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Tesla stock is weak again despite the likelihood CEO Elon Musk will step down as head of Twitter and earnings estimates for 2023 staying stable.
Investors are perplexed, but traders know why. Investors can’t, or shouldn’t, ignore the stock chart.
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The Consumer Financial Protection Board on Tuesday said it is requiring Wells Fargo & Co. to pay $3.7 billion as a result of alleged widespread mismanagement of auto loans, mortgages and deposit accounts.
The CFPB said Wells Fargo “repeatedly misapplied loan payments, wrongfully foreclosed on homes and illegally repossessed vehicles, incorrectly assessed fees and interest, charged surprise overdraft fees, along with other illegal activity affecting over 16 million consumer accounts.”
Wells Fargo
WFC,
has been ordered to pay more than $2 billion in redress to consumers in addition to a $1.7 billion civil penalty for legal violations.
“Consumers were illegally assessed fees and interest charges on auto and mortgage loans, had their cars wrongly repossessed, and had payments to auto and mortgage loans misapplied by the bank,” the CFBP said.
Wells Fargo did not admit wrongdoing as part of the settlement.
Wells Fargo CEO Charlie Scharf said the settlement marks an “important milestone in our work to transform the operating practices of Wells Fargo and to put these issues behind us.”
As a result of the settlement, the CFPB will terminate a 2016 consent order, Wells Fargo said.
The settlement will also provide clarity and a path forward for termination of a 2018 consent order and will underscore that the CFPB “recognizes recent acceleration of efforts,” the bank said.
“The CFPB recognized that since 2020, the company has accelerated corrective actions and remediation, including to address the matters covered by today’s settlement,” the bank said in a statement.
Wells Fargo warned it will book an operating-loss expense of $3.5 billion, or $2.8 billion net of tax, when it reports fourth-quarter results on Jan. 13.
“Wells Fargo has made significant progress in strengthening its risk and control infrastructure over the past several years,” the bank said.
Jefferies analyst Ken Usdin said in a research note that the CFPB action marks a “positive step in the regulatory improvement process” for Wells Fargo.
But he said Wells Fargo’s plan to book a fourth-quarter operating loss of $3.5 billion does not mean that the bank’s accrual for probable and estimable losses (RPL), which it discloses every quarter, will go to zero.
“We would hope that probable and estimated losses would decline somewhat after [the fourth quarter] given the magnitude of today’s settlement,” Usdin said. “[Wells Fargo’s] separate announcement that it will book $3.5 billion of operating losses in [the fourth quarter] suggests that only some of the CFPB-specific settlement was already reserved for. But this sizable [fourth-quarter] number also means that [Wells Fargo] has been booking losses for other actions along the way that are still open-ended.”
Scharf has been CEO of Wells Fargo since late 2019 and has been focusing on bringing the megabank into regulatory compliance.
While an asset cap has remained in place for Wells Fargo since 2018 as punishment for its phony-accounts scandal, other regulatory matters are now in the rear-view mirror.
In December 2021, the Office of the Comptroller of the Currency (OCC) terminated a consent order issued in 2015 regarding add-on products that the bank sold to retail banking customers.
A CFPB consent order issued in 2016 regarding the bank’s retail practices expired in 2021, and a 2015 consent order from the OCC regarding Wells Fargo’s bank-secrecy and anti-money-laundering compliance was terminated in January 2021.
Finally, a CFPB consent order issued in 2015 regarding claims that the bank violated the Real Estate Settlement Procedures Act expired in January 2020.
Shares of Wells Fargo fell 0.3% on Tuesday. The stock is down 13.1% in 2022, compared with a 19.6% loss by the S&P 500
SPX,
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Ford Motor
has a legal hearing set to start Monday related to a product liability case that resulted in a $1.7 billion punitive award against the auto maker. Investors seem to be a little nervous about the Georgia case. They probably don’t need to be — yet.
The award was part of a jury verdict that held, in part, Ford (ticker: F) was responsible for insufficient roof strength of its super-duty trucks. Two people were killed in 2014 after their super-duty truck rolled over. Ford maintains that its design is sound.
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During the wildest year for global markets since 2008, individual investors have been doubling down on stocks. Many professionals, on the other hand, appear to have bailed out.
U.S. equity mutual and exchange-traded funds, which are popular among individual investors, have attracted more than $100 billion in net inflows this year, one of the highest amounts on record in EPFR data going back to 2000.
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Tesla Inc. shares Friday wrapped up their worst week since 2020, as Chief Executive Elon Musk sold billions in stock and faced a call from a prominent investor to step down from the helm of the electric-vehicle maker.
Tesla
TSLA,
stock fell 4.7% Friday for a weekly decline of 16.1%, the fourth-worst week in history for the shares after a series of three weeks in late February and early March 2020, when investors sold stocks in fear of the COVID-19 pandemic’s effects. Tesla ended the week with a market capitalization of less than $500 billion for the first time since November 2020, and the share price nearly fell lower than $150 for the first time since that month, ending the week at $150.05.
In-depth: Tesla investors await clues on demand, board actions and weigh downside risks in 2023
The decline occurred as Musk sold stock, which he has done repeatedly since November of 2021. Musk disclosed the sale of more than $3.5 billion in Tesla stock late Wednesday, after performing the trades over the three previous trading sessions, when the price declined a cumulative 12.4%. In total, the Tesla CEO has sold $39.3 billion worth of Tesla stock in the past 13 months, according to calculations from Dow Jones Market Data and MarketWatch.
The recent sales have seemed tied to Musk’s acquisition of the social-media platform Twitter, which he bought for roughly $44 billion this year. It is the second time he has sold stock since closing that deal in October.
See also: Elon Musk’s $5.7 billion mystery gift has been revealed
Musk has reportedly been spending much of his time at Twitter, which seems to have angered some prominent Tesla investors. Leo KoGuan, Tesla’s third-largest individual shareholder, publicly called for a new CEO on Twitter this week, as a chorus of previously boosterish accounts on the service expressed dismay at the stock decline and Musk’s actions.
Bullish analysts have also expressed concerns about Musk’s focus and stock sales. Wedbush analyst Daniel Ives, who has an outperform rating and $250 12-month price target on Tesla shares, wrote Thursday that “Musk continues to throw gasoline in the burning fire around the Tesla story by selling more stock and creating Tesla brand deterioration through his actions on Twitter.”
“The nightmare of Musk owning Twitter has been an episode out of the Twilight Zone that never ends and keeps getting worse,” Ives wrote. “In late April Musk said he was done selling Tesla stock, instead the exact opposite has happened and put massive pressure on Tesla shares which have significantly underperformed the market since Musk took over Twitter in late October.”
Opinion: Why Tesla investors are the biggest losers in Elon Musk’s Twitter deal
Tesla shares have now declined 57.4% so far in 2022, as the S&P 500 index
SPX,
has declined 18.3%. Tesla’s market cap was $474.4 billion as of Friday’s close.
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Adobe Inc. shares rose in the extended session Thursday after the software company capped off its fiscal year by topping quarterly earnings expectations, and executives predicted the new fiscal year would play out close to Wall Street’s expectations.
Adobe ADBE reported fiscal fourth-quarter net income of $1.18 billion, or $2.53 a share, compared with $1.23 billion, or $2.57 a share, in the year-ago period. Adjusted earnings, which exclude stock-based compensation expenses and other items, were $3.60 a share, compared with…
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Delta Air Lines’ stock rose 4.7% before market open on Wednesday after the company raised its earnings guidance.
The carrier
DAL,
said it is executing on its three-year recovery plan, with year-one results ahead of expectations. Delta also highlighted robust demand for air travel as the industry recovers from the widespread disruption caused by the COVID-19 pandemic.
The carrier raised its 2022 adjusted EPS guidance to $3.07 to $3.12. Analysts surveyed by FactSet were looking for earnings of $2.88 a share. For 2023, Delta Air Lines Inc. forecast a near doubling of adjusted earnings to $5 to $6 a share.
See Now: After too little, too much, there are ‘Goldilocks’ conditions for air travel in 2023
Delta also forecast 2023 revenue growth at 15% to 20% compared with 2022 and said it is on track to meet its 2024 earnings target of more than $7 a share. “Demand for air travel remains robust as we exit the year and Delta’s momentum is building,” said Delta CEO Ed Bastian, in a statement.
Delta said it expects to deliver strong topline growth in 2023 and significant operating leverage, boosted by a full restoration of its network and continued improvements in premium and loyalty revenue.
Non-fuel unit costs are expected to decline 5% to 7%, driving Delta’s margin expansion and adjusted earnings growth, the company said. Delta expects to generate more than $2 billion of free cash flow, which it said will enable further debt reduction.
See Now: Delta kicked off airline earnings season with a bang. What does it mean for other carriers?
“2022 is proving to be a pivotal year as we rebuild the world’s best-performing airline,” said Bastian, in the statement.
The company’s robust guidance boosted other airline stocks before market open, with United Airlines Holdings Inc.
UAL,
rising 1.4%, American Airlines Group Inc.
AAL,
gaining 1.3%, and JetBlue Airways Corp.
JBLU,
rising 1.3%.
Delta shares have fallen 14.6% this year, compared with the S&P 500 index’s
SPX,
decline of 15.7% and the U.S Global Jets ETF’s
JETS,
slump of 14.3%.
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To start 2023, investors will have a choice to invest in a brand new $18 billion company with some 50,000 energized employees and a plan to create shareholder value.
To close out 2022, that company—GE HealthCare—is on the road, introducing itself to investors. With each new detail that emerges investors get a better sense of where the new stock should trade.
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Oracle
shares were moving higher late Monday after the company posted better-than-expected financial results for its latest quarter. The enterprise software giant continued to see success in shifting more of its business to the cloud during the period.
“Simply put, we had an outstanding quarter,” Oracle CEO Safra Catz said on a call with analysts. “More and more customers are recognizing our second generation infrastructure cloud as being better architected for higher performance, better security and unmatched reliability” than other cloud providers.
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Oracle Corp. topped Wall Street’s expectations for profit and revenue in its most recent quarter, though the software company is still expected to issue a forecast that could be more fraught.
Oracle
ORCL,
on Monday reported fiscal second-quarter net income of $1.74 billion, or 63 cents a share, on revenue of $12.28 billion, up from $10.36 billion a year ago. After adjusting for stock-based compensation and other costs, Oracle reported earnings of $1.21 a share, even with the same quarter a year ago.
Analysts on average expected adjusted earnings of $1.17 a share on sales of $11.96 billion, according to FactSet. Oracle shares gained nearly 3% in after-hours trading immediately after the results were announced, following a 1.8% increase to $81.29 in regular trading.
Oracle executives did not provide guidance for the fiscal third quarter in Monday’s announcement, but Chief Executive Safra Catz does typically provide a forecast in their conference call, which is scheduled for 5 p.m. Eastern time. Those numbers are likely to affect earnings more than the results, as concerns about an increasing slowdown in business spending have rocked a swath of software companies in recent weeks.
“We believe the darkest days of this downturn are ahead of us,” Monness Crespi Hardt analyst Brian J. White wrote in a preview of Oracle results, later adding that “results across Big Tech, the leading public clouds, and the enterprise software complex paint an increasingly concerning picture for the software world heading into 2023.”
Oracle stock has outperformed the S&P 500 index
SPX,
since executives hosted an event for financial analysts and investors in October, with shares gaining 4.8% in the past three months while the larger index fell 3.9%. Oracle executives promised to grow adjusted earnings by more than 10% every year as revenue growth accelerates, after years of stagnant sales growth led to large share repurchases and constant cuts to improve the software company’s bottom line.
Oracle is experiencing strong revenue growth thanks to the acquisition of healthcare-focused company Cerner, a $28 billion deal that closed in June. There are hopes for organic growth as well, though, as Oracle’s cloud-computing effort starts to show fruit, including winning part of a recent Defense Department contract after suing to halt an earlier version of that award.
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Things tend to slow down for the holidays. The stock market isn’t there yet.
With Christmas just a couple of weeks away, it’s easy to look ahead to candy canes, caroling, and presents under the tree, but there’s still work to be done. The coming week certainly won’t be boring, with highly anticipated inflation data and a Federal Reserve decision on back-to-back days. The two events will do much to determine the direction of the market for the coming weeks—a deeper slide or a resumption of the Santa Claus rally.
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Lululemon Athletica Inc. stock fell more than 10% in the extended session Thursday after the athleisure-wear maker reported mixed quarterly results and saw inventories soar.
Lululemon
LULU,
earned $735 million, or $2 a share, in the third quarter, compared with $541 million, or $1.44 a share, in the same quarter last year. Adjusted for one-time items, Lululemon
LULU,
earned $1.62 a share.
Revenue rose 28% to $1.9 billion, the company said. Same-store sales were up 22%.
Analysts polled by FactSet expected Lululemon to earn $1.97 a share on revenue of $1.81 billion. Same-store sales were expected to rise 19.1%.
“We are proud to have delivered another quarter of strong sales and earnings growth, despite an operating environment that remains dynamic,” Chief Financial Officer Meghan Frank said in a statement.
The retailer said inventories ended the quarter up 85% to $1.7 billion, compared with $900 million at the end of the third quarter of 2021.
“The company believes its inventories are well-positioned to support its expected revenue growth in the fourth quarter,” it said.
Lululemon guided for fourth-quarter revenue between $2.605 billion and $2.655 billion, and adjusted EPS between $4.20 and $4.30.
For the full year, the company expects revenue between $7.944 billion and $7.994 billion, and adjusted EPS between $9.87 and $9.97. FactSet consensus calls for EPS of $9.92 on sales of $7.935 billion.
Analysts were relatively upbeat about Lululemon heading into the results, saying the company was able to keep its prices higher, even as other retailers cut their prices.
Retailers have slashed prices on clothing in an effort to clear shelves and entice customers, following an inflation-induced shift in consumer spending to necessities. But Raymond James analysts, in a note this week, said they found that Lululemon “didn’t have broad-based promotions” in the third quarter, or the fourth quarter so far.
They said that the company leaned on its “We Made Too Much” section to iron out its inventories. And they noted a jump in downloads for Lululemon’s app. However, they said business in China “could be a curveball” amid that nation’s COVID-19 restrictions.
Piper Sandler analysts, in October, also said that Lululemon remained more insulated than other clothing retailers from big markdowns.
Lululemon stock is down 4% so far this year. The S&P 500 Index
SPX,
by comparison, has slid 17% over that time.
Claudia Assis in San Francisco contributed to this report.
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GREENVILLE, Miss. — The former leader of a Mississippi grain storage and processing company has been indicted on federal and state charges, more than a year after the company filed for bankruptcy, prosecutors said Tuesday.
John R. Coleman, 46, of Greenwood, Mississippi, is the former CEO of Express Grain Terminals, LLC.
A federal grand jury indicted Coleman on charges of defrauding farmers, banks and the Mississippi Department of Agriculture, U.S. Attorney Clay Joyner and Mississippi Attorney General Lynn Fitch said in a news release.
Coleman made his initial appearance Tuesday before U.S. Magistrate Judge Jane M. Virden in Greenville. Federal court records did not list an attorney for him.
Federal court documents say that from June 2018 to October 2022, Coleman altered Express Grain’s audited financial statements to receive a state warehouse license and lied about the amount of debt he owed on corn, wheat, soybeans or other crops held at the facility.
The federal indictment said farmers delivered grain to Express Grain throughout the 2021 harvest season but did not receive payment.
The indictment said that Express Grain sent an email to customers on Sept. 28, 2021, with wording approved by Coleman. The message said the company was in good financial shape.
“We have funding from multiple sources to make sure everyone gets paid on time,” the company email said. “Stay safe out there and keep those combines rolling!”
The next day, Express Grain eventually filed for Chapter 11 bankruptcy.
“Coleman’s fraud caused widespread financial hardship and suffering throughout the Mississippi Delta and elsewhere,” the federal indictment said.
In September 2021, Express Grain had $70 million in outstanding loans from UMB Bank in Kansas City, Missouri.
If convicted on the federal charges, Coleman would face up to 180 years in prison.
Fitch also said a Leflore County grand jury has indicted Coleman on five counts of making false representations to defraud government and one count of false pretenses.
The FBI, the Mississippi Attorney General’s Office, the U.S. Department of Agriculture Office of Inspector General and the Internal Revenue Service are investigating the case.
Law enforcement agents raided the Express Grain offices and Coleman’s home in February, days before the company’s properties were sold at auction, the Greenwood Commonwealth reported. A legal battle over Express Grain’s proceeds was settled earlier this year. Farmers who chose to participate in the settlement were able to claim a share of $9 million.
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Monday served as another smackdown for investors who are banking on a Goldilocks economy and a less aggressive Fed.
Some are now not ruling out a Grinch-like turn from the central bank — a 0.75% hike next week instead of the 0.50% markets have been pinning hopes on — following strong data on services, jobs and wages.
It all goes along with the theme of 2022 — expect the unexpected. The relief of moving out of a crippling pandemic was quickly replaced by the biggest war on Europe’s shores in decades, that sparked worldwide inflation surges.
What comes next is anyone’s guess and that brings us to our call of the day via Saxo Bank’s annual “Outrageous Predictions” for 2023.
While some of these will sound crazy, note that the Saxo team, led by Chief Investment Officer Steen Jakobsen, have nailed a few wild prophecies in the past decade. Those include: a Brexit prediction in 2015, a 25% drop for the S&P 500 from its 2007 high in 2008, a tripling of Bitcoin’s value forecast in 2017.
The focus for 2023’s prediction is that “a return to the disinflationary prepandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts; whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine,” says Jakobsen.
As for those predictions, here we go:
The rest of their predictions are here, such as the formation of an EU Armed Forces in 2023 and an “UnBrexit” referendum.
Read: Why Monday’s stock-market rout should be a wake up call for investors
Stocks
DJIA,
SPX,
COMP,
are drifting into the red, with Treasury yields
TMUBMUSD10Y,
TMUBMUSD02Y,
steady, the dollar
DXY,
lower and oil
CL.1,
BRN00,
also down.
For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.
BioVie stock
BIVI,
is climbing after positive results from the clinical-stage biopharmaceutical company on a drug for Parkinson’s and Alzheimer’s.
NRG Energy
NRG,
agreed to buy Vivint Smart Home
VVNT,
in a $5.2 billion deal. Vivint shares are soaring.
MEI Pharma
MEIP,
shares are tumbing after drugmaker said it would stop developing cancer treatment zandelisib outside of Japan and announces job cuts. Herbalife shares
HLF,
are down 10% after an offering of convertible notes
Powell Industries
POWL,
stock is up 9% after the electrical equipment maker’s well-received results and new orders. Within software Sumo Logic
SUMO,
and GitLab shares
GTLB,
are surging on upbeat results and forecasts.
Layoffs extending beyond tech? PepsiCo
PEP,
is reportedly cutting hundreds of workers at its North American headquarters.
Home builder Toll Brothers
TOL,
will report results after the close.
The October trade deficit jumped 5.4% to $78,2 billion.
The U.S. and EU are reportedly considering fresh steel and aluminum tariffs on China to fight carbon emissions.
“Nothing to be glad about.” An empty, lonely and cold formerly occupied Ukraine city.
Morocco’s World Cup team leans on its secret weapon of parents in the stands.
Why human composting could be the next big thing.
Headed into the holidays, consumers are using savings and credit, says a team of Jefferies analysts led by Corey Tarlowe. “The savings rate continues to trend lower and credit card balances are growing +15% Y/Y. We believe these trends indicate that the consumer is stretched.”
Against this backdrop, they like Costco
COST,
Dollar General
DG,
Target
TGT,
and Walmart
WMT,
These were the top-searched tickers on MarketWatch at 6 a.m.:
| Ticker | Security name |
|
TSLA, |
Tesla |
|
GME, |
GameStop |
|
AMC, |
AMC Entertainment |
|
NIO, |
NIO |
|
BBBY, |
Bed Bath & Beyond |
|
AAPL, |
Apple |
|
APE, |
AMC Entertainment Holdings preferred shares |
|
COSM, |
Cosmos |
|
AMZN, |
Amazon.com |
|
MULN, |
Mullen Automotive |
Tributes pour after “Cheers” star Kirstie Alley dies at 71.
Happy 190th birthday to the world’s oldest tortoise.
A green Grinchy dog for Christmas? Not everyone’s heart grew three sizes.
Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton
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By Colin Kellaher
Shares of BioVie Inc. rose sharply in premarket trading Tuesday after the clinical-stage biopharmaceutical company reported positive results from a pair of Phase 2 studies assessing the potential of its NE3107 drug candidate in Parkinson’s disease and Alzheimer’s disease.
The Carson City, Nev., company said the study of NE3107 in Parkinson’s met both main objectives, with patients treated with a combination of the drug and levodopa seeing meaningful improvements in their motor score and an absence of adverse interactions of NE3107 with levodopa.
BioVie said that based on the study findings, it will proceed with planning the Phase 3 program for discussion with the U.S. Food and Drug Administration.
Meanwhile, BioVie said patients treated with NE3107 in the Alzheimer’s study experienced improved cognition and biomarker levels, with no drug-related adverse events observed.
BioVie shares, which closed Monday at $5.21, were recently up 15% to $5.98 in premarket trading.
Write to Colin Kellaher at colin.kellaher@wsj.com
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Today in History
Today is Friday, Dec. 2, the 336th day of 2022. There are 29 days left in the year.
Today’s Highlight in History:
On Dec. 2, 1954, the U.S. Senate passed, 67-22, a resolution condemning Republican Sen. Joseph R. McCarthy of Wisconsin, saying he had “acted contrary to senatorial ethics and tended to bring the Senate into dishonor and disrepute.”
On this date:
In 1823, President James Monroe outlined his doctrine opposing European expansion in the Western Hemisphere.
In 1859, militant abolitionist John Brown was hanged for his raid on Harpers Ferry the previous October.
In 1942, an artificially created, self-sustaining nuclear chain reaction was demonstrated for the first time at the University of Chicago.
In 1957, the Shippingport Atomic Power Station in Pennsylvania, the first full-scale commercial nuclear facility in the U.S., began operations. (The reactor ceased operating in 1982.)
In 1980, four American churchwomen were raped and murdered in El Salvador. (Five national guardsmen were convicted in the killings.)
In 1982, in the first operation of its kind, doctors at the University of Utah Medical Center implanted a permanent artificial heart in the chest of retired dentist Dr. Barney Clark, who lived 112 days with the device.
In 1993, Colombian drug lord Pablo Escobar was shot to death by security forces in Medellin (meh-deh-YEEN’).
In 2000, Al Gore sought a recount in South Florida, while George W. Bush flatly asserted, “I’m soon to be the president” and met with GOP congressional leaders.
In 2001, in one of the largest corporate bankruptcies in U.S. history, Enron filed for Chapter 11 protection.
In 2015, a couple loyal to the Islamic State group opened fire at a holiday banquet for public employees in San Bernardino, California, killing 14 people and wounding 21 others before dying in a shootout with police.
In 2016, a fire that raced through an illegally converted warehouse in Oakland, California, during a dance party killed 36 people.
In 2020, in a video released on social media, President Donald Trump stood before a White House lectern and delivered a 46-minute diatribe against the election results that produced a win for Democrat Joe Biden, unspooling one misstatement after another to back his baseless claim that he really won. Britain became the first country in the world to authorize a rigorously tested COVID-19 vaccine, giving the go-ahead for emergency use of the vaccine developed by American drugmaker Pfizer and Germany’s BioNTech.
Ten years ago: Hundreds of concrete slabs, each weighing more than a ton, fell from the roof of a highway tunnel west of Tokyo, crushing vehicles below and killing nine people. Dustin Hoffman, David Letterman, Led Zeppelin, Chicago bluesman Buddy Guy and ballerina Natalia Makarova received Kennedy Center Honors.
Five years ago: President Donald Trump changed his story on why he fired Michael Flynn as his national security adviser, now suggesting that he knew at the time that Flynn had lied to the FBI about his contacts with Russians. ABC News suspended investigative reporter Brian Ross for four weeks without pay for an erroneous report about Flynn. (Ross had reported that then-candidate Trump had directed Flynn to make contact with the Russians; Ross clarified the report hours later, saying that his source now said Trump had not done so as a candidate, but as president-elect.)
One year ago: Nevada’s Supreme Court ruled unanimously that gun manufacturers could not be held responsible for the deaths in the 2017 mass shooting on the Las Vegas Strip because a state law shielded them from liability unless the weapon malfunctioned. Jason Meade, the Ohio sheriff’s deputy who shot Casey Goodson Jr. in the back five times as the Black man entered his grandmother’s house, was charged with murder, as Goodson’s family also filed a federal civil rights lawsuit. (Meade has pleaded not guilty.) Major League Baseball plunged into its first work stoppage in a quarter-century when the sport’s collective bargaining agreement expired and owners immediately locked out players.(An agreement would end the lockout after 99 days; the start of the season was delayed by about a week.)
Today’s Birthdays: Former Attorney General Edwin Meese III is 91. Actor Cathy Lee Crosby is 78. Movie director Penelope Spheeris is 77. Actor Ron Raines is 73. Country singer John Wesley Ryles is 72. Actor Keith Szarabajka is 70. Actor Dan Butler is 68. Broadcast journalist Stone Phillips is 68. Actor Dennis Christopher is 67. Actor Steven Bauer is 66. Country singer Joe Henry is 62. Rock musician Rick Savage (Def Leppard) is 62. Actor Brendan Coyle is 59. Rock musician Nate Mendel (Foo Fighters) is 54. Actor Suzy Nakamura is 54. Actor Rena Sofer is 54. Rock singer Jimi (cq) HaHa (Jimmie’s Chicken Shack) is 54. Actor Lucy Liu (loo) is 54. U.S. Veterans Affairs Secretary Denis McDonough is 53. Rapper Treach (Naughty By Nature) is 52. Actor Joe Lo Truglio is 52. International Tennis Hall of Famer Monica Seles is 49. Singer Nelly Furtado is 44. Pop singer Britney Spears is 41. Actor-singer Jana Kramer is 39. Actor Yvonne Orji is 39. Actor Daniela Ruah (roo-ah) is 39. NFL quarterback Aaron Rodgers is 39. Actor Alfred Enoch is 34. Pop singer-songwriter Charlie Puth is 31.
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Shares of EV charging company
ChargePoint
have been caught in the sell off that’s hammered small-capitalization stocks that don’t produce earnings or generate free cash flow, yet. Investors hoped that third-quarter earnings could turn sentiment around, but some concerns linger.
ChargePoint
(ticker: CHPT), on Thursday afternoon, reported a per-share loss of 25 cents from $125 million in sales. Wall Street was looking for a loss of 20 cents per share on sales of $132.3 million.
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Okta Inc. executives on Wednesday said they will report an adjusted profit in the fourth quarter and, in a surprise, predicted profitability for all of next fiscal year, trumping profit concerns stemming from recent sales-operation issues.
For the fourth quarter, Okta
OKTA,
guided for adjusted earnings of 9 cents to 10 cents a share on revenue of $488 million to $490 million. Analysts, on average, were expecting an adjusted loss of 12 cents a share on sales of $488.3 million, according to FactSet.
In a surprise announcement during the conference call, Chief Financial Officer Brett Tighe revealed a full forecast for fiscal 2024 as well. Most software companies shy away from such practices amid uncertainty about macroeconomic conditions. He said Okta executives are aiming for adjusted profits for the full year on revenue of $2.13 billion to $2.15 billion. Analysts on average expected adjusted losses of 30 cents a share on sales of $2.3 billion, beating profit projections widely but also missing sales expectations by more than $100 million.
Shares rallied as much as 18% in after-hours trading immediately following the release of the results, but those gains noticeably pared back to a steady 12% level after Tighe announced the outlook to analysts on the call. They have fallen 76% so far this year, compared with a 27% decline by the tech-heavy Nasdaq Composite Index
COMP,
In an exclusive interview with MarketWatch ahead of the company’s conference call, Okta Chief Executive and co-founder Todd McKinnon said the company is not providing any forecasts past 2024 because of uncertainty in the macro environment.
“We’re thinking a pretty conservative assumption that the macro is going to get worse before it gets better, so that’s definitely factored into the guide,” McKinnon told MarketWatch.
On a more positive note, McKinnon said sales-rep attrition has been the lowest it has been in the past several quarters, following a spike last quarter. Okta also announced that Susan St. Ledger, the president of worldwide field operations, is retiring and McKinnon will take over her duties on an interim basis.
“What we’ve done over the last six months is what a lot of companies are doing, slowing hiring, re-evaluating real estate, doubling down on the things we know are high value. And some of the things that are maybe less value we’re doing less of, so that’s where we see the profitability come from,” McKinnon told MarketWatch.
Much of that comes from addressing the company’s struggle in combining Okta’s salesforce with sales reps acquired in the May 2021 acquisition of identity-platform Auth0 (pronounced “Auth Zero”), which is more focused on direct-to-user sales than Okta’s corporate focus.
“The problem was never that we didn’t have talented sales people,” McKinnon told MarketWatch. “The problem is that we didn’t enable them and clarify things with them.”
In-depth: Okta CEO says ‘short-term challenges’ resulted in workers leaving at a higher rate
“We still have work to do,” McKinnon said. “We don’t think we’ve solved it after one quarter of a positive trend but I do think it’s progress.”
“The biggest factor: We’ve really done a much better job clarifying the products and the positioning and saying we have two clouds: We have Workforce Identity Cloud and Customer Identity Cloud and it’s very clear what to sell when,” he said.
Okta reported a third-quarter loss of $208.9 million, or $1.32 a share, compared with a loss of $221.3 million, or $1.44 a share, in the year-ago period. After adjusting for stock-based compensation expenses and other items, the company reported break-even results on a per-share basis, compared with a loss of 7 cents a share in the year-ago period. Revenue rose to $481.4 million from $350.7 million in the year-ago quarter.
Analysts had forecast an adjusted loss of 24 cents a share on revenue of $465.4 million, based on the company’s forecast for a loss of 24 cents to 25 cents a share on sales of $463 million to $465 million.
For the current year, Okta forecast an adjusted loss of 27 cents to 26 cents a share on revenue of about $1.84 billion, compared with the Street’s forecast of 73 cents a share on revenue of $1.82 billion.
So far in November, cloud software stocks have been getting trashed. While the S&P 500
SPX,
has gained 5.4%, and the Nasdaq has advanced 4.4%, the iShares Expanded Tech-Software Sector ETF
IGV,
has risen 1.6%, the Global X Cloud Computing ETF
CLOU,
has ticked up 0.8%, the First Trust Cloud Computing ETF
SKYY,
has fallen 2%, and the WisdomTree Cloud Computing Fund
WCLD,
has dropped 6.9%.
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Salesforce Inc. performed better than expected in the third quarter, but executives issued a fourth-quarter forecast that fell short of expectations on Wednesday and revealed that co-Chief Executive Bret Taylor is leaving the company.
Salesforce
CRM,
shares fell about 7% after hours, after rising about 5.5% in the regular session to close at $159.97, their fifth gain in the past six sessions.
The cloud-software company said in a news release that founder, co-CEO and Chairman Marc Benioff will resume the sole CEO role on Jan. 31. Taylor is the second executive to be elevated to co-CEO with Benioff, only to leave with Benioff still in charge. Keith Block stepped down in February 2020 after just 18 months in the position, and Taylor lasted exactly a year in the co-CEO position after being promoted Nov. 30 of last year.
“I am grateful for six fantastic years at Salesforce,” Taylor, who was also vice chairman, said in a statement. “Marc was my mentor well before I joined Salesforce and the opportunity to partner with him to lead the most important software company in the world is career-defining. After a lot of reflection, I’ve decided to return to my entrepreneurial roots.”
On the company’s earnings call, Benioff said “we’re still in a little bit of shock and extremely sad” about Taylor’s exit, but did not answer an analyst’s question about whether he would fill the co-CEO position.
At least one analyst said he didn’t see the departure coming: “Given that Mr. Taylor was assumed to be the ‘heir apparent’ at CRM, this does bring up a lot of questions in terms of the management team and frankly offsets some of the positive narrative around margins heading into [calendar year 2023],” wrote Kirk Materne, analyst for Evercore ISI, in a note Wednesday.
Salesforce reported that third-quarter net income fell to $210 million, or 21 cents a share, compared with $468 million, or 47 cents a share, in the year-ago period. Adjusted for stock-based compensation and other costs, earnings were $1.40 a share. Revenue rose to $7.84 billion from $6.86 billion in the year-ago quarter.
Analysts, who have been expressing concerns about a slowdown in business-software spending, had forecast adjusted earnings of $1.22 a share on revenue of $7.83 billion, according to FactSet.
“We remain positive on the long-term outlook for Salesforce as front-office applications leader,” Michael Turits, analyst for KeyBanc Capital Markets, wrote ahead of the company’s earnings report. “That said, we remain cautious regarding the near-term outlook given ongoing recession concerns, slowing cloud spend, and weaker conversations we had with a few Salesforce channels this quarter.”
Those concerns sprung up in the company’s forecast, as Salesforce executives’ guidance fell $900 million short of expectations. They expect fourth-quarter earnings of 23 cents to 25 cents a share on revenue in the range of $7.932 billion to $8.032 billion, and adjusted earnings of $1.35 to $1.37 a share. Analysts had forecast adjusted earnings of $1.44 a share on revenue of $8.94 billion.
Chief Financial Officer Amy Weaver said on the earnings call that along with the “unpredictable” macroeconomic environment and some slowing in customer spending, the strong dollar had an impact on the company’s showing. “Foreign exchange continued to be a headwind for our results,” she said.
Still, Weaver said the company remains committed to a goal of operating margins of 25% or above; in the third quarter it was at 22.7%, which she said was a record high. Among the things the company is doing, she said, is taking a measured approach to hiring. Earlier this month, the company confirmed hundreds of layoffs, though it did not address them during the call.
See: Tech layoffs approach Great Recession levels
In response to an analyst’s question about employees working from home and the company’s real-estate footprint, Benioff said the San Francisco-based company will have more employees in the office while maintaining the flexibility of remote work. “We’re never going back to how it was, we all know that,” he said. Meanwhile, Weaver said the company is “looking at every aspect of our real estate .”
Shares of Salesforce have declined about 37% this year. The Dow Jones Industrial Average
DJIA,
whose 30 components include Salesforce, has fallen about 5% year to date, while the S&P 500 index
SPX,
is down almost 15% this year.
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