Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Airbnb Inc. (NASDAQ: ABNB) shares tumbled more than 6% on Wednesday after the vacation rental company issued a weaker-than-expected outlook for the current quarter.

The stock had gained about 9.34% over the past 12 months. For the quarter ending March 2024, Airbnb had reported an EPS of $0.41, beating expectations by approximately 75%.

Airbnb Stock Price Update

Airbnb shares fell over 6% since the market opened at the time of writing, trading at $147. The stock finds a zone of support between $141 and $148 from the 200-day moving average and price action dating back to September last year.

However, failure to hold above this support zone opens the door for Airbnb’s stock price to potentially decline to lower support around $126.

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Why Airbnb Stock Dipped Today

Airbnb reported first-quarter revenue of $2.14 billion, up 18% year-over-year, and adjusted earnings per share of $0.41, beating analyst estimates of $2.06 billion in revenue and $0.24 EPS. Despite the strong results, Airbnb’s second-quarter revenue forecast of $2.68-$2.74 billion, representing 8-10% growth, had its midpoint below the $2.74 billion Wall Street consensus, disappointing investors.

The company cited headwinds to second-quarter results from the timing of Easter, an extra leap-year day in the first quarter, and foreign exchange fluctuations. Jefferies maintained a Hold rating and $150 price target on Airbnb stock, stating that the results failed to ease growing fears of slowing growth. Morgan Stanley kept an Underweight rating and $120 target as room night growth continues to underwhelm.

Bank of America acknowledged Airbnb’s strong first-quarter performance but noted that the company’s outlook reflects slowing travel growth. As a result, BofA cut its price target on Airbnb stock to $160 from $168.

Do you see Airbnb as a solid stock to hold? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Roblox Corporation (NYSE: RBLX) recently unveiled its financial and operational results for the first quarter of 2024. The company’s financial health appears robust, with significant year-over-year increases in net cash and cash equivalents provided by operating activities and record-setting free cash flow. However, the firm reduced its guidance for the upcoming quarter and full year.

Roblox’s revenue surged to $801.3 million, a 22% increase from the previous year. Bookings, a critical metric for Roblox that encompasses revenue plus changes in deferred revenue and other adjustments, rose to $923.8 million, up 19% year-over-year.

Despite these positive trends, the company reported a consolidated net loss of $271.9 million. However, it’s noteworthy that the average daily active users (DAUs) increased by 17% to 77.7 million, and hours engaged on the platform grew by 15% to 16.7 billion, indicating a strong and engaged user base.

Roblox’s Q1 Performance

Roblox’s financial performance in the first quarter of 2024 has shown growth in revenue and bookings and operational efficiency. The company’s adjusted EBITDA was reported at $(6.9) million after accounting for increases in deferred revenue and deferred cost of revenue. Although negative, this figure is part of Roblox’s strategic approach to investing in growth and expansion. The net liquidity stood at $2.5 billion, showcasing the company’s solid financial position.

Roblox’s efforts to drive user engagement and monetization, such as experimenting with AI-driven discovery algorithms and reintroducing platform-wide events, have begun to yield positive results, according to CEO David Baszucki. Additionally, CFO Michael Guthrie highlighted the company’s operational efficiency improvements, including a nearly 50% reduction in capital expenditures compared to the previous year, contributing to the record operating and free cash flow.

When comparing Roblox’s first quarter performance against market expectations, the company’s results present a mixed picture. Analysts had forecasted an EPS of -$0.53 and revenue of $929.67 million for the quarter.

Roblox’s reported revenue of $801.3 million fell short of expectations, despite showing strong year-over-year growth. The net loss per share of $0.43, however, outperformed the anticipated EPS, suggesting a better-than-expected control over costs or potentially higher operational efficiency than analysts had predicted.

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Roblox Lowers Guidance for Q2 and Full Year 2024

Looking ahead, Roblox has provided guidance for the second quarter and updated its full-year outlook for 2024. For the upcoming quarter, the company expects revenue to be between $855 million and $880 million and bookings to range from $870 million to $900 million. The anticipated consolidated net loss is between $(267) million and $(265) million, with adjusted EBITDA projected to be between $36 million and $38 million. For the full year, Roblox estimates revenue to be between $3,450 million and $3,525 million and bookings between $4,000 million and $4,100 million. The updated guidance also accounts for changes in the estimated average lifetime of a payer, reflecting Roblox’s adaptive strategies in response to its dynamic business environment.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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SharkNinja, Inc. (NYSE: SN), a leading global product design and technology company, has recently unveiled its financial results for the first quarter ended March 31, 2024.The company reported a significant increase in net sales, which rose by 24.7% to reach $1,066.2 million. Adjusted Net Sales saw a similar uptrend, increasing by 27.6% to the same amount. This growth was driven by performance across all four major product categories: Food Preparation Appliances, Cooking and Beverage Appliances, Cleaning Appliances, and Other, which include beauty and home environment products.Notably, the Food Preparation Appliances category witnessed a remarkable 74.0% increase in net sales, while the Cooking and Beverage Appliances category grew by 28.4%.

SharkNinja Outperforms Expectations in Q1, Reports $1.07 Billion Revenue

The financial results also highlighted improvements in gross margin and Adjusted Gross Margin, which increased by 260 and 210 basis points, respectively. This improvement can be attributed to supply chain tailwinds and cost optimization efforts.

Furthermore, SharkNinja’s net income saw a 25.9% increase to $109.6 million, with Adjusted Net Income rising by 24.8% to $148.6 million. Adjusted EBITDA also experienced a healthy growth, increasing by 29.5% to $230.5 million. These results demonstrate SharkNinja’s ability to grow its top line and enhance its profitability and operational efficiency.

Comparing these results against the expectations for the quarter, SharkNinja has outperformed on several fronts. Analysts had projected an EPS of $0.88 and revenue of $918.06 million for the quarter. The actual performance, with an Adjusted Net Income per diluted share of $1.06 and net sales of $1.07 billion, far exceeded these expectations.

This outperformance indicates a strong demand for SharkNinja’s products and its effective execution on strategic initiatives. The company’s ability to exceed analyst expectations reflects its robust business model and the successful implementation of its growth strategies.

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SharkNinja raises guidance for Fiscal Year 2024, Expect Net Sales to Raise 12% to 14%

SharkNinja has raised its outlook for the fiscal year 2024, reflecting confidence in its ongoing business momentum. The company now expects net sales to increase by 10.0% to 12.0% and Adjusted Net Sales to rise between 12.0% and 14.0% compared to the prior year.

Adjusted Net Income per diluted share is anticipated to be between $3.66 and $3.82, indicating a 14% to 19% increase compared to the previous year. Adjusted EBITDA is projected to be between $840 million and $870 million, showcasing a 17% to 21% increase. These projections highlight SharkNinja’s optimistic outlook and commitment to delivering sustainable, profitable growth.

The company’s strategic investments in new product launches, technology, and market expansion are expected to continue driving its success in the competitive global market.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

EPAM Systems, Inc. (NYSE: EPAM), a global leader in digital transformation services, has reported its financial results for the first quarter ended March 31, 2024. The company announced first-quarter revenues of $1.165 billion, marking a 3.8% decrease year-over-year.

Despite the challenging demand environment, EPAM demonstrated resilience with GAAP income from operations at 9.5% of revenues and non-GAAP income from operations at 14.9%. The GAAP diluted earnings per share (EPS) increased by $0.24 to $1.97, while non-GAAP diluted EPS slightly decreased by $0.01 to $2.46. CEO Arkadiy Dobkin highlighted the company’s adaptability and ongoing investments in AI-enabled delivery and consulting to navigate the current market conditions.

The company’s performance in the first quarter also showed a strong cash flow, with $129.9 million generated from operating activities, compared to $87.3 million in the same period last year.

Additionally, EPAM continued its share repurchase program, buying back 396 thousand shares for $120.6 million. Despite a slight decrease in cash, cash equivalents, and restricted cash, which totaled $1.990 billion as of March 31, 2024, the company’s financial position remains solid. As of the end of the quarter, the total headcount was approximately 52,800, including around 47,050 delivery professionals, underscoring EPAM’s commitment to maintaining a robust talent pool.

EPAM Beats Expectations in Q1

EPAM’s first-quarter performance did not fall short of expectations, with analysts projecting an EPS of $2.31 and revenue of $1.16 billion. The reported revenue of $1.165 billion was slightly above the anticipated figure, and the adjusted EPS of $2.46 exceeded the expected EPS.

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EPM Expects Full-Year Revenues to Be Between $4.57 Billion to $4.67 Billion

Looking ahead, EPAM has updated its full-year outlook, now expecting revenues to be in the range of $4.575 billion to $4.675 billion, reflecting a year-over-year decline at the midpoint of the range. The company has also adjusted its expectations for GAAP diluted EPS to be in the range of $7.34 to $7.64 and has narrowed the expected range for non-GAAP diluted EPS to $10.00 to $10.30. For the second quarter, EPAM anticipates revenues to be between $1.135 billion and $1.145 billion, with GAAP diluted EPS in the range of $1.52 to $1.60 and non-GAAP diluted EPS between $2.21 and $2.29. These projections account for the ongoing challenges in the demand environment and EPAM’s strategic measures to optimize operations and invest in growth areas such as AI and digital transformation.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Compared to its long-standing adversary AMD (NASDAQ: AMD), Intel (NASDAQ: INTC) severely underperformed. Year-to-date, AMD stock gained 11.5%, while INTC shares lost 37.4%. Over one year, this divergence is even more pronounced, with AMD increasing by 63% while INTC is decreasing by 3%.

Although both semiconductor companies supply the market with CPUs and GPUs, Intel has a significant lead in the CPU market. Moving forward, does that mean that Intel’s fundamentals are sound, making this a buy-on-weakness opportunity, or is Intel stock heading for a further slump?

What is Intel’s Current Market Positioning?

According to the annual CPU shipments report for full-year 2023, prepared by Canalys, Intel holds a massive market lead of 78%, excluding tablets. Intel’s year-over-year shipments growth also surpassed AMD at 3% vs. -1%, with Apple shrinking by 4%. Mediatek tracked the largest growth spurt of 27% while Qualcomm (NASDAQ: QCOM) saw a 17% decline in shipments.

By PC vendors, Intel is more diversified, gaining revenue relatively evenly from Dell (NYSE: DELL) (26%), HP (NYSE: HPQ) (21%), and Lenovo (26%). AMD’s vendors are more concentrated, divided between Lenovo (40%) and HP (28%). Qualcomm, having had the highest shipments decline of 17%, is nearly entirely dependent on Acer (74%) and Dell (26%).

When it comes to the GPU market, everyone is behind Nvidia (NASDAQ: NVDA). Although Intel dominates the market at 67% share in Q4 2023, that is owing to the integrated graphics sector. Intel is a latecomer in the discrete GPU market arena, having launched Iris Xe Max in October 2020. Since then, until Q4 2022, Intel’s dGPU market share increased to an estimated 9% with its ARC lineup.

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What is Intel’s Financial Status?

At the end of April, Intel delivered its Q1 2024 earnings report. After beating the prior three quarters’ estimates, the company suffered a negative (loss) earnings per share of $0.06 vs estimated -$0.03. 

Intel delivered a net loss of $381 million compared to the year-ago loss of $2.7 billion. Intel’s total assets remained relatively flat year-over-year, at $192.7 billion vs $191.5 billion in 2023. During that period, the company’s total liabilities slightly decreased, at $27.2 billion vs $28 billion in a year-ago quarter.

This puts Intel’s debt-to-equity ratio relatively low at 0.495, although AMD’s ratio is even lower at 0.044. After securing $8.5 billion from the US CHIPS Acti, alongside $11 billion in loans, Intel Foundry delivered an operating loss of $7 billion.

Intel CEO Pat Gelsinger expects these investments to generate profits between 2027 and 2030. If that materializes, and there is no shortage of qualified personnel, Intel could become one of the world’s largest semiconductor companies, sandwiched between TSMC and Samsung.

For Q2 ’24, Intel expects another earnings (loss) per share of $0.05 and revenue range of $12.5 – $13.5 billion from this quarter’s $12.7 billion. 

Intel’s Entanglement with Israel

Given the perennial Middle East volatility, it bears noting that Intel started heavily investing in Israel at the end of 2023, launching a $25 billion package. This led to Intel’s reliance on Israel’s multiple manufacturing and research and development facilities.

Additionally, there have been speculations that Intel implemented backdoors into Management Engine (ME) on CPUs. Purported undocumented x86 instructions also pushed the public perception in the negative direction.

Considering recent developments in the region, the international backlash may reflect badly on Intel as well among consumers.

Analyst Forecast for INTC Stock

Per Nasdaq’s aggregated data, INTC’s average price target is $39.92 vs the current $29.79, which is not far off from the 52-week low of $26.86 per share. The high estimate is $68, while the low forecast is $17. 

Overall, Intel’s heavy investments are taking a toll in the short to medium term. But considering the company’s domineering market weight for both GPU and CPU sectors, alongside USG’s blessing to revitalize the semiconductor industry, INTC stock is in a good position for long-term investors.

Do you hold heavy or light exposure to semiconductor stocks? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

U.S. prosecutors are reportedly investigating Tesla (NASDAQ: TSLA) for potential securities and wire fraud related to its electric vehicles’ self-driving capabilities. The probe, which involves the company’s Autopilot and Full Self-Driving systems, aims to determine whether Tesla misled investors about the true abilities of these features. Despite public statements by Tesla and its CEO, Elon Musk, suggesting that the cars can drive themselves, the systems are not fully autonomous and require drivers to remain engaged.

Autopilot and Full Self-Driving Systems Under Scrutiny

The investigation focuses on Tesla’s Autopilot and Full Self-Driving systems, which provide assistance with steering, braking, and lane changes but do not offer complete autonomy. Prosecutors are examining whether Tesla committed securities fraud by making false or misleading statements to investors about the capabilities of these systems.

Additionally, the probe covers allegations of wire fraud involving deceptive communications regarding the driver-assistance features. The Securities and Exchange Commission (SEC) is also investigating Tesla’s representations of these systems to investors.

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Broader Criticism of Tesla’s Practices

Beyond the current investigation, Tesla has faced criticism on various fronts. The company has been accused of fostering a problematic workplace culture, engaging in questionable business practices, and neglecting safety and occupational hazards.

Critics have alleged that Tesla has employed deceptive marketing tactics, made unfulfilled promises, and engaged in fraudulent activities, particularly concerning its self-driving technology and sustainability claims. Reports and lawsuits related to sudden unintended acceleration, brake failures, and vehicle quality issues have also emerged. Moreover, Tesla’s relationships with employees and unions have been strained, with reports of high turnover, poor treatment, and anti-union activities.

The company has also faced accusations of environmental misconduct, inappropriate use of cryptocurrencies, and non-compliance with open-source licenses.

TSLA Slides in Premarket

As the investigation into Tesla’s self-driving systems continues, the company’s stock price has experienced a decline.

As of the latest update, Tesla’s stock closed at $177.81, representing a decrease of $6.95 or -3.76%. In pre-market trading, the price was listed at $172.00, down by $5.81 or -3.27%.

The outcome of the ongoing probe into Tesla’s Autopilot and Full Self-Driving systems, as well as the broader criticisms faced by the company, could have significant implications for its reputation, investor confidence, and prospects in the highly competitive electric vehicle market.

Do you think Tesla can turn around its stock price? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Euronav NV (NYSE: EURN & Euronext: EURN), a leading name in the shipping industry, has reported an impressive start to the year with its first-quarter financial results for 2024. The company announced a remarkable profit of USD 495 million for Q1 2024, a significant leap from the previous year’s figures. This quarter also saw the successful acquisition of CMB.TECH, marking a strategic expansion in Euronav’s operations. The company’s proactive approach towards fleet modernization and diversification was evident in selling three older VLCCs and ordering new, technologically advanced vessels, including two Newcastlemaxes and container vessels.

The quarter was about financial gains and marked Euronav’s foray into sustainable shipping practices. The launch of the first hydrogen production and refueling station in Africa and the introduction of the continent’s first hydrogen vessel underscores Euronav’s commitment to green energy and innovation. Additionally, the proposed full-year 2023 distribution of USD 4.57 per share and a Q1 2024 distribution of USD 1.15 per share reflect the company’s robust financial health and its intention to reward shareholders generously.

Euronav Beats EPS and Revenue Expectations in Q1

Euronav’s Q1 2024 performance has surpassed expectations on several fronts. Analysts had projected an EPS of $1.89 and revenue of $212.01 million for the quarter. However, Euronav’s reported revenue of $240.377 million and an EPS of $2.46 far exceeded these forecasts. This outperformance can be attributed to strategic asset management, including the disposal of tangible assets, resulting in a net gain of $407.562 million and a keen focus on optimizing operational efficiency.

The company’s success in exceeding expectations is also a testament to its agile response to market dynamics and its ability to capitalize on strategic opportunities, such as the acquisition of CMB.TECH. This has strengthened Euronav’s market position and laid a solid foundation for sustainable growth in the evolving shipping industry landscape.

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Guidance and Future Outlook

Looking ahead, Euronav has provided optimistic guidance for the coming quarters. The company expects continued growth in global oil demand, with projections indicating a rise of +1.3 mb/d in 2024 and +1.1 mb/d in 2025. This demand, coupled with the anticipated increase in tonne-mile crude oil trade, positions Euronav favorably in the tanker market. Furthermore, the company’s strategic fleet developments, including adding low carbon-emitting vessels and focusing on hydrogen and ammonia fuel technologies, are expected to drive long-term value creation.

Euronav’s outlook is also buoyed by the tanker market dynamics, with a supportive supply-side scenario characterized by a below-average order book and an aging global fleet. These factors and geopolitical tensions and the potential for increased oil supply route disruptions may lead to heightened demand for Euronav’s services. The company’s dry-bulk and container segments also show promising growth trajectories, underpinned by strong market fundamentals and strategic fleet expansions.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Uber Technologies, Inc. (NYSE: UBER) has reported its financial results for the first quarter of 2024, showcasing substantial year-over-year growth across several key metrics. The company’s performance indicates a robust demand for its services, with notable operational efficiency and profitability improvements. This quarter’s achievements underscore Uber’s ongoing commitment to expanding its global footprint while enhancing user experience and driver partner benefits.

Uber experienced a remarkable uptick in its operational metrics, with trips growing by 21% year-over-year. Gross bookings saw a 20% year-over-year increase, reaching $37.7 billion, or a 21% rise on a constant currency basis. This growth was driven by a 25% increase in Mobility Gross Bookings and an 18% rise in Delivery Gross Bookings.

Uber’s EPS Falls Short of Expected in Q1 with Surprise Loss, Revenue Beats Expectations

Revenue for the quarter stood at $10.1 billion, marking a 15% increase from the previous year. Despite facing business model changes that negatively impacted year-over-year growth by eight percentage points, the company managed to maintain a steady revenue flow. Additionally, Uber reported an income from operations of $172 million, a significant improvement from the prior year, and an adjusted EBITDA of $1.4 billion, up 82% year-over-year.

Comparing Uber’s current performance against expectations, the company has demonstrated a robust financial standing that slightly exceeds market forecasts for revenue. Analysts had anticipated an EPS of $0.22 and revenue of $10.09 billion for the quarter. Uber’s reported revenue of $10.1 billion aligns closely with these expectations, indicating the company’s ability to meet and marginally surpass analyst projections. However, its reported EPS of -$0.32 is significantly shorter than expected.

This performance highlights Uber’s effective strategy execution and resilience in navigating market challenges, including the impact of currency fluctuations and evolving consumer behavior post-pandemic.

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Uber Predicts Gross Bookings of $38.75 to $40.25 Billion for Q2 2024

Uber has provided optimistic guidance for Q2 2024, projecting gross bookings of $38.75 billion to $40.25 billion. This forecast suggests an 18% to 23% year-over-year growth on a constant currency basis despite anticipating a currency headwind. Adjusted EBITDA is expected to range between $1.45 billion and $1.53 billion, representing a 58% to 67% year-over-year growth.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Shopify Inc. (NYSE, TSX: SHOP) demonstrated its robust financial health and operational efficiency in the first quarter of 2024, setting a solid foundation for the year ahead. The company reported a 23% increase in revenue, amounting to $1.9 billion, and an even more impressive 29% growth when adjusting for the sale of its logistics businesses.

This remarkable growth is complemented by a 33% increase in gross profit dollars, reaching $957 million, and a doubled year-over-year free cash flow margin of 12%.

Harley Finkelstein, President of Shopify, emphasized the company’s commitment to long-term success, highlighting the quarter’s achievements as evidence of Shopify’s strongest version to date. The company’s dedication to maintaining a consistent team size while capitalizing on opportunities that accelerate merchant success has been pivotal to its impressive start to the year. Shopify’s Chief Financial Officer, Jeff Hoffmeister, also noted the company’s operational discipline and strong execution as key drivers behind the sustained growth and improved free cash flow margin.

Shopify Beats Q1 EPS and Revenue Forecasts

When comparing Shopify’s Q1 2024 performance against expectations, it’s clear the company has exceeded analyst forecasts. The expectations for the quarter were an EPS of $0.16 and revenue of $1.84 billion. Shopify’s actual performance, with a revenue of $1.9 billion, surpasses these projections, showcasing the company’s ability to outperform market expectations. This overachievement is further underscored by the significant growth in Gross Merchandise Volume (GMV) and Gross Payments Volume (GPV), which increased by 23% and 32%, respectively.

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Shopify Optimistic for Q2 2024

Looking ahead, Shopify has provided an optimistic outlook for the second quarter of 2024, expecting revenue to grow at a high-teens percentage rate year-over-year. This projection translates into a low-to-mid-twenties growth rate when adjusting for the impact from the sale of its logistics businesses. Despite anticipating a slight decrease in gross margin by approximately 50 basis points compared to Q1 2024, the company is poised to maintain its operational expenditure growth at a low-to-mid-single digit percentage rate. Furthermore, Shopify has signaled its intention to sustain the double-digit free cash flow margin achieved over the past three quarters, underscoring its commitment to financial discipline and operational efficiency.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Tesla (NASDAQ: TSLA) continues to ramp up its efforts to become a leaner EV company. In mid-April, a company-wide email informed Tesla’s global workforce that they can expect a 10% reduction out of a total of 140,000 workers. Given that Elon Musk is known for having lean teams, as demonstrated by Twitter’s 80% workforce reduction, these layoffs are hitting vital cogs of the company.

This led to the termination of Rebecca Tinucci, the head of the EV charging division, and 500 workers with her. Daniel Ho, the head of the new vehicles program, and Rohan Patel, the head of the public policy and business development team, were also let go. These indicate a drastic shift in the company’s priorities, from expansion to survival through cost-efficiency increases.

Even More Tesla Layoffs on the Way?

Elon Musk confirmed the shift in an email to employees, noting their need to go “absolutely hardcore.” Specifically, this is to catch up with the 18% YoY cut in gross profits and the 9% YoY cut in total deliveries in Q1 2024. From Q3 earnings to Q1, Tesla saw a 20.1% fall in EV deliveries. 

This translates to Musk likely doubling layoff pressure up to 20%, as initially reported by Bloomberg. Such a scenario is reminiscent of Google’s 12,000 employee reduction during 2023, following shareholder pressure to reduce bloat.

However, Tesla is not a company with Google’s level of deep pockets, nor its hiring practices. And certainly not after reporting negative free cash flow of $2.5 billion in Q1 vs positive $2 billion in Q4’23. 

Year-to-date, TSLA stock is down 27.6% at $179.36, or 67% lower from its 52-week high of $299.29 per share. The question for investors is whether Tesla has enough runway to weather the lagging demand for EVs.

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Industrial Race to Make EVs Affordable

In the early stages of EV adoption, Elon Musk made it a point to launch them as luxury vehicles. This broke the public perception of such cars as unwieldy and awkward, attracting investors. At the same time, this strategy set up a ceiling for EV adoption. 

After all, consumer surveys consistently show that affordability is the main adoption obstacle, topping charging and range concerns. But as rampant inflation and higher borrowing costs took their toll, consumer sentiment diverged from expectations and plummeted to levels of the 2008 Great Financial Crisis.

Image credit: The Centre for Economic Policy Research (CEPR)

Tesla is now finding itself at the tail end of that trend. This Friday, the Michigan Consumer Sentiment Index should paint a clearer picture of Americans’ personal finances and business conditions. But compounding this concern, Chinese EV companies, such as Nio and Li Auto, have been forcing Tesla’s hand to initiate multiple price cuts across 3, S, Y, and X models.

Moreover, China’s Geely Volvo is poised to encroach on Tesla’s home territory in the US. Cheaper than Model Y by $9,000, Volvo’s EX30 is more affordable and has a purportedly higher profit margin within the 15% – 20% range. In Q1’24 earnings, Tesla reported a 592bp YoY reduction in operating margin to 5.5%.

In addition to fewer deliveries, price cuts and R&D projects, Tesla attributed this sharp fall to the Cybertruck rollout. The National Highway Traffic Safety Administration hampered the rollout with a notice to remove 3,878 Cybertrucks from the roads due to accelerator pedal defects.

This also created the impression that Tesla rushed the development without checking all the QA boxes. Further layoffs will likely not improve that perception.

Robotaxis to the Rescue?

Elon Musk set the date for August 8th to unveil the much-anticipated Tesla Robotaxi. It is supposed to share the platform with the previously speculated next-gen $25,000 EV codenamed “Redwood,” pushed back to late 2025 production. Now dubbed Model 2, the EV’s potential boosted TSLA value by 10% last month.

If successful, both of these rollouts will set the stage for addressing EV affordability and a brand new market for autonomous transportation services. However, Tesla has yet to move beyond the Level 2 system defined by SAE International. Jumping the shark, Tesla’s Autopilot is more about marketing future functionality than present performance without driver assistance.

It remains to be seen if layoffs across the board will erode Tesla’s human capital to resolve this difficult technical challenge. 

What Do Analysts Forecast for TSLA Price?

Given that Tesla still dominates the US and EU electric vehicle markets, the analyst consensus is not as negative as expected. From the present price of $179.36, Nasdaq’s average TSLA price target is $173.29 per share. However, with so many variables loose, the low estimate is highly divergent at $22.86.

Nasdaq’s high estimate is above the $52-week high, at $310 per share. WSJ’s price target is more optimistic, at $183.03, while the low estimate is $85 vs the same high forecast of $310 per share. 

Do you think Elon Musk’s acquisition of Twitter will influence investor sentiment? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Palantir Technologies Inc. (NYSE: PLTR), a leading data analytics company, announced its first-quarter 2024 earnings on Monday, May 6. The company reported revenue of $634 million, a 21% increase compared to the same quarter last year, and earnings per share (EPS) of 8 cents, which met analyst expectations. Palantir also achieved a net income of $105.5 million, representing a 17% rise from the previous year.

However, the stock fell after its guidance was lower than expected. At the time of writing, Palantir was trading at $21.66, down 14.09% from the market open.

Palantir Reports Segment Revenue and Customer Growth

The company’s revenue growth was driven by strong performance in both its commercial and government segments. Commercial revenue grew by 27% to $299 million, while government revenue increased by 16% to $335 million, with the U.S. government contributing $257 million to the total government revenue. Palantir also saw a 42% jump in customers compared to the same quarter last year, indicating a growing demand for its data analytics solutions.

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Palantir Ups Guidance, But It’s Not Enough

Despite the positive earnings, Palantir’s full-year revenue forecast fell short of analyst expectations. The company raised its full-year revenue guidance to between $2.68 billion and $2.69 billion, up from its previous estimate of $2.65 billion to $2.67 billion. However, this was below the consensus estimate of $2.71 billion. Palantir also expects its adjusted operating income to be between $868 million and $880 million for the full year. For the second quarter, the company anticipates revenue to be between $649 million and $653 million, with adjusted income from operations guided between $209 million and $213 million.

PLTR Plunges After Guidance Announcement

Following the earnings announcement, Palantir’s stock price fell over 6% in extended trading as the company’s guidance failed to meet investor expectations. As of May 7, 2024, at the time of writing, Palantir’s stock price was $21.66, down 14.09% following the earnings announcement, despite a year-to-date return of +26.12%. Analysts, such as those from Goldman Sachs (NYSE: GS), expressed concerns about the sustainability of Palantir’s U.S. commercial growth and its ability to maintain or accelerate its revenue growth.

Do you think the market is overreacting to Palantir’s numbers? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

The post Palantir Stock Plunges After Revised Guidance Falls Short of Forecasts appeared first on Tokenist.

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

GlobalFoundries Inc. (NASDAQ: GFS) has recently disclosed its financial results for the first quarter of 2024, showcasing a performance that met and exceeded expectations. With revenue reaching $1.549 billion, the company has demonstrated resilience and adaptability in a challenging market. The gross margin stood at 25.4%, with a non-IFRS gross margin slightly higher at 26.1%, reflecting the company’s efficient cost management and operational effectiveness. Furthermore, GlobalFoundries reported a net income of $134 million, alongside a robust non-IFRS EBITDA of $577 million, solidifying its financial health and stability.

The company’s operating margin was reported at 9.5%, with a non-IFRS operating margin of 12.1%, indicating a strong operational performance despite the competitive and dynamic nature of the semiconductor industry. The cash reserves, including cash equivalents and marketable securities, were reported at $4.2 billion, providing GlobalFoundries with a significant buffer to navigate future uncertainties. Dr. Thomas Caulfield, president and CEO of GF, highlighted the positive financial outcomes as a result of the company’s strategic initiatives and the dedication of its global teams.

GlobalFoundries Beats EPS and Revenue Expectations in Q1

Comparing GlobalFoundries’ current performance against the expectations, it’s evident that the company has surpassed the anticipated metrics for the quarter. Analysts had forecast earnings per share (EPS) of $0.23 and revenue of $1.52 billion for the quarter. GlobalFoundries exceeded the revenue expectation with $1.549 billion and demonstrated a strong profit margin and net income, reporting an EPS of $0.31 for the quarter. This overachievement is particularly noteworthy given the semiconductor industry’s recent challenges, including inventory corrections and supply chain constraints.

The company’s financial results reflect a significant positive deviation from the expected performance, showcasing GlobalFoundries’ robust operational efficiency and strategic planning. Although showing a decline year-over-year and sequentially from the previous quarter, the gross margin and operating margin still represent a strong performance in the context of the broader industry challenges.

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GlobalFoundries Optimistic for Upcoming Quarters

GlobalFoundries has provided optimistic guidance for the upcoming quarters, signaling confidence in its growth trajectory and operational strategy. The company’s recent business highlights, including significant awards from the U.S. Department of Commerce and New York State for expanding its manufacturing capabilities, are expected to bolster its position in key markets such as automotive, aerospace, and defense. Furthermore, GlobalFoundries’ commitment to sustainability, with goals to achieve net-zero greenhouse gas emissions and 100% carbon-neutral power by 2050, aligns with broader industry and societal trends towards environmental responsibility.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

The Walt Disney Company (NYSE: DIS) has recently unveiled its financial outcomes for the second quarter ended March 30, 2024, showcasing a mix of triumphs and challenges. The entertainment giant reported a slight increase in revenues, which rose to $22.1 billion from $21.8 billion in the prior-year quarter. Despite this growth, diluted earnings per share (EPS) presented a stark contrast, turning from an income of $0.69 in the prior-year quarter to a loss of $0.01 in the current quarter. This decline was attributed to goodwill impairments, although partially offset by higher operating income in the Entertainment and Experiences sectors.

However, when excluding certain items, diluted EPS for the quarter increased to $1.21 from $0.93 in the prior-year quarter, indicating strong double-digit percentage growth in adjusted EPS and meeting or exceeding the company’s financial guidance for the quarter.

Disney Missed Revenue Forecasts for Q1

Comparing the current performance against expectations, The Walt Disney Company has demonstrated a resilient stance amidst economic uncertainties. Analysts had set the bar with expectations of an EPS of $1.1 and revenue of $22.12 billion for the quarter. The actual revenue of $22.08 billion slightly missed these projections, while the adjusted EPS of $1.21 surpassed expectations, illustrating Disney’s capability to navigate through operational hurdles and still deliver commendable financial performance.

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Disney is on Track to Generate $14 B, Sets Full Year Adjusted EPS Growth Target of 25%

Disney has provided optimistic guidance for the future, reflecting confidence in its strategic direction and growth trajectory. The company has set a new full-year adjusted EPS growth target of 25%, underpinned by its strong Q2 performance. Disney remains on track to generate approximately $14 billion of cash provided by operations and over $8 billion of free cash flow this fiscal year, signaling healthy financial health and operational efficiency.

Furthermore, Disney’s Entertainment Direct-to-Consumer business turned profitable in the second quarter, with expectations of continued profitability in the combined streaming businesses in the fourth quarter. This is a significant indicator of Disney’s strategic investments in its streaming services paying off, positioning it well for sustained growth and profitability in the evolving entertainment landscape.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Jacobs Solutions Inc. (NYSE: J) has recently released its financial outcomes for the fiscal second quarter ended March 29, 2024. The company reported a 4.7% year-over-year increase in revenue, reaching $4.3 billion, with its People and Places Solutions (P&PS) segment seeing a notable 7.5% rise. Despite these gains, operating profit experienced a slight decline of 3% compared to the previous year, although adjusted operating profit showed a robust increase of 10%. Jacobs also made significant shareholder returns through a $95 million share repurchase during the quarter and refined its fiscal 2024 adjusted EBITDA and adjusted EPS guidance.

CEO Bob Pragada expressed satisfaction with the quarter’s solid performance, particularly highlighting the exceptional results from the People & Places Solutions segment. The company’s strategic focus on separating its CMS and Cyber & Intelligence business is progressing well, with ongoing efforts to streamline operations and optimize costs. Interim CFO Kevin Berryman also emphasized the team’s commitment to delivering high-value solutions and maintaining operational excellence, contributing to the company’s strong quarter. The reported free cash flow conversion for the year’s first half remained around 100%, aligning with Jacobs’ financial goals.

Jacobs Beats EPS Expectations in Q1, Revenue Miss

Comparing the current performance against expectations, Jacobs has narrowly missed the anticipated earnings per share (EPS) of $1.85, with an actual EPS of $1.29, but its adjusted EPS of $1.91 beat the forecasts.However, it slightly missed the revenue expectation of $4.33 billion, reporting $4.27 billion for the quarter. The adjusted EPS from continuing operations stood at $1.91, indicating a resilient operational performance despite the challenges. The deviation in EPS can be attributed to a discrete tax benefit in the prior period, affecting year-over-year comparisons. The company’s backlog increased by 1.5% year-over-year to $29.4 billion, with gross profit in backlog up by 3.7%, showcasing a healthy pipeline of future projects.

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Jacobs Narrows Fiscal 2024 Adjusted EBITDA to a Range of $1.54 B to $1.58 B

Looking ahead, Jacobs has narrowed its fiscal 2024 adjusted EBITDA forecast to a range of $1,540 million to $1,585 million and adjusted EPS to $7.80 to $8.10, signaling a positive outlook for the remainder of the year. These adjustments reflect a 9% and 10% increase year-over-year at the midpoints. The company is on track with its planned separation transaction, having received all necessary approvals and clearances, and anticipates closing the deal in the second half of the fiscal year. This strategic move is expected to streamline Jacobs’ operations further and enhance shareholder value.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Investors often gauge their exposure choices based on popular fund allocations. The problem is a 60-day deadline lag between their reports and current market sentiment. The most common is the 30-day reporting lag after the end of the quarter.

This leaves plenty of room for front-running stocks, as insiders could use confidential information to game the market. It also means the fund could have already unloaded certain stocks after the last report.

Such a scenario could play out between Berkshire Hathaway and Apple, among other stocks.

Is Apple (AAPL) Losing Buffett’s Favor?

On Saturday’s Berkshire Hathaway annual shareholder conference, Chairman and CEO Warren Buffett directly addressed the selling of ~116 million AAPL shares in Q1. This represents a 13% Apple exposure reduction, following the sale of ~10 million shares in Q4 ‘23, representing 1.09% of the Berkshire Hathaway stake.

This puts the total AAPL stake worth $135.4 billion to around 790 million shares, a significant cut from 905.5 million at the end of 2023, making 50.19% of the portfolio weight. Buffett hinted that the reduction was due to taxes potentially going up. Presumably, tax hikes would be used to patch up massive budgetary deficits amid sticky inflation, next to astronomical $34.7 trillion US debt.

“if I’m doing it at 21% this year and we’re doing it a little higher percentage later on, I don’t think you’ll actually mind the fact that we sold a little Apple this year”

Year-to-date, AAPL shares are down 2.7%, severely lagging behind other Magnificent Seven stocks like META (up 30.5%) and AMZN (up 23.3%) for the same period. As previously covered, Apple’s cancellation of its electric vehicle project and lackluster Vision Pro demand created a lack of excitement for the company.

Combined with stiff smartphone competition from China and an antitrust lawsuit, it seems as if the best Apple days are in the rearview mirror. Investors could only guess what the AAPL price would be now without the heavy reliance on Apple’s record-breaking stock buyback program.

In this light, Buffett may even reconsider his stance on the company, having called it one of “Our Four Giants” in February 2022. Back then, the Oracle of Omaha was pleased with Tim Cook’s aggressive buybacks, noting that “each 0.1% of Apple’s 2021 earnings amounted to $100 million”.

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Warren Buffet’s Cash Hoarding

Alongside Coca-Cola (KO) and American Express (AXP), Apple (AAPL) remains Berkshire Hathaway’s most significant stake. Buffett considers AAPL shares “extremely likely” to hold this status by the end of the year.

More interestingly, Berkshire reported in the Q1 earnings that cash and cash equivalents ramped significantly to $36.16 billion from $27.3 billion in a year-ago quarter. Of that, $33.67 billion in cash reserves came from the insurance sector. Further, Berkshire’s cash holdings from insurance and other businesses, including U.S. Treasury equivalents ($156.2 billion), rose to $182.3 billion.

Amid this quarterly 12% cash hoarding uptick, Buffett foresees cash holdings to increase to $200 billion by the end of Q2. From an investing standpoint, holding that rapidly depreciating asset would warrant allocation into currency debasement hedges, like Bitcoin.

Bitcoin advocates often point out dilutive inflation as the main reason for gaining BTC exposure, which is up 50% YTD vs BRK.B stock at 13%. 

The US Dollar as global reserve currency steals from people around the world, impoverishing them with dilutive inflation, just to enrich and empower the elites of Wall Street and DC that print for free. This is profoundly immoral and indefensible, and #Bitcoin fixes this.

— Pierre Rochard (@BitcoinPierre) May 5, 2024

However, Warren Buffett remains a staunch Bitcoin opponent, saying that he wouldn’t buy the entire Bitcoin supply if it were priced at $25, which now has a market cap of $1.25 trillion.

“If you … owned all of the bitcoin in the world and you offered it to me for $25, I wouldn’t take it,”

Unlike farmlands and apartments, Buffett believes that Bitcoin “isn’t going to do anything.” For now, he doesn’t see any significant investing opportunities.

“We’d love to spend it but we won’t spend it unless we think we’re doing something that has very little risk and can make us a lot of money,”

Do you agree with Warren Buffett’s sentiment that Bitcoin has no purpose or use? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

The post Berkshire Hathaway Reduces Apple Stake, Holds on to Cash appeared first on Tokenist.

Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

BioNTech SE (BNTX) has recently disclosed its financial outcomes for the first quarter of 2024, providing a comprehensive overview of its current performance and future outlook. The quarter has been marked by significant advancements in the company’s pipeline, including the initiation of potentially registrational trials and the presentation of crucial clinical data. Despite these developments, BioNTech has reported first-quarter revenues of €187.6 million and a net loss of €315.1 million, with a loss per share of €1.31. This performance reflects the company’s ongoing investments in research and development, particularly in its innovative cancer vaccine candidates and COVID-19 vaccine adaptations.

The company’s progress toward launching ten or more potentially registrational trials by the end of 2024 is noteworthy. The commencement of a Phase 3 clinical trial evaluating BNT323/DB-1303 in metastatic breast cancer patients and the planned start of another Phase 3 trial in recurrent endometrial cancer highlight BioNTech’s commitment to expanding its oncology portfolio.

Additionally, the presentation of clinical data at major scientific meetings underscores the potential of its mRNA-based cancer vaccine platforms. These efforts and the continued development of a variant-adapted COVID-19 vaccine demonstrate BioNTech’s strategic focus on addressing unmet medical needs through innovation.

BioNTech Falls Short of EPS and Revenue Forecasts in Q1

Comparing BioNTech’s first-quarter performance against expectations reveals a mixed picture. Analysts had anticipated a loss per share of -€0.80 and revenue forecasts of €519.29 million for the quarter. The actual results, with a loss per share of €1.31 and revenues of €187.6 million, fell short of these expectations. This discrepancy underscores the challenges faced by the company, including the high costs associated with advancing its clinical programs and the unpredictable nature of drug development and commercialization. Despite these hurdles, BioNTech’s commitment to its research and development pipeline remains unwavering, as evidenced by its significant investments in potential breakthrough therapies.

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BioNTech Optimistic on its Development Pipeline

Looking ahead, BioNTech has provided guidance that reflects its optimistic outlook on its development pipeline and commercial strategies. The company’s focus on advancing its registrational trials and preparing for the commercial launch of its variant-adapted COVID-19 vaccine in 2024 indicates a strategic approach to growth and market expansion. Moreover, BioNTech’s plans to share additional clinical data at upcoming scientific meetings suggest that the company is poised to reveal further insights into the efficacy and safety of its product candidates. This forward-looking perspective highlights BioNTech’s confidence in its ability to overcome current challenges and achieve long-term success.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Freshpet, Inc. (NASDAQ: FRPT) has recently disclosed its financial outcomes for the first quarter of 2024, showcasing a significant leap in performance metrics. The company, known for its commitment to providing fresh, real food for pets, reported a robust net sales increase of 33.6% to $223.8 million, up from $167.5 million in the comparable period last year.

This growth was primarily fueled by a 30.6% uptick in volume gains. Moreover, Freshpet witnessed a substantial improvement in profitability, with net income flipping from a loss of $24.8 million in the prior year period to a gain of $18.6 million. The gross margin also significantly rose, reaching 39.4% from 30.3% in the prior year. This increase can be attributed to improved leverage on plant expenses, reduced quality costs, and lower input costs as a percentage of sales.

FreshPet Surprises with Q1 Results, Reports $0.37 EPS Against Expected -$0.23

The adjusted EBITDA further highlighted the company’s operational efficiency, which soared to $30.6 million from just $3.0 million in the year-ago period. This remarkable improvement was due to increased adjusted gross profit despite increased SG&A expenses. Freshpet’s CEO, Billy Cyr, expressed optimism about the company’s trajectory, emphasizing the strength of the business model and the operational improvements driving margin expansion. The company focuses on delivering consistently strong performance to create significant shareholder value while fulfilling its mission to nourish pets, people, and the planet.

When comparing Freshpet’s recent performance against market expectations, it’s clear that the company has outpaced predictions. Analysts had anticipated an EPS of -$0.23 and revenue of $216.17 million for the quarter. Instead, Freshpet shattered these forecasts by posting a substantial net income of $0.37 per share and surpassing revenue expectations with $223.8 million.

This outperformance is a testament to the company’s resilient business model and its ability to generate volume-based growth amidst challenging market conditions. The improved gross margin and adjusted EBITDA underscore the company’s success in leveraging operational efficiencies and reducing costs.

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FreshPet Updates Guidance for 2024, Expects Net Sales of $950 Million

Looking ahead, Freshpet has updated its guidance for 2024, reflecting the company’s confidence in its growth trajectory and operational efficiencies. The company now expects net sales of at least $950 million, marking an increase of at least 24% from 2023, which remains unchanged from previous guidance. However, the adjusted EBITDA forecast has been raised to at least $120 million, up from the prior range of $100 to $110 million, indicating a more optimistic outlook on profitability. Capital expenditures are anticipated to be around $210 million, consistent with prior forecasts. Freshpet’s revised guidance underscores its expectation for continued strong sales growth and operational improvements throughout the year.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

In a pivotal moment for the cryptocurrency market, large-scale Bitcoin investors, colloquially known as “whales,” have seized the opportunity presented by the recent price retreat to acquire over 47,000 BTC, valued at approximately $2.9 billion.

This strategic accumulation marks a significant shift in sentiment, suggesting a bullish trajectory for Bitcoin despite the heightened market volatility following the highly anticipated halving event, which reduced the Bitcoin block reward to 3.125 BTC.

Whale Accumulation and Market Impact

According to Ki Young Ju, founder and CEO of CryptoQuant, wallets holding at least 100 BTC have resumed accumulating cryptocurrency, gathering a substantial amount of Bitcoin at current rates. This move by the whales is expected to profoundly impact the market, potentially solidifying Bitcoin’s position and paving the way for further growth.

However, whale accumulation contrasts with the recent trend in spot Bitcoin ETFs. The eleven United States Bitcoin ETFs have recorded nearly $871 million in negative net withdrawals this week, indicating a divergence in investment strategies between institutional investors and high-net-worth individuals.

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Bitcoin Price Breaks Through the $65,000 Level

On a macroeconomic level, the Federal Reserve’s dovish stance could boost Bitcoin’s upward momentum. As the central bank maintains an accommodative monetary policy, investors may increasingly turn to Bitcoin to hedge against inflation and diversify their portfolios.

Traders are advised to monitor the $60,000 mark closely, as a move below this critical level could trigger the liquidation of more than $700 million in leveraged long positions across various exchanges. This scenario could lead to increased volatility and potentially exert downward pressure on the cryptocurrency’s price.

As of the most recent data, Bitcoin (BTC) is trading at $65,249.79, representing a 2.26% increase over the past 24 hours. The cryptocurrency has seen a trading volume of $17,810,353,572.05 during this period and is currently being exchanged on 11,024 active markets.

Do you think Bitcoin could hit $100k by the end of the year? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

Spirit Airlines, Inc. (NYSE: SAVE) has recently disclosed its financial outcomes for the first quarter of 2024. Despite facing a significant headwind due to deferred earnings recognition from Pratt & Whitney credits, the airline’s quarterly performance aligns with projections. The reported operating revenues stood at $1,265.5 million ($1.26 billion), with an operating loss of $207.3 million, translating to an operating margin of -16.4%. Adjustments for AOG (Aircraft on Ground) credits slightly improved the adjusted operating loss to $146.6 million, with a margin of -11.6%. The net loss for the quarter was reported at $142.6 million, or -$1.30 per diluted share, slightly better than the adjusted figure of -$1.46 per share.

President and CEO Ted Christie expressed optimism despite the loss, crediting the ongoing strategic and tactical changes for the unit revenue benefits. The airline focuses on implementing its standalone plan, expecting to unveil further milestones in the upcoming months. The operational challenges, including adverse weather, air traffic control delays, and civil unrest in Haiti, have notably impacted Spirit’s performance. However, the airline managed a system completion factor of 98.7 percent and a slight capacity increase of 2.1 percent year over year, demonstrating resilience amidst operational disruptions.

Spirit Airlines Posts -$1.46 Adjusted EPS for Q1, in line with Expectations

Comparing the actual performance with expectations, Spirit Airlines has shown a commendable effort in managing its financial health. The expectations for the quarter were an EPS of -$1.45 and revenue of $1.27 billion. The reported EPS of -$1.30 (-$1.46 adjusted) and revenue of $1.265.5 million indicate that Spirit has slightly outperformed the EPS expectation but matched the revenue forecast closely. This performance is noteworthy, especially considering the operational challenges and the 230 basis point headwind from deferred earnings recognition. The airline’s strategic measures, including cost-saving initiatives expected to benefit 2024 by over $75 million, are poised to improve its financial trajectory further.

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Guidance

Looking ahead, Spirit Airlines has laid out a comprehensive guidance plan focusing on strategic growth and operational efficiency. The airline anticipates over $75 million in cost savings for 2024, with annualized run-rate savings estimated at over $100 million. This financial prudence is expected to strengthen Spirit’s competitive edge in the challenging airline market. Furthermore, the airline has engaged in discussions with loyalty bondholders and convertible holders due in 2025 and 2026, anticipating resolutions by summer. Spirit is optimizing its fleet to enhance operational efficiency and passenger experience by delivering seven new aircraft and the retirement of five older models. The agreement with Pratt & Whitney for AOG compensation and aircraft delivery deferrals with Airbus is a strategic move to bolster liquidity and operational readiness for future growth.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our  website policy prior to making financial decisions.

On Thursday, Apple (NASDAQ: AAPL) sparked a mini-controversy with its Q2 2024 earnings report. The phone company announced the largest share buyback program in the history of the US stock market, worth $110 billion. This surpassed Apple’s own record of $100 billion buyback program announced in 2018.

Only Chevron Corporation (NYSE: CVX) came close second at $75 billion in January 2023.

But for those who have read Apple’s deeper coverage in March, this was not surprising. The company is facing stiff competition from several fronts. South Korean Samsung and Chinese Huawei and Xiaomi arguably pose a better value for the money for most consumers.

Although Apple branched out beyond the smartphone market, it still comprises the bulk of the revenue. For Q2 2024, Apple tracked $90.8 billion net sales, a 4% decline year-over-year. Of those, the iPhone segment was responsible for $45.9 billion, or 50% of Apple’s revenue.

Moreover, Apple priced its Vision Pro entry in the AR/VR market as a luxury item, as if Meta’s Oculus Quest doesn’t exist or suffers from decades of failures to launch. Compounded with rising costs of living via inflationary pressure, Apple’s focus on a closed, premium ecosystem doesn’t bode well for growth.

However, is a record-breaking share repurchase program the right strategy to boost AAPL value? Wouldn’t that transform Apple from a growth Big Tech stock into a value stock?

It turns out, this financial novelty has its root in inflation, mirroring today’s macroeconomic landscape.

Stock Buybacks: Market Manipulation or Value Booster Driven by Macro?

Up until the early 1980s, share repurchase programs were illegal. After all, by repurchasing its own shares on the open market, the company’s insiders would have an advantage that can be construed as market manipulation.

Nonetheless, during that period of rampant inflation, the Securities and Exchange Commission (SEC) deemed it as another mechanism to return shareholder value beyond dividends. By passing Rule 10b-18 in 1982, the SEC made it a valid move to combat high inflation. This way, instead of engaging in the expense of expansion, companies can tweak their share supply so the stock price can keep up with inflation.

As the inflation rate is becoming sticky and crushing meme stocks, Goldman Sachs reported a six-year high in stock buybacks and mergers worth $625 billion this year, as of the end of March. GS analysts forecast the continuation of this trend, with S&P 500 firms ramping up share repurchases by 13% by the end of the year to $934 billion and then crossing the $1 trillion milestone in 2025.

This trend is the opposite of 2023, when there was a 13% decline in corporate buybacks. However, this was the year of recessionary concerns wherein recession was seen as the ultimate remedy for inflation at the cost of unemployment. 

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Limits to Stock Buybacks

By artificially tampering with shares’ supply, much like central banks do with fiat currencies, companies create a false sense of stock demand. In the irrational waters of the stock market, this has great potential for stock overvaluation. In turn, this creates a pull-the-rug potential.

Moreover, such large expenditures to boost stock value are displacing resources for growth. Instead of investing in employees or research and development, the purpose of the company shifts to financialization.

At a time when Apple faces antitrust charges, the company not only increased share repurchases but increased dividend payouts by 4%. Early on, in January 2019, Apple CEO Tim Cook made it clear that the company’s bottom line rests on its closed ecosystem that generates high brand loyalty.

“…my honest opinion is that there is a culture of innovation in Apple and that culture of innovation combined with these incredible, loyal customers, happy customers, this ecosystem, this virtuous ecosystem, is something that is probably underappreciated.”

Tim Cook in Mad Money with Jim Cramer interview.

If the latest antitrust lawsuit were to break those ecosystem walls, such as imposing “extraordinary costs on developers, businesses, and consumers”, Apple’s value proposition would likely lag behind buyback efforts.

In a way, just as the USG conducts record-breaking interest payments to pay for its money supply tampering, instead of building great projects, Apple may find itself in a similar bind. 

Do you think Apple will engender more shareholder loyalty in the future, as a value stock, or will this dynamic eventually burn out?

The post Apple Leads the US Buyback Resurgence, But Is it Sustainable? appeared first on Tokenist.