Sony’s Profit Plummets, Dragged on by Financial Services
Sony Group (SONY) reported a 31% year-over-year decrease in earnings in the most recent quarter, despite strong gaming revenue. The company’s financial services unit saw a significant decline in profit, with a 61% drop from last year. Sony attributed this decline to interest rate changes affecting its life insurance business.
On a positive note, gaming revenue increased by 28% compared to the same quarter last year, and the unit’s operating income grew by 8%. The unit also raised its full-year revenue guidance by 7%, citing solid Playstation 5 sales and favorable foreign exchange rates.
Despite the positive performance in gaming, Sony’s American depositary receipts (ADRs) fell by 6% on Wednesday.
Rivian Reduces Per-Unit Losses on the Road to Profitability
Electric vehicle maker Rivian Automotive Inc. (RIVN) has announced that it is making progress towards profitability. Although the company is still losing money on every vehicle it makes, losses have significantly narrowed. Rivian aims to achieve profitability by the end of 2024.
In its second-quarter earnings report, Rivian revealed that the gross loss per unit delivered between April and June decreased to $32,595. This marks an improvement compared to the first quarter’s loss of $67,329 per delivered vehicle. It is also a substantial gain from the same period last year when per-unit losses were as high as $157,600.
While competitors in the electric vehicle space have been engaging in a price war, Rivian CEO RJ Scaringe stated that the company would not be following suit. Scaringe cited “continued strong demand” as the reason for not slashing prices.
Despite the improvement in losses, Rivian shares experienced an 8% decline, falling further than the broader market.
Toast, Marqeta, Akamai Technologies, Doximity, and Palantir Experience Market Movement
Several companies experienced significant market movement during midday trading:
– Toast Inc. (TOST): The shares of the restaurant payment services company rose by 15% after reporting second-quarter sales that surpassed analysts’ estimates, with a growth of 45% compared to the previous year.
– Marqeta Inc. (MQ): The digital payments firm’s stock climbed by 13% after securing an extension of its partnership with Block (SQ) and reporting second-quarter revenue above Wall Street’s expectations.
– Akamai Technologies Inc. (AKAM): The shares of the cloud services provider increased by 9% following better-than-expected earnings for the second quarter and an upward revision of full-year guidance driven by growing demand for its cybersecurity solutions.
– Doximity Inc. (DOCS): The shares of the medical services platform provider fell by 22% after lowering its full-year revenue forecast due to weaker pharmaceutical sales.
– Palantir Technologies (PLTR): The shares of the data analytics software company dropped by 9% after reporting that revenue growth in the second quarter had slowed to 10% compared to 15% in the previous quarter.
Roblox Shares Tumble After Reporting a Wider Loss as Expenses Grow
Roblox (RBLX) experienced a 20% decline in shares following the online gaming platform’s second-quarter earnings report, which showed a larger loss due to increased costs. Roblox posted a loss of 46 cents per share, exceeding analysts’ expectations of a 45-cent loss. The company’s bookings, which include revenue plus changes in deferred revenue and other adjustments, rose by 22% to $780.7 million, missing estimates. However, average bookings per daily active user fell by 3% to $11.92.
Roblox warned that it expects to continue posting a loss for the “foreseeable future.” This announcement caused shares to reach their lowest level since January.
Natural Gas Futures Jump as Labor Action Threatens Supply
Futures contracts for natural gas increased by over 6% on Wednesday morning due to the threat of labor strikes at liquefied natural gas (LNG) facilities in Australia. Workers at three natural gas platforms operated by Woodside Energy voted in favor of “protected action options,” which could include a strike. Additionally, union representatives at two Chevron Corp. (CVX) facilities filed for a vote on potential labor action.
Australia is one of the world’s largest natural gas producers and exporters, with significant export capacity. Energy stocks rose by 1.6% as gas and oil prices increased.
Semiconductor Stocks Slump for the Second Day
The VanEck Semiconductor ETF (SMH) experienced its second consecutive day of losses, falling by 1.7% as investors reduced their risk exposure and took profits following a surge in semiconductor stocks. The industry benchmark had reached an all-time high of $160.62 on July 31, largely driven by a 200% gain in Nvidia Corp.’s (NVDA) stock this year. However, the ETF has since declined by 6%.
Nvidia shares dropped by 3.9%, making it one of the worst performers in the S&P 500. Broadcom Inc. (AVGO), the third-largest holding in the VanEck ETF, reported a loss of 3.4%, while shares of Intel Corp. (INTC) fell by 1.3%.
Penn Entertainment Shares Jump After $2 Billion Sportsbook Deal With Disney’s ESPN
Shares of Penn Entertainment (PENN) surged by over 11%, following the announcement of a $2 billion deal with Disney-owned ESPN to rebrand and relaunch its sportsbook. As part of the agreement, Penn will sell its existing Barstool Sports brand back to its founder and launch a rebranded version of its sportsbook online with ESPN. ESPN Bet is set to debut this fall.
Penn Entertainment will pay ESPN $1.5 billion in cash over the next decade and grant about $500 million worth of its shares. ESPN will also have the option to designate a board member for Penn after three years. The deal is expected to bring an annual long-term adjusted earnings potential of $500 million to $1 billion in Penn’s interactive segment.
Prior to its earnings report after the market close, shares of Disney (DIS) were down by 0.7%.
Oil Continues to March Higher
Oil prices reached their highest level this year as production cuts by Saudi Arabia and Russia tighten global supply. West Texas Intermediate futures rose by 1.3% to $84 a barrel, the highest since November 2021. Brent crude futures gained 1.2%, climbing to $87.15, a four-month high.
OPEC+ production cuts have reduced global oil supply by approximately 3.66 million barrels per day. Falling prices also led to U.S. oil drillers reducing their production. In August, U.S. oil output is expected to decline for the first time this year. These developments could pose challenges for U.S. consumers, as the price of crude oil accounts for a significant portion of gasoline prices, impacting inflation.
WeWork Expresses Doubt About Its Survival, Shares Plummet
Flexible workspace provider WeWork (WE) admitted in a regulatory filing that it has “substantial doubt” about its ability to remain in business. The company’s shares dropped by as much as 26% following the news.
WeWork incurred losses of $0.7 billion and had negative cash flow from operating activities of $0.5 billion in the first half of this year. The company acknowledged that its membership this year was lower than expected. WeWork’s ability to continue operating largely depends on the renewal of membership agreements.
The rise in remote work due to the pandemic and economic challenges has increased WeWork’s debt while constraining its cash flows. The company could potentially remain in business by increasing revenue through membership, limiting capital expenditure, or seeking capital through debt or equity issuance.
Stocks Making the Biggest Moves Premarket
Several companies experienced notable stock price movements in premarket trading:
– Penn Entertainment Inc. (PENN): Shares of the gaming company and casino operator rose by 15% after announcing a $2 billion deal with Disney-owned ESPN to rebrand its online sportsbook as ESPN Bet, while divesting its stake in media brand Barstool Sports. Shares of Disney (DIS) also increased by 1.4% ahead of its earnings report.
– Celsius (CELH): The stock of the energy drink company surged by 10% after reporting strong second-quarter results and raising its full-year guidance.
– Toast Inc. (TOST): The restaurant payment services company’s shares gained 5% following its second-quarter sales growth of 45% compared to the previous year, surpassing analysts’ estimates.
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