This Stock Just Dropped 40% in 40 Minutes!

Link to join StockHub free investing discord server: Want to join our free STOCKHUB discord chat? Here is the link

Holy smoke is this ain’t no jokers i just watched a stock price go down 40% in a matter of 40 minutes a percent a minute okay this suck here today is called home stock ticker symbol home okay this stock is down over 40% and i watched it drop that much literally in a matter of 40 minutes okay we’re gonna go ahead and look at the numbers here around the stock we’re

Talking about there’s value to be had in the stock the risk reward profile with the stock like this and if you remember right this is a stock i was in for a very short amount of time and then i’m doing a video basically i sold out of all my shares this was very interesting okay but wait if you’re wondering why i sold out of all my shirts you don’t have to go back

And watch that video essentially the main reason was the balance sheet i just couldn’t deal with the balance sheet the balance sheet on the stock was so bad and that was the main overwhelming reason and i was just like i can’t be in this stock because the balance sheet was so bad so i sold it all did a video about it and then it got real real interesting after i

Sold out of this stock okay keep in mind i still out of the stock probably a little under 6 bucks this year i think it was like high fives okay and as soon as i sell out of this stock somebody shoots a pistol in the air and they say oh okay okay who’s gonna win to mars first is it gonna be elon musk or is it gonna be home stock price and literally home stock price

Almost got to mars first like literally in such a short amount of time the next thing you know the stock was like trading around $10 a share in a matter of about a month or two after i had sold out it was unbelievable it was unbelievable how fast the stock shot up after i sold out okay and a lot of people were asking me oh my gosh you must be frustrated because

Literally i could have made tens of thousands of dollars profit in this stock based upon what i had in the stock and based upon how much it went out and i remember like being in the dischord chat and people were asking me all that time about home stock at all man and everybody was posting their screenshots cuz a lot of people had bought into home stock and a lot

Of people had made a lot of money and they were like showing oh i cashed out with you know the made of the $500 profit $6,000 profit i remember there was one guy in there that made i think somewhere around 50,000 to $75,000 on home stock so it was awesome i liked i enjoyed it for everybody everybody made homes the money on homes talking except for me i think but

It’s all good and whenever you make a fundamental decision with the stock like that you just have to deal with it for better for worse whatever happens with that stock price after you sell out is whatever happens okay sometimes you’re gonna sell out and the stocks gonna go up a ton more it is what happens i made a fundamental decision around selling out that stock

I didn’t like the balance sheet it was too bad for me to feel comfortable holding that stock and i sold out okay enough by the way here today now after hours the stock is trading at like low five so technically it’s actually quite a bit below where i sold out my shares so now if you look back net net i mean obviously it was a good decision because i sold at a much

Higher price than where the shares are trading at right now okay now let’s go ahead and look at these numbers home reporter here after hours and see if this stock really deserves to be down as much let’s talk about a little bit of risk reward profile with a stock like this okay by the way if you enjoyed this video make sure you guys smash that thumbs up button leave

See also  Igng ON FIRE

A comment down there on what your opinion is on home stock home earnings for the home decor retailers fiscal third quarter of 2020 are devastating home stock in after-hours trading on tuesday an investor place get things together okay it is wednesday today it is not tuesday investor place okay this is despite it reporting flat eps for the quarter which is better

Than wall street’s negative two cent estimate revenue came in at 318 million which is also above what analysts were expecting which was around three hundred and fourteen million so revenue you look at there and it looks really good i mean revenue looks up nineteen point two nine percent me like man why would a stock fall like this well a lot of it’s just because

They opened up more stores okay there’s not because the older stores are performing well i something like that’s just because they’re opening a bunch more stores that’s how they got that revenue growth okay operating income came in at just under two million dollars which is nearly a 90% drop year-over-year that home earnings report also sees a company move from a

Net profit in fiscal q3 2019 to a net loss in the current quarter how did the ceo spin this okay he says we delivered our 23rd straight quarter of at least hi teams revenue growth and exceeded our profit guidance driven by strong productivity of our new stores in out performance in our fall and halloween assortment and the numbers don’t say that ok mr. ceo liebhard

Okay the numbers flat-out don’t say hey your fall and halloween assortment did good it based upon the profit loss numbers it doesn’t look like you have very strong productivity to be completely honest ok we’re also pleased that our discipline effort to improve our inventory position has been highly effective i can make an argument that that’s not so good either

We’ll look at the balance sheet in just a minute now in terms of big issue with at home it had to do with their guidance and this is the main reason why the stock is falling off a cliff right now ok the problem in the at home earnings report comes in with this lower guidance from fiscal 2020 the company now expects adjusted earnings per share to range between 51

Cents to 56 cents and revenue to come in at one point three five billion to one point three six billion that is dramatically down from what wall street was expecting they were expecting about 68 cents okay pretty close in the revenue numbers but the eps dramatic difference yeah i’m talking you know a midpoint there’s about 54 cents as far as what the company expects

In wall street was expecting 68 cents so that’s really really bad i mean that’s a dramatic down take there and 2020 numbers expected and i mean the the profit for this company is just being eroded and erode it and this is one of the reasons that the stock has gotten down so much recently i mean if you look at a one-year chart of the stock is absolutely like one of

The worst one-year charts you’re gonna find of many public companies and a lot of investors are saying like they the profit continues to go down management doesn’t seem to have a grip on this but there’s even more of a worrisome thing here in some of these numbers that i don’t think a lot of people are paying attention to okay and if you look at comstor sales which

Is essentially if you have a store open for at least a year is they’re doing more business or less business in the same time last year and the fact is comstor sales decreased two percent year-over-year in its most recent quarter that’s an extremely bad sign and that is definitely a sign that the business is not being run well okay flat out however the ceo wants

See also  Stock Market For Beginners HUGE MISTAKES I Made

To spin things here and say they had you know successful fall assortment in the halloween assortment it doesn’t show that in the numbers liebhard your same store sales just fell two percent year-over-year so flat out whatever they’re they’re not getting enough customers in the store and whatever customers they are getting in the store they’re not spending enough

Money okay so that’s just like like whatever however they want to spin it just look at the numbers down two percent year-over-year that means your stores are doing less business then the same quarter last year bad bad sign for any physical retailer bad bad sign for any restaurant play whenever you see them having less business in their old store especially in an

Economic environment that’s completely fine they’re us-based us economy is fine like like you know many other businesses are flourishing right now and obviously at home is not now the main issue i always had with the stock and the main reason i sold out of the stock was around the balance sheet okay and okay if we take a peek at the balance sheet here it’s improved

A little bit since i sold out okay so now they’re up to a little over 14 million dollars in cash now at this point in time but keep in mind they still have three hundred and thirty five and million dollars in long-term debt okay so they still have a massive load of debt they do have a little more cash than they had before so that is a slight improvement and i like

To see that but it’s still you know not a very big number okay it’s not a very big number and i’ll tell you just a minute why a lot of investors should definitely be worried about that and why it is definitely a risky stock to be involved with i’ll explain that in just a moment but also you look at inventories inventories now up to 431 million okay versus 349 and

They did increase how many stores they have so obviously the more stores you have the more inventory you need but at the same time like if i just go to like my local at home i’m just seeing they have too much inventory in a lot of these stores i guess just piled up to the sky and it’s just it’s too much inventory in my opinion they need to cut down on inventory

Dramatically in my personal opinion in 2020 they’re keeping way too much inventory in their stores in 2020 and you know what too much inventory and a physical retail store can lead it to end up looking messy over time and you never want you know customers to come in your store and walk through your store in it to feel like a messy environment okay but once again

Here’s the main issue and here’s why the risk reward is not as attractive as one might seem okay essentially you look in that company with fourteen million cash three hundred and thirty five million in long-term debt okay the main issue with this is okay right now it’s not an issue right because technically the company will still make a profit on a yearly basis

And next year they’ll probably make a profit on a yearly basis so it doesn’t look like this is an issue right now as long as you can keep making profits everything’s fine and dandy okay but whenever we do have the next recession this is gonna be a major problem and the reason this will be a major problem is all son what ends up happening in a recession scenario

Likely a company like at home will start taking losses okay we’ll start taking losses in the short term when they start taking losses in the short term they’re gonna run through that amount of fourteen million dollars or whatever in cash in a matter of a snap of fingers okay run through that real quick then you have to load up on a bunch more debt k and if you’re

See also  Dramatic Gilead USO and Gold Stock Movements

In a recession you’re loading up on more debt one designing guaranteed you’ll get the funding okay so if you don’t get the funding you go bankrupt let’s say you do get the bankrupt if it’s in a recession scenario likely you have to pay a higher interest rate than you would have in a different situation in a better economic environment because you know the bank’s

Just don’t want to learn as much money or individuals don’t want to loan as much money and that’s just the way it is so a stock like this could end up start losing money then get a ton more down in their balance sheet and maybe not such favorable interest rates or they maybe can’t even get a loan in general and they just go bankrupt okay so they’re running the

Business way too tight right now in my personal opinion way too tight they’re not the only ones doing this okay and i see this from another retailer out there that’s been a super hot stock and their stock is rho k rh the good thing for rh is they do cater to the high end of the market which the high end of the market even if there is a recession they’re not as

Much of a group that would have to pull back on spending or things like that because it’s like if you have like 50 million dollars before a recession you still have like 25 million after a recession like you’re still super rich you used for like new furniture @rh which is what they can or the high-end market but i see the same thing with rh a lot of debt on their

Balance sheet and they run the business so tight and you have these type of retailers running their business so tight right now that man whenever whenever a recession does happen and we don’t know when the next one is but whenever it does happen these are a lot of business models that could end up going bankrupt or end up having to load up on a lot more bad debt

And so when i look at home stock it you know excites me from the perspective of you know if they could get this business to grow again in terms of comp store sales and if they could get the profit to go back up i mean this could be a stock that you could see a 2 x 3 x maybe even 4 x and the stock price but the risk on the other side is men this is like this is a

Potential bankruptcy candidate if they started actually losing money because they don’t have much cash to go through a tough time with this business model so or they just have to take out a ton more debt and then they load up that balance sheet also next thing you know they got 450 million in debt a half a billion dollars in debt with a company of this size that’s

A massive massive debt load that you have to pay that interest on and that interest just keeps compounding compounding those numbers keep getting bigger so when i look at at home it’s tempting at 5 bucks this year but the balance sheet i just can’t touch it because of that balance sheet guys so you know respect if you want to buy it you know tomorrow or 5 bucks

To share or whatever personally i just can’t do it cuz that balance sheet it’s just it’s so bad it’s so bad to run the business way too tight in my opinion i worry a lot if the economy was to go down how big of the losses they would start taking and you know what that would do for the business models so anyways let me know your opinion on at home in that comment

Section don’t forget to smash the thumbs up button if you enjoyed today’s video as always thank you for watching have a great day

Transcribed from video
This Stock Just Dropped 40% in 40 Minutes! By Financial Education

Scroll to top