What's Trending with TickerTrends #4
Your regular monitor for interesting social arbitrage ideas.
Your regular monitor for interesting social arbitrage ideas.
TickerTrend’s Monday Monitor is our overview of interesting social arbitrage event-driven trades and companies that could potentially benefit from these. We aim to find the best ideas driven by social arb. If you have any interesting ideas, feel free to contact us on X or join our Discord.
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Disclaimer. This newsletter is provided for informative purposes only. No significant due diligence has (yet) been performed on the names on this list. This overview does not constitute advice; always do your own due diligence.
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Earnings Recap:
You can get the transcripts for all earnings calls here: https://www.tickertrends.io/transcripts. This week the most prominent companies to report were the following and these are the highlights from the calls:
1. United Parcel Service, Inc. ($UPS):
UPS earnings showcased resilient financial performance despite ongoing macroeconomic headwinds, including a slower U.S. economy and softened online sales. Consolidated revenue reached $22.2 billion, marking a 5.6% year-over-year increase, while operating profit grew by 22.8% to reach $2 billion. UPS reported notable gains across its segments: U.S. average daily volume increased by 6.5%, and the company achieved a consolidated operating margin of 8.9%, an improvement of 120 basis points compared to last year. International operations also performed well, with a 3.4% revenue increase and an operating margin of 18%, up by 220 basis points year-over-year. Supply Chain Solutions saw growth in logistics, especially within healthcare, contributing to an 8% rise in revenue.
Key achievements included the company’s robust $4 billion year-to-date free cash flow, boosted by initiatives like Fit to Serve and Network of the Future, both aimed at enhancing productivity and cost savings. These productivity improvements are expected to bolster profitability further into Q4 and extend into 2025. Additionally, UPS has prepared for a tempered peak season, proactively managing customer demand with effective holiday surcharges and volume strategies.
For the full-year outlook, UPS anticipates revenue to reach approximately $91.1 billion, targeting an adjusted operating margin of around 9.6%. Capital expenditures are expected to total $4 billion, with $4 billion already paid in dividends this year. As UPS continues to adapt to a challenging economic landscape, its strong focus on cost control, productivity, and strategic initiatives positions the company well to maintain profitability and drive future growth.
2. Coca-Cola Company ($KO)
Coca-Cola expressed optimism for the company’s return to growth, pointing out that the macro environment remains resilient and affirming Coca-Cola’s control over its marketing, innovation, and execution strategies to propel growth through the fourth quarter and into 2025. A central focus for Coca-Cola has been its ability to adapt quickly to market demands, management cited several examples, such as the company’s expansion of affordable options, the strategic placement of cold drink equipment, and tailored marketing messages to meet the preferences of local markets. These measures form part of Coca-Cola’s agile marketing approach and have allowed the company to stay relevant in varying economic climates.
When asked about the sustainability of the mix component within Coca-Cola’s price mix, which stood at 3% this quarter, the management explained that it is driven by a balance of affordability and premiumization strategies. While some elements of the mix are influenced by temporary factors, such as growth variations in emerging markets, the company’s focus on both affordable and premium segments is a long-term approach aimed at sustaining revenue growth.
Addressing the observed softness in discretionary spending within North America, Quincey emphasized Coca-Cola’s response to shifting consumer behavior. With some households seeking greater value, Coca-Cola is adapting by offering combo deals and smaller pack sizes to cater to budget-conscious shoppers while maintaining a strong presence in segments less impacted by income pressures. Additionally, fairlife, Coca-Cola’s high-growth dairy brand, has become a significant contributor to North American sales, having surpassed $1 billion in revenue. Quincey highlighted fairlife as a major driver of Coca-Cola’s growth strategy, noting the company’s ongoing plans to expand fairlife’s production capacity to keep up with rising demand.
Trends this week:
Wendy’s Co ($WEN):
Wendy’s Boo! Bags and Frosty Frights kids' meals have quickly gained traction online, becoming a viral sensation this Halloween season. With themed collectibles like glow-in-the-dark figurines, Franken Frosty toys, and limited-edition meal deals aimed at both kids and "kidults," Wendy’s has successfully captured a wide audience eager for these seasonal treats. The brand’s $1 Boo! Books—offering free Frosty coupons while benefiting the Dave Thomas Foundation for Adoption—have further amplified engagement as fans purchase them not just for personal use but also to hand out for Halloween.
The hype surrounding Wendy’s campaign, especially on social media, signals strong brand affinity and is likely to drive increased foot traffic and sales, potentially benefiting the stock. By aligning their seasonal promotion with charitable giving and collectible merchandise, Wendy’s has tapped into both consumer excitement and goodwill, setting up a promising scenario for boosted revenues and enhanced brand loyalty during the holiday season. This buzz also suggests that Wendy’s could be a key player in seasonal offerings, helping maintain momentum into the final quarter of the year.
Wendy’s also continues to create excitement with its seasonal Frosty flavors, adding a fresh twist to its signature dessert lineup. The latest addition, the Salted Caramel Frosty, is set to drop soon after the popular Pineapple Under the Sea Frosty collaboration with SpongeBob SquarePants ends in November. This new salted caramel offering promises to bring a perfect blend of sweet and salty notes, aligning with the cozy, indulgent flavors that fans crave during the fall and holiday season. With its reputation for delivering fan-favorite limited-time flavors like the Peppermint Frosty, Wendy’s has high expectations to meet, and fans are already expressing their excitement on social media.
However, the buzz around seasonal Frosty flavors isn’t just a U.S. phenomenon. Wendy’s international menu continues to spark envy among American fans with unique flavors such as Rocky Road, Chocolate Covered Pretzel, and Mango Tajin available overseas. This diversity in offerings showcases Wendy’s responsiveness to local tastes and reinforces its position as an innovative player in the fast-food industry. With a strong brand presence both domestically and internationally, Wendy’s seasonal approach to the Frosty not only keeps the menu exciting but could also boost engagement and foot traffic, positively impacting the brand’s performance throughout the final quarter.
2. Philip Morris International Inc. ($PM):
Baker Mayfield’s unexpected sideline moment with a Zyn nicotine pouch during the Buccaneers game quickly went viral, sparking a mix of humor, surprise, and plenty of internet chatter. Just before attempting to turn the game around, Mayfield was seen popping a Zyn on the bench—a quirky habit caught live on camera that soon lit up social media, with fans playfully crediting the pouch for his second-half energy. Reactions ranged from supportive cheers to friendly banter, as fans joked that the Zyn might be his secret weapon.
This lighthearted moment put Zyn, a Philip Morris-owned brand, directly in the spotlight, positioning it as an unexpected player in the NFL conversation. While Mayfield may have received a reminder about sideline policies, the buzz around Zyn couldn’t have come at a better time. With football season in full swing, this fun, viral exposure could be a surprising plus for the brand, bringing it even more attention among fans and consumers alike.
McDonald’s Corp ($MCD):
On Friday, October 27, 2023, the Centers for Disease Control and Prevention (CDC) reported an E. coli outbreak linked to McDonald’s Quarter Pounders, which has resulted in at least 75 cases of illness across 13 states. This includes 22 hospitalizations and one confirmed death. The CDC’s investigation has pinpointed slivered onions sourced from Taylor Farms as the likely cause of contamination, though the beef patties for Quarter Pounders remain under examination. In response, McDonald’s has pulled the affected onions and specific patties from approximately 900 restaurants across states such as Colorado, Kansas, and Wyoming, reducing the risk to the public.
This severe outbreak could become a considerable challenge for McDonald’s, as both consumer confidence and investor sentiment could be impacted by the health crisis. With lawsuits already filed by affected individuals, McDonald’s might face increased regulatory oversight, substantial recall costs, and supply chain modifications. In addition, the outbreak presents the potential for lasting reputational damage, which could influence the company’s stock as it works to restore trust in product safety amidst the repercussions of this significant food safety incident.
Starbucks Corp ($SBUX):
Starbucks has brewed up a new collaboration with Universal Pictures to celebrate Wicked, creating a buzz across social media with the release of themed drinks and merchandise inspired by the iconic characters Glinda and Elphaba. "Glinda's Pink Potion" and "Elphaba's Cold Brew" have quickly gained popularity, drawing Starbucks and Wicked fans alike with their vibrant colors, whimsical names, and “Oz-dusting” of candy sprinkles. This alignment with such a culturally significant film launch has amplified Starbucks' visibility on platforms like TikTok, where both drinks are capturing the attention of younger audiences looking for unique and Instagrammable beverage options. As this excitement continues to build, the brand has a promising opportunity to capitalize on the virality of these drinks and foster customer loyalty among both Starbucks enthusiasts and fans of Wicked, potentially driving foot traffic and app engagement for the remainder of the holiday season.
However, while this collaboration may boost brand awareness, the impact on Starbucks' short-term financial performance could be more muted. The company recently reported a 3% revenue drop and a 24.5% decrease in adjusted earnings for the fiscal fourth quarter, falling short of analyst expectations. Sales were underwhelming in the U.S. and China, with the anticipated boost from fall offerings like the Pumpkin Spice Latte not materializing. Starbucks has also paused financial guidance for 2025, giving new CEO Brian Niccol time to address operational challenges and restructure elements of the business, including streamlining the menu and enhancing barista workflows. Although Wicked-inspired beverages offer a bright spot in Starbucks' marketing strategy, the company faces immediate obstacles that require effective execution of its new operational initiatives to see any meaningful financial turnaround.
Crocs Inc ($CROX):
On What’s Trending with TickerTrends #2 published October 14, 2024 (link), we covered the announcement of Crocs’ collaboration with Bark and the launch of their “Pet Crocs”. As we had predicted, this collaboration was super successful and led sold out within less than 24 hours.
The response was overwhelming. The comfy foam boots, available in green and pink and designed to match human clogs, sold out on the very day they were released, making it clear just how popular this quirky extension of the brand has become. These $50 dog boots were accompanied by glow-in-the-dark clogs for humans, still available online, allowing pet owners to coordinate with their furry friends in true Crocs fashion. Alongside these boots, Crocs also introduced a Halloween costume styled as a giant Croc shoe, offering die-hard fans a unique way to celebrate their love for the brand.
The success of the dog boots highlights Crocs' ability to tap into niche, playful markets, demonstrating strong brand loyalty and customer enthusiasm for unique, cross-generational designs. This launch not only underscores Crocs' appeal as a lifestyle brand but also opens up potential new revenue streams in the pet accessories market. Given the high demand, restocks or similar pet-focused products could become regular offerings, appealing to pet owners who already value Crocs' iconic comfort and style.
Hims & Hers Health Inc. ($HIMS):
Novo Nordisk's recent actions against copycat versions of its popular GLP-1 weight-loss drug, Wegovy, could pose a significant threat to Hims & Hers' GLP-1 offerings. Novo Nordisk has asked the FDA to add semaglutide, the active ingredient in Wegovy, to a restricted list that would prevent compounding pharmacies from manufacturing cheaper alternatives. While the FDA’s rule hasn’t yet been implemented, the Danish drugmaker’s request signals an intensified effort to curtail the compounded versions that have flourished in response to Wegovy’s supply shortages. If the FDA agrees to add semaglutide to the exclusion list, Hims & Hers and similar providers may lose access to the raw ingredients needed to produce these cost-effective alternatives for their customers.
This potential supply disruption is particularly concerning given the popularity of Hims & Hers' compounded GLP-1 offerings, which have helped the telehealth company capture a significant share of the weight-loss market. As Hims & Hers depends on 503B compounding pharmacies for mass production, it could face difficulties sourcing semaglutide if the shortage ends and these pharmacies are no longer legally able to manufacture it. Even as Novo argues the issue is about patient safety, compounding industry advocates see the move as a revenue-preserving tactic for Novo and Eli Lilly, both of which dominate the GLP-1 market. This increased scrutiny may further undermine the stability of Hims & Hers' GLP-1 revenue stream, which has already raised investor concerns over its long-term sustainability.
7. Abercrombie & Fitch Co ($ANF):
Abercrombie has been in the news this week but not because of its clothes. U.S. prosecutors allege that Jeffries, alongside his partner Matthew Smith and recruiter James Jacobson, orchestrated a sex trafficking operation from 2008 to 2015, exploiting young male models under the guise of offering career opportunities. According to court documents, Jeffries and his co-defendants allegedly coerced these men into attending "sex events," promising them potential modeling jobs and threatening career harm if they didn’t comply. The former Abercrombie & Fitch CEO Mike Jeffries pleaded not guilty to charges of sex trafficking and interstate prostitution. Prosecutors claim Jeffries and Smith organized travel and staffing to support these events, while Jacobson, the alleged recruiter, interviewed prospective participants and engaged in coercive acts during the selection process. The indictments paint a picture of an organized exploitation network facilitated through Jeffries’ connections in the modeling and fashion industry. If convicted, Jeffries, Smith, and Jacobson face serious consequences, including a maximum life sentence.
The accusations have thrust Abercrombie & Fitch back into the spotlight, potentially damaging the brand’s reputation. While Jeffries’ association with the company ended nearly a decade ago, his tenure as CEO was already marred by controversies, including discriminatory hiring practices and statements about the brand's image and exclusivity. For Abercrombie, these charges may reignite scrutiny of its past culture and the leadership practices under Jeffries. Although Abercrombie has rebranded in recent years to align with a more inclusive and diverse consumer base, the severity of these allegations risks casting a shadow on the company’s renewed image and may create challenges in maintaining public trust and investor confidence.
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