The stock market rally held near record highs, with the S&P 500 and Dow Jones setting fresh all-time levels. Disney (DIS) jumped on rebounding earnings and strong Disney+ streaming figures.
A slew of recent IPOs reported earnings, including Airbnb (ABNB), Upstart (UPST), Doximity (DOCS), Unity Software (U), ZipRecruiter (ZIP) Maravai LifeSciences (MRVI), Palantir (PLTR), Coindesk (COIN), Figs (FIGS), FuboTV (FUBO) and many more. Most, but not all, rallied on earnings.
Stock Market Near Highs
The Dow Jones and S&P 500 rose modestly, hitting record highs. The Nasdaq was slightly lower as some growth stocks, especially certain chip plays, retreated. But Apple (AAPL) and Tesla (TSLA) flashed new buy signals. Steelmakers and financials did well, along with housing-related plays and many discounter retailers. The 10-year Treasury yield continued to climb, even amid signs that inflation may be peaking.
The core consumer price index rose 0.3% in July and 4.3% from a year ago, with the annual inflation rate slipping from June’s 29-year high of 4.5%. Overall inflation, including food and energy prices, held at 5.4%, highest since 2008. But the monthly rise slowed to 0.5% from June’s 0.9%, slightly undershooting expectations. Used car and truck prices edged up 0.2% after June’s 10.5% monthly spike. Airline fares dipped 0.1% on the month, following gains of 2.7% in June and 7% in May. Still, wage hikes, shipping costs and healthy demand boosted prices for food away from home rose 0.8%, the biggest monthly gain in 30 years. While inflation has been running much hotter than Federal Reserve officials predicted, their bet that price pressures would prove transitory is looking pretty good.
Although wage pressures haven’t subsided, that might happen as generous pandemic unemployment benefits expire by Labor Day, pushing more sidelined workers to re-enter the job market. New jobless claims slipped to 375,000 in the week of Aug. 12, not far off the pandemic low of 368,000 seen in late June and early July. Yet about 9 million beneficiaries were still collecting pandemic-related benefits as of the July 24 week.
BioNTech (BNTX) and Maravai Lifesciences (MRVI) reported better-than-expected second-quarter earnings last week. Coronavirus vaccine maker BioNTech earned $12.67 per share, minus some items, on $6.24 billion in sales. The gain swung from a year-earlier loss and sales skyrocketed by a quintuple-digit percentage. Maravai, which makes compounds for the BioNTech and Moderna (MRNA) vaccines, reported adjusted earnings of 44 cents per share with sales surging 364% to $217.8 million. BioNTech and Maravai reversed from record highs during the week before rebounding Thursday ahead of the FDA backing booster shots for immunocompromised Americans.
Disney Earnings, Streaming Users Strong
The media and entertainment conglomerate posted a 900% EPS gain, easily beating, as revenue shot up 45% to $17.02 billion, also topping views. Disney+ subscriptions of 116 million slightly exceeded estimates, while theme parks were strong. Disney (DIS) now expects 2021 capital expenditures to be about $200 million lower than 2020’s $4 billion level, due to lower spending by parks, various facilities and DTC technology. Upcoming movies “Free Guy” and “Shang-Chi” will have exclusive theatrical releases. A Disney Genie app is also in the works to meld consumer preference with park offerings. Disney+ Day was announced for Nov. 12. Disney stock jumped Friday.
Tesla China Exports Boom
Tesla wholesale sales totaled 32,968 in July, but only 8,621 vehicles sold locally. Exports swelled to 24,347, including the made-in-China Model Y for the first time. The main export market is Europe, but the Berlin plant will soon open. Elon Musk said Friday he hopes the Berlin plant will open in October or soon after, though many reports have suggested operations won’t begin until early next year. Tesla’s local China sales, as elsewhere, tends to be backloaded in the last month of the quarter. Tesla stock rose 2.6% for the week.
Meanwhile, Nio (NIO) reported a smaller-than-expected loss as revenue swelled 149% to $1.31 billion. Nio guided higher on Q3 revenue, saying deliveries will rise vs. Q2. Nio stock fell.
Memory Chip Stocks Fall
Micron Technology (MU) and other memory chip stocks tumbled after market research firm TrendForce forecast weakening prices for DRAM in the fourth quarter. Morgan Stanley piled on with a report predicting a cyclical downturn for memory chips starting in Q1 2022. It downgraded Micron stock to neutral. Memory-exposed chip-equipment makers Applied Materials (AMAT), KLA (KLAC) and Lam Research (LRCX).
Digital Ad Firms Beat Q2 Views
Trade Desk (TTD) reported adjusted EPS doubled while revenue rose 101% to $280 million, both easily beating. It also guided Q3 revenue estimates higher. PubMatic (PUBM) reported EPS of 18 cents vs. 1-cent a year earlier, with revenue growing 88% to $49.7 million. PubMatic guided 2021 revenue targets higher and gave preliminary fiscal 2022 sales targets above consensus. Trade Desk stock and PubMatic, a late 2020 IPO, fell for the week.
Weed Sees Gains, Slow Markets
U.S. cannabis producer Green Thumb Indstries (GTBIF) reported second-quarter results that beat expectations, helped by sales growth in Illinois and Pennsylvania. Trulieve (TCNNF) results were mixed, but boosted by its presence in Florida. Curaleaf (CURLF) also had mixed results, as costs related to its Europe expansion hit profit. Shares of hydroponics retailer GrowGeneration (GRWG) slid amid concerns about potentially decelerating sales growth despite a flurry of acquisitions, while management said some new legal markets were slow to develop. Hydrofarm (HYFM), a hydroponics equipment maker, also reported. Curaleaf edged higher for the week, Green Thumb fell slightly while Trulieve, GrowGeneration and Hydrofarm tumbled.
Coinbase Warns On Volume
The cryptocurrency exchange forecast lower trading volume and active users for the third quarter, following a drop in crypto prices and trading action. But Coinbase (COIN) second-quarter results beat expectations. Meanwhile, Bitcoin backed off recent highs above $46,000 as the Senate passed an infrastructure bill with new tax-reporting requirements for cryptocurrency transactions. Shares initially surged, but then slashed gains.
News In Brief
FuboTV (FUBO) jumped after the sports-focused multichannel streaming video service crushed Wall Street’s targets for the second quarter and raised its guidance for the full year. It added 91,000 subscribers in Q2 for a total of 682,000.
Cerence (CRNC) topped fiscal Q3 forecasts. The automotive voice assistant leader’s earnings jumped 94% as sales increased 29% to $96.8 million.
Sonos (SONO) jumped after the maker of premium music speakers and television sound bars crushed estimates for its fiscal third quarter ended July 3. It earned 12 cents a share on sales of $378.7 million. Analysts expected Sonos to lose 17 cents a share on sales of $315 million.
Unity Software (U) narrowed its loss to 2 cents a share while sales rose 48% to $273.6 million. Video game design and animation software maker also raised guidance. Shares jumped.
ZipRecruiter (ZIP) reported a loss that appeared to be wider than analyst targets. But revenue shot up 109% vs. a year earlier to $183 million — and up sharply from Q1’s $125.4 million. The online job search firm raised full-year revenue and EBITDA guidance. ZIP stock, which came public in late May, shot up Friday after already being extended.
Upstart Holdings (UPST) reported strong Q2 results. The AI lending platform also hiked its full-year revenue outlook above forecasts. Shares spiked higher.
Globant (GLOB) reported Q2 EPS grew 96%. Revenue rose 67% to $305.3 million. Globant recently acquired Miami-based Grupo ASSA for $74.5 million.
Palantir (PLTR) met EPS views while revenue jumped 49% to $375.6 million, topping estimates. The maker of data analytics software said government revenue rose 66% to $232 million, topping estimates. Palantir said it had 169 commercial customers as of June 30, topping estimates. Shares jumped.
Doximity (DOCS), a social network for doctors and other health care workers, reported a 700% EPS gain as revenue doubled to $72.7 million, both beating views in its first post-IPO report. DOCs stock exploded higher.
EBay (EBAY) reported Q2 results that were roughly in line but guided low on Q3 revenue.
Airbnb (ABNB) topped loss estimates as revenue soared 300%, but the vacation rental network warned of effects from the Covid-19 delta variant.
DoorDash (DASH) reported a larger than expected loss as revenue jumped 198% to $1 billion. DASH stock rose Friday.
Olo (OLO) beat second-quarter estimates with a 40% EPS drop and 48% revenue gain as the order integration and logistics company announced a deeper partnership with GrubHub.
Figs earnings fell 11% to 8 cents a share adjusted. However, the maker of hospital scrubs reported a GAAP loss of 29 cents a share. Revenue rose 58% to $101.1 million, easily beating. Figs raised full-year sales guidance, though much of that reflected Q2’s top-line beat. The company also signaled higher shipping costs will pressure margins in the second half. Shares fell sharply at Friday’s open but closed higher.
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