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Pre-market futures are taking a breather this morning. After five straight sessions in the green for the Dow (only marginally positive by Tuesday’s closing bell, however), the blue-chip index is -78 points at this hour. The Nasdaq is falling even faster, -113 points, as its three-day winning streak came to an end yesterday. The S&P 500 is down -22 points at this point in today’s early trading, while the small-cap Russell 2000 is -15.
It’s a week relatively devoid of impactful economic prints. This is especially true relative to Jobs Week last week and CPI/PPI out next week. These are the metrics economists and market participants alike look toward to help calculate the nearness of the first interest rate cut since the onset of the pandemic, now more than four years ago. After today’s open, we’ll get Wholesale Inventory numbers and some select appearances from Fed members, but these aren’t expected to change the trading trajectory.
One company that has proven to have an outsized impact on the market is TeslaTSLA. This morning, reports from Reuters are that the SEC is looking into whether the company committed wire fraud and securities infractions related to Tesla’s claims about its self-driving, auto-pilot system. This is not to say an indictment will be forthcoming, but the federal government is looking into it. Tesla shares are down -3.6% in early trading.
Quarterly earnings reports paint an unflattering picture this morning. Most of this pivots on overall consumer behavior, across many lines; we’ve seen the consumer shy away from higher costs in previous earnings reports from StarbucksSBUX and elsewhere. SpotifySPOT shares are down -19% at this hour on a big swing to negative earnings (-$0.21 per share versus +$0.16 expected and +$0.01 per share reported a year ago). Revenues came in slightly ahead of estimates to $1.9 billion in the quarter, but a 50-basis-point (bps) slide in Gross Margins offset growth in Gross Merchandise Volumes (+23% year over year) and Gross Payment Volumes (+60%).
Uber UBER posted similar Q1 results ahead of today’s open. Earnings swung to a negative -32 cents per share from an expected +21 cents (and well below the year-ago -8 cents per share) on revenues of $10.13 billion, which eked out a beat over the Zacks consensus. Gross Bookings rose +20% year over year and adjusted EBITDA reached +82% to $1.4 billion, but shares are tumbling more than -7% so far in pre-market activity.
Hain Celestial HAIN, meanwhile, missed on both top and bottom lines. Negative earnings of -12 cents per share missed the +7 cents anticipated (off the +8 cents per share posted a year ago) on $438.4 million in revenues, which was well short of the $465.7 million analysts were looking for. Business in North America fell -9.8% in the quarter for the tea and healthy snack distributor, which was slightly offset by a +9.3% gain in its International segment. Free cash flow grew an impressive +104% year over year, which has helped the stock gain +6% in early trading.
Meanwhile, Affirm HoldingsAFRM posted a good fiscal Q3 this morning. An earnings loss of -43 cents per share was an improvement on the -70 cents expected (and -69 cents per share reported a year ago) on $576 million in revenues, which outpaced the $548 million in the Zacks consensus, +51% year over year for the “buy now, pay later” fintech company. Next-quarter revenue guidance has increased to $595 million from the $569.4 million previously projected, and shares in the pre-market session are up +2.3%.
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American Axle & Manufacturing Holdings (AXL)Upgraded: 05/07/24
American Axle’s considerable strides and collaborations in the electric drive space & robust prospects for ICE vehicle bode well for its top- and bottom- line growth.
Ingevity is experiencing increased demand across its engineered polymers and industrial specialties businesses, supported by strategic acquisitions and initiatives to drive long-term growth.
Public sector’s ongoing transition to cloud-based solutions from on-premise and outdated systems bodes well for Tyler. Stable revenue base and strategic acquisitions are key positives.
ATI should benefit from strength in its HPMC unit driven by the aerospace and defense sectors. The HRPF facility and efforts to improve operational efficiency will also contribute to its performance.
Restructuring efforts and favorable market conditions have led to improved operating margins, driven by strong demand in the solar and infrastructure industries.
Strength in the GSG unit, a solid backlog level and accretive acquisitions are expected to aid Tetra Tech’s growth. The company’s commitment to handsomely reward shareholders is impressive.
Persistently rising expenses is likely to hurt Bank of Hawaii’s bottom-line growth. Further, declining fee income restricts top-line expansion. Also, geographic concentration is a major headwind.
Disruption in supply chain, including the manufacturing, transportation and delivery of products as well as any delay in the release of key video game titles will have a direct impact on GameStop.
MettlerToledo International (MTD)Downgraded: 05/07/24
Seasonality, volatility in emerging market growth, foreign exchange headwinds and business concentration in China remain major concerns for Mettler-Toledo.
Rising fuel price may impact the company's commercial business. Supply chain challenges impacting the 787 program may impact Spirit AeroSystems' growth
Stiff competition from other providers of news, information, entertainment and real estate-related services and decline in advertising expenditures may have a direct bearing on News Corporation.
Manufacturing inefficiencies related to supply-chain disruptions have been impacting Astec’s results. Higher material, labor and transportation costs will add to the pressure on its margins.
Bandwidth operates in a highly competitive market. It faces concentration risks as revenues are generated from a limited number of enterprise customers.
Hormel Foods intends to strengthen its business on the back of strategic acquisitions. The company is investing in growth, innovation, cost savings and automation.
Netflix’s growing subscriber base, driven by content strength, focus on originals across various genres and languages, rapid international expansion and partnerships with telcos are key drivers.
Central Garden & Pet has been advancing digital capabilities, optimizing its supply chain, expanding data analytics capability and focusing on marketing activities to better engage with customers.
Strength across all product groups is a positive catalyst for Edwards Lifesciences. The company’s bullish long-term growth strategy buoys optimism on the stock.
