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Nvidia Plans to Buy Back Billions in Stock. Other Companies Could Join in Soon.
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Beer giant Heineken N.V. is the latest Western company to exit Russia, announcing Friday the sale of its Russian operations to Arnest Group for one euro.
Under the terms of the deal, all of Heineken’s
HEIA,
remaining assets, including seven breweries in Russia, will transfer to the new owners, the beer giant said in a statement. The Russian Arnest Group has also taken over responsibility for Heineken’s 1,800 employees in Russia.
Heineken began the process of exiting Russia in March 2022, following that country’s invasion of Ukraine. The company said it expects to incur a total cumulative loss of €300 million ($324.1 million) as a result of its exit.
“We have now completed our exit from Russia. Recent developments demonstrate the significant challenges faced by large manufacturing companies in exiting Russia,” Heineken CEO Dolf van den Brink said in a statement. “While it took much longer than we had hoped, this transaction secures the livelihoods of our employees and allows us to exit the country in a responsible manner.”
A number of major Western corporations, including U.S. giants Apple Inc.
AAPL,
Alphabet Inc.
GOOGL,
GOOG,
Amazon.com Inc.
AMZN,
International Business Machines Corp.
IBM,
and McDonald’s Corp.
MCD,
have left Russia in response to Moscow’s February 2022 invasion of Ukraine.
Earlier this week, DP Eurasia, the master franchiser of the Domino’s Pizza Inc.
DPZ,
brand in Turkey, Russia, Azerbaijan and Georgia, also announced its exit from Russia.
But Heineken is “no hero,” according to Mark Dixon, the founder of the Moral Rating Agency, an organization set up after the invasion of Ukraine to examine whether companies were carrying out their promises of exiting Russia. “It failed to leave Russia for a year and a half,” he told MarketWatch via email. “The explanation that it took longer than expected doesn’t hold water, because of course it’s difficult to find a buyer if you remain so long a pariah state.”
The Ukraine Solidarity Project said that Heineken’s move should increase the pressure on companies that remain in Russia, such as consumer-goods giant Unilever PLC
ULVR,
“The point here is that major companies, like @Heineken, are and have taken loses of hundreds of millions and billions in leaving the Russian market. It is possible,” the Ukraine Solidarity Project tweeted Friday. “We’re sure @Unilever can do it, too.”
Related: WeWork, Carl’s Jr., Unilever and Shell among companies slammed by Yale over operations in Russia
The Ukraine Solidarity Project recently launched a high-profile campaign urging Unilever to get out of Russia, using images of Ukrainian veterans injured in the war with Russia. Last month, activists from the Ukraine Solidarity Project held up a giant poster featuring the veterans outside Unilever’s London headquarters.
The Moral Rating Agency has also reiterated its calls for Unilever to end its Russian operations.
“We have always said we would keep our position in Russia under close review,” a Unilever spokesperson told MarketWatch earlier this month. The spokesperson also directed MarketWatch to a statement on the war in Ukraine that the company released in February 2023.
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Shares of electric-vehicle startup VinFast Auto Ltd. have surged since the company went public through a special-purpose acquisition company deal last week, taking its market capitalization to levels well beyond established automakers such as Ford Motor Co. and General Motors Co.
Shares of low-float company VinFast
VFS,
rose 16.1% Friday, after ending Thursday’s session up 32.3%, sending the company’s market cap to $231.3 billion. In comparison, Ford’s
F,
market cap is $47 billion and GM’s
GM,
is $45.2 billion, according to FactSet data. Rival EV maker Rivian Automotive Inc.
RIVN,
has a market cap of $18.6 billion. However, all of these are dwarfed by Tesla Inc.’s
TSLA,
$730.2 billion market cap.
In roughly a week, the VinFast stream on Stocktwits, a social platform for investors and traders, has racked up about 3,000 watchers, and message volume is “pretty consistent” throughout the day, Tommy Tranfo, Stocktwits’ head of community, and Tom Bruni, a senior writer for the platform, told MarketWatch Thursday.
Related: EV startup VinFast may be worth more than Ford or GM, but there’s a catch
“What everyone is discussing is whether or not the current hype in the stock is warranted given where the business is,” Tranfo and Bruni said in a statement emailed to MarketWatch Thursday, noting the company’s soaring market cap. “That’s despite the underlying business doing less than $1 billion in revenue, having negative cash flow from operations of $1.5 to $2 billion.”
In the short term, the stock is trading on momentum and hype, according to Tranfo and Bruni. “But eventually, its business results have to justify the valuation. And as we’ve seen with other startups in the space, it’s easy to say they’re going to accomplish XYZ, but harder to actually execute and produce results,” they said.
“From the community side: [We] think what we’re paying attention to the most right now is if this hype sticks,” they added.
The EV maker is a majority-owned affiliate of Vietnamese conglomerate Vingroup, one of the largest publicly traded companies in Vietnam. VinFast said that as of June 30, 2023, the company has delivered close to 19,000 EVs.
About 99% of VinFast’s shares are controlled by Vingroup chair and VinFast founder Pham Nhat Vuon, making only a small portion available to investors.
Stocktwits’ Tranfo and Bruni noted that EVs have a good track record of growing strong retail community support. “So there is reason to believe that this momentum could continue, but it may be too early to tell for sure,” they added. “Retail loves the electric-vehicle industry, so the interest is likely to continue regardless of how well the company (and stock) actually perform.”
Related: Tesla’s stock jumps 7% after Baird highlights Cybertruck, other ‘catalysts’ for the year
VinFast is importing its vehicles into the U.S. and is also ramping up its North American presence. In July, the company broke ground on an electric-vehicle manufacturing site within the Triangle Innovation Point in Chatham County, N.C. The EV startup says the plant will eventually have the capacity to make 150,000 EVs a year.
Claudia Assis contributed.
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After nearly six decades as a family-owned business, Subway has been sold to private equity firm Roark Capital in a groundbreaking deal – but it’s not the only sandwich joint in the firm’s portfolio.
The sale puts Subway under the same umbrella as rival Jimmy John’s, which is controlled by Inspire Brands also owned by Roark Capital.
The sandwich giant announced the news in a press release on Thursday, and although terms of the deal weren’t disclosed, the Wall Street Journal previously reported that Roark offered Subway $9.6 billion after it was listed for sale in February for $10 billion.
RELATED: Nearly 10,000 People Agree to Make a Legally Binding, Lifetime Commitment for Free Subway Sandwiches
Photo by Xavi Lopez/SOPA Images/LightRocket via Getty Images | Pedestrians walking past a Subway store.
The deal with Roark is one of the biggest acquisitions in the fast food industry, per CNN. The company has $37 billion in assets and a massive food portfolio with investments in Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carvel, Sonic, and more.
The largest was Inspire Brands’ $11.3 billion deal to purchase Dunkin’ in October 2020.
Subway’s sale comes as the brand tries to revamp with store renovations and freshly sliced meats.
RELATED: This Is Where Subway’s Co-Founder Left Half of His Fortune
The acquisition is a new beginning for the sandwich shop, which has been owned by the DeLuca and Buck families since Fred DeLuca and Dr. Peter Buck opened the first Subway in Bridgeport, Connecticut, in 1965, according to the company’s website.
Today, Subway is one of the world’s largest restaurant brands, with 37,000 locations across more than 100 countries.
With hopes of continuing to expand, “this transaction reflects Subway’s long-term growth potential and the substantial value of our brand and our franchisees around the world,” Subway CEO John Chidsey explained in the press release.
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Sam Silverman
Source link
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UPS employees approved a new five-year union contract with the delivery giant Tuesday, about a month after reaching a tentative deal that averted a strike of 340,000 United Parcel Services workers.
The Teamsters said 86.3% of members voted for the “historic” deal, saying it was “the highest vote for a contract in the history of the Teamsters at UPS.”
UPS,
“Teamsters have set a new standard and raised the bar for pay, benefits and working conditions in the package-delivery industry,” Teamsters General President Sean O’Brien said in a statement. “This is the template for how workers should be paid and protected nationwide, and nonunion companies like Amazon
AMZN,
better pay attention.”
Among the parts of the contract the union highlighted were $2.75-an-hour raises for existing full- and part-time union members this year, and a total of a $7.50-an-hour raise over five years. All existing part-timers will earn at least $21 an hour starting immediately per the contract, according to the Teamsters.
The union also noted that the pay increases for full-timers will keep UPS Teamsters as the highest-paid delivery drivers in the country, with the average top rate rising to $49 an hour. In addition, the Teamsters said the new contract ends what it called the two-tier wage system at the company, with all UPS Teamster drivers currently classified as “22.4s” — or hybrid drivers and warehouse workers who were paid less than full-time drivers — to be reclassified immediately as RPCDs, or regular package car drivers.
A UPS spokesperson sent the following statement from the company: “Our Teamsters-represented employees have voted to overwhelmingly ratify a new five-year National Master Agreement that covers more than 300,000 full- and part-time UPS employees in the U.S.”
Amazon did not immediately respond to a request for comment.
One local supplemental agreement that affects 174 workers in Florida will be renegotiated, the union said. The national master agreement will go into effect as soon as that supplement, which is one of 44 local supplements, has been renegotiated and ratified, the union said.
See: UPS blames ‘late and loud’ Teamsters talks for revenue miss, outlook cut
Also: Actors, writers, hotel housekeepers and grad-student workers are all striking for the same reason
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Arm Holdings Ltd. filed its long-awaited initial public offering late Monday, following last year’s failed bid by Nvidia Corp. to acquire the U.K.-based chip architecture company.
Arm has reportedly been seeking to raise $8 billion to $10 billion at a valuation of $60 billion to $70 billion, making its IPO the biggest of the year so far, and a number of large tech companies, including Amazon.com Inc.
AMZN,
Intel Corp.
INTC,
and Nvidia
NVDA,
are reportedly in the mix to be anchor investors.
In a late Monday filing with the Securities and Exchange Commission, Arm said it was offering to list its U.S. traded shares on the Nasdaq under the ticker symbol “ARM.”
Arm, which is owned by Japan’s SoftBank Group Corp.
9984,
was the target of an unsuccessful $40 billion acquisition by Nvidia last year. After Nvidia scrubbed the deal and paid a $1.36 billion breakup charge following the U.S. Federal Trade Commission’s unanimous decision to block it, Nvidia disclosed it paid Arm $750 million for a 20-year license to its technology.
At the time of the breakup, chips sales had hit record highs in 2021, surging 26.2% to a record $555.9 billion, fueled by pandemic-triggered shortages. But the chip industry has since swung to a glut.
Arm listed Barclays, Goldman Sachs, JP Morgan, Mizuho, BofA Securities, Citigroup, and Deutsche Bank Securities among the IPO’s underwriters.
Recent reports said SoftBank was in discussions to purchase the 25% stake in Arm that it does not outright own, which is held by its Vision Fund 1, ahead of the IPO.
Read from Feb. 2022: Wall Street’s reaction to death of Nvidia-Arm deal: No duh
Arm reported net income of $524 million, or 51 cents a share, on revenue of $2.68 billion for fiscal 2023, which ended March 31, compared with net income of $549 million, or 54 cents a share, on revenue of $2.7 billion, in fiscal 2022, and $388 million, or 38 cents a share, on revenue of $2.03 billion in fiscal 2021.
Arm uses an architecture that is different from the once-standard x86 one built by Intel in the early days of computing.
The company said it has shipped more than 250 billion Arm-based chips since its started in 1990 as a joint venture between Acorn Computers, Apple
AAPL,
and VLSI Technology. In fiscal 2023, Arm said it shipped 30.6 billion chips.
The company said it is going public as the “resources required to develop leading-edge products are significant and continue to increase exponentially as manufacturing process nodes shrink.” Transistors are expressed in scales of nanometers, with design costs running about $249 million for a 7-nanometer chip and about $725 million for a 2-nm chip.
“As the world moves increasingly towards AI- and [machine language]-enabled computing, Arm will be central to this transition,” the company said in the filing. “Arm CPUs already run AI and ML workloads in billions of devices, including smartphones, cameras, digital TVs, cars and cloud data centers.”
Arm said it is working with Alphabet Inc.
GOOG,
GOOGL,
GM’s
GM,
Cruise, Mercedes-Benz
MBG,
Meta Platforms Inc.
META,
and Nvidia “to deploy Arm technology to run AI workloads.”
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This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.
https://www.barrons.com/articles/u-s-steel-usw-right-bid-cliffs-89cbf208
The battle for
United States Steel
has already taken a number of unexpected twists and turns. Investors just got another one.
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Adyen shares fell as much as 22% on Thursday as the fast-growing Dutch payment company’s first-half results lagged estimates.
Adyen’s
ADYEN,
first-half profit was virtually flat at €282.2 million ($307 million), while net revenue rose 21% to €739.1 million, missing the consensus of €777 million.
Its earnings before interest, tax, depreciation and amortization fell 10% to €320 million, lagging the consensus of €379 million.
Adyen has previously lamented not being able to grow its team in North America, which it said is impacting now. “We now see the impact of a sales team size that did not match our ambitions, particularly in North America,” the company said in its shareholder letter. In the first half, it added 551 full-time employees, three-quarters in tech roles. The company blamed the adjusted profit decline on increased wages and salaries.
Inflation was a problem for its customers, too. “As a natural consequence of the shifting economic climate – driven by higher inflation and interest rates – profit outweighed growth for many North American digital businesses in the first half. Enterprise businesses prioritized cost optimization, while competition for digital volumes in the region provided savings over functionality,” the company said.
The company reiterated its longer-term revenue and margin goals, including for revenue growth between the mid-twenties and low-thirties. “We know that growth is not always linear, and reiterate our financial objectives,” the company said.
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SoftBank Group Corp. is reportedly in discussions to purchase the 25% stake in chip designer Arm Ltd. that is held by its Vision Fund 1, ahead of a highly anticipated IPO.
Reuters reported Sunday that Japan’s SoftBank
9984,
— which owns 75% of Arm — is negotiating a deal with VF1, the $100 billion investment fund it created in 2017, and noted that a deal could give VF1 investors a big boost after years of meager returns. Saudi Arabia’s Public Investment Fund and Abu Dhabi’s Mubadala Investment Co. are among VF1’s largest investors.
SoftBank is planning to launch a long-awaited initial public offering for British chip designer Arm as soon as September. That will likely be the biggest IPO of the year on Wall Street, aiming to raise $8 billion to $10 billion at a valuation around $60 billion to $70 billion.
A number of large tech companies, including Amazon.com Inc.
AMZN,
Intel Corp.
INTC,
and Nvidia Inc.
NVDA,
are reportedly in the mix to be anchor investors in Arm’s IPO.
Last week, SoftBank reported its tech-heavy Vision Funds turned a quarterly profit for the first time in 18 months
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The thing that will make companies lower prices is if consumers stop complaining about paying more for the things they need and want, and actually start refusing to buy them.
As the U.S. corporate earnings-reporting season progresses, with earnings from major retailers Walmart Inc.
WMT,
Target Corp.
TGT,
and Home Depot Inc.
HD,
on tap next week, investors can get a ground-floor view of how consumer demand may have been hurt, or not, by higher prices, and what the companies plan to do, or not do, about it.
This dynamic of how consumers adjust their spending habits when prices change is referred to by economists as the price elasticity of demand.
“ For companies to cut prices, ‘you have to have the consumer go on strike, and they’re not there yet.’”
Those who trust companies will choose to ratchet down prices on their own, or at least not raise them because the rise in input costs has been slowing, haven’t been listening to what the many companies have told analysts on their post-earnings-report conference calls.
Read: U.S. inflation eases again, PCE shows. Prices rise at slowest pace in almost two years.
Kraft Heinz Co.
KHC,
acknowledged after its second-quarter report that its relatively higher prices have hurt demand, but not by enough for the food and condiments company to consider cutting prices.
Colgate-Palmolive Co.
CL,
said it will continue to raise prices, even as inflation slows and selling volume declines, as the consumer-products company continues to be laser focused on boosting margins and profits.
And while PepsiCo Inc.
PEP,
was worried that elasticities would increase, given how its lower-income customers were being particularly pressured by inflation, the beverage and snack giant reported strong results as it witnessed “better elasticities” in most of the markets in which it operated.
“Obviously, there is still carryover pricing, and I don’t think we’ll do anything different than our normal cycles on pricing in the balance of the year,” PepsiCo Chief Financial Officer Hugh Johnston told analysts, according to an AlphaSense transcript.
Basically, as MarketWatch has reported, so-called greedflation is alive and well.
Jamie Cox, managing partner for Harris Financial Group, said as long as the job market stays strong, as it is now, corporate greed will continue to pay off.
“If something is more expensive, and you have a job, you’ll complain about it, but you won’t substitute it for something cheaper,” Cox said. For companies to cut prices, “you have to have the consumer go on strike, and they’re not there yet,” Cox added.
“ ‘At some point, people are going to say, “All right — enough.” ’ ”
The reason elasticity is so important in the current environment is that, as long as consumers continue to pay the higher prices companies are charging, inflation will remain stubbornly high, making it, in turn, more likely that the Federal Reserve will continue to raise interest rates or, at the very least, not lower them.
But the longer interest rates stay high enough to crimp economic growth, the more likely the stock market will reverse lower as recession fears rise.
“At some point, people are going to say, ‘All right — enough,’ ” said Paul Nolte, senior wealth manager and market strategist at Murphy & Sylvest Wealth Management. “But we just haven’t seen that yet.”
What is elasticity?
Economists use the term “price elasticity of demand” to refer to the way in which consumers adjust their spending habits when prices change.
“Elasticity tries to measure how much more producers will want to produce if prices rise, and how much more consumers will want to buy if prices fall,” explained Bill Adams, chief economist at Comerica.
Elasticity often depends on the type of product a company sells.
For example, consumer-discretionary-goods companies that sell products and services that people want will often experience greater price elasticity than consumer-staples companies that sell things that people need, such as groceries and prescription drugs.
But even for needs, consumers often still have a choice, as less expensive generic, or private-label, alternatives may be available.
Andre Schulten, chief financial officer of consumer-staples maker Procter & Gamble Co.
PG,
which recently beat earnings expectations as it continued to raise prices, telling analysts that, while there was “some trading into private label,” the overall market share of private-label products was unchanged for the year.
As Harris Financial’s Cox said, consumers may be complaining about higher prices, but they aren’t yet desperate enough to stop buying.
The Federal Reserve’s latest Beige Book economic survey stated that business contacts in some districts had observed a “reluctance” to raise prices as consumers appeared to have grown more sensitive to prices, but other districts reported “solid demand” allowed companies to maintain prices and profitability.
That’s likely why companies and analysts have become less concerned about price elasticity. Based on a FactSet analysis, mentions of the word “elasticity” in press releases and conference calls of S&P 500 companies
SPX
increased as inflation and interest rates started surging in early 2022 through the end of the year.
With inflation trends softening this year, the Fed took a brief pause in raising rates in June, helping fuel further stock-market gains, before raising rates again in July.
FactSet
As the chart shows, “elasticity” popped up in more than 55% of earnings releases and conference calls in mid-2022, but with the second-quarter 2023 earnings-reporting season more than half over, mentions had dropped to about 20%.
Perhaps that will pick up, as retailers, especially those catering to lower-income customers — recall the PepsiCo comment — assess the demand impact of continued price increases.
Meanwhile, the branded-foods company Conagra Brands Inc.
CAG,
whose wide-ranging food brands including Birds Eye, Duncan Hines, Hunt’s, Orville Redenbacher’s and Slim Jim, were starting to see the emergence of a different dynamic.
Chief Executive Sean Connolly said consumers were shifting behavior in some categories as prices remained high. Rather than trade down to lower-priced alternatives, he noticed some consumers buying fewer items overall, “more of a hunkering down than a trading down.”
That’s exactly the kind of consumer behavior that is needed, if companies are to stop feeding into the greedflation phenomenon and to start pulling back on prices.
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Analysts got to the point early and often during a conference call late Wednesday: What are Disney Chief Executive Robert Iger’s M&A plans, particularly following reports that former Disney executives Kevin Mayer and Tom Staggs, now co-CEOs of Blackstone-backed Candle Media, have been retained in a “consulting capacity” to decide ESPN’s fate?
There is even the unthinkable, unsinkable decades-old rumor floating about again: Could Apple Inc.
AAPL,
acquire Disney
DIS,
as one Hollywood executive floated to the Hollywood Reporter?
The prospect of an Apple-Disney combo seems far-fetched in a heated regulatory climate, where the Federal Trade Commission is attempting to crack down on Big Tech acquisitions, but it could happen should Disney sell off assets and Apple gobbles up Disney’s direct-to-consumer business that includes streaming service Disney+, some media analysts speculate. Apple could conceivably even buy ABC, which reportedly is on the block. But the path is long and circuitous.
Yet the rumors persist, dating back to Apple co-founder Steve Jobs’ reverence for the Disney brand, and the increasingly overlapping businesses of both companies over the years.
When pressed by analysts during a conference call late Wednesday, Iger declined to discuss the future of Disney’s structure or possible asset sales. When asked if Disney might “plausibly” be snapped up by one company — read Apple — an exasperated Iger said he would not “speculate” on the sale of Disney to a technology company or anyone else, given the current global stance of regulators. The FTC has aggressively challenged mergers from the likes of Microsoft Corp.
MSFT,
and Facebook parent Meta Platforms Inc.
META,
with limited success.
Since Iger hinted at the potential sale of Disney’s assets in an interview with CNBC last month, rumors have swirled around ESPN.
ESPN and related properties likely could command at least one-third of Disney’s current depressed market cap of about $150 billion, say some media watchers, though Iger has denied ESPN is for sale. He has acknowledged “the sports leader” is seeking “strategic partners” — possibly with the NFL, MLB, NBA and NHL — to generate revenue. Late Tuesday, ESPN stuck up a deal with Penn Entertainment Inc.
PENN,
to create ESPN Bet, a digital sportsbook to launch in the fall in 16 states.
Read more: Penn dumps Barstool for ESPN-branded sports-gambling service
Another possible property being dangled is ABC. But with rights to the NBA Finals and two Super Bowls in the next eight years, it is unclear who would acquire the network and how Disney would replace lucrative sports revenue.
Other properties on the block include cable channels Freeform and Disney Channel, according to a report by the Wall Street Journal.
“If an asset sale happens, will the proceeds be deployed into fortifying its balance sheet or beefing up its remaining operations?” Rick Munarriz, senior media analyst at The Motley Fool, said in an email.
Disney, which is in the midst of a $5.5 billion cost-cutting campaign, is exploring several avenues to prop up sales as linear TV ads shrink, Disney+ subscriptions decline and attendance at Walt Disney World wanes.
Read more: Disney posts smaller streaming loss amid cost-cutting moves, stock slips
Shares of Disney are trading at half their highs from a few years ago, in large part because of dwindling sales and profits at ESPN and Disney’s other cable networks.
Enter Mayer, who previously ran Disney’s strategic planning group for years and engineered a trifecta of mega deals: The acquisition of the aforementioned Pixar Animation Studios from Steve Jobs for $7.4 billion in 2006, the purchase of Marvel Entertainment for $4 billion in 2009, and the acquisition of Lucasfilm for $4.05 billion in 2012. Mayer also led the $71.3 billion acquisition of 20th Century Fox’s entertainment assets in 2019, which has drawn mixed reviews.
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Online sports-betting company Penn Entertainment Inc. sealed a $1.5 billion deal with Walt Disney Co.’s
DIS,
ESPN to launch ESPN Bet, a branded sportsbook for fans in the U.S., and pivoted away from Barstool Sports on Tuesday, selling the platform back to founder Dave Portnoy.
Penn Entertainment
PENN,
will rebrand its current sportsbook and relaunch as ESPN Bet in the fall in 16 legalized-betting states where Penn is licensed.
The rebrand — which includes the mobile app, website, and mobile website — sent Penn’s stock soaring 13% in after-hours trading Tuesday. ESPN Bet will benefit from exclusive promotional services across ESPN’s platforms, including access to ESPN talent, the companies said.
Penn will pay ESPN $1.5 billion over 10 years as part of the strategic partnership, and will grant ESPN $500 million of warrants to purchase about 31.8 million Penn common shares, with additional bonus warrants possible.
“Together, we can utilize each other’s strengths to create the type of experience that existing and new bettors will expect from both companies, and we can’t wait to get started,” Penn Entertainment Chief Executive Jay Snowden said in a release.
Penn also said it has divested 100% of its stake in Barstool Sports to Portnoy, allowing the sports media platform “to return to its roots of providing unique and authentic content to its loyal audience without the restrictions associated with a publicly traded, licensed gaming company.”
For Penn, the ESPN partnership represents “a clear step up from Barstool in terms of mass appeal…and minimal regulatory risk,” according to Wells Fargo analyst Daniel Politzer, who said it was a “nearly impossible challenge for a publicly traded, licensed gaming company” to own “a media platform that thrived on viral/provocative content.”
Still, he said in a note to clients that “it’s premature to conclude this is a game change” since past partnerships between online sports-betting companies and media players have come up short of what initial fanfare would’ve suggested.
The news sent rival DraftKings Inc. shares
DKNG,
sinking about 5% in after-hours trading.
The decline in DraftKings shares comes as they’ve advanced 178% so far in 2023, through Tuesday’s close. Two analysts upgraded DraftKings’ stock just this week.
See more: DraftKings’ stock has nearly tripled this year — and it just won a new fan
Disney shares rose fractionally in after-hours trading.
Mike Murphy contributed to this report.
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Palantir Technologies Inc. matched expectations with its latest quarterly results Monday while announcing a new $1 billion buyback authorization.
The software company posted its third quarter in a row of GAAP profitability, recording second-quarter net income of $28 million, or 1 cent a share, whereas Palantir
PLTR,
racked up a net loss of $179.3 million, or 9 cents a share, in the year-earlier period. Analysts tracked by FactSet were modeling GAAP earnings per share of 1 cent.
Palantir logged adjusted earnings per share of 5 cents, in line with the FactSet consensus.
Revenue rose to $533 million from $473 million and also met the FactSet consensus. The company notched $232 million in commercial revenue, up 10% from a year before, along with $302 million of government revenue, up 15%.
After initially falling following the report, Palantir shares rose 2.6% in after-hours trading.
“We continue to see unprecedented demand,” Chief Revenue Officer Ryan Taylor told MarketWatch. That includes both “top-of-funnel” conversations with new customers and others expanding their use of Palantir software, as momentum builds for the company’s artificial-intelligence offerings.
Taylor added that Palantir’s U.S. government work has “never been stronger.”
See also: Palantir is ‘the Messi of AI,’ says analyst who thinks its stock can jump 45%
Palantir also announced that its board of directors has approved a stock-buyback program of up to $1 billion. The move comes as the company posted $285 million in adjusted free cash flow during the first half of the year and finished the second quarter with $3.1 billion in cash and equivalents on its balance sheet.
“Our cash flow, balance sheet and the authorization of a billion-dollar buyback show what we believe in for the future of this company,” Chief Financial Officer David Glazer told MarketWatch. The belief is that “AI is a massive opportunity.”
Added Chief Executive Alex Karp in a shareholder letter: “The scale of the opportunity that lies ahead has increased significantly in recent months. And we intend to capture it.”
He noted that the company is in talks with more than 300 additional enterprises about using Palantir’s AI platform, “all of which are searching for an effective and secure means of adapting the latest large language models for use on their internal systems and proprietary data.”
For the third quarter, Palantir expects $553 million to $557 million in revenue, along with GAAP profitability. Analysts tracked by FactSet were modeling $553 million,
Palantir also expects to report GAAP net income for its fourth quarter. It further models upwards of $2.212 billion in full-year revenue, while analysts were looking for $2.210 billion.
Shares of Palantir are up 180% so far this year.
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Palantir Technologies Inc. matched expectations with its latest quarterly results Monday while announcing a new $1 billion buyback authorization.
The software company posted its third quarter in a row of GAAP profitability, recording second-quarter net income of $28 million, or 1 cent a share, whereas Palantir
PLTR,
racked up a net loss of $179.3 million, or 9 cents a share, in the year-earlier period. Analysts tracked by FactSet were modeling GAAP earnings per share of 1 cent.
Palantir logged adjusted earnings per share of 5 cents, in line with the FactSet consensus.
Revenue rose to $533 million from $473 million and also met the FactSet consensus. The company notched $232 million in commercial revenue, up 10% from a year before, along with $302 million of government revenue, up 15%.
After initially falling following the report, Palantir shares rose 2.6% in after-hours trading.
“We continue to see unprecedented demand,” Chief Revenue Officer Ryan Taylor told MarketWatch. That includes both “top-of-funnel” conversations with new customers and others expanding their use of Palantir software, as momentum builds for the company’s artificial-intelligence offerings.
Taylor added that Palantir’s U.S. government work has “never been stronger.”
See also: Palantir is ‘the Messi of AI,’ says analyst who thinks its stock can jump 45%
Palantir also announced that its board of directors has approved a stock-buyback program of up to $1 billion. The move comes as the company posted $285 million in adjusted free cash flow during the first half of the year and finished the second quarter with $3.1 billion in cash and equivalents on its balance sheet.
“Our cash flow, balance sheet and the authorization of a billion-dollar buyback show what we believe in for the future of this company,” Chief Financial Officer David Glazer told MarketWatch. The belief is that “AI is a massive opportunity.”
Added Chief Executive Alex Karp in a shareholder letter: “The scale of the opportunity that lies ahead has increased significantly in recent months. And we intend to capture it.”
He noted that the company is in talks with more than 300 additional enterprises about using Palantir’s AI platform, “all of which are searching for an effective and secure means of adapting the latest large language models for use on their internal systems and proprietary data.”
For the third quarter, Palantir expects $553 million to $557 million in revenue, along with GAAP profitability. Analysts tracked by FactSet were modeling $553 million,
Palantir also expects to report GAAP net income for its fourth quarter. It further models upwards of $2.212 billion in full-year revenue, while analysts were looking for $2.210 billion.
Shares of Palantir are up 180% so far this year.
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Warren Buffett’s Berkshire Hathaway swung to a profit in the second quarter owed to its investment portfolio and insurance holdings, according to a release out Saturday.
The holding company with businesses that range from insurer Geico and railroad BNSF Railway to Dairy Queen restaurants and its own energy division posted net income of $35.9 billion, or $24,775 a class A share equivalent. That compared with a loss of $43.8 billion, or $29,754 a class A share equivalent, a year earlier.
Berkshire’s
BRK.A,
BRK.B,
after-tax operating earnings, a figure Warren Buffett wants shareholders to and which excludes some investment results, rose 6% to just over $10 billion from $9.3 billion a year earlier. Regulations do require Berkshire to include unrealized gains and losses from its investment portfolio when it reports its net income.
Berkshire’s stock repurchases totaled $1.4 billion in the second quarter, compared with $4.4 billion in the first quarter and $1 billion for the year-earlier period. The Q2 repurchases were below an estimate of $2.2 billion from UBS analyst Brian Meredith.
Reduced buybacks did come alongside appreciation in Berkshire stock, which was up 10% in the second quarter.
Berkshire ended the second quarter with $147.4 billion in cash and cash equivalents, compared with $105.4 billion in the same period a year ago.
Berkshire’s Class A shares have been hovering near all-time highs, up 21% over the past year and bringing the company’s market value to roughly $780 billion.
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Icahn Enterprises L.P.’s stock tumbled 30% on Friday, after the company said it’s cutting its quarterly distribution to $1 from $2 previously.
The company
IEP,
made the announcement as it reported a surprise quarterly loss with Chairman Carl Icahn, the billionaire activist investor, blaming the news squarely on one thing.
“I believe the second quarter partially reflected the impact of short selling on companies we control or invest in, which I attribute to the misleading and self-serving Hindenburg report concerning our company, “Icahn said in a statement.
“It also reflected the size of the hedge book relative to our activist strategy.”
Icahn was referring to a report by short seller Hindenburg Research published on May 2 that accused IEP, Icahn’s publicly traded investing arm, of overstating asset values. Hindenburg also revealed that Icahn himself had borrowed from the company, among other issues.
That had been disclosed in a footnote to financials that Wall Street had overlooked.
Read: What we know about Carl Icahn’s margin loan
The report shaved billions off IEP’s market cap and was firmly rebutted by Icahn, who recently said he has finalized amended loan agreements with banks that untie his personal loans from the trading price of his company’s shares.
Icahn said IEP has paid out distributions for 73 continuous quarters and does not intend for a “misleading” report to interfere with that practice.
“The payment of future distributions will be determined by the board of directors quarterly, based upon current economic conditions and business performance and other factors that it deems relevant at the time that declaration of a distribution is considered,” said Icahn.
On a call with analysts, IEP’s Chief Executive David Willetts highlighted the long-term “lumpiness” of the business, given its many moving parts.
“We have large wins at times and we have volatility, we’re not a company that necessarily has predictable cash flow, there are no guarantees,” he told analysts.
But IEP is not changing its strategy on distributions, he added.
The stock was headed for the biggest one-day selloff since it went public 36 years ago. The next biggest drop was 20.0% on May 2, when the Hindenburg Research report was released.
The company, which is 84% owned by Icahn and his son, Brett, offers exposure to Icahn’s personal portfolio of public and private companies, including petroleum refineries, car-parts makers, food-packaging companies and real estate. Its unit holders are mostly retail investors.
The fund has performed poorly in the past decade. For many years Icahn has publicly expressed suspicion of the bull market that raged around him. He shorted the stock market in a big way as a hedge against his long activist positions. Going into 2021, for example, Icahn’s investment fund had a short exposure of 142%, SEC filings show.
For more, see: Carl Icahn admits he was wrong to take a huge short position on the market that lost $9 billion
Hindenburg, the short selling firm founded by Nate Anderson, took a victory lap on Elon Musk’s X platform, the renamed Twitter, noting that it had predicted that IEP’s poor investment performance would eventually force it to cut the distribution.
Icahn has himself waged endless activist campaigns against companies and their management teams, and most recently succeeded in his effort to shake up management at gene sequencing test maker Illumina Inc.
ILMN,
In June, that company accepted the resignation of its Chief Executive and director, Francis DeSouza, ending a monthslong heated battle over its $7.1 billion acquisition of cancer test maker Grail that has faced regulatory hurdles, as the Associated Press reported.
Icahn had urged shareholders to vote out its chairman, John Thompson, and DeSouza. Company shareholders voted out Thompson in late May.
Past activist campaigns by Icahn’s company have generated billions of dollars for shareholders and helped boards and CEOs capture untapped value, Icahn has argued, citing Reynolds, Netflix
NFLX,
Forest Labs, Apple
AAPL,
CVR Energy
CVI,
Herbalife
HLF,
eBay
EBAY,
Tropicana, Cheniere
LNG,
and Occidental
OXY,
as examples.
IEP said it had a loss of $269 million, or 72 cents per depositary unit, for the second quarter, wider than the loss of $128 million, or 41 cents per depositary unit, posted in the year-earlier period.
Revenue fell to $2.684 billion from $3.796 billion.
The FactSet consensus was for income of 25 cents per depositary unit and revenue of $2.657 billion.
Meanwhile, investors are waiting to see the outcome of a federal probe of IEP’s corporate governance and other issues, which was disclosed along with first-quarter earnings.
IEP’s stock is down 35% in the year to date, while the S&P 500
SPX
has gained 18%.
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Palantir Technologies
shares were getting a major boost Friday after Wedbush technology analyst Dan Ives launched coverage of the AI software company with an Outperform rating, setting a target price of $25. Ives contends Palantir is well-positioned to take market share in both the commercial and government analytics software markets.
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Stocks have surged this year without really anything going right, besides the rolling out of error-prone artificial intellligence chatbots. Interest rates have surged to a 22-year high, earnings are down from last year, and pandemic-era savings are being drawn down if not entirely exhausted.
Read more: Those extra pandemic savings are now wiped out, Fed study finds.
Strategists at Bank of America led by Michael Hartnett have an interesting theory.
“Asset price overshoots [are] the new normal,” they say.
Consider:
“AI is simply the new overshoot,” they say.
The S&P 500
SPX,
has gained 18% this year as the Nasdaq Composite
COMP,
has rallied by 34%.
Hartnett and team noted that real retail sales — that is, adjusted for inflation — fell at a 1.6% year-over-year clip, which has coincided with recessions since 1967. Real retail sales falls in excess of 3% are associated with hard recessions.
Historically, a 2-3 point rise in the savings rate also is recessionary, and already it’s risen from 3% to 4.6%. The unemployment rate so far hasn’t risen, though a 0.5 point to 1 point rise in the jobless rate also is typically recessionary.
“It would be so ‘2020s’ for the economy to hit a brick wall just as everyone punts ‘soft landing’ into 2024,” they say.
They like emerging market/commodities as summer upside plays and credit and tech as autumn downside plays.
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Weaker Energy Prices Temper Shell’s Profit, but Not Cash Payouts for Investors
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