BC TRADING
Saved by @jacobhtml

1/ How to review quarterly earnings 🧵

A step by step guide using $DXCM as an example

⬇️

 2/ The BIG question: Is the thesis on track❓

Other question:

❓Is revenue growing?
❓Are margins stable/expanding?
❓Profits?
❓Balance sheet?
❓New opportunities?
❓New threats?
3/ I open 4 browser tabs

Tab 1 - Current company earnings report / shareholder letter

Tab 2 - Previous company earnings report / shareholder letter (check guidance)

Tab 3 - Analyst estimates

Tab 4 - Call Transcript
4/ Tabs 1 & 2 - Find the current & previous earnings report

I search "Dexcom Investor Relations"

I click on "press release"

Open the newest quarterly earnings report and last quarter

It can also be a shareholder letter/presentation
5/ Tab 3 - Find the quarterly analyst estimates

Open up $DXCM in yahoo finance

The "news" section usually has a link to reports on whether the company beat/met estimates

The "analysis" tab is a good source, but sometimes it updates to the next quarter too quickly
6/ Tab 4 - Find a transcript of the earnings call

@themotleyfool transcripts are best

Sometimes links are on Yahoo Finance news

Search "Fool DXCM Transcript" if not

Seekingalpha / NASDAQ are two other free sources
7/ In most recent earnings, I check the headline numbers:

Revenue growth: 23% to $569 million
Revenue vs. Wall Street expectations (beat by 1.88%)✅

non-gaap EPS growth: -21% to $0.91

EPS vs. Wall Street expectations (meet expectation)✅
8/ Results vs. guidance

Management issued yearly guidance for 2020 in Q3 2020

Revenue +29% to $1.9 billion (actual +31% to $1.93 billion)✅

Non-GAAP Gross margin 66% (actual 66.7%)✅

Non-GAAP Operating margin 16% (actual 16.5%)✅
9/ Balance Sheet

$2.71 billion cash

$1.67 billion long-term convertible notes
10/

Margins

Use transcript / press release / or calculate yourself

Gross 70.2% vs. 66.8% (gross profit grew faster than revenue)

Non-gaap Operating: 18.3% vs. 22.5% (investigate!)

non-gaap Net: 15.8% vs. 22.9% (investigate!)
11/

News from press release?

✅Building out salesforce (explains operating margin & net margin drop)

✅Reimbursement in France
12/

Read through transcript:

✅Gross margin ⬆️ from new manufacturing facility

✅Super bowl commerical

✅New service center in Lithuania

✅New manufacturing site in Malaysia

✅New sensor launching in 2nd half 2021

✅Enter VC space
13/ Transcript

✅50% of sales now coming through pharmacy

✅International sales 35% of revenue

✅International DTC campaign launching
14/

2021 Guidance:

Revenue:
Management expects 15% to 20% growth

Wall Street expects 21%

Margins:
Gross ⬇️ to 65%
Operating ⬇️ 13%
15/

Management has a long history of under-promising & over-delivering, so I view these numbers as the floor, not the ceiling
16/

My big takeaways:

✅Revenue growing
✅Gross margin expanding
✅International expansion
✅Reinvestment year causing bottom-line to look worse
🛑2021 Margins will be weak
✅Move to pharmacy working
✅G7 launching in 2021
✅VC fund adds optionality

THESIS ON TRACK
17/

If you own $DXCM, the best move is to continue to do nothing
18/

Best guess is that $DXCM is in the top of the 5th inning of its growth cycle
19/ I email financial graphics like these every day for free

Interested?

https://t.co/SjeNPpNAHN

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Brian Feroldi
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2/ Mindset

Humans are programmed to think short-term

Evolutionary, thinking short-term makes sense. It helps with survival.

Financial wellness is all about training yourself to develop a long-term mindset

Not easy -- it takes practice


3/ Mindset

If you join the right tribes, you can’t help but improve

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@ChooseFiFI
FinTwit
@MicroCapClub
@themotleyfoolFool
@visualizevalue

Twitter / Podcasts / Blogs / YouTube -- when used correctly -- are amazing


4/ Mindset

Educate yourself - constantly!

Especially about:

1⃣Money
2⃣Relationships
3⃣Health

These 3 categories have an outsized influence on all areas of your life

Books


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In the beginning, focus on growing your income

Do more than what is expected

Become a lynchpin

Find a career that you ENJOY (<- important!) that also has high-income potential

Start a side hustle (<- important!)

Build your talent
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Accounting is the language of business.

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▪️Liabilities: What it owes
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At a fixed point in time

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A balance sheet is a SNAPSHOT of a company’s net worth.

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That’s different from an income statement or cash flow statement, both of which are measured over periods of time

All balance sheets follow the same formula:

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This formula must be in balance at all times

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This formula can be easily re-arranged into the “net worth” formula that you are already familiar with

Assets - Liabilities = Shareholders Equity (Net worth)
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Panic selling once can destroy years of good investment decisions in an instant

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Here are 13 investing tips/tricks/principles that I use to keep calm when my portfolio is in free fall:

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You can borrow stock ideas from other investors, but you can’t borrow conviction

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Look through the holdings of high-growth ETFs

Google the ETF symbol and “holdings”

These are worth cracking open:
▪️ $ARKF / $ARKG / $ARKK / $ARKW
▪️ $FFTY
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Thread on Short straddle with adjustments:

Short straddle is non-directional strategy

Selling same strike price CALL/PUT option same underlying with same expiry.

Nifty Spot at 14353, So you can sell 14350 CE as well 14350 PE of 14 Jan. Expiry.

(1/n)

*RETWEET for max response

Bullish short straddle: Selling 14400 CE and 14400 PE of same expiry.

Bearish short straddle: Selling 14250 CE and 14250 PE of same expiry.

You can sell straddle as per your market view.

If you are natural view sell CE and PE at ATM strike.

(2/n)

Short straddle has limited profit potential (only premium) and unlimited risk without adjustment.

In Example, Short straddle of 14350, Breakeven is (14131.0-14569.0), need 1.7Lac Margin to sell straddle.
Maximum profit: 16k and Loss: Unlimited, Winning probability: 50%

(3/n)


If market staying near at 14350 then win. Probability increase slowly. Rewards also increase slowly.

Volatility(IV) is also play important role in selling straddle, Like If IV increase so straddle premium increase and IV cool off so premium casually comes down.

(4/n)

Short straddle adjustment:
https://t.co/59Lr64kEtK way to limit the overnight risk.
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Nick Drendel \U0001f981 \U0001f6a2
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If I stuck to this one rule the day I started trading I would have...

• Saved $1,000's of dollars in losses.
• Sped up my learning process.
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If you're new to trading, make sure you stick to this 👇🏼

The 1% Rule 🧵

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The most important aspect of trading is risk management.

It's great to make money, but worthless if you don't have a system to keep it.

Over 50% of my trades are losses, but I'm still profitable because of the 1% Rule.

Keep losses small & let winners run!

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