Julie Hyman, Emily McCormick and Brian Sozzi discuss the quarterly earnings of Beyond Meat, Airbnb and DoorDash. Beyond Meat has reported deals with McDonald’s and Yum Brands, as stocks fall due to loss of profits. DoorDash and Airbnb exceeded estimates, while DoorDash said it expects a slowdown in sales.
Video transcription
JULIE HYMAN: Let’s talk about some of the companies with profits after yesterday’s close, in particular some of those hot names that have made IPOs in the past few days. And we started with Airbnb, the company posted a loss of $ 3.9 billion in the fourth quarter. Much of that was costs linked to the initial public offering and also some costs linked to loans because of COVID. But, of course, Airbnb has been one of those companies that has adapted remarkably and has also been lucky in its business, right, at the time of the coronavirus. Emily, you know, people don’t necessarily want to go to hotels in cities, they prefer to rent a house just for them somewhere in the country.
EMILY MCCORMICK: That’s right, Julie. And I think this is one of the great benefits that Airbnb has here. I mean, instead of going to a hotel where you’ll have to deal with a potentially crowded lobby, you can just rent an Airbnb for a longer period. And that is what consumers are looking for during the pandemic.
And when we look at that revenue line, it dropped 22% year over year, but even better than we feared when you think about some declines year after year that we saw in traditional hotel companies. And if you look at Airbnb, of course, with a market capitalization of more than $ 100 billion, that’s more than double what we see at Marriott, for example. And so I think this is really telling you that Wall Street thinks that the Airbnb model with that experience as a kind of rental of a fully home-oriented model is what consumers will continue to look for even when we start this reopening.
JULIE HYMAN: And another company that came out was DoorDash, which also, of course, benefited from people being at home and placing orders. And the numbers there are quite impressive, sales grew by 226%. But, Emily, and you covered those gains, the question is, what happens now with a company like DoorDash?
EMILY MCCORMICK: That’s right. And again, just taking a look here, DoorDash hasn’t done much to ease Wall Street’s concerns about growth going forward. They said the prospects remain quotes, “highly uncertain”. They said they cannot predict the short- or long-term effects that the reopening will have on consumer behavior. So, when you look at revenue growth of over 200%, more than tripling compared to last year, the question of whether this will be sustained.
And DoorDash itself is essentially saying that it won’t be able to sustain that kind of growth. And when you combine that with the fact that the company actually doubled its net losses on a year-over-year basis in the fourth quarter, something that is really weighing heavily on this stock. I mean, it is still high when you consider where it opened for its IPO and where those shares were traded, but it really dropped sharply last month, as we saw the rotation for these reopens.
BRIAN SOZZI: Yes, you know, and I’m just going to add Dash too, that’s a big point about slowing sales, Emily. In the most recent quarter, Door Dash sales increased by 226% for growing stock as the direction of DoorDash’s growth will make a difference. In the third quarter, its sales grew 268%. The Street is not going to like slowing sales growth in high-growth stock or supposedly high-growth stock like a DoorDash. And also, you know, in their press release, they highlight the directional trend in adjusted earnings. And if you look at this trend, just that trend line, it looks like it may have stabilized in the short term. Again, this is not something, Julie, that you really want to see.
JULIE HYMAN: Not definitely NO. Another thing that you watch closely, Brian Sozzi, is Beyond Meat. It’s such an interesting story, right? I have heard some ads for Impossible Whopper that are interesting in comparison and in competition with Beyond Meat. But the company said it was signing some new deals with McDonald’s and Yum Brands, even as reported – that revenue, as we are showing, that came in just below the estimate. So, are these deals overshadowing the numbers?
BRIAN SOZZI: I have a lot to digest this quarter. And I don’t know if I digested it completely, no pun intended this morning, folks. But, yes, they launched two new businesses for McDonald’s and Yum Brands. But really, the focal point, I think, is in the McDonald’s business. And I will note that, this is not an exclusive agreement with McDonald’s. And I tweeted that. This is a preferred deal.
And I think that leaves the door open for McDonald’s to use other herbal products in everything it decides to do with its herbal menu. And I think that maybe it initially put some pressure on the stock last night. Now it went up 8% this morning, which surprises me a little.
You know, on the earnings conference call, CEO Ethan Brown continued to highlight the pressure on the food service business. These sales fell about 42% in the most recent quarter. And I am – and I think investors have to be aware of a potential price war in the vegetable meat sector.
In the past few weeks, you have seen Impossible Foods announce that it is reducing the prices of its food for restaurants by 15%. Now they are taking it to retail, cutting it by 20%. Brown has now said he will not enter this price war. It just won’t do that. But you must ask yourself: when your biggest competitor is there cutting and burning prices, will you also get sucked in?
JULIE HYMAN: Well, it doesn’t look like the stock is being traded based on that perception right now. So, we’ll see what happens. It looks like investors may be taking his word for it now.