CE 100 Index Slips Slightly Despite Porch’s 58% Rally

Earnings season draws ever nearer to its close.

And for the Connected Economy 100 Index, headed into a shortened Thanksgiving holiday week, a few notable rallies were not enough to save a downtrend that saw the index slip by 2.1%.

CE100 Relative Performance

The most notable performance came with Porch Group’s eye-popping 58% surge through the past five sessions. The rally retraces the steep drop in the wake of results reported earlier in the month, where revenues were $75.4 million, up from $62.8 million last year. The company took note of macro impacts of inflation and unusual weather, and investors were quick to bid the stock lower. 

But this time around, the shares soared as the company announced the availability of the Porch app through its inspection software company, Inspection Support Network. The app, according to the announcement, allows inspectors to “extend the value of their inspection” by offering an interactive way for their clients to manage the information in their inspection reports. 

Tencent rocketed up 26% on the week, as the company reported results that showed revenues of RMB140.1 billion ($19.7 billion) a decrease of 2% over the third quarter of 2021. 

And though revenue from music and game-related livestreaming services decreased, according to management, revenue from video accounts livestreaming service increased, “reflecting more users, additional content, and enhanced recommendation efficiency to better match users to content,” according to James Mitchell, chief strategy officer. 

Impressive Gains, but Still Down Year to Date

Impressive though those gains were, and are, it should be noted that they’ve not been enough to erase a downturn that has seen Porch’s year-to-date performance stand 89.6% lower, and Tencent to list 18.5% lower through the same timeframe.

Communications names were down 5.6% through the week, led by Snap, which lost almost 9%, and by Zoom, which lost 7.5%. In the case of the latter firm, we’ll get a sense of traction for the company’s platform strategy when it reports earnings on Monday. In focus will be growth with new and existing enterprise customers.

Shopping-related names were roughly flat, as a group, for the week, which might come as a surprise given the numbers and commentary put up by Target this week. Management noted that pressures are impacting consumer spending, and promotions and price sensitivity are the hallmarks of the current environment.  Cutting prices, we note, helped buoy CE 100 component Walmart 5.4%. Walmart said its Q3 worldwide revenues rose 8.7%, with the U.S. business delivering 8.2% topline growth, led by a 16% advance in its expanding digital revenues.

“Our purpose of saving people money has never been more important as inflation remains consistently high,” CFO John Rainey said on the call, noting that high fuel prices and midteens food-price inflation have forced consumers to more tightly manage household budgets and show a bias in buying habits for everyday essentials.

And in those statements we find the key trends that likely will wind up impacting the CE 100 names well after the last of the earnings reports trickle in … and we look to the next spate of reports three months hence.

The consumer is the key driver of so many of the connected verticals, from shopping, of course, to leisure to banking. The trend may be toward using digital channels to get those activities done, but the path may be a bit bumpy, too, at least as measured in top and bottom lines.