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WALL ST beef will be cooked up at your nearest TEXAS Roadhouse restaurant – lol
Dow 35,091.13 1.39 0.00%
S&P 500 4,483.87 -16.66 -0.37%
Nasdaq 14,015.67 -82.34 -0.58%
GlobalDow 4,221.30 20.62 0.49%
Gold 1,822.50 14.70 0.81%
Oil 91.37 -0.94 -1.02%Some of best “wa-wa” pedal guitar I’ve heard recently to celebrate market close 🙂
Dow 35,462.78 371.65 1.06%
S&P 500 4,521.51 37.64 0.84%
Nasdaq 14,194.45 178.79 1.28%
GlobalDow 4,250.91 29.68 0.70%
Gold 1,828.20 6.40 0.35%
Oil 89.66 -1.66 -1.82%PTON Peloton dismal Q2 results and announcing CEO shakeup
Connected fitness equipment maker Peloton (PTON) has now missed EPS expectations for three straight quarters.
The company also issued revenue guidance for Q3 and FY22 that was well below expectations, cementing the premise that demand continues to dramatically erode. The reopening of fitness centers, increasing mobility, and rising competition are a few factors that are battering PTON.
The mid-point of PTON’s Q3 revenue guidance is $975 mln, which equates to a projected yr/yr decline of 23%. That would mark the first time as a publicly traded company that PTON’s revenue declined on a yr/yr basis.While PTON didn’t get acquired today, it did announce a major shakeup as Barry McCarthy was named CEO, replacing John Foley, who will become Executive Chair. McCarthy seems like a solid choice based on his past leadership positions at Netflix (NFLX) and Spotify (SPOT).
Additionally, PTON announced a restructuring program to help profitability and free cash flow, resulting in the reduction of 2,800 positions. As demand and margins continue to dive lower, significant cost-cutting actions are in order. In Q1, adjusted EBITDA was $(266.5) mln compared to $116.9 mln in the year-earlier period.
The main takeaway is that PTON’s business is still in freefall and that, after being pressured by activist investment firm Blackwells Capital, it’s taking some initial steps in executing a turnaround. An acquisition is still not out of the question either, as these moves may be a precursor to a future deal.
NVIDIA walks way from Arm deal
NVIDIA (NVDA -1.2%) announced today it will terminate its deal to acquire Arm Limited from SoftBank Group (see 4:20 comment). Instead SoftBank will seek to spin off Arm in an IPO. NVDA is known for making graphics chips for videogames, but its real sweet spot is data center chips. Arm is a bit different. It’s not a manufacturing company, it’s more of a neutral designer of chips and it licenses its technology to a wide variety of semiconductor companies.
The deal was announced back in September 2020 that it would pass regulatory scrutiny and the companies are now citing “significant regulatory challenges” for killing the deal. Both the US and China would have needed to sign off on the transaction.
Because Arm’s designs are used by lots of chip companies in everything from sensors to smartphones to supercomputers, it’s understandable to question whether it’s smart to let them be owned by another company. Also not helping is that the US blocked Broadcom’s (AVGO) bid for Qualcomm (QCOM) a couple of years ago on similar grounds. So we could see China not being too happy about this deal.
What’s interesting is that there is no talk of SoftBank looking for another buyer, probably because the same issues would arise, so instead it’s going the IPO route.Bottom line, Arm is known as a neutral provider of technology and this deal might have tarnished that position. Also, many of NVDA’s competitors are licensees of Arm so we can understand that they would not be keen on this deal going through. We suspect regulators heard an earful from them. It’s probably better Arm stays independent and goes public on its own. –
DuPont’s exposure to hot semiconductor market drives flurry of good news (79.14 +3.77)
Chemical company DuPont (DD) had plenty of good news to share this morning. Not only did DD exceed 4Q21 EPS and revenue expectations, but it also announced a new $1.0 bln stock repurchase plan and a 10% hike to its quarterly dividend. DD may not be the first company that comes to mind when thinking about semiconductors, but its significant exposure to the industry fueled its strong results. Specifically, DD’s Electronics & Industrial segment, which generated Q4 sales growth of 19%, provides specialty materials that are used in the fabrication and packaging of semiconductors.
This earnings season has featured impressive earnings reports from several chip makers — Texas Instruments (TXN), Qualcomm (QCOM), and Cirrus Logic (CRUS) are a few that come to mind — so DD’s bullish commentary on the demand environment is not surprising. In particular, the company noted that demand strength was driven by the ongoing transition to advanced technologies, such as high-performance computing and 5G communications. This favorable environment enabled DD to boost prices by 7% in Q4, mitigating inflationary pressures.
In DD’s Water & Protection segment, the healthy residential construction market in North America helped push organic sales higher by 17% to $1.4 bln. Some key products underlying the solid growth include decorative surface materials, water filtration systems, weatherization waterproofing, and sealants.
While these positives outweigh the negatives, DD’s report wasn’t entirely pristine. A few items that blemish the company’s upside results and shareholder-friendly capital allocation plans include:
Due to persistent raw material and logistics cost inflation, margins are expected to be negatively impacted in 1Q22. On a sequential basis, operating margin is projected to be roughly flat, with improvements anticipated later in 2022.
Relatedly, DD’s Q1 EPS guidance of $0.94-1.00 fell short of estimates.Supply chain constraints within the auto manufacturing industry continue to weigh on DD’s Interconnect Solutions business. Chip shortages have caused many auto OEMs to cut back or halt production, hurting demand for DD’s automotive-related products, such as printed circuit boards and display materials.
The Mobility & Materials segment continues to be a laggard, with operating EBITDA falling by 3% yr/yr to $230 mln despite generating 13% organic sales growth. Since this business primarily sells lower-margin products like resins and adhesives, it’s more susceptible to rising raw material costs.
Weakness in Mobility & Materials isn’t overly concerning, though, because DD plans on divesting a substantial portion of this segment.
DD isn’t firing on all cylinders, as supply chain disruptions continue to hinder its auto-related businesses. However, its exposure to the robust semiconductor and residential construction markets is largely offsetting supply chain and inflationary pressures. In turn, these dynamics facilitated strong Q4 results and the confidence to authorize a dividend increase and new buyback program.Energy pullback with oil
Occidental Petroleum (OXY 39.48, -1.52, -3.7%): weakest performer in the sector, revisiting yesterday’s low.
Diamondback Energy (FANG 125.59, -4.59, -3.5%): falling to a one-week low.
Marathon Oil (MRO 20.97, -0.64, -3.0%): revisiting yesterday’s low.
TechnipFMC (FTI 6.58, -0.18, -2.7%): slipping toward its 50-day moving average (6.38).
Devon Energy (DVN 51.25, -1.34, -2.6%): touched a one-week low before narrowing its loss.
Pioneer Natural Resources (PXD 220.95, -5.53, -2.4%): slipping to levels from Thursday.
Exxon Mobil (XOM 80.85, -1.55, -1.9%): surrendering yesterday’s gain.
ConocoPhillips (COP 91.33, -1.61, -1.7%): trading near the midpoint of yesterday’s range.
Chevron (CVX 136.48, -2.07, -1.5%): trading in the lower half of yesterday’s range.
Valero (VLO 88.38, -1.25, -1.4%): trading near the midpoint of yesterday’s range.
Kinder Morgan (KMI 17.31, -0.15, -0.9%): slipping toward its 200-day moving average (17.21).
ONEOK (OKE 62.87, -0.39, -0.6%): best performer in the sector, trading near yesterday’s opening level.Pre market:
S&P Futures vs Fair Value: +33.0
10 yr Note: 1.921%
USD/JPY: 115.43 -0.11
EUR/USD: 1.1427 +0.0009
Europe: FTSE: +0.6% DAX: +1.5% CAC: +1.4%
Asia: Hang Seng: +2.1% Shanghai: +0.8% Nikkei: +1.1%
Gold (1828.90 +1.00) Silver (23.25 +0.05) Crude (89.02 -0The global equity markets are marching higher. S&P Futures are up about 33 points to trade around the 4546 area. The strength in European markets helped the S&P break out of the range established during the Asian hours. The low was set early in the session at 4517.25 while spoos are just off the high of 4547.25.
In Asia, China rose 0.8% while Japan finished 1.1% higher. The Shanghai tussled around the neutral zone for the first hour but managed to pick up a bid that was sustained the rest of the day. The price action enabled the Chinese benchmark to close near the session high. In Japan, SoftBank led the Nikkei’s rally with a gain of nearly 6%. SoftBank shares soared after announcing plans that it would aim to take Arm public following the termination of the sale to NVIDIA.
In Europe, the major bourses are all higher. The DAX is representing leadership with 29 out of the 30 stocks in positive territory. Automakers are among the best sectors with the likes of Porsche, Volkswagen and BMW trading 3-5% better. Semiconductors are also hot today with names such as STMicroelectronics and Infineon up 3-4%.
In the Treasury market, the 2-yr yield is down one basis point to 1.33%, and the 10-yr yield is down two basis points to 1.93% in front of a $37 billion 10-yr note auction (results out at 1:00 p.m. ET).
The earnings story, meanwhile, has been mixed.
Chipotle Mexican Grill (CMG 1545.00, +84.65, +5.8%) and Enphase (ENPH 173.75, +29.25, +20.2%) are two earnings standouts, while CVS Health (CVS 109.01, -1.82, -1.6%) and Lyft (LYFT 39.70, -1.50, -3.6%) are trading lower after providing underwhelming guidance.
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