Consumer Discretionary Spend in this Segment Shifted in May
June 21, 2022
Economic pressure is mounting for consumers.
Spending on credit is rising as consumers spin their wheels to keep up with the rising cost of living – including gas, food, and seemingly everything in between.
At LikeFolio, we’re watching for segments where consumers are reaching a tipping point. WHERE are consumers getting frugal?
After all, frugality mentions (which are typically extremely stable) have risen by +14% YoY.
One area we’re tracking recorded a significant drop off in consumer demand in May: electronics/discretionary devices.
Consider the YoY decline in consumer demand in key companies in the electronics segment, including GoPro, iRobot, Logitech, and even Best Buy:
On the surface, GoPro appears to be faring the best vs. its discretionary peers in this segment, but you can see a stark inflection point in May when you examine the company’s change in Earnings Score momentum over time:
This could be bad news for GoPro hopefuls.
After reporting traction in its move to become a more direct-to-consumer, subscription-centric business – subscribers rose to 1.74 million in Q1, up 85% YoY – consumers may be trimming what they deem non-essential.
You can see the uptick in mentions through May and the corresponding drop-off.
In the meantime, GPRO shares have struggled to gain steam, down over 43% this year and almost 50% in the last 12 months.
Looking ahead, we’re not betting on a turnaround for this company yet..and we’ve got our eyes on other names in the electronics sector who are faring even worse.
This is one of the first areas where we are seeing a noted shift in consumer spending. We’ll continue to monitor core consumer trends (and segment performance) for actionable opportunities.