Outdoor travel and camping retailer Camping World Holdings, Inc. (NYSE: CWH) shares have been on a rollercoaster ride after sinking to lows of $3.40 during the pandemic panic selling that shaved the benchmark S&P 500 index (NYSEARCA: SPY) by (-34%) in the five weeks ending March 24th. However, shares quickly rallied on the outdoors recreational narrative. This narrative saw the airlines and cruise ship’s losses as gains for recreational vehicles and outdoors activities that inherently incorporate social distancing. CWH shares peaked at $42.49 and has seen a cascade of “sell-the-news” profit-taking action that has plunged shares to oversold levels worth watching for reversions at opportunistic pullback levels for nimble traders and investors alike.
Q2 FY 2020 Earnings Release
On Aug 5, 2020, Camping World released its second-quarter fiscal 2020 results for the quarter ending June 2020. The Company reported a profit of $1.62 per share versus consensus analyst estimates for a profit of $0.61 per share, a $1.01 per share beat. Revenues grew 9% year-over-year (YoY) to $1.61 billion versus consensus estimates of $1.41 billion. The Company sold over 38,000 RVs and ended the quarter with $228 million of cash and $217 million in the floorplan offset account, the most cash in its history. Camping World ended the quarter with 2.067 million Good Sam members with an average spend of $1,850 per member annually. Unique website user sessions were 57.6 million, up 14 million YoY. The Camping World Chairman and CEO, Marcus Lemonis, ran the conference call. Lemonis is also the celebrity billionaire business advisor on CNBC’s The Profit and single largest shareholder with over 36 million shares. He stated specifically that the surge in traffic was not all COVID-19 related by a result of the strategies put into place in 2019. The Company did see the most first-time buyers in its history during the two-months into the end of the quarter. Lemonis stated, “It is estimated 11 million households in the U.S. owns an RV and as more people experience the outdoors, we believe there is an opportunity for significant growth in the number.
Sell the News Reaction
By all metrics, the numbers were amazing, yet shares sold off in reaction. CWH stock rallied 290% off its lows heading into the earnings report, triggering a sell-the-news reaction afterwards. However, further events caused shares to accelerate to the downside. While not significant, insider selling occurred in a filing on Aug. 20th, Camping World’s COO sold 12,000 shares for approximately $430,000 in proceeds.
Crestview Spoils the Party
On Aug. 19, 2020, one of Camping World’s largest investors Crestview Partners made an unusual move offering out 6 million shares through Morgan Stanley at $35.00 to $35.50 per share, with a 30-day lock up period for the unregistered shares. This was a 3.6% discount to the previous close near $36. The private offering is a conversion of 4.7 million class B shares to class A shares, which also pumps the existing float by 17%. This added further pressure on a diluted float with thinning bid liquidity. This action shook the proverbial “trees” causing more sellers to step in front of the lock-up. The fundamentals are gangbusters on this Company, the problem is the uncertainty in the underlying share structure.
Special Cash Dividend and Insider Buying
On August 20th, Camping World announced a special $0.17 per share cash dividend comprised of $0.09 regular dividend and an additional $0.08 special dividend representing a portion of excess tax distributions from CWGS Enterprises, LLC. On Aug. 25th, CEO Marcus Lemonis filed a Form 4 indicating 15,475 shares purchased at an average price of $32.23. This action did nothing to instill confidence as shares continued to collapse lower, which is presenting potential buying opportunities for risk-tolerant nimble traders and investors.
CWH Opportunistic Pullback Price Levels
Using the rifle charts on the monthly and weekly time frames provides a broader view of the landscape for CWH stock. The monthly rifle chart has been in a powerful double barrel pup breakout composed of a moving average (MA) pup breakout and stochastic mini pup. The 5-period MA support sits at $24.67 after pulling back under the monthly upper Bollinger Bands (BBs). The weekly rifle chart triggered a market structure low (MSL) buy above the $7.83 Fibonacci (fib) level. The weekly stochastic made a full oscillation on the mini pup and peaked out for a fall under the 80-band and channel tightening to the weekly 5-period MA at $28.83. This sets up a weekly make or break from here with upside trajectories towards the $33.05, $35.21 and $37.99 on a weekly stochastic cross up. Opportunistic pullback price levels are at $28.83 weekly 15-period MA, $27.50 sticky 2.50s zone, 25.35 fib and $24.67 monthly 5-period MA. fib and 22.95 weekly lower BBs. It’s also prudent to track the price action on RV makers WGO and Thor Industries (NYSE: THO) .
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