Nike’s China Problem Worsens
Plus, Robinhood buyout rumors.
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Nike’s China Problem Worsens
Shares of Nike (NYSE: NKE) dropped 2.89% in after-hours trading on Monday after the footwear and apparel giant posted mixed financial earnings.
Financials: Nike reported earnings per share of 90 cents and revenue of $12.2 billion; both were better than expected.
The Good: Nike Direct, the company’s direct-to-consumer division, had a 7% increase in revenue. Nike digital’s brand went up 15%.
The Bad: Revenues dropped 1% year-over-year. Wholesale revenues declined 7%. Nike-owned stores declined 2%. The gross margin in the quarter decreased 80 basis points to 45%.
China Problems: Nike has a long, documented history of problems in China during the past year, but it got worse. Lockdowns resulted in higher inventory obsolescence. There were also freight and logistics costs. Revenue in China dropped 19% in the quarter.
Expenses: Higher technology investments resulted in higher overhead costs. Selling and administrative expenses increased 8%. Supply chain issues also resulted in added inventories.
Buyback Bounce: Nike issued an $18 billion stock buyback program, which will help drive the stock price up.
Numbers: Nike’s stock is down 32% this year. Last year, the stock was up 17%.
Final Thoughts: Problems in China plus supply chain and currency issues resulted in trouble for Nike. The good news is that the stock price is lower for new investors to get in.
Notable Earnings Today: TD Synnex (NYSE: SNX), Beyond Air (Nasdaq: XAIR), Enerpac Tool Group (NYSE: EPAC), AeroVironment (Nasdaq: AVAV), Roivant Sciences (Nasdaq: ROIV), Progress Software (Nasdaq: PRGS), Cognyte Software (Nasdaq: CGNT), Aethlon Medical (Nasdaq: AEMD).
Notable IPOs Today: bioAffinity Technologies, Inc. Common Stock (Nasdaq: BIAF).
Notable Equity Crowdfunding Campaigns Ending Today: Daxbot (StartEngine), Revolution MD (StartEngine), Magnuss (StartEngine), Geoship (StartEngine), Parallel Flight Technologies (StartEngine), Red Flags Brewing Company (Honeycomb), CHELLY (StartEngine), Baggerbot by Brigade Automation Corporation (StartEngine), 3i Tech Works (StartEngine), Rule G Brewing (Honeycomb).
Notable Economic Events Today: Goods Trade Balance (8:30 a.m ET), S&P/CS HPI Composite (9:00 a.m. ET), CB Consumer Confidence (10:00 a.m. ET), API Weekly Crude Oil Stock (4:30 p.m. ET).
Robinhood Up and Down Amid Buyout Talks
Shares of Robinhood (Nasdaq: HOOD) dropped 4.93% in after-hours trading on Monday after a buyout report leaked.
Up: The report stated that cryptocurrency exchange FTX was interested in buying Robinhood. The stock jumped 12% before trading was halted. Robinhood did not comment.
Down: The stock dropped again after FTX CEO Sam Bankman-Fried denied the report, telling CNBC, “there are no active M&A conversations with Robinhood.”
Final Thoughts: Since its IPO, Robinhood’s stock is down 74%.
Citigroup Still Feeling The Banking Pinch
Citigroup (NYSE: C) has been trying to navigate a tough financial market this year, which has been especially rough for banking stocks.
Numbers: Shares of Citigroup are down 24% this year. In 2021, the stock went down only about 2%.
Recent Development: Citigroup could face a decline of up to 55% in its investment banking business and an increase of 25% in its market business, according to a company executive during a recent investor conference.
Final Thoughts: Citigroup reports earnings on July 15.
Trends to Watch
Short Supply: CVS, Walmart Limit Purchases of Plan B Pills After Surge in Demand (The Wall Street Journal)
Expensive Plane Ticket: JetBlue Sweetens Takeover Bid for Spirit Airlines (MarketWatch)
First Time for Everything: Ford F-150 Lightning gets first recall for air tire pressure sensor failure (Teslarati)
More Risk: Bitcoin’s short-term price prospects slightly improved, but most traders are far from optimistic (Cointelegraph)
Bank on it: JPMorgan and Citigroup keep dividend unchanged as rivals including Morgan Stanley boost payouts (CNBC)
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