Markets Defused is an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Chipotle spiked higher thanks to a rise in burrito demand
- Ford stock dropped on disappointing revenue and profits
- IBM's AI-boosted financials beat expectations
- Universal Music’s merch revenue lifted by Swifties
- AMC Entertainment blamed Hollywood for new profit warning
- Aston Martin traded higher on hopes of a stronger finish
- Easyjet boosted by upbeat financials and bright outlook for summer
Ford stock dropped after revenue and profit missed Wall Street forecasts
Ford Motor Company (NYSE:F) stock crashed more than 10% lower in Wednesday’s ‘afterhours’ trade, after quarterly results that the market evidently took to be dismal.
Ford pointed to the impact of persistent warranty issues, as the reason for the drop in its profitability.
Revenue for the quarter came in at $47.8 billion, shy of Wall Street’s consensus forecast of $48.09 billion.
Earnings per share was, meanwhile, significantly below expectations reported at 47 cents, versus 68 cents.
The carmaker revealed a 26% drop in operating profit to $2.8 billion compared to $3.8 billion this time a year ago.
The company is still sticking with full-year earnings guidance, which pitches earnings (adjusted EBITDA) between $10 billion and $12 billion.
In ‘afterhours’ trading, Ford stock gave up $1.44 or 10.3% priced at $12.27.
Chipotle spiked higher in ‘afterhours’ as improved burrito demand boosted sales
Chipotle Mexican Grill Inc (NYSE:CMG) shares rose sharply in ‘afterhours’ trading, before dropping back a bit, after strong demand for burritos and rice bowls saw quarterly financials exceed Wall Street’s forecasts.
Second quarter revenue of $2.97 billion exceeding a Wall Street consensus forecast of $2.94 billion. At $455.7 million net income was up significantly year-over-year, from $341.8 million in 2023. On a per share basis, Chipotle’s earnings were reported at 34 cents, easing past the market’s forecast for 32 cents.
The quick-service restaurant chain said its comparable sales increased by 11.1%, driven by consistent demand for rice bowls and burritos.
"The second quarter was outstanding as successful brand marketing,” chief executive Brian Niccol said in a statement.
Chipotle repeated its full-year outlook for same-store sales growth “in the mid-to-high single digits” and said it plans to open between 285 to 315 new restaurants this year. It opened 53 new locations in its second quarter.
After initially spiking to $59.61 after the release, Chipotle shares eased back and were up $1.07 or 2% following an hour of late trading, changing hands at around $53.00.
IBM shares rise quickly as AI-boosted financials beat expectations
International Business Machines Corp (NYSE:IBM) shares turned higher in ‘afterhours’ dealing, after its second-quarter financials beat Wall Street expectations.
The IT firm reported $15.77 billion of revenue, ahead of consensus analyst' forecasts of $15.62 billion. At $2.43 per share, earnings per share was comfortably above the market’s forecast of $2.18.
IBM said it generated $1.83 billion of net income for the quarter, equating to $1.96 per share.
Given the AI-boom perhaps it's unsurprising that IBM’s software division performed well with the unit’s revenue contribution coming in at $6.74 billion, which was a 7% improvement year-over-year.
IBM highlighted strong demand for its AI-related services – which includes machine learning OG ‘Watson’ as well as as its newer ‘Watsonx’ and the ‘Granite’ family of AI models. Growth in IBM’s AI business was sharp at $2 billion having doubled, adding $1 billion in the second quarter alone.
IBM, meanwhile, upgraded its forecast for full-year free cash flow which it now predicted to exceed $12 billion.
In ‘afterhours’ trading, IBM shares were up $4.26 or 2.3% priced at $188.28 each – after seeing nearly $193 per share with a reflex move as the results were released.
Universal Music’s merch revenue boosted by Swifties
Universal Music Group (EURONEXT:UMG) reported expectation-beating quarterly financials, after the market close in Amsterdam, boosted by the likes of Taylor Swift, Billie Eilish, SEVENTEEN, and Morgan Wallen.
Physical media and merchandise sales were at the heart of the performance.
At €2.93 billion, the audio rights holder saw a 9.6% jump in revenue for its second quarter, and it was ahead of consensus estimates for €2.89 billion. It means first-half revenue totalled some €5.53 billion, up 8.8% on a constant currency basis. Second quarter earnings (adjusted EBITDA) increased 10.0% year-on-year, to €649 million.
Drilling into the detail, streaming revenue was down 4.2% but was more than offset by ‘physical’ revenue which was up 14.4%.
In that segment, UMG highlighted a strong performance across all segments, with significant growth in music publishing and merchandising revenues – no doubt supported by the continuing Taylor Swift’s Eras Tour (currently on its European leg).
Specifically, UMG’s ‘merchandising and other’ revenue stream was up 44.6% year-over-year at €227 million for the quarter, and up 29% at €341 million for the half year. It meanwhile highlighted ‘growth in touring merchandise sales and direct-to-consumer sales’.
“We are, by design, a multifaceted music entertainment company that places our artists at the center of everything we do,” UMG chief executive Sir Lucian Grainge said in a statement.
“Our unique structure, which is both innovative and constantly evolving, enables us to support our recording artists and songwriters with an ever-expanding array of revenue sources, reinforced by new products and the exciting next phase of development of streaming services."
AMC Entertainment blamed Hollywood for new profit warning
AMC Entertainment Holdings (NYSE:AMC) told investors (and memetraders) that it expects to report a net loss of $32.8 million for its second quarter of 2024, which would mark a reverse from the $8.6 million profit for the same period last year.
On 2 August, the company will release its actual results for the quarter.
The cinema operator blamed Hollywood – well, more accurately, the lighter movie release slate this year, which is a downstream impact of last year’s writers and actors' strikes.
It said that revenue for the quarter is projected to fall 24% to $1.03 billion.
This softness was seen in April and May, though AMC chief executive Adam Aron said there had been a rebound in June and daily revenues increased significantly.
In New York, AMC stock was down 38 cents or 7.6% changing hands at $4.70.
Aston Martin shares traded higher on hopes of a stronger finish to 2024
Aston Martin Lagonda Global Holdings PLC (LSE:AML) shares traded higher, up 967% at Wednesday’s close, as the sports car brand stuck with its full year guidance despite reporting a drop in sales and a bigger loss for the first half.
To borrow a phrase from motor racing, management is expecting to accelerate out of the corner.
It told investors to expect a strong recovery in the second half due to the introduction of new models such as Valkyrie and Valour, plus the launch of its the DB12, Vantage, and Vanquish models in China.
“Aston Martin is at a pivotal moment in its journey, with our immense product transformation supporting volume growth and sustainable positive free cash flow generation later this year, of which we have full confidence in achieving,” executive chair Lawrence Stroll said in a statement.
The actual results, meanwhile, saw the car brand report a profit of an operating loss of £106.1 million, compared to a £93.2 million loss a year ago, with earnings (adjusted EBITDA) reported at £62.2 million, down from £80.6 million last year.
Net debt, meanwhile, rose to £1.19 billion which is a 41% increase over the intervening twelve month period.
At one stage, in earlier deals today, the share price was some 11% higher for the session. Closing at 164.5p, the price was up 14.5p or 9.67%. At this level, the market values the business at just over £1.3 billion.
Easyjet lifted by upbeat financials and bright outlook for summer
easyJet PLC (LSE:EZJ) shares traded up on Wednesday, finishing the session more than 5% higher, thanks to upbeat financials for its third quarter.
The short-haul airline reported quarterly profit some 16% higher to £236 million. Revenue also saw an uptick, rising 11%, to £2.6 billion as the airline saw an 8% increase in passenger numbers, selling 28.1 million seats in the three months and marking a load factor (which measures how full flights are) of 90%.
Its package holiday business, EasyJet Holidays, meanwhile, upped its profits by 49% to £73 million.
Looking to the peak summer season, EasyJet highlighted that its bookings so far already cover 69% of its availability.
"Our strong performance in the quarter has been driven by more customers choosing easyJet for our unrivalled network of destinations and value for money,” chief executive Johan Lundgren said in a statement.
He added: “we remain on track to deliver another record-breaking summer, taking us a step closer to our medium term targets."
In London, EasyJet shares closed Wednesday up 22.4p or 5.34% at 450.1p.