Small-Caps Slide Hard

📉 Markets are seeing a whole lotta red, with small-cap stocks officially entering correction territory.

April 04, 2025

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In this issue of the peel:

  • 📉 Markets are seeing a whole lotta red, with small-cap stocks officially entering correction territory.

  • 👉 Global tit for tat retaliation ensues, with Canada and France becoming the first countries to respond to the US.

  • 🙃 Layoffs surged to a multi-year high, driven by the DOGE mandates for federal layoffs.

Market Snapshot

Banana Bits

Elon Dreams, Mode Mobile Delivers

As Elon Musk said, “Apple used to really bring out products that would blow people’s minds.”

Thankfully, a new smartphone company is stepping up to deliver the mind-blowing moments we've been missing.

Turning smartphones from an expense into an income stream, Mode has helped users earn an eye-popping $325M+ and seen an astonishing 32,481% revenue growth rate over three years.

They’ve just been granted the stock ticker $MODE by the Nasdaq—and the share price changes soon.

*An intent to IPO is no guarantee that an actual IPO will occur. Please read the offering circular and related risks at invest.modemobile.com.
*The Deloitte rankings are based on submitted applications and public company database research.

Macro Monkey Says

Government to Unemployment Pipeline

Layoffs are back in a big way, and it’s all because of DOGE. No, not the dog-themed meme coin tanking, but the Department of Governmental Efficiency. Also known as Elon Musk's side hustle.  

Since taking over, Musk has made Washington his playground, slashing wasteful spending left and right.

In what feels like a live-action episode of Silicon Valley meets C-SPAN, DOGE has officially triggered the biggest wave of federal layoffs since the pandemic. In March alone, over 216,000 government workers were cut loose—many through “voluntary” buyouts that felt about as voluntary as a Tesla recall. 

According to Challenger, Gray & Christmas, that’s the third-highest layoff tally in a single month since they started counting in 1989.

DOGE’s mission? Cut $1 trillion in spending. How? Think Musk’s playbook: slash, optimize, and hope Excel spreadsheets can run public policy. Entire agencies like the CFPB and USAID are either scaled down or axed completely. 

Ironically, some federal employees are getting paid through September not to work. So much for governmental efficiency!

So far, the YTD tally for federal government layoffs is up an astonishing 672% from the same period last year. Despite the large number, DOGE has been clear that it is not done. 

Reports indicate that the Veterans Affairs Department is on the chopping block for 80,000 jobs, and the IRS is in line for another 18,000 layoffs. The Treasury Department is expected to see a pretty big drop as well. No one can feel too safe.

The Takeaway?

If you’re reading this and working in the federal government, I would respond to those “what did you do this week” emails if I were you. DOGE is looking to cut $1 trillion in spending, and it doesn’t look like the organization is anywhere close to the finish line. 

Federal layoff announcements hit a multi-year high, up 672% YoY, with no discernible end in sight from the looks of it. 

Career Corner

Question

If net debt increases, the EV goes up and the EQV goes down. (Net debt = debt - cash). However, if debt increases, EV doesn’t change, and EQV doesn’t change. Is this correct?

Answer

For the second point, yes, as long as the new debt taken sits as cash on the BS, meaning the net debt remains the same.

To your first point, not such an easy statement. If your point is that you take on more debt and use that money to invest in the business, EV goes up, but equity value (from a book perspective) stays the same because you haven’t done anything to affect equity value (EV increases, but debt increases as well and no change in cash since you spent the funds, so equity value flat).

Head Mentor, WSO Academy

What's Ripe

Goodyear Tire (GT) 11.7%

  • ​Looks like some winners are emerging from the new era of tariffs. GT’s US-centric manufacturing shields it from rising production costs and makes the stock a rare bright spot in the market. Additionally, if tariffs increase vehicle prices for US buyers, consumers could theoretically extend vehicle lifespans, increasing demand for replacement tires.

Lamb Weston (LW) 10.0%

  • Lamb Weston hit a last-second buzzer-beater. After 12 straight months of stock declines, with the company losing half its value, the frozen potato giant surprised everyone with a rare positive earnings report. Their EPS beat analysts’ expectations by a long shot, primarily due to a solid cost-cutting program implemented by management. But revenue also increased due to strong demand. Despite all the economic turmoil around us, I guess people are still buying fries. 

What's Rotten

Restoration Hardware (RH) 40.1%

  • “Oh, Sh-t.” That is exactly what RH’s CEO said on the earnings call, watching his company’s stock trading today. You can look it up if you don’t believe me. I mean, the company’s earnings weren’t great, but geez, this is a massacre. The likely culprit is that the company has a robust supply chain in Asian countries, sourcing materials from them. Wayfair, another furniture company, saw a similar decline.

VF Corp (VFC) 28.7%

  • Shares of the clothing retailer got smacked down today. Once again, the story is that investors don’t even want to touch anything with heavy exposure to Asia, and VFC unfortunately has a lot of factories in the region. 

Thought Banana

Small Moves, Big Ambitions

In a bold move highlighting the evolving urban transportation environment, Rivian has spun off its micromobility division into a standalone entity named Also, Inc. 

Your first question is probably something like, “What is micromobility?” Well, there’s no need to feel embarrassed. We’ve got your back. Micromobility is basically the opposite of car ownership. Think of electric scooters, e-bikes, mopeds, etc., that people rent to travel short distances. 

This subsector of the auto industry has taken off, particularly in downtown areas where cars are more of a hassle than they are helpful. Rivian initiated the micromobility program a few years back, operating under the radar to explore the potential of compact electric transportation solutions. 

But then they realized they also have a full-scale business to run in the traditional car space. So, they decided to separate this division into its own company to focus on the core business of electric trucks and SUVs, while Also, Inc. can focus on the growing demand for eco-friendly urban transportation.

The acquisition makes sense because Rivian already has expertise in electric vehicle technology, and the micro-mobility market is expanding rapidly. By spinning off, Rivian allows the new company to grow in its own niche while still benefiting from its tech and innovation, positioning itself well for future growth in urban mobility.

Also, Inc. has secured $105 million in funding from Eclipse Ventures, which gives it some near-term financial runway to build out its operations and product development. 

The company's mission centers on delivering efficient, sustainable, and user-friendly electric vehicles. Its initial product launch, slated for early 2026, will target the US and European markets. 

By leveraging in-house technology, including motors, batteries, electronics, and software, it also aims to carve out a significant niche in the burgeoning micro mobility area.

The Takeaway?

This spin-off reflects a broader trend in the automotive industry, where companies are diversifying their portfolios to include a range of electric transportation solutions. As urban centers grapple with congestion and environmental concerns, the demand for innovative micromobility options is on the rise. 

Also, Inc.'s emergence signals Rivian's recognition of this shift and its commitment to contributing to the future of urban mobility.​

The Big Question: How will Also, Inc. differentiate itself in the crowded micromobility market dominated by companies like Lime and Bird?

Banana Brain Teaser

Previous

Team A and Team B are competing against each other in a game of tug-of-war. Team A, consisting of 3 males and 3 females, decides to line up male, female, male, female, male, female. The lineup that Eam A chooses will be one of how many different possible lineups?

Answer: 36

Today

A border of uniform width is placed around a rectangular photograph that measures 8 inches by 10 inches. If the area of the border is 144 square inches, what is the width of the border, in inches?

Send your guesses to [email protected]

❝

There is simply no telling how far stocks can fall in a short period.

Warren Buffett

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Happy Investing,
Chris, Vyom, Ankit & Patrick