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Indexes Fall Modestly, But Growth Stocks Strong: Weekly Review

The stock market rally saw the major indexes retreating modestly, with the Dow Jones briefly dipping below its 50-day line. But the Nasdaq and S&P 500 remain near all-time highs while many growth stocks acted well. Lululemon Athletica (LULU), Affirm (AFRM) and RH (RH) were notable earnings winners. Tesla (TSLA) China sales jump, but most of Shanghai output went to Europe. Bitcoin tumbled from multimonth highs, while Coinbase (COIN) lashed out at the SEC.




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Market Rally Pauses

After growth-led gains in the prior two weeks, the Nasdaq and S&P 500 fell modestly this past week, still near record highs. The Dow Jones retreated below its 50-day line on Thursday, but was set to retake that key level on Friday. Industrial, homebuilders and steel stocks struggled, but many housing-related stocks and apparel plays did well, as well as many growth names.

Tesla’s August China Sales Jump

Tesla (TSLA) wholesale sales totaled 44,264 in August, up 34% from July’s 32,968, even as chip shortages continue to weigh on automakers. It exported 31,379 from its Shanghai factory, 29% more than in July. Tesla’s August sales in China jumped 32% vs. May, the second month in the last quarter. Sales are up 30% in the first two months of this quarter vs. the first two months of last quarter. However, local sales dropped 41% in August vs. May, while exports ballooned 172%. Meanwhile, Tesla stock rose modestly in a buy zone. Chinese electric car sales tripled in August. China new energy vehicle wholesale sales totaled 304,000. EV-only wholesale sales leapt 200% to 249,000.

Ford (F) hired Doug Field, who headed up the top-secret Apple Car project. Field previously was a top Tesla executive, and once worked at Ford decades ago.

Lululemon Crushes Earnings

Lululemon (LULU) earnings per share more than doubled from the year-ago period to $1.65 on a 61% sales jump to $1.45 billion, both beating estimates. Direct-to-consumer net revenue grew 8% to $597.4 million. Net revenue surged 63% in North America, and jumped 49% internationally. Lululemon opened 11 stores in the quarter, bringing the total to 534. LULU stock hit a new high.

LULU stock spiked to a record high.

Affirm Soars On Results

Affirm reported a wider-than-expected loss, but revenue grew 71%, easily beating views. The fintech also guided higher. Shares soared. The “buy now, pay later” specialist recently reached a partnership with Amazon (AMZN) after already working with Walmart (WMT) and Shopify (SHOP). PayPal (PYPL) acquired Japanese fintech Paidy for $2.7 billion, bolstering its BNPL offerings. Last month Square (SQ) agreed to pay $29 billion for AfterPay. BNPL installment payment services are encroaching on the credit card industry.

Copart Posts Another Solid Quarter

Copart (CPRT) beat earnings and revenue estimates for the fourth quarter. The salvage vehicle retailer’s earnings rose 51% to 1.03 on a 42% jump in sales to $748.6 million. It’s the fifth straight quarter of earnings growth and the third quarter in a row of accelerating revenue growth. Shares fell but pared losses.

RH Beats, Guides Up Despite Supply Woes

The upscale home furnishings retailer’s EPS jumped 73% as sales climbed 39% to $989 million, both easily beating. RH (RH) also raised full-year guidance, but it reported widespread supply chain woes that will delay the fall catalog and more. RH stock rebounded above its 50-day line. Lovesac (LOVE) surged from multimonth lows on strong earnings.

Cybersecurity Firms Top

Zscaler (ZS) reported 75% EPS growth while revenue rose 57% to $197.1 million, both beating fiscal Q4 views.  The web security gateway maker guided higher on 2022 revenue. Shares rose modestly Friday, near record highs. In its first post-IPO earnings report, SentinelOne (S) said it lost 20 cents a share in the July quarter, in line with estimates. Revenue rose 121% to $45.8 million, topping estimates of $40.4 million. Annual recurring revenue increased 127% to $198 million, including the acquisition of Scalyr. SentinelOne projected current-quarter revenue above estimates. Shares fell but have run up sharply in recent weeks.

Business Software

Coupa Software (COUP) reported adjusted EPS rose 24%, defying views for a loss. Revenue for the maker of business spending management software climbed 42% to $179 million, including recently acquired Llamasoft. That topped estimates of $163 million. For the October quarter, Coupa guided higher. Shares fell after results.

Smartsheet (SMAR) reported a narrower-than-expected loss as revenue rose 44% to $131.7 million, topping estimates of $125.5 million. But shares plunged.

Uipath (PATH) reported a 1-cent adjusted profit, beating estimates for a 5-cent loss in Q2. The automation software maker said revenue rose 40% to $195.5 million, topping estimates of $184 million. But analysts said guidance pointed to slowing new annual recurring revenue growth in the back half of 2021. PATH stock plunged to a record low.

GameStop Silent On Digital Shift

GameStop (GME) lost 76 cents per share, missing views but narrower than a loss of $1.40 a year ago. Sales grew jumped 26% to $1.183 billion, beating. Same-store sales climbed 26%, a slight miss. The mall-based video game retailer once again took no questions on its earnings call. It gave no update on turnaround plans after GME stock skyrocketed earlier this year on hopes for digital-focused future. GME stock fell modestly.

Academy Sports Goes On Wild Ride

Academy Sports & Outdoors (ASO) hiked full-year financial guidance after beating Q2 views. The sporting goods retailer’s EPS climbed 19% as sales rose 12% to $1.792 billion. Same-store sales grew 11%, nearly double expectations for a 6% gain. ASO stock initially plunged far below a buy point Thursday, but rebounded for a modest gain.

SEC Targets Coinbase

Coinbase said the SEC threatened to sue it if the cryptocurrency exchange launched a lending program allowing users to earn interest on some crypto assets. The SEC views the lending feature as a security, potentially subjecting it to the agency’s oversight. Coinbase CEO Brian Armstrong called the SEC’s move “really sketchy behavior” with little explanation behind it. Bitcoin fell hard during the week, along with other alt-coins and related stocks and securities. COIN stock fell solidly.

Homebuilders See Shortages

Homebuilding giant PulteGroup (PHM) warned that shortages for a variety of building products were interfering with its ability to get homes closed. The announcement came amid still-elevated pandemic-era housing demand. However, smaller rival Hovnanian (HOV) noted that “sales have slowed to a more historically typical sales pace,” in part via home-price increases. It also cited “supply chain disruptions and labor challenges.” Still, Hovnanian raised its full-year outlook for fiscal 2021.  Pulte led big builders lower.

Korn Ferry (KFY) easily beat fiscal Q1 EPS views while revenue rose 70% to $588.1 million. The staffing firm also guided higher for Q2.

Traeger (COOK) reported a 42% EPS decline and 39% revenue gain in its first earnings report since its IPO. The wood pellet grill maker also guided higher. But COOK stock plunged Friday.

Kroger (KR) reported Q2 earnings and sales that were modestly above views. The grocery store giant also raised full-year guidance.

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