Today is Friday, September 16, 2022.
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FedEx's “Volume Softness”
Shares of FedEx (NYSE: FDX) dropped 16.58% in after-hours trading on Thursday after the transportation giant withdrew its fiscal year 2023 earnings forecast.
Details: FedEx Express is facing a revenue shortfall of $500 million in the quarter relative to previous forecasts. FedEx Ground is $300 million below company forecasts. Capital spending for the fiscal year 2023 dropped from $6.8 billion to $6.3 billion.
Problems: The company said that the results in the final weeks of the quarter were “adversely impacted by global volume softness,” including macroeconomic weakness in Asia and service challenges in Europe. Operating expenses remained high relative to demand.
Quote: “Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S. We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first quarter results are below our expectations.” - Raj Subramaniam, FedEx Corporation president and chief executive officer.
Cutting Costs: FedEx is addressing the lower demand by reducing flight frequencies, reducing labor hours, consolidating some operations, and closing some offices.
Still Spending: Despite the financial setback, FedEx still plans to spend $1 billion in stock buybacks this quarter. This could boost the stock price.
Stock Price: Shares of FedEx are down about 20% this year, including 14% in the past 30 days.
Final Thoughts: During its June earnings report, FedEx sounded really optimistic. But now the economy has changed. FedEx also warns that additional pandemic business restrictions and fuel price increases could jeopardize the current forecast.
Notable Earnings Today: Manchester United (NYSE: MANU).
Notable IPOs Today: N/A.
Notable Equity Crowdfunding Campaigns Ending Today: Ana’s Norwegian Bakeri (Mainvest), Fenwick’s Distilling (Mainvest).
Notable Economic Events Today: Michigan Consumer Sentiment / Expectations (10:00 a.m. ET).
Ethereum’s Merge Hype Fades
The price of Ethereum dropped about 8% on Thursday after its long-awaited merge occurred.
Background: The merge referred to Ethereum’s move to a proof-of-stake blockchain, which will make the cryptocurrency more energy efficient. Traders have been waiting for this change to happen for weeks.
Expectations: Simply put, the expectations were too high for the merge. Some investors had expected the price to go up after the merge was complete, not realizing that the excitement may have already been priced in. Riyad Carey, a research analyst at crypto data firm Kaiko, told CoinDesk that this looks like a “buy-the-rumor, sell-the-fact” response.
Final Thoughts: While most crypto prices have dropped in 2022, Ethereum has enjoyed a nice resurgence lately. The price is up about 30% since June.
Roblox Faces Currency Problems
Shares of Roblox (NYSE: BLX) dropped 2.71% in after-hours trading on Thursday after the video game developer posted an August update.
Dollar Problems: The strengthening of the U.S. dollar against foreign currency resulted in a reduction of about 4% in the bookings year-over-year.
Final Thoughts: Despite the currency issues, Roblox has a lot to celebrate. Daily active users are up 24% and hours engaged are up 18%.
Trends to Watch
Two Thousand and Late: Mortgage rates top 6% for the first time since 2008 (CNN)
Can’t Photoshop Your Way Out of This Mess: Adobe shares plunge on deal to acquire design platform Figma for $20 billion (CNBC)
Consumers vs. Inflation: U.S. retail sales unexpectedly rise, but inflation hampering spending (Reuters)
All Eyes on This Rate: Ray Dalio says watch out for rates reaching this level, because Wall Street stocks will take a 20% hit (MarketWatch)
Your Turn, Bitcoin: Environmental groups want Bitcoin to follow Ethereum’s example in moving to proof-of-stake (Cointelegraph)
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