Tag: Financial Performance

WSJ News Exclusive | Peloton Co-Founder John Foley Faced Repeated Margin Calls From Goldman Sachs as Stock Slumped

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John Foley, the co-founder and former chief executive of Peloton Interactive faced repeated margin calls on money he borrowed against his Peloton holdings before he left the fitness company’s board last month, according to people familiar with the situation.

As Peloton’s shares slumped over the past year, Goldman Sachs Group asked Mr. Foley several times to provide fresh funds or additional collateral for personal loans the bank had extended to him, the people said. The company’s share price has fallen nearly 95% from its $160 peak in December 2020.

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October 11, 2022

This industry could be worth $180 billion by 2040. Citigroup offers four stock names to play it, and a few more to think about.

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Investors are bracing for some choppiness on Wall Street, with oil prices falling as growth worries rattle around the globe. That’s as the clock ticks down to CPI and the start of a earnings season later this week, and in the backdrop a war is intensifying in Europe.

Tough times don’t last, but tough investors do right? Maybe, hopefully. In any case, focusing on the distant future might offer some comfort right now.

And that’s where we’re headed with our call of the day from Citigroup, whose strategists have stock ideas to play what they expect will be one of the ten fastest-growing markets through 2040.

They are talking about the global fuel cell industry, a direct play on the green energy debate, and “reaching the part that batteries cannot.”

“Fuel cells enable both de-carbonization and energy resilience, and we see them as crucial in harder-to-abate sectors like commercial vehicles and marine,” a Citi team led by research analyst Martin Wilkie told clients in a note on Tuesday.

Their base case sees this market reaching 50 gigawatts (GW) and $40 billion by 2030, offering a compound average growth rate of more than 35% in dollar terms, with further acceleration to 500GW/$180 billion by 2040.

They admit they’re on the bullish side with these projections, and note fuel cell stocks are on average down around 70% since their January 2021 peaks .

“The fuel cell equity story has had false starts before, but we see the impetus from emissions policy as well as announced hydrogen plans as creating attractive opportunities,” said the Citi analysts, highlighting policies such as the U.S. Inflation Reduction Act, which aims at beefing up renewable energy and a recent EU move to offer more green-energy research and development subsidies.

While passenger cars were a big source of demand for the growing fuel cell market in 2021, they don’t think it can be a big competitor to battery electric. However, stationary power, such as distributed and backup power generation and heavy-duty transport, think commercial vehicles, off-road and later marine are set to become key fuel-cell markets.

U.K.-based Ceres Power
CWR,
-1.69%,
Plug Power
PLUG,
-0.25%,
Belgium’s Umicore
UMI,
-1.69%,
and Japan’s Toyota
7203,
-0.96%

TM,
-0.73%
are Citi’s buy-rated stocks with high exposure to the fuel-cell theme.

Other names they mention, include Daimler Truck
DTG,
+1.32%
and Volvo
VOLV.B,
+0.21%

VOLV.A,
+0.12%,
which are working with Germany’s Traton
8TRA,
-2.09%
on a joint venture called Cellcentric that aims to develop that technology for trucks, with a production goal of 2025. Others are outsourcing fuel-cell tech, such as Italy’s Iveco Group
IVG,
+0.10%,
which has teamed up with South Korea’s Hyundai
005380,
-4.27%,
and U.S.-based Paccar
PCAR,
+0.23%
with Toyota
TM,
-0.73%.

The markets

Stock futures
ES00,
-0.38%

YM00,
-0.22%

NQ00,
-0.46%
have pared some losses, while bond yields
TMUBMUSD10Y,
3.927%

TMUBMUSD02Y,
4.307%
are mixed, and the dollar
DXY,
-0.14%
has turned lower. Oil prices
CL.1,
-1.42%
are also pressure.

The buzz

Shares of the world’s biggest chip maker, TSMC
2330,
-8.33%,
fell 8% in Taiwan
Y9999,
-4.35%,
where stocks dropped more than 4% following new limits by the U.S. imposed on exports of semiconductors and chip-making equipment to China.

The Bank of England made the second move this week to calm jittery markets, saying Tuesday it will expand its bond purchases to index-linked U.K. bond. But the program still ends Friday, something the pensions fund industry wants to see extended. Those yields
TMBMKGB-10Y,
4.448%
TMBMKGB-30Y,
4.718%,
meanwhile, continue to creep higher.

The National Federation of Independent Business small-business index showed confidence rising in September, but inflation a nagging problem. At noon Eastern we’ll hear from Cleveland Fed President Loretta Mester.

Subscription-based private aviation company Flexjet plans to go public through a merger with SPAC Horizon Acquisition
HZON,

valuing it at $3.1 billion.

The U.S.’s third-biggest railroad union will be back at the negotiating table with employers on Tuesday, after rejecting a deal and raising the possibility of crippling strikes.

The Kremlin’s war hawks were thrilled at the devastating strikes across Ukraine on Monday. Now they want more. G-7 leaders are holding an emergency meeting to discuss the ramping up of the war.

Amazon’s
AMZN,
-0.78%
second Prime-Day like event kicks off Tuesday.

Best of the web

U.K. spy chief says Russians are starting to realize the cost of Putin’s war in Ukraine

India’s biodegradable bags are in demand, and reviving its industry

We are not at peace. The world needs to get ready for more sabotage

One of the greatest transfers of intergenerational wealth is coming, says head of TIAA

The chart

This graphic by Visual Capitalist’s Truman Du, shows Disney’s
DIS,
-2.06%
streaming empire — Disney+, Hulu, ESPN+ — is “giving Netflix
NFLX,
+2.33%
a run for its money.”

Visual Capitalist, Disney, Netflix quarterly reports

The tickers

These were the top searched tickers on MarketWatch as of 6 a.m. Eastern Time:

Ticker	Security name
TSLA, -0.05%	Tesla
GME, -1.38%	GameStop
AMC, -2.76%	AMC Entertainment Holdings
AAPL, +0.24%	Apple
NIO, -3.49%	NIO
BBBY, -2.21%	Bed Bath & Beyond
APE, -6.53%	AMC Entertainment Holdings preferred shares
NVDA, -3.36%	Nvidia
TWTR, +2.40%	Twitter
AMD, -1.08%	Advanced Micro Devices

Random reads

Everyone hail to this 2,560-pound pumpkin.

“Where’s Tony gone?” Supply-chain woes hit (shudder) Frosted Flakes.

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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October 11, 2022

Ford stock is now a ‘sell’ at UBS as an oversupply problem looms

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Shares of Ford Motor Co. were hit hard Monday by UBS analyst Patrick Hummel’s recommendation that investors sell, as the auto industry is facing a worrisome U-turn from undersupply to oversupply.

Hummel also cut his ratings on several other global auto makers, including General Motors Co.
GM,
-5.59%,
saying that as a recession concerns grow, “demand destruction is no longer a vague risk.”

In addition to all of the data suggesting the economy is slowing, Hummel said growing U.S. dealer inventories, weak used-car pricing, used-car dealer profit warnings and signs indicating deteriorating orders and shorter delivery times make him more cautious on the overall auto industry.

Don’t miss: CarMax stock suffered biggest selloff since the year 2000, as inflation, low consumer confidence lead to big profit miss.

“We think it will only take 3-6 months for the auto industry to end up in oversupply, which will put an abrupt end to a 3-year phase of unprecedented OEM [original equipment manufacturer] pricing power and margins,” Hummel wrote in a note to clients.

As part of his negative industry outlook, he cut his rating on Ford
F,
-7.38%
to sell from neutral and his stock price target to $10 from $13, with the new target implying about 11% downside from current levels.

Ford’s stock sank 7.6% in morning trading. It was trading up just 0.6% month to date, after plunging 26.5% in September to suffer its worst monthly performance since it plummeted 30.6% during pandemic-stricken March 2020.

Hummel noted that Ford has already warned about having more vehicles in inventory than expected, and above payments to suppliers running about $1 billion higher than projected, so he sees little margin left for negative surprises in terms of fourth-quarter deliveries and supply costs.

Hummel cut his 2023 adjusted earnings-per-share estimate by 61% to 52 cents a share, to reflect a $6.5 billion drop in price and sales mix. The compares with the current 2023 FactSet EPS consensus of $1.87.

“This sounds very negative, but Ford gains $19 billion in price alone since the beginning of 2020,” Hummel wrote.

Also read: Ford again raises price of F-150 Lightning electric pickup.

Read more: Ford September sales fall as drop in trucks offsets near tripling in EVs.

Meanwhile, GM’s stock dove 6.9% in morning trading toward a three-month low, and shares have shed 2.5% so far this month after tumbling 16% last month.

Hummel downgraded GM to neutral from buy, and dropped his price target by 32%, to $38 from $56.

The rating remains above Ford’s, because unlike its rival, Hummel noted that GM has had “no hiccups” in its third-quarter production schedule and therefore a “solid” quarterly report is expected. However, the downgrade reflects the fact that GM is “not immune” to a downturn in the industry.

Separately, Hummel also cut his stock-price target on Tesla Inc.
TSLA,
-0.16%
to $350 from $367, saying that following a third-quarter volume report that was below expectations, it will be “more challenging” for the electric-vehicle maker to meet its 2022 delivery growth target.

However, Hummel reiterated his buy rating on Tesla, as he believes the EV maker is best positioned to use pricing as the tool to fill its factories.

“Overall, the recession outlook should result in moderately lower margins for Tesla than previously expected, but we’re highly confident that by keeping the top line [revenue] momentum, Tesla will even widen the gap vs. competitors in terms of profitability,” Hummel wrote.

Ford’s stock has fallen 3% over the past three months, while GM shares have lost 3.1% and Tesla’s stock has dropped 11.8%. In comparison, the S&P 500 index
SPX,
-1.08%
has declined 7.5% the past three months.

Among other auto makers, he also downgraded both Renault SA
RNO,
+2.41%

RNLSY,
+1.17%
and Volkswagen AG
VOW,
-3.29%
to neutral from buy. He also downgraded auto parts makers Continental AG
CON,
+0.10%
and Faurecia SE
EO,
-3.77%

FURCF,
-3.67%
to neutral from buy.

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October 10, 2022
AMD stock drops as $1 billion shortfall blamed on even weaker-than-expected PC sales

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Advanced Micro Devices Inc. shares fell in the extended session Thursday after the chip maker cut its already conservative forecast because a drop in PC sales after two years of pandemic-driven sales appears worse than feared.

AMD
AMD,
-0.13%
shares fell as much as 4% after hours, following a 0.1% decline in the regular session to close at $67.85.

Late Thursday, the company forecast third-quarter revenue of about $5.6 billion with adjusted gross margin of 50%.

“The PC market weakened significantly in the quarter,” said Lisa Su, AMD’s chair and chief executive, in a statement. “While our product portfolio remains very strong, macroeconomic conditions drove lower-than-expected PC demand and a significant inventory correction across the PC supply chain.”

AMD expects a 40% drop in client sales to about $1 billion, compared with Wall Street’s consensus estimate of $2.04 billion.

In early August, AMD held firm on its revenue forecast of $26 billion to $26.6 billion for the year, and forecast third-quarter revenue of $6.5 billion to $6.9 billion, which at the time fell below the Wall Street consensus, and gross margins of 54%.

Analysts polled by FactSet currently forecast third-quarter revenue of $6.71 billion, and annual sales of $26.13 billion. AMD is scheduled to report quarterly earnings on Nov. 1.

“The gross-margin shortfall to expectations was primarily due to lower revenue driven by lower client processor unit shipments and average selling price,” AMD said. “In addition, the third-quarter results are expected to include approximately $160 million of charges primarily for inventory, pricing and related reserves in the graphics and client businesses.”

Last week, after Micron Technology Inc.
MU,
-0.20%
reported an “unprecedented” oversupply problem, analysts debated whether this supply glut was worse than the one in 2019 that the industry has tried to avoid this time around, following two-years of COVID-19-related demand and supply-chain difficulties.

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October 6, 2022

21 dividend stocks yielding 5% or more of companies that will produce plenty of cash in 2023

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When the stock market has jumped two days in a row, as it has now, it is easy to become complacent.

But the Federal Reserve isn’t finished raising interest rates, and recession talk abounds. Stock investors aren’t out of the woods yet. That can make dividend stocks attractive if the yields are high and the companies produce more cash flow than they need to cover the payouts.

Below is a list of 21 stocks drawn from the S&P Composite 1500 Index
SP1500,
+3.12%
that appear to fit the bill. The S&P Composite 1500 is made up of the S&P 500
SPX,
+3.06%,
the S&P 400 Mid Cap Index
MID,
+3.18%
and the S&P Small Cap 600 Index
SML,
+3.80%.

The purpose of the list is to provide a starting point for further research. These stocks may be appropriate for you if you are looking for income, but you should do your own assessment to form your own opinion about a company’s ability to remain competitive over the next decade.

Cash flow is key

One way to measure a company’s ability to pay dividends is to look at its free cash flow yield. Free cash flow is remaining cash flow after planned capital expenditures. This money can be used to pay for dividends, buy back shares (which can raise earnings and cash flow per share), or fund acquisitions, organic expansion or for other corporate purposes.

If we divide a company’s estimated annual free cash flow per share by its current share price, we have its estimated free cash flow yield. If we compare the free cash flow yield to the current dividend yield, we may see “headroom” for cash to be deployed in ways that can benefit shareholders.

For this screen, we began with the S&P Composite 1500, then narrowed the list as follows:

Dividend yield of at least 5.00%.
Consensus free cash flow estimate available for calendar 2023, among at least five analysts polled by FactSet. We used calendar-year estimates, even though fiscal years for many companies don’t match the calendar.
Estimated 2023 free cash flow yield of at least double the current dividend yield.

For real-estate investment trusts, dividend-paying ability is measured by funds from operations (FFO), a non-GAAP figure that adds depreciation and amortization back to earnings. Adjusted funds from operations (AFFO) takes this a step further, subtracting cash expected to be used to maintain properties. So for the two REITs on the list, the FCF yield column makes use of AFFO.

For many companies in the financial sector, especially banks and insurers, free cash flow figures aren’t available, so the screen made use of earnings-per-share estimates. These are generally considered to run close to actual cash flow for these heavily regulated industries.

Here are the 21 companies that passed the screen, with dividend yields of at least 5% and estimated 2023 FCF yields at least twice the current payout. They are sorted by dividend yield:

Company	Ticker	Type	Dividend yield	Estimated 2023 FCF yield	Estimated “headroom”
Uniti Group Inc.	UNIT, +7.36%	Real-Estate Investment Trusts	8.33%	25.25%	16.92%
Hanesbrands Inc.	HBI, +5.56%	Apparel/ Footwear	8.33%	17.29%	8.96%
Kohl’s Corp.	KSS, +5.80%	Department Stores	7.68%	16.72%	9.04%
Rent-A-Center Inc.	RCII, +10.40%	Finance/ Rental/ Leasing	7.52%	17.26%	9.73%
Macerich Co.	MAC, +8.18%	Real-Estate Investment Trusts	7.43%	18.04%	10.60%
Devon Energy Corp.	DVN, +5.72%	Oil & Gas Production	7.13%	14.47%	7.33%
AT&T Inc.	T, +1.19%	Major Telecommunications	6.98%	14.82%	7.84%
Newell Brands Inc.	NWL, +5.16%	Industrial Conglomerates	6.59%	17.42%	10.82%
Dow Inc.	DOW, +2.96%	Chemicals	6.18%	15.63%	9.45%
LyondellBasell Industries NV	LYB, +3.64%	Chemicals	6.09%	16.07%	9.99%
Scotts Miracle-Gro Co. Class A	SMG, +5.01%	Chemicals	6.04%	12.68%	6.65%
Diamondback Energy Inc.	FANG, +5.23%	Oil & Gas Production	5.56%	13.63%	8.08%
Best Buy Co. Inc.	BBY, +5.86%	Electronics/ Appliance Stores	5.53%	14.08%	8.55%
Viatris Inc.	VTRS, +5.62%	Pharmaceuticals	5.50%	28.95%	23.45%
Prudential Financial Inc.	PRU, +5.66%	Life/ Health Insurance	5.38%	13.30%	7.91%
Ford Motor Co.	F, +7.76%	Motor Vehicles	5.23%	15.95%	10.72%
Invesco Ltd.	IVZ, +6.76%	Investment Managers	5.23%	14.95%	9.73%
Franklin Resources Inc.	BEN, +4.37%	Investment Managers	5.17%	13.21%	8.04%
Kontoor Brands Inc.	KTB, +0.73%	Apparel/ Footwear	5.17%	14.15%	8.98%
Seagate Technology Holdings PLC	STX, +4.09%	Computer Peripherals	5.11%	13.19%	8.07%
Foot Locker Inc.	FL, +1.35%	Apparel/ Footwear Retail	5.03%	15.52%	10.49%
Source: FactSet

Any stock screen has its limitations. If you are interested in stocks listed here, it is best to do your own research, and it is easy to get started by clicking the tickers in the table for more information about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information for free on the MarketWatch quote page.

For the “estimated FCF yields,” consensus free cash flow estimates for calendar 2023 were used for all companies except the following:

For the REITs, (Uniti Group Inc.
UNIT,
+7.36%
and Macerich Co.
MAC,
+8.18%
), consensus AFFO estimates were used.
Consensus EPS estimates were used for Prudential Financial Inc.
PRU,
+5.66%,
Invesco Ltd.
IVZ,
+6.76%
and Franklin Resources Inc.
BEN,
+4.37%.

Don’t miss: Dividend yields on preferred stocks have soared. This is how to pick the best ones for your portfolio.

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October 4, 2022

Twitter stock surges 22% after Elon Musk gives up bot battle and commits to $44 billion deal

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Tesla Inc. Chief Executive Elon Musk now plans to close his proposed $44 billion deal for Twitter Inc., according to a Tuesday filing that arrived less than two weeks before a judge was scheduled to hear a case on the disputed acquisition.

Musk’s lawyers sent a letter to Twitter’s management team indicating that he was proposing to move forward with the original acquisition terms late Monday, and that letter was released as a filing with the Securities and Exchange Commission Tuesday afternoon. A Twitter spokesperson later confirmed to MarketWatch that the company intended to proceed with the deal for $54.20 a share.

Twitter
TWTR,
+22.24%
shares jumped 22.2% to $52 in Tuesday’s session, after an hours-long trading halt that started after Bloomberg News first reported the move around noon Eastern time, suggesting a possible end to the legal saga between the two parties. The increase is the second best daily percentage gain on record for Twitter stock, behind only the 27.1% gain experienced when Musk disclosed his initial ownership stake in Twitter in April. Twitter was the best performing stock Tuesday in the S&P 500 index
SPX,
+3.06%,
and is now up 20.3% on the year.

The two sides have been locked in a legal battle for months, and a Delaware Chancery Court judge was expected to hear from both sides in a five-day trial slated to begin Oct. 17. The Wall Street Journal reported Tuesday that the Delaware judge asked the two sides to come up with a plan by the end of the day that could bring about an end to the litigation.

“Musk could see the writing on the wall that he was going to lose the trial,” said Josh White, an assistant finance professor at Vanderbilt University, in an email to MarketWatch. “By doing this, he can save legal costs, time and ultimately losing in a very public trial.”

See also: Here’s how Twitter’s users reacted to Musk agreeing to buy the platform

Musk agreed in April to buy Twitter in a deal that valued the company at roughly $44 billion, but he later said that he was terminating the deal. The Tesla
TSLA,
+2.90%
CEO cited concerns about bot activity on Twitter and said he believed the company’s management team wasn’t accurate in its public disclosures about the extent of spam activity on the platform.

White noted that text messages released in conjunction with the case showed that Musk was aware of Twitter’s bot issue before going forward with his original deal offer, and he doubted that Musk would be able to show that “something really changed” after that point.

“If he offered less than $54.20, Twitter might have proceeded with the trial, and he would be deposed,” White continued. “By offering the original price, he maximizes the chance that Twitter accepts and the trial ends. I expect Twitter’s board to accept the deal and for it to close rather quickly.”

Wedbush analyst Daniel Ives agreed that the Tesla leader’s latest move marked a “clear sign that Musk recognized heading into Delaware Court that the chances of winning vs. Twitter board was highly unlikely and this $44 billion deal was going to be completed one way or another,” he wrote in a note to clients. “Being forced to do the deal after a long and ugly court battle in Delaware was not an ideal scenario and instead accepting this path and moving forward with the deal will save a massive legal headache.”

Opinion: Twitter stood up to Elon Musk and won, but will it feel like a win once he owns it?

Vanderbilt’s White noted that a deal at the original price would be a “big” win for Twitter shareholders.

“The stock price of Snap
SNAP,
+8.42%
and Twitter seemed to trade around the same price level before the offer,” he told MarketWatch. “Snap is now a ~$10 stock with a $17 billion market cap. So Twitter’s shareholders win by getting $54.20 rather than having the price drop to $10-20 per share.”

Additionally, he deemed Delaware business law another winner: “This deal shows that even the richest man in the world cannot overcome well-written contracts enforced in a neutral and fair way by the Delaware courts.”

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October 4, 2022
Poshmark to be bought by South Korean internet company Naver in $1.2 billion deal

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Online secondhand-fashion marketplace Poshmark Inc. has agreed to be bought by South Korean internet company Naver in a $1.2 billion deal, the companies announced Monday, a move that executives said would help both brands expand internationally.

Shares of Poshmark
POSH,
-0.64%
jumped 11.8% in after-hours trading on the news.

Under the terms of the deal, Naver
035420,
-8.79%
will acquire Poshmark’s outstanding shares for $17.90 in cash, representing a 15% upside to Poshmark’s Monday closing price of $15.57. The transaction is set to close by the first quarter of next year, pending Poshmark shareholders’ approval.

Poshmark went public in late 2020, pricing shares at $42 a share, and ended its first day of trading at more than $100 a share, but has never approached those heights again. It last traded for more than the acquisition price Naver has agreed to pay late last year.

For more: Five things to know about Poshmark

In a statement, executives from both companies talked up the potential to combine Naver’s array of search, e-commerce, AI and social-media technology with Poshmark’s social and shopping platforms. Poshmark, the companies said, would also embark on a bigger international expansion strategy, including into other markets in Asia, in the “medium-term.”

They also talked about the potential for the combined company to save around $30 million annually within two years after the deal’s closing through “rationalization of public company costs” and higher operating leverage, along with the potential for more than 20% yearly sales growth by harnessing Naver’s advertising resources.

Naver, which runs large search and e-commerce platforms, said the move would broaden its e-commerce platform, bring younger users into the company’s fold and allow it to “capitalize on the global online fashion re-commerce and sustainable economy opportunity.”

“Naver’s leading technology in search, AI recommendation and e-commerce tools will help power the next phase of Poshmark’s global growth,” Choi Soo-Yeon, Naver’s chief executive, said in a statement, which also said that Naver hosted a large number of digital content creators in Korea.

Naver owns companies like Wattpad, a social-media platform, and runs Webtoon, a site for digital comics, along with a metaverse platform called Zepeto, and also has joint ownership of an internet service group in Japan. Naver said its online community in Korea consists of more than 36 million monthly users, who use its search engine and other services.

Poshmark Chief Executive Manish Chandra said the deal would also give Poshmark opportunities to grow.

“Longer term, as part of Naver, we will benefit from their financial resources, significant technology capabilities, and leading presence across Asia to expand our platform, elevate our product and user experiences, and enter new and large markets,” he said in the statement.

Naver said the acquisition would also help give it a bigger foothold in the U.S. And it said the deal would allow it to broaden the appeal of so-called live-stream shopping.

“Live-stream shopping is a key driver of e-commerce in China and Korea (and increasingly in the U.S.) today, allowing shoppers to buy products in real-time through live video broadcasts, enabling greater insights and more clarity around purchasing decisions,” the statement said.

Once the deal closes, Poshmark will be a standalone subsidiary of Naver, with the same management team, brand and headquarters in Redwood City, Calif., the companies revealed.

At the close of Monday’s trading, shares of Poshmark were down around 9% year-to-date. The S&P 500 index
SPX,
+2.59%,
by comparison, has slid 23% over that time.

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October 3, 2022
Tesla’s Deliveries Missed the Mark. Why Analysts Aren’t Worried.

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Tesla

stock dropped on Monday after the electric-vehicle company disclosed delivery figures that fell short of Wall Street forecasts, but at least some analysts see reason for optimism.

On Sunday,

Tesla

(ticker: TSLA) reported that it delivered 343,830 cars and produced 365,923 in the third quarter. The deliveries were a jump compared with the 254,695 vehicles

Tesla

handed over to customers in the second quarter, but still below Wall Street estimates. The company said that deliveries have historically been skewed toward the end of each quarter, and that as “production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost during these peak logistics weeks.”

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October 3, 2022
Intel files for Mobileye IPO, creating a share structure that will keep the chipmaker in control

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After nearly a year’s wait, Mobileye is on the highway to Wall Street.

Intel Corp.
INTC,
-2.31%
-owned Mobileye Global Inc. launched its drive to an initial public offering in a Securities and Exchange Commission filing late Friday, leaving the size of the offering blank for now on what is expected to be one of the largest IPOs of the year.

Intel executives were targeting mid-2022 as of late last year, and filed confidentially with the SEC in March for the IPO of its self-driving-car unit, but the IPO market has been dry amid a decline for stocks, especially those that went public in a 2021 rush.

Mobileye plans to trade Class A shares of common stock on the Nasdaq exchange under the symbol “MBLY,” the same symbol the company had before Intel acquired Mobileye in 2017 for $15.3 billion in cash. While selling shares in Mobileye, Intel will retain official control of the company, keeping class B shares that carry 10 votes apiece while selling class A shares that have only one vote.

Mobileye also plans to have four Intel-affiliated members on its board, including Chief Executive Pat Gelsinger serving as chairman of Mobileye’s board.

Intel will also get paid from the offering: Mobileye issued Intel a dividend note for $3.5 billion, and expects to pay that off with proceeds from the sale, according to the filing; there was an initial payment of $336 million, leaving more than $3 billion still owed to Intel. Earlier reporting suggested Intel would seek a $30 billion valuation for Mobileye in the IPO, though the initial filing Friday did not include targeted prices for the shares.

The filing did include financial information, though: Mobileye reported revenue of $1.39 billion in 2021, well ahead of Nvidia Corp.
NVDA,
-0.66%,
which reported fiscal-year revenue of $566 million in auto chip sales in January. Mobileye reported a loss of $70 million last year, compared with a $196 million loss in 2020 and $328 million in 2019. Revenue in the first half of this year hit $854 million, growing 41% in the second quarter from the year before.

The filing lists a whopping 24 underwriters for the deal including Goldman Sachs, Morgan Stanley, Evercore ISI, Barclays, Citigroup, and B of A Securities.

Shares of Intel were up 0.5% after hours Friday, following a 2.3% decline in the regular session to close at $25.77.

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September 30, 2022
Weekend reads: What to expect now for home prices, stocks and bonds

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This week Freddie Mac said the average interest rate on a 30-year mortgage loan in the U.S. had climbed to 6.70% from 6.29% the week before and 6.02% two weeks ago. The average rate a year ago was 3.01%.

Would-be sellers who have low-rate mortgage loans are reluctant if it means they need to take out a new loan to fund their next home. Would-be buyers are forced out of the market, as the monthly principal and interest payment for a new 30-year loan, based on Freddie Mac’s figures, has increased 53% from a year ago.

Home-sale contracts are being canceled at a record pace in some areas.

But these factors could lead to a buyer’s market in 2023 if prices plunge. Here are the areas economists expect to see the largest home price declines.

The strong dollar and the stock market

Khaled Desouki/Agence France-Presse/Getty Images

The dollar has strengthened as the Federal Reserve has taken the lead among central banks in raising interest rates. This is reverberating across the world, making it more costly for countries to make interest payments on dollar-denominated debt and increasing the cost of any commodity traded in dollars.

The rising dollar lowers prices on imported goods for Americans and can also lower their international travel costs. But Michael Wilson, Morgan Stanley’s chief equity strategist, warns that earnings for the S&P 500
SPX,
-1.51%
would decline as a direct result of the strong dollar and called the current foreign-exchange backdrop an “untenable situation” for the stock market.

On the other hand: Companies are trying to blame weak earnings on the strong U.S. dollar, but that’s a lame excuse

This is what happens when bearish sentiment runs high

Michael Brush interviews David Baron, co-manager of the Baron Focused Growth Fund
BFGFX,
-0.76%,
who describes opportunities cropping up as institutional investors dump stocks. He also explains his winning long-term strategy, which has included a very long-term investment in Tesla Inc.
TSLA,
-1.10%.

A a positive sign for the stock market: These 12 stocks have seen strong insider buying

Time to buy bonds?

When interest rates rise, bond prices fall. But it also means that if you have money to put to work, bond yields have become much more attractive.

Khuram Chaudhry, a European equity quantitative strategist at JPMorgan in London, makes the case for buying bonds now.

What about preferred stocks?

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Preferred stocks feature stated dividend yields and prices that move the same way bond prices do. That means prices for many issues are now heavily discounted to face value and that current yields are much higher than they were at the end of 2021. Here’s an in-depth guide on how to research preferred stocks and make your own selections.

Related: 22 dividend stocks screened for quality and safety

The problem with macro market projections

Stanley Druckenmiller predicted a “hard landing” in 2023 for the U.S. economy while speaking at CNBC’s Delivering Alpha Investor Summit on Sept. 28.

Bloomberg

Stanley Druckenmiller predicted a U.S. recession in 2023 as a result of monetary policy tightening by the Federal Reserve. That may not be much of a stretch, considering that the U.S. economy contracted during the first half of 2022, according to revised GDP figures from the Bureau of Economic Analysis.

But investors should be careful — macro forecasts often turn out to be incorrect, Mark Hulbert warns.

More on stocks: It’s the worst September for stocks since 2008. What that means for October.

Recessions and your retirement plans

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Alessandra Malito has advice on how retirees and people planning for retirement can prepare for tough economic times.

Also: Reset your retirement calculator now for today’s bleaker stock markets and make sure you’re still on track

Investors tremble and a central bank scrambles

The Bank of England’s headquarters.

Agence France-Presse/Getty Images

After the new U.K. government of Prime Minister Liz Truss announced a massive tax cut along with a new spending program to help counter rising fuel costs and new borrowing, the pound hit a new low against the dollar on Sept. 26 as investors and money managers panicked and sold-off U.K. government bonds. Steve Goldstein explains how and why the Bank of England came tot the rescue.

A closer look at reverse mortgages

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Beth Pinsker digs deeply to explain how to use a reverse mortgage as a financial planning tool.

Poking a little fun at Elon Musk

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After Tesla CEO Elon Musk said the upcoming Cybertruck would be sufficiently waterproof to “serve briefly as a boat,” the San Francisco Bay Ferry offered this advice to patrons.

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

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September 30, 2022
Nike stock drops 10% as execs predict cheaper clothing for at least the rest of the year

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Shares of Nike Inc. plunged as much as 10% after hours Thursday, after the athletic-gear giant’s executives said price-cutting efforts to flush off-season clothing from warehouses in North America would dent gross margins for the rest of its fiscal year and warned of a big potential hit from the stronger dollar.

Management also said they expected their rivals to keep cutting prices through at least the end of the calendar year, as they try to clear their own stockpiles. But the Nike executives said inventory levels in North America likely “peaked” in its first quarter, which ended on Aug. 31, and expected levels to even out — with newer, seasonally-aligned, in-demand product — in the months ahead as it prepares for the holiday rush.

“We’re taking decisive action to clear excess inventory, focusing on specific pockets of seasonally late product, predominantly in apparel,” Chief Financial Officer Matthew Friend said on Nike’s earnings call.

He added that he expected the moves to have a “transitory impact” on gross margins for the year.

The lopsided inventory levels, which grew 44% during Nike’s third quarter, followed factory closures last year in Asia, where most of its footwear is made, that led to late product deliveries, Friend said.

But those late deliveries are now getting mixed in with holiday-season deliveries that are set to arrive earlier than planned. The earlier arrivals, executives said, were a function of earlier ordering — due to the shipping delays that have characterized the past year —and then a sudden, more recent improvement in those shipping times.

And as the U.S. dollar strengthens, Friend said he expected the full-year negative impact of foreign exchange on reported sales and earnings before interest and taxes to be $4 billion and $900 million, respectively.

Still, executives said inventory management in China was “ahead of plan” as it recalibrates supply and navigates COVID-19 related restrictions there. And they said that consumer demand was still strong, despite rising prices. Friend and CEO John Donahoe both repeated that Nike remained customers’ “No. 1 cool” and “No. 1 favorite” brand.

Donahoe said shoes like the Air Max Scorpion — which offered the “most air ever, in terms of pound per square inch” — reflected Nike’s commitment to innovation. The company’s Travis Scott and LeBron 20 sneakers also remained popular, executives said. The back-to-school season, and demand for its Jordan and Converse sneakers, were also solid.

As for fiscal first-quarter financials, Nike reported net income of $1.5 billion, or 93 cents a share, compared with $1.9 billion, or $1.16 a share, in the year-earlier period. Sales came in at $12.7 billion, compared with $12.2 billion a year ago.

Analysts polled by FactSet expected earnings of 92 cents a share on sales of $12.28 billion. Shares of Nike
NKE,
-3.41%
were last down 9.3% after hours, but fell more than 10% at one point after the close.

Prior to the report, analysts following Nike had zeroed in on the impact of the stronger U.S. dollar, the impact of China’s COVID lockdowns, as well as the effects from bigger discounts to sell shoes and other gear that sat around for too long due to backups in the company’s supply chain. The back-to-school season, and competition with the likes of Adidas AG
ADDYY,
-5.21%
were also points of focus for Wall Street.

Gross margins fell to 44.3% from 46.5% during the quarter. Nike executives said the decrease “was primarily driven by North America, which took measures to liquidate excess inventory through Nike Direct markdowns and wholesale marketplace actions.”

Inventory for Nike stood at $9.7 billion, a 44% increase from the year-earlier period, due to what executives described as “ongoing supply-chain volatility, partially offset by strong consumer demand during the quarter.”

Nike, in June, said it expected “higher promotional activity” in the first quarter, as it tries to sell seasonal items that arrived late, following the factory closures last year in Asia. However, for the full year ahead, management at that time said it was planning for “mid-single-digit price increases.”

Executives also said then that they were planning to expand sales that go directly to consumers, via its own stores and online. The company over the years has been trying to rely less on retail chains like Foot Locker Inc.
FL,
-6.36%
for sales.

Shares of Nike have fallen 43% so far this year. By comparison, the S&P 500 index
SPX,
-2.11%
is down around 24% over that time.

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September 29, 2022
Micron Posts Weak Results as Memory Demand Softens

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Micron Technology

shares are under renewed pressure after the memory chip company posted weak results and provided softer-than-expected financial forecasts.

The anemic quarterly results, reported after the close of trading on Thursday, were no real surprise. Micron had ratcheted down expectations amid weak demand from personal-computer manufacturers and other customers, reflecting softening consumer spending. But even with the market braced for bad numbers, the severity of the expected downturn flagged in management’s earnings guidance still managed to surprise the Street.

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September 29, 2022
H&M profit drops after Russia exit costs

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Sweden’s Hennes & Mauritz AB said Thursday that net profit for its third quarter fell significantly after it booked a one-time cost related to the winding down of its Russian operations, and that it will start a cost and efficiency program.

The company
HM.B,
-3.17%
posted a net profit of 531 million Swedish kronor ($47.4 million) for the fiscal quarter ended Aug. 31, compared with SEK4.69 billion a year earlier. Analysts polled by FactSet had expected a net profit of SEK2.17 billion.

Sales were SEK57.45 billion compared with SEK55.59 billion a year earlier. Analysts polled by FactSet had expected sales of SEK57.45 billion.

The company said it has booked a one-time cost of SEK2.10 billion, related to the winding down of Russian operations, hitting the result for the quarter.

The cost and efficiency program is expected to result in annual savings of around SEK2 billion.

“The third quarter has largely been impacted by our decision to pause sales and then wind down the business in Russia. This has had a significant effect on our sales and profitability, which explains half of the decrease in profits compared with the third quarter last year,” Chief Executive Helena Helmersson said.

Write to Kyle Morris at kyle.morris@dowjones.com

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September 29, 2022
U.S. Polo Assn. Delivers Record Results, Reaching Nearly $2 Billion in Retail Sales

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Global Brand’s Footprint Expands to 1,200 Retail Stores and Sales Across 190 Countries

WEST PALM BEACH, Fla., June 29, 2022 (Newswire.com)
–
USPA Global Licensing Inc. (USPAGL) has announced that U.S. Polo Assn., the official brand of the United States Polo Association, delivered a record year on all fronts for 2021 with aggressive expansion planned for 2022 and beyond. U.S. Polo Assn. reached $1.8 billion in global retail sales in 2021. The global, sport-inspired brand’s footprint also expanded into 190 countries and approximately 1,200 retail stores globally as U.S. Polo Assn. continues to climb the ranks as one of the largest global licensed brands in the world.

USPAGL, the company that manages and oversees the U.S. Polo Assn. brand, was able to build on the strategies it has implemented throughout the pandemic to generate record growth for U.S. Polo Assn. in online shopping with 40 some brand sites in 18 languages. Fast-tracking digital resulted in the doubling of sales online in several regions. U.S. Polo Assn. continues to build global momentum on social media, exceeding 7 million followers worldwide.

“Our global team and strategic partners around the world have worked hard through the most challenging of times to deliver a record financial performance while also achieving several major milestones in 2021,” notes J. Michael Prince, President & CEO of USPAGL. “We continue to execute on our aggressive digital strategy and our international growth strategy to continue expanding our global retail fleet of U.S. Polo Assn. stores in key cities and markets worldwide.”

U.S. Polo Assn.’s ambitious growth has come as the result of expanding its already sizeable footprint in emerging markets, such as India, China, and the Middle East, while continuing to gain market share with strong partnerships in more mature regions such as North America, Western Europe, and Latin America.

“One of the key drivers to U.S. Polo Assn.’s growth has been its aggressive worldwide expansion of branded retail stores in an environment where many other brands have closed doors,” added Prince.

Some highlights of the worldwide U.S. Polo Assn. store expansion being the remodel of the brand’s global flagship locations in both New York’s Times Square and the five-story location on Istiklal Street in Istanbul, Turkey, and new store openings in strategic worldwide locations such as the Express Avenue Mall in Chennai, India, the Cheshire Oaks Designer Outlets in the United Kingdom, and the Morumbi Mall in São Paulo, Brazil.

In late 2021, U.S. Polo Assn. was awarded the prestigious Retail and Leisure International (RLI) Global Retailer of the Year Award, as well as a place in Digital Commerce 360, the industry’s trade bible, which recently included U.S. Polo Assn.’s e-commerce business as a TOP 500 Retailer for the first time ever.

In early 2022, U.S. Polo Assn. officially announced USPA Life, featuring the evolution of the U.S. Polo Assn. brand using eco-processes and green innovations for specific products, while providing the brand’s global licensees with the messaging and materials needed to be consistent and successful in the long-term sustainability initiatives. A partnership with 4ocean was also announced, with the goal to pull 60,000 pounds of trash from the world’s oceans throughout the coming year. At this stage, U.S. Polo Assn. has met the halfway goal of 30,000 pounds pulled from global waterways.

True to the heritage of the brand, U.S. Polo Assn. maintains a strong foothold in the sport of polo by signing a landmark global deal with ESPN, bringing multiple championship games to millions of viewers worldwide.

The United States Polo Association (USPA) and U.S. Polo Assn. were instrumental in bringing the XII FIP World Polo Championship to Palm Beach County, and back to the United States for 2022, for only the second time in the tournament’s history. The Federation of International Polo (FIP) is the international federation representing the sport of polo, officially recognized by the International Olympic Committee (IOC).

Despite another challenging year for global retail, U.S. Polo Assn. has maintained its leadership position.

“We continue to look for avenues and partnerships to expand into new global markets. We are also working on some projects that will bring awareness into new areas of our business. I’m optimistic about the U.S. Polo Assn. business with our goal to grow by more than 100 stores annually, and double revenue in the coming years,” concludes Prince.

About U.S. Polo Assn. and USPA Global Licensing Inc. (USPAGL)

U.S. Polo Assn. is the official brand of the United States Polo Association (USPA), the nonprofit governing body for the sport of polo in the United States and one of the oldest sports governing bodies, having been founded in 1890. With a multi-billion-dollar global footprint and worldwide distribution through some 1,200 U.S. Polo Assn. retail stores and thousands of department stores as well as sporting goods channels, independent retailers and e-commerce, U.S. Polo Assn. offers apparel for men, women, and children, as well as accessories and footwear in 190 countries worldwide. Ranked the fifth largest sports licensor in License Global magazine’s 2020 list of “Top 150 Global Licensors,” U.S. Polo Assn. is named alongside such iconic sports brands as the National Football League, the National Basketball Association and Major League Baseball. Visit uspoloassnglobal.com.

USPA Global Licensing Inc. (USPAGL) is the for-profit subsidiary of the USPA and its exclusive worldwide licensor. USPAGL manages the global, multi-billion-dollar U.S. Polo Assn. brand and is the steward of the USPA’s intellectual properties, providing the sport with a long-term source of revenue. Through its subsidiary, Global Polo Entertainment (GPE), USPAGL also manages Global Polo TV, the world’s leading digital platform with polo and lifestyle content. In addition, USPAGL partners with ESPN and beIN Sports globally to share the sport of polo broadcasts on television and on-demand to millions of viewers around the world. For more polo content visit globalpolo.com.

###

For Additional Information, Contact:

Stacey Kovalsky – Senior Director, Global Communications

Phone +001.561.790.8036 – Email: skovalsky@uspagl.com

Kaela Drake – PR & Communications Coordinator

Phone +001.561.461.8596 – Email: kdrake@uspagl.com

Source: USPA Global Licensing Inc.

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June 29, 2022
New DDI Study Reveals Minority Leaders Getting More Promotions, But More Likely to Switch Companies to Advance
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Part of the Global Leadership Forecast series, DDI’s new Diversity and Inclusion Report 2020 shows strong benefits of corporate inclusion efforts, as well as retention risks for minority leaders

Press Release
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updated: Oct 28, 2020
PITTSBURGH, October 28, 2020 (Newswire.com)
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Senior minority executives plan to leave their current position at twice the normal rate of other executives. And this exodus could be coming within the next year, according to DDI’s Diversity and Inclusion Report 2020.

This is just one finding from the report, which is part of the Global Leadership Forecast series by DDI. The report includes data from 15,787 leaders and 2,102 human resources professionals. These leaders represent more than 1,740 organizations across more than 25 industries globally. The report delivers data on gender and racial/ethnic diversity among leaders, and its effect on companies’ financial results. Companies can use the data to help guide their diversity and inclusion efforts, as well as their talent strategy.

“While leaders from diverse ethnic and racial backgrounds are finally advancing at a faster rate, our study showed that organizations face high retention risks for these leaders,” said Stephanie Neal, director of DDI’s Center for Analytics and Behavioral Research. “It’s likely that these leaders still face significant barriers as they move up the ladder, which may be why they feel like they have to leave the company to advance. Companies should be paying close attention to how inclusive their culture and talent practices are to ensure they retain these diverse and highly talented leaders.”

The study found that fewer than one in four leaders reported their organization consistently recruits and promotes from a diverse talent pool. Furthermore, only 27 percent of leaders believe inclusion is a strong part of their organizations’ culture and values.

The Diversity and Inclusion Report 2020 found that while organizations are working to build more diverse and inclusive workforces, there are still gaps that need to be addressed. The study also found:
- Diversity has a greater impact on financial performance than any other organizational demographic factor. Organizations with above-average gender, racial and ethnic diversity had at least 30 percent of women and 20 percent of leaders from diverse racial and ethnic backgrounds in leadership roles. These organizations were eight times more likely to be in the top 10 percent of organizations for financial performance.
- Leaders from minority backgrounds are more likely to feel the need to change companies to progress their career across all leadership levels. Also, they were much more likely to say they plan to leave within the next year. This is especially true among senior-level minority leaders, who are more than twice as likely to leave as their non-minority peers.
- Diversity and inclusion efforts resonate across organizations’ entire workforce. More than one-third of leaders from companies that qualify as “Best Places to Work” reported that inclusion is a strong component of their work culture and value. This is in comparison to the 20 percent of leaders from other companies without the same label.
- Organizations with more diversity in high-potential pools typically see higher financial performance. Organizations in the top 10 percent of financial performance report that women make up 24 percent of their high-potential pool, and 19 percent are from diverse racial and ethnic backgrounds. Organizations with below average financial performance report less diversity in their high-potential pools. Their pools include only 16 percent women and 12 percent from diverse racial and ethnic backgrounds.
- Women continue to struggle to advance. At higher levels of leadership, women indicated an increasing need to switch companies to climb higher in their roles. In fact, 45 percent of women executives said they would likely need to switch companies to advance, compared to only 32 percent of male executives.
“There’s a clear bottom-line benefit to workplace diversity and inclusion, and organizations can only benefit from increasing these efforts,” Neal said. “It’s important that leaders take the time to assess the state of diversity and inclusion in their organization and employ best practices if they want to realize the benefits of a diverse and inclusive workforce.”

For more information, including the full report, visit ddiworld.com/research/inclusion-report.

###

About DDI

DDI is a global leadership consulting firm that helps organizations hire, promote and develop exceptional leaders. From first-time managers to C-suite executives, DDI is by leaders’ sides, supporting them in every critical moment of leadership. Built on five decades of research and experience in the science of leadership, DDI’s evidence-based assessment and development solutions enable millions of leaders around the world to succeed, propelling their organizations to new heights. For more information, visit ddiworld.com.

Available for Interviews

Stephanie Neal, director of DDI’s Center for Analytics and Behavioral Research

Contact:
Brad Pedersen
PR Specialist, DDI
Brad.Pedersen@ddiworld.com
412-485-9767

Source: DDI
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October 28, 2020