Here is the list of the most Hyped assets of the week insights and analysis
Feb 20 - Feb 24 2023
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Asset 1
DraftKings (NASDAQ: DKNG)
Background:
DraftKings is a digital sports entertainment and gaming company, and it has become a unicorn this month. It specifically features American daily fantasy sports contests and sports betting.
Summary:
While growth stocks have largely faltered in February due to "sticky" inflation, shares of the online gaming company have soared by 24.6% so far this month. Even more impressively, DraftKings' stock has climbed by a stately 80.3% since the start of 2023.
DraftKing’s latest earnings report showed that the company is attracting new users at a rapid clip, increasing the revenue per user at a steady rate, and, perhaps most importantly, lowering its fixed costs in mature markets.
DraftKings also raised the midpoint of its 2023 revenue guidance to $2.95 billion, an increase of approximately $10 million over its prior estimate. The key driver behind the company's soaring share price in 2023 is simply that its business appears immune to rising interest rates and stubbornly high inflation levels.
DraftKings' annual revenue grew by a staggering 81% year over year to $855 million in the fourth quarter.
Hype Change: 334%
Price Change: 25%
Sentiment: POSITIVE
DraftKings' stock may level out over the next two quarters as seasonality comes into play from an earnings standpoint. But this online gaming play ought to be a big winner for shareholders over the next few years due to the industry's stellar growth trajectory and DraftKings' proven ability to attract and, subsequently, retain customers.
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Asset 2
C3.AI (NYSE: AI)
Background:
C3 AI is a provider of Enterprise AI software for accelerating digital transformation. C3.ai is a software company that provides a range of ML-driven solutions that are tailored to specific industries and aimed at larger companies.
Summary:
C3.ai develops AI algorithms that can be integrated into an organization's existing software infrastructure to automate tasks, improve employee safety, cut costs, and detect financial fraud.
It's still gaining new customers, it expects its revenue growth to accelerate again, and its stock looks a lot cheaper than it did at the height of the meme stock rally.
C3.ai ended the second quarter of fiscal 2023 (which ended last October) with 236 customers, compared to 228 customers in the previous quarter and 203 customers a year earlier. As for C3.ai's revenue, which is only expected to rise 1% to 2% in fiscal 2023, Siebel predicted during its latest conference call that it could "return to a growth rate of greater than 30% year over year within the next 18 months." This bullishness initially led to a price increase of 65% very recently.
However, C3.ai’s customer concentration issues, its abrupt transition from subscriptions toward usage-based fees, and its shrinking margins all suggest its business is still in serious trouble (as indicated by the price decrease).
Hype Change: 116%
Price Change: -12%
Sentiment: NEGATIVE
Analysts expect C3.ai to stay deeply unprofitable for the foreseeable future. The risks outweigh the potential rewards C3.ai isn't doomed yet, but the bearish thesis makes more sense than the bullish one.
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Asset 3
DoorDash (NYSE: DASH)
Background:
DoorDash, Inc. is an American company that operates an online food ordering and food delivery platform. The company is based in San Francisco, California.
Summary:
Food delivery is a challenging business, DoorDash remains the king of the sector with an estimated 65% market share, but unfortunately, it hasn't converted its success into profits just yet.
DoorDash's revenue growth is accelerating, but there's a problem. Because of issues with competition that force prices to be driven downwards, DoorDash has experienced a steady drop in its gross profit margin.
Its fourth-quarter net loss does include a $312 million one-off impairment loss from an investment the company made, but even discounting that, it was still the steepest loss of 2022. Throughout 2022, DoorDash's operating costs increased by $2.4 billion. Its revenue, on the other hand, only grew by $1.7 billion.
Combined with its shrinking gross margin, the company found itself with a net loss that tripled on an annual basis from $468 million in 2021 to $1.4 billion in 2022.
Hype Change: 127%
Price Change: -19%
Sentiment: NEGATIVE
Based on all the signs, even if DoorDash's revenue growth continues to accelerate in 2023, its bottom line will still deteriorate further. Investors should proceed with caution with DoorDash stock.
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Asset 4
Devon Energy Corporation (NYSE: DVN)
Background:
Devon Energy Corporation is a leading independent oil and natural gas exploration and production company. Devon's operations are focused onshore in the United States. The company's portfolio of oil and gas properties provides stable, environmentally responsible production and a platform for future growth.
Summary:
Devon Energy is cash rich and offers a dividend with an attractive upside Devon Energy focuses on upstream operations, exploration, and oil production.
Last year was a record-setting year for the company, with a free cash flow of $6 billion and its highest level of oil production ever. This cash-rich position helped Devon make two acquisitions, RimRock Oil and Gas in the Williston Basin and Validus Energy, which immediately boosted production and cash flow.
Devon offers investors a fixed-plus-variable dividend policy, giving them a bigger payout when oil prices spike. The fixed portion comes from its operating cash flow, while up to 50% of the variable amount comes from excess cash flow.
However, the company has recently faced difficult headwinds and has decreased its dividend payment once again.
Hype Change: 124%
Price Change: -17%
Sentiment: NEGATIVE
While focussing on what seem like indications of a downfall, investors may be missing out on potential growth factors for Devon in the near future. This is a stock that investors should definitely keep an eye out for from now onwards.
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