Slope of Hope Blog Posts

Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.

Negative Sales Growth Emerges

By -

A much larger volume of filings last week lifted the 3rd quarter financial statement update to about 33% complete. Still too early to make any macro measurements but anecdotally we are seeing a large frequency of rising gross and operating profit margins at companies with negative and falling sales growth. That is the opposite of the last quarter when profit margins fell very broadly. We suggested back in July that layoffs were being delayed but this has now become reality as shown in the recent financial reporting.

Companies are beginning to assess the longer term now as it looks like businesses will be disrupted for an extended period. A higher gross profit margin for a negative sales company means that costs are dropping at a faster rate than sales. That is layoffs of production labor are imminent. Similarly, the only way for costs to decline when sales are negative is to layoff salespeople, administrators, and management.

(more…)

Bank On It

By -

I’m having another good day, in spite of the ES and NQ being green (and the NQ specifically being up nearly triple digits). There’s really one and only one reason for this: weak banks. For whatever reason, I am lassoed to bank stocks, even though they represent only a fraction of my holdings. As the intraday chart below shows, KBE is “catching down” to SPY (in black and blue, respectively, and appropriately):

slopechart KBESPY
(more…)

Exp World Holdings

By -

White Diamond noted that eXp’s stock price has surged more than 400% since mid-May, carrying its market capitalization to $3.3 billion. The company’s closest peers are ReMax and Realogy, which have market caps of $630 million and $1.1 billion, respectively. eXp’s gross profit last year was $84 million, compared to Realogy’s $1.1 billion and ReMax’s $210 million.

The White Diamond team said eXp’s recent rally was driven by a rapid increase in its agent growth and promotion of Virbela, the company’s virtual reality remote meeting program. They praised the company’s agent recruiting system but noted some drawbacks, like the generous commission structure, which is good for the agent but bad for the company. Further, the structure is a multi-level marketing structure.

(more…)