US FINANCIAL MARKET

U.S. Stocks Turn Lower, Extending Selloff – Wall Street Journal, 5/10/2022

• U.S. stock indexes rebounded early Tuesday, before dropping back into negative territory, following three days of punishing declines.
• The S&P 500 was recently down 0.5% in morning trading, a day after the broad index slumped 3.2% to its lowest level for the year.
• The technology-heavy Nasdaq Composite dropped 0.4% while the Dow Jones Industrial Average fell about 0.5%. All three indexes retreated over the course of the morning after rising at least 1.6% early.
• Federal Reserve Bank of New York President John Williams said Tuesday that he believes the Fed can achieve a “softish landing” for the U.S. economy while raising rates, though the unemployment rate could rise.
• Peloton Interactive fell 11% after reporting declining sales and mounting losses as the stationary-bike maker struggles with the return to prepandemic consumer habits.
• Biohaven Pharmaceutical surged more than 70% after Pfizer said it would buy the rest of the company for around $11.6 billion.
• AMC Entertainment Holdings rose more than 8% after reporting a strong jump in first-quarter sales.
• Brent crude oil fell 0.3% to $105.59 a barrel.
• Oil prices had been rising for the past few months, but concerns that China’s lockdowns will sap demand for commodities have taken some steam off the rally.
• Overseas, the pan-continental Stoxx Europe 600 rose 1.5%.
• In Asia, Japan’s Nikkei 225 closed 0.6% lower, the Shanghai Composite rose 1.1% and Hong Kong’s Hang Seng Index dropped 1.8%.

Upstart Stock Plunges 54% as Full-Year Revenue Outlook Is Cut – Barron’s, 5/10/2022

• Shares of Upstart were falling more than 54% Tuesday after the artificial-intelligence lending company slashed its full-year revenue outlook, noting the possibilities of a recession.
• Upstart reported first-quarter adjusted earnings of 61 cents a share, beating forecasts of 53 cents, and revenue of $310.1 million, higher than estimates of $300 million.
• Upstart said it expects revenue in 2022 of about $1.25 billion, down from its previous forecast of $1.4 billion. The company said revenue in its second quarter will be about $295 million to $305 million, below Wall Street forecasts of $335 million.
• “Given the hawkish signals from the Fed, we anticipate prices will move even higher later this year, which will have the effect of reducing our transaction volume, all else being equal,” Chief Executive Dave Girouard said.
• Upstart Chief Financial Officer Sanjay Datta also highlighted rising interest rates and said higher inflation and monetary tightening from the Fed implied “the non-trivial risk of a recession potentially later this year.”

Peloton shares fall after company posts huge loss and offers weak guidance – CNBC, 5/10/2022

• Peloton on Tuesday reported a wider-than-expected quarterly loss and a steep decline in sales, as inventory piled up in warehouses and ate away at the company’s cash.
• Revenue dropped to $964.3 million from $1.26 billion a year earlier. That was short of expectations for $972.9 million and marked the company’s first year-over-year decline in sales since it went public in 2019.
• Peloton generated $594 million in sales from its connected fitness products and $370 million from subscriptions in the latest period.
• The company ended the quarter with 2.96 million connected fitness subscribers, representing a net addition of 195,000.
• Average net monthly connected fitness churn, which Peloton uses to measure its retention of connected fitness subscribers, improved to 0.75% during the period, compared with 0.79% in the second quarter.
• Peloton’s losses widened in the fiscal third quarter to $757.1 million, or $2.27 per share, from a net loss of $8.6 million, or 3 cents a share, a year earlier. That came in larger than the per-share loss of 83 cents that analysts had been looking for.
• Peloton is calling for fourth-quarter revenue to be between $675 million and $700 million.
• Analysts had been looking for $821.7 million, according to Refinitiv estimates.
• The company expects connected fitness subscribers to total 2.98 million, which would represent just a 1% increase from the third quarter.

Fox’s Revenue Rises With Higher Ad Sales, Fox News Ratings – Wall Street Journal, 5/10/2022

• Fox won’t use its portfolio of live sports to boost its streaming platforms, Executive Chairman and Chief Executive Lachlan Murdoch said on a call with analysts to discuss quarterly results.
• Quarterly revenue rose 7.5% to $3.46 billion.
• Fox said advertising revenue rose about 9% to $1.31 billion.
• That was offset by higher preemptions related to its coverage of the war in Ukraine.
• Affiliate revenues rose as well, largely on contractual price increases and higher fees from pay-TV distributors.
• Tubi has 51 million active users, the company said earlier this month. It also has a library of 42,000 titles and is increasing its original programming.
• Net profit halved to $283 million, a decline that the company partly attributed to a change in the fair value of its investments.
• Mr. Murdoch reiterated that Fox is projecting investing between $200 million and $300 million in 2022 on its streaming services.

Novavax shares slide 20% on COVID vaccine demand uncertainty – Reuters, 5/10/2022

• Novavax’s shares plunged nearly 20% in premarket trading on Tuesday due to uncertainty over global demand for the company’s COVID-19 vaccine following a slow start to deliveries.
• The company said in September it had targeted for the delivery of at least 2 billion doses of its COVID-19 vaccine in 2022.
• Novavax said on Monday it delivered about 42 million doses globally in the first quarter.
• Novavax’s COVID-19 vaccine is based on a more conventional technology and was expected to persuade some skeptics of the mRNA technology used by companies such as Pfizer and Moderna.
• However, Novavax has been plagued by manufacturing and regulatory delays, as well as a slow uptake in key markets such as the European Union.
• The company on Monday reiterated its forecast for total revenue of $4 billion to $5 billion for 2022, saying it expects shipments to key markets and sales to increase in the second quarter.

AMC shares rise after results outpace Wall Street expectations – CNBC, 5/10/2022

• Not even the tag-team of Spider-Man and Batman could make AMC Entertainment profitable during the first quarter. Still, shares of the movie theater chain rose more than 4% after hours Monday after it posted a narrower-than-expected loss during the period.
• Revenue rose to $785.7 million from $148.3 million last year and topped the $743 million analysts had expected.
• While “No Way Home” and “The Batman” had solid runs in theaters and AMC saw nearly 40 million visitors during the quarter, revenues collected during the period did not outweigh the nearly $1 billion AMC spent on operating expenses and rent.
• The movie theater chain reported a net loss of $337.4 million, or 65 cents a share, as compared with a loss of $567.2 million, or $1.42 per share, a year ago.

Pfizer to Buy Rest of Biohaven for $11.6 Billion – Wall Street Journal, 5/10/2022

• Pfizer agreed to buy the rest of Biohaven Pharmaceutical Holding for about $11.6 billion, deploying its pile of cash earned from Covid-19 sales to acquire a new migraine drug.
• Pfizer said it would pay $148.50 a share in cash for the Biohaven shares that it doesn’t already own, a nearly 79% premium to Monday’s closing price of $83.14 for the New Haven, Conn., drugmaker.
• Through the deal, Pfizer will gain Biohaven’s migraine drug Nurtec, a potential blockbuster that analysts say could add billions of dollars in yearly sales to a big drugmaker facing several costly patent expirations in the coming years.

Exclusive: Tesla halts most output at Shanghai plant, April sales dive – Reuters, 5/10/2022

• Tesla has halted most of its production at its Shanghai plant due to problems securing parts for its electric vehicles, according to an internal memo seen by Reuters, the latest in a series of difficulties for the factory.
• Shanghai is in its sixth week of an intensifying lockdown that has tested the ability of manufacturers to operate amid hard restrictions on the movement of people and materials.
• Tesla planned to manufacture fewer than 200 vehicles at its factory in the city on Tuesday, according to the memo, far below the roughly 1,200 units per day it had ramped up to shortly after reopening on April 19 following a 22-day closure.
• The automaker’s sales in China had already slumped by 98% in April from a month earlier, data released by the China Passenger Car Association (CPCA) showed on Tuesday, underscoring the hit from China’s hard COVID-19 lockdowns.

Netflix tells employees ads may appear by end of 2022, NYT reports – Reuters, 5/10/2022

• Netflix could introduce its lower-priced ad-supported subscription plan by the end of the year, earlier than originally planned, the New York Times reported on Tuesday.
• The streaming pioneer is also planning to start cracking down on password sharing among its subscriber base around the same time, the report said, citing an internal note to employees.
• The lagging subscriber growth prompted Netflix to contemplate offering a lower-priced version of the service with advertising, citing the success of similar offerings from rivals HBO Max and Disney+.

Some Covid-19 Patients Relapse After Taking Paxlovid, Puzzling Doctors – Wall Street Journal, 5/10/2022

• U.S. health authorities and researchers are investigating why some people who appeared to recover from Covid-19 after taking Pfizer Inc.’s antiviral pill developed symptoms again soon after.
• Paxlovid is supposed to treat the newly infected, keeping them out of the hospital. Within two weeks of appearing to get better, however, some users experienced cold-like symptoms such as sore throat and cough, according to physicians and published case reports.
• The health experts said they aren’t sure if the relapsed patients are contagious.
• Nor are they sure what causes the rebounds, theorizing that patients may be taking Paxlovid too early or not long enough.
• The experts also don’t know how common the rebounds are, though Pfizer said its real-world data indicates the relapses occur in fewer than 1 in 3,000 patients.
• The rebound cases haven’t resulted in severe disease so far. Doctors and health authorities still encourage Paxlovid’s use among people at high risk of developing severe Covid-19.

Intel launches new AI chips, challenging Nvidia’s market – Reuters, 5/10/2022

• Intel on Tuesday launched a new chip called Gaudi2 focused on artificial intelligence computing, as the chip manufacturer makes a bigger push into the AI chip market currently dominated by Nvidia.
• Gaudi2 is the second generation processor by Habana Labs, an Israeli AI chip startup Intel bought in late 2019 for about $2 billion.
• Chief business officer at Habana Labs Eitan Medina said the Gaudi2 was twice as fast as Habana’s previous AI chip and manufactured at Taiwan Semiconductor Manufacturing Co’s 7-nanometer transistor technology from 16-nanometers previously.
• AI chip startups have been getting huge investments in recent years as AI computing is one of the fastest growing areas for data centers.
• Sandra Rivera, who heads Intel’s data center and AI, said the AI chip market is estimated to grow some 25% a year in the next five years to reach around $50 billion.

Ford Sells About 8% of Its Stake in Electric-Vehicle Startup Rivian – Wall Street Journal, 5/10/2022

• Ford Motor has sold off about 8% of its stockholdings in Rivian Automotive, according to people familiar with the matter, pushing shares of the electric-vehicle startup to an all-time low.
• Rivian’s stock closed down 21% to $22.78 Monday, continuing a slide that began earlier this year as the company has had to curtail factory production due to supply-chain challenges.
• Ford sold about 8 million shares between late Sunday and Monday morning through Goldman Sachs, the people familiar with the move said.
• Before the sale, Ford held about 102 million shares in Rivian overall, about 11.4% of the company.

Caterpillar Works to Turn Old Engines Into New Profits – Wall Street Journal, 5/10/2022

• Construction equipment maker Caterpillar wants to sell engines—again and again.
• Caterpillar, like other major manufacturers, has been pressured by investors over the environmental impact of its factories and machines. Last year, 48% of voting Caterpillar shareholders supported a resolution to increase climate disclosures, which the Deerfield, Ill.-based company’s board opposed.
• This year, Caterpillar’s board is supporting a similar shareholder resolution. The company in 2021 made the remanufacturing operation into its own division, and named its first chief sustainability officer.
• The effort, which in 2021 took in an estimated 127 million pounds of equipment to be reprocessed, is part of a push by the construction equipment giant to meet environmental goals and boost revenue from services, which Caterpillar said could also give the company an edge over rivals.
• Caterpillar now aims by 2030 to increase its remanufacturing revenue by 25% above 2018 levels, and wants to double services revenue to $28 billion by 2026.