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NetEase's Unstoppable Growth: Bullish Analyst Highlights How It's Shaping the Future of Gaming with AI

Benzinga News — Mon, 05 Jun 2023 14:27:00 -0400

Bernstein analyst Robin Zhu initiates coverage on NetEase Inc (NTES ) with an Outperform rating with a price target of $120.

NetEase has grown consistently over the years, irrespective of regulatory intervention. NetEase is a dependable operator with a concrete runway for compound growth, with optionality from generative AI development and expansion overseas.

The company's legacy franchises remain strong, while its stable studios have supported 20-30 new game launches a year with a solid track record of building and managing game franchises domestically over multiple years.

NetEase has set up a dozen new overseas studios in the past 18 months, staffed with industry veterans with AAA game development experience.

The immediate launch slate includes the launch of Justice Mobile on June 30, plus the international launches of Harry Potter: Magic Awakened and Eggy Party in the second half of 2023. Naraka: Bladepoint Mobile and Where Winds Meet remains in development but are notable titles that could help to extend the recent launch cycle into 2024.

NetEase has achieved recognition in Japan, while its success with Naraka: Bladepoint represents an encouraging data point on the possibility of future console and PC success.

The analyst estimates the global video gaming TAM to be around $100 billion - $150 billion outside China, within which NetEase takes a 1% share.

He expects generative AI growth to represent a massive productivity boost for video game development, driving efficiency gains in game production and enabling richer gaming experiences - both in-game (e.g., AI-powered NPCs, user-generated content) and within broader fan ecosystems.

The analyst anticipates generative AI to streamline and accelerate the game development process and reduce costs and time associated with work streams such as art and 3D design and production.

In May, NetEase reported first-quarter FY23 revenue growth of 6.3% year-on-year to $3.65 billion, beating the consensus of $3.56 billion. Games and related value-added services revenues grew 7.6% Y/Y to $2.92 billion.

Non-GAAP EPADS of $1.69 beat the consensus of $1.25.

Price Action: NTES shares traded lower by 0.47% at $86.20 on the last check Monday.

US Banking Crisis Spurs $756 Billion Capital Surge Into Cash Funds, Says Bank Of America

Benzinga News — Mon, 05 Jun 2023 14:26:47 -0400

In a note on Friday, the Bank of America Corp (BAC ) said that money market funds have witnessed a deluge of more than half a trillion dollars' worth of capital.

According to the note, money market funds have attracted $756 billion in investments this year amid the banking crisis and the Federal Reserve's rate hikes, Reuters reported.

The bank said that the flow of capital into money market funds is coming close to a level last seen approximately three years ago when investors panicked and redirected $917 billion into cash funds amid the COVID-19 pandemic.

The downfall of several U.S. banks this year has prompted a significant number of individuals and businesses to withdraw their money from bank deposits and invest in money market funds.

Additionally, the bank revealed that tech stocks continued to maintain appeal, with a steady inflow of $500 million into tech stock funds for the sixth consecutive week.

Last month, Bank of America's chief investment strategist Michael Hartnett said in a note that the stock market could witness a significant sell-off event in the coming weeks, Bloomberg reported.

Referring to data from the financial analytics firm EPFR, the bank disclosed that stocks experienced their third consecutive week of outflows, amounting to $3.9 billion.

Palo Alto Networks Shares Surge As It Joins S&P 500: Who Is It Replacing?

Benzinga News — Mon, 05 Jun 2023 13:46:21 -0400

Shares of Palo Alto Networks (PANW ) climbed nearly 5% in Monday's pre-market session following a Friday announcement from S&P Dow Jones Indices indicating that the cybersecurity firm is joining the S&P 500 (SPY ).

What Happened: The Santa Clara, California-based company will replace DISH Network Corp (DISH ) in the broad market index.

Dish will move to the S&P SmallCap 600, replacing Cutera, Inc (CUTR ).

The reshuffling will take effect prior to the opening bell on June 20, corresponding with the quarterly rebalance of the indices, S&P said. The goal is to ensure that each index accurately reflects its respective market capitalization range.

Palo Alto Networks' move comes as the company's shares are ebbing around all-time highs.

The announcement also affects a range of companies across the S&P MidCap 400 and S&P SmallCap 600.

A group of companies - Doximity Inc (DOCS ), Berry Global Group Inc (BERY ), and Planet Fitness Inc (PLNT ) - will join the S&P MidCap 400.

In the S&P SmallCap 600, new entrants include Artisan Partners Asset Management Inc (APAM ), CarGurus Inc (CARG ), and Schrodinger Inc (SDGR ).

Other companies affected by the reshuffle, like Doximity and Planet Fitness, also saw shares move to the upside on Monday.

PANW Price Action: Shares of Palo Alto Networks are trading 4.71% higher to $227.50, according to data from Benzinga Pro.

Google Searches For Bitcoin Reach Lows Not Seen Since 2020 When Price Was At $10K

Benzinga News — Mon, 05 Jun 2023 13:46:01 -0400

Google (GOOGL ) search interest for cryptocurrency-related terms, including "crypto," has been on the decline for the past two months, reaching levels not seen since late 2020.

What Happened: Google Trends data shows that the term "crypto" currently has a score of 17, indicating a substantial drop in search volume.

The lower interest in cryptocurrencies also coincides with lower trading volumes on exchanges; according to Guy Turner, also known as "Coin Bureau Guy," trading volumes have reached a 32-month low.

"Crypto" search trends are at the lowest point they have been since December 2020. This also corresponds to exchange volumes which were at 32 month lows this past May. Apathy? - Coin Bureau (@coinbureau) June 4, 2023

Turner suggests that the fall in interest is related to a bear market in cryptocurrency. "Crypto search trends are at the lowest point they have been since December 2020. This also corresponds to exchange volumes which were at 32-month lows this past May," he tweeted.

Why It Matters: The decline in search interest is most noticeable when it comes to Bitcoin BTC/USD.

Google searches for "Bitcoin" have dropped to levels not seen since October 2020, when Bitcoin was priced at around $10,000.

Price Action: At the time of writing, BTC was trading at $26,834.57, down 1.12% in the last 24 hours, according to Benzinga Pro.

Wall Street's Most Accurate Analysts Say Hold These 3 Defensive Stocks With Over 6% Dividend Yields

Benzinga News — Mon, 05 Jun 2023 13:45:42 -0400

During times of turbulence and uncertainty in the markets, many investors turn to dividend-yielding stocks. These are often companies that have high free cash flows and reward shareholders with a high dividend payout.

Benzinga readers can review the latest analyst takes on their favorite stocks by visiting our Analyst Stock Ratings page. Traders can sort through Benzinga's extensive database of analyst ratings, including by analyst accuracy. Here's a look at the most recent high-yield dividend stock ratings from the most accurate Wall Street analysts, according to Benzinga's Analyst Stock Ratings.

Below are the ratings of the most accurate analysts for three high-yielding stocks in the consumer staples sector.

Altria Group, Inc. (MO )

Dividend Yield: 8.29%
Morgan Stanley analyst Pamela Kaufman maintained an Equal-Weight rating and cut the price target from $46 to $45 on June 2, 2023. This analyst has an accuracy rate of 65%.
Citigroup analyst Adam Spielman maintained a Neutral rating and lowered the price target from $49.5 to $47 on April 17, 2023. This analyst has an accuracy rate of 63%.
Recent News: Altria Group completed the previously announced acquisition of NJOY Holdings, Inc.

Medifast, Inc. (MED )

Dividend Yield: 8.32%
DA Davidson analyst Linda Bolton Weiser maintained a Neutral rating and cut the price target from $94 to $71 on May 2, 2023. This analyst has an accuracy rate of 68%.
Jefferies analyst Stephanie Wissink downgraded the stock from Buy to Hold and cut the price target from $345 to $150 on Aug. 4, 2022. This analyst has an accuracy rate of 81%.
Recent News: Medifast posted better-than-expected first-quarter results.

Walgreens Boots Alliance, Inc. (WBA )

Dividend Yield: 6.33%
UBS analyst Kevin Caliendo maintained a Neutral rating and lowered the price target from $39 to $37 on March 29, 2023. This analyst has an accuracy rate of 73%.
Mizuho analyst Ann Hynes reiterated a Neutral rating with a price target of $41 on March 29, 2023. This analyst has an accuracy rate of 72%.
Recent News: Walgreens Boots Alliance plans to slash 504 employees from its corporate workforce as the drugstore chain transforms into a consumer-centric healthcare company.

Bill Gates Makes Billion-Dollar Bet On Heineken Just Before Budweiser Controversy, Threatening The Beer Giant's Top Ranking

Benzinga News — Mon, 05 Jun 2023 13:45:29 -0400

Billionaire and Microsoft Corp. (MSFT ) Co-Founder Bill Gates continues to make waves with his latest venture into the beer industry. Gates made headlines by acquiring a substantial stake in Heineken Holding NV (HEINY ), a Dutch company worth nearly $1 billion.

The transaction, which occurred on Feb. 17, involved Gates purchasing 10.8 million shares valued at $939.87 million, according to the filing by the Netherlands' Financial Markets Authority (AFM). The acquisition coincided with the significant sale of Heineken shares by FEMSA, the company's major Mexican shareholder. The well-timed investment comes just a short time before the controversy surrounding Anheuser-Busch (BUD ), meaning the billionaire could end up seeing a bump as Anheuser-Busch continues to slide.

Gates's interest in Heineken comes as no surprise to those familiar with his previous beer-related investments. In 2007, Gates made a $392 million purchase of a stake in FEMSA. But FEMSA sold its brewery to Heineken in 2010, leading Gates to redirect his investment toward the Dutch brewing giant. Now, with his significant stake in Heineken, Gates solidifies his position in the global beer market.

Despite his substantial investments, Gates has been open about his personal preference when it comes to beer. In a Reddit "Ask Me Anything" session, Gates wrote, "I am not a big beer drinker." He shared that when attending events such as baseball games, he opts for light beer to blend in with fellow beer enthusiasts, apologizing to "real beer drinkers" who may have expected a different response.

Anheuser-Busch InBev SA (AB InBev), which owns Budweiser, is facing its own challenges. A boycott initiated by conservative activists has resulted in a 15.39% decline in AB InBev's stock in the last month. The decline wiped out over $17 billion of the company's market value.

According to May 30 reports, Bud Light sales have experienced their worst week ever, plummeting by 25.7%. This follows a previous week's decline of 24.6% and marks the sixth consecutive week of decreasing sales since transgender influencer Dylan Mulvaney's endorsement of Bud Light on April 1. According to Fox Business, the company's market value has dropped $27 billion in total so far as shares near a bear market.

Although Gates isn't a beer enthusiast, his strategic investments in the industry are gaining significant attention. As Heineken deals with divesting FEMSA, and Anheuser-Busch InBev faces the repercussions of the boycott, it is evident that the beer industry is heavily influenced by ever-changing consumer sentiments and external factors.

Whether a fan of Heineken or Budweiser, a social drinker or a non-drinker, anyone can take inspiration from Gates and invest wisely.

The Alcohol Industry

Anheuser-Busch's decline marks a stark contrast from other popular alcohol brands right now. Many of Bud Light's competitors are not only seeing a substantial bump due to the popular company's decline, but saw massive stock spikes following the boycotts. For example, companies like Molson Coor Beverage Co. (TAP ) are up 18% in the past 12 months, including a 15% rally in April alone. The company makes the popular beer brands "Coors" and "Molson." Similarly, Miller Industries Inc. (MLR ) is up a staggering 36% in the past 12 months.

In the startups market, brands have also seen substantial traction. For example, BarGlance is a nightlife tech startup that allows bar-goers to see a 'heat map' of bars in their city and see the best bars in any city. The company has already seen considerable investments from retail investors.

On platforms like StartEngine, alcohol is one of the most popular investments. Island Brands, for example, has raised over $1.6 million from 1350+ investors. Copperworks Distilling Company has raised over $398,000 from 212 retail investors. Hercules Mulligan is nearing $500,000 raised from nearly 450 retail investors.

The Saga Of Bringing Electric Pickups To Roads Has Collaboration Written All Over It

Benzinga News — Mon, 05 Jun 2023 13:45:17 -0400

2023 has been deemed as the year of the electric pickup. This particular vehicle is considered as the backbone of the automotive industry, especially in the U.S. But, as electrification transforms the entire industry, electrifying pickups can seem even more daunting for automakers compared to producing EVs.

Besides the scary costs that come with EVs and make it harder for automakers to keep their finances in check, pickup makers are also in for other manufacturing and production challenges. For this reason, there's still no automaker that produces electric pickups at a scale. But the contenders are the EV king himself, Tesla. Inc (TSLA ), legacy automakers such as Ford Motor (F ) and General Motors (GM ), as well as EV startups like Rivian Automotive Inc (RIVN ). However, there are also players from the automotive parts field that can play a big part in the electric pickup race, such as Worksport Ltd (WKSP ).

Rivian Has Set The Benchmark

The EV startup currently has three models on the roads: a delivery van (the EDV), pickup truck (the R1T), and SUV (the R1S). Despite the usual startup and manufacturing pains, Rivian came close to meeting its 2022 production target of 25,000 units as its annual output amounted to 24,337 units. It aims to double its output this year and it affirmed its guidance during the latest earnings report. Even if it loosens its ties with Amazon (AMZN ) regarding exclusive delivery truck orders, it still counts on the tech titan as its investor for support.

Tesla's About To Throw Its Hat In The Electric Pickup Ring

Although even the cash-abundant Tesla struggled more than it anticipated on this front. After several delays, its eagerly anticipated Cybertruck is finally coming by the end of the year with the initial production goal being 2021. But even if Tesla rolls it off the production line this year, mass production won't happen before 2024. When it comes to Tesla, Musk's quarterly investor calls are the place where one learns about the company's plans. The world still does not know much about the truck besides the fact it does not resemble any truck that exists on the market. Meanwhile, GM's subsidiary, GMC is already selling the Hummer EV. While also pushing in the midsize pickup truck department, GM has also announced the Chevrolet Silverado EV and a GMC Sierra EV, both of which could possibly hit production before Tesla's Cybertruck.

Ford Is Trying To Regain Its Pickup Supremacy In The EV Universe

Ford has paused the production of its electric pickup, F-150 Lightning for almost a month this spring due to a battery issue. Its peer, Lordstown Motor Corporation (RIDE ) also halted production of its electric pickup Endurance back in February due to quality issues. So, regardless of the experience and the company's history, making electric pickups is no picnic for anyone. For this reason, Ford joined forces with Tesla to create its EV ecosystem. Ford's future vehicles will benefit directly from Tesla's supercharging infrastructure without needing an adapter. After this surprising move, Ford CEO Jim Farley predicts an acceleration of cooperation across the industry. If Farley's right, Tesla is on the way to change the charging norm of the industry.

On Wednesday, Farley stated that the challenging cost of EVs will remain higher compared to their ICE counterparts until the end of the decade. Simply put, it will take second and third generation models to come to life to achieve the know-how. As of 2030, Farley expects costs savings from smaller batteries and the fact that vehicles will require fewer parts.

Worksport Can Help Those That Didn't Even Stand A Chance Enter The Pickup Race

This renown tonneau cover manufacturer possibly has two game-changing products on its hands. The solar powered tonneau cover Terravis and the remote power storage COR promise to revolutionize truck beds. Hyundai has gained the right to use this potentially groundbreaking technology in its Santa Cruz SUV.

Worksport's U.S. factory in New York already has the equipment installed, first materials have been received and skilled staff has been trained. This week, it officially launched the SC4 PRO soft folding tonneau cover, and like all of its products, it is available on Amazon and Walmart (WMT ). With its patented solar-powered accessories, Worksport will be able to help pickup makers in easing the challenges of the manufacturing battle.

All in all, bringing electric pickups to life turned out to be a daunting task even for the most powerful players. It is a competitive and challenging battle that is far from over, and therefore, cooperation in many forms and across the industry seems the inevitable and only way forward. It seems that pickups are the biggest EV challenge and Ford is the first legacy automaker to acknowledge that only team effort can bring this electric future to life.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

Top 5 Tech And Telecom Stocks That May Rocket Higher This Month

Benzinga News — Mon, 05 Jun 2023 13:45:03 -0400

The most oversold stocks in the communication services sector presents an opportunity to buy into undervalued companies.

The RSI is a momentum indicator, which compares a stock's strength on days when prices go up to its strength on days when prices go down. When compared to a stock's price action, it can give traders a better sense of how a stock may perform in the short term. An asset is typically considered oversold when the RSI is below 30.

Here's the latest list of major oversold players in this sector, having an RSI near or below 30.

Vodafone Group Public Limited Company (VOD )

Vodafone Portugal and RingCentral launched new communications and collaboration solution to power hybrid work for employees. Henrique Fonseca, Vodafone Portugal's Business Unit director, said, "To the robust, effective, and simple Vodafone One Net solution that we have been offering to our customers for more than 10 years, we are pleased to now partner with RingCentral to leverage their collaboration capabilities. Portuguese companies will be among the first in Europe to experience the advantages of this differentiating platform, which is a real step forward in their relationship with customers and employees. The solution will accelerate their productivity with maximum agility and reliability." The company's stock has a 52-week low of $9.35 .
RSI Value: 29.22
VOD Price Action: Shares of Vodafone rose 0.8% to close at $9.57 on Friday.

AMC Networks Inc. (AMCX )

AMC Networks reported better-than-expected first-quarter financial results. Chief Executive Officer Kristin Dolan said, "AMC Networks has always been known for great content that breaks through in popular culture, receives critical acclaim and engages fans. In an environment of shifting consumption, we are committed to making our content available across the entire distribution ecosystem. While we reevaluate the pathways to content monetization, we are strategically reducing costs and streamlining our organization. These efforts contributed to a first quarter with strong margins and increased streaming revenue as we prioritized higher-value subscribers for our streaming portfolio." The company's stock has a 52-week low of $11.16.
RSI Value: 28.53
AMCX Price Action: Shares of AMC Networks rose 2% to close at $11.64 on Friday.

Frontier Communications Parent, Inc. (FYBR )

Frontier Communications increased its FY23 cash capital expenditures guidance and reported mixed first-quarter financial results. "We delivered another strong quarter and reached a critical milestone in our transformation. Thanks to our team's consistent operational performance, we achieved EBITDA growth for the first time in five years," said Nick Jeffery, President and Chief Executive Officer of Frontier. The company's stock has a 52-week low of $14.49.
RSI Value: 26.51
FYBR Price Action: Shares of Frontier Communications rose 2.5% to close at $15.17 on Friday.

iQIYI, Inc. (IQ )

iQIYI posted upbeat quarterly results. "We kicked off the year with an exceptional first quarter. iQIYI originals once again demonstrated its power, driving our financial performance and market share to new highs, and expanding our subscriber base by over 17 million net additions," commented Mr. Yu Gong, Founder, Director, and Chief Executive Officer of iQIYI. The company's 52-week low is $1.65.
RSI Value: 29.56
IQ Price Action: Shares of iQIYI rose 6.5% to close at $4.45 on Friday.

Sea Limited (SE )

Sea reported worse-than-expected first-quarter financial results. "The first quarter of 2023 was another strong quarter for us," said Forrest Li, Sea's Chairman and Group Chief Executive Officer. The company has a 52-week low of $40.67.
RSI Value: 29.99
SE Price Action: Shares of Sea Limited rose 2.4% to close at $59.39 on Thursday.

Biden Signs Debt Ceiling Bill To Avert Government Default

Benzinga News — Mon, 05 Jun 2023 13:44:49 -0400

On Saturday, President Joe Biden signed a bill that extends the debt ceiling for two years, preventing an economically damaging debt default before the pending Monday deadline.

The Fiscal Responsibility Act of 2023, negotiated with House Speaker Kevin McCarthy, sets a two-year federal spending limit until January 1, 2025, and postpones the debt ceiling until after the 2024 election, reports Bloomberg.

With approvals from the House and Senate, this achievement bolsters Biden's standing as a practical negotiator as he gears up to ramp up his reelection campaign.

Last week, the Senate endorsed the budget deal with a 63-36 vote. A day prior, the House approved the legislation with a 314 to 117 vote, with 149 Republicans and 165 Democrats united in support of the deal negotiated by Biden and McCarthy.

According to Bloomberg, Biden signed the bill behind closed doors without a ceremony.

In a statement released on Saturday, the White House acknowledged the signing and expressed gratitude to the leaders of Congress, including McCarthy and Senate Republican Leader Mitch McConnell, for their collaboration.

The newly enacted legislation limits expenditure for the forthcoming two years. In addition, it incorporates conservative provisions to recover approximately $28 billion in unused COVID-19 relief funds.

However, the act eliminates $1.4 billion in IRS funding and reallocates around $20 billion of the $80 billion that the IRS received via the Inflation Reduction Act towards non-defense funding.

During his remarks at the Oval Office on Friday, Biden said, "I want to commend Speaker McCarthy. You know, he and I and our teams, we were able to get along and get things done."

"We were straightforward with one another, completely honest with one another, respectful of one another. Both sides operated in good faith; both sides kept their word," he added.

HP And Dell Pull Out A Beat Despite The PC Slump

Benzinga News — Fri, 02 Jun 2023 19:50:23 -0400

With various cost-cutting efforts, HP Inc (HPQ ) succeeded to overcome yet another steep drops in PC sales as it delivered better than expected quarterly results. HP's competitor, Dell Technologies Inc (DELL ) also crushed estimates with its latest quarter thanks to its cost management execution, but unlike HP, it wasn't as optimistic with its guidance.

Overall, this was a pleasant surprise from PC makers, as back in April, even the mighty Apple Inc (AAPL ) showed its Mac shipments tanked 40.5% during the first quarter of the year. As far as largest computer makers go, Apple saw the biggest decline, but everyone, including Asus and Lenovo saw drops in shipments and weakened demand.

HP's Fiscal Second Quarter Highlights

For the quarter ended on April 30th, HP saw its revenue take a 22% YoY plunge as it amounted to $12.9 billion. However, despite the lighter revenue, net earnings amounted to $1.07 billion, or 80 cents a share, topping last year's comparable quarter when they amounted to $1 billion, or 95 cents a share. When restructuring costs and other charges are taken aside, HP earned $1.07 a share, dropping from last year's fiscal quarter when it made $1.10 a share. Meanwhile, Fact Set survey of analysts guided for net earnings of 49 cents per share on revenue of $7.3 billion.

HP's Third Quarter Guidance

Revenue is expected in the range between $6.7 billion to $7.2 billion, at the lower end of Fact Set's guidance with earnings in line with Fact Set's estimate in the range between 44 cents and 48 cents a share.

Dell's First Quarter Highlights And Guidance

For the quarter ended in April, Dell normalized its supply chain, lowering its operating expenses 6% to $3.57 billion. Revenue did drop 20% to $20.92 billion but still topped Refinitiv's consensus of $20.27 billion. The consumer and enterprise PC business unit saw a 23% drop in revenue, while the infrastructure unit that houses servers, storage and networking hardware experienced an 18% drop in revenue. Adjusted earnings amounted to $1.31 per share, topping estimates of 86 cents. But, due to cautious IT spending, Dell guided for second quarter revenue in the range between $20.2 billion and $21.2 billion, which the highest point of the range being the midpoint of analyst expectations, according to Reuters.

AI Is Bringing A New Kind Of PCs

HP CEO Enrique Lores told CNBC that AI will radically change the fundamentals of the PC industry and therefore, HP. For one thing, AI will power PCs to analyze data in record time. Therefore, Lores expects the industry to be truly refreshed as the customer experience will be redefined by this utterly new architecture. These innovative AI-powered models are expected to hit the market as early as next year. Even Apple has boarded software engineers to exploit the opportunities of generative AI. What is certain is that everyone agrees that AI is transforming the way people interact with technology and what technology can do but it seems even the mighty Apple is lagging on this front.

HP Recap

Amid an unfavorable macroeconomy, both computing giants showed an exemplary execution of cost-control strategies. But HP did not only protect the margins of both its PC and printing segment as it also raised its full year guidance, despite consumers being more cautious about their IT spending. HP showed that disciplined execution can make a powerful difference and even Wall Street is impressed how good it navigated through the economic storm. HP CEO expects PC sales to recover in the remaining half of the year and relies on AI to fuel its future growth as it will redefine what PCs can do.

According to the IDC report, PC manufacturers can expect a recovery as 2023 nears its close. Even Apple, whose share of the PC market shrank, is expected to benefit from the eagerly anticipated rebound.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

What Does the Airbnb Guidance Drop Say About Travel Demand?

Benzinga News — Fri, 02 Jun 2023 19:50:12 -0400

Digital lodging platform Airbnb Inc. (ABNB ) disappointed investors with its outlook for Q2 2023. The popular disruptor and innovator of BnB travel bookings have had gravity-defying growth and earnings throughout the weakening economy. It was a prime example of consumers shifting their discretionary spending towards services like Airbnb over goods like apparel. Airbnb is one of the major benefactors of the positive normalization of the travel and leisure industry in the post-pandemic era.

Other travel and leisure booking platforms, including Expedia Group Inc. (EXPE ), TripAdvisor (TRIP ), and Booking Holdings Inc. (BKNG ), have been benefactors in the travel recovery. The pent-up demand for leisure and vacation travel and lodging continues to drive spending even as other industries have been facing negative normalization after 2021 peaks.

Falling ADR Concerning

However, high inflation appears to be revealing some kinks in the armor for Airbnb as it lowered its forecasts for Q2 2023 revenues. The company insists that demand is still robust, and the lowered revenue range results from a more extensive mix and new Host pricing tools. However, the company expects average daily rates (ADR) to fall slightly.

This means there's pressure on margins from the inventory glut, causing landlords to lower their prices in the face of falling demand. Almost 80% of Airbnb rooms are going for under $100 per night, and its Airbnb Rooms, which are private rooms, are averaging $67 per night. This is good for customers but not for hosts or Airbnb's top and bottom lines.

Strong Q1 2023 Earnings But Cautious

On May 9, 2023, Airbnb released its fiscal first-quarter 2023 results for March 2023. The company reported a GAAP earnings-per-share (EPS) profit of $0.18 versus consensus analyst estimates for a profit of $0.10, beating estimates by $0.08. Net income was $319 million for the quarter and $1.9 billion. Nights and Experiences Booked rose 19% YoY and 49% sequentially to 121 million.

While the U.S. saw stable growth in North American Nights and Experiences, Asia Pacific saw a 48% YoY spike as the region recovered from the pandemic. Revenues rose 20.5% year-over-year (YOY) to $1.82 billion, beating analyst estimates of $1.79 billion. Gross Bookings Value increased 19% YoY to $20.4 billion. The Average Daily Rate (ADR) was flat at $168 YoY. The company achieved GAAP profits again, which led them to raise its stock buyback program of up to $2.5 billion in stock or 3% of its market cap.

In-Line Guidance Fails to Impress

Airbnb issued in-line guidance for Q2 2023 with revenues of $2.35 billion to $2.45 billion versus $2.42 billion consensus analyst estimates. Nights and Experiences are expected to have unfavorable YoY comparisons, and growth is expected to be lower than revenue growth in the quarter. The company expects ADR to be slightly lower in Q2 2023 due to a mix of shifts and the launch of new Host pricing tools. Full-year 2023 adjusted EBITA margin is expected to be in line with the full-year 2022.

CEO Insights

In the earnings conference call, ABNB CEO Brian Chesky commented, "We have some big ideas for where to take Airbnb next. We're building the foundation for new products and services that we plan to launch in 2024 and beyond. At the same time, Airbnb is still underpenetrated in many markets around the world. So we're increasing our focus on these less mature markets, and we are already seeing positive results." He noted that Germany and Brazil are two of its fastest-growing markets, credited with rolling out its expansion playbook for accelerated growth.

The company introduced Airbnb Rooms along with 50 new features and upgrades. They launched new pricing tools for Hosts enabling them to see what other Airbnbs in the area are charging along with listings in high demand and getting booked so that they can be more competitive. Longer stays past three months will get more discounts.

Airbnb rooms are the most affordable rate, with average prices of only $67 a night. He noted that 80% of Airbnb rooms are priced under $100. They also unveiled anti-party crackdowns to keep disruptive behavior down.

Weekly Descending Triangle

ABNB's weekly candlestick chart illustrates a descending triangle that commenced after peaking at $178.88 in April 2022. A descending triangle consists of a falling trendline indicating lower highs on bounces against a flat bottom trendline. ABNB formed a flat bottom of around $86.81 in December 2022. It triggered a weekly market structure low (MSL) breakout through $88.84 to stage a rally up to $144.63 in February 2023 before peaking at the triangle-falling trendline on consecutive breakout attempts.

The weekly stochastic peaked on its complete oscillation just under the 80-band before falling back towards the 20-band. The weekly 20-period exponential moving average (EMA) resistance is at $112.48, followed by the weekly 50-period MA at $108.67. Pullback support levels are at $99.71, $93.28, $88.84 weekly MSL trigger and $82.58 swing low.

The article "What Does the Airbnb Guidance Drop Say About Travel Demand?" first appeared on MarketBeat.

HP Is A Winner For Income Investors

Benzinga News — Fri, 02 Jun 2023 19:49:59 -0400

HP Inc (HPQ ) is not a growth stock; it's not exciting to own, but it is a winner if you are an income investor. The business is down, and the outlook isn't all that rosy, but the business is solid, FCF is robust, and the dividend is as reliable as they come. The dividend is worth about 3.35%, with shares trading near $30, which is a decent return compared to the S&P 500 (SPY ), and it offers a deep value compared to the broad market.

Trading at 9X its earnings is half as cheap as the average S&P 500 name, paying more than double the yield. Add favorable guidance compared to some that have been less than ideal, and the odds are high this stock could outperform in the back half of the year.

HP Has Mixed Quarter, Reaffirms Guidance

HP had a mixed quarter and is feeling the pain of diminished consumer and business demand, but the report also has good news. The revenue of $12.91 is down 21.7% compared to last year and more than expected, but it is offset by margin strength. On a segment basis, the core Personal Systems unit is down 29% compared to last year and offset by a smaller 5% decline in the Printing segment.

The company's margins contracted, which was expected, but the good news is that the contraction was less than forecast. The company reported an adjusted operating margin of 8.7%, down a tenth compared to last year but 60 bps better than expected. This led to a solid bottom line figure, $0.80, down YOY but 1000 bps ahead of the Marketbeat.com consensus.

The guidance is the news that is helping to support the market in early trading. The company did not update its revenue figures but reaffirmed its earnings and cash flow outlook. The adjusted EPS is expected to align with the consensus figure in Q2 and above it for the year, with FY free cash flow running in a range of $3 to $3.5 billion. That's excellent news for income investors and assures the company can pay and increase the distribution this year.

Net cash from operating in Q2 came in at $0.6 billion with $0.5 billion in FCF. That puts the dividend at 60% of the FCF, which is safe and sustainable. However, the FCF payout ratio improves to roughly 35% for the year, which is safe and sustainable and leaves ample room for aggressive increases should the company decide to do so. Until then, investors must be satisfied with the 13% CAGR the stock has been running. The only red flag that is popping up is a YOY reduction in cash on the balance sheet but a reduction in current liabilities and long-term debt offsets that.

The Analysts Support HP Inc.

The analysts' activity in HP Inc. is light this year, but they support the market. The 4 most recent updates include 2 that came out before the Q2 release and 2 after. The 2 pre-release commentaries were issued in April and May and include 2 upgrades to Buy equivalents from Neutral equivalents. The 2 that came out after the Q2 release include price target increases with the stock trading near the broader consensus of $29.80. That figure assumes fair value at current levels and is trending sideways, enough to keep the market moving at least.

The price action fell following the Q2 report, but the bottom is already in. The market shows firm support at the $29 level, consistent with sideways, rangebound trading. This level may be tested again over the next few weeks or months but should provide a floor for the action assuming no deterioration in the outlook.

The article "HP Is A Winner For Income Investors " first appeared on MarketBeat.

Coinbase Shakes Up The Crypto World With Bitcoin And Ethereum Futures Rollout

Benzinga News — Fri, 02 Jun 2023 19:49:48 -0400

Coinbase Global Inc.'s (COIN ) Derivatives Exchange announced on Friday it will launch institution-sized Bitcoin and Ethereum futures contracts on June 5.

The new contracts, named BTI and ETI futures, will be sized at 1 bitcoin and 10 ethereum per contract, respectively. This sizing is designed to allow participants to tailor their exposures to these burgeoning digital asset commodities with granularity, granting traders the flexibility to exploit opportunities in a highly dynamic market environment.

Notably, these institution-sized contracts are set to offer significantly lower fees than traditional offerings.

In a blog post, Coinbase stated this move is aimed at enhancing capital efficiency for institutions, underscoring its commitment to boosting accessibility and participation in the crypto ecosystem by reducing trading costs.

In an effort to extend further support to its institutional clients, Coinbase has also partnered with leading Futures Commission Merchants (FCMs), brokers and front-end providers.

These partnerships aim to ensure access to these futures contracts through robust trading platforms.

"With the launch of these institutional-sized USD-settled contracts, we look to empower institutional participants with greater precision in managing crypto exposure, expressing directional views, or tracking Bitcoin and Ether returns in a capital-efficient way," Coinbase stated.

MongoDB Gets Major Forecast Revisions By These 4 Analysts After Upbeat Earnings

Benzinga News — Fri, 02 Jun 2023 19:49:34 -0400

Shares of MongoDB Inc (MDB ) climbed in early trading on Friday, after the company's big earnings beat.

The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Piper Sandler analyst Brent Bracelin maintained an Overweight rating, while raising the price target from $270 to $400.
Needham analyst Mike Cikos reiterated a Buy rating, while lifting the price target from $250 to $430.
Truist Securities analyst Miller Jump reaffirmed a Buy rating, while raising the price target from $235 to $365.
Oppenheimer analyst Ittai Kidron maintained an Outperform rating, while lifting the price target from $270 to $430.

Piper Sandler

MongoDB's first-quarter results were better than feared, Bracelin said in a note. "Growth from both Atlas and EA came in better than expected, coupled with strong customer additions and new workload trends," he added.

"Despite near-term macro and consumption headwinds, we remain encouraged by MDB's evolution into the modern cloud database of choice, aided by tailwinds such as next-gen application development and generative AI," the analyst further stated.

Needham

MongoDB's upbeat earnings were driven by "high-quality subscription revenues," Cikos said. "Additionally, the company added more Net-New Customers than in any quarter in the previous 2 years - a bullish sign for MongoDB's longer-term financial profile as these customers scale over time," he added.

"While New Customers and New Workloads are starting small, we think MongoDB's Consumption model should benefit from outsized torque in a macro recovery," the analyst wrote.

Truist Securities

"The strength in the quarter was broad-based as they saw an impressive uptick in new business from both existing customers and new logos," Jump wrote in a note.

Although macro headwinds persisted, the company's execution "leads us to believe that there could be upside to guidance on both growth and margins," the analyst stated. "We believe that the margin improvement story could serve as a tailwind for shares."

Oppenheimer

MongoDB reported strong quarterly results, driven by "robust Atlas and large customer growth," Kidron stated.

"While the company continues to see consumption trends below historical levels, it more than made up revenue with solid execution, record new workloads and strong customer additions," the analyst said. "We expect the near-term macro environment to remain challenging but believe management has appropriately accounted for this in 2Q outlook," he added.

Mark Zuckerberg's Meta Throws Curveball With New In-Office Work Policy

Benzinga News — Fri, 02 Jun 2023 19:49:22 -0400

Meta Platforms Inc. (META ) shocked employees with a sudden change in its remote-work policy by mandating three days a week of in-office presence starting in September.

What Happened: Meta, the parent company of Facebook, has announced a significant shift in its remote work policy. Employees have been notified that beginning in September, they will be required to work from the company's offices three days a week, CNBC reported, citing The Information.

This surprising move marks a departure from Meta's previous remote-first approach, which was extended to all full-time employees in June 2021 amid the COVID-19 pandemic.

"We're committed to distributed work, and we're confident people can make a meaningful impact both from the office and at home," a Meta spokesperson said in a statement. "We're also committed to continuously refining our model to foster the collaboration, relationships and culture necessary for employees to do their best work."

Earlier this year, Meta CEO Mark Zuckerberg hinted at the policy change, citing internal analysis that suggested in-person work yielded better performance, the report noted.

Why It's Important: The decision comes amidst a trend of tech companies, such as Amazon.com, Inc. (AMZN ) and Alphabet Inc. (GOOGL ) (GOOG ), reversing their remote-work plans and emphasizing the importance of in-person collaboration.

Last November, Elon Musk, who bought Twitter in October 2022 for $44 billion, banned remote work at the company, saying that the social media platform needs "intense work" in the office.

What Recession? How High-End Lululemon Compares To Discount Dollar General, Walmart, Costco

Benzinga News — Fri, 02 Jun 2023 19:49:10 -0400

Lululemon Athletica, Inc (LULU ) shares spiked after the retailer reported 24% sales growth and raised its full-year guidance.

Shares of the athleisure company rose by 11.3% on Friday on the heels of an impressive first-quarter (Q1) earnings report, according to Benzinga Pro.

For the first quarter of 2023, Lululemon's success as a premium retailer was evident when it boasted a 24% surge in net revenue to $2 billion compared to the same three-month timeframe in 2022.

Net revenue increased 17% in North America, and roughly 60% internationally.
China, alone, saw revenue pop 79% in Q1.
Total comparable sales climbed 14%, or 17% on a constant dollar basis.
Comparable store sales enjoyed a 13% boost, or 16% on a constant dollar basis.
Direct-to-consumer net revenue increased 16%, or 18% on a constant dollar basis, and represented 42% of total net revenue compared to 45% for Q1 in 2022.
Gross profit increased 32% to $1.2 billion.
Income from operations increased 54% to $401.4 million.

How The High-End Fashion Brand Measures Up To Discount Outlets

Lululemon, which touts a total of 662 stores, seems to be bucking a trend. For all this talk of a looming recession, one would expect shoppers to cut back on high-end outlets and spend more at discount retailers.

That doesn't seem to be the case. Just hold up Lululemon to companies like Walmart Inc (WMT ), Costco Wholesale Corp (COST ) and Dollar General Corp. (DG ).

Walmart

While Lululemon posted double-digit percentage gains, Arkansas-based Walmart had a more modest report and remains cautious for the months ahead.
The company reported Q1 sales of 7.8% on May 18. It also upped its expectations for the fiscal year, predicting 3.5% growth in consolidated net sales.
In terms of total revenue for the three-month period, Walmart expected about $149 billion, but reported more than $152 billion - just over $141.5 billion in 2022.
Same-store sales climbed 7.4% year-over-year.

Costco

The big-box wholesale club saw sales growth slow in the fiscal 2023 3Q, reporting smaller net and comparable sales gains.
Total revenue of $53.65 billion was up from last year's $52.6 billion in the same quarter, but missed a Street consensus estimate of $54.57 billion.
Costco also reported net sales of $52.6 billion. That's up just 1.9% year-over-year. And membership revenue for the period was up just 1.6%.

Dollar General

The Tennessee-based company is seeing a decrease in customer traffic, resulting in worse-than-expected Q1 results.
EPS decreased 2.9% to $2.34 and missed the analyst consensus of $2.38.
Dollar General also reported sales growth of 6.8% year-on-year to $9.34 billion, missing the consensus of $9.46 billion.
Net sales growth fell between 3.5%-5.0%, compared to its previous expectation of 5.5%-6%.
Same-store sales increased a paltry 1.6% compared to the first quarter of 2022.

Market Update: Dow Rallies Over 700 Points on Debt-Ceiling Bill Passage, Jobs Report

Rachel Hemple — Fri, 02 Jun 2023 19:20:43 -0400

Stocks rallied higher on Friday, with the Dow Jones Industrial Average climbing over 700 points to post its best day since January, as market participants celebrated a strong jobs report and the passage of a U.S debt-ceiling bill.

Here's how the market settled to close out the week:

S&P 500 Index (SPY ): +1.45% or +61.35 points to 4,282.37

Dow Jones Industrial Average (DIA ): +2.12% or +701.19 points to 33,762.76

Nasdaq Composite Index (QQQ ): +1.07% or +139.78 points to 13,240.77

With Friday's gains, the S&P 500 and Nasdaq added about 1.8% and 2% for the week, respectively, while the Dow finished up 2%. The Nasdaq also posted its sixth straight weekly gain for the first time since 2020.

Driving much of the market's positive gains was the passage of the Fiscal Responsibility Act, which allows the United States to raise its debt-ceiling for two more years. President Joe Biden plans to sign the bill into law on Saturday.

"This is vital," Biden said in an address from the Oval Office on Friday. "Essential to all the progress we've made in the last few years is keeping the full faith and credit of the United States and passing a budget that continues to grow our economy and reflects our values as a nation."

Also in the spotlight, the U.S. economy added a much-more-than-expected 339,000 nonfarm jobs in May while the unemployment rate rose to 3.7%, according to the Labor Department on Friday. May's print marks the 14th straight month that the labor market added more jobs than expected by Wall Street.

"Nonfarm payrolls are the elephant in the room," Bank of America U.S. economist Michael Gapen wrote in a note to clients on Friday, quoted by YahooFinance. "The strength in this metric alone means that a June hike remains on the table in the event of a very strong CPI report on June 13, even if it is not the base case at the moment. And perhaps more important, the continued resilience of the labor market means there is still a strong case for additional hikes later in the year."

In single-stock news, MongoDB (MDB ) shares popped 28% after the data management company posted strong first-quarter earnings results and issued higher-than-expected second-quarter revenue guidance between $388 million and $392 million. MongoDB also joined a wave of tech companies integrating artificial intelligence into their products.

"The move to embed AI in applications requires a broad and sophisticated set of capabilities while enabling developers to move even faster to create a competitive advantage," CEO Dev Ittycheria said in the company's earnings release. "We are confident MongoDB's developer data platform is well positioned to benefit from the next wave of AI applications in the years to come."

Lululemon Athletica (LULU ) was also a stellar performer on Friday, with shares raising more than 11% on better-than-expected first-quarter results and strong full-year revenue guidance in a range of $9.44 billion to $9.51 billion.

"Our Q1 results were strong as guests responded well to our product offering in all our markets across the globe. A meaningful acceleration in our China sales trend, coupled with lower air freight, contributed to our better than planned financial performance," CFO Meghan Frank said in a statement.

Looking ahead, market participants are trading with the Federal Reserve's June 13-14 policy meeting in mind now that the threat of a U.S. default has dissipated.

Dell Q1 Earnings Highlights: Shares Halted On Early Reported Result, Company Beats Revenue, EPS Estimates

Benzinga News — Thu, 01 Jun 2023 18:55:06 -0400

Dell Technologies (DELL ) reported first-quarter financial results Thursday. The results came early from the company at around 3 p.m. ET after shares of the company were halted with a code of "news pending."

What Happened: Dell reported first-quarter revenue of $20.9 billion, which was down 20% year-over-year. The revenue total beat a Street consensus estimate of $20.27 billion, according to data from Benzinga Pro.

The company reported earnings per share of $1.31, which beat a Street estimate of 86 cents per share.

The company's infrastructure solutions group segment saw revenue of $7.6 billion, which was down 18% year-over-year. Within the segment, storage revenue was $3.8 billion and highlighted as seeing demand growth. Servers and networking revenue was $3.8 billion, with demand seen for AI optimized servers.

The Client Solutions Group had first-quarter revenue of $12 billion, which was down 23% year-over-year. Within the segment, commercial revenue was $9.9 billion and consumer revenue was $2.1 billion.

"We executed well against a challenging economic backdrop," Chief Operating Officer Chuck Whitten said. "We maintained pricing discipline, reduced operating expenses and our supply chain continued to perform well after normalizing ahead of competitors."

The company ended the quarter with $39 billion in remaining performance obligations and had recurring revenue of $5.6 billion.

What's Next: Artificial intelligence was highlighted in the press release, with Project Helix recently announced by the company in collaboration with Nvidia Corporation (NVDA ). Project Helix is said to help customers quickly and securely deploy generative AI at scale with their own proprietary data.

The company will host a conference call to discuss results Thursday at 4:30 p.m. ET.

DELL Price Action: Shares of Dell were halted Thursday at $45.33 versus a 52-week trading range of $32.89 to $51.75. The stock was trading 4.4% higher at $46.78 after resuming trading.

Top 5 Consumer Stocks That You May Want To Dump In June

Benzinga News — Thu, 01 Jun 2023 18:54:54 -0400

The most overbought stocks in the consumer discretionary sector presents an opportunity to go short on these overvalued companies.

Here's the latest list of major overbought players in this sector.

LL Flooring Holdings, Inc. (LL )

LL Flooring confirmed the receipt of $5.76 per share unsolicited, non-binding proposal from Cabinets To Go, a subsidiary of F9 Brands. The company's stock has a 52-week high of $12.52 .
RSI Value: 70.18
LL Price Action: Shares of LL Flooring rose 8.7% to close at $4.50 on Wednesday.

Tile Shop Holdings, Inc. (TTSH )

Tile Shop posted downbeat earnings for its first quarter. "Our sales during the first quarter were flat with last year," stated Cabell Lolmaugh, CEO. "Ocean freight costs have come down which contributed to a slowing rate of margin decline." The company's stock has a 52-week high of $5.97.
RSI Value: 74.09
TTSH Price Action: Shares of Tile Shop rose 4.8% to close at $5.26 on Wednesday.

Dream Finders Homes, Inc. (DFH )

The company said homebuilding revenues increased 16% year-over-year to $767 million in the first quarter. Patrick Zalupski, Dream Finders Homes Chairman and CEO, said, "Coming off a record fourth quarter in 2022, DFH maintained positive momentum in the first quarter of 2023, delivering revenue growth of 16% along with pre-tax income of $69 million and earnings per basic share of $0.49, which increased 10% and 12%, respectively, compared to the year-ago quarter. These are all first quarter Company records." The company has a 52-week high of $18.63.
RSI Value: 72.16
DFH Price Action: Shares of Dream Finders Homes rose 3.3% to close at $18.54 on Wednesday.

Tesla, Inc. (TSLA )

The EV maker plans to give an early glimpse of its revamped Model 3 sedan as part of Elon Musk's first visit to the company's Shanghai factory in years, reported Bloomberg citing people familiar with the matter. The company's 52-week high is $314.67.
RSI Value: 72.97
TSLA Price Action: Shares of Tesla rose 1.4% to close at $203.93 on Wednesday.

NeoGames S.A. (NGMS )

NeoGames agreed to be acquired by Australia's Aristocrat Leisure Limited, a gaming and technology company. "After careful consideration, the Board determined that Aristocrat's proposal provides shareholders with compelling value, further validating the strength of the business that NeoGames has built," said CEO Moti Malul. The company has a 52-week high of $27.77.
RSI Value: 82.61
NGMS Price Action: Shares of NeoGames gained 0.1% to settle at $27.27 on Wednesday.

Lululemon Athletica Q1 Earnings Highlights: Revenue And EPS Beat, Guidance Update And More

Benzinga News — Thu, 01 Jun 2023 18:54:41 -0400

Apparel company Lululemon Athletica (LULU ) reported first-quarter financial results after the market close Thursday. Here are the key highlights.

What Happened: Lululemon reported first-quarter revenue of $2 billion, which was up 24% year-over-year. The revenue came in ahead of a Street consensus estimate of $1.92 billion, according to data from Benzinga Pro.

The company reported earnings per share of $2.28 in the first quarter, beating a Street estimate of $1.98.

Revenue was up 17% year-over-year in the North America segment and up 60% year-over-year in the International segment.

Comparable sales in the first quarter were up 14% year-over-year. Store sales were up 13% year-over-year and direct to consumer sales were up 16% year-over-year.

Direct to consumer revenue represented 42% of the first quarter total.

"We are pleased with our solid start to the year, delivering strong financial performance and continued momentum. Our results reflect the strength of our guest relationships, our innovative products and how our brand resonates across the globe," Lululemon CEO Calvin McDonald said.

Lululemon ended the first quarter with 662 stores, with seven net new company owned stores opened in the first quarter.

The company ended the first quarter with $950.6 million in cash.

What's Next: Lululemon is guiding for second-quarter revenue to be in a range of $2.14 billion to $2.17 billion, representing growth of 15% year-over-year. The Street consensus estimate is $2.16 billion, according to data from Benzinga Pro.

Earnings per share in the second quarter are expected to be in a range of $2.47 to $2.52.

For the full fiscal year, Lululemon sees revenue coming in a range of $9.44 billion to $9.51 billion, which would be up 17% year-over-year at the mid-point. Full-year earnings per share are expected to be in a range of $11.74 to $11.94.

"We are pleased with our momentum heading into the second quarter and for the full year as reflected in our revised outlook for FY23," Chief Financial Officer Meghan Frank said.

LULU Price Action: Lululemon shares are up 11% to $362.50 in after-hours trading Thursday.

Salesforce's AI Strategy Is 'Firming Up': 4 Analysts On Q1 Print, Outlook

Benzinga News — Thu, 01 Jun 2023 18:54:28 -0400

Shares of Salesforce Inc (CRM ) tanked in early trading on Thursday, despite the company reporting upbeat revenues and earnings for its first quarter.

The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Piper Sandler On Salesforce

Analyst Brent Bracelin maintained an Overweight rating, while raising the price target from $230 to $248

Salesforce reported earnings growth ahead of Street expectations and raised its full-year operating margin guidance, which "reinforces the commitment to cost optimization efforts and improving profitability against a challenging macro," Bracelin said.

"The Gen AI strategy appears to be firming up, with a formal AI investor event, product demos, and new innovations scheduled to be hosted in New York on Monday, June 12," he added.

Mizuho Securities On Salesforce

Analyst Gregg Moskowitz reiterated a Buy rating, while raising the price target from $225 to $240..

While Salesforce's first-quarter results were "solid," its second-quarter guidance was "subdued and only in line with consensus," Moskowitz wrote in a note. "More importantly, we continue to believe CRM's outlook signals a new chapter dictated by profitable growth above all else," he added.

"Mgmt noted strong early interest in its GenAI products, and we expect this will drive much greater automation, along with better sales productivity," the analyst said.

Needham On Salesforce

Analyst Scott Berg reaffirmed a Buy rating and price target of $230.

Salesforce's operating margins were "10pts higher Y/Y at 27.6%, led by S&M expense that was 500bps lower," Berg wrote in a note.

"While incremental softness in domestic U.S. sales weighed on reiterated full-year revenue guidance, the 1pt increase in the operating margin from 27% to 28% is at least in line with expectations and is a clear signal the company is more committed to its 30% target than prior financial discussions," he added.

Oppenheimer On Salesforce

Analyst Brian Schwartz maintained an Outperform rating and price target of $235.

Salesforce delivered "mixed" results for the quarter, which "overcame a low bar" and raised its full-year operating margin, EPS and cash-flow guidance, Schwartz said.

Macro headwinds and business transformation initiatives "impacted the sales execution in F1Q, and left a large decel in the F2Q CRPO billings growth guidance (5% versus 12% in F1Q) despite an easier y/y comparison," the analyst wrote. "Also, the CRPO and revenue upside in F1Q didn't yield a higher FY2024 revenue guidance which implies a softer top line view for F2Q-F4Q:2024 versus three months ago," he added.

ChatGPT Is Fabricating Information: Why That's a Problem For Every Industry, Not Just Journalism

Benzinga News — Thu, 01 Jun 2023 18:54:15 -0400

The rapid evolution of the digital landscape is punctuated by remarkable innovations in artificial intelligence (AI). Yet these developments come with their own share of challenges.

One such issue, increasingly capturing the attention of industries ranging from academia to journalism, is the fabrication of information by AI, specifically OpenAI's ChatGPT, which recently closed a $10-billion multiyear investment deal with Microsoft Corp (MSFT ).

From Personal Experience To Academic Confirmation

I have personally experienced this problem on multiple occasions.

Seeking to verify these concerns, I set out on a quest to discern the truth. I tasked ChatGPT with retrieving quotes from a particular person, meticulously feeding it precise information. To my surprise, it furnished me with plausible responses, fashioned in the speaker's style, but they were not genuine quotes.

Even when armed with copious context and explicit directives not to fabricate quotes, ChatGPT still invented remarks. It packaged these counterfeit quotes as if the person in question had voiced them verbatim, attributing them to the person and enclosing them in quotation marks.

This practice represents a stark misrepresentation, as the source never uttered these words. Despite my prompts' stipulations, ChatGPT continued to invent quotes the interviewee never said, even after supplying it with a Q&A transcript.

While the process was undertaken with care to maintain the utmost fidelity to the provided information, these anomalies underscored the need for rigorous fact-checking.

The Research On ChatGPT Inaccuracies: This growing concern was brought into sharp focus by the study "High Rates of Fabricated and Inaccurate References in ChatGPT-Generated Medical Content," conducted by Mehul Bhattacharyya, Valerie M. Miller, Debjani Bhattacharyya and Larry E. Miller.

Through an analysis of 30 medical papers generated by ChatGPT-3.5, each containing at least three references, the researchers uncovered startling results: of the 115 references generated by the AI, 47% were completely fabricated, 46% were authentic but used inaccurately and only 7% were authentic and accurate.

Their findings reflect the larger concern that ChatGPT is capable of not only creating fabricated citations, but whole articles and bylines that never existed. This propensity, known as "hallucination," is now seen as a significant threat to the integrity of information across many fields.

Benzinga contacted OpenAI for commentary. While nobody at the company was available to comment, the team pointed Benzinga toward a new blog post and research paper addressing some of these issues.

The 'Hallucination' Issue: Is GPT Tripping?

The repercussions of this phenomenon are notably severe within the journalism industry. Instances of reporters finding their names falsely attributed to non-existent articles or sources are escalating.

One such victim of this trend was AI researcher and author Kate Crawford, whose name was inaccurately linked to criticisms of podcaster Lex Fridman. Moreover, ChatGPT's ability to concoct references for completely non-existent research studies raises the risk of propagating disinformation, ultimately undermining the credibility of legitimate news sources.

This has happened many other times. For instance:

The Guardian reported that ChatGPT created entire articles and bylines that it never actually published. This has been noted as a worrying side effect of democratizing tech that can't reliably distinguish truth from fiction.
Journalists at USA Today discovered that ChatGPT generated citations for entire non-existent research studies about how access to guns doesn't raise the risk of child mortality.
Noah Smith shared a tweet showing how he asked ChatGPT to write an argument against wage boards in the style of economist Arin Dube. The AI completely fabricated the quote, and also mischaracterized Dube's stance, who is, in reality, a proponent of wage boards. The AI also cited a non-existent article as its source.

Risk And Repercussions: The Dark Side Of AI Fabrication

While AI's prowess is beyond doubt, recent events have cast a somber shadow over its potential misuse. At the heart of the storm is once again OpenAI's ChatGPT, which has run amok in the field of law, presenting unforeseen dilemmas and legal conundrums.

This AI-induced chaos unfurled around the case of Mata Vs. Avianca, when Mata's legal counsel employed ChatGPT to find prior court decisions pertinent to the case. What seemed like an innovative application of AI turned into a bizarre sequence of events, with ChatGPT fabricating non-existent cases.

In response to queries about the validity of these cases, ChatGPT went a step further. It concocted elaborate details of the made-up cases, which were then presented as screenshots in the court filings.

The lawyers even sought AI's "confirmation" of the fabricated cases, presenting it as part of their legal argument. An incredulous twist that, in the words of lawyer Kathryn Tewson, demands attention: "did you see the 'cases'? You have GOT to see the cases."

A hearing is slated for the coming month to discuss potential sanctions on the lawyers - a potential risk to their livelihoods and reputations. This incident echoes another recent predicament where an Indian judge grappled with the question of granting bail to a murder suspect who sought legal advice from ChatGPT.

Highlighting the severity of the issue, a Reddit user shared their concern about people's blind faith in AI's capabilities, even in sensitive areas like medicine or law.

The release of the latest version of ChatGPT, ChatGPT-4, has elicited mixed responses. On one hand, this AI model, capable of scoring 90% on the U.S. bar exam and perfect scores on SAT math tests, signifies a leap in AI development. On the other, it raises concerns about the risks of misuse and the potential for large-scale disinformation and cyberattacks.

Elon Musk and OpenAI CEO Sam Altman have been vocal about the need for AI regulation.

"Society, I think, has a limited amount of time to figure out how to react to that, how to regulate that, how to handle it," Altman has said.

Altman is particularly concerned about malicious uses of ChatGPT. Since it can write computer code, GPT-4 can be used for large-scale disinformation and offensive cyberattacks, he said.

Altman has also addressed the "hallucination" issue.

"The thing that I try to caution people the most is what we call the 'hallucinations problem,'" Altman said in an interview with ABC News. "The model will confidently state things as if they were facts (but they) are entirely made up."

Musk, a co-founder of OpenAI who recently said he invested approximately $50 million in the company, has previously expressed concerns regarding AI. It's notable as Musk is the CEO of another company, Tesla (TSLA ), that is aggressively investing in AI. The automaker adopted its natural language processing (NLP) system from OpenAI, which is used to handle the virtual assistant in its vehicles.

AI technology is also employed to enhance the performance of Tesla's autonomous vehicles, improving their ability to understand and respond to their surroundings. Assuming Tesla's push into AI is subject to some of the same risks - hallucinations - as other generative AI solutions, it's an interesting prospect given the potential for autonomous, AI-assisted vehicles with little to no human input on the roads en masse.

Reports from 2023 suggest a potential collaboration between Tesla and OpenAI that could further strengthen Tesla's AI operations. Yet this could also amplify the potential risks if the AI hallucination problem isn't effectively addressed. There is no evidence to suggest that Tesla vehicles as they are constructed now are a danger to society.

Other tech leaders, such as Sundar Pichai, Ginni Rometty, Marc Benioff and Satya Nadella, have also voiced concerns about AI's negative potential, adding to the growing clamor for regulation and oversight.

AI, undoubtedly, is the future - at least when it comes to the idea that it can solve administrative hurdles and boost productivity. As we rocket into this new era, these incidents serve as a stark reminder of the challenges and responsibilities that come with the power of AI. Balancing the promise and perils of AI is a task that demands our utmost attention, vigilance and discernment.

Understanding Hallucinations And Potential Solutions

OpenAI is actively refining its models to mitigate hallucination issues and is exploring ways to allow users to customize ChatGPT's behavior while setting safeguards to prevent misuse. Strategies like training AI on a more narrow and vetted dataset could potentially reduce the instances of hallucination, albeit at the risk of limiting the AI's creativity and breadth of knowledge.

Other potential solutions could include improving the user interface, indicating sections of generated text with varying levels of confidence, and integrating external databases. However, these remedies come with their own sets of challenges such as data privacy concerns and the technological feasibility of integrating large amounts of external data.

As we delve deeper into the era of AI, the challenge lies in leveraging its remarkable text-generating abilities while mitigating the risk of misinformation. Navigating this intricate balance calls for a steadfast dedication to truth and accuracy, along with a willingness to adapt and evolve amidst the fast-paced landscape of artificial intelligence.

Alibaba Unveils Its Spin-Off Plans

Benzinga News — Thu, 01 Jun 2023 18:54:01 -0400

Chinese e-commerce giant Alibaba Group Holdings Ltd. (BABA ) announced in November 2022 that it would be spinning off six companies. Ali Baba has been referred to as the Amazon.com Inc. (AMZN ) of China. It is the second largest e-commerce company in China, behind Meituan. Alibaba stated that it was restructuring as a holding company focused on capital management. The company seeks to focus on its core business and enhance shareholder returns.

Complying with Regulators

However, regulatory scrutiny is also a significant factor. The company paid RMB18.23 billion or $2.8 billion to settle anti-trust violations to Chinese regulators in 2021. The spin-offs will help Ali Baba comply with Chinese regulators regarding anti-monopoly regulations. Several of the individual companies will be competing in the e-commerce platform space with PDD Holding Inc. (PDD ) and JD.com Inc. (JD ). The initial announcement sent shares higher to form a triangle top at $121.30 in January 2021. The company disclosed more details on its spin-off plans in its Q4 2022 earnings release causing shares to gap and crap. Alibaba will retain complete control of its current e-commerce business. Here are the details of the six companies it plans to spin off.

Alibaba Cloud

As one of the largest cloud providers in the world, Alibaba Cloud also referred to as Aliyun, provides cloud and virtualization services to over 200,000 companies of all sizes throughout 200 countries and regions. Some of its many services are storage, networking, serverless computing, big data, and machine learning artificial intelligence (AI). The service is secure and scalable. It generated RMB186 billion in 2022. However, it faces challengers encroaching on its space, forcing it to cut prices on some of its cloud services by up to 50% to remain competitive. Internet giant Tencent Holdings (TCEHY ) has announced price cuts of up to 40% for its cloud service. China Mobile announced 60% price cuts for cloud services for a limited time. The cloud business generates 9% of Alibaba's total revenues. Cloud Intelligence will be spun off as an independent public company as a dividend to shareholders in the next 12 months.

Ant Group

Alibaba had initially planned to spin off Ant Group in an IPO that regulators canceled within days of the IPO. It is a leading provider of financial services providing investing, wealth management, lending, payments and insurance services. It has over one billion users in China. Ant Group generated RMB 1.25 trillion of $190.5 billion in revenues in 2022. The company plans to be spun off as a fully independent company in calendar year 2023.

Lazada

Singapore-based Lazada is an e-commerce platform enabling sellers to sell products and services throughout Southeast Asia and its 600 million people. The company provides payment, delivery and support services. It generated RMB 120 billion or $18.6 billion in 2022.

Taobao and Small Business Group

Taobao is a Chinese marketplace started by Alibaba in 2003. It has over 600 registered users and 10 million active sellers. Tmall is a leading cross-border e-commerce platform with over 200 million users in China. Alibaba will retain complete control of Taobao and Tmall as 100% owned core holdings. It generated $25 billion in free cash flow in fiscal 2023 and will be a primary source of funds.

Cainiao Smart Logistics Group

This company provides supply chain, delivery and logistics services to Taobao, Tmall, Alibaba International Digital Commerce Business Group (AIDC) and third-party customers. The company is expected to generate $10 billion in 2023, up from the $7 billion it generated in 2022. Alibaba holds a 67% interest in the company. Its IPO is targeted to complete in 12 to 18 months.

Freshippo

Freshippo is a brick-and-mortar grocery chain retail business with an IPO expected in six to 12 months. It has over 300 high-tech stores throughout China and offers delivery services. The company is expected to double its revenues to $1 billion in 2023, driven by the growth in online grocery shopping in China.

Alibaba Fiscal Q4 2023 Earnings

On May 18, 2023, Alibaba reported its fiscal Q4 2023 earnings. The company reported earnings-per-share (EPS) of RMB 10.71 per share, beating consensus analyst estimates by RMB 1.24). Revenues climbed 2% year-over-year (YoY) to RMB 208.2 billion, falling short of RMB 209.29 billion.

The article "Alibaba Unveils Its Spin-Off Plans " first appeared on MarketBeat.

Is Tesla 'Blackberry Of EV Industry?' Why Analyst Sees Its Valuation At Risk of Collapse

Benzinga News — Thu, 01 Jun 2023 18:53:47 -0400

Tesla, Inc. (TSLA ) stock has seen some upward momentum since mid-May and the buoyancy has lifted it above the $200 threshold. An analyst, however, warned that this could be a false start and the stock's fate is doomed.

Struggling Car Maker? Tesla is the "Blackberry of the EV industry" and its valuation could implode as competition intensifies and it becomes clear to investors that it is a struggling car company, said GLJ Research analyst Gordon Johnson, repeating his thesis on the stock.

Blackberry, though was the pioneer of smartphones, went out of business as it failed to adapt to changing consumer preferences and competitors flooded the industry.

Johnson has a Sell rating on the stock and a $24.33 price target.

To support his argument, Johnson noted a Reuters report that said Tesla has doubled discounts on some Model 3 as well as on some Model Y and other cars held in inventory in the U.S. The promotional measure could have been precipitated by waning demand amid economic uncertainties, rising competition and the upcoming Model 3 refresh, he said.

Stock Ignores Bad News: The recent stock surge has come despite a spate of bad news in the past, including a lackluster Investor Day, inventory issues in the U.S./EU, moderating sales in China, concerning lead times and new price cuts, Johnson noted.

Tesla's stock strength, according to the analyst, is due to the $233.024 billion in liquidity the Treasury injected into the equity markets in May alone. The liquidity injection in the 30 days is equal to 25 years of Fed's balance sheet expansion, achieved through the working down of the Treasury General Account balance, and to a lesser extent AI euphoria, he added.

Johnson expects Treasury Secretary Janet Yellen to withdraw $600 billion to $900 billion from equity markets, now that the budget bill is on the cusp of being enacted.

"We believe TSLA's fundamentals may, shortly, come back into focus. And, as they do, with numerous problems mounting for the company, we expect the stock to resume its downward trend lower toward our PT by year-end," he said.

Market Update: Stocks Higher on Debt-Ceiling Bill Optimism

Rachel Hemple — Thu, 01 Jun 2023 18:24:27 -0400

Stocks rose higher on Thursday after the U.S. House passed a debt ceiling bill, clearing another hurdle before it can be signed into law by President Joe Biden. The Dow Jones Industrial Average climbed over 150 points, while the S&P 500 Index and Nasdaq Composite added about 1% and 1.3%, respectively.

Here's how the market settled on Thursday:

S&P 500 Index (SPY ): +0.99% or +41.20 points to 4,221.03

Dow Jones Industrial Average (DIA ): +0.47% or +154.09 points to 33,062.36

Nasdaq Composite Index (QQQ ): +1.28% or +165.70 points to 13,100.98

The Fiscal Responsibility Act passed by a vote of 314-117 with bipartisan support late Wednesday, moving the bill into the Senate. Senate Majority Leader Chuck Schumer said the Senate will stay in session until a bill is passed.

Also driving market moves on Thursday, U.S. private payrolls rose by 278,000 in May, the ADP reported Thursday, topping estimates but coming slightly below the point from the previous month. The report comes a day ahead of the Labor Department's "official" payroll report for May, which is expected to show an increase of 190,000.

Separately, initial jobless claims edged higher to 232,000 for the week ended May 27, the Labor Department reported Thursday, coming in slightly below estimates. Continuing unemployment claims also rose to 1.795 million, but were below economist estimates.

Investors are looking ahead to the Federal Reserve's policy meeting later this month, with Friday's jobs report being the latest major labor market reading before the central bank's decision on interest rates.

In single-stock news, JPMorgan Chase downgraded Target (TGT ) on Thursday, citing concerns over the retailer's outlook due to declining market share and disinflation in the company's grocery segment.

"Today, we believe TGT sits at the center of a number of consumer headwinds," analyst Christopher Horvers said. "With 51% of its sales derived from discretionary categories (apparel, hardlines, and home), 49% derived from more consumable categories (which are facing disinflation), accelerating share of wallet reversion occurring, and student loans potentially coming due, we see the risk of downward earnings revisions rising."

Looking ahead, market participants are expected to applaud the passage of the debt ceiling bill in the Senate, which could happen as soon as Thursday evening. Friday's job market data is also expected to move markets ahead of the Fed's June policy meeting.

Nordstrom Q1 Earnings Highlights: Revenue Beat, EPS Beat, Guidance, Store Update And More

Benzinga News — Wed, 31 May 2023 16:03:44 -0400

Retailer Nordstrom (JWN ) reported first-quarter financial results after the market close Wednesday. Here are the key highlights.

What Happened: Nordstrom reported first-quarter revenue of $3.18 billion, which was down 11.6% year-over-year. The revenue total beat a Street consensus estimate of $3.12 billion, according to data from Benzinga Pro.

Adjusted earnings per share were 7 cents in the first quarter, beating a Street estimate of a loss of 8 cents per share.

Net sales for the company's flagship Nordstrom brand were down 11.4% year-over-year. Net sales for the Nordstrom Rack brand were down 11.9% year-over-year.

The first quarter saw the wind-down of the company's Canadian operations with one month of sales from the Canadian segment included in the results, compared to a full three months in the prior year.

Digital sales were down 17.4% year-over-year in the first quarter.

"We are pleased with the progress we're making against the key priorities we laid out for 2023 as we continue to enhance our overall customer experience, improve Nordstrom Rack performance, increase inventory productivity and optimize our supply chain operations," Nordstrom CEO Erik Nordstrom said.

Chief Brand Officer Pete Nordstrom said the focus on key priorities is allowing the company the opportunity to better serve customers and position the company "for more profitable growth."

Nordstrom ended the quarter with $1.4 billion in liquidity, including $581 million in cash.

The company has 347 stores versus 356 in the first quarter of the prior year.

What's Next: Nordstrom reaffirmed full-year guidance for revenue with an estimated loss of 4% to a loss of 6% projected on a year-over-year basis.

The company sees full-year earnings per share coming in a range of $1.80 to $2.20 compared to a Street estimate of $1.88.

"We're encouraged by our momentum, especially given the uncertain macroeconomic environment. We remain focused on executing with agility and delivering long-term value to our shareholders," Erik Nordstrom said.

The company did not comment on the shares held by activist investor Ryan Cohen and his push for a board shakeup, but it could be a topic during the conference call.

JWN Price Action: Nordstrom shares are up 9.8% to $16.80 after hours Wednesday.

Goldman Sachs On Theme Park Stocks: A Ride Worth Taking?

Benzinga News — Wed, 31 May 2023 16:03:28 -0400

Goldman Sachs turned attention to the theme park sector, telling investors it initiated coverage on Cedar Fair LP (FUN ), SeaWorld Entertainment Inc (SEAS ), and Six Flags Entertainment Corp (SIX ).

With amusement parks riding high on post-COVID demand and considerable growth in admissions and in-park spending, it's a sector ripe for investor scrutiny. Here's what Goldman analyst Lizzie Dove thinks about theme parks.

Cedar Fair LP: Buy rating, $50 price target.

Despite current investor caution around the theme park sector, Dove sees a +5.0% EBITDA CAGR through 2026. She cited Cedar Fair's well-invested park portfolio, stable management team, and high-repeat customer base as key contributors to pricing power.

SeaWorld Entertainment Inc: Buy rating, $75 price target.

SeaWorld's high exposure to the burgeoning Orlando market offers admissions pricing power, while mobile app usage and new park investments could bolster in-park spending per-cap growth, Goldman said. Dove believes ongoing cost-cutting initiatives and growth opportunities from international licensing and domestic resort potential are not being adequately appreciated by investors.

Six Flags Entertainment Corp: Sell rating, $26 price target.

Despite an anticipated easy comp from a 40% attendance decline in 2022, Goldman suggested that consensus may be misjudging per-cap growth in 2023 and the ongoing investment necessary for advertising and new attractions.

Given the cautious investor sentiment with potential recession impacts, parks over-earning, and competition, Dove urges investors to focus on company-specific growth drivers and potential return on invested capital late cycle.

Despite park multiples reflecting a 15-20% discount versus pre-COVID levels, Goldman said the growth opportunity is still intact and warrants a fresh look from investors.

Microsoft's AI Opportunity is Likely Bigger Than Cloud, Analysts Say While Boosting Expectations

Benzinga News — Wed, 31 May 2023 16:03:14 -0400

Piper Sandler analyst Brent Bracelin maintains Microsoft Corp (MSFT ) with an Overweight, raising the price target from $348 to $400.

He is confident that MSFT will bring AI to the masses based on bullish commentary from 3P data for April and the Build developer conference in Seattle. He thinks the Microsoft AI opportunity could be more significant than the cloud.

MSFT was a significant $78 billion software business back in FY13 but wholly transformed over the last decade, with FY23E revenue on track to exceed $211 billion.

The Microsoft Cloud segment alone is poised to exceed $110 billion. The incremental revenue, profit, and cash flows generated from Microsoft Cloud have more than offset a lower gross margin that could hit 68.8% in FY23E vs. 73.8% in FY13.

Bracelin saw parallels within AI that could boost revenue and result in a gross margin drag on elevated AI investments.

He increased his revenue estimates by $2 billion and $7 billion for FY24 and FY25 on AI tailwinds but lowered EPS slightly by $0.05 and $0.07, respectively.

Net-net, AI tailwinds could accelerate top-line growth for the next three years. The price target boost reflects higher estimates and a higher target P/E of 31x (vs. 28x) warranted by AI tailwinds.

Credit Suisse analyst Sami Badri maintains Microsoft an Outperform and raises the price target from $350 to $420.

Given MSFT's rapid increase in AI/GPT-based product announcements, Badri updated his AI/GPT uplift base case revenue and EPS on the updated installed base, product penetration, and productization assumptions.

Given Microsoft's progress in the productization of GPT technology, particularly in the Office suite (Microsoft Copilot), he embedded his AI/GPT uplift estimates into the price target valuation.

MSFT's ability to monetize GPT technology within the Office Suite remains the core driver of the analyst's uplift assumptions.

Price Action: MSFT shares traded lower by 0.26% at $330.41 on the last check Wednesday.

HP At Forefront Of Upcoming AI Revolution In PC Industry, CEO Says

Benzinga News — Wed, 31 May 2023 16:02:58 -0400

HP Inc. (HPQ ) CEO Enrique Lores believes that artificial intelligence, or AI, will revolutionize the personal computer industry, and his company is at the forefront of this transformative wave.

What Happened: Lores told CNBC's Jim Cramer that HP is developing a range of AI-enabled PCs that are poised to revolutionize the way users interact with their computers.

"[AI is] going to help us to redefine what a PC is, the experiences that customers will be able to get are going to be much different, and we are working with all the key software vendors, key silicon providers to redesign the architecture of a PC," Lores told Cramer, reported CNBC.

With AI integration, these PCs will drastically reduce the time and effort required for tasks that involve data analysis. AI will not only streamline processes but also engage in dialogue, providing valuable insights and recommendations to users.

"I have never seen an opportunity like this, to really drive innovation and drive new type of customer needs that we really think are going to be fundamental," Lores added, according to the report.

The introduction of AI-enabled PCs is expected as early as 2024.

Why It Matters: As AI continues to impact the world - the surging popularity of ChatGPT being the biggest example - by leveraging the technology, HP is creating a new breed of PCs that can cater to the evolving needs of customers.

Apart from HP, Wendy's Co. (WEN ) too plans to integrate AI into its services to revolutionize customer experiences. The fast-food chain plans to introduce a pilot program utilizing a robot-powered "underground delivery system" for online order pickups.

China ETFs Fall As Economy Shows Signs Of Contraction For The Second Consecutive Month

Benzinga News — Wed, 31 May 2023 16:02:43 -0400

China's sudden and explosive growth trend has entered a phase of decline.

New data from the month of May shows manufacturing activity stagnating for the second consecutive month, as the country's manufacturing purchasing managers' index dropped to its lowest point since January.

China experienced a spike in manufacturing activity as the country announced an end to harsh COVID-zero policies in December. By late February, the PMI was peaking and showcasing its fastest growing rate in over 10 years.

Yet growth is proving to be short-lasting. By March, the PMI index was lower than in February, and in April it reached 49.2. Any level below 50 is indicative of contraction. May's number came in below expectations, at 48.8, suggesting the country's post-COVID recovery is losing its momentum.

Analysts at Japanese investment bank Nomura told the South China Morning Post they expect manufacturing PMI to remain in contraction during June.

What's Causing China's Slump?

Several measures of China's economic activity fell last month, including imports, factory gate prices, property investment, industrial profits, factory output and retail sales, reported Reuters.

Earlier this month, Nomura cut its 2023 GDP growth forecast for China from 5.9% to 5.5%, a 6.7% drop.

The analysts said China's headwinds are part of "a structural property slump, a deepening global manufacturing downturn and worsening geopolitical tensions."

Rising competition with the U.S. and its economic allies is putting pressure on some sectors within China's industry, including tech manufacturing.

A report published on Tuesday by China Beige Book, a U.S.-based firm, said that China's real estate market is also showing stagnation, in spite of earlier signs of improvement.

The property market, which represents a fifth of the country's economy when accounting for related sectors, saw sales drop during May. Home sales fell 14.3% from April to May.

The non-manufacturing PMI, which illustrates the state of the construction and services sectors, didn't fall below the 50 mark, but grew at its lowest pace in four months, reaching 54.5 in May, down from 56.4 in April.

Bruce Pang, chief economist for Greater China at Jones Lang LaSalle Inc., told Bloomberg that China could be headed into a "K-shape recovery," meaning that some sectors in non-manufacturing might be recovering while others may enter a recession.

Youth unemployment is also weighing on the population's spending strength. Official data released this week puts urban unemployment for 16-to-24-year-olds above 20% - 4 times higher than the overall level, as many of the country's recently college-graduated workforce are forced to take jobs below their skills, CNBC reported.

"For consumers, there are concerns about the future - you don't really want to spend," Hui Shan, chief China economist at Goldman Sachs, told the Financial Times.

The Hang Seng Index, which follows the trajectory of the Stock Exchange of Hong Kong, dropped almost 2% on Wednesday at the time of writing, and is down 5.4% in the last five days and 9.5% in May.

The index touched 18,044.86 points on Wednesday, which is technically bear territory, as it stands 20.5% below its 52-week closing high.

U.S.-listed China ETFs are also reacting negatively to recent data.

iShares MSCI China ETF (MCHI ) lost 0.7% of its value on Wednesday at the time of writing and 4.3% in the last five days.
KraneShares CSI China Internet ETF (KWEB ) dropped 1.2% on Wednesday and 4.7% in the last five days.
SPDR S&P China ETF (GXC ) lost 0.7% on Wednesday and 4.7% in the week.

GM, Stellantis and Volkswagen Try to Differentiate Their Offerings While Tesla and Ford Challenge the Industry Charging Norm

Benzinga News — Wed, 31 May 2023 16:02:29 -0400

While Tesla Inc (TSLA ) continues to expand its fleet with a range of electric models that suit various business needs, legendary automakers are pressured to play catch up or at least try to do so.

Ford Motor (F ) is the first automaker to gain direct access to Tesla's Supercharging infrastructure, with its vehicles planned to contain Tesla's charging DNA as of 2025 at which point they won't even be needing an adapter to use Tesla Superchargers built around the NACS standard. With this surprising deal, Ford gained a significant lead over its Detroit peers, General Motors (GM ) and Stellantis N.V. (STLA ) whose cars are built on the current industry charging norm, CCS.

During its annual GM Fleet Solutions Summit, General Motors has launched a new brand to serve fleet EV customers named "Envolve" With this launch, the legendary automaker stated it has entered a phase of accelerated expansion as it will aiding corporate clients minimize their footprint, optimize their fleets and improve driver safety. The unveiling was positively received by AutoZone Inc (AZO ) CEO Bill Rhodes. What is interesting about this move is that automakers are clearly trying to differentiate themselves in serving all kinds of customers.

GM's peer, Stellantis N.V. recently celebrated the inauguration of its Europe gigafactory. Located in France, Stellarntis joined forces with TotalEnergies and Mercedez-Benz to build this ACC battery gigafactory. Reuters reported the words of its CEO Carlos Tavares, who said that Stellantis will be needing one or even two additional battery plants in the U.S. to meet its EV output targets. Stellantis aims to achieve carbon net zero by 2038, with the French plant expected to produce high-performance lithium-ion batteries with a minimal CO2 footprint. Therefore, latest factory is the first of the three that Stellantis plans to open in Europe to power its electrification plans.

Volkswagen AG (VWAGY ) is also accelerating its EV efforts. Through its subsidiary, Electrify America, it is trying to build a charging network across the U.S. Interestingly, unlike Tesla, Volkswagen has not boarded the price discounting train in China. Reuters reported that Volkswagen Chief Operating Officer Ralf Brandstaetter said in an interview that was released today Volkswagen won't be entering the discount battle at any price, despite the surmounting pressure. Volkswagen still aspires to be the biggest international automaker in China but considering that this is the world's largest market that is expected to grow from its present value of 22 million to a range between 28 to 30 million by the end of the decade,Brandstaetter finds it irrelevant if another national automaker sells more, like BYD that outsold Volkswagen during the first quarter of the year.

Ford And Tesla Pact To Disrupt The EV Universe

The deal between Tesla and Ford could easily be a game changer and result in NCAS becoming the new industry norm. Automakers like GM, Stellantis and Volkswagen have a big choice to make: will they stick to their playbooks and have less charging options, also keeping in mind that Tesla's superchargers have been ranked as superior to others, or will they put their egos aside like Ford to prioritize their customers, offer them fast and convenient charging through an adaptor to access Tesla superchargers and together make a big step towards global EV adoption.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

PayPal Stock At Multiyear Lows On Choppy Fundamentals, Leadership Worries: What's In Store?

Benzinga News — Wed, 31 May 2023 16:02:16 -0400

Payment platforms provider PayPal Holdings, Inc's (PYPL ) stock has significantly declined from its previous all-time high in mid-2021. Despite the overall tech rally observed since the beginning of the year, the stock has failed to gain momentum, languishing at lows last seen in September 2017.

Not A Good Payoff For Investors: San Jose, California-based PayPal, co-founded by Peter Thiel, came into being in March 2000. It had its origin as Confinity Inc., a software company founded by Max Levchin, Thiel and Luke Nosek. Confinity launched PayPal in late 1999 and later merged with Elon Musk co-founded online bank X.com.

Following the merger, the company came to be called PayPal, which was acquired by eBay, Inc. (EBAY ) for $1.5 billion in 2002. Thirteen years later, in 2015, eBay spun off PayPal as an independently-traded public company.

PayPal has a namesake branded checkout unit and a suite of unbranded solutions, including PayPal Braintree and PayPal Complete Payments, or PPCP. Braintree provides enterprise-grade processing for merchants and PPCP is an end-to-end, full-stack payments platform serving SMBs and partners.

PayPal's stock did not take off in a big way until the pandemic, and along with other COVID-19 plays, it took off in a big way and rallied to an all-time high of $310.16 (intraday basis) on July 26, 2021.

This marked a strong increase from an $82.07 (intraday) trough reached on March 23, 2020 - a 278% rally in a year and four months.

At the peak, its market capitalization was $362.53 billion based on the closing price of $308.53 that was hit on July 23, 2021.

Good things did not last forever. It began to trace a downhill path after completing a double top formation in early August 2021. The stock is currently languishing near a multi-year low.

Since the start of 2023, the stock has lost nearly 13% compared to the S&P 500 Index's 9.5% gain. The company's market cap is a far cry from its peak value of $69.23 billion.

What's Ailing PayPal? PayPal's fundamentals have faltered, with total active accounts rising merely 1% year-over-year to 433 million in the first quarter of 2023. The metric declined from 435 million in the previous quarter.

Payment volume rose 10% in the quarter and revenue was up 8.6%. Much of the gains came from the Braintree business, which saw payment volume growth of 30% compared to 6.5% growth of its branded legacy checkout business and 9% growth at Venmo, Financial Times said in a report.

The unbranded business, however, is less lucrative than the branded business, the report said. To make matters worse, the branded business is facing increasing rivalry from tech companies that have forayed into the payments business as well as the emergence of upstart 'Buy Now, Pay Later' companies.

Apple, Inc. (AAPL ), Alphabet, Inc. (GOOGL ), Affirm Holdings, Inc. (AFRM ) and AfterPay are among the companies PayPal is contending with.

PayPal banked on cost cuts to improve profitability but this option cannot continue to help the company, FT said.

Near-Term Risks: Bernstein analyst Harshita Rawat highlighted the long-term stock outlook, gross profit growth outlook due to deteriorating mix and transaction margins, and CEO succession as the three near-term risks faced by PayPal.

The company announced in early February that President and CEO Dan Schulman would retire on Dec. 31, 2023. Schulman joined PayPal in 2014 just ahead of the 2015 IPO. Four months after the announcement, no successor has been named yet.

Sell-side, however, is fairly bullish and expects the stock to climb over 56% from current levels, based on the average analysts' price target of $96.83, according to TipRanks. Out of the 27 analyst rating the stock, 18 are bullish and 9 are neutral on the stock.

PayPal shares closed Tuesday's session 3.04% higher at $62.05, according to Benzinga Pro data.

AI Revenue To Bolster Ambarella's Growth By 60% In 2024, 3 Analysts On Q1 Print

Benzinga News — Wed, 31 May 2023 16:02:05 -0400

Shares of Ambarella Inc (AMBA ) tanked in early trading on Wednesday, despite the company reporting upbeat earnings for its fiscal first quarter. Investors grew concerned on the company's weak second-quarter forecast.

The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Susquehanna analyst Christopher Rolland maintained a Positive rating and price target of $85.
Needham analyst Quinn Bolton reiterated a Buy rating and price target of $100.
Oppenheimer analyst Martin Yang reaffirmed a Perform rating on the stock.

Susquehanna

The inventory overhang "continues to weigh" on Ambarella's performance, which resulted in a worse-than-expected guidance for the second quarter, Rolland said.

"Once again, like so many others, Ambarella sees a customer inventory build for IoT and some Auto, as they now forecast another quarter of burn, thus guiding 2Q flat across both Auto and IoT," the analyst wrote. However, there is "little visibility into the end of the channel inventory overhang."

Needham

Management's guidance for the second quarter of fiscal 2024 is impacted by continued inventory corrections, primarily in IoT, Bolton said. "Auto & IoT were guided to be flat Q/Q (signaling the correction isn't worsening), but order rates have yet to provide visibility into a recovery," he added.

The company represents a "near-term AI-driven buying opportunity," with AI-related revenues expected to be around 60% in fiscal 2024, the analyst stated.

Oppenheimer

Although the company issued weak guidance, it exhibited "impressive progress with its CV family of chips," Yang wrote in a note.

"The company secured its first design win for L4 (jointly developed with Continental) with a commercial vehicle customer," he added.

AMBA Price Action: Shares of Ambarella had risen by 12.58% to $71.65 at the time of publishing Wednesday.

Market Update: Stocks Fall Ahead of House Debt-Ceiling Vote, Nasdaq Rallies Nearly 6% in May

Rachel Hemple — Wed, 31 May 2023 15:22:17 -0400

Stocks fell Wednesday as investors continued to monitor congressional debates on the U.S. debt-ceiling deal in the final trading day of May. The Dow Jones Industrial Average dropped over 100 points, while the S&P 500 and Nasdaq Composite were both about 0.6% lower.

Here's how the market settled on Wednesday:

S&P 500 Index (SPY ): -0.61% or -25.69 points to 4,179.83

Dow Jones Industrial Average (DIA ): -0.41% or -134.51 points to 32,908.27

Nasdaq Composite Index (QQQ ): -0.63% or -82.14 points to 12,935.29

President Joe Biden and House Speaker Kevin McCarthy reached a deal on raising the U.S. debt ceiling over the weekend, with the bill advancing to the House floor following a 7-6 vote in the House Rules Committee Tuesday night. The floor vote on the bill is expected to take place Wednesday night.

Congress must pass the bill to avoid a U.S. default by June 5, which is the so-called June X-date when the nation will run out of funding to cover its debts, estimated by Treasury Secretary Janet Yellen last week.

Wednesday's moves marked the end of trading for the month of May, with the Nasdaq climbing 5.8% higher as a tech-rally fueled by AI-related stocks helped propel the index higher. The S&P 500 added about 0.3% for the month, while the Dow fell almost 3.5% as Nike (NKE ), Disney (DIS ), 3M (MMM ), Walgreens (WBA ) and Chevron (CVX ) each lost over 10% on the month.

The latest U.S. job openings and labor turnover survey (JOLTS) was under the spotlight on Wednesday, with openings increasing to more than 10 million in April from 9.6 million in March. Economists polled by Bloomberg expected openings to decline to about 9.4 million for the month.

Elsewhere, China's factory activity signaled contraction in May with a reading of 48.8, marking its second straight month of declines. The report also serves as another sign that the nation's post-pandemic economic recovery is slowing.

In single-stock news, Citi analyst Atif Malik wrote in a note on Wednesday that investors looking to play generative artificial intelligence (AI) should "stay long" on Nvidia (NVDA ) as its recent string of product announcements should contribute to the chipmaker's growth overtime.

"We estimate all three announcements depict NVIDIA's effort to lean on its existing AI accelerator dominance to establish a robust presence in what is potentially for the company a mostly untapped combined accelerated computing TAM of $1T+ going from AI networking to the largely CPU-centered server market," he wrote.

Looking ahead, market participants will look for more details on the debt-ceiling vote ahead of the upcoming default deadline.

Nvidia Becomes Ninth Company To Hit $1-Trillion Market Cap — Which Stock Could Be Next To Join Elusive Club?

Benzinga News — Tue, 30 May 2023 16:14:33 -0400

A surge in price for shares of Nvidia Corporation (NVDA ) after the company's quarterly earnings results and guidance has put the semiconductor company in the elusive $1 trillion market capitalization club. Here's a look at the past and current members of the club and who could be next to join.

Nvidia Joins $1 Trillion Market Cap Club: On Tuesday, shares of Nvidia were trading higher and the company officially joined the $1 trillion market capitalization club.

While the move could end up being short-lived or the start of what's to come, Nvidia is one of a limited number of companies to hit the milestone.

Nvidia reported first-quarter revenue of $7.19 billion, which beat Street consensus estimates of $6.52 billion. The revenue beat previous guidance from the company in a range of $6.37 billion to $6.63 billion.

The company also beat earnings per share estimates of 92 cents with first-quarter results of $1.09 per share.

Nvidia highlighted the strength of its data center business and the demand for AI chips.

Nvidia guided for second-quarter revenue to be $11 billion, plus or minus 2%. The revenue guidance is significantly higher than Street consensus estimates of $7.15 billion.

The strong results and guidance from Nvidia led to many analysts raising their price targets and calling for the company to quickly hit a $1 trillion market capitalization.

The $1 Trillion Market Cap Club: Nvidia joins five current members of the $1 trillion market capitalization club that includes some of the most recognizable global names.

Other companies with current market capitalizations of over $1 trillion include:

Apple Inc (AAPL ): $2.8 trillion
Microsoft Corporation (MSFT ): $2.5 trillion
Saudi Aramco: $2.1 trillion
Alphabet Inc (GOOG ): $1.6 trillion
Amazon.com Inc (AMZN ): $1.2 trillion

Apple and Saudi Aramco were two of the first companies to hit market capitalizations of $1 trillion and $2 trillion. The companies have battled over the years for the title of the world's most valuable public company.

In mid-2021, Microsoft became only the second U.S. company to ever hit a market capitalization of $2 trillion.

In early 2022, Apple became the first company to hit a market capitalization of $3 trillion.

The current $1 trillion market capitalization club has six members, with Nvidia the new member. Several companies are previous members of the club but have since fallen out. Here are the former members of the club:

Meta Platforms (META ): $679.2 billion market cap
Tesla (TSLA ): $630.4 billion market cap
PetroChina: $189.5 billion market cap

On the list of companies ranked by market capitalization, Meta and Tesla claim the eighth and ninth positions, respectively. PetroChina, which hit a valuation of $1 trillion in 2007 is now the 55th most valuable public company in the world.

Who's Next To Join The Club?: Back in 2021, Benzinga took a look at three companies that could hit a market capitalization of $1 trillion. Two of the three names ended up joining the club, with Tesla and Nvidia among the picks.

The miss from the list was Tencent Holdings (TCEHY ), which is currently ranked as the 19th most valuable public company at $383 billion.

Outside the six members of the $1 trillion market capitalization club, there are only four companies with market caps of $500 billion to $1 trillion.

Here are the next highest-valued public companies:

Berkshire Hathaway Inc (NYSE: BRK-A): $699.3 billion
Meta Platforms: $$679.2 billion
Tesla Inc: $630.4 billion
Taiwan Semiconductor Manufacturing (TSM ): $536.8 billion

These four names are the most likely to join or re-join the $1 trillion market capitalization club based on their current valuation. The four companies are also the subject of a Benzinga Twitter poll to ask our readers which company they think could be next.

Driving Ford's Dividends After Its Upgrade: How Much Would You Need To Earn $500 Per Month?

Benzinga News — Tue, 30 May 2023 16:14:22 -0400

Following Tuesday's upgrade from Jefferies that lifted Ford Motor Co (F ) shares about 5%, investors may be rushing into the stock in hopes of it hitting the analysts' price targets.

But what about its dividend yield? How many shares would one need to yield a steady $500 per month in dividends?

The Ford Analyst: Jefferies analyst Philippe Houchois upgraded Ford from Hold to Buy, upping the price target from $13 to $16 in light of last week's investor event.

Houchois's optimism stemmed from Ford's ambitious plans, including its aim to achieve a 10% margin by 2026 - a significant contrast with a consensus stuck below 6%. He also applauded Ford's new reporting structure, which splits the numbers into Blue, Model e and Pro divisions, promoting better tracking and accountability.

As of now, Ford has a dividend yield of 4.73%. But what does that mean for investors hoping to reap $500 monthly in dividends?

To determine how much Ford stock an investor would need to own to yield $500 per month in dividends, we can start by calculating the annual dividend income required: $500 x 12 months = $6,000.

Next, divide the amount by the 4.73 % dividend yield: $6000 / 0.0473

This means that an investor would need to own approximately $126,849.89 worth of Ford stock, or 10,060 shares, to generate a monthly dividend income of $500.

And, if the stock goes to $16 like Houchois forecasted, that means investors owning 10,060 shares would also gain $33,801.60 from the increased stock value, representing a 26.58% growth on the trade, in addition to the monthly dividend yield.

Note that dividend yield can change on a rolling basis, as the dividend payment and the stock price both fluctuate over time.

The dividend yield is calculated by dividing the annual dividend payment by the current stock price. As the stock price changes, the dividend yield will also change.

For example, if a stock pays an annual dividend of $2 and its current price is $50, its dividend yield would be 4%. However, if the stock price increases to $60, the dividend yield would decrease to 3.33% ($2/$60).

Conversely, if the stock price decreases to $40, the dividend yield would increase to 5% ($2/$40).

Further, the dividend payment itself can also change over time, which can also impact the dividend yield. If a company increases its dividend payment, the dividend yield will increase even if the stock price remains the same. Similarly, if a company decreases its dividend payment, the dividend yield will decrease.

How The Debt Ceiling Deal Could Affect You: Student Loan Repayments, SNAP Alterations, Unspent Covid Relief

Benzinga News — Tue, 30 May 2023 16:14:10 -0400

The U.S. -and the rest of the world- may soon be able to breathe a sigh of relief as a deal struck by President Joe Biden and House Speaker Kevin McCarthy to raise the debt ceiling is in the hands of Congress.

While the deal still needs to pass the House Rules Committee and receive approval by both the House and the Senate, the "Fiscal Responsibility Act" provides clarity on the spending patterns of the U.S. government from now to Jan. 1, 2025, when the deal expires.

The deal, a compromise for the two parties, received criticism from both sides of the aisle. Prominent Republicans, including Florida Governor and presidential candidate Ron DeSantis balked at the deal for not doing enough to solve a trajectory towards bankruptcy while maintaining "inflated levels of spending from COVID."

Conversely, Democratic presidential candidate Marianne Williamson called the deal "a negotiation with economic terrorists" and said it "inflicts harm on people who are most vulnerable."

A key provision set by the deal fixes non-defense spending (about 53% of all discretionary spending) at current levels for the 2024 fiscal year, with a 1% increase for the following year.

COVID Relief Is Over, But Medicaid Is Safe

Contrary to DeSantis' remarks, the bill does address measures that were put in place to offset the negative effects of the COVID-19 pandemic.

For one, the bill recalls $28 billion in unspent Covid relief funds. These include about $5 billion in funding to accelerate the development of new Covid-19 vaccines and treatments.

Medicaid programs, however, are not a part of the deal and won't be affected, at least under the current version of the bill's language.

Student Loans Payments To Resume

As a measure to address some of the financial harm caused by the pandemic, the CARES act, passed in March of 2020, allowed a pause on student loan repayments. This pause would be terminated by the current debt ceiling deal, and repayments would need to resume on August 29, 2023.

While the pause had been extended eight times since being put into place, the Biden administration had already alerted that it would likely take its foot off the brake pedal sometime during 2023.

A separate Covid-related proposal, introduced by the Biden administration that could potentially erase up to $20,000 in student loan debt per person, is still on track. The proposal was not touched by the debt ceiling deal, and its validity will depend on a decision currently being weighed upon by the Supreme Court.

Work Requirements For Food Stamp Beneficiaries Now Raised To 55 Years Old

The current federal Supplemental Nutrition Assistance Program (or SNAP) provides nutrition benefits to low-income individuals and their families in the form of food stamps.

In order to qualify for the SNAP, able-bodied beneficiaries of up to 49 years of age without children must prove that they work or participate in a training program to receive food stamps on a long-term basis. This requirement would now be raised to include those of ages 50 to 55.

Streaming Powerhouses vs Traditional Networks: Who Will Win the NBA Broadcast Rights?

Benzinga News — Tue, 30 May 2023 16:13:57 -0400

Walt Disney Co (DIS ), home of ABC and ESPN, and Warner Bros. Discovery, Inc (WBD ), owner of TNT, are exclusively negotiating to renew their contracts, with the NBA being the last major U.S. sports deal up for grabs.

Disney and Warner Bros. Discovery pay about $2.7 billion annually to broadcast NBA games to a national audience, Bloomberg reports. The current deals expire in 2025.

The price tag will likely breach the $5 billion-a-year mark. Sports consultant Ed Desser expects NBA rights to more than double and potentially quite a bit more.

While regular season NBA ratings were flat, viewership for the playoffs has been the highest in years, and live sports are almost single-handedly keeping the cable-TV business alive.

This time, the league will likely sell its rights to more than two companies, carving out games for a streaming service.

The league wants more games to be shown on free broadcast stations like ABC, NBC, Fox, or CBS to win a higher fanbase. The league will likely wish to simultaneously air those contests on streaming services to attract additional viewers.

To many, Disney is the favorite to keep the rights. Warner Bros. Discovery also has a close relationship with the NBA.

If the NBA carves out a package for another broadcaster, Amazon.Com Inc (AMZN ) is a likely frontrunner.

Comcast Corp (CMCSA ) NBCUniversal also has a history with the NBA, broadcasting its games during the 1990s and early 2000s Michael Jordan era.

Apple Inc (AAPL ) has been expanding its ambitions in sports, having acquired rights to Major League Soccer and Major League Baseball.

Fox Corp (FOX ) has expressed some interest in NBA rights.

Netflix Inc (NFLX ) may bid for a smaller package of games in some international markets.

IBM Plans To Replace Nearly 8,000 Jobs With AI — These Jobs Are First to Go

Benzinga News — Tue, 30 May 2023 16:12:45 -0400

IBM (IBM ) CEO Arvind Krishna announced a hiring pause earlier this month, but that's not all. He also stated the company plans to replace nearly 8,000 jobs with AI.

Krishna noted that back-office functions, specifically in the human resources (HR) sector, will be the first to face these changes.

The transition will happen gradually over the next few years, with machines potentially taking over up to 30% of noncustomer-facing roles in the five years. This means that workers in finance, accounting, HR and other areas will likely find themselves facing stiff competition from robots and algorithms.

The decision highlights the increasing reliance on automation and artificial intelligence across various sectors and the potential impact on the workforce.

It's not the first time the company has made headlines for cutting jobs. Earlier this year, IBM also announced that it would be slashing 3,900 jobs, indicating a larger trend toward automation and cost-cutting measures in the tech industry.

While IBM isn't the only tech giant to downsize recently, with layoffs also hitting Meta Platforms Inc. (META ), Amazon.com Inc. (AMZN ), Twitter Inc., and Microsoft Corp. (MSFT ), it's clear that AI is rapidly transforming the workforce.

The writing has been on the wall for some time, with experts sounding the alarm about AI's potential to replace human workers for decades. This trend has not gone unnoticed by policymakers, with the White House releasing a report in December warning that it's "inevitable" that some workers will be displaced by AI.

Krishna remains bullish about the prospects of AI in the workplace, pointing to the technology's ability to free up thousands of hours of labor-intensive tasks in areas such as finance, accounting and HR. AI is projected to add a staggering $16 trillion to the global economy by 2030.

The prospect of mass automation looms large, as a new report by Goldman Sachs economists reveals that up to 300 million full-time jobs worldwide could be affected by the latest wave of AI technology, including the likes of ChatGPT. The report suggests that 18% of all work around the globe could potentially be replaced by machines, with the most advanced economies being hit the hardest.

This news signals a major shift in the way companies are operating in the digital age. And it's likely this is only the beginning. AI is quietly becoming a part of our everyday lives. Startups like AvaWatz are using advanced technology to roll out teams of AI-driven autonomous robot teams. These are used to operate farms, clear airfields and a host of other operations. While ChatGPT and other programs are quickly increasing efficiency in teams that might cause less growth in certain jobs.

A Game-Changing And Surprising Tesla And Ford Pact To Disrupt The EV Universe

Benzinga News — Tue, 30 May 2023 16:12:32 -0400

Last Thursday, Ford Motor Company (F ) revealed it has joined forces with no other than the EV king, Tesla Inc (TSLA ) so its electric vehicles can be charged at Tesla's Supercharger stations across the U.S. and Canada. The agreement is set to go into effect in the spring of 2024.

The surprise deal that was revealed during a live audio discussion between Ford CEO Jim Farley and Tesla CEO Elon Musk on Twitter Spaces is troubling for General Motor (GM ), Stellantis N.V. (STLA ) and other EV players. Upon the announcement, Tesla shares climbed by 4.7% while Ford shares rose 6.2%.

The Pact

As of 2025, Ford's cars will be equipped with Tesla's NACS charging port, Until then, Ford's EV models, currently F-150 Lightning, Mustang Mach-E and E-Transit that have the Combined Charging System (CCS) port, will be accessing Tesla's V3 Superchargers with a specific adapter.

Ford is among the first automakers to explicitly become part of Tesla's network.

As of next year, Ford's owners will be able to access to more than 12,000 Tesla Superchargers across the U.S. and Canada. Tesla says it has roughly 45,000 Supercharger connectors across the globe at 4,947 Supercharger Stations. Moreover, Ford's next generation of EVs which should arrive by 2025 will be able to use these superchargers without needing an adapter.

The Changing Industry Norm

The current industry norm is the CCS charger, while Tesla vehicles and its Supercharger network use NACS. The charging infrastructure is considered crucial to global EV adoption. Yet, Stellantis, GM and other automakers don't have access to as many fast chargers as only Tesla has successfully built its own charging network with its charges ranking best for overall customer satisfaction last year, according to a survey from J.D. Power. Not to mention the fact that according to another study from the same source, at least 1 in 5 charging attempts overall failed in 2022, giving Tesla an even greater lead on the charging front. It is important to note that electric vehicles from Stellantis and General Motors, as well as others, can still use Tesla's superchargers, but through Tesla's specific adapter.

Tesla's Long Game

During the Twitter chat, Musk said that by collaborating with Ford, and perhaps others, customers will be better off its NACS becomes the standard. It seems that General Motors, Stellantis and others have been given the invitation to join Tesla's supercharging network.

Ford's New SUV

Last week during its "Delivering Ford+" day, Ford also unveiled details about its upcoming three-row electric SUV revealing it will be similar in size to the Expedition, with a fast-charging ability of 150 miles of range in less than 10 minutes, with a total range of 350 miles per charge.

Lithium

Before the event, Ford already revealed it signed multiple deals to secure a supply of lithium battery materials.

Ford Continues Pursuing Its Ambitious Goals

Ford continues its race towards producing 2 million EV units by the end of the year. Tesla expects to export to Canada from Shanghai 2026, jumping even more compared to its targeted 600,000 produced units by the end of this year.

Also last week, Tesla's website delighted its Canadian fans, confirming the export of China-made Model 3 and Model Y. With this move, Tesla can maintain the supply of EVs manufactured in the U.S., namely California and Texas, for the U.S. market where they are eligible for tax incentives that add up to $7,500 in savings.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice

Market Update: Dow Closes Lower as U.S. Debt Ceiling Deal Awaits Congress Vote

Rachel Hemple — Tue, 30 May 2023 15:39:21 -0400

The Dow Jones Industrial Average fell on Tuesday as market participants continued to monitor developments out of Washington D.C. surrounding Congress passing a tentative deal on raising the U.S. debt ceiling. The S&P 500 and Nasdaq Composite closed slightly higher.

Here's how the market settled on Tuesday:

S&P 500 Index (SPY ): +0.00% or +0.07 points to 4,205.52

Dow Jones Industrial Average (DIA ): -0.15% or -50.56 points to 33,042.78

Nasdaq Composite Index (QQQ ): +0.32% or +41.74 points to 13,017.43

Over the weekend, President Joe Biden and House Speaker Kevin McCarthy reached an agreement to raise the debt ceiling to avoid a potential default. Congress is set to vote on the deal as early as Wednesday, with both Republican and Democratic support needed for the bill to become a law.

"The agreement prevents the worst possible crisis, a default, for the first time in our nation's history," Biden said Sunday evening at the White House. "Takes the threat of a catastrophic default off the table."

Also in the spotlight, Nvidia (NVDA ) reached a $1 trillion market cap at the open on Tuesday. The stock, however, failed to hold above $404.86 to maintain that distinction throughout the session, falling to $990 billion market cap at market close. Nvidia is the fifth U.S. publicly traded company to reach that milestone, following Apple (AAPL ), Alphabet (GOOGL ), Amazon (AMZN ), and Microsoft (MSFT ).

Bank of America raised its price target on Nvidia to $500 per share from $450 on Tuesday, implying an upside of 28.4% from Friday's close.

"We reiterate Buy on top pick NVDA following CEO keynote at Computex (Annual computer expo) in Taiwan over the holiday weekend," analyst Vivek Arya wrote in a note. "Transforming into a data center powerhouse, NVDA highlighted how its full-stack platform has supported AI leadership, with company already partnered with >1,600 genAI startups (plus top hyperscalers). Indeed, AI upside is driving strong performance YTD (+180% vs. SOX +40%), but we believe we are only at the start of the story."

On the economic front, the Conference Board's consumer confidence index came in above expectations for May with a reading of 102.3. The month's reading was also below April's revised print of 103.7.

"Consumer confidence declined in May as consumers' view of current conditions became somewhat less upbeat while their expectations remained gloomy," said Ataman Ozyildirim, senior director of economics at The Conference Board, in a statement. "Their assessment of current employment conditions saw the most significant deterioration."

U.S. home prices rose 0.7% in March year-over-year, according to a report from S&P CoreLogic Case-Shiller Indices on Tuesday. Month-to-month, prices increased at a seasonally adjusted rate of 0.4% in March.

"The modest increases in home prices we saw a month ago accelerated in March 2023," said Craig J. Lazzara, managing director at S&P DJI, in a release. "Two months of increasing prices do not a definitive recovery make, but March's results suggest that the decline in home prices that began in June 2022 may have come to an end."

Looking ahead, market participants are expected to continue to trade cautiously as they wait for more details on the congressional debt ceiling decision.

Market Update: Stocks Climb Higher as Lawmakers Near Debt-Ceiling Deal

Rachel Hemple — Fri, 26 May 2023 16:58:41 -0400

Stocks rose higher on Friday as market participants grew hopeful that lawmakers in Washington, D.C. will reach a deal to raise the U.S. debt ceiling before the nation will be at risk of default.

Here's how the market settled to close out the week:

S&P 500 Index (SPY ): +1.30% or +54.17 points to 4,205.45

Dow Jones Industrial Average (DIA ): +1.00% or +328.69 points to 33,093.34

Nasdaq Composite Index (QQQ ): +2.19% or +277.59 points to 12,975.69

The Nasdaq outperformed this week, rising 2.5% and notching its fifth straight weekly gain. The S&P 500 also ended the week in the green, advancing 0.3, while the Dow fell 1% on the week.

On Friday, Reuters reported that President Joe Biden and House Speaker Kevin McCarthy are "closing in on a deal" to raise the U.S. debt ceiling, boosting the broader market higher on the day -- many analysts believe a deal ahead of the June 1 deadline estimated by Treasury Secretary Janet Yellen is the most likely scenario heading into next week.

Also driving market moves on Friday, Marvell Technology (MRVL ) shares rallied over 32% higher after the chipmaker said its revenue attributable to artificial intelligence could double in the next year, echoing Nvidia's (NVDA ) rosy outlook that ignited a tech rally on Thursday.

"AI has emerged as a key growth driver for Marvell," Marvell CEO Matt Murphy said in the company's earnings release. "While we are still in the early stages of our AI ramp, we are forecasting our AI revenue in fiscal 2024 to at least double form the prior year and continue to grow rapidly in the coming years."

On the economic front, April's personal consumption expenditures (PCE) reading came in hotter-than-expected with a 0.4% rise, while core PCE rising 4.7% over last year -- accelerating from March's 4.6% annual increase.

Meanwhile, consumer sentiment rose to 59.2 in May's final reading from the University of Michigan. However, economic outlooks for many Americans were impacted by concerns over the U.S. debt-ceiling.

"Consumer sentiment slid 7% amid worries about the path of the economy, erasing nearly half of the gains achieved after the all-time historic low from last June," said Joanne Hsu, director of the Survey of Consumers, in a statement.

"This decline mirrors the 2011 debt ceiling crisis, during which sentiment also plunged. This month, sentiment fell severely for consumers in the West and those with middle incomes. The year-ahead economic outlook plummeted 17% from last month," Hsu added.

Looking ahead, market participants will continue to monitor ongoing talks in Washington as well as trade ahead of May's job report due out on Friday. The U.S. stock market will be closed on Monday for Memorial Day.

Marvell Technology AI Sales To Double: 5 Analysts Take A Look At Q1 Print

Benzinga News — Fri, 26 May 2023 16:26:53 -0400

Shares of Marvell Technology Inc (MRVL ) climbed in early trading on Friday, after the company reported upbeat quarterly results.

The report came amid an exciting earnings season. Here are some key analyst takeaways from the earnings release.

Morgan Stanley On Marvell Technology

Analyst Joseph Moore maintained an Equal-Weight rating while raising the price target from $45 to $55.

"Numbers came in better than feared, in line with our estimates around upside in autos and ongoing networking weakness," Moore wrote in a note. The inventory overhang in enterprise networking could persist through the rest of the year, he added.

Management refined its "AI growth narrative," focusing on "isolating the elements of their business driven by AI, primarily the higher speed elements of the Inphi optical businesses, and longer-term cloud custom silicon" the analyst stated.

KeyBanc Capital Markets On Marvell Technology

Analyst John Vinh reiterated an Overweight rating while lifting the price target from $60 to $70.

Marvell Technology's quarterly results were "solid" and its second-quarter guidance came slightly above expectations, Vinh said in a note.

"Upside to guidance was due to consumer growing ~35% q/ q, while core segments such as networking, data center, and carrier infra are still correcting," the analyst wrote. He added, however, that these segments could bottom in the second quarter.

"MRVL quantified its AI exposure as $200M in FY23 and expects it to double in each of the next two years," Vinh further stated.

Susquehanna On Marvell Technology

Analyst Christopher Rolland reaffirmed a Positive rating, while raising the price target from $53 to $60.

"Marvell announced slightly better results and guidance, bucking the trend of recent quarters," Rolland said.

"While the story appears to be getting back on track, and we appreciate the breakout of AI, we were somewhat surprised by the stock's strong AH reaction as we felt management dampened expectations somewhat for 2H," he added.

Needham On Marvell Technology

Analyst Quinn Bolton maintained a Buy rating while lifting the price target from $50 to $65.

"AI was the obvious focus point on the call," Bolton wrote. "For the first time, MRVL quantified its AI opportunity: FY23 = ~$200MM (actual); FY24 = > $400MM; and FY25 = >$800MM," he added.

"Near-term AI sales are primarily driven by PAM4 DSPs and 400ZR DCI products," the analyst wrote. "Bookings have increased materially for these products since LQ's call," he added.

BMO Capital Markets On Marvell Technology

Analyst Ambrish Srivastava reiterated an Outperform rating and price target of $65.

"The AI potential has always been there, but the narrative for investors changed, and likely appropriately so, after the miss on multiple fronts in the prior quarter," Ambrish said.

"However, this time, demonstrating a steadier handle on GM, along with the comments/details/specifics around the AI opportunity for the company, ought to put the company back in the list of potential other winners in AI," he added.

Gap Insists It Is Making Progress Despite Declining Sales

Benzinga News — Fri, 26 May 2023 16:25:50 -0400

The Gap Inc (GPS ) delivered better than expected results despite sale drops across all its brands and fourth quarter of net losses.

Gap's report comes after its peers, Urban Outfitters Inc. (URBN ), Kohl's Corporation (KSS ) and Abercrombie & Fitch Co. (ANF ) also largely exceeded earnings expectations this week. But Gap's shares surged about 15% upon news as gross margins have improved. This is a positive wave after earlier apparel such as the one from Foot Locker (FL ) who has major fixes to do if it wants to prevent being crushed by the leading seller of apparel and footwear in the U.S., no other than the e-commerce titan itself Amazon.com Inc (AMZN ).

First Quarter Key Figures

For the quarter ended on April 29th, Gap reported revenue of $3.28 billion, translating to a decline of 6% YoY with comparable sales declining by 3% across Gap's four brands and store sales dropping 4% compared to last year's comparable quarter. As sales go back to 'pre-pandemic' trends, online sales, which made up 37% of total net sales, dropped 9% YoY. Even its peer Foot Locker Inc showed with its latest results it desperately needs a better digital game as it competes not only with Amazon but all brands that sell their merchandise directly to customers, such as Nike Inc (NKE ).

But when compared to the fiscal first quarter of 2019, they rose as much as 39%.

Compared to last year's comparable quarter when Gap lost $162 million, or 44 cents a share, net loss narrowed to $18 million, or 5 cents per share. Adjusted earnings amounted to $3 million, or 1 cent per share.

Abercrombie & Fitch Has Evolved

After surpassing analyst expectations both for its quarterly results and guidance, the apparel retailer showed it successfully changed the identity of its brand from "T shirt and jeans" to lifestyle choice as millennials are purchasing its clothing for their return to the office. Net sales grew 2.9% YoY to $836 million to $814.4 million with brand comparable sales rising 14%. Unlike Gap's relatively unchanged guidance, Abercrombie & Fitch expects full year net sales growth in the range between 2% and 4%, with second quarter sales being off to a great start.

Urban Outfitters Benefitted From a More Stable Supply Chain

Unlike Foot Locker whose margins got dented by promotions, Urban Outfitters managed to control its promotions and as a result, its margins increased 2.6 percentage points owed to higher merchandise markups driven by lower freight costs. During the quarter that ended on April 30th, sales rose 6% YoY to $1.11 billion and resulted in a net income of $52.82 million, or 56 cents a share, which is an impressive improvement from last year's comparable quarter when Urban Outfitters made $31.53 million, or 33 cents a share.

Gap Needs To Work On A New Brand Identity

All in all, results show that cost-cutting measures are resulting in improved performance. Lower air freight expenses, less reliance on discounts and promotions who harm margins, a reduced headcount and trimmed expenses have all contributed to the improvement but the above results also suggest that the Gap needs to go beyond cost cutting to reposition itself for long-term growth, like its peer Abercrombie & Fitch. But when it comes to a business where someone like Amazon is leading the way, without even counting on physical stores, this is a daunting task. Like Foot Locker, Gap needs to encourage loyalty of its customers and make its brand image appealing to their lifestyles as otherwise it risks being smashed by competitors, including Amazon. It certainly does not help that with its empire and smart algorithms, Amazon is even disrupting the concept of a personal style. Gap management acknowledges this need for a critical change and continues its path towards improving its business by concrete actions, such as conducting research to better understand its consumers. But is it able to pull it off in a world where Amazon is constantly upleveling its game is a whole other story.

DISCLAIMER: This content is for informational purposes only. It is not intended as investing advice.

With Strong Results, Who Needs Splashy Chatbots? Not Tencent

Benzinga News — Fri, 26 May 2023 16:25:35 -0400

China's regulator, the National Press and Publication Administration, on Monday published its latest list of approvals for domestically developed online games, with 86 titles getting the nod this time. Tech giant Tencent Holdings Ltd. (TCEHY ) made the list, with its "Ace Force 2" becoming the company's fourth title approved this year.

But making it onto the list isn't always easy in a country where every online game must get regulatory approval. In the past two years, Beijing has rolled out a slew of policies to curb excessive gaming, and has also suspended approvals of new titles for months at a time.

As China's largest gaming company, Tencent has become a target for those critical of the gaming pastime, criticized by official media at one point for serving up "spiritual opium." The company's stock has fallen sharply since then, from a record high of HK$775.50 to a low point of HK$180.50 at the end of last year, losing three-quarters of its value.

After taking a beating for nearly two years, China's former "leading internet stock" seems to be finally emerging from the cloud of official regulation, combined with fallout from China's strict pandemic controls that dampened spending. At least that's our initial conclusion judging from the WeChat owner's first quarter results.

Tencent reported its revenue rose 11% in the first quarter year-over-year to about 150 billion yuan ($21.3 billion), ending more than a year of revenue growth that was either flat or negative. Its net profit rose by a similar 10% to 25.8 billion yuan, while its adjusted net profit, which typically excludes employee stock compensation costs, jumped 27% to 32.5 billion yuan.

"I am quite satisfied with Tencent's quarterly results, its performance was better than market expectations," said Kenny Wen, KGI Asia's head of investment strategy, "The worst time for its mobile games business has passed. With the successive approval of new game licenses and positive growth in its international gaming business, I believe its full-year outlook is something to look forward to."

Investors were preparing for upbeat news even before the announcement, driving up the stock more than 5% in the two days before the results came out. In a classic case of "buy on the rumor, sell on the news," the stock actually fell 1.5% the day after last week's actual results came out, as short-term buyers pocketed some quick profits.

Accelerating International Business

Tencent's value-added services revenue rose 9% in the first quarter to 79.3 billion yuan, while domestic gaming revenue rose 6% to 35.1 billion yuan, mainly benefiting from popular titles like "Honor of Kings," "Dungeon & Fighter: Innovation Century" and "Cross Fire." Notably, its international game revenue grew by 25%, or 18% excluding the impact of currency fluctuations.

Its online advertising revenue also grew 17% to 21 billion yuan in the quarter, fueled not only by recovering consumption in China, but, more importantly, by the continued growth of business on Tencent's WeChat Channels video service tied to its wildly popular WeChat social networking platform.

The number of daily active creators and daily active video uploads in WeChat Channels almost doubled compared to the same period last year, and the length of use and traffic on the platform continued to grow rapidly. Tencent President Martin Lau said that livestreaming and video are great opportunities, and the WeChat e-commerce ecosystem could get a significant boost by bringing together WeChat Channel livestreamers, WeChat mini-app developers and WeChat's payment functions.

As China's tech leader, Tencent is committed to opportunities involving artificial intelligence (AI), which Lau said can reduce costs and help build content and improve services. Despite that, Tencent has yet to release an AI-powered chatbot, despite demos of such products by rivals Baidu (BIDU ), Alibaba (BABA ) and SenseTime, seizing on the huge awareness raised by ChatGPT.

Sources quoted by Chinese media The Paper quoted Pony Ma telling shareholders at a meeting that Tencent won't follow in the footsteps of its rivals and rush out any "half-baked products," but instead will continue to invest heavily in building AI and cloud infrastructure.

Some AI insiders say Tencent has an advantage in this area due to its dominant position in gaming and possession of large troves of information that can be used to train future AI. "Apart from its own cloud business, Tencent also owns huge amounts of data generated on WeChat every day, which is very useful for training AI," one insider told Bamboo Works. "In addition, if Tencent can add AI to the game to give souls to non-player characters (NPC) and have them talked freely with players, sense of immersion will be greatly boosted and thus attract more people to splurge on games."

Analysts Approve

After two years in the desert, Tencent's price-to-earnings (P/E) ratio has dropped to about 16 times, even lower than smaller gaming rival NetEase's (NTES ) 20 times. But its latest impressive results have the investment community saying it may be time to give the stock a second look.

JPMorgan has raised its target price for Tencent from HK$430 to HK$440, with an "overweight" rating. The bank expects continued momentum in gaming revenue growth owing to a shift in Tencent's revenue structure in the first quarter, and is quite impressed by the company's continued efforts to operate more efficiently.

Goldman Sachs expects Tencent's profit growth to outpace revenue growth this year, mainly due to growing contributions from the company's profitable businesses, as well as better operating leverage and cost controls. It maintains a "buy" rating on the company with a target price of HK$443.

Tencent's recent share price of about HK$340 is well below most of those target prices. Recent selling of the stock by Naspers, Tencent's major longtime shareholder, may be partly to blame. The South African company still holds 25.99% of Tencent's shares even after several reductions, and investors may worry that Naspers will dump more shares if the stock shows renewed strength. Given that uncertainty, the near-term upside for Tencent's stock may be limited.

At the same time, many have speculated over whether Tencent might break itself up, ever since Alibaba announced a similar plan in March. But KGI Asia's Wen believes Tencent's situation is very different from Alibaba's.

"Since Tencent is mainly focused on equity investments (in other companies), it is expected to still pay out its holdings (in those companies) in the form of dividends to release more value," he said. He cited Tencent's recent decisions to distribute its large holdings in JD.com (JD ) and Meituan as stock-based dividends to its shareholders as examples of how the company is hiving off its various strategic stakes in other companies.

TikTok CEO Says Montana's Ban Of The App Is 'Simply Unconstitutional' — These 3 Stocks Could Gain If The Platform Goes Away

Benzinga News — Fri, 26 May 2023 16:25:16 -0400

Earlier this month, Montana became the first state in the U.S. to ban the popular short-form video app TikTok. And now the company has filed a lawsuit against the state.

"We believe that the Montana bill that was recently passed is simply unconstitutional," TikTok CEO Shou Zi Chew said at the Qatar Economic Forum. "We very recently filed a lawsuit to challenge this in the courts, and we are confident that we will prevail."

U.S. lawmakers have expressed concerns that the Chinese government may potentially access U.S. data through the app. But Chew denies that possibility.

"The Chinese government never asked us for U.S. users' data, and we will not provide even if asked," he said.

"We have built over the last two years something we call internally 'Project Texas'," Chew added. "What it really is is to ensure that American data is stored on American soil by an American company and overseen by American personnel."

Concerns regarding TikTok's potential impact on national security extend beyond the state level. Previously, TikTok said that the Biden administration wanted the app to be divested from its Chinese parent company or face a potential ban.

The possibility of further bans on TikTok poses a significant threat to its business. But it also presents opportunities for the app's U.S. competitors. Here are three rival companies that could capitalize on the situation.

Alphabet Inc. (GOOGL )

As the parent company of Google, Alphabet was created in 2015 to give Google's wild ideas some room to play. The company boasts a vast array of ventures, from dominating the search engine market to dabbling in self-driving cars and life sciences.

Alphabet also presents itself as a formidable competitor to TikTok. The company has introduced YouTube Shorts on its video-sharing platform, allowing users to create and share short-form videos directly competing with TikTok's format.

According to Alphabet CEO Sundar Pichai, this new format has been gaining popularity.

"Last year, the number of channels that uploaded to Shorts daily grew over 80%," he said during the company's latest earnings conference call. "Those posting weekly on Shorts saw the majority of new channel subscribers coming from their Shorts posts."

Commanding a market cap of over $1.5 trillion, Alphabet is already a tech behemoth. But the stock can still be volatile. Shares plunged 39% in 2022 but have surged 38% so far in 2023.

Meta Platforms Inc. (META )

Facebook parent Meta Platforms is another mega-cap stock that took investors on a wild ride - shares of the social media behemoth tumbled 64% in 2022 but have already doubled in 2023.

While Meta's main platform is renowned for its social networking features, the company has made notable efforts to challenge TikTok's dominance in short-form video content. Meta introduced Reels on Instagram and Facebook, enabling users to create and share short videos with captivating effects and music.

During Meta's first-quarter earnings call, CEO Mark Zuckerberg revealed that users are resharing Reels over 2 billion times every day.

"Reels are also increasing overall app engagement, and we believe that we're gaining share in short-form video too," he added.

Snap Inc. (SNAP )

With a market cap of around $15.6 billion, Snap is considerably smaller than Meta and Alphabet. But its core product Snapchat is a social media platform that focuses on short-form video content, positioning it as a direct competitor to TikTok.

Snap initially gained popularity for its disappearing photo and video messages but has evolved into a feature-rich multimedia platform with augmented reality filters, chat functions and discoverable content.

In the first quarter, the company had 383 million daily active users, marking a 15% increase year over year. According to the latest investor presentation, Snapchat now reaches 90% of the 13- to 24-year-old population in over 20 countries.

But the stock hasn't been a hot commodity. Shares of Snap are down about 30% over the last 12 months.

Stocks are volatile, and even mega-cap names like Meta and Alphabet are not immune to the market's wild swings. If your goal is to earn a steady stream of passive income, you might want to look into reliable dividend plays - both in and outside the stock market.

PetCo Management Getting it Right? Earnings Beat Says Yes

Benzinga News — Fri, 26 May 2023 16:24:55 -0400

Analysts expected PetCo Health and Wellness (WOOF ) to deliver first-quarter 2023 earnings per share of $0.025. However, many are waking to a satisfying surprise, as the American pet outlet reports a 140% upside beat for $0.06 earnings per share. Today, as the company releases all the significant information points and performance metrics for the quarter, the stock price is overhauled by a trader's market since most are focusing on some of the past negatives rather than the future positives.

As a result of the participant majority of Wednesday morning, WOOF stock is trading lower by as much as 7.6%.

PetCo has been outperforming other names in the sector, such as Chewy (CHWY ), by as much as 70.2% during the past twelve months, as the performance spread in both companies' charts suggested. However, there is a critical point to touch on for investors, as Chewy's price-to-earnings ratio stands at an obscene 274.9x, compared to PetCo's more realistic 29.9x.

What matters most is how this multiple will be affected and the subsequent stock price, based on management's 2023 full-year guidance provided in today's press release.

Why PetCo Shares are Lower

Earnings should be taken with a pinch of salt, as they are heavily focused on the short-term cycles and performance of a company, and even a terrible quarter could still represent a fantastic company to invest in in the big picture. Today, PetCo reported a net loss of $1.9 million, compared to net income of $24.7 million just a year prior. Subsequently, following this loss, earnings per share declined from $0.14 in 2022 to today's $0.06 to represent a more than 50% contraction in investor earnings power.

Investors can take refuge in understanding that the net loss came primarily from increased interest expenses paid by the company, as 2022 saw the most aggressive rate hikes in the nation in more than a decade. PetCo paid $37.2 million in interest expenses, 89% higher than $19.6 million just a year prior.

Operationally, however, the company reports a comparable sales increase of 5.1% year-over-year, stacked at 10.2% on a two-year basis.

Moreover, management reports this quarter to be the 18th consecutive quarter posting comparable sales growth, this metric being a widely followed key performance indicator (KPI) for the retail industry; growth in this aspect alone should have been enough to cushion any other blow.

Lastly, some may be leaning hard on free cash flow concerns, as it is the lifeblood of any business and investment. Reporting a negative free cash flow of $24.4 million is a reasonable concern for investors. However, it is an understandable position since the company is still within its "growth stage."

Companies going through these growth spurs have yet to be expected to spit out free cash flow. Instead, they are held up against their effectiveness at growing revenues and market share. Based on the critical metrics, and management guidance, some will find today's sell-off to be an exaggeration.

What to Expect Moving Forward from PetCo

PetCo analyst rating points to a 23.5% upside from today's prices, reasonably bullish and similarly cautious regarding the seeming 'contraction' being experienced in the business. Within their earnings presentation, management points to further achievements accruing to the credibility of a growth company.

For example, digital sales within the industry grew at a double-digit clip year-over-year, with continued growth in repeat delivery and digital pharmacy products. In addition, the number of pets veterinarians saw increased by 20% annually as the business added 375 veterinarians to its ecosystem. These expansionary measures point to further monetization opportunities for the company at the expense of the expected negative cash flows as management focuses on growth investing.

Two factors are what can spark future revenue growth, market share, and monetization, which can result in richer price-to-sales multiples in the business. First, revenue growth, with more recurring than discretionary revenue, is the more desired outcome since it will bring less volatility to the bottom line.

Second, PetCo's loyalty and membership programs brought over 100,000 new customers to Vital Care Premier, finishing the quarter with 580,000. These active customers' monthly membership fees accrue over $1 billion annually. They are expected to keep growing at high single-digits and retain their recurring nature.

As management expects to finish 2023 with net sales between $6.15 billion and $6.275 billion, markets will see a growth rate of 1.9% to 4.0%. As interest expenses drove profitability significantly lower during the past twelve months, the company expects to make a $100 million principal payment on its loan balances, effectively reducing the interest burden experienced during the period.

With positive EBITDA scheduled to fall between $520 million and $540 million, investors will see a swift recovery in the negative earnings per share balance. Considering these improvements, management has set expectations for payments to finish the year within $0.40 to $0.48 per share, representing a 17.6% to 41.2% increase from 2022 $0.34 earnings per share.

Such an advance in earnings, an improving operational structure stemming from debt pay downs, and sustained revenue growth could all lead to analysts upping their price targets and investors assigning richer multiples for WOOF stock.

The article "PetCo Management Getting it Right? Earnings Beat Says Yes" first appeared on MarketBeat.

Warren Buffett Says Electric Vehicle Market Too Tough to Tackle, No Clear Winners In Sight And Too Much Competition

Benzinga News — Fri, 26 May 2023 16:24:42 -0400

Berkshire Hathaway (BRK.A ) CEO Warren Buffett emphasized the prevailing uncertainty in the electric vehicle (EV) market during the company's annual meeting. Buffett stated there would be no clear winner in the sector, as the industry is highly unpredictable and subject to constant change.

Buffett referred to Ford Motor Co.'s (F ) dominance in the automobile market years ago because of the success of the Model T. But after two decades, the company faced substantial losses. This historical example serves as a cautionary tale for Tesla Inc. (TSLA ), which holds the largest market share of any EV manufacturer in the United States. Nevertheless, Tesla faces mounting competition, although its competitors have not yet reached Tesla's position because of challenges in the supply chain and funding issues.

Tesla is down as much as 21% in the past 12 months. As the EV market and makers like Tesla continue to struggle for growth, some retail investors have looked to the startups market. For example, Civilized Cycles launched on Wefunder and has seen substantial traction from retail investors.

Recent reports indicate that U.S. EV startups continue to burn through cash without showing tangible progress amid a challenging economic backdrop marked by declining EV demand. Thomas Hayes, chairman of hedge fund Great Hill Capital, expressed concern over companies that are losing money and have a low valuation, highlighting the vulnerability of EVs in this regard.

Even established players such as General Motors Co. (GM ) and Ford are experiencing financial difficulties in their EV divisions. GM, while aiming to halt cash burn by 2025, is struggling in this area. Ford reported a loss of $722 million in the first quarter for its EV division, translating to over $66,000 per vehicle, as energy market analyst Robert Bryce disclosed.

Tesla also faces challenges, including the need to reduce prices to maintain demand and the impact of raw material inflation on profit margins. Federal government subsidy plans under the Inflation Reduction Act could exacerbate these issues.

Berkshire Hathaway has extensive holdings in various industries, including a dealership group with over 100 franchises representing 27 automakers across 10 states. But Buffett and his trusted associate Charlie Munger have made it clear that they are not inclined to further expand their involvement in the auto business.

Buffett expressed their long-held belief that the auto industry is a formidable field, stating, "Charlie and I long have felt that the auto industry is just too tough. It's just a business where you've got a lot of worldwide competitors, they're not going to go away, and it looks like there are winners at any given time, but it doesn't get you a permanent place."

This sentiment resonates with their cautious approach to venturing deeper into the industry despite their current holdings, which include roughly 40 million shares in General Motors. This is down from the 50 million shares they owned in 2022.

Munger echoed Buffett's sentiment, acknowledging the significant rise of electric vehicles but emphasizing the associated capital costs and risks.

"The electric vehicle is coming big time, and that's a very interesting development," said. "At the moment, it's imposing huge capital costs and huge risks, and I don't like huge capital costs and huge risks."

Instead of embracing the automotive sector further, Buffett emphasized the importance of identifying opportunities with greater certainty. He contrasted his confidence in predicting Apple Inc.'s (AAPL ) trajectory in the coming years with the unpredictable nature of the car companies, stating, "I think I know where Apple's going to be in five or 10 years, and I don't know what the car companies are going to be in five or 10 years."

Amazon Prime Gaming Delivers 13 Free Games Throughout June

Benzinga News — Fri, 26 May 2023 16:24:29 -0400

Amazon.com, Inc.'s (AMZN ) gaming hub, Amazon Prime Gaming, offers exclusive in-game items and free access to rotating games for Prime members. It just announced a lineup of 13 free games available throughout June.

Starting June 1, Prime Gaming members can access Sengoku 2, where players assume the role of a warrior summoned by a shrine princess and fight across different historical periods, and Mutation Nation. Other titles, such as Soccer Brawl and Over Top, launch on June 8.

Starting on June 15, players can enjoy The Super Spy, a game that involves punching, kicking and utilizing weapons to rescue captives in a large building; Top Hunter, which offers a side-scrolling action with space pirates; and SteamWorld Dig 2, a platform mining adventure influenced by classic Metroidvania style games.

The highly anticipated Neverwinter Nights: Enhanced Edition, a bestselling Dungeons & Dragons roleplaying game, debuts June 22, as well as Autonauts, which allows players to build, create and automate their colony in an ever-evolving paradise; and Revita, a fast-paced twin-stick roguelite platformer where players harvest and sacrifice souls to challenge formidable bosses and procedural encounter rooms.

Closing the month, on June 29, Prime Gaming members can access Roguebook, a roguelike deck builder that challenges players to construct a team of heroes; Once Upon a Jester, which invites players to take on the roles of Jester and Sok, traveling the kingdom and performing theatre shows; and Gems of Destiny: Homeless Dwarf, a game that offers an intriguing story about Axel, the dwarf and his quest to establish a new city.

In addition to the free games, Prime Gaming members will receive exclusive in-game loot and content drops for popular titles like Divine Knockout, Realm Royale, World of Warcraft and Fall Guys.

5 Bond ETFs To Watch As Debt Ceiling Talks Enter The Final Hours To Avoid A U.S. Default

Benzinga News — Fri, 26 May 2023 16:24:17 -0400

The debt limit talk has reached its last and most important stage with just five days, or barely more than a 100 hours, when the U.S. Treasury may run out of money.

Both the stock and the bond market are likely to react strongly depending whether a deal is reached or not, or if any other surprises arise at the end. Treasury yields could also see sharp swings on sensitive headlines in the coming hours.

Negotiators for the White House and the Republican party are scrambling to avert a historic and probably catastrophic U.S. default, as Treasury Secretary Janet Yellen predicted "early June" as the date when the government's cash won't be able to meet all payments due.

The odds of an agreement being revealed late on Friday, May 26 or on Saturday, May 27, with a House vote the following week are the highest, according to Goldman Sachs Chief Economist Jan Hatzius.

Goldman Sachs' baseline forecasts see the U.S. Treasury reaching its minimum cash level on June 6, with funds totally depleted by June 9 if the debt limit is not raised.

Benzinga highlighted how these five bond ETFs could react to debt limit announcements in the coming hours.

1) IShares 0-3 Month Treasury Bond ETF (SGOV )

The fund managed by Blackrock Inc. (BLK ) invests in Treasury bills with maturities up to three months. These are the shortest-dated U.S. Treasury securities which are particularly sensitive to the June deadline.

In the previous month, yields on one-month Treasury notes due after June have risen from 4% to 5.7%, indicating market worry regarding the debt limit resolution. Short-term T-bill rates will fall if the debt ceiling is lifted, raising the ETF's value.

2) IShares 1-3 Year Treasury Bond ETF (SHY )

The IShares 1-3 Year Treasury Bond ETF is particularly sensitive to market Fed rate expectations, which are substantially reflected in two-year Treasury yield fluctuations.

Short-term Treasury rates may fluctuate whether the debt ceiling is raised or not. A compromise will keep the Fed focused on recent inflation and labor market data, which have been hotter than expected, supporting market predictions for a June rate hike. ETFs will decrease if short-term rates rise, but yield-seeking investors may find an attractive entry point here if they think the Fed will soon end its tightening cycle.

Since a U.S. default would cause market disruptions and employment losses, the Fed would likely opt to stop raising interest rates in a no-deal situation. In this case, the value of the IShares 1-3 Year Treasury Bond ETF will rise.

3) IShares 20+ Year Treasury Bond ETF (TLT )

The IShares 1-3 Year Treasury Bond ETF is sensitive to long-term Treasury yield changes, which are heavily influenced by growth and inflation forecasts.

A deal is likely to increase in duration-exposed Treasury yields, to varying degrees depending on the amount of the expenditure reductions. Lower-than-expected budget cutbacks will provide a stronger push to yields than a debt limit agreement indicating substantial expenditure cuts.

4) iShares iBoxx $ High Yield Corporate Bond ETF (HYG )

HYG invests in high-yield corporate bonds denominated in U.S. dollars, which are by definition a risky asset that is closely tied to market sentiment.

If the debt limit resolution is seen positively by the market, high-yield corporates will profit from the wider risk-on atmosphere and the ETF's value is projected to rise.

A no-deal scenario or an agreement with significant budget cutbacks, on the other hand, may cause weakness in high-yield corporates, prompting investors to flee riskier assets and flock to safer alternatives.

5) iShares J.P. Morgan USD Emerging Market (EMB )

The fund invests in developing market dollar-denominated fixed-income instruments and may experience significant volatility depending on whether or not an agreement on the debt limit is reached.

Given that developing market bonds are a risky asset class, they tend to be linked to U.S. high-yield corporate bonds, so EMB could experience a similar impact as HYG. A broader risk-off mood could spark losses in EM bonds, while this market is likely to benefit from an increasing risk appetite.