Coffee With Greta: The Bear Just Missed…
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +272 (+0.9%) SPX Futures: +43 (+1.1%) NASDAQ Futures: +173 (+1.5%) Good morning friends! Futures are higher as the market looks poised for a Friday rally after two days of selling. Let’s get right to it! S&P 500 Inching Closer to Bear Market The S&P 500 looks like it will avoid opening in bear market territory as the index teeters on the edge of that cliff. The official closing level for a bear market is 3,837.25, which would be down 20% from the index’s most recent record in January. If the S&P slips into that territory it would be its first bear market since the pandemic plunge in March 2020. The Nasdaq is already deep in a bear market, down 29% from its November record as of Thursday’s close. The Dow has dropped more than 15% from its high. Even with today’s bounce, the Dow is on track for its first 8-week losing streak since 1932. Both the S&P and the Nasdaq are on track for their seventh straight weekly loss. Investors Flee To Bonds The 10-year and 30-year Treasury yields are both flat, after tumbling on Thursday as investors flee to safety amid turmoil on Wall Street. Yields fall as more investors buy Treasury notes and bonds. Analysts say this week’s activity in the Treasury market shows investors are becoming increasingly concerned about the short-term future of the economy as the Fed tackles inflation. Foot Locker Rises on Earnings Beat Foot Locker (FL) shares are up 4.2% ahead of the open after beating Q1 profit expectations. The shoe retailer reported adjusted earnings of $1.60 per share on $2.18 billion in revenue. Analysts were expecting adjusted EPS of $1.54 on $2.2 billion in revenue. Comparable-store sales fell 1.9% year over year and the company’s gross margin fell by 1% as supply-chain costs and markdowns rose. Foot Locker forecast full-year earnings at the top range of its guidance. The company expects EPS to be between $4.25 and $4.60 in 2022. Discount Retailer Ross Plunges On Earnings Ross Stores (ROST) shares are tumbling 23.3% in premarket trade after missing Q1 expectations. The discount retailer reported earnings of $0.97 per share on $4.33 billion in revenue. That missed analysts’ expectations for EPS of $0.99 on $4.53 billion in revenue. It was also a sharp decline from EPS of $1.34 on $4.52 billion a year ago. Comparable-store sales dropped 7% compared to Q1 2021. Ross forecast same-store sales will fall 4% to 6% annually in Q2 with EPS between $0.99 and $1.07. Deere Slips Despite Earnings Beat Deere & Company (DE) shares are down 5.7% ahead of the open despite beating Q1 expectations. The company reported earnings of $6.81 per share on $13.4 billion in revenue. That was better than analysts’ expectations for EPS of $6.69 on $13.2 billion in revenue. It was also an increase from Q1 2021 and Deere hiked its full-year earnings guidance. The company now expects $7.2 billion in net income this year, up from $6.9 billion previously and higher than analysts’ estimates for $7 billion. Palo Alto Networks Jumps On Outlook Palo Alto Networks (PANW) shares are up 11.8% in premarket trade after beating fiscal Q3 expectations and hiking its full-year guidance. The cybersecurity company reported adjusted earnings of $1.79 per share on $1.39 billion in revenue. That topped expectations for adjusted EPS of $1.68 on $1.36 billion in revenue. Revenue jumped 29% year-over-year. Palo Alto’s CEO said, “We saw strong top-line growth in Q3, which is a testament to our teams’ consistent execution in capitalizing on the strong cybersecurity demand trends.” The company hiked its full-year outlook, forecasting adjusted EPS between $7.43 and $7.46 per share and revenue between $5.481 billion and $5.501 billion. That beat analysts’ estimates for EPS of $7.29 on $5.46 billion in revenue. Oil Prices Hold Steady Oil prices are slightly higher today as the market weighs several factors. West Texas Intermediate crude futures are up 0.3% to $112.50 bbl while Brent crude futures are 0.3% higher at $112.40 bbl. Concerns about slowing economic growth in the U.S. are offsetting expectations of a demand rebound in China. The EU is also still working to approve a sanctions package which includes a ban of Russian oil imports. Both WTI and Brent are on track for their fourth straight weekly gain. U.S. Gas Prices Hit New Record Average U.S. gas prices jumped to another record-high for the 11th day in a row today. AAA shows the national average for a gallon of regular rose to $4.593 overnight. Diesel slipped to $5.57/gal after touching $5.577 earlier this week. Gas prices have been surging due to reduced refinery capacity in the U.S. on top of higher oil prices from Russia’s war in Ukraine. In Case You Missed It Existing home sales tumbled 2.4% in April as mortgage rates rose. The National Association of Realtors reported sales dropped to a seasonally adjusted annual rate of 5.61 million units vs 5.64 million expected. The median sales price jumped 14.8% year-over-year to a record $391,200. There were 1.03 million homes for sale at the end of April, representing a 2.2-month supply at the current sales pace. The Conference Board’s leading economic index fell 0.3% in April. That drop was unexpected as economists had forecast a flat reading. The decline was largely due to a decline in home building permits and consumer confidence. The Conference Board expects the U.S. economy will expand just 2.3% this year vs 5.6% in 2021.
Continue Reading -->Coffee With Greta: Retail Is a Total Mess, Thanks to Inflation
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -339 (-1.1%) SPX Futures: -41 (-1%) NASDAQ Futures: -124 (-1%) Good morning friends! Futures are falling with the S&P 500 teetering on the brink of a bear market following more disappointing retail earnings. Let’s get right to it! Kohl’s Slashes Outlook Kohl’s (KSS) shares are down 7.1% ahead of the open after missing fiscal Q1 profit expectations and slashing its full-year outlook. The retailer reported earnings of $0.11 per share on $3.72 billion in revenue. Analysts were expecting EPS of $0.70 on $3.68 billion in revenue. Comparable sales tumbled 5.2% year over year vs analysts’ expectations for a 0.5% increase. Kohl’s CEO blamed the profit miss on inflation. “Sales considerably weakened in April as we encountered macro headwinds related to lapping last year’s stimulus and an inflationary consumer environment,” she said. The company now expects full-year adjusted EPS between $6.45 to $6.85 vs the previous forecast for $7.00 to $7.50. Kohl’s also said final and fully-financed bids from potential buyers are expected in the coming weeks as it faces increased pressure to sell. Cisco Crashes On Revenue Miss, Weak Outlook Cisco Technologies (CSCO) shares are tumbling 11.3% in premarket trade after missing fiscal Q3 revenue expectations and calling for an unexpected sales decline in the current quarter. The networking company reported adjusted earnings of $0.87 per share vs analysts’ expectations for $0.86. But revenue of $12.84 billion missed analysts’ estimates for $13.34 billion. Cisco’s CEO said the Ukraine war reduced revenue by $200 million, added $5 million to the cost of sales last quarter, and added $62 million in operating expenses. The company forecast earnings between $0.76 and $0.84 per share in fiscal Q4. Cisco expects revenue to fall 1% to 5.5% annually this quarter. Analysts were estimating fiscal Q4 earnings at $0.92 per share on $13.87 billion in revenue, which would be up 6% year over year. Bath & Body Works Drops After Cutting Outlook Bath & Body Works (BBWI) shares are dropping 7.6% ahead of the open despite beating Q1 expectations. The specialty retailer reporting earnings of $0.64 per share on $1.45 billion in revenue. That was better than analysts’ expectations for EPS of $0.53 on $1.44 billion in revenue. Bath & Body Works forecast full-year earnings between $3.80 and $4.15 per share vs previous guidance of between $4.30 and $4.70 per share. The company said that adjusted outlook reflects its “decision to accelerate investments in information technology and its customer loyalty program, as well as projected increases in inflationary pressures.” Under Armour CEO Steps Down Under Armour (UAA) shares are sliding 5.7% in premarket trade after announcing its president and CEO will step down. Patrik Frisk will leave the position effective June 1. Current COO Colin Browne will take over as operating CEO while the company searches for a permanent replacement. Frisk will also step down from the Board of Directors but will remain with Under Armour as an advisor through September 1. Weekly Jobless Claims Hit 4-Month High Weekly jobless claims rose to a 4-month high. The Labor Department reported 218,000 Americans filed initial claims for unemployment benefits last week, up 21,000 from the previous week’s revised level. That was sharply higher than economists’ expectations for 200,000. Continuing claims fell by 2,000 to 1.32 million in the week ending May 7. Philly Fed Manufacturing Index Tumbles Manufacturing activity slowed sharply in the Philadelphia Fed region. The Philly Fed’s Gauge of Regional Manufacturing plunged to 2.6 in May vs 15 expected. That’s the lowest level of activity in two years but any reading above 0 still indicates expansion in the sector. The new orders index rose 4.3 points to 22.1 while the shipments index rose 16.2 points to 35.3, the highest since October 2021. But the employment index tumbled 16 points to 25.5, dragging down the overall reading. Respondents to the survey expect inflation to still be at 6.5% a year from now, up from the previous outlook for 5% in February. The 6-month business outlook also slumped by 5.7 points to 2.5 in May. Oil Prices Fall On Economic Growth Fears Oil prices are sliding on fears of an economic slowdown in the U.S. West Texas Intermediate crude futures are down 2.8% to $106.50 bbl while Brent crude futures are falling 1.7% to $107 bbl. Energy traders are growing concerned about the impact of high fuel prices on economic growth. But the EU’s still expected ban of Russian oil imports is supporting prices from falling further. U.S. Gas Prices Hit 10th Straight Record-High Average gas prices in the U.S. jumped more than 2 cents overnight . AAA shows the national average for a gallon of regular rose to $4.589 today, a new record for the 10th straight day. Diesel held steady at $5.577/gal. Existing Home Sales Expected to Fall The National Association of Realtors reports existing home sales for April at 10:00 a.m. ET. That report is expected to show sales fell last month to a seasonally adjusted annual rate of 5.64 million units. The housing market has suffered from high demand and low inventory over the past two years. But buyer demand has fallen in recent months as mortgage rates jump. In Case You Missed It U.S. oil inventories declined unexpectedly last week. The Energy Information Administration reported crude inventories dropped by 3.4 million barrels in the week ending May 13 vs expectations for an increase of 2.1 million barrels. The U.S. gasoline stockpile fell by 4.8 million barrels vs expectations for a 100,000 barrel decline. Retail stocks got rocked by weak earnings on Wednesday. Target (TGT) was the biggest loser in the sector, plummeting 24.8% after missing Q1 profit expectations. That was the largest one-day plunge for the stock since Black Monday in 1987. Walmart (WMT) shares tumbled 6.9% while Costco (COST) dropped 12.5%. American CEOs are expecting the Fed’s inflation battle to cause
Continue Reading -->Coffee With Greta: Inflation Wrecks Target
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -184 (-0.6%) SPX Futures: -32 (-0.8%) NASDAQ Futures: -144 (-1.1%) Good morning friends! Futures are lower following disappointing retail earnings. Let’s get right to it! Target Craters On Big Earnings Miss Target (TGT) shares are plunging 24.2% ahead of the open after sharply missing Q1 expectations. The retailer reported adjusted earnings of $2.19 per share on $25.17 billion in revenue. EPS came in below the $3.07 consensus but the revenue number beat estimates of $24.49 billion. Comparable sales rose 3.3% year over year, better than expectations for a 0.8% gain. Profits plummeted 41% compared to a year ago. Target’s CEO Brian Cornell blamed the profit miss on “unusually high costs”. Those challenges included inventory that arrived too early or too late, employee compensation, more employees at distribution centers, and changing merchandise sales. Target was also hit by higher freight costs as gas prices jumped, those issues are expected to be worse in Q2. The company reiterated its full-year forecast for revenue growth in the mid single-digits but did not provide earnings guidance. Lowe’s Dips On Revenue Miss Lowe’s (LOW) shares are down 4% in premarket trade after missing Q1 sales expectations. The home improvement retailer reported earnings of $3.51 on $23.66 billion in revenue. That was better than analysts’ expectations for EPS of $3.22 but missed estimates for $23.76 billion in revenue. Lowe’s CEO said sales in its outdoor seasonal categories “were impacted by unseasonably cold temperatures in April.” He said the company has already seen improvement in May. Same-store sales were down 4% year over year, worse than expectations for a 2.5% drop. Lowe’s reiterated its full-year outlook for revenue to range between $97 billion and $99 billion. Housing Starts, Building Permits Slump U.S. homebuilding slowed unexpectedly in April. The Census Bureau reported housing starts fell 0.2% to a seasonally adjusted annualized rate of 1.72 million units. That missed economists’ expectations for starts to rise to a SAAR of 1.75 million units. Building permits also tumbled but were in line with expectations. The number of new permits issued last month dropped 3.2% to a SAAR of 1.82 million units. The data is indicative of a new home market that is struggling amid surging material costs and falling demand due to rising mortgage rates. Weekly Mortgage Demand Tumbles Mortgage demand fell last week even as rates cooled a bit. The Mortgage Bankers Association says purchase applications fell 12% weekly and dropped 15% year over year. That was the first weekly drop since the third week in April. Refinance applications fell 10% weekly and were down 76% compared to a year ago. The average 30-year contract rate actually decreased to 5.49% from 5.53%, but those rates are still sharply higher than even a few months ago. Adjustable-rate mortgages made up 10.5% of all applications, up from about 3% at the start of the year. Oil Prices Rise On China Demand Optimism Oil prices are rising on optimism that easing Covid restrictions in China will boost demand. West Texas Intermediate crude futures are up 2.2% to $115 bbl while Brent crude futures are up 1.6% to nearly $114 bbl. Shanghai, China has had three consecutive days of no new Covid cases outside quarantine zones. Authorities allowed 864 of the city’s financial institutions to resume work Wednesday. The American Petroleum Institute reported Tuesday that U.S. crude inventories fell by 2.4 million barrels last week. Gasoline inventories declined by 5.1 million barrels. The Energy Information Administration reports official inventory data today. The EIA report is expected to show a 2.1 million barrel increase in crude inventories and a 100,000 barrel decline in gas stockpiles. U.S. Gas Prices Hit New Record Average gas prices in the U.S. jumped more than 4 cents overnight. AAA shows the national average for a gallon of regular rose to $4.567 today, a new record for the ninth straight day. Diesel jumped to a fresh record $5.577/gal. Analysts say U.S. households are now spending $5,000 a year on gas. That’s up sharply from $2,800 a year ago. In March, the annual rate of spending on gas was at just $3,800. Powell: Fed Won’t Hesitate to Move Rates Past Neutral Fed Chair Jerome Powell told the Wall Street Journal Tuesday that the bank is committed to doing whatever it takes to tackle inflation. Powell said, “If that involves moving past broadly understood levels of neutral we won’t hesitate to do that”. He said the Fed’s goal is to reach “a place where we can say financial conditions are in an appropriate place, we see inflation coming down. We’ll go to that point. There won’t be any hesitation about that.” The Fed Chair also warned those efforts do have the potential to cause a recession but said “there are a number of plausible paths to have a soft as I said softish landing. Our job isn’t to handicap the odds, it’s to try to achieve that.” CME Group’s FedWatch Tool shows 87% of traders expect a 0.5% rate hike at the June meeting after Powell previously said a 0.75% was not on the table. 13% of traders are still betting on a 75-basis point hike. Elon Musk Wants SEC Investigation of Twitter’s Fake User Claims Elon Musk escalated his dispute with Twitter (TWTR) over the number of fake users on the platform Tuesday. Musk responded to a tweet that said, “The SEC should investigate” whether Twitter’s estimates about fake users are true. In response, Musk tweeted “Hello @SECGov, anyone home?” Twitter shares have been tumbling as investors sell the stock in fear Musk will abandon his $44 billion deal to take the company private. TWTR is down 1.1% ahead of the open. The stock has given up all of its gains since Musk originally unveiled his stake in the company on April 4. In Case You Missed It The National Association of
Continue Reading -->Coffee With Greta: The People vs. Inflation
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +371 (+1.1%) SPX Futures: +56 (+1.4%) NASDAQ Futures:+213 (+1.7%) Good morning friends! Futures are rallying after some strong economic data. Let’s get right to it! April Retail Sales Jump The Commerce Department reported U.S. retail sales rose 0.9% in April to $677.7 billion as consumers remain resilient in the face of soaring prices. Although that was slightly lower than economists’ expectations for a 1% gain, March was revised higher to a 1.4% increase from the original 0.7%. Retail sales were up 8.2% compared to April 2021. Gasoline sales surged 36.9% year-over-year while restaurant sales jumped 19.8% annually. Core retail sales, which excludes gas stations and auto dealers, rose 1% last month. Adjusted for inflation on a monthly basis, retail sales were still up 0.6%. Walmart Tumbles On Earnings Miss Walmart (WMT) shares are falling 5.6% ahead of the open after missing Q1 earnings expectations. The retailer reported adjusted earnings of $1.30 per share on $141.57 billion in revenue. That was weaker than analysts’ expectations for adjusted EPS of $1.48 but beat estimates for $138.94 billion in revenue. Walmart’s CFO blamed the miss on high fuel costs, labor costs, and high inventory levels. The CEO said, “We’re adjusting and will balance the needs of our customers for value with the need to deliver profit growth for our future”. The company raised its sales outlook, forecasting net revenue growth of about 4% this year vs the prior 3% outlook. But Walmart lowered profit expectations, now expecting full-year EPS to decline about 1% year-over-year. Home Depot Rallies On Earnings Beat Home Depot (HD) shares are up 3.6% in premarket trade after reporting a record first quarter. The home improvement retailer reported earnings of $4.09 per share on $38.91 billion in revenue. That crushed analysts’ expectations for EPS of $3.68 on $36.72 billion in revenue. Revenue jumped 3.8% and set a new record for Q1. Same-store sales increased 2.2%. Home Depot hiked its full-year outlook, now expecting revenue growth of about 3% and EPS growth in the mid-single digits. Berkshire Invests in Citigroup, Paramount Citigroup (C) shares are 5% higher ahead of the open while Paramount (PARA) is jumping 10% after Berkshire Hathaway (BRK.A) unveiled new investments in both companies. In an SEC filing Monday evening, Berkshire said it purchased more than 55 million Citigroup shares and had a $2.95 billion stake in the bank as of the end of March. Warren Buffett’s company also bought 68.9 million shares of Paramount, bringing that stake to $2.6 billion at the end of March. Oil Prices Rise, U.S. Gas Prices At Fresh Record Oil prices jumped to a 7-week high today as the EU continues efforts to ban Russian oil imports. West Texas Intermediate crude futures are up 0.3% to $114.50 bbl while Brent crude futures are 0.4% higher at $114.75 bbl. Brent rose to a high of $115.69 earlier today, the highest since March 28. The market is also expecting higher demand as China lifts Covid restrictions. U.S. gas prices hit a fresh record-high today as well. AAA shows the national average for a gallon of regular jumped 4 cents overnight to $4.523. Diesel also rose to a new record $5.573/gal. Musk Still Focused On Fake Twitter Accounts Twitter (TWTR) shares are falling 2% ahead of the open after Elon Musk said he will not move ahead on his take over deal without more clarity on fake users. In a tweet this morning, Musk said “My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does.” Twitter then filed a proxy statement with the SEC, saying it is committed to the deal at the pre-agreed price. Musk hinted Monday he could seek to renegotiate that $44 billion price. Bloomberg reported that Musk said a deal at a lower price wasn’t “out of the question” during an event in Miami Monday. Twitter shares tumbled 8.2% in Monday’s session and have erased all gains made since Musk disclosed his investment in the company in early April. The Tesla CEO estimates fake users make up at least 20% of all Twitter users while the company says it is less than 5%. United Airlines Rallies On Updated Outlook United Airlines (UAL) shares are up 4.2% in premarket trade after the company issued an updated Q2 outlook after-hours on Monday. In an SEC filing, the airline said, “the demand environment has continued to improve, resulting in a higher unit revenue outlook for the second quarter 2022.” United now expects total revenue per available seat mile (TRASM) to be 23% to 25% higher compared to Q2 2019, up from previous guidance of 17%. The company also expects capacity to be 14% higher versus previous guidance of 13%. Homebuilder Sentiment Expected to Fall The National Association of Homebuilders releases its April sentiment index at 10:00 a.m. ET. Economists expect the index to fall 2 points to 75. Homebuilders have enjoyed strong demand for new homes amid a severe shortage of existing homes in the market. But they have also struggled with high costs, supply chain shortages, and an ongoing labor shortage. In Case You Missed It The White House is in a spat with Jeff Bezos over inflation. In a statement Monday, the Biden Administration said “it doesn’t require a huge leap to figure out why” Bezos is opposed to their plans to raise taxes on the wealthy and corporations. Bezos responded in a tweet accusing the White House of trying to “muddy the topic”. The Amazon (AMZN) founder accused the administration late last week of “misdirection” for trying to link inflation to corporate taxes.
Continue Reading -->What Sami’s Taking Long This Week
Sami has been trailing out of a lot of his short positions and adding on some long positions… but all of the long stocks have something in common. What do these moves say about his thoughts on the upcoming week? In this video, Sami explains: – Why he doesn’t have any shorts on this week’s watchlist – What is so interesting about AKAN – How he plans to play stocks near their all-time lows – Why it might be too late to get in EYE (and what would keep it in play) – What makes LIQT an exception to the rule
Continue Reading -->Scott Redler’s Dog Bytes: RDR in FAANG
SPX made a low of 3858 Thursday. To see 4120-4157, it needs to prove it can hold 3963 for a session or so. SPX futures are down 15 but well off the overnight lows. We had chances to switch gears Thursday when my 3850 target was reached. The Oscillator was -75 and it’s now -20. We’ll see if this bear market bounce goes for a week or so. SPY needs to hold $395ish to stay in the game to clear $403 and see $410-$414.TSLA did a Red Dog Reversal around the $700 pivot after six down sessions. It hit a high of $787 Friday. This morning it’s flattish. It might participate in a market bounce but it doesn’t feel like a huge rally is coming. If it can hold $751ish, maybe it can see $845. FB was a nice focus for us Thursday into Friday as it did a Red Dog Reversal to get me long. I sold Friday afternoon as it hit $199.87. I’m looking to buy for a red to green trade. It might even try and clear Friday’s high. AMZN has been one of the weakest F.A.N.G. -type names for a while now. The gap down from earnings never got filled, and it’s been last to rally on all oversold attempts. It got interesting Thursday when it bounced off of $2049. I sold three sets of puts into the weakness to get synthetically long. Buying calls would have been better. It hit $2263. Now we’ll see if it can hold $2156ish to show commitment.Positions Disclosure as of 5/16/2022 at 8:48 a.m. ET
Continue Reading -->Did the Fed Kill the Metaverse?
The Fed sent Wall Street into panic mode in 2022. High-growth tech stocks have been pummeled after soaring through 2020 and 2021. And even the Metaverse isn’t immune. The metaverse was all the rage at the end of 2021. Facebook even changed its name to Meta Platforms (FB) on October 28, 2021. CEO Mark Zuckerberg said, “We believe the metaverse will be the successor to the mobile internet, we’ll be able to feel present – like we’re right there with people no matter how far apart we actually are.” People were even buying real estate in the metaverse — with real money. The Metaverse Group has sunk more than $10 million into digital real estate and is the de facto “landlord” of the virtual world. The 2021 Metaverse report from crypto asset firm Grayscale said, “the metaverse represents a $1 trillion annual revenue market opportunity.” Keep in mind that according to the World Bank, only 16 countries have a GDP over $1 trillion. Cryptocurrencies and NFT’s went mainstream. And then the Fed decided to tackle inflation and ruined the party. The Central Bank has hiked the federal funds rate twice, by 0.25% in March and 0.5% in May. The Fed will also begin the runoff of its $9 trillion balance sheet in June. And 5 more rate hikes are on the schedule this year, with the federal funds rate expected to top 3% by year-end. These actions are meant to reduce the money supply in the U.S. economy to squelch consumer demand that is outstripping the supply chain. But traders are worried that will cause a recession. And that fear has driven a major revaluation of high-growth tech stocks that soared throughout 2020 and 2021. Metaverse stocks are one sector that’s been hit particularly hard… even though it’s supposed to be a trillion-dollar opportunity. Let’s take a look at my previously chosen 5 Top Metaverse Stocks to Watch and how they’ve fared in the 2022 tech rout. Unity Software (U) Unity Software (U) has crumbled more than 70% in 2022. That makes it one of the biggest losers among “metaverse stocks” in 2022. The video game software company got rocked this week by earnings. Although Unity reported Q1 results in line with analysts’ expectations after-hours Tuesday, the market was focused on guidance. The company’s Q2 forecast missed expectations and Unity slashed its full-year outlook. The stock cratered 37% on Wednesday and notched a fresh record-low during the session. The drop wiped out $5 billion of Unity’s market cap. Unity’s plunge from its all-time high is even more severe than the YTD drop. The stock hit a high of $210 on November 18, 2021. Since then, Unity shares are down more than 80%. Autodesk (ADSK) Like the rest of this sector, Autodesk (ADSK) has fallen sharply in 2022. But this drawdown isn’t as severe as Unity Software. Autodesk shares are down about 30% YTD. The stock is faring worse in the 52-week range. ADSK shares have dropped more than 40% from the 52-week high at $344.39 Nvidia (NVDA) Nvidia (NVDA) has been pummeled in 2022. The chipmaker’s stock is down about 40% this year. And the stock is doing much worse in the 52-week range. NVDA ended Friday’s session down nearly 50% from the 52-week high of $346.67. Nvidia’s focus on gaming and graphics processors makes it a key company for the future of the metaverse. The company is scheduled to report fiscal Q3 earnings on May 25. Roblox (RBLX) Roblox (RBLX) hit a fresh record-low this week before bouncing back some. The company reported mixed Q1 results after the close on Tuesday. Those results initially dented the stock but traders turned around their sentiment after optimistic comments from the CEO Wednesday morning. Roblox ended Wednesday’s session up 3.4% at $23.97. But when you zoom out, the stock looks just like the rest of this sector. RBLX shares are down nearly 70% YTD. And it’s even more discouraging when you look at the drawdown from its record high. Roblox hit a high of $141.60 on November 19, 2021. Since then, the stock is down more than 75%. Meta Platforms (FB) The collapse of Meta Platforms (FB) has been one of the biggest stock stories this year. We all remember the stock plummeting 26% on February 3 following brutal Q4 earnings. That drop alone wiped out more than $250 million of FB’s market cap and was the worst day in company history. And it’s gotten worse since then. Meta is down more than 40% YTD. And FB has plummeted nearly 50% from its all-time high of $384.33 on September 10, 2021. The company now plans to cut its metaverse-related spending… less than a year after the rebrand. Reuters reported Thursday that the Reality Labs division at Meta is bracing for a slowdown in spending. The company’s chief technology officer reportedly told employees they would not be able to afford some planned projects and would need to postpone others. The company betting its entire future on the metaverse (so much so that it changed its name) is slowing down its spending on developing the metaverse. Meta lost $2.9 billion on Reality Labs in the first quarter and $3.3 billion in Q4. Although this sector has been beaten down in 2022, analysts still believe the metaverse is the future. Citigroup says the metaverse “represents a potential total addressable market of up to $13 trillion by 2030, made up of 5 billion users.” Is now the time to buy the dip? Let us know what you think in the comments below.
Continue Reading -->Coffee With Greta: Elon Musk Gets Cold Feet
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: +341 (+1.1%) SPX Futures: +57 (+1.5%) NASDAQ Futures: +246 (+2.1%) Good morning friends! Futures are higher as traders look to shake off a dramatic week of selling. Let’s get right to it! Musk Puts Twitter Deal On Hold Twitter (TWTR) shares are plunging 12.4% ahead of the open after Elon Musk announced his buyout deal is on hold. In a tweet, Musk said the deal is “temporarily on hold pending details” on fake accounts. Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn — Elon Musk (@elonmusk) May 13, 2022 In a follow-up tweet, he said he is “still committed” to the acquisition. Still committed to acquisition — Elon Musk (@elonmusk) May 13, 2022 Musk included a link to a Reuters report on Twitter’s estimation that less than 5% of accounts on the platform are spam or fake accounts. He wants this confirmed before he moves ahead with purchasing the platform. If he were to ditch the deal, he would owe Twitter a $1 billion breakup fee. Fed Can’t Guarantee Soft Landing Fed Chair Jerome Powell knows getting inflation under control may cause some pain for the economy. In an interview with Marketplace Thursday, Powell said he can’t guarantee the Fed can accomplish a soft landing. “So a soft landing is, is really just getting back to 2% inflation while keeping the labor market strong. And it’s quite challenging to accomplish that right now, for a couple of reasons,” he said. His comments came after fresh stagflation fears swept across Wall Street Thursday. But Powell steered clear of saying a recession is imminent. He said avoiding a recession “will be challenging, it won’t be easy. No one here thinks that it will be easy. Nonetheless, we think there are pathways … for us to get there.” The Fed Chair reiterated the Fed’s target to get inflation back down to 2%. The CPI jumped 8.3% annually in April while the PPI rose 11%. Cryptocurrencies Bounce The crypto market is clawing back gains after a week of intense selling similar to the moves on Wall Street. Bitcoin is up nearly 9% in the past 24 hours and nearing $31,000. Ethereum is up nearly 9% as well, topping $2,100. The global crypto market cap has risen 8.2% to $1.38 trillion. Crypto was hit hard this week as traders sold-off risk assets. The collapse of Terra’s UST stablecoin also wreaked havoc across the market. The world’s largest stablecoin, Tether, briefly dropped below $1 on Thursday but has since reclaimed that peg. Oil Rises, Gas Hits 4th Straight Record Oil prices are rising despite fears of weaker demand. West Texas Intermediate crude futures are up more than 2% to over $108 bbl while Brent crude futures are up 2% to over $109 bbl. But oil is still on track for its first weekly loss in three weeks amid heightened concerns about slowing economic growth. In the meantime, U.S. gas prices hit a new record-high today. Data from AAA shows the national average for a gallon of regular is now $4.432 while diesel jumped to $5.56/gal. This is the 4th day in a row those prices have jumped to a fresh record. Affirm Rallies On Fiscal Q3 Results Affirm Holdings (AFRM) shares are rallying 36.1% in premarket trade after beating fiscal Q3 expectations. The buy-now, pay-later company reported a loss of $0.19 per share on $354.8 million in revenue. That was better than analysts’ expectations for a loss of $0.46 per share on $344 million in revenue. Affirm said it processed $3.9 billion in gross merchandise volume (GMV) last quarter, up 73% year-over-year and better than estimates for $3.85 billion. The CEO said 81% of those transactions were from repeat customers. Affirm forecast fiscal Q4 GMV between $3.95 billion and $4.05 billion with revenue ranging from $345 million to $355 million. That was in line with analysts’ estimates. Crypto Exchange CEO Buys Stake in Robinhood Robinhood (HOOD) shares are jumping 20.3% ahead of the open after the CEO of a major crypto exchange bought a large stake in the company. A new SEC filing shows FTX CEO Sam Bankman-Fried bought a 7.6% stake in Robinhood. The rally comes after HOOD tumbled to an all-time low at $7.71 Thursday. Bankman-Fried purchased $648 million worth of the stock through his firm Emergent Fidelity Technologies. The SEC filing says he bought the shares believing they “represent an attractive investment”. Consumer Sentiment Expected to Fall The University of Michigan releases the preliminary reading of its May consumer sentiment index at 10:00 a.m. ET. Sentiment is expected to fall more than 1 point to 64. So far, consumers have weathered inflation well with spending remaining high. But many economists see Americans reaching a breaking point soon as the threat of a recession rises. In Case You Missed It The Senate confirmed Fed Chair Jerome Powell for a second 4-year term Thursday. His nomination was approved on an 80 to 19 vote. 13 Republicans and 6 progressive Democrats voted ‘no’. Powell’s term will expire in February 2026. U.S. airline bookings tumbled 17% in April as flight prices surged 8% from March. Consumers spent $7.8 billion on domestic flights last month, down 13% from March. But demand is still higher than pre-pandemic levels. Bookings rose 5% compared to April 2019 while prices jumped 27%.
Continue Reading -->Coffee With Greta: More Inflation, More Problems
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -157 (-0.5%) SPX Futures: -30 (-0.8%) NASDAQ Futures: -177 (-1.5%) Good morning friends! Futures are falling as selling continues to wreak havoc on Wall Street. Let’s get right to it! Producer Inflation Surges The Bureau of Labor Statistics’ producer price index jumped 0.5% monthly in April and surged 11% year-over-year. That was in line with economists’ expectations on a monthly basis and a slowdown from 11.5% annual inflation in March. That’s the first decline in annual price changes since the pandemic started. The core PPI, which excludes food, energy, and trade services, rose 0.6% monthly and 6.9% annually. That was also in line with expectations. Producer prices are leading indicator for consumer prices as the increases are passed down to shoppers. The CPI also came in hotter than expected in April. Consumer prices rose 0.3% monthly and 8.3% year-over-year last month vs expectations for 0.2% and 8.1% respectively. The Core CPI jumped 0.6% monthly and 6.2% annually. Weekly Jobless Claims Rise Unexpectedly The Labor Department reported 203,000 Americans filed initial claims for unemployment benefits last week. That was an increase of 1,000 from the previous week and missed economists’ expectations for claims to fall to 194,000. The previous week was also revised higher to 202,000 from 181,000. That was the biggest weekly increase since July 2021. Continuing claims fell by 44,000 to 1.34 million in the week ending April 30, the lowest level since early 1970. Oil Prices Fall, Gas Prices Hit Record Oil prices are slipping today on fears of an impending recession in the U.S. West Texas Intermediate crude futures are down 1.3% to $104 bbl with Brent crude futures falling 1.4% to $106 bbl. The International Energy Agency also warned Thursday that soaring gas prices will hurt demand. And U.S. gas prices just hit a new record high. Data from AAA shows the national average for a gallon of regular is $4.418, this is the third record set just this week. Diesel prices are also sitting at a record $5.557 per gallon. Cryptocurrencies Collapse More than $200 billion has been wiped off the global crypto market cap over the past day. Bitcoin is down 8.4% in the past 24 hours, hovering around $28,000. The coin plunged as low at $25,919 earlier this morning, which is the first time its dropped below $27,000 since December 2020. Ethereum has lost 17.4% in the past 24 hours, falling under $2,000. The global crypto market cap is down 14.8% to $1.26 trillion. Investors have been fleeing crypto amid the intense selling on Wall Street. Disney Shakes Off Earnings Miss, Rallies On Subscriber Growth Walt Disney (DIS) shares are sliding 5.2% ahead of the open after missing fiscal Q2 expectations. The company reported adjusted earnings of $1.08 per share on $19.25 billion in revenue. That missed analysts’ expectations for adjusted EPS of $1.19 on $20.1 billion in revenue. But Disney+ had 137.7 million total subscribers last quarter, beating expectations for 135 million. That subscriber beat is pumping up the stock. Disney’s theme parks business is also seeing a solid recovery from the pandemic. Theme parks and product sales nearly doubled year-over-year to $6.65 billion, better than expectations for $6.3 billion. Rivian Rallies On Outlook Rivian Automotive (RIVN) shares are down 4.1% in premarket trade after missing Q1 expectations. The electric automaker reported a loss of $1.77 per share and a $1.6 billion operating loss on $95 million in sales. That was worse than analysts’ expectations for a loss of $1.45 per share and a $1.5 billion operating loss on $131 million in sales. But the stock is up after Rivian maintained its previous 2022 production guidance. The company still expects to deliver 25,000 vehicles this year after producing 2,553 in Q1. Rivian said it had more than 90,000 reservations at the end of the quarter and nearly $17 billion in cash. Beyond Meat Tumbles On Disappointing Q1 Results Beyond Meat (BYND) shares are tumbling 23.6% ahead of the open after reporting a wider-than-expected first-quarter loss. The alternative meat company reported an adjusted loss of $1.58 per share on $109.5 million in revenue. That was worse than analysts’ expectations for a $1.01 per share loss on $112.3 million in revenue. Beyond Meat executives warned of “near-term uncertainty” due to inflation, rising interest rates, and the supply chain. The company forecast full-year revenue between $560 million and $620 million vs analysts’ expectations for $580.7 million. WeWork Earnings WeWork (WE) shares are up 2.9% in premarket trade after reporting a narrower Q1 loss than expected. The office-sharing company reported a loss of $0.57 per share on $765 million in revenue. That was better than analysts’ expectations for a loss of $0.72 per share on $768 million in revenue. Revenue rose 28% year-over-year. WeWork’s total expenses fell to $1.12 billion vs $2.1 billion a a year ago. The company forecast Q2 revenue between $800 million and $825 million and full-year sales between $3.4 billion and $3.5 billion. Instacart Files For IPO Grocery delivery platform Instacart isn’t letting the tech rout scare it off. The company announced it has filed a draft registration statement with the SEC, in its first step toward going public through an IPO. Instacart previously raised $265 million and was valued at $39 billion in March 2021. But the company cut its own valuation to $24 billion in March, citing the 2022 sell-off in tech stocks. Record-High Federal Budget Surplus The U.S. government ran a record-high budget surplus in April as tax revenue surged. The Treasury Department reported a surplus of $308 billion last month. Tax revenue nearly doubled year-over-year to a record-high $864 billion. Part of that huge annual increase was because last year’s tax filing deadline was delayed to May. Government spending fell to $555 billion, down $110 billion from a year ago. Through the first seven months of fiscal 2022,
Continue Reading -->Coffee With Greta: Inflation Is Still Poisoning the Market
Editor’s Note: Coffee With Greta is a FREE morning update from our newest contributor Greta Wall. Want to get it by email every day? Click here. ******** DJIA Futures: -138 (-0.4%) SPX Futures: -25 (-0.6%) NASDAQ Futures: -137 (-1.1%) Good morning friends! Futures are lower following the release of hotter than expected inflation data. Let’s get right to it! Inflation Is Still Hot U.S. inflation pressures rose more than expected in April, remaining at the highest level in nearly 40-years. The Bureau of Labor Statistics’ consumer price index jumped 0.3% monthly and 8.3% year-over-year. That was higher than economists’ expectations for a monthly gain of 0.2% and 8.1% annually. But it was a slowdown from March. Grocery prices jumped 10.8%, oil soared 80.5%, gas surged 43.6%, electricity rose 11%, utility gas jumped 22.7%, and used vehicle prices were up 22.7%. The Core CPI, which excludes food and energy prices, also rose more than expected. That index was up 0.6% on a monthly basis, an increase from 0.3% in March. The Core CPI jumped 6.2% annually. Terra Coins Collapse The two main stablecoins of crypto firm Terra are collapsing. Data from CoinGecko shows the TerraUSD stablecoin UST is down nearly 52% in the past 24 hours, at just $0.44. The coin is meant to be pegged to the US Dollar and should be steady at a value of $1. UST plunged as low as $0.31 today. Its sister token, Luna is also crumbling. Luna is down about 95% over the past 24 hours, at $1.68. Coinbase Plunges On Revenue Drop Coinbase (COIN) shares are tumbling 19.6% ahead of the open after revenue fell sharply in the first quarter. The crypto trading platform reported a net loss of $1.98 per share on $1.17 billion in revenue. That was worse than analysts’ expectations for a loss of $0.01 per share on $1.48 billion in revenue. Coinbase’s revenue tumbled 27% year-over-year. The drop came as crypto trading slowed sharply. The company had 9.2 million monthly transacting users in Q1 vs 11.4 million in Q4. Q1 trading volume fell to $309 billion vs $547 billion in Q4 and $335 billion in Q1 2021. Costs also rose sharply in Q1. Coinbase’s overall operating expenses jumped to $1.72 billion in the quarter, outstripping revenue for the first time. The weak results pushed the stock to a record low after COIN plunged 12.6% in regular trading Tuesday. Unity Software Collapses on Weak Guidance Unity Software (U) shares are falling 28.4% in premarket trade after releasing weak Q2 guidance and cutting its full-year outlook. The video game development company reported an adjusted loss of $0.08 per share on $320.1 million in revenue. That was in line with analysts’ expectations. But the market soured on Unity’s Q2 guidance. The company forecast revenue between $290 million and $295 million this quarter vs analysts’ estimates for $360.97 million. Unity also cut its full-year guidance to between $1.35 billion and $1.425 billion vs the previous forecast for $1.485 billion to $1.5 billion. The CEO struck an optimistic tone on the earnings call saying, “Unity delivered record quarterly revenue in the first quarter of 2022, the highest in the company’s history, up 36% compared with the first quarter of 2021… We remain focused on the massive opportunity we see in front of us long-term.” But traders don’t seem to agree. Roblox Sinks on Weak Q1 Roblox (RBLX) shares are down 4% ahead of the open after missing Q1 expectations. The video game company reported a loss of $0.27 per share on $631.2 million in revenue. That was worse than analysts’ expectations for a loss of $0.21 per share on $636.6 million in revenue. Roblox had 54.1 million average daily active users during the quarter, up 28% year-over-year but weaker than analysts’ estimates for 55 million. In a letter to shareholders, the company said, “While Covid and the subsequent re-opening have contributed to slowing growth in several of our metrics, based on third party data we believe we are gaining share on both users and hours relative to certain other companies in gaming and social media that compete for our users’ attention.” SoFi’s Big Oops SoFi (SOFI) shares are slipping 0.2% in premarket trade after accidentally releasing its Q1 results early on Tuesday. The fintech company reported a loss of $0.14 per share on $322 million in revenue. That was better than analysts’ expectations for a loss of $0.15 per share on $286 million in revenue. SoFi blamed “human error” for its Q1 results being released during the trading day instead of after-hours on Tuesday. And the stock tanked as the Q2 forecast came in weak. Trading was halted on SOFI at 11:19 a.m. ET Tuesday, as the stock tumbled 18%. Trading reopened 3 hours later and SOFI closed 12.1% lower Tuesday. SoFi forecast Q2 revenue between $330 million and $340 million vs analysts’ expectations for $343.7 million. Adjustable-Rate Mortgage Demand Jumps Demand for adjustable-rate mortgages is on the rise, as rates soar. The Mortgage Bankers Association reported overall mortgage demand rose 5% last week but applications were still down 8% year-over-year. The increase came despite the average 30-year fixed rate rising to 5.53% from 5.36%. But more buyers are turning to adjustable-rate mortgages, with the average 5-year rate at 4.47%. ARMs represented 11% of all mortgages last week, up from just 3% at the start of 2021. That’s the highest share since March 2008. Refinance applications fell 2% last week and were down 72% compared to a year ago. Oil Prices Jump Oil prices are rising today after tumbling nearly 10% in the past two days. West Texas Intermediate crude futures are up 4% to $103.75 bbl while Brent crude futures are up 3.6% to $106 bbl. The rally comes as the EU works to gain support for its proposed Russian oil ban. The Energy Information Administration will release its weekly report on U.S. crude supplies today. Apple Kills the iPod The Apple (AAPL) iPod is dead. The tech giant announced Tuesday it is discontinuing the
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