The stock market has puked again. But I didn't smell it this week at the Goldman Sachs conference.
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Today's newsletter is by Brian Sozzi, an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
The stock market has puked again.
But I didn’t catch a whiff of that acidic stench while on the ground at the Goldman Sachs Communacopia + Technology Conference for a good chunk of this week. The conference was packed – Goldman tells me they had record registration and attendance (What pandemic and push to work from Zoom calls?). And it showed in the palatial San Francisco hotel where the event was held.
Breakfast, lunch and snack tables were brimming with bankers, analysts and CEOs (though not this journalist however – I lived on hopes, prayers, focus, adrenaline and caffeine – it’s just my modus operandi for conferences). Many presentations were standing room only, notably, as a source pointed out to me, the one held by Uber CEO Dara Khosrowshahi, whose comments were well received by investors, the source said.
All in all, a fascinating event to attend. But it was also one seemingly detached from the realities happening in the economy and in markets. Packed conferences aren’t exactly indicative of an economy falling apart and companies pinching pennies on expenses. Trends I heard on demand from CEOs didn’t strike me as warranting 5% to be wiped off the Nasdaq Composite by the close of trading on Tuesday.
Here are a few hot takeaways from the event – which I will split into two buckets. Bucket one: General takeaways from my gazillions of chats. Bucket two: Takeaways from the CEOs I interviewed on Yahoo Finance Live over the course of two days.
Overall takeaways
- Private companies with once lofty valuations and insane dreams continue to retrench. Look for these companies to be bought out within the year as founders toss in the towel on trying to be the next great public company. This is ultimately good news for more established companies as they can buy one-time threats on the cheap and further solidify their leads in key markets.
- On the topic of deals, expect them to pick up in the fourth quarter and early 2023. We aren’t too removed from knowing the Fed’s next moves on interest rates. I think companies with cash are seeing super attractive valuations on companies they have long coveted and are getting ready to make plays. This would be welcome news to the broader market as it would signal a valuation bottom in key sectors such as software.
- The stock market hasn't bottomed yet for 2022, most execs hinted strongly.
- Consumer and big business demand doesn’t appear to be falling off a cliff. Things haven’t accelerated much from the end of the second quarter (I didn’t see any guidance raises at the conference, for example) as deals are getting more scrutiny by CFOs, but they haven’t gotten worse.
- I still don’t think execs understand how much they will need to cut expenses to appease margin-focused investors.
- With valuations way down, investors are beginning to eye turnaround stories. This is a hard predictive game, so I encourage you to do your homework.
Company-specific takeaways
AT&T CEO John Stankey - Views the 6%+ yield on his stock as attractive – may be a bit before AT&T is back in dividend raise mode as it pays down its elevated debt pile.
- Apple’s new iPhones are off to a solid start.
- Customers are still under pressure — and delaying by a few days when they pay their phone bills.
ADT CEO Jim DeVries - If you are snooping around for a turnaround play, put ADT on your research list. Some impressive momentum is building in the business amid new smart home hardware introductions (from key investor Google). A new deal with State Farm – whereby the insurer is a 15% owner in ADT – looks attractive too.
Sonos CEO Patrick Spence - Reiterated guidance at the event, a positive.
- Uncertainty still present in how the holiday season shakes out, however Spence says the company will run its first holiday promotion this year.
Okta CEO Todd McKinnon - Tightening up the execution of the sales force now that Auth0 is in the fold will take some time. This execution remains an important source of debate for the stock among investors.
ZoomInfo CEO Henry Schuck - Schuck flies under the radar in tech CEO land, but he shouldn’t. ZoomInfo has been putting up impressive results, and my sense from our chat was the company is well-positioned into year-end. I like the company’s focus and tenacity, which comes from Schuck.
Expedia CEO Peter Kern - Another one of those aforementioned turnaround stories. If the economy doesn’t totally tank, investors may be favorably surprised by Expedia’s margins and cash flow in 2023.
Intuit CEO Sasan Goodarzi - The owner of MailChimp, Turbo Tax and Credit Karma is sticking with full year guidance that a lot of analysts see as optimistic. I get it – there’s lots of recurring revenue playing out at the company. Intuit could very well reiterate its guidance and lay out a bullish long-term vision at an investor day coming up later this month. Sidenote – I wouldn’t be surprised if Goodarzi pulls the trigger on another big deal within the next 12 months.
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| Note: Data is as of the time of opening this email. To view real-time markets data click here. |
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| What to watch today | Economy - Initial jobless claims, week ended September 10 (227,000 expected, 222,000 during prior week)
- Continuing claims, week ended September 3 (1.478 million expected, 1.473 during prior week); Empire Manufacturing, September (-15.0 expected, -31.3 during prior month)
- Retail Sales, month-over-month, August (0.0% expected, 0.0% during prior month)
- Retail Sales excluding autos, month-over-month, August (0.1% expected, 0.4% during prior month)
- Retail Sales excluding autos and gas, month-over-month, August (0.8% expected, 0.7% during prior month)
- Philadelphia Fed Business Outlook, September (3.0 expected, 6.2 during prior month)
- Import Price Index, month-over-month, August (-1.2% expected, -1.4% during prior month)
- Export Price Index, month-over-month, August (-1.1% expected, -3.3% during prior month)
- Industrial Production, month-over-month, August (0.1% expected, 0.6% during prior month)
- Capacity Utilization, August (-0.1% expected, 0.7% during prior month)
- Manufacturing (SIC) Production, August (-0.1% expected, 0.7% during prior month)
- Business Inventories, July (0.6% expected, 1.4% during prior month)
Earnings |
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