Thank God for Friday, without the final day rally Wall Street’s equity markets could have looked a good deal uglier. As it is, the S&P 500’s 2.5% dive on the week and 3% slide for the Nasdaq Composite will hardly bag any beauty gongs, but at least those declines are not of the same scale as bitcoin losses.
The world’s most widely followed cryptocurrency plunged below the $30,000 mark for the first time since July 2021 during the past week as its fortunes correlate increasingly neatly with risk-on stocks like tech.
That’s done nothing to lift the stresses of crypto exchange investors, with Coinbase (COIN:NASDAQ) losing 30% after reporting a first-quarter horror show on Wednesday (11 May), with sharply falling monthly users and trading volumes causing it to badly miss forecasts.
Q1 earnings were way off estimates, coming in at a $1.98 loss per share versus consensus $0.05 forecasts, while revenue was $1.16 billion, missing the consensus estimate of $1.5 billion. Coinbase stock is now more than 80% off its $381 listing price in just over a year. Phew, one can imagine quite a few investors exclaiming having dodged that bullet.
In the spirit of investing fellowship, spare a thought for Twitter (TWTR:NYSE), perhaps the butt of Elon Musk’s cryptic sense of humour, after the crypto-loving billionaire ‘temporarily put on hold’ his buyout of the social media platform announced, ironically, on Twitter.
Counting fake tweet accounts was his excuse, although speculation that the whole takeover is a smokescreen to flog a tonne of Tesla (TSLA:NASDAQ) stock on the qt is gathering credibility by the day. As one wag said, ‘it’s like Elon is playing 3D chess while everyone else is on draughts’.
Big IPO news over the week also as online grocery delivery platform Instacart announced that it had filed a draft registration statement with the SEC to list its shares. But nowhere near the $39 billion it was worth in March 2021, its valuation has slumped 40% to $24 billion, although a still pretty eye-watering 13.3-times 2021’s $1.8 revenues.
WALT DISNEY CO
There were signs in Walt Disney Co’s (DIS:NYSE) latest quarterly results that it might be making some progress in a bruising streaming battle.
Unlike Netflix (NFLX:NASDAQ), the company managed to grow streaming numbers. It helps Disney that it is growing from a lower base than Netflix.
However, the better-than-expected 7.9 million sign-ups to its Disney Plus platform might also reflect the fact that its content is resonating more with viewers, who increasingly are looking to rationalise their streaming subscriptions amid squeezed household budgets.
Less positively, subscriber growth levels are expected to slow in the second half, and the company missed expectations on the bottom line and top line, posting $1.08 adjusted earnings per share against the $1.19 forecast and revenue of $19.2 billion compared with the $20.03 billion pencilled in.
The company also pointed to risks that supply chain disruptions and rising wages could put more pressure on its finances.
Another quarter, another puncture for Peloton’s (PTON:NASDAQ) dwindling army of believers. Markets were anticipating a rough quarter, but not as bad as this. The beleaguered connected fitness company missed revenue estimates by $6 million, reporting $964.3 million, which is down from $1.26 billion this time last year. Losses for the quarter hit $757.1 million, while cash burn of $670.1 million was more than four-times Q3 2021.
New CEO Barry McCarthy, who took over from embattled co-founder John Foley in February, has three key goals - stabilising cash flow, getting the right people in the right roles and growing again. ‘Given its level of cash, inventory, and cash burn, we view existential threats on Peloton as rising,’ wrote Rohit Kulkarni, analyst at MKM Partners, which is sure to cheer McCarthy up.
Shares in plant-based burger-maker Beyond Meat (BYND:NASDAQ) hit a new record low of $20.50 this week, adding to losses of more than 60% year to date, as once again investors questioned the firm’s path to profitability.
First quarter sales of $109.5 million missed estimates while the net loss per share ballooned to $1.58 from $0.43 in the same quarter last year. The consensus forecast was a loss of $0.98 per share.
Volume sales were healthy, but growth came at the expense of profits as average prices were down 10% due to trade discounts, lower list prices in the EU, new product launches and a weaker sales mix.
President and chief executive Ethan Brown apologised for the scale of the losses: ‘We recognise the decisions we are making today in support of our long-run ambition have contributed to challenging near-term results, including a sizable though temporary reduction in gross margin as we took cost-intensive measures to support important strategic launches, (but) we are confident in the future we are building.’
Analysts were unforgiving, slashing their earnings forecasts, with many more than halving their price targets to as low as just $14 or $15, suggesting little respite for embattled shareholders.