Latest news with #RVLV
Yahoo
28-05-2025
- Business
- Yahoo
1 Internet Stock to Consider Right Now and 2 to Brush Off
Whether it be online shopping or social media, secular forces are propelling consumer internet businesses forward. Luckily for them, the market seems to believe there is still more growth ahead. This assumption has helped the industry stand firm over the past six months with a flat return while the S&P 500 shed 1.9%. Nevertheless, investors should tread carefully as many internet companies pursue winner-take-all strategies, meaning losses can be hefty if their playbooks don't pan out. Taking that into account, here is one internet stock poised to generate sustainable market-beating returns and two best left ignored. Market Cap: $14.07 billion Founded by Stanford University students Evan Spiegel, Reggie Brown, and Bobby Murphy, and originally called Picaboo, Snapchat (NYSE: SNAP) is an image centric social media network. Why Are We Cautious About SNAP? Decision to emphasize platform growth over monetization has contributed to sluggish trends in its average revenue per user Costs have risen faster than its revenue over the last few years, causing its EBITDA margin to decline by 5.2 percentage points Earnings per share fell by 10.2% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable Snap is trading at $8.42 per share, or 21.9x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than SNAP. Market Cap: $1.43 billion Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve (NASDAQ:RVLV) is a fashion retailer leveraging social media and a community of fashion influencers to drive its merchandising strategy. Why Are We Out on RVLV? May need to improve its platform and marketing strategy as its 7.4% average growth in active customers underwhelmed Concerning trends in both user engagement and monetization suggest its platform's efficacy is declining as its average revenue per buyer fell by 4% annually Performance over the past three years shows its incremental sales were much less profitable, as its earnings per share fell by 18.5% annually Revolve's stock price of $20 implies a valuation ratio of 18.8x forward EV/EBITDA. Read our free research report to see why you should think twice about including RVLV in your portfolio, it's free. Market Cap: $2.46 billion Founded by PayPal alumni Jeremy Stoppelman and Russel Simmons, Yelp (NYSE:YELP) is an online platform that helps people discover local businesses through crowd-sourced reviews. Why Could YELP Be a Winner? Platform is difficult to replicate at scale and leads to a best-in-class gross margin of 91.2% Highly efficient business model is illustrated by its impressive 25.7% EBITDA margin, and its operating leverage amplified its profits over the last few years Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its rising cash conversion increases its margin of safety At $38.20 per share, Yelp trades at 7.2x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it's free. Market indices reached historic highs following Donald Trump's presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth. While this has caused many investors to adopt a "fearful" wait-and-see approach, we're leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today for free.
Yahoo
20-05-2025
- Business
- Yahoo
RVLV Q1 Earnings Call: Management Details Tariff Mitigation and Brand Investments Amid Macro Uncertainty
Online fashion retailer Revolve (NASDAQ:RVLV) met Wall Street's revenue expectations in Q1 CY2025, with sales up 9.7% year on year to $296.7 million. Its non-GAAP profit of $0.16 per share was 7.6% above analysts' consensus estimates. Is now the time to buy RVLV? Find out in our full research report (it's free). Revenue: $296.7 million vs analyst estimates of $297.4 million (9.7% year-on-year growth, in line) Adjusted EPS: $0.16 vs analyst estimates of $0.15 (7.6% beat) Adjusted EBITDA: $19.3 million vs analyst estimates of $15.3 million (6.5% margin, 26.1% beat) Operating Margin: 5%, up from 3.4% in the same quarter last year Free Cash Flow Margin: 14.6%, up from 0.6% in the previous quarter Active Customers : 2.7 million, up 152,000 year on year Market Capitalization: $1.49 billion Revolve's first quarter results for 2025 were shaped by a combination of steady consumer demand, notable gains in marketing efficiency, and ongoing investments in technology and owned brands. Management attributed performance to increased customer engagement, improved logistics, and a lower product return rate, while highlighting a challenging environment driven by shifting consumer sentiment and global tariff uncertainty. Michael Karanikolas, Co-CEO, noted, 'We achieved these strong results while continuing to invest in key foundations for long-term success, including advancing our AI technology and personalization capabilities.' Looking ahead, management's forward-looking guidance is heavily influenced by ongoing trade policy instability and cautious consumer spending. CFO Jesse Timmermans emphasized the dynamic impact of tariffs and the company's mitigation strategies, stating, 'Our outlook for gross margin is especially susceptible to variability given the uncertainty surrounding the timing and level of tariffs that will ultimately be in effect.' While management is taking a measured approach to inventory and cost planning, they remain focused on expanding owned brands, optimizing supply chains, and leveraging new retail formats to drive long-term growth. Revolve's leadership provided extensive commentary on the operational and strategic factors shaping Q1 results and the company's near-term positioning: Tariffs and mitigation focus: Management spent significant time outlining exposure to new tariffs and described a multi-pronged mitigation strategy—emphasizing that about 78% of inventory is sourced through third-party brands, limiting direct tariff impact. For products directly imported (primarily owned brands), the company is pursuing supply chain diversification, cost-sharing, and selective price increases. Marketing efficiency gains: Marketing investments became more efficient relative to prior periods, supported by the impact of large-scale brand events like REVOLVE Festival. Michael Mente, Co-CEO, highlighted that social media impressions and press coverage increased year-over-year while spend decreased, signaling effective brand-building. Shift in consumer price sensitivity: The company observed a move toward more accessible price points among shoppers, influencing average order values. Management reported higher markdown activity and noted that this trend was not isolated to the U.S., though it was most pronounced domestically. Owned brands momentum: For the first time in two and a half years, owned brands increased as a mix of net sales. Management reported these brands delivered higher gross margins and outperformed third-party brands on key metrics, with multiple new launches planned for later in 2025 and early 2026. Physical retail expansion: Construction is underway for a flagship Los Angeles store at The Grove, with management citing positive early data from physical retail, such as lower return rates and effective new customer acquisition. A new Head of Retail with extensive industry experience was recently hired to oversee this initiative. Management's outlook centers on navigating tariff-driven cost volatility, evolving consumer demand, and continued investment in strategic growth initiatives for the remainder of the year. Tariff impact and mitigation: The evolving global tariff environment is expected to remain a key driver of gross margin variability. The company is actively negotiating with suppliers, seeking alternative sourcing, and considering price adjustments to offset higher costs, but notes that the full impact is difficult to predict. Expansion of owned brands: Management anticipates owned brands will contribute more meaningfully to revenue and margin, given their higher profitability relative to third-party products. Planned product launches and deeper vertical integration are strategic priorities. Physical retail and customer experience: The opening of the Los Angeles store is seen as a test bed for further retail expansion. Management believes physical retail can enhance customer acquisition, reduce return rates, and strengthen overall brand presence, supporting long-term growth. Mark Altschwager (Baird): Sought clarification on the gross margin guidance's tariff assumptions and how quickly Revolve could pivot sourcing away from China if necessary. Management confirmed their guidance reflects best estimates of mitigation and noted supply chain changes for owned brands have longer lead times. Anna Andreeva (Piper Sandler): Asked if owned brand launches would be delayed due to tariffs and whether promotion strategies would change. Management stated some adjustments have been made, but key launches remain on track, and markdowns are driven by inventory algorithms rather than industry trends. Jay Sole (UBS): Questioned the magnitude of softer sales expectations and whether price increases might reduce demand. Management said they are moderating inventory buys and considering price elasticity, emphasizing flexibility and ongoing monitoring of consumer sentiment. Lorraine Hutchinson (BofA Securities): Asked how third-party brands are responding with pricing given tariff pressures and whether customers are showing resistance. Management reported some price increases by partners but no significant customer pushback yet, noting the situation is still evolving. Michael Binetti (Evercore ISI): Inquired about sustainability of lower product return rates and shifts in consumer behavior outside the U.S. Management expects improvements in return rates to moderate and reported that international trends are stable except for Canada, where policy changes have impacted demand. In the quarters ahead, the StockStory team will be closely monitoring (1) Revolve's ability to manage gross margin variability as tariffs fluctuate and mitigation strategies unfold, (2) the initial performance and customer traction of the Los Angeles flagship store, and (3) the continued growth and profitability of owned brands, especially as new product launches roll out. Additionally, trends in consumer price sensitivity and the impact of macroeconomic uncertainty on active customer growth will be important markers for execution. Revolve currently trades at a forward EV/EBITDA ratio of 19.7×. In the wake of earnings, is it a buy or sell? The answer lies in our free research report. Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,754% five-year return). Find your next big winner with StockStory today. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
13-05-2025
- Business
- Yahoo
Here's What Pressured Revolve Group (RVLV)
The London Company, an investment management company, released 'The London Company Small Cap Strategy' first quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. equities experienced a correction in 1Q25 due to macro risks, weak economic growth, and inflation. The fund declined 6.9% (-7.1%, net) compared to a 9.5% decrease in the Russell 2000 Index. The positive impact of stock selection contributed to the strategy's relative performance in the quarter, partially offset by sector exposure. For more information on the fund's top picks in 2025, please check its top five holdings. In its first-quarter 2025 investor letter, The London Company Small Cap Strategy highlighted stocks such as Revolve Group, Inc. (NYSE:RVLV). Revolve Group, Inc. (NYSE:RVLV) is an online fashion retailer for millennial and Generation Z consumers. The one-month return of Revolve Group, Inc. (NYSE:RVLV) was -0.42%, and its shares lost 11.97% of their value over the last 52 weeks. On May 12, 2025, Revolve Group, Inc. (NYSE:RVLV) stock closed at $19.79 per share with a market capitalization of $1.441 billion. The London Company Small Cap Strategy stated the following regarding Revolve Group, Inc. (NYSE:RVLV) in its Q1 2025 investor letter: "Revolve Group, Inc. (NYSE:RVLV) - RVLV sold off heavily in the first quarter as tariff developments pressured sentiment. The company reported notable sales and margin momentum. We remain confident in the company due to its premium-priced retailer status, high full-price sell-through rate, and proven ability to pass through tariffs in 2019. Additionally. RVLV's self-help initiatives targeting operating expenses should help offset any gross margin challenges." A modern fashion boutique lit up with neon display signs. Revolve Group, Inc. (NYSE:RVLV) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 24 hedge fund portfolios held Revolve Group, Inc. (NYSE:RVLV) at the end of the fourth quarter compared to 18 in the third quarter. In the first quarter, Revolve Group, Inc. (NYSE:RVLV) reported net sales of $297 million, marking a 10% increase from Q1 2024. While we acknowledge the potential of Revolve Group, Inc. (NYSE:RVLV) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. In another article, we covered Revolve Group, Inc. (NYSE:RVLV) and shared Optimist Fund's vies on the company. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks. Disclosure: None. This article is originally published at Insider Monkey. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
31-03-2025
- Business
- Yahoo
3 Reasons to Sell RVLV and 1 Stock to Buy Instead
Over the last six months, Revolve shares have sunk to $22.10, producing a disappointing 10.8% loss - worse than the S&P 500's 4.1% drop. This may have investors wondering how to approach the situation. Is now the time to buy Revolve, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it's free. Despite the more favorable entry price, we're sitting this one out for now. Here are three reasons why RVLV doesn't excite us and a stock we'd rather own. Launched in 2003 by software engineers Michael Mente and Mike Karanikolas, Revolve (NASDAQ:RVLV) is a fashion retailer leveraging social media and a community of fashion influencers to drive its merchandising strategy. Average revenue per buyer (ARPB) is a critical metric to track because it measures how much customers spend per order. Revolve's ARPB fell over the last two years, averaging 6.6% annual declines. This isn't great, but the increase in active customers is more relevant for assessing long-term business potential. We'll monitor the situation closely; if Revolve tries boosting ARPB by taking a more aggressive approach to monetization, it's unclear whether buyers can continue growing at the current pace. Investors regularly analyze operating income to understand a company's profitability. Similarly, EBITDA is a common profitability metric for consumer internet companies because it excludes various one-time or non-cash expenses, offering a better perspective of the business's profit potential. Analyzing the trend in its profitability, Revolve's EBITDA margin decreased by 6.7 percentage points over the last few years. This raises questions about the company's expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its EBITDA margin for the trailing 12 months was 6.2%. We track the change in earnings per share (EPS) because it highlights whether a company's growth is profitable. Sadly for Revolve, its EPS declined by 19.9% annually over the last three years while its revenue grew by 8.2%. This tells us the company became less profitable on a per-share basis as it expanded. Revolve isn't a terrible business, but it doesn't pass our quality test. After the recent drawdown, the stock trades at 19.5× forward EV-to-EBITDA (or $22.10 per share). This multiple tells us a lot of good news is priced in - we think there are better stocks to buy right now. We'd suggest looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce. The Trump trade may have passed, but rates are still dropping and inflation is still cooling. Opportunities are ripe for those ready to act - and we're here to help you pick them. Get started by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Sterling Infrastructure (+1,096% five-year return). Find your next big winner with StockStory today for free. Sign in to access your portfolio
