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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/ge-larry-culp-investors-annual-letter-83f4e20b
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Electric vehicle maker
Lucid
was shut out of the government’s new purchase tax credits for consumers buying an EV. The company decided to do something about that.
Investors aren’t so sure they like it. They are taking some profits after a run that had
Lucid
(ticker:LCID) stock outperforming
Tesla
(TSLA) shares.
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Robinhood Markets Inc. accidentally sold short on a small stock as it went on a meme-like ride in December, costing the trading app more than the stock’s current market capitalization, executives disclosed Wednesday.
Cosmos Health Inc.
COSM,
shares nearly tripled and experienced record trading volume more than seven times any previous day on Dec. 16, as online traders looking for heavily shorted companies accused exchanges of not allowing them to sell their shares into the updraft. Robinhood
HOOD,
executives admitted Wednesday that their trading app actually became part of the frenzy, and ended up down $57 million because of it.
In an earnings call, Robinhood Chief Executive Vlad Tenev noted a “processing error on a corporate action” that was “really disappointing,” leaving Chief Financial Officer Jason Warnick to spell it out.
“A processing error caused us to sell shares short into the market, and although it was detected quickly, it resulted in a loss of $57 million as we bought back these shares against a rising stock price,” Warnick said.
When Cosmos Health effected a 1-for-25 reverse stock split that Friday morning in December, just hours after announcing its intentions, trading portals did not appear prepared. As MarketWatch reported on the day, TD Ameritrade publicly told Twitter users that the company had not received the newly issued shares to dole out to their clients as the stock spiked. A Charles Schwab Corp.
SCHW,
spokesperson emailed MarketWatch the next week to say that the distributions were all taken care of as of the end of the next business day, a Monday.
The stock gains didn’t last through that Monday, though — after reaching as high as $23.84 on the day that Robinhood was apparently buying, they lost it all in after-hours trading and headed even lower after Cosmos Health announced an equity offering.
Shares closed Wednesday at $5.04, which gives Cosmos Health a market cap of about $53 million, according to FactSet — less than Robinhood executives said they lost on the Dec. 16 trades.
Robinhood shares were up in after-hours trading Wednesday after the trading app reported a fourth-quarter miss, but said the company would seek to buy back shares sold to disgraced cryptocurrency-exchange founder Sam Bankman-Fried and executives would forego $500 million in stock compensation. Robinhood stock has declined 21.8% in the past 12 months, as the S&P 500 index
SPX,
has dropped 8.9%.
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Shares of Under Armour Inc. sprinted higher Wednesday toward a nine-month high, after the athletic apparel and gear seller reported a big beat in fiscal third quarter profit and raised its full-year outlook.
Net income for the quarter to Dec. 31 rose to $121.6 million, or 27 cents a share, from $109.7 million, or 23 cents a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share of 16 cents was well above the FactSet consensus of 9 cents.
Revenue grew 3.4% to $1.58 billion, above the FactSet consensus of $1.55 billion, as a 25% jump in footwear revenue offset 2% declines in apparel and accessories revenue. Meanwhile, a 2% decline in North America revenue was offset by a 14% increase in international revenue.
The Class C shares
UA,
shot up 6.8% in premarket trading, which puts them on track to open at the highest price seen during regular-sessions hours since May 5, 2022. The Class A shares
UAA,
jumped 6.9%.
Gross margin contracted by 6.5 percentage points, due primarily to higher promotions, sales mix impacts and the negative impact of currency fluctuations.
For fiscal 2023, the company raised its adjusted EPS guidance range to 52 cents to 56 cents from 44 cents to 48 cents, but kept its revenue growth guidance at a low single-digit percentage range. The FactSet consensus for EPS was 46 cents, and the FactSet revenue consensus of $5.86 billion implied 2.7% growth.
The Class C shares have soared 53.5% over the past three months through Tuesday, while the S&P 500
SPX,
has gained 8.8%.
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Tyson Foods Inc. stock slid 5.5% in premarket trade Monday, after the meat processor and parent to brands including Jimmy Dean and Hillshire Farm missed consensus estimates for its fiscal first quarter by a wide margin.
“We faced some challenges in the first quarter,” Chief Executive Donnie King said in a statement. “Market dynamics and some operational inefficiencies impacted our profitability. We expect to improve our performance through the back half of fiscal 2023 and into the future, as we strive to execute with excellence and work to become best in class in our industry.”
Springdale, Arkansas-based Tyson posted net income of $316 million, or 88 cents a share, for the quarter to Dec. 31, down from $1.121 billion, or $3.07 a share, in the year-earlier period. Adjusted per-share earnings came to 85 cents, well below the $1.31 FactSet consensus.
Sales rose to $13.260 billion from $12.933 billion, also below the $13.515 billion FactSet consensus.
The company, the biggest U.S. meat supplier measured by sales, said beef prices fell by an average of 8.5% in the quarter, while chicken prices rose 7.1% and pork prices were up 1.4%. The company’s prepared foods division’s sales rose 7.6% and international and other food sales were up 4.9%.
Beef sales rose 2.9% to $4.723 billion, while pork sales fell 7.4% to $1.529 billion. Sales of chicken rose 2.5% to $4.263 billion, while prepared foods sales rose 1.2% to $2.538 billion. International and other food sales were up 6.4% to $612 million.
The U.S. Department of Agriculture is expecting domestic protein production — beef, pork, chicken and turkey — to be flat in fiscal 2023 versus year-earlier levels, said Tyson.
Tyson said it is expecting fiscal 2023 sales of $55 billion to $57 billion, while FactSet expects $55.2 billion. Tyson expects capex of about $2.5 billion and net interest costs of about $330 million.
The stock has fallen 27% in the last 12 months, while the S&P 500
SPX,
has fallen 8%.
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Eric Thayer/Bloomberg
A portfolio of stocks picked by Barron’s has enjoyed a rally in the past week, as the market anticipates the end of the Federal Reserve’s interest rate hikes. A buoyant performance from the auto industry also juiced the portfolio.
The entire stock market has enjoyed a gain in the past week. The S&P 500 is up about 3% in that span, including a pop in the last couple of days. Wednesday, the Fed announced a small interest rate hike, but markets interpreted Chairman Jerome Powell’s comments to mean that the end of rate increases is coming soon.
The rally has helped the average stock in the Barron’s portfolio post a 3.8% gain in the past week. The measure differs from a value-weighted index like the S&P 500, where stocks with bigger market capitalizations have bigger effects on the index.
Almost three quarters of 86 stocks in the Barron’s portfolio are up in the past week, with some of the winners posting mammoth gains. Top performers include
Generac
(GNRC),
PoolCorp
(POOL) and
Olaplex
(OLPX), which gained 15%, 14% and 19%, respectively in the past week.
Some stocks posted even larger gains.
Tesla
(TSLA) gained 22% since last Thursday’s close. In its fourth quarter of 2022 reported on Jan. 25, sales of $24.3 billion beat expectations for $24 billion, while earnings per share of $1.19 came in above estimates of $1.12. Wall Street is confident that, even with the company lowering prices as consumers feel the pain of higher rates, Tesla can keep boosting sales and profit growth. Analysts expect vehicle deliveries to grow 40% from a year earlier to almost 1.85 million in 2023, better than the 31% growth seen in the reported quarter.
“The key debates from here will be on whether vehicle deliveries can reaccelerate (we expect that they will especially starting in 2Q23),” writes
Goldman Sachs
analyst Mark Delaney.
Barron’s recommended Tesla stock on Jan. 6, arguing that the the worst of the company’s challenges—including delivery growth—are behind it. The stock is up 67% since then.
Lithia Motors
(LAD), a $7 billion by market capitalization auto dealer, has seen its stock rise 23% in the past week. It reports fourth-quarter earnings Feb 15, but the stock has risen as the picture for auto sales has improved. Tesla’s quarterly performance helped, but so did General Motors‘ (GM). The automating giant reported better-than-expected sales and EPS and said on its earnings call that 2023 will be a “strong year,” one in which analysts expect sales growth.
Barron’s recommended Lithia Motors in April 2022, arguing that the stock was cheap and that production constraints that held sales back would soon be a thing of the past. Since then, the stock is up about 4%.
Lucid Group
(LCID), a $20 billion electric vehicle and battery maker, is up 39% since last Thursday. Earnings are Feb. 22, but strong auto trends already have helped. Lucid, too, is expected to lower prices and aggressively grow deliveries. The stock got a pop late in January on speculation that Saudi Arabia’s Public Investment Fund could buy the rest of the company. The fund recently invested $1.5 billion and holds just over 60% of the company.
Unfortunately, Barron’s recommended shorting the stock in November, and it is up 17% since then.
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com
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Apple Inc. posted its largest revenue decline in more than six years amid underwhelming sales of iPhones, Macs and wearables, but its shares pared back most of their initial losses in after-hours trading Thursday after the company blamed its smartphone declines on supply issues.
Apple’s
AAPL,
iPhone revenue fell to $65.8 billion in the fiscal first quarter from $71.6 billion a year before, whereas analysts tracked by FactSet were looking for $67.8 billion. The performance comes after Apple warned in November that its iPhone 14 Pro and Pro Max shipments would be impacted by pandemic-fueled production constraints at a major Foxconn
2354,
facility in China.
Chief Executive Tim Cook said on Apple’s earnings call that he believes the company would have shown iPhone sales growth in the quarter had it not been for the supply constraints.
At the same time, he noted that it’s “very hard” to estimate the company’s ability to recapture lost sales, “because you have to know exactly what would’ve happened.”
Apple shares ended the extended session Thursday down 3.2%, after having been down as much as 5.6% in after-hours trading.
After reporting a quarterly revenue record for Macs in the September quarter, Apple fell way short of those heights in the December quarter with its Thursday afternoon report, and the company missed expectations by a wide margin. Mac sales declined to $7.7 billion from $10.9 billion a year earlier, while analysts had been looking for $9.4 billion.
Those big misses helped drive total revenue lower on the year and fueled a miss on the top line, despite a sizable beat in the iPad category. Overall revenue declined to $117.2 billion from $123.9 billion a year ago, while analysts were looking for $121.4 billion.
Dating back to its report for the December 2017 quarter, Apple has only missed revenue expectations twice, according to FactSet, including one time when the company issued a formal warning ahead of its official results.
The smartphone giant’s sales decline of 5.48% was its steepest year-over-year fall since the September quarter of 2016, when sales slipped 8.12%, according to Dow Jones Market Data.
Apple executives once again declined to provide a traditional financial forecast, though Chief Financial Officer Luca Maestri shared on the call that he expects Apple’s year-over-year revenue performance in the March quarter to be similar to what was seen in the December quarter. That would actually mark an acceleration of sorts, he said, since the December quarter benefited from an extra week.
Within iPhones specifically, Maestri also anticipates that year-over-year revenue growth will accelerate.
Apple’s profits fell as well in the latest period, as the company generated net income of $30.0 billion, or $1.88 a share, compared with $34.6 billion, or $2.10 a share, a year earlier. Analysts were modeling $1.94 in earnings per share.
Maestri called out “significant foreign-exchange headwinds, supply constraints on iPhone 14 Pro and iPhone 14 Pro Max and a challenging macroeconomic environment” in discussing the company’s smartphone performance. Mac growth was negatively impacted by economic conditions, currency pressures and tough comparisons to a year before.
Within its iPad segment, Apple showed sharp growth. Revenue increased to $9.4 billion from $7.3 billion a year earlier. The FactSet consensus was for $7.8 billion.
Maestri noted that the iPad business benefited from the launch of new iPads during the quarter as well as comparisons to a year-earlier period in which Apple faced supply constraints.
Revenue for wearables, home and accessories came in at $13.5 billion, down from $14.7 billion a year before and far below the $15.3 billion that analysts were modeling. Services revenue rose to $20.8 billion from $19.5 billion and beat the FactSet consensus, which was for $20.4 billion.
Shares of Apple have fallen 14.2% over the past 12 months, though they’re up 16.1% to start 2023. The Dow Jones Industrial Average
DJIA,
is off 4.4% over a 12-month span but ahead 2.7% so far this year.
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Alphabet Inc.’s stock slipped nearly 5% in extended trading Thursday after the tech giant missed slightly on revenue and earnings in ho-hum quarterly results.
Google’s parent company reported fiscal fourth-quarter total revenue of $76.05 billion, up from $75.3 billion a year ago. Earnings were $13.62 billion, or $1.05 per share, compared with $20.64 billion, or $1.53 per share, last year. Alphabet’s revenue, minus traffic-acquisition costs (TAC), was $63.12 billion, vs. $61.9 billion a year ago.
“We’re on an important journey to re-engineer our cost structure in a durable way and to build financially sustainable, vibrant, growing businesses across Alphabet,” Chief Executive Sundar Pichai said in a statement announcing the results. The company recently announced 12,000 layoffs and has scaled back hires.
In a conference call later with analysts, Google Chief Business Officer Philipp Schindler said a “pullback” in spending by advertisers amid a more challenging economy as well as foreign-exchange headwinds impacted sales.
Analysts polled by FactSet expected Alphabet
GOOG,
GOOGL,
to report total revenue of $76.2 billion and earnings of $1.18 per share, with sales expected to be in line with last year’s results and profit declining from the holiday season a year ago. Revenue, minus TAC, were modeled at $63.2 billion, which also suggests little to no growth from last year.
Google’s total advertising sales slid to $59 billion from $61.2 billion a year ago, missing analysts’ average expectations of $60.44 billion. Google Cloud brought in $7.32 billion, compared with $5.54 billion last year. YouTube ad sales slipped to $7.96 billion from $8.63 billion a year ago.
“The search giant underperformed our expectations across almost all business units, most importantly its core ad-search segment,” Jesse Cohen, senior analyst at Investing.com, said. “Once again, YouTube growth slowed to a crawl amid tough competition from TikTok and other players in the video-streaming space.”
A dip in digital advertising has defined the past few quarters for Google, Meta Platforms Inc.
META,
Snap Inc.
SNAP,
Pinterest Inc.
PINS,
and other companies dependent on ads. Meta’s better-than-expected quarterly report Wednesday was a sign of encouragement after Snap had another desultory quarterly performance.
Indeed, Alphabet shares closed up 7% in Thursday’s regular session, at $107.74, before retreating 5% in after-hours trading.
Read more: Alphabet earnings: What to expect from the Google parent company
“After Alphabet’s advertising revenue cycle reached peak growth” in the second quarter of 2021, revenue for this part of the business is set to decelerate for the sixth quarter in a row, said Monness, Crespi, Hardt analyst Brian White, who forecast a 3% drop in the recently completed quarter.
On Thursday, Alphabet Chief Financial Officer Ruth Porat said that beginning in
the current quarter, AI subsidiary DeepMind will be included in Alphabet’s corporate costs rather than in Other Bets.
Alphabet’s stock has declined 24.7% over the past 12 months. The S&P 500 index
SPX,
is down 6.7% over the past year.
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Amazon.com Inc. reported its least profitable holiday quarter since 2014 on Thursday, leading to the biggest annual loss on record for the e-commerce giant, which also disappointed Wall Street with its forecast amid concerns about cloud growth.
Amazon
AMZN,
reported a holiday profit of $278 million, or 3 cents a share, down from $1.39 a share a year ago. Revenue increased to $149.2 billion from $137.41 billion a year ago. Analysts on average were expecting earnings of 17 cents a share on sales of $145.71 billion, according to FactSet.
Shares fell 5% in after-hours trading following the release of the results, after closing with a 7.4% increase at $112.91.
“In the short term, we face an uncertain economy, but we remain quite optimistic about the long-term opportunities for Amazon,” Chief Executive Andy Jassy said in a statement.
Amazon was expected to post a loss for the whole year for the first time since 2014, but worse-than-expected holiday earnings actually led Amazon to the company’s worst annual loss on record. For the year, Amazon produced a net loss of $2.7 billion and revenue of $513.98 billion, up from $469.82 billion a year ago and the company’s first annual sales total to surpass a half-billion dollars. Amazon had never lost more than $1.4 billion in a single year since going public in 1997, according to FactSet records.
Amazon’s fourth-quarter profit was hindered again by the decline of Rivian Automotive Inc.
RIVN,
stock, which cost Amazon $2.3 billion in net income in the quarter. In addition, Amazon recognized many of the costs of its recently announced layoffs and other cost cuts in fourth-quarter results as well — a $2.7 billion impairment charge included $640 million in severance charges related to layoffs and $720 million related to closures and impairment of physical stores, Chief Financial Officer Brian Olsavsky said in a call with reporters.
Without those charges, Amazon would have exceeded expectations, and recognizing them in 2022 leaves a cleaner sheet for this year, when Amazon’s ability to return to strong profitability will be the focus of Wall Street. The end result will likely rest on Amazon Web Services, or AWS, the cloud-computing offering that has supplied the bulk of Amazon’s profit in recent years, including 2022. Last year, AWS had operating profit of $22.84 billion, while the rest of the business produced an operating loss of $10.59 billion.
But cloud-computing growth has slowed, as Microsoft Corp.
MSFT,
displayed in its results and forecast last week, and Olsavsky confirmed the slowdown Thursday after AWS results missed expectations and suggested revenue growth had slowed to mid-teens and could stay there.
“Starting back in the middle of the third quarter of 2022, we saw our year-over-year growth rates slow as enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions,” he said in a conference call with analysts. “As expected, these optimization efforts continued into the fourth quarter.”
Olsavsky told reporters he expected “slower growth rates for the next few quarters” for AWS, and later disclosed to analysts that revenue growth was in the mid-teens in the first month of this year. He noted that AWS revenue growth rates had been hit by customers looking to cut their cloud spending, and “we expect these optimization efforts will continue to be a headwind to AWS growth in at least the next couple of quarters.”
Opinion: The cloud boom has hit its stormiest moment yet, and it is costing investors billions
Making his first appearance on an earnings call since being named CEO two years ago, Jassy — who led AWS before being promoted to replace Jeff Bezos as CEO — said “if it’s good for our customers to find a way to be more cost effective in an uncertain economy, our team is going to spend a lot of cycles doing that.”
“We’re the only ones that really break out our cloud numbers in a more specific way, so it’s always a little bit hard to answer your question about what we see,” Jassy said to an analyst asking about the larger cloud industry, while referencing rival Microsoft’s refusal to provide full financial information about Azure. “But to our best estimations, when we look at the absolute dollar growth year over year, we still have significantly more absolute dollar growth than anybody else we see in this space.”
In the fourth quarter, AWS produced operating income of $5.21 billion on revenue of $21.38 billion, with sales growing more than 20% and operating income declining slightly. Analysts on average were expecting profit of $5.73 billion on sales of $21.85 billion, according to FactSet.
Any slowdown in AWS would hit Amazon’s bottom line as well as its overall top line, and executives’ forecast for the first quarter shows less optimism than Wall Street expected. Amazon’s guidance calls for operating profit of break-even to $4 billion and revenue of $121 billion to $126 billion, while FactSet recorded an average analyst forecast of $4.04 billion in operating profit on sales of $125.09 billion.
Amazon’s e-commerce business has struggled for growth amid the worst inflation in decades, with Olsavsky saying in a call with reporters that Amazon “saw customers spend less on discretionary items… [while] continuing to spend on everyday essentials.” Amazon recently announced it would start charging for grocery delivery for Prime members, which could increase revenue from sales of fresh food.
For more: Amazon Fresh to start charging Prime customers up to $10 for grocery deliveries
Amazon’s domestic e-commerce business posted an operating loss of $240 million on sales of $93.36 billion, after a $206 million loss on sales of $82.36 billion in the holiday quarter of 2021. Olsavsky said cuts in the company’s physical stores and device businesses would improve operating margins in North America.
Amazon’s international efforts struggled more, with a sales decline and increasing losses, as Olsavsky said the U.K. and other parts of Europe showed slowdowns. Amazon reported an operating loss of $2.23 billion on revenue of $34.46 billion overseas, after a loss of $1.63 billion on sales of $37.27 billion a year ago.
One bright spot in Amazon’s report was a record quarter for its advertising business, which has grown fast in recent years in a challenge to Alphabet Inc.’s
GOOGL,
GOOG,
Google and other online ad giants. Ads brought in $11.56 billion in the holiday quarter, growing nearly 19% from $9.71 billion a year ago and beating the analysts’ consensus.
Amazon stock has fallen more than 25% over the past 12 months, but has experienced a rebound so far in 2023, gaining more than 33% year to date. The S&P 500 index
SPX,
has declined 10.2% in the past year while gaining 7.3% since the calendar flipped to 2023.
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Meta Platforms Inc. shares soared in after-hours trading Wednesday despite an earnings miss, as the Facebook parent company guided for potentially more revenue than Wall Street expected in the new year and promised more share repurchases amid cost cuts.
Meta
META,
said it hauled in $32.17 billion in fourth-quarter revenue, down from $33.67 billion a year ago but stronger than expectations. Earnings were $4.65 billion, or $1.76 a share, compared with $10.3 billion, or $3.67 a share, last year.
Analysts polled by FactSet expected Meta to post fourth-quarter revenue of $31.55 billion on earnings of $2.26 a share, and the beat on sales coincided with a revenue forecast that also met or exceeded expectations. Facebook Chief Financial Officer Susan Li projected first-quarter sales of $26 billion to $28.5 billion, while analysts on average were projecting first-quarter sales of $27.2 billion.
Shares jumped more than 19% in after-hours trading immediately following the release of the results, after closing with a 2.8% gain at $153.12.
Alphabet Inc.’s
GOOGL,
GOOG,
Google and Pinterest Inc.
PINS,
benefited from Meta’s results, with shares for each company rising more than 4% in extended trading Wednesday.
“Our community continues to grow and I’m pleased with the strong engagement across our apps. Facebook just reached the milestone of 2 billion daily actives,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. “The progress we’re making on our AI discovery engine and Reels are major drivers of this. Beyond this, our management theme for 2023 is the ‘Year of Efficiency’ and we’re focused on becoming a stronger and more nimble organization.”
Read more: Snap suffers worst sales growth yet in holiday quarter, stock plunges after earnings miss
Facebook’s 2 billion-user milestone was slightly better than analysts expected for user growth on Meta’s core social network. Daily active users across all of Facebook’s apps neared, but did not crest, another round number, reaching 2.96 billion, up 5% from a year ago.
Meta has been navigating choppy ad waters as it copes with increasing competition from TikTok and fallout from changes in Apple Inc.’s
AAPL,
ad-tracking system in 2021 that punitively harmed Meta, costing it potentially billions of dollars in advertising sales. Meta has invested heavily in artificial-intelligence tools to rev up its ad-targeting systems and making better recommendations for users of its short-video product Reels, but it laid off thousands of workers after profit and revenue shrunk in recent quarters.
The cost cuts seemed to pay off Wednesday. While Facebook missed on its earnings, it noted that the costs of its layoffs and other restructuring totaled $4.2 billion and reduced the number by roughly $1.24 a share.
Meta executives said they now expect operating expenses to be $89 billion to $95 billion this year based on slower salary growth, cost of revenue, and $1 billion in savings from facilities consolidation — down from previous guidance for $94 billion to $100 billion. Capital expenditures are expected to be $30 billion to $33 billion, down from previous guidance of $34 billion to $37 billion, as Meta cancels multiple data-center projects.
In a conference call with analysts late Wednesday, Zuckerberg called 2023 the “year of efficiency” after 18 years of unbridled growth. He recommitted to Meta’s emphasis on AI and the metaverse, a platform for “better social experiences” than the phone, he said.
“The reduced outlook reflects our updated plans for lower data-center construction spend in 2023 as we shift to a new data-center architecture that is more cost efficient and can support both AI and non-AI workloads,” Li said in her outlook commentary included in the release.
Meta expects to increase its spending on its own stock. The company’s board approved a $40 billion increase in its share-repurchase authorization; Meta spent nearly $28 billion on its own shares in 2022, and still had nearly $11 billion available for buybacks before that increase.
“Investors are cheering Meta’s plans to return more capital to shareholders despite worries over rising costs related to its metaverse spending,” said Jesse Cohen, senior analyst at Investing.com.
“At first glance…Meta getting its mojo back,” Baird Equity Research analyst Colin Sebastian said in a note late Wednesday. “Results and guidance look particularly solid after Snap’s dismal report; however, further cuts to operating and capital expenditures announced this afternoon were perhaps the biggest surprise.”
UBS analyst Lloyd Walmsley said he anticipates double-digit revenue growth exiting 2023 and strong growth in earnings and free cash flow.
The results came a day after Snap Inc.
SNAP,
posted fourth-quarter revenue of $1.3 billion, flat from a year ago and the worst year-over-year sales growth Snap has ever reported. But they also arrived on the same day Facebook scored a major win in a California court. The company successfully fended off the Federal Trade Commission bid to win a preliminary injunction to block Meta’s planned acquisition of VR startup Within Unlimited.
Read more: Meta wins bid to buy VR startup Within Unlimited, beating U.S. FTC in court: report
Meta shares have plunged 53% over the past 12 months, while the broader S&P 500 index
SPX,
has tumbled 10% the past year.
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Advanced Micro Devices Inc. shares rose in the extended session Tuesday after the chip maker’s data-center sales gained and executives forecast sales of more than $5 billion to start 2023, even as cloud-customer demand begins the year light.
AMD shares AMD rose 3% after hours, following a 3.7% gain in the regular session to close at $75.15.
AMD…
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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/stock-market-movers-tesla-alibaba-gm-lucid-51674835133
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Intel Corp. shares dropped more than 9% in the extended session Thursday after the chip maker reported a big miss for the fourth quarter, forecast a loss for the first quarter, said the data-center market was contracting and that inventory digestion will gnaw at margins.
Intel
INTC,
executives forecast an adjusted loss of 15 cents a share on revenue of about $10.5 billion to $11.5 billion and adjusted gross margins of about 39% for the current quarter. Analysts surveyed by FactSet had estimated adjusted first-quarter earnings of 25 cents a share on revenue of $13.93 billion.
Chief Executive Pat Gelsinger told analysts on a conference call he would not provide a 2023 forecast. Gelsinger restricted the outlook to the current quarter, citing macro uncertainties, a digestion of PC inventory that was “difficult” to forecast and a contracting data-center market. In the fourth quarter, AI group sales dropped 33% to $4.3 billion, while the Street expected revenue of $4.08 billion.
“We expect Q1 server consumption [total addressable market] to decline both sequentially and year-over-year at an accelerated rate, with first-half 2023 server consumption TAM down year-on-year before returning to growth in the second half,” Gelsinger said.
Chief Financial Officer David Zinsner told analysts that the company will institute an accounting change in the first quarter, where Intel will extend the useful life of their machinery to eight years from a current five years. Gelsinger said that Intel was going to “squeeze” its effective capacity.
While Zinsner would not give a full-year outlook, he did say that continued inventory digestion should be weighted to the first half of the year.
Pressed on how Intel could get back to the 51% to 53% margins range he promised a year ago, Zinsner said a “significant inventory burn” on PC inventory would hit gross margins by 400 basis points in the first quarter. Gross margins for the fourth quarter dropped to 43.8% from 55.8% a year ago, and from 45.9% in the third quarter.
Intel reported a fourth-quarter loss of $664 million, or 16 cents a share, versus net income of $4.62 billion, or $1.13 a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported earnings of 10 cents a share, compared with $1.13 a share from a year ago.
Revenue declined to $14.04 billion from $20.52 billion in the year-ago quarter, for a 10th straight quarter of year-over-year declines.
Analysts surveyed by FactSet estimated earnings of 21 cents a share on revenue of $14.49 billion, based on Intel’s forecast of 20 cents a share on about $14 billion to $15 billion.
Intel shares fell 9% in after-hours trading, after closing the regular session up 1.3% at $30.09. Other chip stocks also declined, including top rival Advanced Micro Devices Inc.
AMD,
which saw shares drop more than 3% in after-hours trading, and Nvidia Corp.
NVDA,
which declined 2%.
Breaking down divisions: Client-computing sales fell 36% to $6.6 billion from a year ago; “network and edge” sales slipped 1% to $2.1 billion; and foundry services revenue rose 30% to $319 million.
Analysts surveyed by FactSet expected revenue from client computing to come in at $7.36 billion; “network and edge” revenue of $2.23 billion; and foundry services revenue of $199.1 million.
Over the past 12 months, Intel stock has fallen 43%. Over the same period, the Dow Jones Industrial Average
DJIA,
— which counts Intel as a component — has slipped 1%, the PHLX Semiconductor Index
SOX,
has dropped 13%, the S&P 500 index
SPX,
has declined 7%, and the tech-heavy Nasdaq Composite Index
COMP,
has dropped 15%.
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Intel Corp. shares dropped in the extended session Thursday after the chip maker reported a big miss for the fourth quarter and forecast a loss for the first quarter.
Intel
INTC,
shares fell 6% in after-hours trading, after closing the regular session up 1.3% at $30.09.
For the first quarter, Intel forecast an adjusted loss of 15 cents a share on revenue of about $10.5 billion to $11.5 billion and adjusted gross margins of about 39%. Analysts surveyed by FactSet had estimated adjusted first-quarter earnings of 25 cents a share on revenue of $13.93 billion.
“In 2023, we will continue to navigate the short-term challenges while striving to meet our long-term commitments, including delivering leadership products anchored on open and secure platforms, powered by at-scale manufacturing and supercharged by our incredible team,” said Pat Gelsinger, Intel’s chief executive, in a statement.
Intel reported a fourth-quarter loss of $664 million, or 16 cents a share, versus net income of $4.62 billion, or $1.13 a share, in the year-ago period. After adjusting for restructuring charges and other items, Intel reported earnings of 10 cents a share, compared with $1.09 a share from a year ago.
Revenue declined to $14.04 billion from $20.52 billion in the year-ago quarter, for a 10th straight quarter of year-over-year declines. Gross margins dropped to 43.8% from 55.8% a year ago, and 45.9% in the third quarter.
Analysts surveyed by FactSet estimated earnings of 21 cents a share on revenue of $14.49 billion, based on Intel’s forecast of 20 cents a share on about $14 billion to $15 billion.
Over the past 12 months, Intel stock has fallen 43%. Over the same period, the Dow Jones Industrial Average
DJIA,
— which counts Intel as a component — has slipped 1%, the PHLX Semiconductor Index
SOX,
has dropped 13%, the S&P 500 index
SPX,
has declined 7%, and the tech-heavy Nasdaq Composite Index
COMP,
has dropped 15%.
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Bed Bath & Beyond Inc. shares plunged more than 20% and were halted Thursday afternoon, after the retailer disclosed in a filing that it was in default on loans that have been called in.
The struggling retailer finally filed its quarterly report with the U.S. Securities and Exchange Commission on Thursday at roughly 2:30 p.m. Eastern time, after being threatened with having its stock delisted for being late with the required report.
Included in the filing is news that Bed Bath & Beyond
BBBY,
had defaulted on loans earlier this month, and executives were informed on Wednesday by banker JP Morgan Chase & Co.
JPM,
that the debt was due immediately.
“On or around January 13, 2023, certain events of default were triggered under the Company’s Credit Facilities as a result of the Company’s failure to prepay an overadvance and satisfy a financial covenant, among other things,” the filing reads.
“As a result of the continuance of such events of default, on January 25, 2023, the administrative agent under the Amended Credit Agreement notified the Company that (i) the principal amount of all outstanding loans under the Credit Facilities, together with accrued interest thereon, the FILO Applicable Premium and all fees (including, for the avoidance of doubt, any break funding payments) and other obligations of the Company accrued under the Amended Credit Agreement, are due and payable immediately.”
See also: Bed Bath & Beyond bankruptcy warning marks latest chapter in troubled retailer’s downward spiral
Shares had traded between $3.25 and $3.47 on the day until about 5 minutes after the filing was released, when shares suddenly dove, triggering a halt. The stock fell as low as $2.10 and was halted three times between 2:46 p.m. and 3:14 p.m. before closing at $2.52, a 22.2% daily decline.
The struggling retailer admitted earlier this year that it has “substantial doubt” about its “ability to continue as a going concern” and may need to declare bankruptcy. The home goods retailer also said that it expects to record lower sales for the latest quarter than analysts were anticipating.
“As we consider all paths and strategic alternatives, we continue to work with our advisors and implement actions to manage our business as efficiently as possible,” a Bed Bath & Beyond spokesperson said in an email Thursday. “As is our practice, we do not comment on speculation. We will update all stakeholders on our plans as they develop and finalize.”
Bed Bath & Beyond stock has become popular with “meme” traders and short sellers, who have been betting on opposite sides of the trade as the retailer reported a poor holiday season and plans to shut down stores. Shares have traded as high as $30.06 and as low as $1.27 in the past 12 months, while declining 81.8% overall in that time. The S&P 500 index
SPX,
has declined 7.7% in the past 12 months.
See also: Why naked short selling has suddenly become a hot topic
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Microsoft Corp.’s profit declined more than 12% in the holiday season, and executives said Tuesday that a revenue deceleration at the end of 2022 is expected to continue into the new year as the company lays off workers.
Microsoft MSFT Chief Financial Officer Amy Hood said in a conference call Tuesday that “we are seeing customers exercise caution,” which resulted in “moderating consumption growth in Azure and lower-than-expected growth in new business” in December. Hood then said that “we expect business trends that we saw…
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Tesla Inc. Chief Executive Elon Musk took the witness stand briefly late Friday in a federal trial in San Francisco over alleged investor losses caused by his “funding secured” tweet and other tweets back in 2018.
In his roughly half-hour being questioned by a defense lawyer, Musk lauded Twitter Inc. as the most “democratic” way to communicate with Tesla investors and took a swipe at short sellers.
His testimony is expected to resume on Monday at 11:30 a.m. Eastern. Meanwhile, Tesla shares
TSLA,
were flat in the extended session Friday after ending the regular trading day up 4.9%.
A defense attorney began with plumbing Musk’s Twitter habits, and that Musk sometimes bristled at the implications his tweets may carry more meaning than what he assigns them.
“Just because I tweet something, it does not mean people believe it, or act accordingly,” Musk said, giving as example another one of its infamous tweet, in which he said Tesla stock was too high — and the stock then went higher.
The case revolves around key tweets from August 2018, including one where Musk told his millions of Twitter followers he was “considering taking Tesla private at $420” and then added “funding secured.”
Investor Glen Littleton, the lead plaintiff in the case, alleges he lost money due to the false tweets and is seeking damages.
U.S. District Judge Edward Chen already has ruled that Musk’s tweets about taking Tesla private were not true and that Musk acted with recklessness.
It is still up to jurors to decide, however, if the tweets were material to investors and if the falsehoods caused investor losses.
During his testimony, Musk said short sellers are essentially pulling for Tesla’s demise.
“Short sellers are basically a bunch of sharks on Wall Street,” Musk said. “(They) wanted Tesla to die, very badly” because they stood to make money for an eventual bankruptcy.
Musk testified right after a lengthy testimony from a plaintiff expert.
The CEO and Tesla each were fined $20 million in September 2018 to settle civil charges around the “funding secured” tweets and Musk was stripped of his chairman role at Tesla.
Musk and Tesla agreed to settle the charges against them without admitting to nor denying the SEC’s allegations.
Musk’s bid to end the SEC settlement deal over Tesla tweets was denied last year.
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Bed Bath & Beyond Inc. has received a warning that it is not in compliance for continued Nasdaq listing because the company has not yet filed its Form 10-Q quarterly report with the Securities and Exchange Commission.
In an SEC filing Thursday, the troubled home-goods retailer said it had received the Nasdaq notice on Jan. 12. The notice has no immediate effect on the listing or trading of Bed Bath & Beyond’s
BBBY,
common stock on the Nasdaq
COMP,
the filing said. “The Notice states that the Company has 60 calendar days from the date of the Notice, or March 13, 2023, to submit a plan to regain compliance with the Listing Rule,” Bed Bath & Beyond said in the filing.
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The stock of a Singapore-based ed-tech and education company called Genius Group Ltd. rallied more than 200% on Thursday, after it said it appointed a former F.B.I. director to lead a task force investigating alleged illegal trading in its stock that it first disclosed in early January.
The stock was last up 264% to mark its biggest-ever one-day percentage gain. Volume of 197.76 million shares traded crushed the 65-day average of just 634,17. Genius Group
GNS,
also said it would issue a special dividend to shareholders to help expose the wrongdoing and is considering a dual listing that would make illegal naked short selling more difficult.
The task force will be led by Timothy Murphy, a former deputy director of the F.B.I. who is also on the board. It will include Richard Berman, also a Genius Group Director and chair of the company’s Audit Committee, and Roger Hamilton, the chief executive officer of Genius Group.
“The company has been in communication with government regulatory authorities and is sharing information with these authorities to assist them,” the company said in a statement.
Genius Group said it has proof from Warshaw Burstein LLP and Christian Levine Law Group, with tracking from Share Intel, that certain individual and/or companies sold but failed to deliver a “significant” amount of its shares as part of a scheme seeking to artificially depress the stock price.
It will now explore legal action and will hold an extraordinary general meeting in the coming weeks to get shareholder approval for its planned actions.
On the Genius website, Hamilton explains what the company, which went public in 2022, thinks happened.
Genius’ IPO priced at $6 a share in April of 2022, he wrote in a blog. The company, which aims to develop an entrepreneur education system, then completed five acquisitions of education companies to build out its portfolio and reported more than 60% growth in its last earnings report.
Analysts at Diamond Equity assigned it an $11.28 stock price target, while Zacks assigned it a $19.20 stock price target.
“By all measures, we believed we were doing all the right things to justify a rising share price,” said Hamilton.
The company then announced two funding rounds totaling $40 million to grow its balance sheet to more than $60 million, yet its stock fell to under 40 cents, or less than 25% of the cash raised and less than 20% of its net assets.
“This didn’t happen gradually,” the executive wrote. “It happened in two month intervals from our IPO, in June, August, October and December. Each time, over a period of a few days, massive selling volume that was a multiple of our float (As most of our shares are on lock up, only around 4 million are tradeable) was sold into the market, making our share price drop by 50% or more.”
The company has since drawn on Wes Christian, a short-selling litigator from Christian Levine Law Group, who has helped it understand how naked short selling works, and then Share Intel helped find the proof that that’s what has happened.
Individuals or groups get together and sell shares in a target company that they don’t own, with the aim of getting the share price to fall 50% in a short period. They use small-cap firms that have low buying volume, allowing them to scare off buyers.
“The broker doesn’t bother to find shares to borrow,” said Hamilton. “They simply sell shares they don’t have and after a few days book them as FTDs (failure to deliver) or hide them as long sales instead of short sales. The people who bought the shares have no idea they bought a fake share, and suddenly there’s plenty more shares in the market than there should be.”
If these groups sell 6 million shares from $12 to $6 each, and then buy back over two months at under $6, they double their money. That allows them to make up to $30 million out of thin air. They can then repeat the whole process a few months later.
“If they don’t buy back all the shares, they simply leave them as FTDs or hide them in offshore accounts,” he wrote. “At no point do they need to put up any cash to make this happen, as they’re making money from the moment they start selling fake shares.”
The ultimate goal is to push a company into bankruptcy, where the equity will be wiped out, meaning they never have to cover the short position on the fake shares.
By issuing a special dividend, Genius is hoping to find who is responsible, as all brokers are forced to disclose to the Depository Trust & Clearing Corp. (DTCC) how many shares their clients hold and how many dividends will be paid. Theoretically, that should expose the oversold shares and dishonest brokers will be forced to cover their position, said Hamilton.
In practice, dishonest brokers will not declare the fake shares and just pay the dividend out of their own pockets.
“If you issue a dividend that isn’t straight cash—such as a spinoff of a company so you are issuing shares, or a blockchain based asset, then the brokers can’t do that are a forced to either cover or be exposed,” he wrote.
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https://www.barrons.com/articles/stock-market-movers-alibaba-xpeng-goldman-morgan-stanley-51673625139
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