At Spaceship we’re long-term investors. But we still keep an eye on what’s happening in the market day-to-day. These were the companies in our Spaceship Voyager portfolios that made some big moves last week (02/05/22 - 06/05/22).

Top movers

Roku

(Roku is in the Spaceship Universe portfolio)

Roku, a streaming giant based out of the US, rose by 4.33% last week (02/05/22 - 06/05/22). Roku is like a one-stop-shop for streaming subscriptions offered through a hardware digital media player.

Last week, Roku announced quarterly results that saw it’s been steadily growing its user base and engagement. This is important because it makes it more attractive to advertisers, who seem to agree: its top 10 advertisers have boosted their spend by nearly 80% year over year, to Q1 2022.

Roku reported that at the end of Q1 2022, 96% of its advertisers who spend more than $1 million in the previous year had stuck with them (calculated year over year on a trailing 4 quarter basis).

There’s been a big shift to advertising on streaming channels in place of more traditional channels such as pay tv, and we expect the trend to continue.
As a growth stock, as at the end of last week, Roku was down by nearly 60% so far this year but is still expecting to grow sales by about 35% this year.

Spotify

(Spotify is in the Spaceship Universe portfolio)

Spotify, a digital music and podcast streaming service you’ve likely used before, rose by 3.08% last week (02/05/22 - 06/05/22).

A likely contributor to Spotify’s rise was the bold statement by CEO Daniel Ek, delivered through Twitter, that ‘Spotify’s best days are ahead’ confirmed with his personal $50 million investment in the company. Owners buying stock of their own companies is generally seen to be a good sign.

The company is focusing on creating more 'value per hour' for its subscribers, which means that it's dialling up the podcasting, news, and educational content offering in addition to music.

Spotify reported that its Q1 2022 podcast consumption rates grew double digits year over year (calculated year over year on a trailing 4 quarter basis).

When asked about how Spotify compared to Netflix, Daniel Ek argued that Spotify has a free service, and is a platform; whereas Netflix is a website that operates behind a paid subscription.

Spotify’s shares had reached an all time low in late April 2022 after its quarterly report underwhelmed investors.

Bottom movers

Temple & Webster

(Temple & Webster is in the Spaceship Universe portfolio)

Last week (02/05/22 - 06/05/22), Temple & Webster, Australia’s largest pure play online retailer in the furniture and homewares market came under selling pressure losing 25.42% after announcing its move into the $26 billion home improvement market.

The company launched The Build (www.thebuild.com.au), a new online-only store for home renovators, DIY and home improvement.

We think the total addressable market opportunity, improved long-term margin expansion and online-penetration story for the home improvement category looks attractive over the longer term, and is a natural progression from the Company’s core business.

We think the market’s reaction was driven by two main factors:

1. This new business will be loss making for several years, putting further pressure on margins that are already being impacted by supply chain disruptions, expensive shipping and freight costs, and

2. Macroeconomic data including rising inflation, weak online retail data out of the US last week and headwinds facing the Australian property market.

Despite these short-term factors being cause for concern, management's strong investment track record leaves us confident that they are investing in a long-term asset that should underpin the company’s sustainable-growth trajectory.

Cloudflare

(Cloudflare is in the Spaceship Universe and Spaceship Earth portfolios)

Cloudflare, a global cloud services provider fell 23.76% last week (02/05/22 - 06/05/22) as the market digested its most recent quarterly earnings report.

Cloudflare reported mixed Q1 results with revenue growth of 54% to US$212 million at the end of the quarter, which beat expectations but its loss per share of US$0.13 fell short of Wall Street expectations.

Cloudflare also reported sales and earnings guidance for next quarter (Q2 2022) which outperformed expectations.

We don’t think Cloudflare’s result was terrible, but highly valued software companies have been out of favour in this rising interest rate environment.

Unfortunately valuation tends to drive stock price performance in the short term but revenue growth is what drives long term returns, and we don’t think Cloudflare has any problem there.

Life360

(Life360 is in the Spaceship Universe portfolio)

Life360, which operates a market-leading mobile app for families, fell 17.87% last week (02/05/22 - 06/05/22) on no material news or developments.

The company fell out of favour with investors in April 2022 l upon release of their quarterly update to investors. Life360 reported strong revenue growth of 129% to US$52.7 million and Monthly Active User growth of 36% year on year, to 28.3 million users but a delayed US dual listing, widening losses and disruptions on operations from the Ukraine war weighed on investors’ minds. We believe the fundamentals of Life360 are still intact with a clear pathway to profitability in the next few years.

Uber

(Uber is in the Spaceship Universe portfolio)

Uber Technologies, the world’s largest mobility as a service provider, fell 17.10% last week (02/05/22 - 06/05/22) after they released their first quarterly earnings report of 2022.

Uber reported sales growth of 136% to US$6.9 billion for the quarter and an adjusted loss of US$0.18 per share, both ahead of analyst expectations and also reported that a total of 1.71 billion trips were taken on its platform during the quarter, up 18% year over year.

Uber’s sell off was largely driven by the announcement of sizable investment losses of ~US$5.9 billion on its strategic investments in companies such as Grab, Didi and Yandex.

Uber has seta 2024 target of having US$5 billion in Adjusted EBITDA and the company’s focus has now changed to being free cash flow positive (i.e. the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets).

Under the leadership of CEO Dara Khosrowshashi (who once headed up travel marketplace Expedia), Uber has transformed into a more diverse and will focus on becoming a leaner company, but more work needs to be done to prove to investors that their business model is sustainable.

Uber has had a tough few years due to the global pandemic, regulatory and macroeconomic issues, but we remain confident that Uber’s management will navigate through these headwinds successfully and are therefore bullish on the company’s long term prospects.

One or more of the Spaceship Voyager portfolios invest in Roku, Spotify, Temple & Webster, Cloudflare, Life360, and Uber. Please refer to the Spaceship app or our website for more information on what each portfolio invests in.

Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.

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