Coffee With Greta: Elon Musk Wants to Buy Twitter

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Good morning friends!

A quick heads up there will be no Coffee with Greta tomorrow morning, the market is closed!

Futures are flat as traders assess a huge Twitter buyout offer from Elon Musk, Q1 earnings, and new economic data.

Let’s get right to it!

Elon Musk Offers to Buyout Twitter

Twitter (TWTR) shares are up 6.3% ahead of the open after Tesla (TSLA) CEO Elon Musk offered to buy the social media company for $43 billion. 

A new SEC filing shows Musk offered to buy the company for $54.20 per share.

In a letter to Twitter Chairman Bret Taylor, Musk said, “I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy”.

He said the company “will neither thrive nor serve this social imperative in its current form. Twitter needs to be transformed as a private company”.

Musk said this is his “best and final offer” and he will have to reconsider holding the stock if it is not accepted. 

In a statement, Twitter said, “The Twitter Board of Directors will carefully review the proposal to determine the course of action that it believes is in the best interest of the Company and all Twitter stockholders”.

Morgan Stanley Tops Q1 Expectations

Morgan Stanley (MS) shares are up 1.5% in premarket trade after reporting strong Q1 earnings. 

The bank reported earnings of $2.02 per share on $14.8 billion in revenue. 

That topped analysts’ expectations for EPS of $1.68 on $14.2 billion in revenue. 

The beat came as trading revenue rose more than expected. 

Morgan Stanley reported $3.2 billion in equity trading revenue vs $2.7 billion expected. 

Fixed income trading revenue rose to $2.9 billion vs $2.2 billion expected. 

But the bank’s $5.9 billion wealth management revenue was shy of expectations for $6.2 billion. 

Investment banking revenue came in at $1.6 billion vs the $1.8 billion estimate.

Citigroup Beats Q1 Estimates

Citigroup (C) shares are 1.8% higher ahead of the open as strong trading revenue boosted its Q1 results. 

The bank reported earnings of $2.02 per share on $19.19 billion in revenue. 

That was better than analysts’ expectations for EPS of $1.55 on $18.15 billion in revenue. 

Earnings were down 46% year-over-year due to higher expenses and credit costs and lower revenues. 

Revenue dipped 2% annually. 

Citigroup is expected to take the biggest hit of all U.S. banks from the war in Ukraine.

The bank has operations in more than 100 countries. 

Goldman Sachs Crushes Q1 Expectations

Goldman Sachs (GS) shares are up 1.5% in premarket trade after crushing Q1 expectations. 

The bank reported earnings of $10.76 per share on $12.93 billion in revenue. 

That dominated analysts’ expectations for EPS of $8.89 on $11.83 billion in revenue.

CEO David Solomon said, “The rapidly evolving market environment had a significant effect on client activity as risk intermediation came to the fore and equity issuance came to a near standstill.”

Fixed income, currency, and commodities trading revenue surged 21% from a year earlier to $4.72 billion. 

That topped analysts’ estimates for $3.04 billion. 

Equities trading revenue fell 15% year-over-year to $3.15 billion but still beat expectations.

Wells Fargo Q1 Revenue Falls Short

Wells Fargo (WFC) shares are down 3.4% ahead of the open after missing Q1 revenue expectations.

The consumer bank reported earnings of $0.88 per share vs expectations for $0.80 EPS. 

But $17.59 billion in revenue was short of analysts’ expectations for $17.8 billion. 

That miss came as rising mortgage rates caused a 33% year-over-year decline in home lending. 

Mortgage banking totaled just $693 million in Q1 vs analysts’ expectations for $880 million. 

UnitedHealth Group Raises Forecast After Strong Q1

UnitedHealth Group (UNH) shares are up 0.5% in premarket trade after a better-than-expected Q1. 

The health insurance giant reported earnings of $5.49 per share on $80.1 billion in revenue. 

That topped analysts’ expectations for EPS of $5.37 on $78.8 billion in revenue. 

Revenue at its pharmacy division, Optum, rose 19% year-over-year to $43.1 billion. 

UnitedHealth boosted its full-year earnings forecast by $0.10 to between $21.20 and $21.70 per share.

Rent the Runway Beats Fiscal Q4 Expectations

Rent the Runway (RENT) shares are down 1.2% ahead of the open after crushing fiscal Q4 expectations.

The clothing rental service reported a loss of $0.62 per share on $64.1 million in revenue. 

That was better than analysts’ expectations for a loss of $0.71 per share on $63.3 million in revenue. 

The CEO said, “the inflationary environment is basically a competitive advantage for Rent the Runway.”

The company forecast fiscal Q1 between $63.5 million to $64.5 million and full-year fiscal 2022 revenue between $295 million and $305 million. 

Retail Sales Fall Short in March

U.S. retail sales rose less than expected last month. 

The Commerce Department reported retail sales rose 0.5% to $665.7 billion. 

Economists were expecting a gain of 0.6%. 

But the increase was all thanks to higher gas prices as gasoline sales surged 8.9%.

Spending at gas stations was up 37% compared to March 2021 while spending at restaurants and bars jumped 19.4%.

Excluding gas stations, retail sales fell 0.3% in March.

February’s retail sales were revised higher to $662.4 billion. 

This data is not adjusted for inflation.

Weekly Jobless Claims Rise 

Weekly jobless claims rose more than expected last week. 

The Labor Department reported 185,000 Americans filed initial claims for unemployment benefits. 

That was up 18,000 from the previous week’s revised level and higher than expectations for 172,000. 

Continuing claims fell by 48,000 to 1.48 million in the week ending April 2.

Fed’s Waller Predicts 0.5% Rate Hikes

Fed Governor Christopher Waller told CNBC Wednesday that he expects multiple 0.5% rate hikes at future meetings. 

In an interview, Waller said, “I prefer a front-loading approach, so a 50-basis-point hike in May would be consistent with that, and possibly more in June and July.”

CME Group’s FedWatch Tool shows 91% of traders expect a 0.5% rate hike next month.

The neutral level for the federal funds rate is currently considered to be around 2.5%.

Waller said the bank should get above neutral by the second half of this year in order to impact inflation. 

His comments come after the CPI surged 8.5% year-over-year in March, the largest gain since December 1981.

Waller said he’s confident inflation will begin to subside but the Fed is limited on how it can fix the supply chain issues. 

“We can’t produce more wheat, we can’t produce more semiconductors, but we can affect the demand for these products in a way that puts downward pressure and takes some pressure off of inflation,” he said.

In Case You Missed It

• Producer-side inflation hit a record high in March. The Bureau of Labor Statistics Producer Price Index skyrocketed 11.2% year-over-year last month, the highest gain on record. The PPI rose 1.4% monthly vs 1.1% expected. The core PPI rose 0.9% monthly and 7% annually. 

 

• JPMorgan Chase (JPM) CEO Jamie Dimon warned the risk of a recession in the U.S. is rising. Dimon told reporters Wednesday that economic growth will continue through at least Q3 but “after that, it’s hard to predict”. He cited inflation and the Fed tightening as “storm clouds on the horizon”. JPMorgan’s stock closed 3.2% lower Wednesday after missing Q1 profit expectations.