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  • Nvidia barrels toward rare $1 trillion valuation after putting a dollar figure on AI boost

    Nvidia barrels toward rare $1 trillion valuation after putting a dollar figure on AI boost

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    Nvidia Corp. headed toward market-capitalization gains of nearly $200 billion in after-hours trading Wednesday, which could put the chip maker within sight of becoming only the seventh U.S. company to top a valuation of $1 trillion.

    Nvidia shares
    NVDA,
    -0.49%
    jumped 25% in the extended session Wednesday, after executives predicted that revenue would exceed the company’s record by more than 30% in the current quarter. The audacious forecast arrived as tech companies look to jump on advances in artificial intelligence that are largely powered by Nvidia’s computing gear.

    Nvidia ended Wednesday’s session with a market cap — the total value of all shares in existence — of roughly $754.3 billion, according to FactSet. A 25% increase would add nearly $189 billion to that total, putting the company within striking distance of $1 trillion. Only six U.S. companies have ever attained a $1 trillion market cap: Apple Inc.
    AAPL,
    +0.16%
    and Microsoft Corp.
    MSFT,
    -0.45%
    are currently worth more than $2 trillion apiece; Google parent Alphabet Inc.
    GOOGL,
    -1.35%
    and Amazon.com Inc.
    AMZN,
    +1.53%
    have valuation of more than $1 trillion; and Facebook parent Meta Platforms Inc.
    META,
    +1.00%
    and Tesla Inc.
    TSLA,
    -1.54%
    have both touched the $1 trillion plateau previously.

    For more: From U.S. Steel’s $1 billion market cap to Apple’s $1 trillion — a brief history of valuation milestones

    Nvidia’s market cap was ahead of both Meta and Tesla as of Wednesday’s close, with both worth less than $650 billion, showing the potential fleeting nature of such a valuation. Nvidia’s record market cap is $834.4 billion, established on Nov. 29. 2021, according to Dow Jones Market Data.

    If Nvidia’s gains hold through Thursday’s trading session, the company could challenge for the largest one-day market-cap gain in history. The biggest currently on record was Amazon’s $191.2 billion increase on Feb. 4, 2022, according to Dow Jones Market Data, followed closely by a $190.9 billion gain by Apple on Nov. 10, 2022. Nvidia also stands to gain more than rival Advanced Micro Devices Inc.
    AMD,
    +0.14%
    is worth in total — AMD ended Wednesday’s session with a market cap of $174.4 billion.

    Nvidia is closing in on the rare $1 trillion plateau because of huge gains in its stock this year, as hopes and hype about generative AI have flooded the tech sector. After OpenAI debuted its ChatGPT AI offering, and investor Microsoft quickly integrated the chatbot into many of its services, expectations for the technology have exploded.

    Despite the hype, most companies have avoided providing hard figures for revenue gains expected from AI. Nvidia’s fiscal second-quarter forecast — which calls for roughly $11 billion in sales, nearly 33% higher than Nvidia’s previous quarterly record of $8.28 billion — could be seen as the first sign of a wave of fresh spending coursing through the tech sector.

    Other companies have indicated that they will be forced to spend to develop their technology before reaping large financial rewards from it. Microsoft, for example, disclosed to investors last month that capital expenditures are increasing as it builds AI capabilities into its Azure cloud-computing platform — spending that is largely going toward Nvidia.

    Full earnings coverage: Nvidia stock soars toward all-time high as AI push leads executives to predict record revenue

    That is a rather typical path for large jumps in tech spending: Companies that make the necessary hardware see gains before the companies that use that gear can develop offerings that take advantage of it. Other gear makers joined Nvidia in the sharp move higher in after-hours trading Wednesday, including AMD, which gained more than 10%; chip maker Marvell Technology Inc.
    MRVL,
    -1.31%    ,
    which increased more than 5%; and networking specialist Arista Networks Inc.
    ANET,
    +0.53%    ,
    which added about 5%.

    Alphabet and Microsoft stocks both increased around 2% in after-hours trading, and software companies that have made AI a core part of their offerings also saw gains. Palantir Technologies Inc.
    PLTR,
    -3.24%
    and C3.ai Inc.
    AI,
    +2.54%
    shares both increased more than 8%, for example.

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  • Nvidia stock soars toward all-time high as record revenue forecast backed by ‘killer app’ of AI

    Nvidia stock soars toward all-time high as record revenue forecast backed by ‘killer app’ of AI

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    Nvidia Corp. executives predicted record revenue well beyond anything the company has experienced Wednesday, pushing shares toward all-time highs, as margins improve with AI-driven data-center sales.

    Nvidia
    NVDA,
    -0.49%
    guided for second-quarter revenue of $11 billion, plus or minus 2%; the chip maker has never before reported quarterly revenue higher than $8.29 billion, which it hit in the fiscal first quarter a year ago. Analysts on average were expecting $7.17 billion, according to FactSet, a gain from the $6.7 billion in sales Nvidia put up in the fiscal second quarter last year.

    On the conference call with analysts, Huang said the simple way to think about it is that the world has “a trillion dollars of data center installed and it used to be 100% CPU,” or central processing units, as opposed to Nvidia’s graphics processors that data centers and AI models have embraced in recent years. And while the world’s data-center budget is strapped, at the same time larger and larger AI models require more and more computing power, he said.

    “The easiest way to think about that is over the next four or five, 10 years, most of that trillion dollars, and compensating adjusting for all the growth in data center still, it will be largely generative AI,” Huang said.

    “What happened is, when generative AI came along, it triggered a killer app for this computing platform that’s been in preparation for some time,” he added.

    The company forecast adjusted gross margins of 70% for the second quarter, after reporting 66.8% for the first quarter, not only as higher data-center margins counter the deficit in gaming, but as Nvidia Chief Financial Officer Colette Kress said on the call: ” We believe the channel inventory correction is behind us.”

    Shares soared more than 25% in after-hours trading, following a 0.5% decline in the regular session to $305.38. Nvidia’s record closing price is $333.76 and the all-time intraday high is $346.47, according to FactSet data. After-hours “prices” topped both of those marks, reaching more than 14% beyond all-time highs for the regular session, as shares registered as high as $395, according to FactSet. The last time Nvidia shares rallied as much in a single session was Nov. 11, 2016, when shares surged 29.8% after the company reported that profit more than doubled.


    FactSet (blue = regular session, yellow = pre- and post-market activity)

    Meanwhile, shares of rival Advanced Micro Devices Inc.
    AMD,
    +0.14%
    rallied 6% after hours.

    Nvidia did not provide full-year guidance, but Chief Executive Jensen Huang has been effusive in his predictions that increased focus on AI from Big Tech partners such as Microsoft Corp.
    MSFT,
    -0.45%
    and Alphabet Inc.
    GOOGL,
    -1.35%
    GOOG,
    -1.34%
    will lead to revenue gains in the near future. Speaking to the media at Nvidia’s developers conference in March, he said that generative AI has only accounted for a “tiny, tiny, tiny” single-digit percentage of revenue over the past 12 months, but predicted that in the next year, revenue from generative AI will grow to be “quite large — exactly how large, it’s hard to say.”

    Nvidia reported fiscal first-quarter earnings of $2.04 billion, or 82 cents a share, on sales of $7.19 billion, a decline from $8.29 billion a year ago but well ahead of expectations. After adjusting for stock compensation and other effects, the chip maker reported earnings of $1.09 a share, a decline from $1.36 a share a year ago. Analysts on average were expecting adjusted earnings of 92 cents a share on sales of $6.53 billion, according to FactSet.

    Gaming sales for the first quarter fell 38% to $2.24 billion, while data-center sales at Nvidia rose 14% to a record $4.28 billion, “led by growing demand for generative AI and large language models using GPUs based on our Nvidia Hopper and Ampere architectures.”

    “The revenue growth reflects strong demand from large consumer internet companies and cloud service providers,” the company said in a statement. “Enterprise demand for GPU platforms was strong, although general purpose networking solutions declined both sequentially and from a year ago.”

    Analysts had expected gaming sales of $1.97 billion — nearly half of last year’s $3.62 billion — and data-center sales of $3.9 billion, a 4% increase from a year ago. Auto chip sales soared 114% to $296 million from a year ago.

    Nvidia’s profit and sales have declined in recent quarters as the company deals with oversupply in the market, a result of pandemic-era shortages flipping to a glut after demand for personal computers and gaming gear waned. Analysts expect that trend to end with this report, however, as demand for gear that can power artificial intelligence kicks into higher gear amid a bevy of promises from tech companies about the power of generative AI.

    Nvidia’s stock has soared toward all-time highs amid the hype for generative AI, which was launched after the successful debut of OpenAI’s ChatGPT service. Shares have more than doubled so far this year, growing 109% as the S&P 500 index
    SPX,
    -0.73%
    has increased 8%.

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  • Meta begins third round of layoffs: reports

    Meta begins third round of layoffs: reports

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    Meta Platforms Inc. has started to execute on its latest round of layoffs, according to reports.

    The third round of cuts is part of a plan that Meta
    META,
    +3.70%
    Chief Executive Mark Zuckerberg announced in March in an effort to further slash costs at the social-media company. He said at the time that Meta would lay off about 10,000 workers while closing roughly 5,000 additional roles for which the company had yet to make hires.

    The current rounds of cuts build on at least 11,000 layoffs that were announced last fall.

    See more: Meta steadily rolls out 3-part round of layoffs

    CNBC reported Wednesday that Meta employees in user experience, marketing and recruiting roles indicated they were affected by the current round of cuts.

    Zuckerberg said in a March note to employees, which was also shared as a company blog post, that the company planned to make restructuring moves in its technology groups in late April before making changes to the business groups in late May.

    Reuters reported that the latest layoffs mainly affect employees in non-engineering positions, part of Zuckerberg’s goal of boosting the ratio of engineers at Meta relative to other positions.

    Don’t miss: Meta’s ‘outstanding’ stock rally can keep roaring, analyst says in upgrade

    Meta declined to comment in response to a MarketWatch request for confirmation of the latest layoffs.

    The company is in the midst of what Zuckerberg has dubbed a “year of efficiency,” which comes in response to investor concern last fall about high spending levels at the company alongside the backdrop of declining revenue. Meta has since become arguably the most aggressive of the largest public technology companies in its cost-cutting efforts.

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  • Instagram is readying a Twitter-like service

    Instagram is readying a Twitter-like service

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    Embattled Twitter may soon have a serious rival: Facebook’s Instagram is planning to release a text-based app as a competitor.

    Instagram, a property of Meta Platforms Inc.
    META,
    -0.49%    ,
    has been testing the service with creators, celebrities and influencers for months, according to people familiar with Meta’s strategy.

    “We’re exploring a standalone decentralized social network for sharing text updates. We believe there’s an opportunity for a separate space where creators and public figures can share timely updates about their interests,” a Meta spokesperson told MarketWatch.

    The app could debut as early as June, according to Lia Haberman, an adjunct professor at the University of California, Los Angeles, who teaches social and influencer marketing. She published a screenshot of an early description of the app, which may eventually be compatible with rival Twitter apps like Mastodon.

    Twitter has hemorrhaged users since Tesla Inc.
    TSLA,
    +1.84%
    Chief Executive Elon Musk began his chaotic leadership of the company late last year, prompting an exodus by disgruntled customers to alternative services like Mastodon and Bluesky.

    Jasmine Enberg, an analyst at Insider Intelligence, said the text-based service has been in the works for months alternately code-named P92 or Barcelona.

    “The big picture here is that there is clearly an appetite for Twitter-like services,” Enberg said in an interview. “With Twitter’s problems and so many alternatives, Meta’s new service looks like a mashup of Instagram and Twitter. Meta sees an opportunity to tap into this market, and it has a history of copying other popular apps [like Snap].”

    Meta’s stock was flat in Friday’s regular trading session.

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  • Netflix’s password-sharing crackdown is imminent, but the writers’ strike may be causing a delay

    Netflix’s password-sharing crackdown is imminent, but the writers’ strike may be causing a delay

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    Netflix Inc. has teased the U.S. rollout of a password-sharing crackdown, but one analyst wonders if the ongoing writers’ strike is delaying the company’s plans.

    The streaming-media company has already started to clamp down on account sharing in other markets by limiting who can use accounts and charging more for additional access. JPMorgan’s Doug Anmuth wondered if Netflix
    NFLX,
    +0.78%
    was rethinking a broader rollout at the moment, given the prospect of content interruptions.

    See more: Netflix delivers cliffhanger for investors as password-sharing crackdown is delayed

    “Paid sharing is effectively a price increase, w/paid members sharing their password receiving less value for the same price, or potentially paying more to add an extra member. And for borrowers who currently do not pay, paid sharing means either activating their own subscription or being added as an extra member, or losing access to NFLX,” he wrote in a note to clients.

    For that reason, “it’s possible that NFLX may not like the optics of implementing paid sharing while 11,500 WGA writers are on strike, w/production suspended or writing paused across at least a handful of NFLX titles including Stranger Things S5 & Emily in Paris S4, among others,” Anmuth continued.

    Netflix didn’t respond to a MarketWatch request for comment asking when paid sharing will roll out in the U.S., why it hasn’t rolled out yet, and if the delay was at all due to the writers’ strike.

    Opinion: Disney shows streaming wars are destroying all that was good about streaming

    The paid-sharing rollout is a critical element of Netflix’s financial story these days. Netflix estimates that some 100 million people were freeloading off of others’ paid Netflix subscribers, and Anmuth expected that Netflix would be able to get at least 30 million of those to start paying up, whether by becoming add-on members for existing accounts or new subscribers in their own right.

    For that reason, a continuation of the writers’ strike “could further postpone revenue & subscriber acceleration,” he wrote.

    See also: Streaming nirvana is about to become more expensive — and offer less content

    The writers’ strike also threatens to impact Netflix’s other hot initiative: its advertising tier. Anmuth noted that the company’s upfront presentation to advertisers, its first-ever, was turning into a prerecorded event, presumably because the company fears “heavy picketing and protesting” and “less availability of star talent.”

    “[U]ltimately, advertising is closely tied to paid sharing, w/borrowers likely viewing a $6.99 Standard w/Ads plan as a compelling low-priced option,” Anmuth wrote. “Therefore, ramp of the ad tier is also delayed if paid sharing is delayed.”

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  • Tech-stock picks that are small and focused: This fund invests in unsung innovators. Here are 2 top choices.

    Tech-stock picks that are small and focused: This fund invests in unsung innovators. Here are 2 top choices.

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    When investors think of technology stocks, they might automatically gravitate toward “the next big thing,” or to the giant companies that dominate the S&P 500
    SPX,
    -0.40%    .
    But Robert Stimson, chief investment officer of Oak Associates Funds, makes a case for diversification through exposure to smaller innovators which he believes are “overlooked in this environment.”

    The River Oak Discovery Fund
    RIVSX,
    +0.98%
    invests in tech-oriented companies with market capitalizations of $5 billion or less, with an average of about $2 billion. It has a five-star rating, the highest, from Morningstar, despite having what the investment information firm considers “above average” annual expenses of 1.19% of assets under management. The fund is ranked in the 6th percentile among 546 funds in Morningstar’s “Small Blend” category for five-year performance and in the 13th percentile among 374 funds for 10-year performance. The performance comparisons are net of expenses.

    The Black Oak Emerging Technologies Fund
    BOGSX,
    +1.54%
    has more of a midcap focus, with some small-cap stocks and follows a similar strategy to that of RIVSX. But with no restriction on the size of companies this fund invests in, “we don’t have to sell stocks,” Stimpson said. So long-term holdings of this fund include Apple Inc.
    AAPL,
    -0.05%
    and Salesforce.com Inc.
    CRM,
    +0.69%    .
    This fund is rated three stars within Morningstar’s “Technology” category and has a lower expense ratio of 1.03%.

    Both funds are concentrated. The River Oak Discovery Fund held 34 stocks and the Black Oak Emerging Technologies Fund held 35 stocks as of March 31. Lists of both funds’ largest holdings are below.

    During an Interview, Stimpson, who co-manages both funds, said that when investing in the small-cap technology space, he and colleagues identify companies that are “focused on niches.

    “I want a company that knows who they are, what they do and do it well, rather than a small company trying to growing into the next Microsoft, Google or Salesforce,” he said.

    More about giant companies dominating stock indexes: This twist on a traditional S&P 500 stock fund can lower your risk and still beat the market overall

    Stimpson said Oak Associates pays close attention to what corporate management teams say during earnings calls and in presentations, preferring comments related to improving sales and operations with a market niche, rather than expressions of grand visions for exponential growth.

    That type of narrow focus can support higher valuations over time, Stimpson said. “They have better execution, a better ability to fend-off competition and they are quality acquisition candidates.”

    “ “I caution everyone that until there is revenue, earnings and a product, the hype can be more dangerous than an opportunity.” ”


    — Robert Stimpson, chief investment officer at Oak Funds, when discussing AI and ChatGPT.

    All of those factors can be important to investors, considering how easily tech giants such as Microsoft Corp.
    MSFT,
    +1.00%
    or Google holding company Alphabet Inc.
    GOOGL,
    +2.89%

    GOOG,
    +2.88%
    can begin to compete with smaller innovative companies because they can afford to make such large investments, he said.

    Simpson went further, saying that when running screens for “quality” metrics, such as improving free cash flow yields, the Oak Associates team also looks for “shareholder friendly practices.” For example, a company may be repurchasing shares. But are the buybacks lowering the share count significantly (which boosts earnings per share) or are they merely mitigating the dilution caused by the shoveling of new shares to executives as part of their compensation?

    Finally, Simpson cautioned investors not to get caught up in tech-focused hype.

    “When I talk to our clients, I get questions about AI and ChatGPT and how to play it. People get focused on a new great tech innovation,” he said. “You can replace ChatGPT with bitcoin, metaverse or 3-D printing.”

    “I caution everyone that until there is revenue, earnings and a product, the hype can be more dangerous than an opportunity.”

    Two examples

    These companies are held by theRiver Oak Discovery Fund and the Black Oak Emerging Technologies Fund.

    Cirrus Logic Inc.
    CRUS,
    -2.37%
    is the largest holding of the River Oak Discovery Fund. Stimpson calls the company “a derivative play on the success of Apple.”

    “They are focused on the chips that go into mobile and [vehicles],” as well as the needs of their customers, including Apple, “rather than problem areas of the chip sector, such as memory or PCs. They are not talking about chips for AI, for example,” Stimpson said.

    Cirrus focuses on systems and related software used in audio systems..

    Kulicke & Soffa Industries Inc.
    KLIC,
    +1.92%
    makes equipment, tools and related software used by a variety of manufacturers of computer chips and integrated electronic devices.

    Stimpson likes the company as a long-term play on the worldwide disruption in semiconductor manufacturing and supply, in the wake of the Covid-19 pandemic. “All chip companies learned that any supply disruption in Southeast Asia is a problem. Over time, the opportunities for semiconductor equipment makers are very good. There will be more plants in more locations, so more equipment,” he said.

    He said KLICK was in a “protected” position, with returns on equity of about 20% and free cash flow yields of about 10%.

    Top holdings of the funds

    Here are the largest 10 holdings of the River Oak Discovery Fund as of March 31:

    Company

    		 Ticker

    		 % of portfolio
    Cirrus Logic Inc.

    		 CRUS,
    -2.37%         		4.9%
    Kulicke & Soffa Industries Inc.

    		 KLIC,
    +1.92%         		4.6%
    Advanced Energy Industries Inc.

    		 AEIS,
    +0.30%         		4.5%
    Cohu Inc.

    		 COHU,
    +1.45%         		3.7%
    Asbury Automotive Group Inc.

    		 ABG,
    -1.75%         		3.7%
    Korn Ferry

    		 KFY,
    -0.96%         		3.6%
    Kforce Inc.

    		 KFRC,
    -2.40%         		3.4%
    Ambarella Inc.

    		 AMBA,
    -0.50%         		3.3%
    Applied Industrial Technologies Inc.

    		 AIT,
    -1.71%         		3.3%
    Perficient Inc.

    		 PRFT,
    +0.72%         		3.2%

    Click on the tickers for more about each company.

    Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

    Here are the largest 10 holdings of the Black Oak Emerging Technology Fund as of March 31:

    Company

    		 Ticker

    		 % of portfolio
    Apple Inc.

    		 AAPL,
    -0.05%         		5.7%
    KLA Corp.

    		 KLAC,
    +1.69%         		4.6%
    Advanced Energy Industries Inc.

    		 AEIS,
    +0.30%         		4.5%
    Cohu Inc.

    		 COHU,
    +1.45%         		4.1%
    SolarEdge Technologies Inc.

    		 SEDG,
    -3.76%         		3.9%
    Cirrus Logic Inc.

    		 CRUS,
    -2.37%         		3.9%
    Cohu Inc.

    		 COHU,
    +1.45%         		3.9%
    Ambarella Inc.

    		 AMBA,
    -0.50%         		3.4%
    Applied Industrial Technologies Inc.

    		 AIT,
    -1.71%         		3.4%
    Salesforce Inc.

    		 CRM,
    +0.69%         		3.3%

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  • A stock-market milestone: Apple is now worth more than the entire Russell 2000

    A stock-market milestone: Apple is now worth more than the entire Russell 2000

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    The market capitalization of Apple Inc. has surpassed that of the entire Russell 2000 for two weeks, the longest stretch on record, according to Bloomberg data.

    Apple’s market capitalization, which measures how much the company is worth based on the value of all its outstanding stock, surpassed that of the Russell 2000
    RUT,
    +1.19%
    on April 27 and has held higher through Monday. The only other time that occurred was Sept. 1, 2020, when Apple’s valuation passed that of the small-cap index for only a day.

    Apple’s premium over this group of small-cap stocks continued to widen over the past two weeks as the consumer-technology giant reported earnings that surpassed Wall Street analysts’ expectations.

    With a market capitalization of roughly $2.7 trillion, Apple is now worth roughly $100 billion more than the combined value of all 2,000 stocks in the Russell 2000, according to Bloomberg data shared with MarketWatch.

    To be sure, the gap narrowed somewhat on Monday as Apple shares declined by 0.4% to $171.80, while the Russell 2000 gained 1.3% to trade at 1,763.

    A team of stock-market analysts from Bespoke Investment Group illustrated the trend in a chart shared on Twitter Monday.

    U.S. equity benchmarks have powered higher in 2023, but some say the strength in popular indexs like the S&P 500 and Nasdaq Composite has masked weakness in other corners of the market.

    Both the S&P 500, which has risen more than 7% year-to-date, and the Nasdaq Composite, which has risen nearly 18%, owe the bulk of their gains to a handful of megacap technology stocks including Apple, Microsoft Corp.
    MSFT,
    +0.16%    ,
    Alphabet Inc.
    GOOG,
    -0.81%
    and Nvidia Corp.
    NVDA,
    +2.16%

    The top 10 stocks in the S&P 500 hold a 29% weight in the index, and have been responsible for around 70% of its year-to-date performance gains, according to a MarketWatch report from last week.

    See: The S&P 500 is top-heavy with tech. Here’s what that says about future stock-market returns.

    The Russell 2000, meanwhile, is essentially unchanged since the start of 2023. Apple, by comparison, has risen more than 32% since Jan. 1, according to FactSet data. The relative weakness in small-caps has inspired discussion about whether this might be a buying opportunity, as market strategists told Barron’s.

    See: Small-Cap Stocks Have Been Crushed. 3 With Big Potential.

    Small-caps have struggled against a plethora of headwinds since the start of 2023. Shrinking corporate earnings, a string of regional-bank failures and signs of a looming recession have taken a heavy toll. Facing so much uncertainty, equity investors have sought safety in shares of megacap technology names this year following a punishing selloff in 2022.

    “It is pretty incredible that one company could overtake an entire universe of small-cap stocks in terms of size,” said Callie Cox, U.S. equity strategist at eToro, during a phone interview with MarketWatch. “To me, it really speaks to how beaten down small-caps are.”

    When Apple reported earnings for the quarter ended in March last week, the company’s management revealed a surprise growth in its iPhone business, which helped to overcoming a shortfall in Mac revenue. The company also promised investors billions more in dividends and stock repurchases, which helped to boost the stock price. Apple’s shares traded higher in response.

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  • Walmart, Alibaba, Target, and More Stocks to Watch This Week

    Walmart, Alibaba, Target, and More Stocks to Watch This Week

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    Walmart, Alibaba, Target, and More Stocks to Watch This Week

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  • Chegg, Arista, Uber, Pfizer, DuPont, and More Stock Market Movers

    Chegg, Arista, Uber, Pfizer, DuPont, and More Stock Market Movers

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    This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers visit http://www.djreprints.com.

    https://www.barrons.com/articles/stock-market-movers-7c17b0b6

    • Order Reprints
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  • BuzzFeed stock plunges over 20% as media company shuts down BuzzFeed News, cuts jobs

    BuzzFeed stock plunges over 20% as media company shuts down BuzzFeed News, cuts jobs

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    BuzzFeed Inc. said Thursday it is shutting down BuzzFeed News and laying off about 15% of its workforce as founder and Chief Executive Jonah Peretti said it has faced “more challenges than I can count.”

    BuzzFeed stock
    BZFD,
    -19.71%
    initially fell as much as 25% after the news. HuffPost and BuzzFeed.com will open “a number of select roles for members of BuzzFeed News,” Peretti said in a memo to staff. HuffPost, which is profitable and enjoys a “loyal direct front page audience,” will be BuzzFeed’s single news brand.

    “We’ve faced more challenges than I can count in the past few years: a pandemic, a fading SPAC market that yielded less capital, a tech recession, a tough economy, a declining stock market, a decelerating digital advertising market and ongoing audience and platform shifts,” Peretti said in the memo.

    “Dealing with all of these obstacles at once is part of why we’ve needed to make the difficult decisions to eliminate more jobs and reduce spending.”

    The CEO also said he and executives could have “managed these changes better.” The integration of BuzzFeed and Complex, which BuzzFeed bought in 2021 for $300 million, “should have been executed faster and better.”

    BuzzFeed went public in December 2021 through a merger with a special-purpose acquisition company, or SPAC. The deal valued BuzzFeed at $1.5 billion.

    The acquisition of Complex, then a joint venture between Hearst and Verizon Communications Inc. that catered to millennials and Gen Zers, was a bid to open up other revenue streams and rely less on advertising.

    BuzzFeed Inc. bought HuffPost from an unit of Verizon in November 2020.

    Peretti said he decided to “overinvest” in BuzzFeed News “because I love their work and mission so much,” which made him slow “to accept that the big platforms wouldn’t provide the distribution or financial support required to support premium, free journalism purpose-built for social media.”

    Chief Revenue Officer Edgar Hernandez and Chief Operating Officer Christian Baesler are leaving as well. The focus going forward is on reducing layers in the organization, streamlining the product mix, “doubling down” on social-media creators, and bringing AI to the sales process, Peretti said in the memo.

    BuzzFeed has about 1,200 employees as of December. It had 1,368 employees across seven countries that month, and announced layoffs hitting about 12% of its workforce.

    Also Thursday, Insider, the news site formerly known as Business Insider, said it was cutting 10% of its workforce due to “economic headwinds.”

    BuzzFeed shares have lost 85% in the past 12 months, compared with losses of around 7% for the S&P 500 index.
    SPX,
    -0.60%

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  • China’s GDP Beat Expectations. Why Alibaba and JD.com Are Falling.

    China’s GDP Beat Expectations. Why Alibaba and JD.com Are Falling.

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    Alibaba



    JD.com


    and other Chinese stocks fell Tuesday despite the country’s economy rebounding at a faster-than-expected pace in the first quarter.

    China’s gross domestic product (GDP) rose 4.5% in the first three months of the year, convincingly beating the FactSet economists’ consensus for 3.4% growth.

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  • Tesla, Netflix earnings due: Cheaper cars, cheaper content, more workout videos, as ‘earnings recession’ seems likely

    Tesla, Netflix earnings due: Cheaper cars, cheaper content, more workout videos, as ‘earnings recession’ seems likely

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    For anyone watching Netflix, the streaming services’ recent moves to cut costs could mean fewer films, lower-budget shows and — depending on your subscription — more ads. For anyone buying a Tesla, its moves to cut prices will make it easier on customers, but harder on profit-seeking investors.

    With both companies reporting results this week, Wall Street will get a look at who still wants a Tesla, amid growing competition, and what kind of growth and viewership anyone can expect from Netflix, as it recalibrates its streaming ambitions and focuses more on profitability following years of rapid growth.

    Netflix Inc.
    NFLX,
    -2.18%    ,
    which reports first-quarter results on Tuesday, is trying to crack down on shared accounts, and analysts polled by FactSet see subscriptions coming in well below the average. However, BofA analyst Jessica Reif Ehrlich said that first-quarter results would likely “mark the low point” of the year, “reflecting the initial impact of password sharing efforts in select markets.”

    Netflix will report as shareholders’ growing influence over the streaming universe raises questions over what shows and films get streamed, and for how long, as Wall Street tries to wring more bottom-line gains from an industry that boomed before and during the pandemic but burned cash and got crowded in the process. Netflix, along with Walt Disney Co.
    DIS,
    -0.93%    ,
    have laid off employees, while Warner Brothers Discovery Inc.
    WBD,
    -1.85%
    fuses its streaming holdings together.

    “We expect Netflix to continue reining in spending, particularly by seeking alternatives to its past practices,” Wedbush analysts Alicia Reese and Michael Pachter wrote in a research note on Thursday. “The company appears to us to be producing fewer feature length films, which we have always viewed as a poor investment, and appears focused on lower cost television content.”

    “We are equally encouraged that Netflix is looking at low-cost content like workout videos, which we believe will present a lot of value to subscribers at very low cost,” they added later.

    The analysts said that they felt Netflix was well positioned, as other streamers rethink their approach to expansion and financials. And they said Netflix “should be valued as an immensely profitable, slow-growth company.” They also said that Netflix’s decision to launch a cheaper ad-supported option was a “great decision” after growth stalled in the U.S. and Canada and the company’s business in Europe, the Middle East and Africa reaches the saturation point.

    For Tesla Inc.
    TSLA,
    -0.48%    ,
    which reports results on Wednesday, the focus for investors will be on price-cutting and its impact on margins. Still, Potter, an analyst at Piper Sandler, has said Tesla is on a “warpath” and “maintaining its aggressive approach to pricing,” and said investors “should expect relentless price cuts to continue.”

    Base prices for Tesla’s Model S and Model X have fallen by around $5,000, MarketWatch has noted, as the electric-vehicle maker tries to stimulate demand. The company is also selling a more affordable Model Y SUV.

    “Tesla concerns on pricing and a race to the bottom persisted as general sentiment on the stock is souring given recent price cuts after a brief period of stabilization,” TD Cowen analyst Jeffrey Osborne said in a note.

    Tesla will report as the Biden administration tries to take a harder stance on auto pollution. The EPA recently proposed new emissions restrictions intended to hasten electric-vehicle usage, by incrementally curtailing tailpipe emissions each year for vehicle model years 2027 through 2032. However, some analysts said the measures would push prices higher for regular and electric vehicles.

    This week in earnings

    The first-quarter earnings reporting season will pick up steam in the week ahead, with 60 S&P 500 companies, including six from the Dow Jones Industrial Average
    DJIA,
    -0.42%    ,
    reporting quarterly results, according to FactSet. Those companies will report as Wall Street analysts remain pessimistic about results for the quarter, and the prospect of another so-called “earnings recession” in which profits contract for at least two straight quarters.

    “As of today, the S&P 500 is reporting a year-over-year decline in earnings of -6.5% for the first quarter, which would mark the largest earnings decline reported by the index since Q2 2020 (-31.6%) and the second straight quarter the index has reported a decline in earnings,” FactSet Senior Earnings Analyst John Butters said in a report on Friday.

    After investors cheered JPMorgan Chase & Co.’s
    JPM,
    +7.55%
    quarterly results on Friday — despite Silicon Valley Bank’s collapse and broader recession anxieties — other banking giants, like Bank of America Corp.
    BAC,
    +3.36%    ,
    Goldman Sachs Group Inc.
    GS,
    +1.44%
    and Morgan Stanley
    MS,
    +1.19%
    report during the week ahead. So does Johnson & Johnson
    JNJ,
    -0.16%    ,
    after it agreed to pay as much as $8.9 billion to settle scores of lawsuits alleging that its talc baby powder was linked to cancer. Charles Schwab Corp.
    SCHW,
    -1.40%    ,
    United Airlines Holdings Inc.
    UAL,
    -0.71%
    and AT&T Inc.
    T,
    -0.15%
    also report during the week.

    The calls to put on your calendar

    Supply-chain update, anyone? Shipping rates have fallen. Labor tensions have risen. Railroad safety is under scrutiny. Elsewhere in that industry, hedge funders are applying pressure. Memories of 2021’s supply-chain meltdown are still fresh after it led to shipping delays and put the low-work labor that fuels much of that distribution network under a spotlight.

    At any rate, trucking and logistics company J.B. Hunt Transportation Services Inc.
    JBHT,
    +1.23%
    reports on Monday, while railroad giant CSX Corp.
    CSX,
    +0.13%
    reports on Thursday. Both companies report after a drop-off in demand for goods last year, as inflation remolded consumers’ buying habits. They also report after rail workers threatened to strike over what they said were inadequate sick-time policies. More recently, a group representing the terminal operators at the ports of Los Angeles and Long Beach alleged that dockworkers were disrupting daily operations at the two massive import gateways, as the workers’ union and the terminal operators try to work out a contract. The quarterly financial reports and earnings calls will offer a look at what the year ahead has in store.

    The number to watch

    Credit-card transactions, charge-offs: Credit-card providers Discover Financial Services
    DFS,
    +0.68%
    and American Express Co.
    AXP,
    +0.57%
    report Wednesday and Thursday, respectively. The companies will report after Discover took a hit in January after it forecast credit-card net charge-offs — a measure of debt a company doesn’t think it’ll get back — that were worse than what Wall Street expected. Similar to the results from the big banks, the results from American Express and Discover will tells us how much consumers are still spending, and whether more are falling behind on their bills, as recession anxieties prevail.

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  • Microsoft Looks to ChatGPT AI to Transform Its Digital Ad Business

    Microsoft Looks to ChatGPT AI to Transform Its Digital Ad Business

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    Microsoft Looks to ChatGPT AI to Transform Its Digital Ad Business

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  • Netflix Is About to Kick Off Tech Earnings. There Are Lots of Questions.

    Netflix Is About to Kick Off Tech Earnings. There Are Lots of Questions.

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    The outlook for


    Netflix


    ‘s first-quarter earnings report, due after the close of trading on Tuesday, is a little muddled.

    The company is still the clear leader in the streaming video market. But it is struggling to show meaningful growth given a weak economy, increasingly aggressive competition, and an apparently saturated U.S. market for streaming.

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  • Apple CEO Tim Cook explains why consumers would want a mixed-reality headset

    Apple CEO Tim Cook explains why consumers would want a mixed-reality headset

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    Apple Inc. Chief Executive Tim Cook, GQ’s latest cover boy, has a sales pitch for a mixed-reality headset.

    “The idea that you could overlay the physical world with things from the digital world could greatly enhance people’s communication, people’s connection,” Cook told GQ, without confirming the rumored June 5 announcement of Apple’s
    AAPL,
    +0.77%
    Reality Pro headset.

    Apple’s plunge into the so-called metaverse would offer a jolt to a flagging industry as well as serious competition to Facebook parent Meta Platforms Inc.
    META,
    +0.53%    ,
    Alphabet Inc.’s
    GOOGL,
    +0.61%

    GOOG,
    +0.88%
    Google, Microsoft Corp.
    MSFT,
    -0.37%    ,
    Snap Inc.
    SNAP,
    +0.27%
    and others.

    “ ‘It’s the idea that there is this environment that may be even better than just the real world — to overlay the virtual world on top of it might be an even better world.’ ”


    — Tim Cook

    Creative users, the lifeblood of Apple’s business model, stand to gain the most from virtual-reality products, according to Cook.

    “It’s the idea that there is this environment that may be even better than just the real world — to overlay the virtual world on top of it might be an even better world,” Cook told GQ. “If it could accelerate creativity, if it could just help you do things that you do all day long and you didn’t really think about doing them in a different way.”

    Cook also looked inward during the far-ranging interview, explaining his persona and the challenges in succeeding the legendary Steve Jobs as Apple CEO. Jobs died in 2011.

    “I always hate the word normal in a lot of ways, because what some people use to describe normal equals straight,” Cook said. “Some people would use that word in that kind of way. I don’t know — I’ve been described as a lot of things, but probably normal is not among those.”

    Added Cook: “I knew I couldn’t be Steve. I don’t think anybody could be Steve. I think he was a once-in-a-hundred-years kind of individual, an original by any stretch of the imagination. And so what I had to do was to be the best version of myself.”

    From the archives (October 2011): Steve Jobs: MarketWatch’s CEO of the Decade

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  • Disney eliminates metaverse division in cost-cutting purge: report

    Disney eliminates metaverse division in cost-cutting purge: report

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    The metaverse is among the first victims of Walt Disney Co.’s cost-cutting purge.

    The Magic Kingdom is shutting down its next-generation storytelling and consumer-experiences unit, the small division that was developing metaverse strategies, as part of a plan to slash 7,000 jobs, according to a Wall Street Journal report on Tuesday.

    Disney…

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  • Alibaba’s Shakeup Is Unrivaled. What It Means for the Stock.

    Alibaba’s Shakeup Is Unrivaled. What It Means for the Stock.

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    Alibaba


    stock was on track for its best day in months after the Chinese technology giant announced that it would split itself into six units, opening the door for its subsidiary businesses to go public.

    Akin to Alibaba (ticker: BABA) shifting from conglomerate to holding company, the move is designed to unlock shareholder value and foster market competitiveness, said the group, which is one of China’s largest and most important companies. It’s a nod both to investors who have weathered years of losses for the stock—caused largely by regulatory pressures—as well as regulators who have hammered Alibaba and the rest of the Chinese tech sector over competition concerns since late 2020.

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  • Amazon’s stock dips 1% as another 9,000 layoffs announced

    Amazon’s stock dips 1% as another 9,000 layoffs announced

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    Amazon.com Inc. is eliminating another 9,000 jobs, the company announced Monday morning.

    In a memo to staff, Amazon
    AMZN,
    -1.25%
    Chief Executive Andy Jassy said the cuts would take place over the next few weeks and primarily affect Amazon Web Services, People Experience and Technology Solutions, advertising and Twitch. [Twitch CEO Dan Clancy broke the news of 400 layoffs to employees in a blog post later Monday.]

    “This was a difficult decision, but one that we think is best for the company long term,” Jassy wrote.

    “For several years leading up to this one, most of our businesses added a significant amount of headcount,” Jassy added. “This made sense given what was happening in our businesses and the economy as a whole. However, given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount.”

    The news sent the retailer’s stock down 1% in trading Monday.

    The latest layoffs, amid a challenging macroeconomic climate that has claimed tens of thousands of jobs in the tech industry, follow an earlier round at Amazon, announced in November, that affected more than 18,000 employees. Additionally, Amazon has paused construction of its second headquarters in Virginia.

    At the same time, there are rumblings out of the Beltway that the Biden administration is preparing legal actions against Amazon stemming from investigations into its business practices, according to a report in Politico.

    Amazon is the second Big Tech company this month to announce additional job cuts. Last week, Mark Zuckerberg, CEO of Facebook parent Meta Platforms Inc.
    META,
    +1.12%    ,
    wrote in a blog post the social-networking company would slash 10,000 more employees as it focuses on a “year of efficiency.” The move drove Meta shares up 7% and helped the company top $500 billion in market value for the first time since June.

    In November, the company said it would cut 11,000 employees, or about 13% of its workforce, in the first layoffs in the company’s 18-year history.

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  • U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

    U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

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    U.S. stocks ended lower Friday as worries about banking-sector stability reemerged following a bankruptcy filing by SVB Financial Group and the release of data showing banks borrowed $165 billion from the Federal Reserve over the past week.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -1.19%
      fell 384.57 points, or 1.2%, to close at 31,861.98.

    • The S&P 500
      SPX,
      -1.10%
      dropped 43.64 points, or 1.1%, to finish at 3,916.64.

    • The Nasdaq Composite
      COMP,
      -0.74%
      slid 86.76 points, or 0.7%, to end at 11,630.51, snapping a four-day win streak.

    For the week, the Dow fell 0.1%, the S&P 500 gained 1.4% and the Nasdaq climbed 4.4%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses while the Nasdaq saw its biggest weekly percentage gain since January.

    What drove markets

    U.S. stocks fell Friday as worries about the banking sector persisted.

    “The markets are up and down all this week, and they’re moving typically in big amounts, because there really isn’t any consensus on how the strains in the banking system will play” into the economy, said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, in a phone interview Friday. Investors are trying to get a sense for how quickly the economy may be slowing and whether the problems in the banking sector will lead to an “accelerated slowing,” he said.

    Concerns about the banking sector’s ability to withstand deposit flight reemerged Friday morning after SVB Financial Group
    SIVB,
    -60.41%
    announced it had filed for Chapter 11 bankruptcy protection. SVB is the holding company of Silicon Valley Bank , which was put into FDIC receivership last Friday.

    On Thursday, First Republic Bank announced that it would receive $30 billion of uninsured deposits from a group of large U.S. banks. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. were among the 11 banks that agreed to provide the deposits.

    Meanwhile, Federal Reserve data released Thursday afternoon in New York showed banks borrowed a combined $165 billion from the central bank. Most of the borrowing occurred via the Fed’s discount window. But a small amount was also tapped through the Fed’s new Bank Term Funding Program that allows bonds trading at a discount to be used as collateral, at par value. The fact that borrowing through the discount window has soared to a record high was adding to the market’s concerns about the banking sector, analysts said.

    See: Banks have borrowed $165 billion from the Fed in past week after SVB failure

    First Republic Bank
    FRC,
    -32.80%
    shares plunged 32.8% Friday, while Credit Suisse Group
    CS,
    -6.94%    ,
    which earlier this week got a lifeline from the Swiss National Bank, closed 6.9% lower, according to FactSet data.

    At least four major banks have put restrictions on trades that involve troubled Swiss lender Credit Suisse Group or its securities, Reuters reported Friday, citing people with direct knowledge of the matter.

    “I think there are still a lot of questions right now,” said Mark Luschini, chief investment strategist at Janney, during a phone interview with MarketWatch. “Investors can’t seem to hold their enthusiasm for equities for longer than a 24-hour news cycle.”

    It’s not hard to understand why investors are still so anxious about the banking sector given the surge in borrowing from the Fed, said Matt Maley, chief market strategist at Miller Tabak + Co.

    “Given that banks borrowed over $150bn at the Fed’s discount window on Wednesday, which compares to $4.4bn the week before, one can understand why investors are worried that the situation might be a bit more dire than the authorities are admitting to right now,” Maley said in emailed commentary.

    In economic news, the Conference Board said Friday that the U.S. leading economic index fell 0.3% in February, marking the 11th straight monthly decline. U.S. industrial production was flat in February, data released Friday by the Fed show.

    Meanwhile, the University of Michigan’s latest reading on consumer sentiment showed consumers were more downbeat in March than at ay time in the last four months.

    While stocks fell Friday, they finished the week mostly higher. The Dow Jones Industrial Average slipped 0.1% for the week, while the S&P 500 booked a 1.4% weekly gain and the technology-heavy Nasdaq Composite saw a weekly rise of 4.4%, according to Dow Jones Market Data.

    Companies in focus
    • FedEx Corp.’s stock 
      FDX,
      +7.97%
       jumped 8% after beating analyst estimates in its fiscal third-quarter earnings. The shipping firm also lifted its profit forecast for the full fiscal year.

    • Shares of PacWest Bancorp 
      PACW,
      -18.95%
      and Western Alliance Bancorp 
      WAL,
      -15.14%
      tumbled as regional banks continued to face pressure, with PacWest falling almost 19% and Western Alliance dropping 15.1%.

    • Shares of Microsoft Corp.
      MSFT,
      +1.17%
      rose 1.2% as analysts saw the latest iteration of Chat GPT giving the tech giant an even greater edge. In other megacap tech names, Alphabet Inc.’s Class A
      GOOGL,
      +1.30%
      shares gained 1.3% while semiconductor giant Nvidia Corp.
      NVDA,
      +0.72%
      advanced 0.7%.

    —Steve Goldstein contributed to this report.

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  • Rivian Stock Falls on Amazon News. It Might Be an Overreaction.

    Rivian Stock Falls on Amazon News. It Might Be an Overreaction.

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    Shares of


    Rivian Automotive


    fell after a report said the electric truck start-up is in talks to end an exclusivity pact with Amazon.com. That might have been an overreaction, judging by Amazon’s response to the news.

    The Wall Street Journal reported Monday that Rivian (ticker: RIVN) is seeking to remove an exclusivity term in its agreement with Amazon (AMZN) after the e-commerce retailer ordered about 10,000 electric delivery vans for this year, which was on the lower end of Amazon’s range.

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