ReportWire

Tag: disruptions

  • PayPal’s stock falls as earnings beat, but a margin metric misses

    PayPal’s stock falls as earnings beat, but a margin metric misses

    [ad_1]

    PayPal Holdings Inc. edged above expectations with its quarterly revenue and earnings outlook Wednesday, though the company fell short of a margin metric and disappointed Wall Street with its take rate.

    Shares of PayPal
    PYPL,
    -3.08%
    fell 7% in after-hours trading after the payment-technology company reported an adjusted operating margin of 21.4% for the second quarter, below the 22% outlook that the company had given previously.

    In its investor deck, the company attributed the shortfall to its credit portfolio, where PayPal generated less revenue than it had anticipated and increased its loss provisions.

    “There’s no other items that really contributed to that miss,” Acting Chief Financial Officer Gabrielle Rabinovitch said on the earnings call, noting that PayPal specifically saw pressure related to business loans.

    Don’t miss: Mastercard earnings bring latest signal of healthy spending

    Analysts also flagged concerns about PayPal’s transaction take rate, which came in at 1.74%, while consensus expectations were for about 1.9%.

    PayPal’s revenue for the second quarter increased to $7.29 billion from $6.81 billion, whereas analysts were modeling $7.27 billion. But Wolfe Research analyst Darrin Peller noted that while revenue was up 7%, gross profit increased only 1%.

    “We believe investor focus will remain on gross-profit growth dynamics given the mismatch [between] revenue and gross-profit growth,” he wrote in a note to clients.

    Rabinovitch said on the earnings call that PayPal expects continued pressure on transaction-margin performance in the third quarter before conditions improve in the fourth quarter. Over the long haul, she anticipates that PayPal’s transaction margins “will certainly be benefited” by factors such as accelerations in branded checkout and e-commerce growth, improved cross-border trends, and new value-added services.

    The payments company reported second-quarter net income of $1.03 billion, or 92 cents a share, whereas it recorded a net loss of $341 million, or 29 cents a share, in the year-earlier period. On an adjusted basis, PayPal earned $1.16 a share, up from 93 cents a share a year prior, while the FactSet consensus was for $1.15 a share.

    PayPal logged $376.5 billion in total payment volume for the period, while analysts had been expecting $368.9 billion.

    Chief Executive Dan Schulman told MarketWatch that PayPal was seeing encouraging spending trends throughout the business and in the industry, as e-commerce growth picks up, discretionary purchasing improves and consumers start to rebalance their preferences once again after dramatically weighting their dollars more toward travel and services when the economy initially reopened.

    A better balance of spending on goods versus services helps drives e-commerce growth, and “any uptick in e-commerce is going to accelerate our growth as well,” Schulman said.

    Amid concerns from some corners of Wall Street about Apple Pay’s advancement, Schulman was confident in the state of PayPal’s branded checkout business.

    “In our view we would expect that our branded checkout would be at or above the growth of e-commerce levels going forward,” he said.

    See also: Apple appears to be making rapid inroads in buy-now-pay-later

    PayPal still expects to drive at least 100 basis points of operating-margin expansion for the full year, and it also continues to anticipate about $4.95 in adjusted EPS for 2023. PayPal expects second-half revenue to at least match its first-quarter revenue total.

    For the third quarter, PayPal expects $1.22 to $1.24 in adjusted earnings per share, along with revenue of about $7.4 billion. The FactSet consensus was for $1.21 in adjusted EPS and $7.3 billion in revenue.

    [ad_2]

    Source link

  • Tupperware and Yellow have skyrocketed, but don’t confuse them with meme stocks

    Tupperware and Yellow have skyrocketed, but don’t confuse them with meme stocks

    [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,
    -26.15%
    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,
    -25.99%
    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,
    -3.45%
    and GameStop Corp.
    GME,
    -4.42%
    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,
    +1.46%
    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,
    -4.16%
     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,
    -1.73%    ,
    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]

    Source link

  • Starbucks sees a big rebound in China, but results fail to impress investors

    Starbucks sees a big rebound in China, but results fail to impress investors

    [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,
    -0.31%
    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]

    Source link

  • Tupperware stock skyrockets toward a record 450% gain in July

    Tupperware stock skyrockets toward a record 450% gain in July

    [ad_1]

    Tupperware Brands Corp.’s stock skyrocketed Monday, and has more than tripled amid a four-day win streak, as the shares of the beleaguered maker of iconic food-storage containers continued their meteoric rally.

    The stock soared 44.5% in midday trading, to put it on track for the highest close since Feb. 3, 2023, and has rocketed 234.6% amid a four-day win streak.

    Monday’s rally adds to the stock’s 242.2% rally last week, which was the biggest one-week gain since it went public in May 1996.

    So far in July, it has blasted 456.4% higher, which would also be a monthly record. The previous record was the 224.8% gain seen in July 2020.

    Related: How ‘left-for-dead’ Tupperware became a buzzy trading play

    The stock’s historic rally kicked off after closing at a record low of 62 cents on July 18. The daily gains have been highlighted by the record 75.6% jump on July 24, despite no news being reported.

    Since the record low close, the stock has soared more than 7-fold (up 617.7%).

    Related: Tupperware’s market cap almost triples as stock continues to skyrocket


    FactSet, MarketWatch

    Amid its surging share price, the company’s market capitalization has reached $196.96 million. On July 7, when Tupperware said that it had entered a waiver agreement with some of its creditors, the company’s market cap hovered around $33 million.

    Tupperware’s recent trading activity is reminiscent of spikes in other names also recently seen as “left for dead,” as Samantha LaDuc, founder of LaDucTrading.com, put it to MarketWatch last week.

    The latest exchange data showed that short interest in Tupperware’s stock, or bearish bets made, had climbed to a three-year high of 9.69 million shares, which 27% of the public float, or shares readily available for the public to trade. Read more about short selling and how it works.

    In comparison with a stock that some say has been subject to a rally induced by bearish investors covering their short bets, often referred to as a “short squeeze,” Sirius XM Holdings Inc.’s
    SIRI,
    -0.20%
    short interest represented 30.8% of its public float.


    FactSet, MarketWatch

    In its preliminary full-year results reported in March, Tupperware sported an 18% sales decline compared with the prior year. Back then, Tupperware Chief Financial Officer Mariela Matute said in a statement that 2023 was expected to be a transition year for the company as it worked to stabilize its business and get on better financial footing.

    Related: Tupperware’s stock craters after food-storage company warns it may go bust

    The following month, Tupperware issued a going-concern warning, essentially cautioning that it could go bust. Tupperware also announced the hiring of financial advisers to help it navigate its near-term challenges.

    The company is projected to release its next quarterly report later this week, according to FactSet.

    Emily Bary, Claudia Assis and Tomi Kilgore contributed.

    [ad_2]

    Source link

  • Ford revenue jumps 12%, but stock dips as Wall Street spooked by shifting EV production goal

    Ford revenue jumps 12%, but stock dips as Wall Street spooked by shifting EV production goal

    [ad_1]

    Ford Motor Co. late Thursday reported quarterly profit that was about three times higher than last year’s and a 12% increase in its revenue, moving it to raise its outlook for 2023, but the beat-and-raise was overshadowed by a delay in EV production goals.

    Ford stock
    F,
    +0.44%
    initially rose about 3% after the positive results, with Chief Executive Jim Farley telling investors that the company’s goal is to match an “exciting, long-term vision” of itself with “boringly predictable execution quarter after quarter, year after year.”

    Share gains started to fade, however, as investors zeroed in on the shifted production goal, and ended the extended session down 1.2%. Ford said it expects to reach a production rate of 600,000 EVs in 2024; when it reported first-quarter earnings in May it said it would reach that milestone by the end of this year.

    The company’s EV production growth has been “disappointing,” CFRA analyst Garrett Nelson said Thursday.

    Nelson said he was “cautious” on Ford in light of the stock’s run so far this year and the possibility that “higher-for-longer” interest rates would weigh on sales after a strong first half of the year. Looming labor negotiations with the United Auto Workers are another reason for caution, he said.

    Ford earned $1.9 billion, or 47 cents a share, in the second quarter, nearly three times higher than in the year-ago period and a 4% margin, the company said. Adjusted for one-time items, the automaker earned 72 cents a share.

    Revenue rose 12% to $45 billion, Ford said, and its cash and liquidity are “persistently strong.” The revenue increase included a 39% rise for Ford’s EV business.

    Analysts polled by FactSet expected Ford to report adjusted earnings of 54 cents a share on sales of $43.17 billion.

    Supply-chain “disruptions” have persisted but are now easing, and Ford has “more work to do” to streamline its systems, reduce costs and improve quality, Farley said in the call.

    EV adoption is still in the upswing, Farley said, but the number of companies entering the market is growing even at the higher end of the market. With its varied offers, though, Ford is building EV “loyalists” to its brand, Farley said.

    Ford lifted its EBIT guidance range for the full year to between $11 billion and $12 billion. It also adjusted upward its expectations for 2023 adjusted free cash flow to between $6.5 billion and $7 billion. Capital expenditures would be between $8 billion and $9 billion, the automaker said.

    The guidance presumes “headwinds” including “global economic uncertainty and inflationary pressures, higher industrywide customer incentives and continued EV pricing pressure,” Ford said, as well as increased warranty costs and costs associated with union contract negotiations.

    On the positive side, “tailwinds” accounted for in the guidance included “improved” supply chain, higher industry volumes, upside from the its all-new Ford Super Duty truck and lower commodity costs, Ford said.

    Ford earlier this month surprised Wall Street by cutting the price of its sought-after electric pickup truck, the F-150 Lightning.

    Ford earnings close the cycle for major U.S. automakers, as Tesla Inc.
    TSLA,
    -3.27%
    reported second-quarter earnings last week and General Motors Co.
    GM,
    +1.78%
    earlier this week.

    Shares of Ford have gained 19% so far this year, matching the advance for the S&P 500 index
    SPX,
    -0.64%    .
    The stock holds an outperformance, however, in the past three months, up 19% to the S&P’s 11%.

    See also: GM, Hyundai and other car manufacturers to build 30,000 fast EV chargers in challenge to Tesla

    [ad_2]

    Source link

  • Intel stock rallies after earnings show AI data-center beat, strong PC sales

    Intel stock rallies after earnings show AI data-center beat, strong PC sales

    [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,
    +0.55%
    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,
    +0.99%    ,
    and to a lesser extent, by Advanced Micro Devices Inc.
    AMD,
    +0.92%    ,
    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.

    Read: Intel may have bottomed, but earnings will show if chip maker can hope to catch up to Nvidia and AMD in AI

    Year to date, Intel shares have gained nearly 31%, while the PHLX Semiconductor Index 
    SOX,
    +1.86%
    has surged 49%, the S&P 500
    SPX,
    -0.64%
    has grown 18%, the Nasdaq Composite
    COMP,
    -0.55%
    has gained 34% and the Dow Jones Industrial Average
    DJIA,
    -0.67%
    is up more than 6%.

    [ad_2]

    Source link

  • Meta’s stock jumps after AI, ad momentum drive earnings, revenue jump

    Meta’s stock jumps after AI, ad momentum drive earnings, revenue jump

    [ad_1]

    Facebook parent Meta Platforms Inc. is raking in digital ads, as its earnings attest, and Wall Street is rewarding it. The company’s stock rose about 7% in after-hours trading Wednesday.

    Meta
    META,
    +1.39%
    reported fiscal second-quarter net income of $7.79 billion, or $2.98 a share, compared with net income of $6.7 billion, or $2.46 a share, in the year-ago quarter.

    Revenue climbed 11% to $32 billion from $28.8 billion in the year-ago quarter.

    Analysts surveyed by FactSet had expected on average net income of $2.91 a share on revenue of $31.1billion.

    Also see: Zuck beats Musk at his own game with Meta’s year of efficiency

    A rebound in advertising, the monetization of Instagram and Reels, and AI-fueled ad targeting and measurement contributed to the quarter’s performance. Meta’s better-than-expected performance comes on the heels of a similarly strong quarter from Google parent
    GOOGL,
    +5.78%

    GOOG,
    +5.59%
    Alphabet Inc. and poor results from Snap Inc.
    SNAP,
    -14.23%    .

    “We had a good quarter. We continue to see strong engagement across our apps and we have the most exciting roadmap I’ve seen in a while with Llama 2, Threads, Reels, new AI products in the pipeline, and the launch of Quest 3 this fall,” Meta Chief Executive Mark Zuckerberg said in a statement announcing the results. AI has been an increasingly dominant story line for Meta, which has quickly shifted its focus from the metaverse. Zuckerberg said AI remains the company’s near-term focus, with metaverse poised to have a long-term impact.

    “In many ways, the two are interrelated,” Zuckerberg said of AI and metaverse in a conference call with analysts. He also spotlighted the potential of Threads, a Twitter-like service that launched earlier this month with much fanfare. “When it gets to hundreds of millions of users, we’ll see how it monetizes,” he said. “It is a long road ahead.”

    Meta executives forecast third-quarter revenue of $32 billion to $34.5 billion, while analysts on average were expecting $31.2 billion, according to FactSet.

    Facebook had 2.06 billion daily active users, up 5% from a year ago, and the “family” of Meta apps — which includes Instagram — reported daily active users of 3.07 billion, up 7%.

    There were blips amid the hoopla, however. Meta says it expects 2023 total expenses will be in the range of $88 billion to $91 billion, compared to the prior range of $86 billion to $90 billion because of legal-related expenses in the second quarter. And Meta’s headcount dropped 14% from a year ago to 71,469 as of June 30. Zuckerberg said Meta’s austerity program will continue into 2024.

    Meta’s stock improved 1.4% to $298.57 in the regular session. The stock has sky-rocketed 148% so far this year, while the broader S&P 500 index 
    SPX,
    -0.02%
     has increased 19%.

    [ad_2]

    Source link

  • PacWest stock rockets nearly 40% after Banc of California confirms plan to buy troubled bank

    PacWest stock rockets nearly 40% after Banc of California confirms plan to buy troubled bank

    [ad_1]

    PacWest Bancorp’s stock jumped more than 38% in after-hours trading Tuesday after the company said it had agreed to be acquired by Banc of California Inc. in an all-stock merger backed by two private-equity firms. The merger comes as PacWest looks to put a rocky period behind it.

    Under the terms of the merger agreement, PacWest
    PACW,
    -27.04%
    stockholders will receive 0.6569 of a share of Banc of California common stock for each share of PacWest common stock. Based on closing prices on Tuesday, the deal values PacWest at $9.60 a share, a premium over its closing price of $7.67 a share on Tuesday.

    Warburg Pincus and Centerbridge will provide $400 million in equity.

    PacWest stockholders will own 47% of the outstanding shares of the combined company, while the private-equity investors will own 19% and Banc of California shareholders will have 34%.

    PacWest said that it is the company being acquired and that it will change its name to Banc of California. PacWest said it will be the “accounting acquirer,” with fair-value accounting applied to Banc of California’s balance sheet at closing.

    Banc of California CEO Jared Wolff will retain the same role at the combined company.

    The combined company will repay about $13 billion in wholesale borrowings to be funded by the sale of assets, “which are fully marked as a result of the transaction, and excess cash,” the companies said.

    The merged company is currently projecting about $36.1 billion in assets, $25.3 billion in total loans, $30.5 billion in total deposits and more than 70 branches in California.

    John Eggemeyer, the independent lead director at PacWest, will be chair of the board of the combined company following the merger.

    The board of directors of the combined company will consist of 12 directors: eight from the existing Banc of California board, three from the existing PacWest board and one from the pair of private-equity firms led by Warburg Pincus.

    Citing sources close to the deal, the Wall Street Journal had reported earlier that a tie-up was imminent.

    In regular trading Tuesday, PacWest’s stock ended 27% down; trading was halted for volatility following the report of the deal.

    Banc of California’s stock rose 11% but was later halted for news pending as well. The stock rose more than 9% in after-hours trading on Tuesday.

    At last check, PacWest’s market capitalization was about $1.2 billion, while Banc of California’s was about $764 million. Combined, the business would be worth about $2 billion.

    PacWest’s big share-price move on Tuesday marks the latest in a volatile few months for the Beverly Hills, Calif., bank, which was founded in 1999.

    Investors had speculated that the bank could be the next to fail after Silicon Valley Bank and Signature Bank failed in March and First Republic Bank was taken over by JPMorgan.

    Also on Tuesday, PacWest said it lost $207.4 million, or $1.75 a share, in its second quarter, as it got a hit from items related to loan sales and restructuring of its lending unit Civic. The loss contrasts with earnings of $122 million, or $1.02 a share, in the year-ago period.

    Analysts polled by FactSet expected the bank to report a loss of 58 cents a share in the quarter.

    PacWest disclosed in recent months that it was exploring strategic alternatives while it sold off parts of its business to raise cash to strengthen its balance sheet. It sold a loan portfolio to Ares Management Corp.
    ARES,
    +0.92%
    in a move to generate $2 billion.

    Also read: PacWest sells loan portfolio to Ares Management in deal that generates $2 billion ‘to improve liquidity’

    It also sold a portfolio of loans to Kennedy-Wilson Holdings Inc.
    KW,
    -1.70%    ,
    which then sold part of the portfolio to Canada’s Fairfax Financial Holdings Ltd.
    FFH,
    +1.07%    .

    Also read: PacWest sparks regional-bank rally after unveiling plan to sell loans worth $2.6 billion

    In May, PacWest sold its real-estate lending portfolio to Roc360.

    Also in May, PacWest’s stock dropped more than 20% after it said it had lost 9.5% of its deposits amid market volatility.

    [ad_2]

    Source link

  • Sales forecast sinks Snap stock, and execs say more investments are likely ahead to improve platform

    Sales forecast sinks Snap stock, and execs say more investments are likely ahead to improve platform

    [ad_1]

    Like other social-media platforms, Snap has struggled with a slowdown in the digital ad market.


    AFP/Getty Images

    Shares of Snap Inc. slid in after-hours trade Tuesday after the social-media platform forecast third-quarter sales that were below expectations, amid concerns about a wobbly digital advertising backdrop and the company’s spending push to improve the way people interact and advertise when they log on.

    Snap
    SNAP,
    -1.34%
    said it expects third-quarter revenue of $1.07 billion to $1.13 billion. The midpoint of that range was below FactSet estimates for $1.13 billion.

    Shares tumbled 18.4% after hours on Tuesday.

    “From a revenue perspective, our business remains in a period of rapid transition as we work to improve our advertising platform, while forward visibility of advertising demand remains limited,” executives said in Snap’s earnings release.

    Like other social-media platforms, Snap has struggled with a slowdown in the digital ad market, amid advertiser wariness of a recession. Snap has also faced competition from the likes of Tiktok and Instagram and Facebook parent Meta Platforms Inc.
    META,
    +0.98%    .

    Snap has invested heavily strengthening its advertising platform, to serve users with more relevant ads and bring more impact to the businesses trying to advertise. It has also been spending to boost user engagement. Management, during Snap’s earnings call on Tuesday, said it would likely make “a further step up in investment here in Q3” to accelerate the progress being made on those efforts.

    Executives said during the earnings call that engagement with Snapchat friend stories in the U.S. had started to fall more slowly, with viewership trending better than they had forecast. And they said time spent watching Spotlight — a part of the site that helps users explore and discover content — more than tripled year over year.

    JPMorgan analysts, in a note earlier this month, said they continued to monitor Snap’s “heightened infrastructure costs.” But they said that the digital ad market had “stabilized” in the second quarter and that advertisers weren’t feeling as cautious, despite worries over the state of the economy.

    “That said, we continue to believe it will take multiple quarters of improved execution for many investors to get more comfortable with the story longer-term,” the analysts said.

    For the second quarter, Snap reported a net loss of $377 million, or 24 cents a share, compared with $422 million, or 26 cents a share, in the same quarter last year. Revenue fell to $1.07 billion, compared with $1.11 billion in the prior-year quarter.

    Analysts polled by FactSet expected Snap to report a per-share loss of 25 cents a share, on revenue of $1.05 billion.

    Daily active users rose 14% year over year to 397 million.

    Evan Spiegel, Snap’s chief executive, said during Tuesday’s call that despite the competition from larger social platforms, it still had some advantages — namely, communication with friends and family.

    “We actually think providing this place for friends and family to communicate has only become more important as more and more platforms focus on public social-media-style features where people feel like they have to compete for popularity, compete for likes and comments,” Spiegel said.

    “It’s never been more important to actually build deeper relationships with your friends and family,” he added.

    [ad_2]

    Source link

  • Alphabet earnings push stock up 6%; CFO Ruth Porat to become president, chief investment officer

    Alphabet earnings push stock up 6%; CFO Ruth Porat to become president, chief investment officer

    [ad_1]

    Google parent Alphabet Inc.’s stock jumped 6% in after-hours trading Tuesday after the company beat estimates on the top and bottom line, and announced the transition of Chief Financial Officer Ruth Porat to president and chief investment officer in September.

    Fueled by strong advertising sales, Alphabet
    GOOGL,
    +0.56%
     
    GOOG,
    +0.75%
    racked up fiscal second-quarter net income of $18.4 billion, or $1.44 a share, compared with net income of $16 billion, or $1.21 a share, in the same quarter a year ago.

    Total revenue was $74.6 billion, compared with $69.7 billion a year ago. Sales minus traffic-acquisition costs were $62.06 billion, vs. $57.5 billion last year.

    Analysts surveyed by FactSet had expected on average net earnings of $1.34 a share on revenue of $72.85 billion and ex-TAC revenue of $60.25 billion.

    “There’s exciting momentum across our products and the company, which drove strong results this quarter,” Alphabet Chief Executive Sundar Pichai said in a statement. “Our continued leadership in AI and our excellence in engineering
    and innovation are driving the next evolution of Search, and improving all our services.”

    During a conference call Tuesday afternoon, he highlighted the intertwining of advertising and Alphabet’s strides in generative AI. He added the company continues to consolidate and align operations to streamline spending.

    Shares of Alphabet have advanced 39% so far this year largely on the strength of generative AI and its potential. The broader S&P 500 index 
    SPX,
    +0.28%
    is up 19%. Alphabet’s stock inched up 0.6% to $122.21 in the regular session Tuesday.

    Google’s total advertising sales improved to $58.14 billion from $56.3 billion a year ago, and edged analysts’ average expectations of $57.45 billion. Google Cloud hauled in $8 billion, compared with $6.3 billion last year. YouTube ad sales rebounded to $7.7 billion from $7.34 billion a year ago.

    “The proverbial floodgates aren’t opening yet but clients are starting to see pockets of opportunity and are willing to invest for a direct return,” Aaron Levy, vice president of paid search at Tinuiti, said in an email.

    Porat, who has played an essential role in Google’s advertising success since she became CFO in 2015, will start her new role on Sept. 1. She will be responsible for Alphabet’s investments in its Other Bets portfolio, and the company’s investments in countries and communities around the world. Porat will continue to report to Pichai.

    “We see technology can make so much of a difference in people’s lives… and in economic growth globally,” Porat said during the conference call late Tuesday.

    The monetization of AI continues to be an obsession of investors and Wall Street. Microsoft Corp.’s
    MSFT,
    +1.70%
    AI version, Bing, hit the market first, but Google’s competing entry, Bard, is making headway, according to analysts. Alphabet is ramping up AI initiatives to improve operational efficiency and productivity.

    When asked on the call about AI monetization, Pichai said the technology expands the company’s total addressable market, brings in potential new customers, deepens the versatility of its product portfolio, and differentiates core products such as cybersecurity.

    AI’s importance was underscored by a Wall Street Journal report on Tuesday that Google co-founder Sergey Brin has been spotted at the company’s Mountain View, Calif., headquarters in recent weeks working with AI researchers on a large-scale project. Brin has been largely out of sight after stepping down from an executive role at parent company Alphabet in 2019.

    [ad_2]

    Source link

  • Microsoft earnings top estimates, but stock falls as execs detail AI’s costs

    Microsoft earnings top estimates, but stock falls as execs detail AI’s costs

    [ad_1]

    Microsoft Corp. easily topped profit and revenue expectations for its latest quarter, though its shares were moving more than 3% lower in extended trading Tuesday after the company discussed the year ahead.

    The technology giant has won favor on Wall Street for its positioning in the artificial-intelligence revolution, though Chief Financial Officer Amy Hood said on Tuesday’s earnings call that “even with strong demand and a leadership position,” Microsoft’s
    MSFT,
    +1.70%
    “growth from our AI services will be gradual.” Microsoft’s AI for its Azure cloud-computing business needs to ramp, and the company is working toward the general availability of its Copilot productivity product.

    Microsoft’s AI revenue impacts will thus be weighted toward the second half of the new fiscal year that just began, she continued. Meanwhile, she expects that Microsoft’s capital expenditures will rise sequentially each quarter “as we scale to meet demand signals.”

    Hood’s commentary came as Microsoft posted fiscal fourth-quarter results Tuesday afternoon that showed a 15% jump in revenue for the company’s cloud-computing segment, which it calls Intelligent Cloud. Revenue for the segment came in at $24.0 billion, while analysts had been anticipating $23.8 billion. The growth rate was 17% on a currency-neutral basis.

    The company said revenue for Azure and other cloud services was up 26%, or 27% in constant currency. Microsoft’s forecast had been for 26% to 27% in constant-currency Azure sales growth, while the company posted 31% constant-currency growth on the metric in the March period. The FactSet consensus was for 27% growth in constant currency.

    “While we believe the Street was hoping for Azure growth more in the ~28% range, we believe the consumption part of the business held up well,” Evercore ISI analyst Kirk Materne said in a note to clients.

    For the September quarter, Microsoft anticipates 25% to 26% in constant-currency Azure growth.

    The cloud migration is still in the “early innings,” Chief Executive Satya Nadella said on the call, while also highlighting a “new world of AI driving a set of new workloads.”

    “We think of that, again, being pretty expansive from a TAM [total addressable market] opportunity and we’ll play it out,” he continued, though the company is also up against the “law of large numbers” given the massive scale of its cloud business.

    The company generated fiscal fourth-quarter net income of $20.1 billion, or $2.69 a share, compared with $16.7 billion, or $2.23 a share, in the year-earlier period. Analysts tracked by FactSet were modeling $2.55 a share.

    Overall revenue for Microsoft climbed to $56.2 billion from $51.9 billion, whereas analysts had been expecting $55.5 billion.

    See also: Microsoft bulls are excited as company reveals pricing for AI offering

    Microsoft logged $18.3 billion in revenue for its productivity and business processes unit, up 10% from a year before, or up 12% in constant currency. That part of the business includes LinkedIn and both commercial and consumer versions of Office. Analysts had been looking for $18.1 billion.

    Revenue for the More Personal Computing segment, which includes Windows and Xbox content and services, dropped 4% to $13.9 billion and was off 3% on a constant-currency basis. The FactSet consensus was for $13.6 billion.

    Nadella, meanwhile, expressed optimism about the eventual opportunities brought upon by Microsoft’s Copilot offerings.

    “I do think people are going to look at how can they complement their [operating-expense] spend with essentially these Copilots in order to drive more efficiency and, quite frankly, even reduce the burden and drudgery of work on their OpEx and their people and so on,” he said.

    Evercore’s Materne called the overall results “solid” amid “a lot of macro headwinds.”  Microsoft’s investment story “gets stronger in [the second half of the calendar year] as some optical headwinds reverse and [comparisons] soften, and Microsoft’s position in the enterprise market continues to get stronger as customers look to consolidate spending,” he wrote.

    Read: Amazon finally is nearing a bottom on this key measure, analyst says

    [ad_2]

    Source link

  • F5, Logitech, Cadence Design, GE, GM, Microsoft, Alphabet, and More Stock Market Movers

    F5, Logitech, Cadence Design, GE, GM, Microsoft, Alphabet, and More Stock Market Movers

    [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/stock-market-movers-9cc9fac3

    • Order Reprints
    • Print Article

    [ad_2]

    Source link

  • Tupperware’s stock sees largest daily gain on record amid meme-like surge

    Tupperware’s stock sees largest daily gain on record amid meme-like surge

    [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,
    +75.56%
    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,
    +1.36%    ,
    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]

    Source link

  • AMC, Chevron, Tesla, Domino’s, Microsoft, and More Stock Market Movers

    AMC, Chevron, Tesla, Domino’s, Microsoft, and More Stock Market Movers

    [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/stock-market-movers-2b3602a5

    • Order Reprints
    • Print Article
    [ad_2]
    Source link

  • AMC stock surges 60% after Delaware judge puts brakes on APE-to-stock conversion plan

    AMC stock surges 60% after Delaware judge puts brakes on APE-to-stock conversion plan

    [ad_1]

    Shares of AMC Entertainment Holdings Inc. rocketed more than 60% higher on Friday after a judge in Delaware shot down a settlement that would have allowed the movie-theater chain to move ahead with a plan, maligned by some investors, to dump more shares onto the market, according to reports.

    AMC
    AMC,
    +1.62%
    has wanted to turn its its so-called APE — or AMC Preferred Equity — preferred units into common stock. But Delaware Chancery Court Vice Chancellor Morgan Zurn rejected an earlier settlement that would have allowed that conversion to move forward.

    The theater chain has been looking to find ways to boost its share count and sell more shares — a tack that helped it through the COVID-19 pandemic — as it tries to shore up its finances and rein in its debt, the Wall Street Journal noted.

    But not every investor was on board with the plan, amid worries about share dilution.

    “At this juncture, the Court’s only task is to approve or reject the proposed
    settlement,” wrote in the ruling, obtained by Bloomberg Law. “The focus of the settlement is on the claims presented in this case. The Court cannot address issues that do not pertain to the fairness of the settlement.”

    “Such issues raised by AMC stockholders include theories about synthetic shares, Wall Street corruption, dark pool trading, insider trading and RICO violations, and a request for a share count,” the ruling continued. “The Court’s role is limited to considering settlement-specific issues, like the strength of the plaintiffs’ claims, the consideration the class would receive, and the scope of the release the class would give in exchange for that consideration.”

    “To cut to the chase, the settlement cannot be approved as submitted,” the ruling added later.

    AMC did not immediately respond to a request for comment.

    [ad_2]

    Source link

  • Here’s why Wall Street has fallen out of love with Tesla — for now

    Here’s why Wall Street has fallen out of love with Tesla — for now

    [ad_1]

    Late on Wednesday, Tesla Inc.
    TSLA,
    -1.10%
    reported that quarterly sales were up 47% from a year earlier. But the stock tumbled 10% on Thursday.

    Tesla’s shares are still up 113% this year. The company is among a group of 13 in the S&P 500 that stand out with high growth expectations for sales, earnings and free cash flow through 2025.

    But less than half of analysts polled by FactSet rate Tesla a buy. Emily Bary explains what they are worried about.

    Traders have placed large short bets against Tesla and two of its rival EV makers — Rivian Automotive Inc.
    RIVN,
    -2.09%
    and Nio Inc.
    NIO,
    +2.52%    .
    Claudia Assis looks into how well those trades have been working out.

    Cody Willard explains why he remains confident that Tesla and Rivian will dominate the EV market over the long term.

    Related coverage:

    Here’s what may propel U.S. stocks for years.

    Chipotle Mexican Grill is among 14 stocks named by Michael Brush for consideration by investors looking to ride along with long-term improvement of U.S. labor productivity.


    AP

    The S&P 500
    SPX,
    +0.03%
    has returned 19% this year, following its 18% decline in 2022. On the same basis, with dividends reinvested, the benchmark index is still down 2% since the end of 2021.

    What is going on? Michael Brush believes that a high level of corporate investment in new technology and equipment is setting the stage for a long phase of earnings growth for U.S. companies. He shares four developments behind the coming productivity boom and 14 stocks expected to benefit from it.

    A signal for the stock-market’s health


    Getty Images

    The Dow Jones Industrial Average
    DJIA,
    +0.01%
    is up 6% this year. The venerable index has trailed the S&P 500, but its closing level of 35,255.18 on Thursday was only 4% shy of its record close a 36,799.65 on Jan. 4, 2022. Joseph Adinolfi explains Dow Theory, which according to technical analysts is sending a strong bullish signal for the stock market.

    Other opinions about market sentiment:

    Even if you have resisted the idea of a Roth IRA, you may soon be forced to have one

    This year if you are age 50 or older and are already maxing-out your contribution to a 401(K), 403(B) or other qualified employer-sponsored tax-deferred retirement plan at $22,500, you can make an additional “catch up” tax deductible contribution of $7,500 for a total of $30,000. But starting in 2024, the catch up contribution will no longer be tax deductible if you earn at least $145,000 a year. You can still make the contribution with after-tax money into a Roth 401(K) account that your plan administrator may already have set up for you.

    Alessandra Malito provides more details and news about employers’ efforts to delay the rule’s implementation.

    Beth Pinker writes the Fix My Portfolio column. This week she digs into Roth IRA conversions, through which you can simplify your taxes down the line.

    A hot vote in Spain

    The center of Madrid on July 15, 2023. A brutal heat wave could affect turnout for the country’s general election on July 23.


    Uncredited

    Barbara Kollmeyer reports from Spain about a highly contested election on Sunday, with controversy over the government’s policies during the pandemic, parties’ social policies and the possibility of a coalition government that might rattle financial markets.

    Meta vs. Alphabet

    Shares of Meta Platforms Inc. and Alphabet Inc. trade only slightly higher than the S&P 500 on a forward price-to-earnings bases, while Nvidia Corp., Microsoft Corp. and Apple Inc. trade much higher.


    FactSet

    Leslie Albrecht looks at Meta Platforms Inc.
    META,
    -2.73%    ,
    which is Facebook’s holding company and has a hit on its hands with the new Threads social-media platform, and Google holding company Alphabet Inc.
    GOOGL,
    +0.69%    ,
    to consider which stock is a better buy.

    Brett Arends: ‘I used to work at Nvidia. The stock I got is now half my portfolio. Should I sell?’

    The Ratings Game

    In The Ratings Game column, MarketWatch reporters track analysts’ thoughts about various stocks. Here’s a sampling of this week’s coverage:

    You don’t know every bad factor causing air travel to be nothing but harassment

    Getting there is half the fun.


    Getty Images

    The U.S. flying scene — from shortages of equipment and labor (and runways) to ill-staffed air-traffic control towers — is a well-known nightmare for U.S. travelers. But there is more to the story. Jeremy Binckes looks into other factors that may surprise you and cause great inconvenience this summer.

    The Federal Reserve is expected to raise interest rates again next week

    The Federal Open Market Committee will meet next Tuesday and Wednesday, to be immediately followed by a policy announcement. Economists expect the central to raise the federal-funds rate by another quarter point. The question is whether or not this will end the Fed’s inflation-fighting rate cycle.

    More coverage of the Fed:

    How much would you pay for 100% downside protection in the stock market?


    MarketWatch illustration/iStockphoto

    Over the past 30 years, the SPDR S&P 500 ETF Trust
    SPY,

    has returned 1,650%, for an average annual return of 10%, with dividends reinvested, according to FactSet. But it hasn’t been a smooth ride. The ETF, which tracks the benchmark S&P 500, fell 18% last year and 37% during 2008, for example. And there have been even larger declines if the analysis isn’t confined to calendar years.

    But can you ride through market declines? Many studies have shown that most investors who try to time the market sell after a decline has started and buy back in well after a recovery is under way, which means their long-term performance can suffer significantly.

    In this week’s ETF Wrap column (and emailed newsletter), Isabel Wang describes a new buffered fund that can give you 100% downside protection over a two-year period, in return for a cap on your potential gains in the stock market. Here’s the price you would pay for the protection.

    The World Cup games have started

    Hannah Wilkinson scored the home team’s first goal against Norway during the first World Cup game in Auckland, New Zealand, on July 20.


    Getty Images

    The Women’s World Cup began Thursday with an upset victory by New Zealand over Norway.

    James Rogers reports on what is expected to be a much easier environment for FIFA and corporate sponsors than that of last year’s Men’s World Cup in Qatar.

    U.S. Soccer Federation President Cindy Parlow Cone participated in MarketWatch’s Best New Ideas in Money podcast and spoke about the long-term effort to achieve equal treatment for women soccer players.

    More coverage of the World Cup:

    Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

    [ad_2]

    Source link

  • 3 Reasons Sirius XM Stock Just Surged 42%

    3 Reasons Sirius XM Stock Just Surged 42%

    [ad_1]

    3 Reasons Sirius XM Stock Just Surged 42%

    Sirius XM Holdings stock surged 42% Thursday on an apparent combination of short covering, an unwinding of a spread trade involving Liberty SiriusXM, and possible buying related to a rebalancing of the Nasdaq 100 index.

    An error has occurred, please try again later.

    [ad_2]

    Source link

  • AT&T’s stock soars toward best day in 3 years as lead-cable update sparks relief

    AT&T’s stock soars toward best day in 3 years as lead-cable update sparks relief

    [ad_1]

    After failing to close in positive territory for a 10th session in a row Tuesday, AT&T Inc. shares were tracking toward a sizable gain in Wednesday’s trading activity.

    The telecommunications stock was up 8.4% in morning trades as recent company commentary suggested to some analysts that AT&T’s
    T,
    +7.62%
    exposure to lead-clad cables may not be as significant as feared. The company estimates that lead-clad cables represent less than 10% of its copper-cable footprint and that “a very small portion” of those run underwater.

    See more: AT&T to pause prior plans to remove lead cables under Lake Tahoe as it works with regulators

    AT&T shares have taken a beating lately after reporting from the Wall Street Journal keyed in on lead-sheathed cables used historically by the telecommunications industry, which the story said posed health risks.

    The stock had gone 10 full trading sessions in a row prior to Wednesday without notching a gain, factoring in one session of flat performance. It fell 16.6% over that 10-session stretch, AT&T’s longest without a daily increase since one of equal length that ended Oct. 21, 2020, according to Dow Jones Market Data.

    AT&T shares were on track to log their largest single-day percentage gain since March 13, 2020, when they rose 10%, according to Dow Jones Market Data.

    Read also: Verizon’s lead ‘overhang’ may limit dividend increases, analyst says in downgrade

    The company late Tuesday held a call with analysts and released a legal filing that left Oppenheimer’s Timothy Horan with the sense that the company’s exposure to lead cable was less than Wall Street initially expected, meaning potential removal costs could be lower than he had anticipated.

    “We think [AT&T] is being conservative, but less than 10% of its footprint [or about 200,000 miles] are lead-sheathed, three-fourths of which are conduits buried underground that should likely just remain in place,” Horan wrote. “Even cables that are not buried can be left for long periods of time when safely sealed up and labeled. We believe a small minority will need to be removed, but expect [AT&T] to give more details on its earnings call next week, sooner than expected.”

    He now estimates that the company could incur $2 billion to $20 billion in costs related to its exposure to lead-coated cables, whereas he had thrown out a “best guess” of $5 billion to $50 billion before Tuesday’s updates.

    Cowen’s Gregory Williams was also encouraged by the disclosures AT&T made late Tuesday.

    “Naturally, AT&T could not provide definitive conclusions at this time; however the company summarized the data from the court filing and essentially provided a compelling framework around the allegations,” he wrote in a note to clients. “The framework suggests a high conviction that any lead-clad cable exposure will result in very minimal health, environmental, regulatory, and financial risks, if any risk at all, and something we had suspected over the past few days of our own conversations and research.”

    Shares of Verizon Communications Inc.
    VZ,
    +5.18%
    were rallying sharply as well, up 5.4% in morning action.

    Read on: Verizon CEO says the wireless market isn’t such a bad business after all

    [ad_2]

    Source link

  • Pinterest stock advances, Masimo shares slump on outlook and other stocks on the move

    Pinterest stock advances, Masimo shares slump on outlook and other stocks on the move

    [ad_1]

    Here are some of the biggest movers of the day:

    Stock gainers:

    Shares of Pinterest Inc.
    PINS,
    +3.64%
    were gaining 4% after an Evercore ISI analyst moved to a bullish stance, cheering better advertising-market conditions and improvements made by Chief Executive Bill Ready, who is about a year into his stint.

    [ad_2]

    Source link

  • Charles Schwab’s stock on track for biggest one-day gain since March of 2020 after earnings beat

    Charles Schwab’s stock on track for biggest one-day gain since March of 2020 after earnings beat

    [ad_1]

    Charles Schwab Corp.’s stock soared 12% Tuesday to put it on track for its biggest one-day increase since March of 2020, after the discount brokerage’s second-quarter earnings fell from a year ago but still topped consensus estimates.

    Chief Executive Walt Bettinger acknowledged a “somewhat unsettled backdrop,” but said Schwab gathered $52 billion in core net new assets in the quarter, bringing the year-to-date total to more than $180 billion.

    “While we observed signs of typical tax seasonality, as well as softer investor sentiment at the beginning of the quarter, we still attracted nearly 1 million new brokerage accounts and finished the period serving $8.02 trillion in total client assets across 34 million accounts,” he said in a statement.

    The company
    SCHW,
    +12.57%
    posted net income of $1.294 billion, or 64 cents a share, for the quarter, down from $1.793 billion, or 87 cents a share, in the year-earlier period. Adjusted per-share earnings came to 75 cents, ahead of the 71-cent FactSet consensus.

    Revenue fell 9% to $4.656 billion, ahead of the $4.610 billion FactSet consensus.

    See now: Morgan Stanley’s profit drops but beats expectations as stock rises

    Bank deposits fell to $304.4 billion from $442.0 billion a year ago. The company’s clients have been engaged in a practice called “sorting,” where they are moving cash out of sweep accounts and into higher-paying products. When that process exceeds cash on hand, the company has to borrow from other funding sources that can be more expensive.

    Still, Chief Financial Officer Peter Crawford said the daily outflows that have hurt the company over the last year as clients react to higher interest rates by seeking out better-paying options, began to slow.

    “While anticipated client cash realignment, along with net equity buying during June, pushed cash levels lower, we observed a continued and substantial deceleration in the daily pace of cash outflows versus prior months,” he said.

    Also read: Bank of America’s stock rises after second-quarter earnings and revenue beat expectations

    “The continuation of this trend through the end of the quarter further strengthens our conviction that this realignment activity will inflect before the end of 2023, unlocking growth in client cash held on the balance sheet.”

    On a call with analysts, Crawford said the company has not had to make any short-term borrowings from either CDs or Federal Home Loan Bank loans since late May and can now cover cash needs with organic sources.

    “And as client cash realignment continues to slow and eventually reverses, we’d expect our supplemental funding balances to continue to decline over the next 18 months and be mostly paid off by the end of 2024,” he said, according to a FactSet transcript. “And this means that they should not really be a factor in our earnings picture in 2025 and beyond.”

    Elsewhere, the company’s net interest income fell 10% to $2.3 billion as net interest margins fell 32 basis points from the first quarter to 1.87%.

    Net interest revenue rose to $4.1 billion from $2.7 billion a year ago, while interest expenses jumped to $1.8 billion from $166 million.

    The company also made progress with the conversion of client accounts from TD Ameritrade into Schwab accounts, with about 30% of accounts converted so far, said Bettinger. That comes after a major effort over the Memorial Day holiday weekend.

    Schwab expects to move almost all of the rest over by year-end and to transition the final group in the first half of 2024, he said.

    The stock has fallen 30% in the year to date, while the S&P 500
    SPX,
    +0.71%
    has gained 17.8%.

    Read now: JPMorgan Chase, Wells Fargo, Citi beat earnings targets but uncertainty clouds the economic outlook

    [ad_2]

    Source link