August 2, 2022

Stocks Shaken By UBER Amount Of News

It was a turbulent Tuesday in the markets — here’s what you missed.

The U.S. labor market is showing some cracks as job openings fall at their fastest pace since the start of the pandemic. Meanwhile, geopolitical tensions are high as Nancy Pelosi visits Taiwan. More on both below. 👇

In earnings news, Uber posted positive free cash flow despite an earnings miss. We break down the numbers in our second story. 💰

Here’s today’s heat map.

Every sector closed in the red, with real estate (-1.30%) and financials (-1.08%).🔻

In individual company news, The $HKD and $AMTD saga continues, with the stock topping a $400 billion valuation just two weeks after coming public at a valuation less than 1% of that. We attempt to explain it below. 📈

Israeli lidar maker Innoviz rallied 18.25% today after winning a $4 billion contract to make millions of sensors for Volkswagen. 🚗

Robinhood (-2.92%) CEO Vlad Tenev said the company is cutting about 23% of jobs. The firm is just one of many reducing costs and blaming a deterioration of the macro environment and market conditions as their reasoning.

Microstrategy (-1.20%) announced the separation of its Chairman and CEO Roles, with Michael Saylor assuming the role of Executive Chairman and Phong Le serving as Chief Executive Officer.

PayPal (+11.17%) surged after its earnings and revenues beat expectations for the second quarter. The company also announced a $15 billion share buyback program, and investors are cheering the fact that activist investor Elliott Management has taken a $2 billion stake. 👍

Airbnb (-9.75%) slumped after revenue missed expectations but reported stronger EPS and a $2 billion share buyback program.

Ferrari (+20.25%) is roaring after reporting better-than-expected earnings and revenues. The company also boosted its full-year guidance. 🏎️

In crypto news, Cathie Wood is out with another one of her whacky predictions…this time saying that Ethereum will reach a $20 trillion market cap by 2030. Another “hackening” has taken place, with crypto startup Nomad losing $200 million to hackers. Finally, the New York Department of Financial Services announced that it had issued a $30 million penalty against Robinhood’s crypto division over its anti-money laundering and cybersecurity program.

Other symbols active on the streams included: $REV (+4.71%), $FAZE (-5.42%), $GETY (-7.75%), $GOVX (-21.54%), and $MULN (+5.59%). 🔥

Here are the closing prices:

S&P 500	4,091	-0.67%
Nasdaq	12,349	-0.16%
Russell 2000	1,882	-0.05%
Dow Jones	32,396	-1.23%

Economy

U.S. Economy & Global News

The economy is slowing, and whether you agree or not that we’re in a recession, we can all agree that the labor market has been a bright spot through it all. 🌞

However, today’s JOLTs data may be the first sign that the labor market is beginning to soften.

The monthly Job Openings and Labor Turnover Survey (JOLTs) performed by the U.S. Bureau of Labor Statistics (BLS) showed that the number of job openings fell by 605k to 10.7 million in June, its steepest drop since the start of the pandemic. 📉

The hardest hit sectors were retail trade (-343,000), wholesale trade (-82,000), and state/local government education (-62,000). Given the softness we’re seeing in the earnings reports of Walmart and other retailers, it’s clear that inflation and economic uncertainty are causing consumers to reconsider their spending.

On the separations side of things, both quits (4.2 million) and layoffs/discharges (1.3 million) were essentially unchanged from the prior month.

Now, it’s important to point out that there are still nearly two jobs for every unemployed person, but this is the first meaningful drop-off in the data in a while.

And with all eyes on the nonfarm payrolls announcement this Friday, the market is watching and analyzing it all very closely. 👀

Meanwhile, the Reserve Bank of Australia joined the U.S. Federal Reserve in saying its policy is not on a pre-set path after hiking rates for the fourth time this year.

Hong Kong’s economy contracted 1.4% in the second quarter, marking its second recession in three years. 👎

Lastly, geopolitical tensions remain high as U.S. House Speaker Nancy Pelosi lands in Taiwan despite retaliation threats from China.

We’ll have to see how this all develops in the days and weeks ahead. 🗓️

Earnings

Uber – Your Free Cash Flow Is Arriving Soon?

Uber shares declined nearly 70% since early 2021 but have turned a corner as of late. 🚗

The stock was up roughly 18% today after it reported revenue numbers well above expectations ($8.07 billion vs. $7.39 billion). The company has benefited from an increase in on-demand transportation and a shift in spending from retail to services, which other companies have highlighted. 📈

Active and new driver growth accelerated during the quarter despite higher fuel prices, with more drivers and couriers earning money than before the pandemic. Inflation is taking its toll, leading to more people turning to gig work to make extra money.

It did report a loss of $2.6 billion for the quarter, though $1.7 billion was due to a revaluation of its investments in Aurora, Grab, and Zomato. 📉

In addition to improving driver and user numbers, the company posted positive free cash flow for the first time ever ($382 million).

Investors are cheering today’s report so far, boosting shares of competitor $LYFT by 16.26%. 🎉

Hop on over to the streams and let us know whether you’re taking these stocks for a ride or steering clear. 💭

Stocks

There’s Always A Bull Market Somewhere…

Just when you thought the markets couldn’t get any crazier, they find a way to deliver. 🤪

Today we’re talking about $HKD, which came public about two weeks ago. The company is AMTD Digital Inc., a comprehensive one-stop digital solutions platform headquartered in Asia. It priced 16,000,000 American depository shares (“ADSs”) at $7.80 per ADS on July 15th.

Since then, the price of this low-float stock has absolutely skyrocketed.

No, we’re not even kidding. To the f*#&ing moon. 🚀🌕

At its intraday peak, it was worth close to $500 billion, making it one of the largest ten companies in the world by market capitalization. At today’s close, it’s still worth $310 billion, meaning it’s larger than 480 S&P 500 stocks (in other words, most of the U.S. stock market). 🤯

And the craziest part is that nobody knows why. Even the company released a note today saying, “During the period since our initial public offering, the Company noted significant volatility in our ADS price and, also observed some very active trading volume. To our knowledge, there are no material circumstances, events nor other matters relating to our Company’s business and operating activities since the IPO date.

Given the share price is now into the thousands, traders have turned to its parent company’s shares, $AMTD, as a way to play the stock’s pop. AMTD Idea Group reportedly owned 97.1% of AMTD Digital’s outstanding shares as of its July 15th SEC filing.

If the market has taught us anything over the last few years, it’s that crazy moves can and do happen all the time, but they don’t last forever.

How long this one will continue is anyone’s guess, but the world is now watching to see how this saga ends. 👀

*Hat tip to retail’s favorite markets persona, Jim Cramer, for the title of this post.

Bullets

Bullets From The Day:

🏦 TD Bank furthers its U.S. expansion with Cowen acquisition. Canada’s Toronto Dominion Bank is expanding its U.S. presence by buying New York-based boutique investment bank Cowen for $1.3 billion in cash. The company is funding this purchase with the money it raised by selling a portion of its ownership stake in Charles Schwab, which it acquired during the purchase of TD Ameritrade. This acquisition follows TD’s purchase of First Horizon for $13.4 billion, which the companies announced in February. CNBC has more.

💳 Household debt tops $16 trillion for the first time. Americans’ IOU balance rose about 2% QoQ to $16.15 trillion in June, primarily driven by increases in mortgage and auto loan balances. Credit card balances surged 13% YoY, posting their most significant gain in more than 20 years, as more and more Americans rely on credit to keep pace with inflation and everyday purchases. For now, delinquency rates remain low, with only 2.7% of outstanding debt falling into that category. More from CNBC.

🤖 Shopify invests $100m in a marketing automation startup. E-commerce marketing automation platform Klaviyo has received a $100 million strategic investment from Shopify as they strengthen their existing partnership. Klaviyo was valued at $9.5 billion in May 2021 and has raised around $775 million, and Shopify continues to invest and acquire companies to broaden its platform’s reach. TechCrunch has more.

💸 Political ad spend hits record ahead of 2022 midterms. Nearly $3.6 billion has been spent on political and issue ads so far in 2022, putting it well on pace to smash 2018’s record as the largest midterm election year by ad spend. Of that spending, $2.1 billion was spent on broadcast, $697 million on digital, $614 million on cable, $100m on radio, and $38.5 on satellite. Axios has more.

🤝 Opendoor settles with FTC over false advertising claims. The Federal Trade Commission alleges the company deceptively claims to help people make more money by selling their house to the company rather than listing it on the open market. According to the FTC, Opendoor’s offers were lower than the market value and asked many sellers to fork over more money than expected for a market sale for home repairs. The $62 million settlement is not only a blow to Opendoor but the iBuying industry in general, which has operated for years on the back of similar claims. TechCrunch has more.