Even though PA Networks beat on the top and bottom lines, it was all about the guidance: lowered. The CEO said that the lowered guidance was due to a shift in strategy, so that they could “accelerate growth, our platform migration and consolidation and activating AI leadership”…with a “difficult customer.” So, the stock “activated” a hard fall on the news. When you cut your billings growth from 16-17% to 10-11%, investors stop listening to the word AI.
Beyond Meat is coming out, supposedly, with a healthier version of its meat substitutes that are high in sodium and saturated fat. With its stock down -60% over the last year, given falling revenues and profits, it’s no surprise that they’re reformulating. Just waiting to learn how they’re using AI….to get that stock back up.
With the ave rate of 30-yr fixed mortgages over 7%, applications for refinancing were down -11% w/w. New home purchase mortgages were down -10% w/w. The rate moved from 6.87% to 7.06% on the heels of inflation data and Fedspeak.
OK, to be honest, I did have to look up the spelling of that word. Germany cut its 2024 growth forecast to 0.2%, from a prior figure of 1.3%. At the minimum, the country has an economic cold. But maybe it’s more like the flu or long Covid. They’re probably hoping that China stimulates soon so that they have a faster way out of their current malaise.
LPs who loaded up on p/e are wondering when they’ll get their money out. Payouts are down -49% in 2 years, per BBG. M&A and IPOs are down, so IRR’s look nice on the page, but they don’t fund your pension. It reminds me of a client celebrating a massive paper win for a vc investment. By the time they got liquidity, it fell to a 1x return. But just watch out that firms aren’t selling investments from one fund to another. They may generate liquidity, but they just shuffled the cards and extended your mgmt fee payment.
The bank stock fell -7%+ after reporting an -80% drop in 4Q23 profit, given almost $6bn in charges. They still have boatloads of cash, but interest rate cuts will make it harder to grow in the future. Plus, their M&A-funding-buybacks won’t be as hefty.
Institutional investors can’t reduce equity holdings at the open or close of a trading day, per the Chinese gov’s attempt to prop up its stock market. So, for the first and last 30 min, you can’t sell more shares than you buy. Also, they’re watching short traders (which is never a good thing…having the Chinese gov watching you). But they need to do something more to lure back international investors.
BBG has a good piece out about FL and its real estate problem. It’s getting harder and costlier to get insurance. The state needs more people buying more real estate, though, to fund its coffers. So, it’s turning to riskier ways to make that happen. Here in CA we’ve seen the problems of massive growth in the Bay Area that, combined with natural disasters, can be a toxic cocktail. Climate change is making matters worse for FL and its politicians who are desperately trying to find a solution.
NVDA reports today. GS called it the “most important stock on earth.” The stock did a 3x+ last year and has been driving up the SPY this year. So, expect price action after the print.
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