Markets Defused aims to give an easy-to-understand and straightforward recap of the day’s most engaging stock market news.
- Zoom slips as forecasts fail to wow
- Hims & Hers rockets on weight loss launch
- AMC needs to 'right size' debt, analyst says
- Keywords Studios sees premium takeover offer
- Gold price spiked to another new high
- Ryanair sees softer fares, but reports record profits
- Applied Nutrition in talks for London IPO
Zoom latest forecasts fail to wow Wall Street
Zoom Video Communications Inc (NASDAQ:ZM) slipped slightly lower as its short-term guidance underwhelmed Wall Street, despite otherwise positive financials.
The remote meeting software firm said that it expected second-quarter sales between $1.145 billion to $1.15 billion, which shaved beneath Wall Street consensus of $1.15 billion. It predicted earnings of $1.20 to $1.24 per share in the second quarter, which was similarly soft versus prevailing market forecasts pitched at $1.24.
Results for quarter one, meanwhile, impressed with revenue coming in at $1.14 billion, marking a 3% gain compared to the same period last year, whilst net income amounted to $216.3 million for the three months – resulting in $1.35 of earnings per share. The first quarter exceeded the predictions of Wall Street analysts who forecasted $1.13 billion of revenue and $1.19 of earnings per share.
Like any good tech company in 2024, Zoom had an artificial intelligence story to tell.
Chief executive Eric Yuan highlighted the progress Zoom has made with its software upgrades for enterprise customers into Zoom Workplace, which now embeds AI tools.
“Our AI-powered collaboration platform that provides customers the ability to reimagine teamwork by streamlining communications, increasing employee engagement and improving productivity within their organizations,” Yuan said in a statement.
Hims & Hers rockets on weight loss launch
Shares in Him & Hers Health (NYSE:HIMS) rocketed close to 30% higher in Monday afternoon’s dealing after it announced it will sell lower-priced GLP-1 weight loss injectables and oral weight loss medication.
The online consumer healthcare brand made its name selling anti-hair loss and erectile dysfunction products and later branched out to selling birth control and ‘anti-aging’ product verticals, and evidently, it has found its new niche. Its weight loss injections will contain the same active ingredients as Ozempic and Wegovy, which are made and sold by Novo Nordisk (NYSE:NVO).
The company added that it current weight loss product range is ‘tracking to eclipse’ $100 million in revenue by the end of 2025, before these GLP-1 products are rolled out.
It will price the weight loss medication from $79 per month, for the oral kits, whilst the GLP-1 injections will price at $199 per month.
In New York, Hims & Hers Health stock jumped $4.40 or 30.2% changing hands at $18.89.
AMC needs to ‘right size’ debt, analyst says
AMC Entertainment Holdings (NYSE:AMC) has the opportunity to continue growing revenue, especially in Europe, but the cinema operator is unlikely to do so until it ‘right sizes’ its balance sheet, that’s the view of Wedbush Securities analyst Alicia Reese.
Reese reckons AMC’s heavy debt and lack of shareholder returns overshadow the cinema operator’s growth prospects.
With $4.4 billion of debt outstanding, the company has a track record of selling stock to cover debt when market demand tips its valuation higher – with last week’s stock sale the latest example.
Immediately preceding last week’s viral stock rally, the company’s bankers closed a share sale that brought in some $250 million, with the funds earmarked mostly to pay down debt.
“AMC must cover its interest payments and conserve cash while it posts losses,” the analyst said.
“Shares of AMC recently received a boost from its retail shareholders, only to fall again after issuing shares.”
She added: “AMC is trading roughly in line with its pre-meme historical multiple, albeit still at a premium to its competitors.”
Wedbush has a ‘neutral’ rating for the so-called ‘meme stock’, with a price target of $3.50.
According to Wedbush, AMC has had repeated success renegotiating its debt to extend maturity, and, the broker reckons it can do so again before its next deadline in 2026, when the bulk of the current debt falls due.
At $4.51 on Monday, AMC stock is still up around 32% since before last week’s volatility.
Keywords Studios sees premium takeover offer
Keywords Studios PLC (AIM:KWS, OTC:KYYWF), a Dublin-headquartered and London-listed service provider to the video games industry, saw its shares soar more than 60% on Monday after it was approached over a potential premium-priced takeover offer.
The bidder EQT Group is offering shareholders £22.50 per share plus the promise of an extra final dividend payment.
Multiple offers have been made by EQT, Keywords said, adding that this latest approach ‘might be recommended’ by the board, if a formal offer comes before a 15 June deadline.
The company – which provides art, sound, language and customer support services to the likes of Activision Blizzard, Nintendo, and Tencent – would be valued at 12-times its underlying earnings by the EQT proposal.
That would be a long way lower than previous video game takeovers in London, as both Sumo Group (bought by Tencent) and Codemasters (bought by Electronic Arts) were valued at 31-times earnings when they were acquired in 2021.
In London, Keywords stock was up 866p or 58% into Monday’s close of trading, at 2,334p per share.
Gold price spiked to another new high
The price of gold surged to hit a new high of $2,500 an ounce against a confluence of geopolitical events and economic trends.
Evidently, the yellow metal is in demand as a safe haven from all kinds of factors at the moment.
To name just a couple, there are fresh concerns of China’s economy, and escalating tensions over Taiwan and also the Red Sea, plus a separate spike in geopolitical uncertainty after the Iranian president has died in a helicopter crash.
Economically, Chinese retail sales data came in softer than expected, meanwhile, in America more comfortable inflation metrics may potentially mean rate cuts can come sooner – and when they do gold prices will likely move higher again.
Analysts at Stifel said prices were rising today "on the back of significantly weaker retail sales data from China" and after a big upward move last week that was largely the result of the soft US inflation number which "once again fueling up the hopes of earlier-than-anticipated Fed rate cuts".
"Once rate cuts start to happen, it will drive another leg up for the gold price, with cuts likely to happen more rapidly than currently expected,” analysts at investment bank Stifel said in a note.
Susannah Streeter, head of money and markets at Hargreaves Lansdown said that gold and oil were claiming in tandem "following the confirmation of the death of Iran’s president, and the health of King Salman of Saudi Arabia being the subject of speculation".
Ryanair sees softer fares, but reports record profits
Ryanair Holdings PLC (LSE:RYA) promised shareholder returns, with a €700 million share buyback, as it reported record results and gave the market insights into prevailing flight prices heading into the key summer trading period.
Profit was up 21% for the financial year, up to €1.92 billion, driven largely by higher average flight prices and record passenger volumes in the reporting period.
This summer though, Ryanair is anticipating slowing fares, seen only ‘flat to modestly higher’, with chief executive Michael O’Leary describing “a recessionary feel” across Europe.
He also cautioned that the industry will be impacted by the delay in delivery of Boeing aircraft, amidst the aerospace manufacturer’s ongoing troubles with quality control.
Ryanair, separately, noted that its fuel bill had also increased by 32%.
Applied Nutrition in talks for London IPO
Liverpool headquartered sports science and nutrition firm Applied Nutrition is reportedly readying plans to float on the London Stock Exchange via a £500 million IPO.
Applied Nutrition, which is part owned by JD Sports, has held meetings with bankers across the City of London to discuss the possible listing, albeit firm plans have yet to be confirmed and nor formal arrangements have bee announced.
It makes and sells protein powders, creatine, and collagen nutrition aids. Its products are sold directly to consumers online, and, via well established retailers including Asda, Walmart, Tesco, and Holland & Barret.
The company is expected to see pre-tax profits of £25 million in the 12 months to July, supported by revenues climbing by a third to between £80 and £85 million.
Applied Nutrition founder Tom Ryder owns around 55% of the company, which JD Sports has 32%. It is reported that Ryder will look to sell some of his existing shares are part of a public sale.