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Tag: Financial Performance

  • XPeng stock rockets toward record rally as bulls brush off bad results, outlook

    XPeng stock rockets toward record rally as bulls brush off bad results, outlook

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    The U.S.-listed shares of China-based electric vehicle maker XPeng Inc. skyrocketed Wednesday, as investors cheered changes in China’s COVID policy while shrugging off weak third-quarter results and a downbeat outlook.

    The stock
    XPEV,
    +45.44%
    charged up 45.0% in midday trading, enough to pace all gainers on the New York Stock Exchange. It was also headed for the biggest one-day gain since going public in August 2020, surpassing the previous record advance of 33.9% on Nov. 23, 2020.

    The rally comes even after XPeng reported a wider-than-expected loss for the third-straight quarter, missed on revenue for the first time and said it expected fourth-quarter revenue to fall 40% to 44% from a year ago while the FactSet consensus called for just a 4.4 decline.

    Instead, investors seemed China appeared to move toward easing its zero-COVID policy, amid growing social unrest and a slowing economy. China’s government said Tuesday that it would renew its push to vaccinate the elderly, and said it would amend COVID control measures.

    XPeng’s stock rally also comes at a time when investor sentiment had soured. Earlier this week, Jefferies analyst Johnson Wan downgraded the EV maker, citing recent “missteps” by the company at a time that the “honeymoon stage” for EVs in China was coming to an end.

    In addition, short interest, or bearish bets on XPeng’s stock, was 5.7% of the public float, or freely tradable shares, based on the latest available exchange data. That compares with short interest as a percent of float for China-based rivals Nio Inc.
    NIO,
    +20.14%
    at 4.1% and Li Auto Inc.
    LI,
    +18.35%
    at 4.7%.

    For Tesla Inc.
    TSLA,
    +2.12%    ,
    which generated $5.13 billion in revenue from China in its latest quarter, or about 24% of total revenue, short interest as a percent of float was 2.9%.

    XPeng’s stock has soared 60.7% in November but has still tumbled 41.7% over the past three months. In comparison, the Invesco Golden Dragon China exchange-traded fund
    PGJ,
    +8.98%
    has shed 11.7% the past three months while the S&P 500 index
    SPX,
    +0.62%
    has slipped 1.1%.

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  • U.S. pending home sales drop for fifth straight month in October

    U.S. pending home sales drop for fifth straight month in October

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    The numbers: U.S. pending home sales fell 4.6% in October, the fifth straight monthly decline, the National Association of Realtors said Wednesday. 

    Economists polled by the Wall Street Journal expected pending home sales to fall 5.5%. 

    The index captures transactions where a contract has been signed, but the home sale has not yet closed.

    Key details: On a year-on-year basis, pending home sales were down a sharp 37%.

    Sales fell in three of the four regions, with the Midwest registering an increase.

    Big picture: Sales have stalled as mortgage rates have jumped, making houses less affordable. Pending home sales are a leading indicator for the sector. Some economists think that buyers might return to the market as mortgage rates have plateaued.

    Market reaction: Stocks
    DJIA,
    -0.63%

    SPX,
    -0.35%
    opened slightly higher on Wednesday. The yield on the 10-year Treasury note jumped to 3.78%.

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  • CrowdStrike stock drops nearly 20% as elongating sales cycle slows new subscriptions

    CrowdStrike stock drops nearly 20% as elongating sales cycle slows new subscriptions

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    CrowdStrike Holdings Inc. shares dropped in the extended session Tuesday after the cybersecurity company said new subscriptions came in below expectations amid macro headwinds and longer customer buying cycles.

    Given concern that businesses are cutting back on spending, CrowdStrike 
    CRWD,
    -1.04%
    shares plummeted nearly 20% after hours, following a 1% decline in the regular session to close at $138.

    George Kurtz, CrowdStrike’s co-founder and chief executive, told analysts on a conference call that the company reported $198.1 million in net new annual recurring revenue, or ARR, in the quarter, not as much as it had hoped. 

    ARR is a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions. That grew 54% to $2.34 billion from the year-ago quarter, while the Street expected $2.35 billion. Kurtz said that about $10 million was deferred to future quarters.

    “We expect these macro headwinds to persist through Q4,” Kurtz told analysts.

    Burt Podbere, CrowdStrike’s chief financial officer, explained that the company relies on ARR because it’s “an X-ray into the contract sales.”

    “As George mentioned, even though we entered Q2 with a record pipeline, and we are expecting the elongated sales cycles due to macro concerns to continue, we’re not expecting to see the typical Q4 budget flush given the increased scrutiny on budgets.”

    Podbere said it is “prudent to assume” fourth-quarter net new ARR will be up to 10% below the third quarter’s. That would mean about a 10% year-over-year headwind going into the first half of next year, and “full-year net new ARR would be roughly flat to modestly up year over year.”

    “This would imply a low 30s ending ARR growth rate and a subscription revenue growth rate in the low to mid-30s for FY 2024,” Podbere said.

    Read: Cloud software is suffering a cold November rain. Can Snowflake and Salesforce turn things around?

    The company expects adjusted fiscal fourth-quarter earnings of 42 cents to 45 cents a share on revenue of $619.1 million to $628.2 million, while analysts surveyed by FactSet forecast earnings of 34 cents a share on revenue of $633.9 million, according to analysts.

    CrowdStrike expects full-year earnings of $1.49 to $1.52 a share on revenue of $2.22 billion to $2.23 billion. Wall Street expects $1.33 a share on revenue of $2.23 billion.

    The company reported a fiscal third-quarter loss of $55 million, or 24 cents a share, compared with a loss of $50.5 million, or 22 cents a share, in the year-ago period. Adjusted net income, which excludes stock-based compensation and other items, was 40 cents a share, compared with 17 cents a share in the year-ago period.

    Revenue rose to $580.9 million from $380.1 million in the year-ago quarter.

    Analysts expected CrowdStrike to report earnings of 28 cents a share on revenue of $516 million, based on the company’s outlook of 30 cents to 32 cents a share on revenue of $569.1 million to $575.9 million.

    So far in November, cloud software stocks have been getting trashed. While the S&P 500
    SPX,
    -0.16%
    has gained 2%, and the tech-heavy Nasdaq Composite
    COMP,
    -0.59%
    is flat, the iShares Expanded Tech-Software Sector ETF
    IGV,
    -0.78%
    has fallen more than 2%, the Global X Cloud Computing ETF
    CLOU,
    -1.12%
    has declined more than 4%, the First Trust Cloud Computing ETF
    SKYY,
    -0.74%
    has fallen more than 6%, and the WisdomTree Cloud Computing Fund
    WCLD,
    -1.05%
    has dropped more than 11%.

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  • 20 dividend stocks with high yields that have become more attractive right now

    20 dividend stocks with high yields that have become more attractive right now

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    Income-seeking investors are looking at an opportunity to scoop up shares of real estate investment trusts. Stocks in that asset class have become more attractive as prices have fallen and cash flow is improving.

    Below is a broad screen of REITs that have high dividend yields and are also expected to generate enough excess cash in 2023 to enable increases in dividend payouts.

    REIT prices may turn a corner in 2023

    REITs distribute most of their income to shareholders to maintain their tax-advantaged status. But the group is cyclical, with pressure on share prices when interest rates rise, as they have this year at an unprecedented scale. A slowing growth rate for the group may have also placed a drag on the stocks.

    And now, with talk that the Federal Reserve may begin to temper its cycle of interest-rate increases, we may be nearing the time when REIT prices rise in anticipation of an eventual decline in interest rates. The market always looks ahead, which means long-term investors who have been waiting on the sidelines to buy higher-yielding income-oriented investments may have to make a move soon.

    During an interview on Nov 28, James Bullard, president of the Federal Reserve Bank of St. Louis and a member of the Federal Open Market Committee, discussed the central bank’s cycle of interest-rate increases meant to reduce inflation.

    When asked about the potential timing of the Fed’s “terminal rate” (the peak federal funds rate for this cycle), Bullard said: “Generally speaking, I have advocated that sooner is better, that you do want to get to the right level of the policy rate for the current data and the current situation.”

    Fed’s Bullard says in MarketWatch interview that markets are underpricing the chance of still-higher rates

    In August we published this guide to investing in REITs for income. Since the data for that article was pulled on Aug. 24, the S&P 500
    SPX,
    -0.29%
    has declined 4% (despite a 10% rally from its 2022 closing low on Oct. 12), but the benchmark index’s real estate sector has declined 13%.

    REITs can be placed broadly into two categories. Mortgage REITs lend money to commercial or residential borrowers and/or invest in mortgage-backed securities, while equity REITs own property and lease it out.

    The pressure on share prices can be greater for mortgage REITs, because the mortgage-lending business slows as interest rates rise. In this article we are focusing on equity REITs.

    Industry numbers

    The National Association of Real Estate Investment Trusts (Nareit) reported that third-quarter funds from operations (FFO) for U.S.-listed equity REITs were up 14% from a year earlier. To put that number in context, the year-over-year growth rate of quarterly FFO has been slowing — it was 35% a year ago. And the third-quarter FFO increase compares to a 23% increase in earnings per share for the S&P 500 from a year earlier, according to FactSet.

    The NAREIT report breaks out numbers for 12 categories of equity REITs, and there is great variance in the growth numbers, as you can see here.

    FFO is a non-GAAP measure that is commonly used to gauge REITs’ capacity for paying dividends. It adds amortization and depreciation (noncash items) back to earnings, while excluding gains on the sale of property. Adjusted funds from operations (AFFO) goes further, netting out expected capital expenditures to maintain the quality of property investments.

    The slowing FFO growth numbers point to the importance of looking at REITs individually, to see if expected cash flow is sufficient to cover dividend payments.

    Screen of high-yielding equity REITs

    For 2022 through Nov. 28, the S&P 500 has declined 17%, while the real estate sector has fallen 27%, excluding dividends.

    Over the very long term, through interest-rate cycles and the liquidity-driven bull market that ended this year, equity REITs have fared well, with an average annual return of 9.3% for 20 years, compared to an average return of 9.6% for the S&P 500, both with dividends reinvested, according to FactSet.

    This performance might surprise some investors, when considering the REITs’ income focus and the S&P 500’s heavy weighting for rapidly growing technology companies.

    For a broad screen of equity REITs, we began with the Russell 3000 Index
    RUA,
    -0.04%    ,
    which represents 98% of U.S. companies by market capitalization.

    We then narrowed the list to 119 equity REITs that are followed by at least five analysts covered by FactSet for which AFFO estimates are available.

    If we divide the expected 2023 AFFO by the current share price, we have an estimated AFFO yield, which can be compared with the current dividend yield to see if there is expected “headroom” for dividend increases.

    For example, if we look at Vornado Realty Trust
    VNO,
    +1.03%    ,
    the current dividend yield is 8.56%. Based on the consensus 2023 AFFO estimate among analysts polled by FactSet, the expected AFFO yield is only 7.25%. This doesn’t mean that Vornado will cut its dividend and it doesn’t even mean the company won’t raise its payout next year. But it might make it less likely to do so.

    Among the 119 equity REITs, 104 have expected 2023 AFFO headroom of at least 1.00%.

    Here are the 20 equity REITs from our screen with the highest current dividend yields that have at least 1% expected AFFO headroom:

    Company

    		 Ticker

    		 Dividend yield

    		 Estimated 2023 AFFO yield

    		 Estimated “headroom”

    		 Market cap. ($mil)

    		 Main concentration
    Brandywine Realty Trust

    		 BDN,
    +2.12%         		11.52%

    		 12.82%

    		 1.30%

    		 $1,132

    		 Offices
    Sabra Health Care REIT Inc.

    		 SBRA,
    +2.41%         		9.70%

    		 12.04%

    		 2.34%

    		 $2,857

    		 Health care
    Medical Properties Trust Inc.

    		 MPW,
    +2.53%         		9.18%

    		 11.46%

    		 2.29%

    		 $7,559

    		 Health care
    SL Green Realty Corp.

    		 SLG,
    +2.25%         		9.16%

    		 10.43%

    		 1.28%

    		 $2,619

    		 Offices
    Hudson Pacific Properties Inc.

    		 HPP,
    +1.41%         		9.12%

    		 12.69%

    		 3.57%

    		 $1,546

    		 Offices
    Omega Healthcare Investors Inc.

    		 OHI,
    +1.23%         		9.05%

    		 10.13%

    		 1.08%

    		 $6,936

    		 Health care
    Global Medical REIT Inc.

    		 GMRE,
    +2.55%         		8.75%

    		 10.59%

    		 1.84%

    		 $629

    		 Health care
    Uniti Group Inc.

    		 UNIT,
    +0.55%         		8.30%

    		 25.00%

    		 16.70%

    		 $1,715

    		 Communications infrastructure
    EPR Properties

    		 EPR,
    +0.86%         		8.19%

    		 12.24%

    		 4.05%

    		 $3,023

    		 Leisure properties
    CTO Realty Growth Inc.

    		 CTO,
    +2.22%         		7.51%

    		 9.34%

    		 1.83%

    		 $381

    		 Retail
    Highwoods Properties Inc.

    		 HIW,
    +0.99%         		6.95%

    		 8.82%

    		 1.86%

    		 $3,025

    		 Offices
    National Health Investors Inc.

    		 NHI,
    +2.59%         		6.75%

    		 8.32%

    		 1.57%

    		 $2,313

    		 Senior housing
    Douglas Emmett Inc.

    		 DEI,
    +0.87%         		6.74%

    		 10.30%

    		 3.55%

    		 $2,920

    		 Offices
    Outfront Media Inc.

    		 OUT,
    +0.89%         		6.68%

    		 11.74%

    		 5.06%

    		 $2,950

    		 Billboards
    Spirit Realty Capital Inc.

    		 SRC,
    +1.15%         		6.62%

    		 9.07%

    		 2.45%

    		 $5,595

    		 Retail
    Broadstone Net Lease Inc.

    		 BNL,
    -0.30%         		6.61%

    		 8.70%

    		 2.08%

    		 $2,879

    		 Industial
    Armada Hoffler Properties Inc.

    		 AHH,
    +0.00%         		6.38%

    		 7.78%

    		 1.41%

    		 $807

    		 Offices
    Innovative Industrial Properties Inc.

    		 IIPR,
    +1.42%         		6.24%

    		 7.53%

    		 1.29%

    		 $3,226

    		 Health care
    Simon Property Group Inc.

    		 SPG,
    +1.03%         		6.22%

    		 9.55%

    		 3.33%

    		 $37,847

    		 Retail
    LTC Properties Inc.

    		 LTC,
    +1.42%         		5.99%

    		 7.60%

    		 1.60%

    		 $1,541

    		 Senior housing
    Source: FactSet

    Click on the tickers for more about each company. You should read Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

    The list includes each REIT’s main property investment type. However, many REITs are highly diversified. The simplified categories on the table may not cover all of their investment properties.

    Knowing what a REIT invests in is part of the research you should do on your own before buying any individual stock. For arbitrary examples, some investors may wish to steer clear of exposure to certain areas of retail or hotels, or they may favor health-care properties.

    Largest REITs

    Several of the REITs that passed the screen have relatively small market capitalizations. You might be curious to see how the most widely held REITs fared in the screen. So here’s another list of the 20 largest U.S. REITs among the 119 that passed the first cut, sorted by market cap as of Nov. 28:

    Company

    		 Ticker

    		 Dividend yield

    		 Estimated 2023 AFFO yield

    		 Estimated “headroom”

    		 Market cap. ($mil)

    		 Main concentration
    Prologis Inc.

    		 PLD,
    +1.63%         		2.84%

    		 4.36%

    		 1.52%

    		 $102,886

    		 Warehouses and logistics
    American Tower Corp.

    		 AMT,
    +0.75%         		2.66%

    		 4.82%

    		 2.16%

    		 $99,593

    		 Communications infrastructure
    Equinix Inc.

    		 EQIX,
    +0.80%         		1.87%

    		 4.79%

    		 2.91%

    		 $61,317

    		 Data centers
    Crown Castle Inc.

    		 CCI,
    +0.93%         		4.55%

    		 5.42%

    		 0.86%

    		 $59,553

    		 Wireless Infrastructure
    Public Storage

    		 PSA,
    +0.19%         		2.77%

    		 5.35%

    		 2.57%

    		 $50,680

    		 Self-storage
    Realty Income Corp.

    		 O,
    +0.72%         		4.82%

    		 6.46%

    		 1.64%

    		 $38,720

    		 Retail
    Simon Property Group Inc.

    		 SPG,
    +1.03%         		6.22%

    		 9.55%

    		 3.33%

    		 $37,847

    		 Retail
    VICI Properties Inc.

    		 VICI,
    +0.81%         		4.69%

    		 6.21%

    		 1.52%

    		 $32,013

    		 Leisure properties
    SBA Communications Corp. Class A

    		 SBAC,
    +0.27%         		0.97%

    		 4.33%

    		 3.36%

    		 $31,662

    		 Communications infrastructure
    Welltower Inc.

    		 WELL,
    +3.06%         		3.66%

    		 4.76%

    		 1.10%

    		 $31,489

    		 Health care
    Digital Realty Trust Inc.

    		 DLR,
    +0.63%         		4.54%

    		 6.18%

    		 1.64%

    		 $30,903

    		 Data centers
    Alexandria Real Estate Equities Inc.

    		 ARE,
    +1.49%         		3.17%

    		 4.87%

    		 1.70%

    		 $24,451

    		 Offices
    AvalonBay Communities Inc.

    		 AVB,
    +0.98%         		3.78%

    		 5.69%

    		 1.90%

    		 $23,513

    		 Multifamily residential
    Equity Residential

    		 EQR,
    +1.46%         		4.02%

    		 5.36%

    		 1.34%

    		 $23,503

    		 Multifamily residential
    Extra Space Storage Inc.

    		 EXR,
    +0.31%         		3.93%

    		 5.83%

    		 1.90%

    		 $20,430

    		 Self-storage
    Invitation Homes Inc.

    		 INVH,
    +2.15%         		2.84%

    		 5.12%

    		 2.28%

    		 $18,948

    		 Single-family residental
    Mid-America Apartment Communities Inc.

    		 MAA,
    +1.83%         		3.16%

    		 5.18%

    		 2.02%

    		 $18,260

    		 Multifamily residential
    Ventas Inc.

    		 VTR,
    +2.22%         		4.07%

    		 5.95%

    		 1.88%

    		 $17,660

    		 Senior housing
    Sun Communities Inc.

    		 SUI,
    +2.12%         		2.51%

    		 4.81%

    		 2.30%

    		 $17,346

    		 Multifamily residential
    Source: FactSet

    Simon Property Group Inc.
    SPG,
    +1.03%
    is the only REIT to make both lists.

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  • Nestle lifts guidances, confirms plan to buy back $21 billion shares over 2022-24

    Nestle lifts guidances, confirms plan to buy back $21 billion shares over 2022-24

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    Nestle SA has lifted its full-year organic sales-growth guidance and outlined targets for 2025 ahead of its investor seminar on Tuesday.

    The Swiss packaged-foods giant
    NSRGY,
    +0.11%

    NESN,
    -0.26%
    said it now expects sales to grow organically between 8% and 8.5% from previous expectations of around 8%. The underlying trading operating profit margin is still seen at around 17%.

    By 2025, it expects to return to an underlying trading operating profit margin in the range of 17.5% to 18.5%, following the margin impact of cost inflation in 2021 and 2022.

    Annual underlying earnings-per-share growth is seen between 6% and 10% in constant currency over the 2022-25 period, Nestle said. The company aims for free cash flow toward 12% of sales, and return on invested capital of 15% by 2025.

    In terms of portfolio management, it said it will explore strategic options for peanut allergy treatment Palforzia, following slower than expected adoption by patients and heathcare professionals. The review should be completed in the first half of next year.

    Nestle said the health-science business will focus more on consumer care and medical nutrition.

    The company confirmed its program to repurchase 20 billion Swiss francs ($21.14 billion) of its shares between 2022 and 2024 and said it aims to keep increasing its dividend year on year.

    Write to Giulia Petroni at giulia.petroni@wsj.com

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  • Cyber Monday deals lure in consumers amid high inflation

    Cyber Monday deals lure in consumers amid high inflation

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    NEW YORK — Days after flocking to stores on Black Friday, consumers are turning online for Cyber Monday to score more discounts on gifts and other items that have ballooned in price because of high inflation.

    Cyber Monday is expected to remain the year’s biggest online shopping day and rake in up to $11.6 billion in sales, according to Adobe Analytics, which tracks transactions at over 85 of the top 100 U.S. online stores. That forecast represents a jump from the $10.7 billion consumers spent last year.

    Adobe’s numbers are not adjusted for inflation, but the company says demand is growing even when inflation is factored in. Some analysts have said top line numbers will be boosted by higher prices and the amount of items consumers purchase could remain unchanged — or even fall — compared to prior years. Profit margins are also expected to be tight for retailers offering deeper discounts to attract budget-conscious consumers and clear out their bloated inventories.

    Shoppers spent a record $9.12 billion online on Black Friday, up 2.3% from last year, according to Adobe. E-commerce activity continued to be strong over the weekend, with $9.55 billion in online sales.

    Salesforce, which also tracks spending, said their estimates showed online sales in the U.S. hit $15 billion on Friday and $17.2 billion over the weekend, with an average discount rate of 30% on products. Electronics, active wear, toys and health and beauty items were among those that provided a big boost, the two groups said.

    CONSUMERS ARE SPENDING CAUTIOUSLY

    Mastercard SpendingPulse, which tracks spending across all types of payments including cash and credit card, said that overall sales on Black Friday rose 12% from the year-ago. Sales at physical stores rose 12%, while online sales were up 14%.

    RetailNext, which captures sales and traffic via cameras reported that store traffic rose 7% on Black Friday, while sales at physical stores improved 0.1% from a year ago. However, spending per customer dropped nearly 7% as cautious shoppers did more browsing than buying. Another company that tracks store traffic — Sensormatic Solutions — said store traffic was up 2.9% on Black Friday compared to a year ago.

    “Shoppers are being more thoughtful, but they are going to more than a few retailers to be able to make a determination of what they are going to buy this year,” said Brian Field, Sensormatic’s global leader of retail consulting and analytics.

    Danny Groner, a 39-year-old who lives in New York City, said he and his wife want to get a new TV to replace one they’ve had for about seven years. He spent some time on Monday searching for deals online and found some good discounts. Still, he says he wants to be intentional about what he buys and doesn’t mind spending a bit more for the right product.

    Overall, online spending has remained resilient in the past few weeks as eager shoppers buy more items on credit and embrace “buy now, pay later” services that lack interest charges but carry late fees.

    In the first three weeks of November, online sales were essentially flat compared with last year, according to Adobe. It said the modest uptick shows consumers have a strong appetite for holiday shopping amid uncertainty about the economy.

    Still, some major retailers are feeling a shift. Target, Macy’s and Kohl’s said this month they’ve seen a slowdown in consumer spending in the past few weeks. The exception was Walmart, which reported higher sales in its third quarter and raised its earnings outlook.

    “We’re seeing that inflation is starting to really hit the wallet and that consumers are starting to amass more debt at this point,” said Guru Hariharan, founder and CEO of retail e-commerce management firm CommerceIQ, adding there’s more pressure on consumers to purchase cheaper alternatives.

    SHIFTING DEMAND

    This year’s Cyber Monday also comes amid a wider e-commerce slowdown affecting online retailers that saw a boom in sales during most of the COVID-19 pandemic. Consumers who feared leaving their homes and embraced e-commerce during the pandemic are heading back to physical stores in greater numbers this year as normalcy returns.

    The National Retail Federation said its recent survey showed a 3% uptick in the number of Black Friday shoppers planning to go to stores. It expects 63.9 million consumers to shop online during Cyber Monday, compared to 77 million last year.

    Amazon saw its retail business thrive during most of the pandemic, but much of the demand waned as the worst of the pandemic eased. To deal with the change, the company has been scaling back its warehouse expansion plans and is cutting costs by axing some of its projects. It’s also following in the steps of other tech companies and implementing mass layoffs in its corporate ranks. Amazon CEO Andy Jassy said the company will continue to cut jobs until early next year.

    Shopify, a company which helps businesses set up e-commerce websites and also offers offline software, laid off 10% of its staff this summer.

    The company said Monday that its merchants have surpassed $5.1 billion in global sales since the start of Black Friday in New Zealand. And spending per U.S. customer went up $5 compared to last year, said Shopify President Harley Finkelstein.

    Despite the bump, Finkelstein said shoppers were more intentional about their spending this year and waiting for discounts before making a purchase.

    ————

    AP Business Writer Anne D’Innocenzio contributed to this report.

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  • BlockFi seeks protection as FTX collapse rattles crypto

    BlockFi seeks protection as FTX collapse rattles crypto

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    Cryptocurrency lender BlockFi is filing for Chapter 11 bankruptcy protection as the fallout from the collapse of crypto exchange FTX spreads outward.

    In a Monday filing for bankruptcy protection in New Jersey, where it is based, BlockFi claimed more than 100,000 creditors, with BlockFi’s liabilities ranging from $1 billion to $10 billion.

    “Chapter 11 is a transparent process and we will continue to communicate with our clients to ensure they hear directly from us,” BlockFi said in a tweet.

    Cryptocurrencies were in retreat Monday in what has already been a disastrous year. Bitcoin, among the most widely traded cryptocurrencies, has plunged almost 70% in 2022 to below $16,000 apiece.

    BlockFi Inc., which was founded in 2017, said bankruptcy protection will allow it to stabilize the company and restructure. That restructuring will include an attempt to recover all obligations that it is owed by its counterparties, including FTX and associated corporate entities. BlockFi, which was bailed out by Sam Bankman-Fried’s FTX early last summer, said it anticipates recoveries from FTX will be delayed.

    FTX filed for bankruptcy protection earlier this month. At the time, BlockFi announced on Twitter that it wasn’t able to do business as usual and was pausing client withdrawals as a result of FTX’s implosion.

    “With the collapse of FTX, the BlockFi management team and board of directors immediately took action to protect clients and the company,” Mark Renzi of Berkeley Research Group, BlockFi’s financial advisor, said in a prepared statement Monday.

    The implosion of FTX is still being sorted out and it is unknown how much collateral damage it could inflict.

    There are already comparisons to the collapse of the storied Wall Street bank Lehman Brothers in 2008. The bank trafficked heavily in subprime mortgages that lost almost all of their recognized worth and shook the U.S. and global economy.

    BlockFi has $256.9 million in cash on hand, which it expects will provide enough cushion to support some operations during the restructuring.

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  • Cyber Monday deals lure in consumers amid high inflation

    Cyber Monday deals lure in consumers amid high inflation

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    NEW YORK — Days after flocking to stores on Black Friday, consumers are turning online for Cyber Monday to score more discounts on gifts and other items that have ballooned in price because of high inflation.

    Cyber Monday is expected to remain the year’s biggest online shopping day and rake in up to $11.6 billion in sales, according to Adobe Analytics, which tracks transactions at over 85 of the top 100 U.S. online stores. That forecast represents a jump from the $10.7 billion consumers spent last year.

    Adobe’s numbers are not adjusted for inflation, but it says demand is growing even when inflation is factored in. Some analysts have said top line numbers will be boosted by higher prices and the amount of items consumers purchase could remain unchanged — or even fall — compared to prior years. Profit margins are also expected to be tight for retailers offering deeper discounts to attract budget-conscious consumers and clear out their bloated inventories.

    Shoppers spent a record $9.12 billion online on Black Friday, up 2.3% from last year, according to Adobe. E-commerce activity continued to be strong over the weekend, with $9.55 billion in online sales.

    Salesforce, which also tracks spending, said their estimates showed online sales in the U.S. hit $15 billion on Friday and $17.2 billion over the weekend, with an average discount rate of 30% on products. Electronics, active wear, toys and health and beauty items were among those that provided a big boost, the two groups said.

    Meanwhile, consumers who feared leaving their homes and embraced e-commerce during the pandemic are heading back to physical stores in greater numbers this year as normalcy returns. The National Retail Federation said its recent survey showed a 3% uptick in the number of Black Friday shoppers planning to go to stores. It expects 63.9 million consumers to shop online during Cyber Monday, compared to 77 million last year.

    CONSUMERS ARE SPENDING CAUTIOUSLY

    Mastercard SpendingPulse, which tracks spending across all types of payments including cash and credit card, said that overall sales on Black Friday rose 12% from the year-ago. Sales at physical stores rose 12%, while online sales were up 14%.

    RetailNext, which captures sales and traffic via sensors, reported that store traffic rose 7% on Black Friday, while sales at physical stores improved 0.1% from a year ago. However, spending per customer dropped nearly 7% as cautious shoppers did more browsing than buying. Another company that tracks store traffic — Sensormatic Solutions— said store traffic was up 2.9% on Black Friday compared to a year ago.

    “Shoppers are being more thoughtful, but they are going to more than a few retailers to be able to make a determination of what they are going to buy this year,” said Brian Field, Sensormatic’s global leader of retail consulting and analytics.

    Overall, online spending has remained resilient in the past few weeks as eager shoppers buy more items on credit and embrace “buy now, pay later” services that lack interest charges but carry late fees.

    In the first three weeks of November, online sales were essentially flat compared with last year, according to Adobe. It said the modest uptick shows consumers have a strong appetite for holiday shopping amid uncertainty about the economy.

    Still, some major retailers are feeling a shift. Target, Macy’s and Kohl’s said this month they’ve seen a slowdown in consumer spending in the past few weeks. The exception was Walmart, which reported higher sales in its third quarter and raised its earnings outlook.

    “We’re seeing that inflation is starting to really hit the wallet and that consumers are starting to amass more debt at this point,” said Guru Hariharan, founder and CEO of retail e-commerce management firm CommerceIQ, adding there’s more pressure on consumers to purchase cheaper alternatives.

    SHIFTING DEMAND

    This year’s Cyber Monday also comes amid a wider e-commerce slowdown affecting online retailers that saw a boom in sales during most of the COVID-19 pandemic. Amazon, for example, raked in record revenue but much of the demand has waned as the worst of the pandemic eased and consumers felt more comfortable shopping in stores.

    To deal with the change, the company has been scaling back its warehouse expansion plans and is cutting costs by axing some of its projects. It’s also following in the steps of other tech companies and implementing mass layoffs in its corporate ranks. Amazon CEO Andy Jassy said the company will continue to cut jobs until early next year.

    Shopify, another company which helps businesses set up e-commerce websites, laid off 10% of its staff this summer.

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  • Credit Suisse shares tumble after flagging $1.6 billion 4Q loss amid strain for wealth management comes

    Credit Suisse shares tumble after flagging $1.6 billion 4Q loss amid strain for wealth management comes

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    Credit Suisse Group AG shares tumbled in Wednesday morning trading after the bank said asset outflows at its wealth-management business would lead to a fifth consecutive quarterly loss.

    Shares
    CS,
    -1.45%

    CSGN,
    -4.64%
    at 0830 GMT were down 4.9% to CHF3.66.

    The Swiss lender said it expects to post a loss before taxes of around 1.5 billion Swiss francs ($1.58 billion) in the fourth quarter, after lower deposits and assets under management led to reduced commissions and fees.

    The bank, Switzerland’s second-largest by assets, said that it net-asset outflows in the quarter to Nov. 11 were around 6%, or $88.3 billion of its total $1.47 trillion assets under management.

    At the bank’s wealth-management arm, its key business serving the world’s rich, customers removed $66.7 billion.

    It came after the Zurich-based company experienced deposit and net-asset outflows in the first two weeks of October, it said, after social-media reports and a spike in credit-default swaps caused a frenzy over the bank’s financial position.

    The bank said the outflows led its liquidity to fall below some local-level legal requirements, but it maintained its required group-level liquidity and funding ratios at all times.

    Write to Ed Frankl at edward.frankl@dowjones.com

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  • ‘There are plenty of storm clouds on the horizon’: 5 things not to buy on Black Friday

    ‘There are plenty of storm clouds on the horizon’: 5 things not to buy on Black Friday

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    It’s a year for shopping prudently.

    Americans will spend between $942.6 billion and $960.4 billion this holiday season, according to projections from the National Retail Federation. That’s up from last year when holiday sales hit a record $889.3 billion, the trade association said.

    However, people are not willing to go as crazy this Black Friday compared to previous years: that 6% to 8% year-over-year growth expectation is slower than the 13.5% annual increase in holiday season spending in 2021 when consumers had pandemic-era government benefits to spend.

    Once again, millions of people will also be shopping from the comfort of their home and avoiding the Black Friday crowds. Online and other non-store sales are predicted to rise 10% to 12% (to between $262.8 billion and $267.6 billion).

    “People have reason to be concerned about their spending. ”

    “The economy is probably doing better than it feels right now, but that’s not true for everyone of course,” said Ted Rossman, senior industry analyst at Bankrate.com. “There are plenty of storm clouds on the horizon.” He cited rising interest rates, 40-year high inflation and tech layoffs. 

    People have reason to be concerned about their spending. The personal saving rate — meaning personal saving as a percentage of disposable income, or the share of income left after paying taxes and spending money — fell to 3.3% in the third quarter from 3.4% in the prior quarter, the government said last month. 

    Despite a strong labor market and unemployment hovering at 3.7% in October, Rossman said, “it still seems like a recession is likely in 2023, although the best guess is that it will be a mild one.”

    So what should you not buy this Black Friday? Quite a lot, if you don’t believe in living large. Here are 5 things to think about avoiding:

    — Quentin Fottrell

    Tech accessories

    For tech accessories — like earbuds and headphones — waiting until December may be a better way to score better deals, added Ryan McGonagill, director, industry research at Savings.com, another site that aggregates discounts.

    The most popular electronic products like Apple AAPL iPads, MacBooks and iPhones have scant Black Friday deals. “For a limited time, get an Apple Gift Card to use on a later purchase when you buy an eligible iPhone, Apple Watch, Mac, AirPods, and more,” according to Apple’s Black Friday offer.

    Computer makers and retailers, however, are coming off the work-from-home boom and may have inventory they need to thin before year’s end. Holiday discounts on computers, at least through October, were at 10% off the base price, according to analysis from Adobe
    ADBE,
    +2.92%    .
     

    The software and analytics provider said computer discounts could go much steeper, up to 32% off the base price before the end of the year. Cyber Monday could be the best day for bargains on computers, Adobe said, but computer deals may stick around for the rest of 2022.

    Pay attention to early deals, if you desperately need a new laptop. “Many retailers offer the same pricing on Black Friday and Cyber Monday,” said Kristin McGrath, editor at RetailMeNot.com, a site that promotes deals. “So start looking on Black Friday and use Cyber Monday as a second chance to snag what you missed.”

    — Andrew Keshner

    Seasonal items

    Winter wear is usually not going to be on sale before Christmas, so it’s best to shop for your puffy jackets and snow boots in the New Year, if you can. The same goes for white linen, tools and holiday decorations, said Charles Lindsey, associate professor in the Marketing School of Management at the University at Buffalo.

    Most stores put their coats, hats, scarves and flannel pajamas on sale — with discounts on big-name brands of 50% or more in January — to make room for their spring collections. Similarly, buy summer clothes in the fall and winter. 

    “The best time to buy holiday decor is immediately after said holidays,” according to DealNews, a site offering shopping advice. “After Christmas sales are generally your best bet for snagging deeply discounted ornaments, lights, and inflatables in order to be well prepared for next year.” 

    Fashion-conscious shoppers inclined to snap up discounted items may want to practice patience on Black Friday. Apparel may have even deeper discounts after the holidays. If you feel compelled to buy something new to wear to the office party, invest in quality pieces. Fast fashion has a cost: It has contributed to a waste crisis, in part because such items are not meant to last very long in your closet.

    But that does not mean you should not keep your eyes peeled for some seasonal goods on Black Friday. Walmart
    WMT,
    +0.34%    ,
    for instance, is pushing out the boat early with some discounts on toys, including hoverboards, bicycles, remote-control cars, and karaoke machines. Similarly, Kohl’s
    KSS,
    +4.17%
    has discounts on a range of doll’s houses.

    — Quentin Fottrell and Emma Ockerman

    Appliances and white goods

    There might be tempting Black Friday deals on appliances, mattresses and furniture. Discounts on appliances may reach up to an 18% from the base price, Adobe said. Still, “you’re going to get another shot at them during New Year’s Eve sales and again during Presidents Day sales in February,” McGrath said.

    If Black Friday is “too chaotic …you’ll have plenty of opportunities to save,” she added. Department stores usually run very attractive discounts on houseware in the days following Christmas. “Stores know they’ll be getting a lot of traffic with so many people returning gifts — and hope to convince shoppers to make an impulse self-gifting purchase or two,” McGrath said.

    If you can’t wait, Costco
    COST,
    +1.64%
    is already rolling out deals on white goods and appliances, including $70 off a Sonos
    SONO,
    +1.87%
    WiFi speaker. However, Consumer Reports cautions consumers against falling for big deals without checking out the reliability of the brand first, as you could end up paying more in repairs down the road. 

    You might be tempted by offers and rebates on matching kitchen suites — typically a refrigerator, range, dishwasher, and microwave — from the same maker,” Consumer Reports said. “But price is only part of the equation when you’re purchasing appliances. Reliability is key, and it can vary within a brand’s offerings.”

    — Andrew Keshner

    Fitness equipment

    One of the best times to buy exercise equipment is around the New Year, when people are making resolutions to improve their health, said Regina Conway, who researches sales and promotions for Slickdeals, a site that tracks retail discounts.

    When you make your purchase, think twice before buying equipment that runs on proprietary technology, like Peloton
    PTON,
    -1.13%
    or Lululemon’s
    LULU,
    +1.79%
    Mirror exercise products, mainly because the at-home fitness boom faces an uncertain future post-pandemic, Conway noted.

    However, this Black Friday is a little different than previous years, and there are some deals in categories that traditionally don’t have good Black Friday discounts, including exercise equipment. “This year we’re seeing strong Black Friday deals from industry stalwarts like NordicTrack,” Conway said.

    Peloton Interactive, which is facing a challenging time since people are no longer stuck at home due to the pandemic, is currently offering $600 off this fitness bike package. However, consumers will still have to fork over $2,195 for the machine and exercise regime.

    “We think consumers are likely to continue to prefer out-of-home experiences in the near-term and believe Peloton is still working through pandemic pull-forward,” Cowen & Co. analyst John Blackledge wrote in an analyst note on Tuesday, citing “limited visibility” on Peloton’s fiscal 2023 performance.

    — Leslie Albrecht and Quentin Fottrell

    Big-ticket items like TVs 

    Does Amazon
    AMZN,
    +0.80%
    founder Jeff Bezos have a point about the dangers of splurging this year? In something of a Black Friday surprise, Bezos offered some shocking spending tips as Americans gear up for the holiday shopping season — amid four-decade-high inflation. Or, to be more accurate, he offered tips on what not to spend your money on.

    ‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table,” Bezos said in a recent interview on CNN
    WBD,
    +2.27%    .
    The remarks drew a significant amount of scorn on social media, with some critics advising people to avoid shopping on Amazon too.

    About those TVs: “They’re normally not going to be a high-end TV brand,” Lindsey said. “It will be a lower to mid-tier brand. Companies utilize these TVS as doorbusters to get people in the store and people clicking on their website. You’re probably better off shopping around the Superbowl in late January.”

    Rossman said consumers are becoming more judicious about their Black Friday splurging. “People seem to be pulling back on some big-ticket purchases,” he told MarketWatch. “For example, sellers of appliances, electronics and furniture all posted disappointing results in the most recent retail sales report.”

    “Yet discretionary sectors such as travel and dining are seeing sharp increases in spending,” he added. “I think the main explanation is pent-up demand. People are prioritizing experiences over things right now, largely due to the pandemic. There was also a pull-forward in demand for many physical goods the past couple of years as many out-of-home activities were curtailed.”

    — Quentin Fottrell

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  • Tesla stock at two-year low, other EV-maker shares plunge as concerns simmer about China, oil futures

    Tesla stock at two-year low, other EV-maker shares plunge as concerns simmer about China, oil futures

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    Tesla Inc. shares on Monday were poised to end at a fresh two-year low, with shares of other electric-vehicle makers also underperforming the broader equity market as worries about China’s COVID-19 lockdowns re-emerged and oil futures prices dropped to their lowest level since January.

    Shares of Tesla
    TSLA,
    -6.84%
    extended their losing streak to a fourth session and were on track for their lowest close since Nov. 20, 2020, when they closed at $163.20. The stock was the 10th worst performer in the S&P 500 index
    SPX,
    -0.39%
    and fourth worst in the Nasdaq 100
    COMP,
    -1.09%
    — and the most active stock on both exchanges.

    American depositary shares of several China-based EV makers, including Nio Inc.
    NIO,
    -4.30%
    and XPeng Inc.
    XPEV,
    -5.67%    ,
    also underperformed the broader market. In contrast, shares of General Motors Co.
    GM,
    -0.63%
    and Ford Motor Co.
    F,
    -0.29%
    merely edged lower.

    The energy sector was taking a broad beating as well, with the SPDR Energy Select Sector ETF
    XLE,
    -1.35%
    looking at a four-week low.

    Related: GM’s EV roadmap is ‘ambitious,’ but Wall Street doesn’t give it full credit just yet

    Tesla’s underperformance as compared with the broader indexes holds on a monthly and yearly basis as well. The stock is down more than 25% so far in November and 52% this year.

    If the trend continues, this would be the worst yearly performance for the stock on record.

    The S&P has lost about 17% year to date and has clawed back to a 2% gain so far in November.

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  • This Week: Dell earns, Best Buy earns, new home sales

    This Week: Dell earns, Best Buy earns, new home sales

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    A look at some of the key business events and economic indicators upcoming this week:

    SPOTLIGHT ON DELL

    Dell Technologies reports its latest quarterly snapshot Monday.

    Wall Street predicts the computer and technology services -company’s fiscal third-quarter earnings fell compared with the same period last year. That would echo the company’s results in its previous two quarters. Investors will be listening for an update on how Dell’s personal computer sales trends are faring heading into the holiday shopping season.

    ANOTHER DOWNBEAT QUARTER?

    Best Buy has been struggling this year amid weakening consumer demand and rising costs due to supply chain disruptions.

    The nation’s consumer electronics chain has posted lower quarterly profits and revenue through the first half of its current fiscal year, which began in February, as consumers have reined in spending on electronics amid sharply higher prices for necessities like food and gas. Wall Street expects the economic trends continued to weigh on Best Buy in the third quarter. The company serves up its quarterly results Tuesday.

    HOUSING BAROMETER

    The Commerce Department releases its October tally of new U.S. home sales Wednesday.

    Economists project that sales slowed last month to a seasonally adjusted annual rate of 572,500 homes. Sales were running at an annual rate of 603,000 homes in September. The housing market has cooled after a strong start to the year as sharply higher mortgage rates have made homeownership less affordable for many would-be buyers.

    New home sales, seasonally adjusted annual rate, by month:

    May 636,000

    June 571,000

    July 543,000

    Aug. 677,000

    Sept. 603,000

    Oct. (est.) 572,500

    Source: FactSet

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  • The PC boom has gone bust, and we are about to see the results ahead of Black Friday

    The PC boom has gone bust, and we are about to see the results ahead of Black Friday

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    The pandemic-fueled personal-computer boom has ended, so how will that affect demand and pricing for PCs and the retailers that sell them this holiday season?

    A sense of the fallout will be provided in the week ahead with results due from PC makers Dell Technologies Inc.
    DELL,
    +0.67%
    and HP Inc.
    HPQ,
    +0.17%    ,
    along with videoconferencing platform Zoom Video Communications Inc.
    ZM,
    -1.15%
    and electronics chain Best Buy Co Inc.
    BBY,
    +2.88%

    All of those companies will report amid signs of deep holiday discounting for products such as clothing and electronics, after many customers — stuck at home in 2020 and 2021 — loaded up on laptops and other goods and turned Zoom into a digital conference room. But this year, decades-high inflation, and a return to prepandemic spending on travel and hanging out in person, have forced retailers and electronics makers to adjust to a world where more people are spending on essentials.

    PC shipments have fallen at rates not seen since at least the 1990s. Adobe
    ADBE,
    -2.06%
    has said online holiday discounts for electronics have been as steep as 17%. For computers, they’ve run for as much as 10% less. TVs are also being sold for cheaper. Holiday-season forecasts have generally called for sales increases, helped by price increases and enduring demand despite those price increases.

    In-depth: The pandemic PC boom is over, but its legacy will live on

    However, results from Target
    TGT,
    +0.54%
    on Wednesday missed big on third-quarter earnings, and the big-box retailer said it was bracing for a possible decline in fourth-quarter same-store sales, citing “softening sales and profit trends that emerged late in the third quarter and persisted into November.” Results from Walmart
    WMT,
    +1.51%
    were almost the opposite, however, detailing earnings that beat by a wide margin and a raised full-year outlook.

    Among smaller retailers, discounter Ross Stores Inc.
    ROST,
    +9.86%
    hiked its full-year profit forecast, citing sales momentum but easier year-over-year comparisons up ahead. But Williams-Sonoma Inc.
    WSM,
    -6.15%
    noted “macro uncertainty” and “increasingly inconsistent” demand.

    This week in earnings

    The companies report during a shortened, quieter week — thanks to Thanksgiving — and after concerns about a recession have hung over much of the year. With 94% of S&P 500
    SPX,
    +0.48%
    companies having already reported third-quarter results, only a dozen are set to release earnings in the week ahead.

    But among those 94%, there are signs that preoccupations with a downturn might be easing, after the economy grew during the third quarter and reversed after two quarters of declines.

    FactSet senior analyst John Butters, in a report on Thursday, said 179 companies have mentioned the term “recession,” during earnings calls in the third quarter. That’s still above the average over 10 years, but it’s below the 242 companies that mentioned a recession in the second quarter.

    Previously: Executives seem pretty convinced a recession is coming

    Elsewhere on Monday, J.M. Smucker Co.
    SJM,
    +1.11%
    — best known for Folgers and Jif — reports results, following concerns about higher food prices and how much higher they might go. Life-sciences electronics maker Agilent Tecnologies Inc.
    A,
    +1.21%
    report results on Monday as well. Fast-food chain Jack in the Box Inc.
    JACK,

    reports Tuesday. Tractor and construction-vehicle Deere & Co.
    DE,
    +0.31%
    reports Wednesday, following production and supply-chain snarls but steady demand.

    The calls to put on your calendar

    Clothing demand, discount demand: Urban Outfitters Inc.
    URBN,
    +2.44%
    reports Monday, while Burlington Stores Inc.
    BURL,
    +4.63%    ,
    Nordstrom Inc.
    JWN,
    +1.71%
    and dollar-store chain Dollar Tree Inc.
    DLTR,
    -0.21%
    report on Tuesday.

    The discounting wave across clothing retailers, an effort to clear inventories, might attract more consumers, but it’s worried Wall Street analysts focused on margins and the bottom line. Still, some analysts have said that more younger shoppers feel like their wardrobes are getting stale, and they say Nordstrom, whose customers tend to have more money, is best geared for “an upcoming wardrobe refresh.”

    Off-price clothing and home-goods retailer Burlington, meanwhile, will report after rival discounters Ross and TJX received a lift from investors this week.

    See also: The holiday-shopping season has a different problem this year than last — and it could lead to some deals

    Ross’ chief executive, Barbara Rentler, noted that rising prices had hurt its lower-income consumers. But Jefferies analysts said that Burlington and other discounters, which often buy up goods that other retailers don’t want, stood to benefit from the inventory purge.

    Dollar Tree, meanwhile, reports as more shoppers seek cheaper grocery options, but as food prices rise nonetheless. But Bank of America analysts, in a note last month, said traffic data implied a “slowdown” heading into the results.

    The numbers to watch

    Demand trends for PCs, electronics: Dell and HP report in the wake of deeper job cuts across the tech industry, while Zoom tries to tack on more features — such as calendar and email functions — to appeal to small business and adapt to a hybrid-work world.

    The PC boom’s demise hit home at Dell during its prior quarter, reported in August, after personal-computer sales at the company came in below estimates. Executives, at that time, said PC demand had fallen and that “customers are taking a more cautious view of their needs given the uncertainty.”

    Opinion: Tech earnings are about to dive, and there’s no life preserver in sight

    Some analysts, however, signaled that some degree of investor pessimism was already baked into the stock prices.

    “We recognize the deteriorating industry fundamentals in relation to PCs as well as incremental slowdown in IT Infrastructure. That said, we believe the magnitude of the cuts last quarter set up Dell to be less exposed to another round of material earnings revisions,” JPMorgan analysts said in a note. And even as HP feels similar pain, analysts there said share buybacks could be “a bright spot.”

    Results from HP and Dell could also have implications for Best Buy, which sells laptops, TVs, phones and other electronic devices.

    “Recall that initial expectations for the year were that BBY would face pressure as it lapped stimulus-fueled spending and broad-based demand for technology products and services,” Wedbush analysts said in a note on Friday.

    “However, the macro has been more volatile than expected with consumers facing significant inflationary pressures and lower-income households are making decisions to trade down in some categories such as televisions.”

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  • They Lived Together, Worked Together and Lost Billions Together: Inside Sam Bankman-Fried’s Doomed FTX Empire

    They Lived Together, Worked Together and Lost Billions Together: Inside Sam Bankman-Fried’s Doomed FTX Empire

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    NASSAU, Bahamas—Sam Bankman-Fried’s $32 billion crypto-trading empire collapsed in an incandescent bankruptcy last week, prompting irate customers, crypto acolytes and Silicon Valley bigwigs to ask how something that seemed so promising could have imploded so fast.

    The emerging picture suggests FTX wasn’t simply felled by a rival, or undone by a bad trade or the relentless fall this year in the value of cryptocurrencies. Instead, it had long been a chaotic mess. From its earliest days, the firm was an unruly agglomeration of corporate entities, customer assets and Mr. Bankman-Fried himself, according to court papers, company balance sheets shown to bankers and interviews with employees and investors. No one could say exactly what belonged to whom. Prosecutors are now investigating its collapse.

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  • U.S. existing home sales retreat for a record ninth straight month in October

    U.S. existing home sales retreat for a record ninth straight month in October

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    The numbers: Existing-home sales fell 5.9% to a seasonally adjusted annual rate of 4.43 million in October, the National Association of Realtors said Friday. Compared with October 2021, home sales were down 28.4%.

    Economists polled by the Wall Street Journal had expected an decrease to 4.37 million units. 

    The level of sales is the lowest since December 2011 excluding the 2020 pandemic.

    This is also the ninth straight monthly decline in sales, the longest streak on record.

    Key details: The median price for an existing home was $379,100 up 6.6% from October 2021.

    But price gains are decelerating. Prices were up over 20% on a year-on-year basis earlier this year.

    Housing inventory fell 0.8% to 1.22 million units in October. Unsold inventory sits at a 3.3-month supply at the current sales pace, up from 3.1 months in September and 2.4 months a year ago.

    A 6-month supply of homes is generally viewed as indicative of a balanced market.

    Sales declined in all regions of the country.

    Big picture: Home sales have dropped as mortgage rates have risen sharply and affordability has dropped.

    Softer inflation data in October have led to a drop in mortgage rates, which could lead for a floor on sales.

    At the same time, Federal Reserve officials may pencil in a “peak” interest rate above 5% at the policy meeting next month.

    Economists see home prices have further to fall in this market.

    What the NAR is saying: Home sales have been very low and the softness could continue for a few months. But sales could pick up early next year if the mortgage rate has peaked, said Lawrence Yun, chief economist at the NAR.

    Market reaction: Stocks
    DJIA,
    +0.59%

    SPX,
    +0.48%
    opened lower on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.827%
    rose to 3.79%.

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  • World Cup organizers in Qatar will reportedly ban beer sales at all eight stadiums

    World Cup organizers in Qatar will reportedly ban beer sales at all eight stadiums

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    DOHA, Qatar (AP) — World Cup organizers will ban the sale of all beer with alcohol at the eight stadiums used for the soccer tournament, a person with knowledge of the decision told The Associated Press.

    The decision comes only two days before games start in Qatar and 12 years after the country first consented to respect FIFA’s commercial partners.

    Non-alcoholic beer will still be available for fans at the 64 matches, the person said.

    The person spoke on condition of anonymity because organizers have not yet announced the decision.

    Champagne, wine, whiskey and other alcohol is still expected to be served in the hospitality areas of the stadiums. Outside of those places, beer is normally the only alcohol sold to regular ticket holders.

    Ronan Evain, the executive director of the fan group Football Supporters Europe, called the decision to ban beer sales at the stadiums “extremely worrying.”

    “For many fans, whether they don’t drink alcohol or are used to dry stadium policies at home, this is a detail. It won’t change their tournament,” Evain wrote on Twitter. “But with 48 (hours) to go, we’ve clearly entered a dangerous territory — where ‘assurances’ don’t matter anymore.”

    While a sudden decision like this may seem extreme in the West, Qatar is an autocracy governed by a hereditary emir, who has absolute say over all governmental decisions.

    Qatar, an energy-rich Gulf Arab country, follows an ultraconservative form of Islam known as Wahhabism like neighboring Saudi Arabia. However, alcohol sales have been permitted in hotel bars for years.

    Qatar’s government and its Supreme Committee for Delivery and Legacy did not immediately respond to request for comment.

    Already, the tournament has seen Qatar change the date of the opening match only weeks before the World Cup began.

    Budweiser’s parent company, AB InBev
    ABI,
    +1.28%

    BUD,
    -0.05%    ,
    pays tens of millions of dollars at each World Cup for exclusive rights to sell beer. and has already shipped the majority of its stock from Britain to Qatar in expectation of selling its product to millions of fans. The company’s partnership with FIFA started at the 1986 tournament and they are in negotiations for renewing their deal for the next World Cup in North America.

    When Qatar launched its bid to host the World Cup, the country agreed to FIFA’s requirements of selling alcohol in stadiums, and again when signing contracts after winning the vote in 2010.

    At the 2014 World Cup in Brazil, the host country was forced to change a law to allow alcohol sales in stadiums.

    AB InBev’s deal with FIFA was renewed in 2011 — after Qatar was picked as host — in a two-tournament package through 2022. However, the Belgium-based brewer has faced uncertainty in recent months on the exact details of where it can serve and sell beer in Qatar.

    An agreement was announced in September for beer with alcohol to be sold within the stadium perimeters before and after games. Only alcohol-free Bud Zero would be sold in the stadium concourses for fans to drink in their seats in branded cups.

    Last weekend, AB InBev was left surprised by a new policy insisted on by Qatari organizers to move beer stalls to less visible locations within the perimeter.

    Budweiser was also to be sold in the evenings only at the official FIFA fan zone in downtown Al Bidda Park, where up to 40,000 fans can gather to watch games on giant screens. The price was confirmed as $14 for a beer.

    Ab InBev did not immediately respond to a request for comment.

    The company will be based at an upscale hotel in the West Bay area of Doha with its own branded nightclub for the tournament.

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  • Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.

    Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.

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    Billionaire Jeff Bezos, who founded the e-retail behemoth Amazon, has some spending tips as Americans gear up for a holiday shopping season — amid four-decade high inflation and recession worries.

    Here’s what he said:

    “‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table.’”

    Bezos made the comments in a CNN
    WBD,
    +0.46%
    interview that aired this week, the same interview where he pledged to give away most of his fortune in his lifetime.

    Why did Bezos offer the tip for consumers and small business to go easy on big-ticket items? He gave one big reason.

    “If we’re not in a recession right now, we’re likely to be in one very soon,” he said in the interview, picking up on his cautionary tweet last month that “the probabilities in this economy tell you to batten down the hatches.”

    Bezos is currently executive chair at Amazon
    AMZN,
    -2.34%    ,
    transitioning to the role last year as Andy Jassy took the reins as CEO.

    Later this week, Amazon confirmed it was laying off some of its staff in its device and services business — joining a growing list of tech companies, including Facebook parent Meta
    META,
    -1.57%
    — that is laying people off. Amazon’s job cuts could number around 10,000, according to the Wall Street Journal.

    “Critics have taken aim at these words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza.”

    To be sure, Bezos is not alone is his worries about a potential recession as the Federal Reserve and other central banks fight higher costs by hiking interest rates.

    But his advice prompted some guffaws on social media. In a nutshell, critics say these are words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza that lets consumers seamlessly spend money.

    As Joshua Becker, a proponent of minimalism wrote on Twitter: “I didn’t hear him mention refraining from Amazon’s Prime Day deals or Black Friday offers, but I recommend adding those items to your list as well.”

    Regardless of how anyone feels about hearing spending advice, particularly from one of the world’s richest people, there are some things to consider as events like Black Friday and Cyber Monday approach.

    For one thing, maybe there are discretionary expenses where people can cut back. Many Americans are still spending briskly, as Walmart
    WMT,
    -0.34%
    third-quarter earnings and October’s retail-sales numbers recently affirmed. Holiday-spending projections paint the same picture.

    Americans will spend between $942.6 billion and $960.4 billion on holiday-season sales this year, according to projections from the National Retail Federation. Last year’s holiday sales totaled $889.3 billion, the trade association said.

    “During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to the National Retail Federation.”

    But Americans are planning for the holidays while credit-card balances are increasing — likely because credit cards are helping them keep up with rising costs.

    During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to Federal Reserve Bank of New York data.

    While balances grow, so do credit-card interest rates. The annual percentage rate (APR) on new credit-card offers averaged 19.14% in mid-November, according to Bankrate.com. That beats the old record on APRs for new cards, set at 19% three decades ago.

    The holiday shopping season is typically when Americans accumulate credit-card debt, pay the debts in the early part of the coming year and repeat the holiday-season debt the following year.

    This year, the stakes could be higher if high credit-card bills arrive and a recession-induced job loss follows.

    “It’s not the time to overspend and have a problem with paying your bills later,” Michele Raneri, vice president of financial services research and consulting at TransUnion
    TRU,
    -4.94%    ,
    one of the country’s three major credit bureaus, previously told MarketWatch. “We know the economy is sending mixed messages.”

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  • New CEO of FTX blasts its handling of financial information

    New CEO of FTX blasts its handling of financial information

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    The new CEO of the collapsed cryptocurrency trading firm FTX, who oversaw Enron’s bankruptcy, said he has never seen such a “complete failure” of corporate control.

    John Ray III, in a filing with the U.S. bankruptcy court for the district of Delaware, said there was a “complete absence of trustworthy financial information.”

    “Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here,” Ray said. “From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”

    Ray noted that many of the companies in the FTX Group, particularly those in Antigua and the Bahamas, didn’t have appropriate corporate governance and many had never held a board meetings. The group also had cash management procedural failures, including the absence of an accurate list of bank accounts and account signatories. There was also insufficient attention paid to the creditworthiness of banking partners.

    Ray also addressed the use of corporate funds to pay for homes and other items for employees.

    “In the Bahamas, I understand that corporate funds of the FTX Group were used to purchase homes and other personal items for employees and advisors. I understand that there does not appear to be documentation for certain of these transactions as loans, and that certain real estate was recorded in the personal name of these employees and advisors on the records of the Bahamas,” he said.

    So far, debtors have found and secured “only a fraction” of the group’s digital assets that they hope to recover, with about $740 million of cryptocurrency secured in new cold wallets, which is a way of holding cryptocurrency tokens offline, said Ray.

    Ray was named CEO of FTX less than a week ago when the company filed for bankruptcy protection and its CEO and founder Sam Bankman-Fried resigned. The embattled cryptocurrency exchange, short billions of dollars, sought bankruptcy protection after the exchange experienced the crypto equivalent of a bank run.

    In its bankruptcy filing, FTX listed more than 130 affiliated companies around the globe. The company valued its assets between $10 billion to $50 billion, with a similar estimate for its liabilities.

    Bankman-Fried was recently estimated to be worth $23 billion. His net worth has all but evaporated, according to Forbes and Bloomberg, which closely track the net worth of the world’s richest people.

    FTX’s failure goes beyond finance. The company had major sports sponsorships as well, including Formula One racing and a sponsorship deal with Major League Baseball. Miami-Dade County decided Friday to terminate its relationship with FTX, meaning the venue where the Miami Heat play will no longer be known as FTX Arena. Mercedes was planning to remove FTX from its race cars starting last weekend.

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  • This record number in Nvidia earnings is a scary sight

    This record number in Nvidia earnings is a scary sight

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    Nvidia Corp.’s financial results had a bit of a surprise for investors, and not on the good side — product inventories doubled to a record high as the chip company gears up for a questionable holiday season.

    Nvidia reported fiscal third-quarter revenue that was slightly better than analysts’ reduced expectations Wednesday, but the numbers weren’t that great. Revenue fell 17% to $5.9 billion, while earnings were cut in half thanks to a $702 million inventory charge, largely relating to slower data-center demand in China.

    Gaming revenue in the quarter fell 51% to $1.57 billion. Nvidia said it is working with its retail partners to help move the currently high-channel inventories.

    While the company was writing off the inventory for China, its own new product inventory was growing. Nvidia
    NVDA,
    -4.54%
    reported that its overall product inventory nearly doubled to $4.45 billion in the fiscal third quarter, compared with $2.23 billion a year ago and $3.89 billion in the prior quarter. Executives cited its coming product launches, designed around its new Ada and Hopper architectures, when asked about the inventory gains.

    In the semiconductor industry, high inventories can make investors nervous, especially after the industry had so many supply constraints in recent years that quickly swung to a glut of chips in 2022. With doubts about demand for gaming cards and consumers’ willingness to spend amid sky-high inflation this holiday season, having all that product on hand just amps up the nerves.

    Full earnings coverage: Nvidia profit chopped in half, but tweaked servers to China offset earlier $400 million warning

    Chief Financial Officer Colette Kress told MarketWatch in a telephone interview Wednesday that the company’s high level of inventories were commensurate with its high levels of revenue.

    “I do believe….it is our highest level of inventory,” she said. “They go hand in hand.” Kress said she was confident in the success of Nvidia’s upcoming product launches.

    Nvidia’s revenue reached a peak in the April 2022 quarter with $8.3 billion, and in the past two quarters revenue has slowed, with gaming demand sluggish amid a transition to a new cycle, and a decline in China data-center demand due to COVID-19 lockdowns and U.S. government restrictions.

    For its data-center customers, the new architectures promise major advances in computing power and artificial-intelligence features, with Nvidia planning to ship the equivalent of a supercomputer in a box with its new products over the next year. Those types of advanced products weigh on inventory totals even more, Kress said, because of the price of the total package.

    “It’s about the complexity of the system we are building, that is what drives the inventory, the pieces of that together,” Kress said.

    Bernstein Research analyst Stacy Rasgon believes that products based on Hopper will begin shipping over the next several quarters, “at materially higher price points.” He said in a recent note that he believes Nvidia’s numbers were likely hitting a bottom in this quarter.

    “We remain positive on the Hopper ramp into next year, and believe numbers have at this point likely reached close to bottom, with new cycles brewing and an attractive secular story even without China potential,” Rasgon said in an earnings preview note Tuesday.

    Read also: Warren Buffett’s chip-stock purchase is a classic example of why you want to be ‘greedy only when others are fearful’

    Nvidia Chief Executive Jensen Huang reminded investors on a conference call that the company’s inventories are “never zero,” and said everyone is enthusiastic about the upcoming launches. But it doesn’t take too long of a memory to conjure up a time when Nvidia went into a holiday with an inventory backlog that included new architecture and greatly disappointed investors: Four years ago, Huang had to cut his forecast for holiday earnings twice amid a “crypto hangover” with similar dynamics to the current moment

    Investors need faith that this holiday season will not be the same, even as demand for some videogame products declines after a pandemic boom just as the market for cryptocurrency — some of which has been mined with Nvidia products — hits a rough patch. Huang said that Nvidia’s RTX 4080 and 4090 graphics cards based on the Ada Lovelace architecture had an “exceptional launch,” and sold out.

    Nvidia shares gained more than 2% in after-hours trading Wednesday, suggesting that some are betting that this time will be different. That enthusiasm needs to translate into revenue for Nvidia so that this big gain in inventories does not end up being part of another write-down at some point in the future.

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  • Cisco’s stock rises on strong quarterly sales and guidance, but a restructuring is coming

    Cisco’s stock rises on strong quarterly sales and guidance, but a restructuring is coming

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    Cisco Systems Inc.’s stock rose in extended trading Wednesday after the networking-technology company delivered better-than-expected numbers on the top and bottom line, and offered encouraging guidance.

    Still, Cisco Chief Financial Officer Scott Herren announced a “limited business restructuring,” to be shared with employees on Thursday, that will right-size its real-estate portfolio and impact about 5% of its 80,000 workers worldwide — or 4,000 people. “This is about rebalancing across the board,” he said, adding that as many jobs will be added as reduced.

    “Our goal is to minimize the number of people who end up having to leave,” Herren told MarketWatch. “We will match as many with new roles at the company as we can. This is not about reducing our workforce — in fact we’ll have roughly the same number of employees at the end of this fiscal year as we had when we started.”

    Cisco
    CSCO,
    -1.14%
    reported a fiscal first-quarter net income of $2.7 billion, or 65 cents a share, compared with net income of $3 billion, or 70 cents a share, in the year-ago quarter. Adjusted earnings were 86 cents a share. Revenue was $13.6 billion, up 6% from $12.9 billion a year ago.

    Analysts surveyed by FactSet had expected on average net income of 84 cents a share on revenue of $13.3 billion. Shares gained 4% in after-hours trading following the results, after closing down 1% in regular trading Wednesday at $44.39.

    “Our fiscal 2023 is off to a good start as we delivered the largest quarterly revenue and second-highest quarterly non-GAAP earnings per share in our history,” Cisco Chief Executive Chuck Robbins said in a statement announcing the results. During a conference call with analysts late Wednesday, Robbins noted “modest improvement” in component delivery amid an easing supply-chain pipeline.

    Cisco’s Product ($10.25 billion) and Service ($3.39 billion) businesses were up slightly year over year. Secure, Agile Networks, the company’s top business segment including data-center networking switches, hauled in $6.68 billion, up 12% from a year ago.

    Herren recognized buying caution in Europe driven by a dramatic increase in energy costs and market volatility. The company has also shut down operations in Russia.

    For the fiscal second quarter, Cisco executives guided for 84 cents to 86 cents a share in adjusted profit and revenue growth of 4.5% to 6.5%. Analysts were forecasting adjusted earnings of 85 cents and revenue of $13.24 billion, according to FactSet.

    Shares of Cisco Systems have dwindled 30% this year, while the broader S&P 500 index
    SPX,
    -0.83%
    has tailed off 17%.

    In the days leading up to Cisco’s report, financial analysts had expected results and guidance in line with their modest expectations but warned of lingering supply-chain woes.

    “We model 15-20% declines in orders [year-over-year] due to tough compares a year ago and stronger seasonality last quarter, but backlog should protect revenues for now,” Barclays analyst Tim Long said in a note to investors on Tuesday.

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