Dow Slides Nearly 1,000 Points as Investors Reassess Fed Comments – Wall Street Journal, 5/5/2022
- U.S. stocks fell sharply, with technology stocks leading the way, as investors assessed the implications of Federal Reserve’s most aggressive tightening of monetary policy in more than two decades.
- The S&P 500 dropped 3.4% as losses accelerated in morning trading Thursday. The tech-focused Nasdaq Composite Index plunged 4.6%, and the Dow Jones Industrial Average retreated 2.9%, or 982 points.
- All three indexes are on track to erase Wednesday’s gains.
- In the bond market, the yield on the benchmark 10-year Treasury note rose to 3.06%, from 2.914% Wednesday.
- The pullback came one day after major U.S. stock indexes soared, with the Dow climbing more than 900 points, its biggest one-day gain since 2020. On Wednesday, central bank officials approved a half-percentage-point interest rate increase, lifting the federal-funds rate to a target range between 0.75% and 1%.
- On Thursday morning, those jitters were seen across the market. Growth stocks were particularly hard hit.
- Booking Holdings jumped 4.1% after its revenue exceeded expectations and it said it has seen strengthening of global travel trends in the current quarter.
- Etsy tumbled 14% after the online marketplace released guidance below expectations for the current quarter.
- Shares of Wayfair also slid, losing 17%, after the online home goods retailer posted a bigger-than-expected quarterly loss.
- Shopify’s first-quarter earnings missed analysts’ expectations, sending the stock plummeting 17%.
- The British pound dropped 2% against the dollar to $1.2378 after the Bank of England raised interest rates, but signaled that it is likely to move cautiously in coming months as worries grow over a slide into recession.
- Overseas, the pan-continental Stoxx Europe 600 rose 0.7%. Banks, technology stocks and transport companies were among those that rallied. Italian bank UniCredit climbed 4% after its revenue came in above analyst expectations.
- Airbus jumped 6.6% after the plane maker reported an increase in net income and moved to increase production of its bestselling A320 single-aisle airliner.
Shopify’s revenue growth slowest in seven years, shares plunge – Reuters, 5/5/2022
- Canada’s Shopify, reported its slowest quarterly revenue growth in about seven years and delivered a big miss on profit, sending the e-commerce giant’s U.S. shares tumbling 15% on Thursday.
- Shopify’s first-quarter revenue rose 22% to $1.2 billion, a far cry from the nearly 100% growth during the early days of the pandemic. Analysts on average had expected revenue of $1.24 billion, according to Refinitiv IBES data.
- Gross Merchandise Volume (GMV), a widely watched industry metric, rose 16% to $43.2 billion, but missed expectations of $45.43 billion.
- Total operating expenses jumped 67.3% to $735.6 million in the quarter.
- First-quarter adjusted profit per share of 20 cents was well short of expectations of 63 cents.
- The company on Thursday announced a $2.1 billion cash-and-stock deal to buy logistics firm Deliverr.
- The U.S.-based firm delivers more than a million orders per month for thousands of merchants across the United States, the company said.
EBay deepens e-commerce gloom with disappointing forecast – Reuters, 5/5/2022
- EBay on Wednesday became the latest e-commerce retailer to give a gloomy revenue forecast as growth slows in the sector after two years of rapid expansion during the pandemic, sending its shares down 6% in extended trading.
- Revenue fell 6% to $2.48 billion, but came in slightly above expectations of $2.46 billion.
- In the first three months of the year, eBay’s gross merchandise volume – a widely watched figure for the e-commerce industry’s performance – slumped 20% to $19.4 billion.
- Active buyers on eBay declined 13% to 142 million in the quarter.
- While the company’s first-quarter adjusted profit was better than estimates, its forecast for earnings in the current period of 87 cents per share to 91 cents per share was below the average analyst view of $1.01 per share.
- The company projected second-quarter revenue between $2.35 billion and $2.40 billion, compared with the average analyst expectation of $2.54 billion, according to Refinitiv IBES data. Its full-year forecast was also below market estimates.
Etsy stock falls as forecast calls for a sales decline amid higher seller fees – MarketWatch, 5/5/2022
- Etsy shares dropped in extended trading Wednesday after the company rode higher seller fees to stronger first-quarter earnings and revenue than Wall Street had expected, but executives guided for a downturn in the current quarter.
- Revenue increased to $579.3 million from $551 million last year.
- Analysts on average expected earnings of 56 cents a share on revenue of $576 million, according to FactSet.
- Etsy reported first-quarter earnings of $86.1 million, or 60 cents a share, down from $1 a share in the same period a year ago.
- Etsy executives guided for revenue of $540 million to $590 million in the second quarter on gross merchandise sales of $2.9 billion to $3.2 billion, after gross merchandise sales hit $3.3 billion in the first quarter.
- Analysts on average were expecting gross merchandise sales of $3.37 billion and net revenue of $627 million, according to FactSet.
Wayfair loses customers and money in a messy quarter, announces its CFO will retire – CNBC, 5/5/2022
- Wayfair shares tumbled more than 20% Thursday morning after the online furniture retailer reported larger-than-expected losses in the first quarter as shoppers scaled back their spending on the home category.
- Sales fell almost 14% to $2.99 billion from $3.48 billion a year earlier. That was in line with analysts’ estimates.
- Net revenue in the United States dropped 9.9%, to $2.5 billion, while international net revenue declined 31.4%, to $451 million.
- Wayfair reported its count of active customers in the first quarter of 2022 declined 23.4% from a year ago, to 25.4 million.
- Orders per customer totaled 1.87, versus 1.98 in the year-ago period.
- Orders from repeat customers likewise fell from 2021, totaling 8.1 million, 26% lower than the year ago.
- For the three-month period ended March 31, Wayfair reported a loss of $319 million, or $3.04 per share, compared with net income of $18 million, or 16 cents a share, a year earlier.
DataDog Had Strong Earnings and an Upbeat Forecast. The Stock Is Still Falling. – Barron’s, 5/5/2022
- Datadog earned more than expected in the first quarter and its financial forecasts beat Wall Street’s estimates as well.
- Revenue of $363 million for the quarter was higher than the $339 million Wall Street had anticipated. Datadog had told investors to expect earnings of 10 cents to 12 cents a share on $334 million to $339 million of revenue.
- The company said that as of the end of March this year, it had 2,250 customers with annual recurring revenue of $100,000 or more, a 60% increase versus last year.
- Adjusted earnings were 24 cents a share in the first quarter, beating the 11 cents analysts expected, according to FactSet data.
- The company expects adjusted earnings in the second quarter to be between 13 cents and 15 cents a share from revenue of $376 million to $380 million. Analysts tracked by FactSet expect 12 cents a share from $363 million.
- Datadog forecast its full-year adjusted earnings will be between 70 cents and 77 cents a share, higher than analysts’ predictions of 51 cents.
- Revenue in 2022 is expected to be in the range of $1.60 billion and $1.62 billion, higher than the consensus call of $1.53 billion.
Booking Holdings stock surges on earnings beat as it forecasts ‘busy summer travel season’ – MarketWatch, 5/5/2022
- Booking Holdings shares surged in the extended session Wednesday after the travel-reservations site operator topped Wall Street expectations and said it expects to benefit from a busy summer travel season.
- Revenue rose to $2.7 billion from $1.14 billion in the year-ago quarter.
- Analysts surveyed by FactSet had forecast earnings of 85 cents a share on revenue of $2.53 billion.
- The company reported a first-quarter loss of $700 million, or $17.10 a share, compared to a loss of $55 million, or $1.34 a share, in the year-ago period. Adjusted earnings were $3.90 a share versus an adjusted loss of $5.26 a share in the year-ago period.
Twilio’s stock reacts wildly after company issues cautious revenue guidance – MarketWatch, 5/5/2022
- Twilio’s stock wildly fluctuated in frenzied trading Wednesday after the company issued cautious revenue guidance on better-than-expected results.
- Revenue jumped 48% to $875.4 million from $589.9 million a year ago.
- The company reported 268,000 active customer accounts as of March 31, compared to 235,000 a year ago.
- Twilio announced a net loss of $221.6 million, or $1.23 a share, compared with a net loss of $206.5 million, or $1.24 a share, in the year-ago quarter. Adjusted earnings were break-even, at 0 cents a share.
- Analysts surveyed by FactSet had expected a net loss of 21 cents a share on revenue of $864 million.
- Investors were initially spooked, however, when Twilio offered second-quarter revenue guidance of between $912 million and $922 million, at the low end of FactSet estimates of $921 million.
Kellogg Posts Higher Profit as Pricing Fights Growing Inflation – Wall Street Journal, 5/5/2022
- Kellogg posted a 15% increase in first-quarter earnings, while warning of worsening cost inflation and disruptions from the war in Ukraine.
- Sales rose 2.4% to $3.67 billion, beating analyst estimates of $3.59 billion.
- On Thursday, Kellogg said it had restored its North American cereal inventory faster than anticipated.
- For the period ended April 2, Kellogg reported profit of $424 million, or $1.23 a share, versus $371 million, or $1.07, a year earlier.
- Analysts polled by FactSet recently forecast earnings of 92 cents.
- Kellogg now expects organic sales, which strips out impacts from currency, acquisitions and divestitures, to rise 4% compared with its prior view of 3%.
Corteva beats profit estimates on solid demand for crop protection products – Reuters, 5/4/2022
- Corteva on Wednesday reported a 19.6% jump in first-quarter operating earnings, which beat Wall Street estimates, driven by strong demand for crop protection products such as herbicides and insecticides.
- The Wilmington, Delaware-based company’s net sales rose 10.12% to $4.6 billion, beating market estimates of $4.5 billion, according to Refinitiv.
- Sales of Corteva’s crop-protection products rose 23% in the quarter, boosted by strong early demand for herbicides in North America on supply concerns. Corteva said its net seed sales grew 1%, driven by an 8% increase in price.
- Corteva said adjusted operating earnings stood at $708 million, or 97 cents per share, in the three months ended March 31, compared with $592 million, or 79 cents per share, a year earlier.
- Analysts, on average, had expected a profit of 82 cents per share.
- The company also revised its full-year 2022 operating earnings per share forecast to between $2.35 and $2.55 to reflect a lower average share count.
Nikola posts wider quarterly loss as production costs rise – Reuters, 5/4/2022
- Nikola reported wider quarterly losses on Thursday, with the electric-truck maker incurring higher costs as it ramped up production of its electric semi-trucks.
- The company posted revenue in the first quarter of $1.89 million.
- The company said it shipped 11 Tre battery electric trucks in April, marking its first ever shipment to customers.
- Net loss widened to $152.9 million, or 37 cents per share, in the quarter ended March 31 from $120.2 million, or 31 cents per share, a year earlier.
Sunrun shares surge after company reports jump in customers, says higher utility prices are fueling solar – CNBC, 5/5/2022
- Sunrun shares jumped 11% during extended trading Wednesday after the company posted first-quarter earnings results, including a 39% increase in customer orders over the same time last year.
- Revenue: $495.8 million, versus $401.3 million expected.
- Sunrun, which is the largest residential solar installer in the U.S., added 29,463 customers during the first quarter, a 20% increase from the same period in 2021. The company now has roughly 690,000 customers.
- Loss: 42 cents per share, versus a loss of 17 cents per share expected.
- The company also raised its guidance, saying it expects installed solar capacity to be 25% or greater for 2022. Sunrun’s prior guidance pegged growth rates at 20%.
Conoco posts a five-fold profit leap, raises shareholder returns – Reuters, 5/5/2022
- U.S. oil producer ConocoPhillips on Thursday reported a five-fold increase in profit from a year-ago that exceeded Wall Street estimates on high prices and acquisitions.
- Conoco’s total output rose about 15% in the quarter to 1.75 million barrels of oil and gas from a year earlier on a large acquisition of Shell Plc’s shale holdings last year.
- The Houston-based company’s adjusted earnings leapt to $4.29 billion, or $3.27 per share in the quarter through March 31, from $902 million, or 69 cents per share a year earlier, beating Wall Street estimates of $3.03 per share, according to Refinitiv IBES data.
- Conoco pledged to bump up shareholder returns by 25% to $10 billion this year, but gave a weaker-than-expected outlook for full-year production despite raising capital spending.
- The company also expects a sequential decrease in the second quarter, with output between 1.67-1.73 million barrels per day, reflecting seasonal turnarounds planned in Europe and Canada, as well as adverse weather in the Bakken.
- Conoco raised its capital expenditure for 2022 to $7.8 billion from previous guidance of $7.2 billion.
Royal Caribbean misses revenue estimates as Omicron, Ukraine crisis hamper demand – Reuters, 5/5/2022
- Royal Caribbean on Thursday missed Wall Street estimates for quarterly revenue, as a resurgence in COVID-19 infections in some parts of the world and Russia’s invasion of Ukraine hampered people’s travel plans.
- The cruise operator’s revenue rose to $1.06 billion in the first quarter from $42.01 million a year earlier, but missed analysts’ average estimate of $1.15 billion, according to IBES data from Refinitiv.
- The company’s net loss widened to $1.17 billion in the first quarter ended March 31, from $1.13 billion, a year earlier.
- It said bookings for Europe sailings improved throughout the first quarter, but softened due to the Ukraine crisis that will have a bigger impact on Baltic itineraries.
- Even though bookings for Europe are now exceeding 2019 levels for the same period, the cruise operator added the situation in Ukraine is expected to cause fewer passenger bookings in Europe this summer.
Albemarle raises annual outlook on surging lithium prices – Reuters, 5/5/2022
- Albemarle, one of the world’s biggest producers of lithium, raised its full-year forecasts on Wednesday after surpassing quarterly profit expectations on robust demand and higher prices for the metal used in electric-vehicle batteries.
- Sales in Albemarle’s lithium unit nearly doubled in the quarter to $550.3 million on the back of higher prices.
- In the three months ended March 31, the company earned an adjusted profit of $2.38 per share, smashing expectations of $1.63 per share.
- Albemarle said it expected its average realized lithium price to jump two-fold this year as demand continues to rise and supply remains tight.
- Albemarle lifted its annual adjusted profit outlook to between $9.25 and $12.25 per share, from $5.65 to $6.65 per share.
- Analysts were expecting a figure of $6.22 per share.
OPEC Sticks to Production Plan as High Oil Prices Boost Economies – Wall Street Journal, 5/5/2022
- OPEC and its allies stuck to a small, planned increase in oil production on Thursday, as windfall revenue from high crude prices boosts the economies of Saudi Arabia and other producers while providing a buffer to Russia against Western sanctions.
- In its third meeting since Russia invaded Ukraine, sending oil prices above $100 a barrel for the first time in eight years, the Organization of the Petroleum Exporting Countries and a coalition of Moscow-led oil producers said they agreed to continue raising their collective production by 432,000 barrels a day.
- The incremental boost for June is in line with what the cartel, called OPEC+, agreed to last year as part of a plan to raise output to prepandemic levels.
- It comes despite repeated calls in recent months from the U.S. and other major oil-consuming nations for Saudi Arabia and other OPEC+ members to tap into the group’s millions of barrels of remaining capacity to pump more oil to help tame prices.
Facebook Parent Meta Hits the Brakes on Hiring as Growth Stalls – Wall Street Journal, 5/5/2022
- Facebook parent Meta Platforms on Wednesday announced a sharp slowdown in hiring, ending an extended period in which the tech giant added thousands of jobs a year.
- “We regularly re-evaluate our talent pipeline according to our business needs and in light of the expense guidance given for this earnings period, we are slowing its growth accordingly,” a Meta spokesperson said in a statement. “However, we will continue to grow our workforce to ensure we focus on long term impact.”
- Specifically, Meta will be halting, or in some cases slowing, hiring for more mid- to senior-level positions, according to the company. This follows a recent pause on hiring early-career engineers a few weeks back.
Search for Yield Pushes Investors Into Dividend-Paying Stocks – Wall Street Journal, 5/5/2022
- Investors seeking shelter from volatility are turning to a part of the markets that had largely been overlooked last year: dividend-paying stocks.
- The iShares Core High Dividend exchange-traded fund, which tracks 75 such stocks, is up 6.4% this year.
- That puts the fund far ahead of the S&P 500, which is down 9.8% in 2022.
- But investors have largely shied away from growth stocks this year. The S&P 500 technology sector is down 15%.
- The communication services sector, which includes technology-driven companies like Netflix, Alphabet and Facebook parent Meta Platforms, is down 21%.