Q: What do this newsletter and avocado toast have in common? 🥑

A: Both are something healthy you consume each morning, & they annoy the shit out of your friends b/c you won’t shut up about how amazing they make you feel.

This is Market Mood — the avocado toast of stock market news. Welcome.

THE EARNINGS HYPE IS HERE 🏆

It’s the biggest week of corporate earnings this quarter… BY FAR. 

Roughly 39% of the S&P 500’s total market cap is scheduled to report this week, i.e. 2 out of every 5 S&P 500 stocks has an earnings call over the coming days.

That means this week has HUGE implications for the trajectory of the stock market’s biggest index (S&P 500), & closes out one of the market’s biggest months since 2019.

So basically, if earnings shit the bed here, the market’s got plenty of room to fall. 💩

The question is, which of these stocks should we be paying most attention to? My guess is that it’s the ones with the most hype:

Most ‘OverHyped’ Earnings 🔥

The rule-of-thumb is that bigger companies tend to get more news coverage; partly because they’ve got a lot going on, and partly because news outlets know they get more clicks. To sound scientific, let’s call it a law:

But this isn’t always true — some stocks get waaay more news than their market cap would suggest (and others don’t get nearly enough). The stocks with more news per market cap are statistically overhyped… and these are the ones worth keeping an eye on. 👀

So we did, just to see. We went through all the articles, tweets, and blog posts mentioning any stock scheduled to report earnings heading into the week, & plotted out their total news volumes compared to their market caps — here’s the results:

As you’ll see, the stocks that fall below the trendline got way more news than you’d expect them to relative to their market caps (statistically). The further down & to the right, the more overhyped, with the most hyped being:

1. SoFi (reported yesterday) ☑️

2. Snap Inc. (reports this afternoon) ⏹️

3. Super Micro Computer (reports this afternoon) ⏹️

4. General Motors (reported this morning) ☑️

5. Peloton (reports Wednesday) ⏹️

Let’s take a look at why each of these stocks got so much news, and see if there’s anything about the ones that’ve already reported that can help us predict how the ones that haven’t reported yet will do. 👇

‘OVERHYPED’ OUTLOOKS🥔

☑️ SOFI

THE HYPE🟢 SoFi saw a lot of hype heading into the week for a few key reasons:

• 1) SoFi stock climbed more than 33% over the past month heading into this week (it had been *beaten* down last year, down -55%), and

• 2) SoFi was also one of the very first stocks to report this week, which gave it an extra lil boost in coverage.

THE OUTCOME🔥 SoFi dominates earnings & looks towards profitability

• SoFi reported strong Q4 results with revenue up 60% YoY and adding 480k new members in the quarter (up 51% YoY).

• The company is expecting 25-30% YoY growth in revenue for 2023 and is aiming for its first GAAP net income profitability at the end of 2023.

• The company has seen strong growth in deposits for SoFi Bank and has seen an increase in personal loan originations.

☑️ GENERAL MOTORS

THE (NEG)HYPE🔴 uncle GM looks boring vs. Ford and Tesla

• Heading into this week, General Motors got A LOT of talk, mainly in comparison to its megarival Ford, but also to Tesla after its report last week.

• Most analysts expected GM’s earnings to underperform vs. its peers. Straight negging.

THE OUTCOME🔥 GM blew expectations out of the water in its report this morning:

• GM lifted its full-year results to record levels for the second straight year.

• Its earnings came out to $3B (or $2.12 per share) — waaayy better than forecasts of $1.69 per share.

• The company also announced plans to purchase a $650M equity stake in Lithium Amercias, which will give it access to the raw materials needed to meet its goal of building $35B worth of electric and automated vehicles between 2020 and 2025.

⏹️ SNAP

THE (NEG)HYPE🔴 hype last week centered around the shifting digital ad space.

• The company is facing competition from TikTok, which is gobbling up market share, and its past two earnings reports have been brutal for the stock.

• Analysts are predicting revenue of $1.3B and an adjusted loss of -$0.11 per share.

• On the other hand, the company has seen a 23.3% gain in its stock price so far this year, and its institutional ownership is held at 55.00% while insider ownership was 8.50%.

• The options market is implying a one-day move of +21% following the earnings report.

⏹️ SUPER MICRO

THE HYPE🟢 analysts say Super Micro looks incredible heading into earnings:

• Super Micro Computer (SMCI) has seen impressive growth over the past year, with its revenue and earnings soaring 46% and 130%, respectively.

• Even though the stock is up 98% over the past year, it still trades 50% below its 10-year highs and the Zacks Tech sector at 9.5X forward earnings.

• SMCI has consistently topped earnings estimates, and recently upped its guidance for Q2 FY23 — lookin’ like a snack heading into the call.

⏹️ PELOTON

THE HYPE🟢 growth stocks like Peloton are back in the spotlight baby:

• Peloton has rallied nearly +54% YTD due to improved sentiment around growth stocks; significantly outperforming competitors such as Apple and Nike.

• That said, the stock did lose about -60% of its value during the past 12 months amid fading customer demand. Talk about a rollercoaster of emotion. 🎢

• Looking ahead, analysts are positive on Peloton into its earnings report on February 1, focusing on the company’s turnaround iniatives and cost reduction efforts

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.

SENTIMENT KEY: 🟢=bullish, 🌑=neutral, 🔴=bearish