Albemarle misses by $1.11, reports revs in-line; provides update on operating structure review; announces a 6-7% workforce reduction (96.60 -3.13)
- Reports Q3 (Sep) loss of $(1.55) per share, excluding non-recurring items, $1.11 worse than the FactSet Consensus of ($0.44); revenues fell 41.4% year/year to $1.35 bln vs the $1.37 bln FactSet Consensus.
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Additional Actions in Connection with Comprehensive Review of Cost and Operating Structure: During Q3, co progressed on its previously announced comprehensive review of its cost and operating structure.
- Effective November 1, 2024, Albemarle implemented a new operating structure, which included transitioning to an integrated functional model designed to increase agility, deliver significant cost savings and maintain long-term competitiveness.
- Co is also announcing today a global workforce reduction expected to impact 6-7% of total headcount to drive significant cost-out and productivity actions.
- The annual run-rate cost savings of actions in connection with the comprehensive review is expected to be in the range of $300 million to $400 million driven by elimination of redundancies, reduced management layers, productivity benefits and optimized manufacturing costs. These savings are in addition to cost savings of over $100 million announced and executed this year.
- During Q4, co expects to record a charge primarily related to severance and related benefit costs.
Closing Stock Market Summary
There was no mistaking that the stock market thought the election outcome will be good for growth. Following the news that Donald Trump won the presidential election, and polling indications that suggest the GOP is likely to hold a majority position in the House and Senate, the major indices operated in rally mode on Wednesday.
There was the relief factor, with participants enthused that this won't be a contested election, and there was the growth factor, with participants thinking president-elect Trump's aim to lower tax rates and decrease regulations will foster economic growth that remains above potential.
That view of policy matters manifested itself in a variety of ways:
- Small-cap stocks soared
- Financial stocks soared
- The U.S. dollar surged against other major currencies
- Bitcoin prices moved noticeably higher
- Cyclical sectors outperformed
- Treasuries were sold, sending yields higher
Today's active buying interest sent the Dow Jones Industrial Average, Nasdaq Composite, S&P 500, and S&P 400 to record highs. The Russell 2000 didn't quite make it to that heady territory, but it led all indices with a material 5.8% gain.
The S&P 500 financial sector (+6.2%) was in good spirits, relishing the thought that regulatory oversight will be reduced and that growth optimism will spur increased capital markets activity. Goldman Sachs (GS 596.29, +69.33, +13.2%), KeyCorp (KEY 19.97, +2.70, +15.7%), and Discover Financial Services (DFS 182.63, +30.78, +20.3%) were laudable proxies capturing that upbeat view.
There were a lot of "big winners" today. Tesla (TSLA 288.53, +37.09) was among them, capitalizing handsomely on the idea that Elon Musk's strong support of Donald Trump will be an added boon for the company. Nucor (NUE 167.74, +23.13, +16.0%) and other steel stocks, which are expected to benefit from tariff protections under a Trump administration, put up some big gains as well.
Tesla's gain fueled a 3.6% increase in the consumer discretionary sector, which joined with the financial, industrials (+3.9%), and energy (+3.5%) sectors to lead the S&P 500. It wasn't a clean sweep for the S&P 500 sectors, however.
The real estate sector (-2.6%) and utilities sector (-1.0%) retreated with market rates rising. The consumer staples sector (-1.6%) lost ground in a risk-on rally that favored cyclical sectors; and it also felt the pinch of concerns about a stronger dollar weighing on earnings prospects for its multinational components and the specter of tariff retaliation that could raise the cost of goods sold. The U.S. Dollar Index was up 1.6% to 105.12.
Treasuries had a tough session. Selling kicked in overnight in response to the election results, sending the 2-yr note yield as high as 4.29% and the 10-yr note yield as high as 4.48% as growth optimism intermingled with worries about inflation and continued deficit spending driving up the national debt. They backed off a bit from those levels, aided by a $25 billion 30-yr bond auction that was met with strong demand. The 2-yr note yield settled the session up six basis points at 4.27% and the 10-yr note yield settled the session up 14 basis points at 4.43%.
The behavior of Treasury yields will remain a focal point Thursday when the FOMC announces its policy decision at 2:00 p.m. Et and Fed Chair Powell holds his press conference at 2:30 p.m. ET. The FOMC is widely expected to cut the target range for the fed funds rate by 25 basis points to 4.50-4.75%.
Today's economic data was limited to the MBA's weekly Mortgage Applications Index, which declined 10.8% with refinance applications down 19% and purchase applications down 5%.
- Nasdaq Composite: +26.5%
- S&P 500: +24.3%
- S&P Midcap 400: +18.2%
- Dow Jones Industrial Average: +15.6%
- Russell 2000: +18.0%
Thursday's economic lineup includes:
- 08:30 ET: Preliminary Q3 Productivity (consensus 2.3%; prior 2.5%) and preliminary Q3 Unit Labor Costs (Briefing.com consensus 0.5%; prior 0.4%)
- 08:30 ET: Weekly Initial Claims (consensus 222,000; prior 216,000) and Continuing Claims (prior 1.862 mln)
- 10:00 ET: September Wholesale Inventories (consensus -0.1%; prior 0.1%)
- 10:30 ET: Weekly natural gas inventories (prior +78 bcf)
- 15:00 ET: September Consumer Credit (consensus $13.5 bln; prior $8.9 bln)
Notable earnings/guidance movers: APP +27.8%, LYFT +19.6%, BROS +17.4%, GH +13.4%, FRSH +13.3%, ZG +11.2% on upside; CDLX -30.7%, SEDG -16%, WOLF -14.7%, MTCH -11.8%, CTVA -11% on downside
- Earnings/guidance gainers: APP +27.8%, LYFT +19.6%, BROS +17.4%, GH +13.4%, FRSH +13.3%, ZG +11.2%, UPWK +10.4%, WAY +8.2%, HUBS +7.5%, ELF +7.4%, RLAY +7.2%, RLJ +6.8%, MKSI +6.6%, RAMP +6.5%, QCOM +6.2%, LZ +6.1%, HCAT +5.9%, KAR +5.5%, MCK +5.5%, ALNT +5%, KD +4.9%, VAC +4.4%, TTWO +4.3%, CXW +3.9%, WK +3.8%, ASPN +3.3%, GILD +3.3%, CDE +3.2%
- Earnings/guidance losers: CDLX -30.7%, SEDG -16%, WOLF -14.7%, MTCH -11.8%, CTVA -11%, KVYO -10.5%, MWA -9.2%, MELI -8.6%, JXN -8.5%, DV -7.8%, BMBL -7.2%, TNDM -6.5%, ACLS -6.4%, BYND -6.1%, AMC -5.5%, RXRX -5.5%, TRIP -5.2%, EOLS -5%, AWR -4.9%, IONQ -4.7%, FBIN -4.4%, MODV -4.2%, ARM -4.1%, SRPT -4%, BKH -3.9%, SUI -3.9%, SBGI -3.6%
Goldman, JPMorgan Eye Crypto Clients as IPO Prospects Brighten
The Takeaway
• JPMorgan, Goldman Sachs, Morgan Stanley bankers meet with crypto firms
• Fireblocks aims to be ready for any IPO by 2026, has $500 million in cash
• Crypto companies try to diversify revenue streams to prepare for potential IPOs
Investment bankers from top Wall Street firms including JPMorgan, Goldman Sachs and Morgan Stanley have been meeting with crypto executives, according to industry participants, hoping to get a foot in the door for lucrative initial public offerings that crypto companies might pursue after the election.
The new enthusiasm reflects optimism that improving market and regulatory conditions after a Donald Trump victory in the U.S. presidential election could clear a way for companies like Kraken, Fireblocks and Chainalysis to go public. Bankers’ interest in meetings is also a shift from much of the past two years, when many investment banks saw crypto companies as too risky to do business with, advisers say.
Many in the crypto industry expected that this week’s election could usher in a golden age for crypto, compared with President Joe Biden’s term. Trump has promised to make the U.S. the crypto capital of the world, vowing to remove U.S. Securities and Exchange Commission Chair Gary Gensler, a Biden nominee who spearheaded a crypto industry crackdown. Bitcoin hit record high Tuesday night, surpassing $75,000, as it became clear that Trump would win the election.
Over the last month, “some banks that were not really wanting to touch digital asset space because of the regulatory uncertainty are now much more open and interested in having those conversations,” said Eric Sibbitt, a partner in law firm Paul Hastings’ capital markets group who specializes in fintech and payments.
Advisers say a solid pipeline is developing of crypto companies gearing up to go public in 2025 or 2026, and the banks are positioning themselves to advise those companies should the regulatory environment clear up.
“There are a lot of fintech companies that are gearing up to go IPO, and crypto companies are in that mix too,” said Jigar Patel, global head of fintech and internet banking at Morgan Stanley.
Internal committees at banks would need to approve any new crypto clients, and there’s little indication of any imminent IPOs. But the shift underlines how Wall Street has increasingly seen the crypto industry as a potential source of deal fees, both from public debuts and from potential mergers and acquisitions, secondary share sales, debt issuance and other transactions.
Wall Street had lined up for big crypto clients during the crypto market boom of 2021. Coinbase went public via a direct listing that April, working with banks including Goldman Sachs, JPMorgan, Allen & Co. and Citigroup to orchestrate the debut. And in July 2021, stablecoin issuer Circle announced plans to go public via a special purpose acquisition company, with Goldman and Citi both working on the SPAC deal with Concord Acquisition Corp.
Circle’s SPAC deal never went through. A decline in crypto prices over the course of 2022 triggered collapses at crypto exchange FTX and other high-profile crypto firms. Citi resigned as an adviser on the Circle deal that May, and Goldman Sachs resigned in November 2022, both without providing a reason, according to a filing. Circle and Concord terminated the proposed deal in December 2022.
The crypto collapses also sparked a regulatory crackdown, including SEC lawsuits in 2023 alleging that Coinbase, Binance, and Kraken had been operating unregistered securities exchanges. Many banks had been worried about dangers including the reputational risks of advising crypto companies whose business regulators might deem illegal.
“A lot of banks pulled back in working with these companies just because it’s a lot of risk to undertake,” Patel said. “As the regulation becomes more clear, as there’s more guidance from the SEC and there’s more conviction around it, I think the tone will change.”
Goldman always evaluates clients on a case-by-case basis and has made no change to that stance with regard to crypto companies, according to a person familiar with the bank’s thinking.
JPMorgan declined to comment for this story.
Crypto companies that survived the 2022 meltdown have started to turn a corner over the past year as crypto markets have recovered, and have been holding more discussions with firms that could guide them to public markets.
“We are seeing discussions about people wanting to talk about potential IPOs, or in some cases, doing beauty contests for potential advisers, bankers or lawyers,” Sibbitt said.
IPO hopefuls include Circle, which announced in January 2024 that it had filed confidentially to go public. It’s not clear which advisers Circle worked with on that filing. Executives at crypto exchange Kraken, meanwhile, have long said the company aims to go public, and they announced last week that it had reached more than $1 billion in net revenue and had named a new chief financial officer.
Other companies focused on crypto market infrastructure or analytics, including Fireblocks, Chainalysis, FalconX, Anchorage, and NYDIG, could be public market candidates, said Elliot Chun, partner at crypto- and fintech-focused advisory firm Architect Partners. They are either already registered with regulators or focus on lower-risk parts of the crypto market, and they have emerged as the dominant firms in their respective niches.
“They are all category-leading infrastructure providers,” Chun said.
Stars Aligning
For a wave of crypto IPOs to kick off, however, a number of factors have to align.
Fireblocks CEO Michael Shaulov said he wants to make sure the company is ready for an IPO in 2026 if needed, but timing would depend on the regulatory landscape and other crypto companies going first and performing well. Fireblocks, which was valued at $8 billion in 2022, is well funded, with about $500 million in cash in the bank, Shaulov said.
And even if a more favorable regulatory environment materializes in the new administration, crypto debuts still depend on the state of the broader IPO market. Bankers generally expect IPOs to see an uptick in 2025 but to remain at below-average levels.
Crypto companies also face the added challenges of crypto’s boom-and-bust nature, and of convincing investors that their businesses can withstand down markets.
Many firms have been focusing on adding new, more stable revenue streams to address potential investor concerns. Crypto wallet provider Ledger, for example, has been trying to sell not only hardware but also software and services that generate recurring revenue.
“Crypto market movements still influence our business, which is why we don’t rush into the IPO market immediately, ” said Ledger CEO Pascal Gauthier. Ledger, which was valued at 1.3 billion euros in 2023, has no intention to immediately go public but will see whether the market offers an opportunity post-election, Gauthier said.
Some crypto companies are also waiting for the passage of federal legislation that could clear up regulatory uncertainty. Industry advisers and executives see Circle as a bellwether for other crypto firms with plans to go public, while Congress has proposed several draft versions of stablecoin bills that could materially affect the company’s business.
Kraken, meanwhile, is currently in the middle of litigation with securities regulators, the outcome of which could be too big a risk for potential investors to swallow. New SEC leadership could clear the way for regulatory settlements that would resolve those uncertainties.
Companies and their advisers likely want to have their regulatory paperwork teed up and be poised to move quickly once big uncertainties are resolved. “If a market window opens, but you are not ready because of where you are on the SEC registration process, that’s obviously not very helpful,” Paul Hastings’ Sibbitt said.
Hurricane Trump will blow Europe’s wind power recovery off course
Lack of clarity about US president-elect’s plans means confusion over the outlook for new projects and turbine orders
Clearing up after a devastating storm can be a lengthy exercise. So it was proving for some of Europe’s leading wind energy businesses. They just got hit by a new weather front: Hurricane Trump.
Donald Trump’s election victory sent shares in European wind companies tumbling on Wednesday morning, thanks to his pre-election pledge to scrap offshore wind projects in the US. Vestas is now down more than 60 per cent since early 2021. Ørsted has also lost more than two-thirds of its value since its January 2021 peak.
This ill wind undermines the sector’s efforts to fix its operations following the last tornado, the result of huge cost inflation and higher financing costs.
Wind companies had made some progress towards recovery, but it was partial at best. At Ørsted, a February recovery plan that involved cutting jobs and its renewable energy capacity targets helped to support its share price before the US election. At Vestas, operating profit margins at its turbine business were recovering, reaching 4.2 per cent in the third quarter. Low-margin legacy contracts should all be fulfilled by the end of this year.
But Vestas shares had already slumped this week as cost issues hit its more profitable services business. This manages and repairs turbines once installed. Salary increases in some markets have outpaced the inflation-linked uplift baked into contracts. Third-quarter operating margins in services were just 16 per cent compared with an average of 25 per cent from 2018 to 2022.
The market was already doubtful that the negative news was all flushed out. To reach its full-year guidance on profitability, Vestas needed to achieve a services margin in the final quarter of above 20 per cent and more than 12 per cent in its turbine business, said Jefferies analyst Lucas Ferhani.
Now a Trump victory has thrown a shadow over the entire sector’s prospects stateside. Ørsted has been trying to complete two offshore wind projects in the US without any fresh surprises after a string of impairments over the past 12 months. Chief executive Mads Nipper said this week he did not think a Trump presidency would affect the projects’ construction.
But the lack of clarity about Trump’s plans — and concerns about the scaling back of incentives for green energy developers — means confusion over the outlook for new projects and turbine orders. Of Vestas’s 4.4 gigawatt firm order intake in the third quarter, more than 40 per cent was from the Americas. The US is its biggest individual market, accounting for about 16 per cent of 2023 deliveries.
Europe’s wind power recovery has been blown seriously off course.