[ad_1]
Johnson & Johnson
$35 billion exchange offer for
Kenvue
that expired last Friday was substantially oversubscribed. The result is that participating J&J holders will be able to convert only a fraction of their shares for Kenvue stock.
[ad_2]
[ad_1]
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.”
[ad_2]
[ad_1]
U.S. stock futures moved higher early Monday, as Wall Street looks to snap a three-week losing streak.
On Friday, the Dow Jones Industrial Average
DJIA
rose 26 points, or 0.07%, to 34501, the S&P 500
SPX
declined 1 points, or 0.01%, to 4370, and the Nasdaq Composite
COMP
dropped 26 points, or 0.2%, to 13291.
Futures are striving to find their footing as Wall Street comes off a three-week losing streak.
“Global markets have recently experienced a series of stumbles due to concerns about China’s economy and higher sovereign bond yields. Last week the S&P 500 dropped 2.1 %, worryingly, with every sector ending in the red,” noted Stephen Innes, managing partner at SPI asset management.
Neither of those factors are providing much succor early Monday. A trimming of interest rates over the weekend by China’s central bank has underwhelmed the market, while the 10-year Treasury yield is up about 4 basis points to 4.29%, holding near 15-year highs.
The rising borrowing costs have been a particular problems for some of the big technology stocks that tend to lead the market, according to Innes.
“Last week, several prominent stocks within the S&P 500, such as
GOOGL,
AAPL,
and
NVDA,
all underperformed compared to the broader market index. This dip in performance is attributed to the recent surge in interest rates…This upward rate movement has exerted downward pressure on longer-duration assets,” Innes added.
With that in mind, the reception afforded Nvidia’s results, due on Wednesday, may shape market sentiment for a while. The chipmaker is among the stragglers of an earnings season that has generally beaten forecasts but failed to deliver additional bullish propulsion to the market.
“This picture simply means that the fear of a further Fed tightening, prospects of higher interest rates, combined [with] the set of bad news from China simply didn’t let investors enjoy the better-than-expected earnings,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
However, Tom Lee, head of research at Fundstrat, reckons the recent sell-off will be halted at or before Federal Reserve Chairman Jay Powell makes a speech at the Jackson Hole symposium at the end of the week.
“Over our many conversations with institutional investors in the past week, the vast majority cite the rise in interest rates as the most concerning for equities,” Lee wrote in a note published over the weekend.
And he thinks the Fed is worried by the surge in 10-year yields, too, because it represents a meaningful tightening of financial conditions for markets, companies and households.
“I think the Fed likely says something dovish-ish [sic]. Why? Does Fed want to risk another ‘something breaking’ ala Feb 2023? While some look back at August 2022 when Fed Chair Powell’s statement was hawkish and marked the local top in 2022 (stocks fell -19% next 8 weeks), we think the context is the opposite.” Lee concluded
Zoom video Communications
ZM,
will report results after Monday’s closing bell. There are no top drawer U.S. economic data due Monday.
[ad_2]
[ad_1]
When Nvidia Corp. last reported quarterly results, the chip maker forecast record revenue that was far above anything it had put up before. In response, investors sent the stock into orbit. On Wednesday, the latest round of earnings for the company will be a test of Nvidia’s status as the darling of the AI investment boom, and a test of whether it can deliver on its own lofty expectations.
The results will also be an update of tech demand overall, after businesses tightened their IT budgets following worries about an economic slowdown. But even with Nvidia’s
NVDA,
stock up more than 200% so far this year and expectations rising just as much, some analysts still say there’s room for shares to go higher, despite supply-side logjams.
Barclays said that Nvidia, whose chips analysts say will help power AI technology in the days to come, has “monopolized the economics of the AI boom, with no clear competitor close behind.” They added that “cloud capex budgets are being funneled towards AI.”
Signs that Nvidia might be falling behind on meeting chip demand have started to emerge. But as businesses rush to mark their territory, or potential territory, in the world of AI, Wedbush analysts have asked whether Nvidia’s results and forecast would even matter, as today’s production constraints turn into tomorrow’s sales.
“We don’t think NVDA results/guidance need to hit the high end of expectations,” Wedbush analyst Matt Bryson said in a research note on Friday.
“With demand for AI training having lifted substantially in the past quarter and with no other silicon supplier now capable of providing part volumes within an order of magnitude of NVDA’s output, we believe any unfilled demand will just be pushed into forward quarters fueling future sales and (earnings per share),” he continued.
Synovus analyst Daniel Morgan was also bullish on Nvidia’s business targeted toward data centers, as those facilities try to integrate generative AI and large language models. And within Nvidia’s gaming segment, he said the company’s new Ada Lovelace graphics-processing unit ecosystem “appears to be seeing a high level of success in retail.”
Still, the longer a stock runs higher, the harder it can fall. And Nvidia’s $1 trillion valuation, Morgan said, “is not for the faint-hearted.”
Along with Nvidia, China search giant Baidu Inc.
BIDU,
reports, as the nation’s economic rebound sputters. And if more businesses are still cautious about cloud spending, or shifting spending to AI, the mood could filter through to results from Splunk Inc.
SPLK,
and Snowflake Inc.
SNOW,
Peloton Interactive Inc.
PTON,
Workday Inc.
WDAY,
and Marvell Technology Inc.
MRVL,
also report.
Zoom and offices: If even Zoom is calling some of its workers back to the office, what could that possibly mean for its results on Monday and the business of videoconferencing? Zoom Video Communications Inc.
ZM,
hasn’t been spared from the wave of tech-industry layoffs, and the company is trying to branch out from its pandemic-mainstay video-call platform, and harnessing its technology to handle phone calls and customer contact centers. Benchmark Research analyst Matthew Harrigan, in a note last week, said he still liked Zoom’s prospects, even though he wasn’t expecting “much instant gratification.” “We do expect AI to crystallize as a significant positive for Zoom even as it navigates through customer pushback on using customer data to train AI models off privacy concerns,” he said.
Sales, forecasts and inventories from retailers: Last week, Target Corp.
TGT,
reported what one analyst called “the definition of mixed results,” while another said the results amounted to “Recessionary trends without the recession.” Sales of essentials like groceries, as they have over the past year, helped Walmart Inc.’s
WMT,
results, but management said that consumers were still feeling the pain from inflation, which for some shoppers over the past year has left little room for much beyond the basics.
In the week ahead, we’ll get results whole bunch of retailers that don’t sell basics — like department stores Macy’s Inc.
M,
and Kohl’s Corp.
KSS,
; clothing chains Nordstrom Inc.
JWN,
Gap Inc.
GPS,
Urban Outfitters Inc.
URBN,
; shoe retailer Foot Locker Inc.
FL,
and beauty-products chain Ulta Beauty Inc.
ULTA,
Those retailers will report as prices for some things start to come down, or at least not rise as fast, and as some economists overcome their recession fears. But remarks from executives could offer some sense of the impact from higher borrowing costs and the return of student loan payments, and how much they’ll be able to bank on the back-to-school season and wealthier — and more carefree — consumers.
Dollar-store Dollar Tree Inc.
DLTR,
will also report results, as low-income consumers suffer more under inflation and deal with the end of pandemic-era supplemental food assistance. Off-price retailer Burlington Stores Inc.
BURL,
reports as well, after Ross Stores Inc.
ROST,
Chief Executive Barbara Rentler said that while its low- and moderate-income shoppers were still hurting, shoppers overall “responded well to our improved value offerings throughout our stores.”
[ad_2]
[ad_1]
The majority of second-quarter earnings season is over, with a handful of major technology and retail names left to report this week. Economists will be focused on any news from an annual gathering of monetary policy thinkers and practitioners in Jackson Hole, Wyoming.
[ad_2]
[ad_1]
Johnson and Johnson
$40 billion exchange offer for shares in
Kenvue
is likely to generate strong interest from the healthcare company’s shareholders, resulting in participants being able to swap only a portion of their J&J stock.
[ad_2]
[ad_1]
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/kenvue-jnj-stock-price-exchange-offer-e85c3c90
[ad_2]
[ad_1]
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
[ad_2]
[ad_1]
The World Health Organization has upgraded COVID-19 variant EG.5 to a variant of interest, or VOI, from a variant under monitoring, or VUM, as it continues to become more prevalent around the world.
The variant — which has been nicknamed Eris by some media, following the Greek-alphabet designation used for other variants — has been found in 51 countries, with most sequences, 30.6%, stemming from China, said the WHO.
Other countries that have submitted at least 100 sequences to a central database include the U.S., the Republic of Korea, Japan, Canada, Australia, Singapore, the United Kingdom, France, Portugal and Spain, the WHO said in a statement.
Eris is a descendent lineage of XBB.1.9.2, which is an omicron subvariant. It was first detected on Feb. 17 and designated as a VUM on July 19.
Its latest designation means it’s more prevalent than it was, has a growth advantage over earlier variants and merits closer monitoring and tracking.
Here’s what you need to know about Eris.
The strain is increasing in global prevalence, accounting for 17.4% of cases sequenced in the week through July 23, up from 7.6% four weeks earlier. The WHO has been tracking COVID data on a 28-day basis, largely because countries have cut back on testing and surveillance as they emerge from the pandemic, meaning the agency has far less data than it did during the pandemic.
Eris has become dominant in the U.S., according to projections made by the Centers for Disease Control and Prevention, although a shortage of data is hampering the agency’s efforts to surveil the illness.
The CDC said last week it was unable to publish its “nowcast” projections, which it releases every two weeks, for where EG.5 and other variants are circulating for every region, because it did not have enough sequences to update the estimates.
“Because nowcast is modeled data, we need a certain number of sequences to accurately predict proportions in the present,” CDC representative Kathleen Conley told MarketWatch.
“For some regions, we have limited numbers of sequences available and therefore are not displaying nowcast estimates in those regions, though those regions are still being used in the aggregated national nowcast,” she said.
It is estimated that EG.5, an omicron subvariant, accounted for 17.3% of COVID cases in the U.S. in the two-week period through Aug. 5. That was up from an estimated 11.9% in the previous period and was more than any other variant.
For more, see: New Eris COVID variant is dominant in the U.S., but a shortage of data is making it hard to track
The public-health risk is deemed to be low at the global level, lining up with the risk posed by XBB.1.16 and other currently circulating VOIs, according to the WHO statement. But it’s likely more infectious.
“While EG.5 has shown increased prevalence, growth advantage, and immune escape properties, there have been no reported changes in disease severity to date,” said the WHO.
That growth advantage and immune-escape properties mean Eris may cause a rise in case incidence over time and become dominant in some countries or even the world, according to the WHO.
The Eris variant causes the same symptoms as seen with other strains of COVID, such as sore throat, runny nose, cough, congestion, fever, fatigue, body aches and a possible loss of taste or smell.
Like earlier strains of COVID, the best protection is to be vaccinated with any of the vaccines developed by Pfizer Inc.
PFE,
and German partner BioNTech SE
BNTX,
Moderna Inc.
MRNA,
or Novavax Inc.
NVAX,
The vaccines that will be made available in the fall will be designed to protect against all subvariants of XBB, including Eris.
[ad_2]
[ad_1]
Online retail giant Amazon.com Inc.’s
AMZN,
second-quarter results and third-quarter forecast sales last week were a bet that more consumers would start buying more things, but Wall Street’s expectations for the third quarter overall have only grown dimmer.
With most of the 500 companies that make up the S&P 500 Index
SPX
already through the second-quarter earnings reporting season, slightly more than normal have reported per-share profit that beat Wall Street’s estimates, according to FactSet.
For the third quarter though, analysts now expect a mere 0.2% increase in per-share profit growth overall, according to a FactSet report on Friday, or slightly lower than the 0.4% growth that was expected for the third quarter on June 30,
And with some two months still left in the third quarter, and with that forecast likely to come down as the period progresses, Wall Street’s profit expectations are getting ever closer to turning negative.
Wall Street analysts overall still expect a bigger rebound for the fourth quarter, the FactSet report said. And they expect 2023 overall to eke out a per-share profit gain of 0.8%.
Worries of a U.S. recession emerging at some point during the back half of this year have started to fade at least a little after many economists fixated on the possibility earlier this year when the Federal Reserve was raising interest rates to combat a jump in inflation in 2022 . Some analysts now say savings fatigue could prompt more shoppers to splurge this year, after relentlessly tightening their budgets due to rising prices.
Federal Reserve Chair Jerome Powell last month said policymakers at the central bank had also shucked off their worries of a downturn.
See: Fed no longer foresees a U.S. recession — and other things we learned from Powell’s press conference
“The staff now has a noticeable slowdown in growth starting later this year in the forecast. But given the resilience of the economy recently, they are no longer forecasting a recession,” he said last month.
Not everyone is convinced that a downturn has vanished from the horizon though. Sheraz Mian, director of research at Zacks, told MarketWatch last month that more bearish analysts had kept pushing out their recession forecasts, after being defied by the actual, and more positive, economic data. Some economists continue to push out those forecasts.
“We still expect a recession, but now we are looking for it to begin in Q1 2024 rather than Q3 2023,” Thomas Simons, U.S. economist at Jefferies, said in a research note on Friday.
He said that interest rate hikes from the Federal Reserve were only just starting to affect customer behavior. Households were trying to rebuild their savings, after spending through whatever they had built up during the pandemic. Student-loan payments were returning, he said, and corporate margins were thinning.
“Corporate profit margins are narrowing, and businesses will look to cut costs through layoffs,” he said.
Among S&P 500 index companies, 34 report results during the week ahead, including one from the Dow Jones Industrial Average, according to FactSet.
Results from Walt Disney Co.
DIS,
will likely gobble up more media attention, but earnings from Paramount Global Inc
PARA,
— which oversees CBS, Showtime, Comedy Central and other channels — will offer more detail about how studios are positioning themselves with Hollywood actors on strike. Lions Gate Entertainment Corp.
LGF.A,
also reports.
Results from Tyson Foods Inc.
TSN,
will give investors and customers a brief look at the state of the grocery aisle where higher food prices over the past year have strained spending on other things. Beyond Meat Inc.
BYND,
which also reports during the week, will be hoping new product launches of plant-based meat-like alternatives can overtake analyst skepticism, amid competition with fake meat and real meat alike.
Elsewhere, ride-hailing platform Lyft Inc.
LYFT,
online dating service Bumble Inc.
BMBL,
and video-game maker Take-Two Interactive Software Inc.
TTWO,
also report during the week. And Canadian pot producer Canopy Growth Corp.
CGC,
will get another chance to pick up the pieces, after over-expanding and now trying to hold onto its cash.
Disney drama: One way or another, people on both coasts are mad at Disney
DIS,
Chief Executive Bob Iger right now, as his company prepares to report quarterly results on Wednesday. Shares of Disney are down slightly this year. The company is currently fighting with Florida Gov. Ron DeSantis, who is trying to stamp out Disney World’s self-governing privileges after the company criticized the state’s restrictions on classroom discussion of gender identity. When Iger accused striking actors and writers in Hollywood of not being “realistic,” the actors and writers shot back, noting his hefty executive compensation plan.
While the friction in Florida hasn’t hurt Disney’s parks attendance, the Hollywood shutdown has threatened Disney’s massive film and TV show operations, as Disney+ subscribers fall and investors more aggressively seek profits from studios’ streaming operations. Elsewhere, Rich Greenfield, an analyst at LightShed Partners, said “Pixar and Disney Animation have not had a breakout hit that impacted children’s play patterns and both Marvel and Lucasfilm feel increasingly tired from overuse.”
The sense is growing that more time is needed for Iger to fix Disney’s problems. On Wednesday, analysts may get a deeper sense of how much more, with the chance of more drama between Disney and its home state and the writers and actors the company depends on.
UPS and the Teamsters deal: United Parcel Service Inc. reports quarterly results on Tuesday, as rank-and-file Teamsters vote on a tentative labor agreement struck with the package deliverer in an effort to avert a strike. The deal, if approved, would raise worker pay and give the economy and businesses a breather, after threats of strikes or work stoppages at the nation’s ports and railways were averted over the past year.
Local Teamsters unions have voted overwhelmingly to at least endorse the agreement, between UPS
UPS,
and the Teamsters union, which represents 340,000 UPS workers, but not everyone was happy with the deal. Some part-timers felt the Teamsters could have used their leverage to wrest more from UPS, following a profit windfall at the company. And investors have held out for more detail from UPS executives themselves on what the deal might mean for the bottom line and for shipping prices.
Analysts will be dissecting the impact of the agreement as shipping demand lags, trucking company Yellow Corp.
YELL,
reportedly shuts down and FedEx Corp.
FDX,
tries to slash costs.
[ad_2]
[ad_1]
Shopify Inc. easily topped adjusted profit expectations for its latest quarter, though shares of the e-commerce marketplace were headed lower in Wednesday’s after-hours action.
The e-commerce company reported a comprehensive loss of $1.30 billion, or $1.02 a share, whereas it logged a loss of $1.21 billion, or 95 cents a share, in the year-earlier period.
On an adjusted basis, Shopify
SHOP,
earned 14 cents a share, whereas analysts tracked by FactSet were anticipating 6 cents a share.
Don’t miss: Mastercard earnings bring latest signal of healthy spending
Revenue jumped to $1.69 billion from $1.30 billion a year prior, while the FactSet consensus was for $1.63 billion.
Gross merchandise volume, or the dollar value of orders facilitated through Shopify’s platform, came in at $53.5 billion. Analysts had been modeling $55.0 billion. The company also posted $31.7 billion in gross payments volume.
See also: Apple appears to be making rapid inroads in buy-now-pay-later
For the third quarter, Shopify anticipates a revenue growth percentage in the low-20s on a year-over-year basis. The company also expects free cash flow in the third quarter to exceed the first-half total.
Shopify generated $97 million in free cash flow during the second quarter, beating the $27 million FactSet consensus and bringing its first-half haul to $183 million. Analysts were expecting $96 million in free cash flow for the third quarter.
“We’re not just shipping products faster, but we are also expanding our global merchant base, all while improving our ability to generate greater free cash flow,” President Harley Finkelstein said in a release.
More from MarketWatch: PayPal’s stock falls as earnings beat, but a margin metric misses
[ad_2]
[ad_1]
All eyes have been on shares of Tupperware Brands Corp. and Yellow Corp. in recent days as the stocks have soared despite a dearth of fresh news in the case of the former, and negative news in the case of the latter.
Shares of the beleaguered maker of iconic food-storage containers enjoyed a record 434% gain in July on no apparent news. Yellow’s stock
YELL,
has also skyrocketed, despite reports that the trucking company is facing bankruptcy.
Over the weekend the Wall Street Journal reported that the less-than-truckload company has shut down operations as it prepares for bankruptcy. On Monday the International Brotherhood of Teamsters said it was served legal notice that Yellow was “ceasing operations and filing for bankruptcy.” MarketWatch has reached out to Yellow with a request for comment.
Related: How ‘left-for-dead’ Tupperware became a buzzy trading play
Set against this backdrop, the surging share prices for Tupperware
TUP,
and Yellow have sparked comparisons with the meme stock phenomenon, where discussions on social media can send share prices surging. This trend turned companies such as AMC Entertainment Holdings Inc.
AMC,
and GameStop Corp.
GME,
into meme stock “darlings” in recent years. But Samantha LaDuc, founder of LaDucTrading.com, says there’s a different explanation for what’s been happening to shares of Tupperware and Yellow.
“Literally, it’s short covering, as the paired trade of long quality, short junk unwinds,” she told MarketWatch, via email. “And it typically always precedes volatility.”
Short selling of a stock occurs when an investor borrows shares and sells them immediately expecting the price to drop. The shares can then be repurchased and returned to the lender, with the investor pocketing the difference. Although sometimes vilified, short sellers are actually misunderstood, Robert Sloan, managing partner at financial analytics firm S3 Partners and author of “Don’t Blame the Shorts,” recently told MarketWatch.
Related: Short selling stocks — and trying to play short squeezes — can be very dangerous
In a letter to investors this week, Dan Loeb, the chief executive of the hedge-fund firm Third Point, explained that short selling is much more challenging today than it has been historically.
“Fundamental analysis is increasingly taking a back seat to monitoring daily option expiries and Reddit message boards, as evidenced by the numerous short squeezes and manipulations of heavily shorted stocks such as AMC and GameStop in 2021 and others this year,” he wrote. “While we have not abandoned short selling, we continue to reduce our single-name short exposure in favor of market hedges and short baskets.”
LaDuc explained that in June and July hedge funds aggressively covered shorts in global equities, and also noted the trend of FOMO, or fear of missing out.
“We have had the largest six-month increase in leverage on record (according to Goldman), with a clear case of FOMO-the-MOMO [momentum] chase in full view as concentration risk in megacap tech forced a NASDAQ “SPECIAL REBALANCE” to ‘down-weight’ AAPL, MSFT, GOOGL etc.”
Related: Short sellers are not evil, but they are misunderstood
Short covering occurs when a person with a short position buys back the shares, ending the short trade, and returns the shares to the seller. With this strategy, the short seller aims to cover after the share price falls and make a profit. They may also cover if the price goes up to limit their losses.
Last week LaDuc told MarketWatch how she was able to anticipate a Tupperware stock spike despite a dearth of traditional market-moving news around the name.
Tupperware’s stock has continued its upward trajectory, rocketing again on Tuesday. The stock eventually ended Tuesday’s session up 26% at $5.38, with LaDuc warning her clients of the risks involved in a parabolic rally. “I suggested to clients it was likely done and to be very cautious if still long because ‘Parabolas are trapped longs that can trigger volatility which can trigger a liquidation event’.”
Related: Yellow’s stock quadruples in 2 days even after reports that bankruptcy is coming
Shares of Tupperware are down 23.2% Wednesday. Yellow Corp.’s stock, which ended Tuesday’s session up 121.6%, is down 17.3% Wednesday.
With regard to Yellow Corp. LaDuc attributes its recent stock movements to insider and Wall Street manipulation. “Low priced, low-float stocks are VERY easy to push around,” she told MarketWatch.
Bankrupt companies such as Bed Bath & Beyond Inc.
BBBYQ,
have even proven attractive to some investors recently, sparking comparisons with the meme stock phenomenon.
“They are clearly retail investors, largely on the Robinhood
HOOD,
platform, that are readers of Reddit,” Howard Ehrenberg, a bankruptcy and reorganization practice partner at law firm Greenspoon Marder, told MarketWatch last month. “They are people buying on rumor and hoping that by participating in a mass purchase binge, they will make money.”
Related: Tupperware stock skyrockets to a record 434% gain in July
Hertz Global Holdings Inc.
HTZ,
which filed for bankruptcy protection in 2020 and exited bankruptcy the following year, also fueled meme-stock comparisons, when mostly retail investors piled into the stock during the bankruptcy process.
Typically in a bankruptcy, shareholders are wiped out as creditors take control of the remaining assets. But those investors were rewarded when the company got a big capital injection and was able to resume trading on an exchange.
The investor behavior around these types of stocks has caught the attention of academics. Victor Ricciardi, visiting finance faculty at Tennessee Tech University and co-author of the new book “Advanced Introduction to Behavioral Finance,” recently described some of the behaviors that can prompt investors to purchase bankrupt stocks.
“Representativeness bias refers to when past performance influences how an individual perceives an investment,” Ricciardi told MarketWatch via email last month. “In particular, a person makes a general assumption about a small sample of information or experience.”
Related: Why investors gamble on shares of bankrupt companies — Bed Bath & Beyond, for example
So, for example, if a person made a substantial gain from a previous bankrupt stock they might conclude that all bankrupt stocks result in investment gains, according to Ricciardi. There are also parallels with gambling.
“The notion of the long shot bias is based on the tendency for people to overweight the probability of a long shot bet paying off, especially in horse racing and lotteries,” Ricciardi added. “This is driven by overconfident behavior and dreams of becoming a millionaire overnight.”
Tupperware’s stock has risen 250.6% in the last three months, while Yellow shares have climbed 84.3%.
Tomi Kilgore and Phil van Doorn contributed to this report.
[ad_2]
[ad_1]
U.S. stock futures stumbled Wednesday after markets were rattled by a downgrade to the U.S. government’s credit rating.
On Tuesday, the Dow Jones Industrial Average
DJIA
rose 71 points, or 0.2%, to 35631, the S&P 500
SPX
declined 12 points, or 0.27%, to 4577, and the Nasdaq Composite
COMP
dropped 62 points, or 0.43%, to 14284.
Equity-index futures are succumbing to a broad risk off tone across markets after rating agency Fitch downgraded the U.S.’s credit rating from AAA to AA+, citing “expected fiscal deterioration” and an “erosion of governance”.
Fitch’s move follows a similar downgrade by S&P more than a decade ago. The U.S. Treasury market acts as a global benchmark upon which many financial products are based and so uncertainty about its stability can cause anxiety for investors.
The news found a stock market arguably vulnerable to unwelcome surprises, with the S&P 500 having already gained 19.2% this year and the tech-heavy Nasdaq Composite up 36.5%.
The CBOE VIX Index , an option-based gauge of expected S&P 500 volatility, jumped 16% to 16.2, its highest in nearly four weeks.
Traditional perceived havens saw demand, with the Japanese yen
USDJPY,
gaining 0.7%, gold
GC00,
nudging up to $1,950 an ounce, and benchmark German government bond yields
BX:TMBMKDE-10Y
moving lower. U.S. 10-year Treasury yields
BX:TMUBMUSD10Y
were little changed at 4.03%.
However, most analysts did not see the downgrade causing the stock market much long term damage.
“While debt downgrades seldom, if ever, have long legs, investors may pause and let the dust settle before re-entering risk markets. However, within this super market-friendly environment of stable growth and a Fed close to the end of its hiking cycle creating fertile ground for stock gains, its unlikely risk sentiment will wander too far off the soft landing path,” said Stephen Innes, managing partner of SPI Asset Management.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said “the market remains sensitive as the final throes of earnings season rumble on, but 82% of S&P 500 companies that have reported results so far have surprised to the upside, offering a bit of a sentiment buffer.”
Earnings results due Wednesday include CVS Health
CVS,
Humana
HUM,
and Carlyle Group
CG,
before the opening bell, followed after the close by PayPal
PYPL,
Shopify
SHOP,
and Qualcomm
QCOM,
U.S. economic updates set for release on Wednesday include the ADP employment report at 8:15 a.m. Eastern.
[ad_2]
[ad_1]
Shares of Starbucks Corp. fell after hours Tuesday after the coffee chain reported third-quarter same-store sales that missed expectations, despite a big rebound in China.
The coffee chain reported fiscal third-quarter net income of $1.14 billion, or 99 cents a share, compared with $912.9 million, or 79 cents a share, in the same quarter last year. Adjusted for restructuring and impairment costs, Starbucks earned $1 a share.
Revenue rose 12.5% to $9.17 billion, compared with $8.15 billion in the prior-year quarter. Same-store sales rose 10% worldwide, with a 7% gain in North America. Those same-store sales jumped 24% internationally, with a 46% gain in China.
Analysts polled by FactSet expected Starbucks
SBUX,
to report adjusted earnings per share of 95 cents, on revenue of $9.29 billion and same-store sales growth of 11%.
Operating margins rose to 17.3%, from 15.9% a year ago, with higher prices and productivity offset by greater spending on employee wages and benefits.
Shares slipped 1.2% after hours on Tuesday. Shares of Starbucks are roughly where they were at the beginning of the year.
Starbucks executives over the past year have said that amid stubborn inflation, customers see coffee as an affordable luxury worth treating themselves to. But Wall Street has struggled to find a reason to push the stock higher amid questions about trends in North America and slowing same-store sales in the years ahead, as well as China’s uneven economic recovery as it shakes off pandemic restrictions.
UBS analysts said that demand in the U.S. was likely still “solid.” But they said that the focus would be on demand in China. Quo Vadis analyst John Zolidis, meanwhile, said that along with China, investors had been focused on the chain’s efforts to set up more drive-through locations in the U.S., and any benefits from higher-priced cold drinks and customizable orders.
The coffee chain also continues to fight with its unionized employees. Bargaining has stalled. Last month, unionized workers accused Starbucks of banning Pride-themed decorations. Starbucks aggressively denied those allegations.
[ad_2]
[ad_1]
Intel Corp. shares surged in the extended session Thursday after the chip maker posted a surprise profit, but while data-center sales came in better than expected, a larger beat in PC product sales drove margin improvement.
Intel
INTC,
shares surged around 8% after hours, following a 0.6% rise to close the regular session at $34.55.
The company reported second-quarter net income of $1.48 billion, or 35 cents a share, versus a loss of $454 million, or 11 cents a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported 13 cents a share, versus net income of 28 cents a share a year ago.
Revenue fell to $12.95 billion from $15.32 billion in the year-ago period, and adjusted gross margins came in at 39.8%, the company said.
Intel had forecast an adjusted second-quarter loss of 4 cents a share on revenue of about $11.5 billion to $12.5 billion for the current period, and adjusted gross margins of about 33.2% for the quarter.
Analysts surveyed by FactSet, on average, expected a loss of 4 cents a share on revenue of $12.12 billion.
The margin beat was “largely a function of revenue,” Intel Chief Financial Officer David Zinsner told analysts on a conference call, and that revenue beat was much more pronounced in Intel client, or PC, business than it was data center.
“We had obviously beat revenue significantly, and we’ve got a good follow-through in the fixed-cost nature of our business, and so that really was what helped us outperform significantly on the gross-margin side in the second quarter,” Zinsner told analysts.
Intel posted PC-group sales of $6.8 billion and data-center sales of $4 billion, while analysts surveyed by FactSet had forecast $6.08 billion and $3.8 billion, respectively.
Before the conference call, Edward Jones analyst Logan Purk told MarketWatch in an interview following the report that most of the improvement in Intel’s gross margin came from the unexpected amount of growth in the PC business.
“The magnitude of client computing growth, and how the PC market is recovering faster than anticipated,” came as a surprise, Purk told MarketWatch. The analyst, who has a hold rating on Intel, said he expects sequential single-digit improvement in data center going forward.
Still, on the call, Intel Chief Executive Pat Gelsinger hammered home the point that Intel was wholeheartedly going after the AI market, which is expected to be dominated by Nvidia Corp.
NVDA,
and to a lesser extent, by Advanced Micro Devices Inc.
AMD,
which reports earnings on Tuesday.
“We see AI being infused in everything and there’s going to be AI chips for the edge, AI chips for the communications infrastructure, AI chips for sensing devices, for automotive devices, and we see opportunities for us both as a product provider and as a foundry and technology provider across that spectrum,” Gelsinger said.
Meanwhile, network and edge sales came in at $1.4 billion, while analysts called for $1.48 billion, and foundry services revenue rose to $232 million for the quarter, while Wall Street looked for $149.2 million.
“In the third quarter, we do obviously at the midpoint see revenue growth sequentially and so that will be helpful in terms of gross margin,” Zinsner told analysts on the call. “We expect, again, pretty good follow-through as we get that incremental revenue.”
Intel forecast third-quarter earnings of about 20 cents a share on revenue of about $12.9 billion to $13.9 billion and adjusted gross margins of about 43% for the current quarter. Analysts surveyed by FactSet had forecast third-quarter adjusted earnings of 16 cents a share on revenue of $13.22 billion.
Year to date, Intel shares have gained nearly 31%, while the PHLX Semiconductor Index
SOX,
has surged 49%, the S&P 500
SPX,
has grown 18%, the Nasdaq Composite
COMP,
has gained 34% and the Dow Jones Industrial Average
DJIA,
is up more than 6%.
[ad_2]
[ad_1]
Anheuser-Busch InBev is planning to cut jobs in the U.S. after a sharp deterioration in sales following a boycott that’s still impacting Bud Light.
The industry publication Brewbound said the company was going to cut 2% of its U.S. workforce, where it employs 19,000. The company told the publication that front-line workers, including warehouse staff and field reps, will not be impacted. The company did not specifically identify slumping Bud Light sales as the cause of the layoffs.
Bud Light sales have tumbled after the company’s ill-fated social media promotion with Dylan Mulvaney.
Citing Nielsen U.S. beer data, analysts at Bank of America said volumes at the brewer tumbled by 15.3% year-over-year in the four weeks ending July 15, compared to the 2.7% decline for the broader U.S. beer category.
Bud Light sales over that same time period skidded 29.8%, and Budweiser volumes skidded 14%. In contrast, Coors Light sales rose 17% in the last four weeks, Miller Lite volumes rose by 12.5% and Yuengling sales surged 38%.
Anheuser-Busch InBev’s U.S.-listed shares
BUD,
have dropped 2% this year. In its home market of Belgium, shares
ABI,
rose 0.6% on Thursday.
[ad_2]
[ad_1]
By Joe Hoppe
Unilever said Tuesday that its second-quarter sales growth beat expectations, as price increases outweighed a slight decline in volumes, and it raised full-year guidance.
The Anglo-Dutch retailer–which owns consumer brands like Ben & Jerry’s ice cream, Dove soap and Domestos cleaning products–posted underlying sales growth of 7.9% for the second quarter of the year, with a decrease of 0.3% in volumes and an increase of 8.2% in prices. Analysts’ consensus for underlying sales growth was 6.4%, according to a forecast from the company.
“As underlying price growth has sequentially moderated from 13.3% in the fourth quarter of 2022, volumes were virtually flat with a step-up in performance in Beauty & Wellbeing and Personal Care offsetting volume declines elsewhere,” it said.
For the first half as a whole, sales growth came in at 9.1%, beating the company’s compiled consensus of 8.3%.
The company said first-half pretax profit was 5.27 billion euros ($5.83 billion) compared with EUR4.36 billion a year earlier.
Turnover came in at EUR30.43 billion, including EUR15.74 billion in the second quarter. Analysts expected half-year and second-quarter turnover of EUR30.34 billion and EUR15.59 billion, respectively.
The company raised its guidance for full-year underlying sales growth for 2023 to be above 5%. It had previously guided at the upper end of 3%-5%.
The board declared a quarterly dividend of 42.68 European cents a share, flat on the first half of 2022.
Write to Joe Hoppe at joseph.hoppe@wsj.com
[ad_2]
[ad_1]
Tupperware Brands Corp. shares enjoyed their best day on record Monday despite an apparent absence of news related to the beleaguered seller of kitchen and home products.
The stock shot up more than 75% Monday in meme-like trading action and amid vastly higher-than-average volume. The surge marked Tupperware’s
TUP,
largest one-day percentage gain yet, surpassing the prior record of a 67.7% increase on July 29, 2020, according to Dow Jones Market Data.
Just shy of 130 million Tupperware shares changed hands on the day, easily breaking the record of 42.7 million shares traded, also set on July 29, 2020. The name’s 30-day average volume is about 2.4 million shares.
The stock finished Monday at $1.58 to record its highest close since April 6, 2023, according to Dow Jones Market Data.
Tupperware shares remain off 62% so far in 2023 amid serious challenges for the company. It issued a going-concern warning in April and disclosed that it has hired financial advisers, and it said earlier in the year that it had discovered misstatements in past financial reports.
Don’t miss: Why investors gamble on shares of bankrupt companies — Bed Bath & Beyond, for example
The company’s website doesn’t appear to show any recent filings or press releases that would have driven Monday’s stock move. Tupperware didn’t immediately respond to a MarketWatch request for comment about the day’s trading activity.
Tupperware’s stock is up 136% over a two-session span, with the rally coming as investors don’t necessarily seem spooked by companies sporting bankruptcy risk. Used-car retailer Carvana Co.
CVNA,
once thought to be on the brink of failure, has seen its shares come roaring back this year, up nearly 900% over the course of 2023.
See more: Carvana’s stock has roared back from the brink. This chart shows its meteoric surge.
[ad_2]
