Morning Market Feed, May 30th
It wasn’t a particularly good day in the markets as most of the companies I follow were red. There were however some odd ones out that had news. Salesforce reported earnings which we will go over as well, so let’s dive straight into it!
- PYUSD is now on the Solana blockchain
Now before commenting on this, I must admit, I’m not quite the expert when it comes to crypto or the blockchain technologies. So I will just repeat what this article says on that front, it’s quick and cheap. So why do I comment on it? PYUSD is PayPal’s stablecoin. As PayPal is the biggest holding in my personal portfolio and one of the (relatively) larger holdings in my social media portfolio, the developments of the company do interest me, however small it is. As PayPal is not doing all too great since the latest earnings call, I will release a video this coming Friday on my YouTube channel in which I explain the struggles I see the company, and stock is having.
- lululemon is going to beat expectations?
Well, Morgan Stanley says so. They did adjust their price target from $490, to $404 but reiterated their “overweight” rating. So what was it they said in more detail? Morgan Stanley expects lululemon to post a high single-digit sales growth in the US, this would be an upside surprise and potentially what holds the key to a rerating higher. The firm also believes that a slight increase in the EPS guidance for the year might be in the cards. To me, this would be surprising. I’m not looking at the data sets the Morgan Stanley analysts are looking at, but we see more and more companies cutting prices. Walgreens and Target doing price cuts, McDonald’s doing “value” deals are examples. This means that I would be surprised if lululemon raises their EPS guide, but it would certainly be welcomed.
- No more sales force
As we can see from the after-hours drop, Salesforce is the latest stock that is basically being dropped as if it has lost all steering and is a company adrift. And we can’t argue how true this is as the company missed its revenue expectations by 0.2% and beat EPS expectations by 2.8%. This made the stock drop 16%. Okay, now I’m being really sarcastic, and I’m also cherry-picking from their earnings and not telling the entire story. So what is the entire story? It is the first revenue miss since 2006, so that’s 18 years ago, in most countries, children born in 2006 would now be allowed to drive, as well as buy alcohol. It’s pretty surprising when such a streak ends. Furthermore, they missed on guidance expectations for both revenue and EPS, as these came in at $2.34, to $2.36 of EPS on revenues of $9.20, to $9.25 billion. This compared to expectations of $2.40 of EPS on revenues of $9.35 billion.
The company also said it saw “enlonged deal cycles, and high levels of budget scrutiny”. So that means potential customers are not willing to pay up for their products. You can read a full market watch article about the earnings here, or check the earnings report yourself here. I do still need to listen to the entire earning call, which I will do today, so if I hear any other notable things, I will comment on it tomorrow.
- More Musk Problems
Tesla continues to put everything on the pay package for Musk. They are trying to sneak up to the edge of what is legal, and I wouldn’t be surprised if they step over that limit. We know Tesla is already running advertisements to influence the stockholders’ vote. As Musk has now also promised to give a factory tour to 15 people who vote in favor of his pay package, you can read more about that here. But the more noise the company makes for investors to vote in favor of the issue, the more large investors seem to say they will vote against the matter. The latest being Calpers, the largest state public pension fund in the US, and a top 30 holder of Tesla shares. A better look into some institutions that will vote against the matter here.
Let’s see what today brings as we know that Costco and Dell are expected after the markets closes, and I will tell you about it tomorrow!
