In today’s briefing:
- Hesai Group IPO: Valuation Insights
- Downgrading Energy; SPX Final Reach Up to 4300-4325?; Buys in Restaurants, Retailers, Industrials
- US Neobanks; Warning Signals from SoFi and Varo 4Q Results
- New Ruipeng Pet IPO: Covid-19 Is Not the Sole Reason for Mediocre Performance
- PINS 4Q22: We Don’t Chase Vanity MAUs
- Project Dorothy on Cusp of Energization; Revenue Generation Draws Closer
- eBay to Connect Fans With Athletes Using Sports NFTs
- SGDJ: Underweight On Junior Gold Mining Stocks
- Verizon Stock: I See No Reason To Panic After Recent Guidance
Hesai Group IPO: Valuation Insights
- Hesai Group (HSAI US) has launched a Nasdaq IPO to raise up to US$171 million at an indicative price range of US$17-19 per ADS.
- We previously discussed the IPO in Hesai Group IPO: The Bull Case and Hesai Group IPO: The Bear Case.
- In this note, we present our forecasts and discuss valuation. Our analysis suggests that Hesai is unattractively valued at the IPO price range. We would pass on the IPO.
Downgrading Energy; SPX Final Reach Up to 4300-4325?; Buys in Restaurants, Retailers, Industrials
- Over the past two weeks, we have been steadfast in our belief that this current rally/short squeeze is likely to fizzle in the 4100-4165 area on the S&P 500.
- There has yet to be any meaningful deterioration and we cannot rule out the SPX reaching higher, potentially for 4300-4325 (August 2022 highs).
- We continue to preach caution and believe upside is limited on the market indexes. Any combination of a continued strong labor market or hotter-than-expected inflation could upset the market.
US Neobanks; Warning Signals from SoFi and Varo 4Q Results
- Varo bank published 4Q22 results that revealed lower quarterly cash burn through cost control, but revenue per client declined and the very high customer acquisition cost
- SoFi’s cost reduction success in 4Q22 seems, in contrast to Varo, to have limited revenue loss, thereby bringing SoFi closer to breakeven; it trades at a premium to peers
- These early 4Q22 results signals may provide some read across which we believe could be negative for Dave in particular, as well being a reality check for Inter’s US ambitions
New Ruipeng Pet IPO: Covid-19 Is Not the Sole Reason for Mediocre Performance
- New Ruipeng is the largest pet care platform in China and second largest globally in terms of no.of hospitals and revenue from pet care services in both 2020 and 2021.
- The company has filed for an IPO in the US and plans to raise at least US$100m through the IPO.
- Though the company’s operations were negatively affected by Covid-19, our analysis shows that intense competition has led to the company losing its market share in the pet care services.
PINS 4Q22: We Don’t Chase Vanity MAUs
- MAUs grew just 5M or 1% QoQ while ARPU was flat. Little turnaround traction evident despite lots of empty statistics offered.
- Longtime CFO Todd Morgenfeld departing, offers vague margin expansion promises.
- Revenue and opex guidance for 1Q23 below consensus…not good for a consensus long.
Project Dorothy on Cusp of Energization; Revenue Generation Draws Closer
- Soluna’s flagship Project Dorothy has now entered ERCOT’s operations phase, putting it on the cusp of energizing and generating revenues.
- Texas electric grid operator ERCOT, which has held up the project while it created and implemented its Large Flexible Load approval process, has now moved the project through both of its multi-month-long planning and modeling phases where the project was evaluated for its impact on the Texas electric grid.
- A key milestone that allows Soluna to finalize the financing and set operational plans to energize.
eBay to Connect Fans With Athletes Using Sports NFTs
- In May 2022, I wrote about ebay, and how they were ‘skating to where the puck is going’ after they announced an exclusive deal to sell Ice Hockey legend Wayne Gretzky NFTs, at the time.
- We haven’t seen much of (2) from Ebay so far, but it looks like they’re trying to push hard on the natively digital front.
- One of the things that I also wrote about was how important a place Ebay became for the reselling of physical collectables during the Covid pandemic.
SGDJ: Underweight On Junior Gold Mining Stocks
- The Sprott Junior Gold Miners ETF’s investment strategy provides underwhelming value additivity.
- The ETF is experiencing cross-sectional momentum and hosts an alluring dividend.
- However, such features might not be enough to entice further gains. We do not think the ETF is a sell.
Verizon Stock: I See No Reason To Panic After Recent Guidance
- Verizon emerges from a second year in a row of disappointing shareholder returns.
- The halo effect of Berkshire Hathaway leaving is also contributing to sentiment becoming very one-sided.
- Verizon is still well-positioned to deliver on its strategy while offering a 6.3% dividend yield.
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