maintenance and the aging vehicle fleet.

Carlyle has a long history of investing in industrial carve-outs, having committed around $13 billion to similar transactions over the past two decades. The acquisition of Worldpac follows Carlyle’s recent $3.8 billion purchase of Baxter International Inc.’s kidney care business.

Shares of Advance Auto Parts are rallying by nearly 6% in premarket trade, while Carlyle Group’s are flat.

Technology

Snowflake Stock Dropping by Nearly 10% Despite Solid Q2 and AI-Driven Growth Outlook

Snowflake raised its annual guidance and reported strong second-quarter results, exceeding Wall Street expectations during after-hours yesterday. Despite this, the company's stock is falling by nearly 10% in premarket trading.

For the quarter ending July 31, Snowflake posted adjusted earnings of $0.19 per share on $868.8 million in revenue, beating analyst estimates of $0.16 per share on $851.6 million in revenue. This represents a year-over-year revenue increase from $674 million.

Product revenue reached $829.3 million, above the consensus estimate of $808.4 million, but the 2.6% beat was narrower than the company's typical 3.7% beat over the past eight quarters. Snowflake attributed its performance to innovation and traction in its early AI product offerings.

Despite the positive earnings report, analysts are pointing to Snowflake’s “conservative” guidance as a possible reason for the stock’s decline.

The company forecasted current-quarter product revenue of $850 million to $855 million and raised its fiscal 2025 product revenue guidance to $3.36 billion, indicating 26% year-over-year growth.

Fashion

Urban Outfitters Tanking After Same Store Sales Decline, Pivoting Strategy to Target Younger Shoppers

Urban Outfitters reported a net income of $117.5 million for the second quarter yesterday, with revenue rising 6.3% year-over-year to $1.35 billion.

The company reported a 9.3% decline in same-store sales for its namesake stores in the second quarter, while its other brands, Anthropologie and Free People, showed strong growth.

Looking ahead, the company expects third-quarter sales growth in the "mid-single digits." The cautious forecast and same-store sales decline are causing it to tank by 10% so far in premarket trading today.

The company wants to undergo a significant transformation as it departs from its traditional "alternative sensibility" to reconnect with younger shoppers, particularly those in suburban areas. It outlined plans to broaden its appeal beyond its once core demographic of hip, city-dwelling millennials.

Shea Jensen, president of Urban Outfitters North America, noted that the brand had lost touch with evolving retail trends as Gen Z came of age during the pandemic. To address this, the company plans to target a wider range of customers, including those pre-college and post-grad, across various price points, sizes, and aesthetics.

The retailer will pivot towards offering more athleisure, denim, and loungewear, and will increase its marketing efforts on social media. However, some stores may close, particularly in areas affected by population shifts, while others could be resized or relocated.

The shift comes amid a challenging retail environment where fashion trends are accelerating, influenced by fast fashion and social media, making it harder for traditional apparel companies to keep pace.

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Guardion Health Sciences, Inc. [GHSI] - Last Close: $9.05

Guardion Health Sciences' stock is rallying more than 20% in premarket trade.

The company announced a substantial cash dividend of $5.00 per share yesterday.

This large dividend is likely driving investor confidence in the company's strong financial position and its commitment to returning value to shareholders.

Mobix Labs, Inc. [MOBX] - Last Close: $0.88

Mobix Labs is surging by more than 60% during premarket trade.

The company released its quarterly earnings report during after-hours yesterday. It reported an 80% sequential increase in revenue, reaching $2.1 million, driven by growing customer demand and the successful acquisition of RaGE Systems, which strengthens its portfolio in radio frequency and mmWave technologies.

Additionally, it announced its intent to acquire J-Mark Connectors Inc., which is expected to enhance its sales strategy, particularly in high-demand sectors like military, aerospace, and defense.

It also secured a $4 million private placement to support its acquisition strategy and received recognition from BAE Systems for its exceptional performance.

Air Industries Group [AIRI] - Last Close: $3.75

Air Industries Group is up by nearly 45% today.

The company announced the largest contract in its history, valued at $110 million. This 7-year contract is for producing thrust struts, a critical component of the Geared Turbo-Fan (GTF) aircraft engine, which Air Industries has been the sole supplier of since 2015.

Starting in January 2025, the new contract will replace and expand upon an existing one and substantially boost the company's backlog to over $280 million.

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Everything Else

• Hong Kong stocks are rallying with Xiaomi and AIA amid an earnings boost, and JD.com recovers losses.

• China criticized the U.S.’s nuclear strategy focused on arsenal expansion.

• The Fed has signaled a potential September rate cut amid a cooling job market and inflation.

• NetEase tanked after its Q2 revenue shortfall despite strong gaming performance.

• The U.S. job market is weaker than estimated as BLS revises employment data downward.

• Bavarian Nordic's mpox vaccine demand is driving shares up, with full-year guidance at the top end.

• Lucid CEO Peter Rawlinson took aim at Tesla, touting tech superiority.

• British tech mogul Mike Lynch was confirmed dead in Sicily yacht wreck, with his daughter still missing.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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