Target Stock Downgraded by Wells Fargo A Reminder to Focus on the Fundamentals

Target Stock Downgraded by Wells Fargo A Reminder to Focus on the Fundamentals

Wells Fargo in the last two days has downgraded Target's stock as it thinks the retailer is entering a period where traffic and comparables will be challenged.

What's Target to do? You can also simply translate it as "Target is not a value retailer" (duh) and Target's store-based fulfillment model is relatively "just-in-time" in an era where the supply chain may not be 100% smooth (Target does not have a lot of built-in buffers in its network).

One of the downsides of being a public company is the ever-present stock price and its distracting focus.

I learned this early in my career.

When Auctionrover (the company that would become ChannelAdvisor) got acquired by Goto in early 2000, it was the peak of the bubble. What happened in the next month was of course it burst, right at the start of a 6 month lockup period.

If you think watching the stock price on the way up is distracting, imagine watching it fall 90% during your lockup period.

First, it's all theoretical anyway. Don't be a "Robinhood trader" for your own company. Remind yourself how long you are in this for.

Second, put the stock price away. Recognize the macro forces.

Third, recognize you didn't get smarter the day before the stock went up, and you didn't get dumber the day after the stock went down. This is another way of saying: "Focus on the things you can control, period."

A great long-term business takes care of itself. Spend 80% of your time ensuring that you are aligned with long-term customer needs -- the stuff that is not changing over time.

Amazon has always been great at this kind of focus.

Count your blessings if you have a positive net operating margin, even during a recession. You can afford to think about the long term.

All others must make immediate adjustments before they can begin to focus on the long-term needs of the customers. With a 12+ year relative boom-time, many startups have not seen the inside of a recession.