Markets Defused is an easy-to-understand and straightforward recap of the day’s most engaging business and stock market news.
- Who bought the dip? ... Dow, S&P and Nasdaq rallied on Thursday
- Expedia soared on roaring travel demand
- Barclays scraps cap to boost banker bonuses
- Eli Lilly boosted by stronger Mounjaro and Zepbound sales
- Under Armour soared on surprise profit after axing discounts
- Entain shares climbed as bookie scored growth
- Amazon’s Anthropic AI deal quibbled by UK watchdog
- Deliveroo shares jumped ... Asda sales dropped
Expedia soared on roaring travel demand, beating expectations
Expedia Group Inc (NASDAQ:EXPE, ETR:E3X1) stock shot up 10% in Thursday’s ‘afterhours’ trade, adding $12.53 to $130.50, as sustained demand for international drove second-quarter profit beyond Wall Street expectations.
Revenue for the quarter was up 6% to $3.56 billion, easing above a consensus analyst forecast of $3.53 billion.
Profit came in at $386 million, or $2.80 per share, compared to $385 million and $2.54 a year ago. Earnings (adjusted) per share meanwhile was stated at $3.51, comfortably beating analysts' forecast pitched at $3.18.
Expedia said that its gross bookings were up 6% to $28.8 billion, including lodging gross bookings up 8% to $20.7 billion – including an 11% increase in hotel bookings specifically.
In afterhours trading, Expedia shares advanced $11.52 or 9.77% priced at $129.49 – adding to a 4.18% gain in New York’s regular trading session in which the stock closed at $117.97.
Who bought the dip? … Dow, S&P and Nasdaq rallied in ‘best day’ for years
Who had the cojones to ‘buy the dip’ earlier this week? … come on, be honest. Anyone who did will be feeling pretty pleased with themselves this Thursday evening after Wall Street benchmarks measured one of the best single-day sessions for a number of years.
The Dow closed nearly 700 points higher, adding 683 points or 1.76%, to 39,446. At 5,319, the S&P 500 had gained 119 points or 2.3% - making it the biggest day’s gain for the index in nearly two years. The Nasdaq, meanwhile, bolted-on 464 points or 2.87% to 16,660.
It came as fresh jobs stats reinjected some confidence, following last Friday’s panic-inducing non-farms jobs report. Today, the US Department of Labor reported a decrease in initial jobless claims, which fell to 233,000 for the week ending August 3, a smaller fall compared to 250,000 in the previous week, and, significantly, this was better than the expected 240,000 claims.
Market watchers claimed this latest print eased growing concerns over a looming potential economic recession.
Bargain hunters raced to microchip-making tech firms like Nvidia (NVIDIA Corp (NASDAQ:NVDA, ETR:NVD)) and AMD (Advanced Micro Devices Inc (NASDAQ:AMD, ETR:AMD)) were among those being bought up as investor confidence returned, with both stocks up around 6% to $105 and $136 respectively.
Investors also poured into big-data specialist Palantir (Palantir Technologies Inc (NYSE:PLTR)) driving the stock more than 11% higher to close at $29.28. Facebook and Instagram owner Meta (Meta Platforms Inc (NASDAQ:META, ETR:FB2A, SWX:FB)) added 4.24% to $509.63, and Elon Musk’s Tesla (Tesla Inc (NASDAQ:TSLA)) rallied around 4% higher back towards $200 per share.
Eli Lilly boosted by stronger-than-expected Mounjaro and Zepbound sales
Eli Lilly and Co (NYSE:LLY) shares bolted more than 9% higher, adding $72.47 to $844.61, on a strong set of second-quarter financials driven by sales of its diabetes and weight loss drugs Mounjaro and Zepbound.
Revenue reached $11.3 billion, up 36% from the same quarter a year ago and comfortably above Wall Street expectations of $9.92 billion. Earnings per share came in at $3.92 which was massively ahead of analysts’ consensus estimate of $2.60.
Mounjaro and Zepbound contributed $3.09 billion and $1.24 billion in sales respectively, boosted by both increased volumes and higher prices.
Moreover, Eli Lilly told investors that with upgraded capacity concerns over supply constraints had eased.
Eli Lilly has now upgraded its full-year revenue forecast, to a range of $45.4 billion to $46.6 billion, from the prior guidance of $42.4 billion to $43.6 billion.
EPS is meanwhile forecast to reach between $16.10 and $16.60, up from the previous range of $13.50 to $14.00.
Under Armour beat expectations with surprise profit after axing discounts
Under Armour Inc (NYSE:UA) shares leapt nearly 20% higher on Thursday, to $7.74, with a “surprise” profit in its first quarter of 2024, thanks to better-than-expected margins.
The sportswear brand said its positive performance was driven by improved full-price sales numbers and a reduction in inventories.
In the words of chief executive Kevin Plank the company is encouraged by early progress in the “premium repositioning” of the Under Armour brand.
Gross margin improved 110 basis points, to 47.5%, it said, whilst retained stock levels reduced 15% to a value of $1.1 billion. It’s the result of fewer promotions and a higher weighting of higher-margin products, namely men's apparel. It reported $8 million of adjusted operating income, or $4 million in adjusted net income (whilst the non-adjusted number was a $305 million net loss).
Revenue dropped by 10% to $1.18 billion which was better than Wall Street analysts feared, as they had predicted a 13% decline.
At 1 cent per share, earnings (adjusted) per share for the quarter was much better than the 8 cents per share loss forecasted on Wall Street.
Looking ahead, Under Armour upgraded its full-year guidance to a range between 19 and 22 cents, from a prior estimate of 18 to 21 cents.
Barclays scraps cap to boost banker bonuses
Barclays (Barclays PLC (LSE:BARC)) has lifted the cap on bankers' bonuses, which will mean that its ‘top bankers’ will be able to earn as much as 10 times their base salary in bonuses.
The decision, on Thursday, followed a shareholder vote and was made possible by post-Brexit regulatory changes that allowed the UK to remove an EU rule that limited the amount bankers could be paid. Previously, under the EU rule, bankers could not be paid more than double their base salary in bonuses.
Barclays follows a number of investment banks that have already axed the cap, and, it said that the change will help it attract and retain top talent in a competitive market.
Payouts will be based on performance and market conditions, Barclays added.
Entain shares climbed as bookie scored revenue and earnings growth
Ladbrokes owner Entain PLC (LSE:ENT) saw its shares rise, closing Thursday’s close up 5% at 550p, after impressing investors in the City of London with strong first-half financials.
Revenue was up 6% to £2.55 billion, whilst earnings (adjusted EBITDA) rose 5% to £524 million. Entain’s reported a loss after tax of £46.9 million which was a major improvement from the £502 million loss this time last year.
The bookie rewarded investors with an increased dividend, which was also up 5%, to 9.3p per share.
Entain said it now expects online net gaming revenue (NGR) to grow in ‘low single digits’, which represents a more bullish outlook than before, and it forecasted its full-year profit at around £1.06 billion, upgraded from £1.04 billion.
Deliveroo shares jumped on its first ever profit
Deliveroo PLC (LSE:ROO) shares gained nearly 10% on Thursday, closing up 9.88% to 140.09p, with the gig-work delivery app seeing its first profit.
After a struggle, in tough markets, following its March 2021 float (described by some market commentators as “the worst IPO in London’s history) Deliveroo today gave investors reason to cheer.
Whether the financial results mark watershed in the firm’s turnaround will yet be determined.
Nevertheless, Deliveroo reported £1.3 million of net income for the first half of 2024, compared to a £82.9 million in the same period a year ago.
Deliver said that its total order volume was up 2%, to 147 million, which its gross transaction value per order had improved to £25 – specifically, it said this was due to higher prices being charged by restaurants and shops using its service.
Overall, is credited its positive performance to shifting consumer demand and its expansion to service more grocery and retail deliveries.
A reported half-year profit, positive free cash flow of £3 million, and an upbeat outlook was also accompanied by a plan to buyback £150 million of shares, to enhance shareholder value.
Asda revealed a drop in sales amid fierce supermarket competition
Asda has revealed a 5.3% drop in like-for-like sales in its second quarter, as the UK supermarket lost market share and lagged rivals Tesco and Sainsbury.
Revenue (excluding fuel) was down 2.2% to £5.3 billion for the quarter, according to a statement.
Asda highlighted that it had seen growth in online sales with groceries volumes up 1.4% whilst online clothes sales via the George brand were up 3.9%.
It also claimed that the ‘price inflation’ in its stores was “below market average”, and said that 53% of all customer transactions benefitted from its Asda Rewards loyalty scheme.
The unlisted supermarket - which is majority owned by Mohsin Issa and TDR Capital – had £3.9 billion of net debt at the end of the quarter, and it noted that it is investing around £50 million on store upgrades.
Thursday’s trading update follows Kantar supermarket survey data in July placed ASDA as the UK’s third largest supermarket by market share, at 12.7% from 13.6% a year ago.
Amazon’s Anthropic AI deal quibbled by UK watchdog
Amazon.com Inc (NASDAQ:AMZN) investment in the AI startup Anthropic is under scrutiny by the UK's Competition and Markets Authority (CMA).
The CMA has initiated a Phase 1 investigation into whether the $4 billion deal could affect competition in the emerging AI market.
This initial probe will determine if the partnership should be subjected to a more detailed review.
As part of the investment deal, announced in March, Anthropic is committed to using Amazon Web Services as its primary cloud computing provider.
Amazon and Anthropic say the partnership does not compromise Anthropic's independence, it can work with other cloud providers, and, also note that Amazon does not hold any decision-making power within the AI company.