(Boursier.com) – Wall Street corrects before market on Tuesday, the warning of Snap, parent company of Snapchat, weighing heavily on the Nasdaq by causing all social media values to fall. The S&P 500 dropped 1.1% in pre-session, the Dow Jones 0.7% and the Nasdaq 1.8%. Other ‘warnings’ are also reported, particularly in the distribution sector. On the Nymex, a barrel of WTI crude took 0.3% to $110.6. An ounce of gold also rose by 0.3% to $1,854. The dollar index is stabilizing against a basket of currencies. Bitcoin dips towards $29,000.
The economic news is quite busy this Tuesday on Wall Street. The preliminary US composite PMI for May will be revealed at 3:45 p.m. (FactSet consensus 56, with an equivalent services index and a manufacturing indicator of 58). New home sales for April will be known at 4 p.m. (consensus 750,000). The Richmond Fed manufacturing index will be announced at the same time (consensus 12).
Fed boss Jerome Powell will also speak tonight. Meanwhile, the Atlanta Fed’s Raphael Bostic said a break in rate hikes in September could make sense. Mary Daly, president of the San Francisco Fed, judged that the Fed could continue its monetary tightening without causing a recession. Esther George of the Kansas City Fed, finally, anticipates a federal funds rate reaching 2% by August, but adds that subsequent rate hikes will be determined by the evolution of inflation.
Values
Snap lost more than 33% pre-market on Wall Street after its profit warning delivered last night. Snapchat’s parent company takes the entire industry with it. Thereby, Metaex-Facebook, stumbles more than 8% in pre-session, while pinterest plunges 16%. Same Twitterwhich was recently the subject of a bid from Elon Musk (since suspended), is dropping 4% with a few hours of opening. Alphabet yields nearly 5%…
Snap said last night that the economy was deteriorating faster than expected. Evan Spiegel’s Californian group has seen particular weakness since late April. As a result, it believes it should report revenue and Adjusted Ebitda below the low guidance ranges for the second quarter of 2022. According to an internal message seen by Reuters, Spiegel warned employees that the company would slow down hiring this year. Snap’s CEO also listed a number of issues, including rising inflation, interest rates, supply chain or labor market disruptions, platform policy changes, and the impact of the war in Ukraine.
Some scheduled hires will be postponed until next year, but the group still expects more than 500 hires by the end of the year. Facebook and Uber had already announced similar measures earlier this month… Snap’s management also intends to determine other cost-cutting actions. Last month, Snap said it expects second-quarter revenue growth of 20-25% year-on-year.
vmware jumped 24.8% on Wall Street last night to $119.4, on rumors of a potential takeover of Broadcom. According to the Wall Street Journal, Broadcom would indeed offer a cash and stock offer for the takeover of cloud computing specialist VMware. Broadcom has a capitalization close to 215 billion dollars, while VMware weighs 50 billion dollars. The Wall Street Journal now adds that the negotiations relate to a transaction of 60 billion dollars, and that the two companies would consider announcing an agreement on Thursday. The offer could therefore be around $140 per VMware title, according to people familiar with the matter quoted by the WSJ. Broadcom reportedly intends to appeal to several banks in order to obtain a debt package of around $40 billion to help finance the acquisition.
Ralph Lauren delivered strong full-year forecasts on Tuesday, expecting revenues to beat expectations with European and US demand. In the fourth fiscal quarter, period closed, the New York group achieved revenues up 18% to 1.52 billion dollars, against 1.46 billion consensus. Growth in North America reached 19%. Adjusted diluted earnings per share were 49 cents, excluding restructuring and other items. For the 2023 fiscal year just started, the group expects growth of 6 to 9% at constant currencies, well above market expectations.
BestBuy, the American giant of the distribution of electronic products, reduced its estimates of annual profits due in particular to the impact of inflation. For the first fiscal quarter ending at the end of April, the retailer posted an 8% decline in like-for-like sales, which was less pronounced than the 9% drop expected by the consensus. Total sales were 10.65 billion, against 11.64 billion consensus. Adjusted earnings per share were $1.57, versus $1.61 consensus. The group now expects annual like-for-like sales to fall by 3 to 6%, compared to previous guidance ranging from -1% to -4%. Annual adjusted earnings per share are expected between $8.4 and $9, compared to $8.85 to $9.15 previously.
Abercrombie & Fitch unscrews before the stock market on Wall Street, while the group deplored a loss for its first quarter and delivers very cautious guidance. For the quarter ended, the American clothing retailer announced a net loss of $16.5 million and 32 cents per title, against a profit of $41.8 million a year earlier. The adjusted loss per share was 27 cents, much heavier than expected. Sales totaled $813 million, up from $781 million a year earlier. The annual guidance has also been lowered.
Zoom Video, one of the stock market stars of containment on Wall Street, who has since lost all of his gains posted between March 2020 and October 2020 (the title had quadrupled over the period!), is trying to take revenge. The Californian group, which provides videoconferencing services allowing online meetings, chat and mobile collaboration, published solid quarterly accounts last night. Zoom also raised its full-year adjusted earnings guidance, pricing in robust corporate demand in a hybrid environment. In the first quarter, revenues from business customers rose by 31%, representing 52% of activity. The adjusted operating margin reached 37.2% for the quarter ended at the end of April. Quarterly earnings beat the consensus, with guidance for the quarter started also beating expectations.
Total first-quarter revenue rose 12% to $1.07 billion. GAAP net income was $114 million, 37 cents per share, while adjusted earnings were $316 million and $1.03 per share. For the year, Zoom expects adjusted earnings per share ranging from $3.7 to $3.77, a sharp upward revision to previous guidance. Total revenues are anticipated between $4.53 billion and $4.55 billion. Non-GAAP earnings from operations are expected to be between $1.48 billion and $1.5 billion.