Markets Turn Skittish Ahead Of Fed

SoFi Technologies has had a rough time since its IPO but received a boost today after reporting better-than-expected earnings. 🏦

The digital financial service company had a $0.05 per share loss vs. the expected $0.09 per share loss. Total net revenues of $456.7 million also beat the $423 million analysts expected. Its fourth-quarter adjusted EBITDA was up over 15x YoY to a record $70 million. 

In addition to this quarter’s positive results, executives see the strength continuing into 2023. They now expect $260 to $280 million in adjusted EBITDA for the full year, well above analysts’ $246 million forecast. They also believe the company could generate positive GAAP net income in the fourth quarter of 2023. 💪

In terms of other stats, its total members rose 51% YoY to over 5.2 million. And total product adds were up 53% YoY to roughly 7.9 million.

Like other consumer-oriented financial services companies, it saw net interest income rise sharply and set aside additional reserves for credit losses as the economy softened. Additionally, personal loan originations are rising, offsetting weakness in their student loan and home loan segments. 💵

Overall, expectations were trending lower for the company and its stock price. But today’s beat and stronger outlook could be a turning point for its business and share price.

That’s at least what some investors are betting, as $SOFI shares were up 12% on the day. 📈

There are many reasons to be pessimistic about the economy and markets. But one money manager says that history suggests that’s the time to take a bullish stance. 🐂

Let’s look at two charts shared by Ken Fisher in this New York Post article.

The first is a chart of recession expectations, which have risen to their highest level in the survey’s history. Roughly 43.5% of the professionals participating in this survey expect a decline in the level of chain-weighted real GDP in the current quarter.

In other words, they’re not optimistic about the economy. And the article argues that this widespread anticipation will lead to a mild downturn — or none at all. That’s because people are already taking steps to mitigate risk in their businesses and lives in anticipation of things worsening. 😨

The second reason for optimism is around historical prices. The article shows a series of data points that argue that the higher probability bet is to expect a strong year for stocks after the dismal year we just had. And based on this data, 2023 lines up with many of these characteristics that typically experience positive stock market returns. 🎯

While making an investment decision based on two data points alone is impossible, they at least offer some contrarian food for thought. 🤔

Auto stocks continue to trend heavily after last week’s earnings report from Tesla. As a result, there was a lot of auto news to recap today. 📰

First up, Toyota Motors managed to defend its title as the world’s top-selling automaker for the third straight year…despite falling sales. The company sold 10.5 million vehicles in 2022, with Volkswagen Group behind it at 8.3 million vehicles. 🏆

Next, Renault and Nissan agreed to a sweeping restructuring of the alliance they’ve had in place since 1999. Renault is set to transfer 28.4% of Nissan shares into a French trust, reducing its stake from 43% to 15%. While Renault would still receive the economic benefit of these shares, its voting rights would be discarded for most corporate decisions. The move equalizes the companies’ cross-share holdings and gives them each the ability to freely exercise the voting rights of their 15% direct shareholdings. 🗳️

Thirdly, Tesla continues to lead the charge in the electric vehicle space as competitors look to follow its lead. After Tesla’s recent price cuts, Ford is now increasing production and cutting prices on its electric Mustang Mach-E crossover to improve affordability and spur demand.

This likely isn’t the last time we see something like this, as the industry’s global players continue competing fiercely for customers. 🔻

Lastly, the short squeeze in Carvana continues, with shares rising another 28% today. 📈

Auto names like $LCID, $TSLA, $CVNA, $PEV, and more continue to trend regularly and will be a highlight of earnings season as they report. 👀