Trade Alert: Selling GLD and RIVN; Plus Earnings Updates

First off, we will do this week’s Live Q&A Chat today at the regular time (3:00 pm ET) in the TradingWithCody.com Chat Room or you can just email us at support@tradingwithcody.com.

We’ve got a couple of Trade Alerts to start. First, we are selling our remaining SPDR Gold Trust (GLD). We caught a great move in gold the last few weeks and want to raise some cash. Cody still owns physical gold and we might buy some GLD back for the hedge fund at some point in the future.

Second, we are getting out of Rivian Automotive (RIVN) after initially buying it between $12 and $14. The company had a pretty good quarter and even raised guidance for its full-year production. But Rivian is still losing a ton of cash (about $1.4 billion in operating losses this quarter) and won’t have positive gross margins until the second half of next year at best. Rivian’s vehicles are quite expensive and its cheaper second-gen vehicle won’t hit the market until 2026 assuming Rivian builds its Georgia factory on schedule and successfully ramps the vehicle as planned. Ramping a new vehicle model is extremely difficult, even for Tesla which is the best vehicle company (and maybe the best company) in the world. We do love the product itself but are increasingly worried about the risk of owning Rivian as it tries to reach profitability.

Now let’s discuss a few earnings reports on our remaining longs:

Uber (UBER) – Uber reported better-than-expected profitability but the topline had a slight miss. Importantly, the company still has a lot of growth drivers. For example, some of its latest growth offerings like taxis, two-wheelers, Uber for Business, and high-capacity vehicles are now collectively at a $9 billion annual run rate and growing over 80% per year. The company is also just getting started in many large countries like Germany, Spain, Japan, South Korea, Turkey, and Argentina, which collectively grew more than 150% y/y this quarter. We think Uber is reasonably valued even after this big run it has had. We still think it should still grow in the mid- to high-teens for the next four or five years and is starting to crank out some serious profits. We trimmed a small amount on yesterday’s pop.

Robinhood Markets (HOOD) – Robinhood missed on the top line mainly due to a continued collapse in crypto trading revenues. This should not be a surprise as bitcoin and most other cryptos were flattish during Q3 and other companies like Coinbase (COIN) also saw a steep dropoff in crypto trading in the quarter. Robinhood would have had its second consecutive quarter of GAAP profitability but for a $100 million charge related to legal/regulatory expenses that it disclosed earlier in the quarter. Importantly, the company is taking market share from other mobile trading applications (namely TD Ameritrade and E*Trade) and still had $4 billion in net deposits in the quarter. The entire fintech industry has been hit pretty hard with rising rates and tough equity markets, and Robinhood has been no exception. And the established players like Charles Schwab (SCHW) (down 33% YTD) and Morgan Stanley (MS) (down 12% YTD) have been hit much harder than Robinhood (up about 6% YTD) on a year-to-date basis including today’s drop. Robinhood is still a tiny player in the asset management/trading world and it still has a ton of growth ahead of it. The company will be launching its operations in the UK and crypto trading in the EU in the coming weeks. We are mostly sitting tight on this one for now.

Blade Air Mobility (BLDE) – Blade had its first-ever quarter of positive free cash flow and broke even on a GAAP EPS basis. This is remarkable as the company is still growing rapidly (50%+ Y/Y including acquisitions, and 26% on a pro forma basis). The company expects to continue to be cash flow positive and is sitting on $170 million in net cash on the balance sheet. Blade’s gross margin improved to about 22% and its entire short-distance airport business was profitable for the first time ever. Our main fear with Blade was that they would be forced to raise money at unfavorable terms but since the company is now cash-flow positive, that risk is somewhat alleviated. We are impressed with management’s execution thus far and think the company has a lot of growth ahead of it if the Blade team keeps up the good work. The stock is up about 30% as of the time of this writing and we did trim a little bit of common stock on this move. This is still a risky business and the company could see a downturn if the broader economy collapses, so we don’t want it to grow into a large position just yet.

That’s it for now. Disney (DIS), Instacart (CART), and NuScale Energy (SMR) earnings are on deck tonight. As always, be cool, don’t be greedy or scared.