Trick or Treat? What You Need to Know About LEVI, SAM, and SNAP

Oct 29, 2022

The only thing spookier than finding Michael Myers in your home is increased volatility in the stock market.

And since the leaves began changing colors, the CBOE Volatility Index (VIX) has shown fear, uncertainty, and doubt are on the rise.

So, why is this happening now?

Investors have plenty to worry about — a slowing housing market, another Fed rate hike, recession odds rising, and a whole handful of other issues.

Turning to our proprietary Investor Fear Index, it’s abundantly clear that people are scared.

Negative mentions about the market are up 141% year-over-year (YoY) on a 365-day average.

1. Levi Strauss & Co. (LEVI)

Earlier this month, Levi Strauss reported Q3 results that were considered an ominous sign for retail stocks when it reported a 43% increase in inventory from the year before.

That overstock pressured the company to offer discounts, which weighed on profit margins.

The jean maker also lowered its revenue and earnings forecast for the full year.

Now down 38% for the year, is LEVI on the bargain rack? LikeFolio data suggests that it is.

Comprehensive demand for Levi’s clothing is at its highest level since 2013, and consumer buzz is up 71% YoY.

Levi is making a fashionable comeback that has yet to be appreciated by the market.

The 169-year-old company has successfully reinvented itself for modern tastes while still staying true to its roots.

Its products are finding favor with men and women who find the iconic Levi’s and Dockers brands fit their casual style while offering good value.

Yes, the next couple of quarters could be choppy with the discounted inventory, but the long-term outlook still looks good.

LikeFolio Goblin says: TREAT

2. The Boston Beer Co. (SAM)

Since reporting favorable earnings on Oct. 20, the SAM stock price climbed 17% in a week.

But our data suggests the market may have gotten ahead of itself on this one.

In the current quarter, Boston Beer Purchase Intent (PI) Mentions are down 34% YoY.

Part of the problem is slowing hard seltzer sales.

As new non-beer products have entered the market, consumer interest in seltzer has fizzled out.

PI Mentions of the company’s Truly seltzer brand are down 42% YoY. Management is tweaking its seltzer strategy by adding real fruit juice to its seltzers, but the novelty of this type of drink could be wearing off.

Hard cider seems to be less popular as well, with Angry Orchard PI Mentions slipping 28% YoY.

One possibility that could be affecting sales for Boston Beer Co. is the trade-down effect.

Inflation pressures may be causing folks to pass on premium adult beverages for cheaper options, which could be one reason why Budweiser mentions are up 29% YoY.

So, while the stock price may have recently moved upward, the Boston Beer Co. could still have some long-term issues with waning demand.

LikeFolio Goblin says: TRICK

3. Snap Inc. (SNAP)

The social media platform Snap was ghosted by investors after it released disappointing Q3 results.

The outlook for digital ad revenue worsened, and management also opted to skip guidance for Q4.

The stock price plunged nearly 30% on the news.

But a silver lining is that the consumer base still loves the art of the selfie and SNAP’s expanding social media platform.

Snapchat PI Mentions are up 32% YoY, and a turnaround may be in the making here.

Snapchat is still a must-have app for younger generations.

The company continued to add users at a good pace in Q3, with an increase of 57 million daily active users (DAUs) from the previous year.

We think its growing base of future consumers will be hard for advertisers to ignore over time.

The likely scenario is that ad spending eventually picks up.

In turn, SNAP’s financials and outlook should get brighter.

LikeFolio Goblin says: TREAT