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A ‘Meh’ Day for Big Banks

Good evening, everyone. It’s already Wednesday — happy hump day!!

3 of the 4 major indexes traded higher while the Dow closed level. The Nasdaq led, rallying 0.73%. 💪

Inflation surged last month and remained at its highest level in more than a decade. The CPI increased 0.4% MoM in Sept vs 0.3% in August. 

Higher inflation will result in a 5.9% rise in Social Security payments for seniors and other Americans, the biggest increase in almost 40 years. For high-wage workers, it’ll also mean higher Social Security taxes.

JP Morgan Chase & Co crumbled 2.64% after exceeding Q3 earnings and revenue estimates. $JPM fell along with other bank stocks like $BAC, $C, and $WFC. 📉 👎

Utilities was the strongest sector as $XLU increased 1.17%. Materials and tech followed suit. Financials and energy finished red. 💔

Zinc futures zipped 5% to record highs, lumber leaped 4%, and copper climbed 3.2%. 🚀

$HUT hopped 7.15%, $SE spiked 7.5%, and $XLM.X accelerated 8.4%.

Here are the closing prices: 

S&P 500 4,363 +0.30%
Nasdaq 14,571 +0.73%
Russell 2000 2,241 +0.34%
Dow Jones 34,377 +0.00%

Earnings

JPM Tees Off Earnings 🏌️‍♂️

JPM Tees Off Earnings 🏌️‍♂️ Featured Image

JPMorgan Chase kicked off both earnings season and big bank earnings today with an acceptable earnings report. 🤷‍♂️

The banking giant reported EPS of $3.74, which was leaps and bounds above the $3.00/per share expected by FactSet analysts. 💯 The company also reported $29.6 billion in revenue, just shy of the forecasted $29.8 billion.

The company’s profits were hefty, too. $JPM posted $11.7 billion in profits for the quarter, which was up $2.2 billion YoY. A sizable portion of that boost came from “reserves set aside last year for soured loans” which have now been freed and categorized as income. The boost was not considered core income. 😪

The bank saw lower trading revenue and fixed income trading, but made up for it in equities trading and activity from its investment bank. It also saw increased loan activity and debit/credit spending, an indication that consumers (and bankers) are ready to leave the pandemic behind. 👋

$JPM dipped 2.6% today. Other banks reporting this week (like $BAC and $C) fell in sympathy with the post-earnings dip.



Events

Snap’s Turn to Crash

Snap’s Turn to Crash Featured Image

Big Tech’s latest beating? Snapchat crashed this morning just nine days after Instagram, Facebook, and WhatsApp experienced major outages. 💣 💥

Early this morning, Snapchat lost the ability to send/receive messages or post, according to complaints from tens of thousands of users. The platform tweeted “We’re aware that some Snapchatters are having issues with the app right now – hang tight, we’re looking into it!”

The company still hasn’t commented on the cause of the outage. A Snap spokesperson did say “the issue has been resolved” later in the day. The crash wasn’t as severe as Facebook’s, as Snap maintained some of its functionality. 

Facebook’s outage last week cost the company a whopping $65 million — during Facebook’s outage, Snapchat usage skyrocketed 23%. What in the world is going on with Big Tech?? 🤯

$SNAP lost 0.4% today.


M&A

GSK’s Spin Off

Speaking of spinoffs, British drugmaker GlaxoSmithKline ($GSK) is planning to spin off its consumer health business next year.

The spinoff will sever ties between GSK’s underperforming drug biz and its lucrative consumer division responsible for producing Sensodyne toothpaste, Advil, and Panadol painkillers, among other products. The consumer business could be worth £45 billion ($61.4 billion USD), according to Jefferies.

The spinoff would hand existing shareholders the lion’s share of the consumer division. GSK pledged to hand shareholders at least 80% of the 68% stake that GSK owns in it.” The remaining 32% stake is owned by Pfizer. Both companies expect to sell their respective cuts of the spun off business.

However, there is a chance the business could fetch bids from private equity firms before its listing. Both Elliott and another activist investor, Bluebell Capital Partners, suggested that the company might sell its consumer biz to another player at a small premium. What would be left would be… the very-imaginatively named ‘New GSK.’ 😅

Activist investors have put heavy hands on the scale for GSK in recent months. Activist investor Elliott Management took a stake in GSK’s business with the goal of turning the company around after “years of disappointing performance.” Its recommendations included an overhaul of the company’s leadership, spinoff of consumer health, and talent hunt for experts with deep pharma and vaccine expertise. 

$GSK gained 0.41% today.


Stocks

Vimeo On The Come Up

Vimeo On The Come Up Featured Image

Video sharing and hosting site Vimeo has been downhill since its spinoff by parent company InterActiveCorp earlier this year. The stock is down 44.7% since its May IPO. Yikes. However, today offered reprieve for YouTube’s main competitor. 🙏

The company said its total revenue for Sept. 2021 was up 33% YoY. Vimeo’s revenue has fallen a long ways from COVID peaks, but numbers like these are exciting to software investors. Vimeo focuses on enterprise video, which has helped the platform become an attractive option for companies looking to host company-related video content.

Vimeo also just penned new partnerships with Facebook, Shopify, and TikTok in recent months to enable greater integration on third-party sites and tools. And that’s just the tip of the iceberg, partnership-wise. 😮

The new monthly figures led Jefferies analysts consider the stock “a compelling buy.” On the news, $VMEO  gained nearly 14% today.


Earnings

Earnings Highlights

$JPM | EPS: $3.74 (vs. $3 expected) | Revenue: $30.4 billion (vs. $29.70 billion expected) | Link to Report

$DAL | EPS: $0.30 (vs. $0.17 expected) | Revenue: $9.15 billion (vs. $8.47 billion expected) | Link to Report

$BLK | EPS: $10.95 (vs. $9.54 expected) | Revenue: $5.05 billion (vs. $4.88 billion expected) | Link to Report

Looking for more earnings action? Check out all the companies that reported today on Stocktwits and hop into the community to see what’s buzzing. 🐝