Markets Defused is an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Airbnb plummeted after earnings miss and downgrade
- Reddit aced Wall Street’s scorecard, but shares slid
- Rivian dropped on revenue disappointment
- Uber shares driven higher after surge in trips and bookings
- Musk's X launched a lawsuit against major brands and advertisers
- Holiday Inn owner’s half year results reassured some investors
- Yum! Brands investors saw bright side on earnings
- Rightmove knocked lower as OpenRent is moving out
- Zalando investors underwhelmed despite upbeat financials
Airbnb plummeted after earnings miss and downgrade
Airbnb Inc (NASDAQ:ABNB, ETR:6Z1) shares plummeted, losing 16%, after reporting second-quarter financials below market expectations, and also downgraded its guidance for the third-quarter.
Revenue for the quarter totalled $2.75 billion, which was actually slightly better than Wall Street’s consensus forecast of $2.74 billion. Earnings, however, disappointed at 86 cents per share versus an estimate of 92 cents. At $555 million, the vacation-home rental app firm’s profit was also below expectations of $650 million.
Pitching guidance for its third quarter, Airbnb projected revenue between $3.67 billion and $3.73 billion, entirely short of analysts' mid-point consensus estimate of $3.84 billion.
It blamed ‘pressured’ domestic travel in the United States since the start of the year, and said more Americans are cautious about travel spending. Specifically, it noted that booking windows have shortened – which means more last-minute bookings and in turn results in more uncertainty and less financial visibility.
In afterhours dealing, Airbnb shares were down $20.75 or 15.9% priced at $109.88.
Reddit aced Wall Street’s scorecard, but shares slid
Reddit (NYSE:RDDT) stock extended Tuesday’s losses in the ‘afterhours’, losing another 5% or so, despite the social media firm beating expectations in practically all meaningful metrics.
It reported $281.2 million of second quarter earnings beating a Wall Street forecast of $254 million. At $10.1 million, Reddit’s net loss narrowed significantly a year-over-year comparative of $41.1 million, and, on a per share basis that loss reduced to 6 cents from 70 cents.
In terms of its audience, Reddit's tally for daily active users amounted to 91.2 million, versus a prediction of just over 84 million.
Ad revenue totalled $251.1 million marking a 41% year-over-year improvement, while its nascent data licensing revenue stream showed a 691% increase to $28.1 million.
On the stock market scorecards Reddit outperformed what Wall Street had expected, albeit it remained loss making and some investors are keen to see progress in that direction.
Meanwhile, Tuesday’s earnings were only Reddit’s second set of financials since its $34 per share March IPO that valued the business at around $6.5 billion.
Some investors and traders will also be aware of the looming end of ‘lock ups’ (due in the coming weeks) following on from the IPO, which once lapsed will enable insider shareholders to sell stock for the first time since this year’s float.
Rivian dropped on revenue disappointment
Rivian (NASDAQ:RIVN) stock dropped in Tuesday’s afterhours trading, losing over 7% to $13.68, after the electric vehicle brand reported second-quarter revenue below Wall Street expectations.
It generated $1.158 billion, versus an analyst consensus forecast pitched at $1.165 billion.
The vehicle maker, that’s part-owned by Amazon, highlighted strides towards improved profitability, most notably reduced material and manufacturing costs. And, it pointed to the recently unveiled technology partnership with Volkswagen which is expected to deliver $5 billion to Rivian by 2026.
In the meantime, however, Rivian reported a net loss of $1.46 billion up from $1.45 billion in the preceding three-month period.
On a per share basis, though, Rivian’s loss (adjusted) was better than anticipated at $1.13 compared to estimates pitched at $1.20.
Some 9,612 Rivian EVs were produced, and 13,790 were delivered.
Uber shares driven higher after surge in trips and bookings
Uber Technologies Inc (NYSE:UBER, ETR:UT8) shares traded up close to 11% on Tuesday, driven by positive revenue and profits for its second quarter.
The gig-app firm generated $10.70 billion of revenue in the quarter, up 16% year-over-year, and better than Wall Street’s consensus forecast of $10.57 billion.
The Delivery segment, which includes Uber Eats, saw gross bookings up 16% to $18.1 billion, whilst the Mobility segment, or ride-sharing, brought in $20.6 billion of gross bookings which was a 23% improvement from last year.
Overall, group gross bookings were up 19% at $40 billion. Trip numbers meanwhile increased 21% compared to the same period last year, to 2.8 billion – which Uber highlighted was approximately the same as 30 million trips per day.
Net income meanwhile more than doubled to $1.02 billion compared to $394 billion a year ago. Earnings (adjusted EBITDA) was reported at $1.57 billion, equating to 47 cents on a per share basis which was easily ahead of analyst estimates of 31 cents.
Uber generated some $1.7 billion of free cash flow in the period, taking its cash pile to some $6.3 billion.
Musk's X launched a lawsuit against major brands and advertisers
Elon Musk has launched a lawsuit against some of the world’s largest consumer brands for not advertising on his social media app, X (formerly Twitter).
Musk’s X has filed a federal antitrust lawsuit against several major advertisers in which it alleges that advertisers, the Global Alliance for Responsible Media (GARM) and consumer brands such as Unilever, Mars, and CVS Health have conspired to withhold billions of dollars in advertising revenue from his platform.
The suit alleges that it is a boycott that violates US antitrust laws, and X claims that the ‘boycott’ threatened the viability of X as a platform for diverse voices.
Yum! Brands investors saw bright side on earnings
KFC, Pizza Hut and Taco Bell parent Yum! Brands Inc (NYSE:YUM) saw its shares trade up 2.65% in Tuesday’s regular trading, as investors took a glass-half-full view of its second quarter.
Earnings (adjusted) per share came in at $1.35, beating a consensus Wall Street forecast of $1.33.
Revenue was undercooked at $1.76 billion for the quarter, versus an estimate of $1.8 billion.
Among the reasons offered by the fast-food firm were reduced consumer spending and tensions in the Middle East, where around 200 stores are temporarily closed.
The Taco Bell business, which is mostly confined to the United States and is position in the market for more ‘cost conscious’ consumer. Here, same store sales were up 5%
KFC and Pizza Hut meanwhile saw a decline in gross sales.
Overall, the fast food firm said net sales were up 4% across the group helped by an increase in its store count – on a ‘same store’ basis sales were overall down 1%.
Holiday Inn owner’s financials reassured some
Holiday Inn owner Intercontinental Hotels Group PLC (LSE:IHG) saw its shares finish Tuesday in green, up 0.76% despite trading more strongly earlier, after reporting growth in revenue and profits for its first half of 2024.
Revenue rose by 7% to $1.1 billion, whilst operating profit was up 12% to $535 million. Meanwhile, the hotelier’s key performance metric ‘RevPAR’ – that revenue per available room – had improved by 3% worldwide.
China was a drag on performance, however, with RevPAR was down 7%.
Nevertheless, growth in the Americas and the EMEAA region (Europe, Middle East, Africa and Asia) offset the worst of it. In the United States, the hotel operator reported a significant rebound particularly in the second quarter.
In London, IHG shares finished Tuesday 0.76% higher for the day, at 7,410p.
Rightmove knocked lower as OpenRent is moving out
Rightmove PLC (LSE:RMV) shares closed Tuesday on the backfoot, down 4.34%, after investors reacted to news that its ended a contract with a major customer.
The relationship with OpenRent, an online letting agent that accounted for just under 8% of all letting listings on Rightmove, is ending after the two parties failed to terms on a new deal. OpenRent will terminate its membership with Rightmove effective 1 September.
Rightmove, meanwhile, attempted to assure investors with a statement telling the market that its full-year revenue and margin guidance would remain unaffected.
That guidance sees achieving a 7% to 9% increase in revenue, and an underlying operating margin of 70% for the year. It did, however, note that overall it is expecting to show a decline of up to 3% in site memberships.
Evidently, Rightmove is taking a stoic view and backing its market position.
In London, Rightmove shares closed Tuesday’s trading session 23.8p or 4.34% lower priced at 524.2p.
Zalando left investors underwhelmed despite upbeat financials
Zalando (ETR:ZAL) shares dropped nearly 2% in Germany, closing Tuesday’s trading at €21.58, despite seemingly upbeat second-quarter financial results.
The European clothing and apparel e-tailer reported a 3.4% rise in revenue compared to the same period in 2023, and highlighted a 2.8% improvement in ‘gross merchandise volume’ which totalled €3.8 billion.
Earnings (EBIT) were, meanwhile, up 18% year-over-year to €171.6 million.
Zalando highlighted successful inventory management and lower fulfillment costs, and also pointed to “significant growth” its sports, designer, and beauty categories driven by ad-spend promoting a "Summer of Sports" in which Germany was host to the UEFA 2024 Euro Championship and France is hosting the Olympics.
The e-commerce firm also, in a separate announcement, told investors that it had bought back €100 million of a €500 million convertible bond series that was due to mature a year from now.
Also in the finance department, CFO Sandra Dembeck will be stepping down (in February).
In Tuesday’s early trade, Zalando shot up marking gains up to €23.41, before the selling set in leaving the share to close 1.9% at €21.58.