Gapping down
In reaction to disappointing earnings/guidance:
- SON -6.7%, HTHT -4.2% (Q2 update) SNBR -3%, ANGO -2.5%, MS -0.5%
Other news:
- TCDA -33.2% (provides regulatory update for veverimer; FDA has identified deficiencies)
- INMB -16.7% (stock offering)
- BCEL -12.6% (prices offering of 7,031,250 shares of its Class A Common Stock and 781,250 shares of its Class B Common Stock, each at a price to the public of $16.00 per share)
- APTO -11.5% (prices offering of 10.5 mln shares of common stock at $5.25 per share)
- NCLH -7.7% (commences underwritten public offering of $250 mln of ordinary shares; provides COVID-19 updates)
- PROF -7% (prices offering of of 2,758,621 common shares at $14.50 per share)
- ADPT -5.5% (prices offering of 8,000,000 shares of its common stock at $40.00 per share)
- AAL -4.9% (warns 25K employees of potential job cuts; also says June passenger revs down more than 80% yr/yr)
- TWTR -4% (falls on headlines of high profile Twitter account hacks)
- CYTK -3.3% (announces $150 mln common stock offering)
Analyst comments:
- GSX -5.8% (downgraded to Equal Weight from Overweight at Barclays)
- KBH -2.8% (downgraded to Sell from Neutral at Goldman)
- PTON -2.7% (downgraded to Neutral from Buy at UBS)
- DIS -2.4% (downgraded to Market Perform from Outperform at Cowen)
- CSCO -1.9% (downgraded to Neutral from Overweight at JP Morgan)
Gapping up
In reaction to strong earnings/guidance:
- AA +4.1%, PAG +2.9%, WNS +1.9%, OI +1.2%, DPZ +0.6%
Other news:
- ACIU +78.3% (announced the initiation of the second highest dosing group in the Company's Phase 1b/2a clinical trial evaluating ACI-35.030 for the treatment of Alzheimer's disease)
- LCI +36.2% (Lannett and Cediprof announce exclusive distribution agreement for an approved levothyroxine; to commence marketing on August 3, 2020)
- DELL +10.4% (Dell confirms it's exploring a potential spin-off of VMW stake)
- KNSA +5.9% (receives Orphan Drug designation for rilonacept for the treatment of pericarditis from the FDA)
- RTIX +5.3% (receives all necessary approvals for sale of OEM business)
- GAN +4.7% (reports June 2020 Internet gambling update for NJ)
- SPCE +3.1% (names new CEO)
- VXX +2.8% (rising with futures trading lower)
- DKNG +2.1% (launches Casino product suite in West Virginia)
- CDXC +1.4% (announces new preclinical study finds Niagen corrects social deficits in mouse model of autism)
Analyst comments:
- NXTC +5.4% (upgraded to Buy from Hold at The Benchmark Company)
- GLW +1.8% (upgraded to Overweight from Neutral at JP Morgan)
- PTC +1.5% (upgraded to Buy from Hold at Stifel)
- NRZ +1.4% (upgraded to Overweight from Neutral at Piper Sandler)
- UGI +0.7% (upgraded to Equal Weight from Underweight at Barclays)
Early premarket gappers
- Gapping up:
- DELL +8.3%, RTIX +4.7%, AA +4.1%, VXX +3.4%, RDFN +3.3%, GAN +3.1%, SPCE +2.6%, HIG +0.4%, TSM +0.4%
- Gapping down:
- TCDA -35.1%, INMB -18.4%, APTO -11.3%, PROF -8.2%, BCEL -7.7%, HTHT -6.8%, TWTR -6.4%, CYTK -5%, AAL -4.4%, ADPT -4.2%, AZN -2.4%, SNBR -2.3%, SMH -1.9%, QQQ -1.7%, OI -1.2%, HHR -1.2%, OI -1.2%, SPY -0.7%, DIA -0.6%, GD -0.5%
Bank of America $5bn loan charges only partly offset by trading surge
Profits halve as lender joins peers in bracing itself for potential surge in bad debt
Bank of America set aside $5.1bn for loans losses in the second quarter, leading net income to halve to $3.5bn.
The bank joined the industry trend in offsetting the damage from the loan charges with a surge in trading revenues in the second quarter, as market volatility returned and companies rushed to issue new debt.
But the increase — fixed income trading rose some 50 per cent — was smaller than the boost enjoyed by its competitors.
Total revenues, at $22.3bn, were down slightly from the prior year, and ahead of analysts targets of $21.9bn. Earnings per share at $0.37 easily beat forecasts of $0.28. Net income fell 52 per cent from the previous year’s second quarter.
Despite the increase in reserves for future loan losses, current credit quality remained broadly stable: non-performing loans rose by less than four per cent from the year before.
Earlier this week, JPMorgan and Wells Fargo reported loan charges of $10.5bn and $9.5bn, respectively.
BofA shares have fallen by 30 per cent since the Covid-19 crisis first shook markets in February, broadly in line with the US banking sector. The shares were down a further 2 per cent in pre-market trading on Thursday.
VW will start selling the ID.3 — one of the most anticipated new electric cars of the year — on July 20.
The German automaker already started taking orders for the ID3. from First Edition reservation holders, but now it is opening orders to the public.
They announced today:
“Subject to local terms and conditions, all the ID.3 models that can be ordered from July 20 are eligible for subsidies in Germany as and also in other European countries. In Germany, customers can apply for the maximum environmental bonus for electric vehicles of a total of €9,480; €3,480 of this amount is borne by Volkswagen as the manufacturer.”
Jürgen Stackmann, Volkswagen Brand Board Member for Sales, commented on the announcement:
“We are overwhelmed by the loyalty shown by so many pre-bookers. A large majority of these customers have already ordered their 1ST from dealers. Other customers, who have had to wait for the start of production sales, will now be able to order. From July 20, they can choose between seven preconfigured ID.3 models with the most popular features at their dealerships,”
As its first electric car based on its next-gen MEB platform, Volkswagen is betting big on the ID.3 to accelerate its electrification effort.
Stackmann added:
“I am convinced that e-mobility will now make its breakthrough. Our model names like Family, Style, Tech and Tour already reveal that we will have the right ID.3 for everyone – at an attractive price. This way, we are realizing our vision of enabling emission free mobility for all.”
Last month, VW delivered the first 150 ID.3 electric cars to employees for testing as one of the last steps before the start of deliveries.
The ID.3 will be offered with three different battery packs, with the base version starting under €30,000 ($33,000). The ID.3’s First Edition version is going to be the first to hit the market in September, and it is more expensive.
When deliveries start in September, VW is expected to deliver a lot of ID.3 vehicles at once.
As we previously reported, despite deliveries only starting in a few months, VW already built thousands of ID.3 electric cars since starting production last year.
Thousands of ID.3 electric cars have previously been spotted being stockpiled in parking lots.
Originally, VW claimed that the reason why it started production almost a year before deliveries were planned was to deliver in all European market at the same time with almost 30,000 units.
However, we have since learned that the German automaker has experienced some problems with the vehicle’s software that could have also affected the delivery timeline.
Richemont quarterly sales halve as luxury sector absorbs body blow
Cartier owner offers no financial guidance but says China offers bright spot
Richemont, the Swiss luxury watch and jewellery maker, has said most of its stores outside the US have reopened after Covid-19 lockdowns, but that the business has suffered “unprecedented levels of disruption”.
The Geneva-based company behind Cartier and Van Cleef & Arpels on Thursday said sales had dropped 47 per cent to €1.99bn in the quarter to the end of June, slightly less than the €2.13bn expected by analysts, according to Bloomberg data.
All regions and categories slumped as the global pandemic not only shut Richemont’s stores, but also the warehouses that it uses to fulfil orders on its online multi-brand stores Yoox and Net-a-Porter.
“The lockdowns on the back of the Covid-19 pandemic are causing luxury goods companies to record the worst quarterly results in their history,” said Luca Solca of Bernstein Research.
Richemont’s quarterly report follows similarly dire results from Burberry on Wednesday, and Swatch on Tuesday, which amply illustrated the deep hole that luxury goods makers will have to dig out of if they are to salvage the year. Sector leaders LVMH and Kering report results in the last week of July.
Richemont did not provide any financial guidance, but Johann Rupert, the founder and largest shareholder, warned in May that Covid-19 would cause “grave economic consequences” for up to three years. This fits with what analysts from Bain have predicted, but larger rival LVMH sounded a more optimistic note in April on the prospects for a quick return to normal for high-end purchases.
The only bright spot for Richemont was China where revenue jumped 49 per cent, although the exact revenue figure was not disclosed.
Travel restrictions mean that more Chinese luxury fans are getting their fix in shops on the mainland instead of on summer holidays to Europe. Before the pandemic, Chinese buyers drove most of the sector’s growth, and analysts estimate that they bought anywhere from 50 to 70 per cent of their luxury goods outside the country.
“Chinese consumer appetite is strong. But sales in China are also benefiting from repatriation, while other locations like Europe suffer from the lack of Chinese visitors,” said Luca Solca of Bernstein Research. “So, we need to take good news from China as encouraging, but with a pinch of salt.”
Richemont’s online platforms fared better than its other channels as the pandemic helped accelerate the shift to ecommerce. But even Yoox and Net-a-Porter were hit by disruptions as its main warehouses near Milan, London and New York were closed to protect workers, which meant the company missed out on capturing some sales. Online retail sales in the quarter stood at €506m, down 22 per cent from a year earlier.
Richemont’s online luxury rival Far Fetch was likely to have fared better, said Mr Solca. The London-based company runs a “distributed inventory model”, which means it has no central warehouses, and keeps inventory at the boutique and brand level, meaning “someone was always ready to ship”.
Richemont shares fell roughly 5 per cent in morning trading, taking its decline this year to date to about 19 per cent. The shares have fallen further this year than those of larger rivals LVMH and Kering, which are down 3 per cent and 14.5 per cent respectively.
BMW agrees €2bn battery cell contract with Northvolt
Order with Swedish manufacturer comes amid race to secure electric vehicle parts
BMW has signed a €2bn contract with the Swedish battery cell manufacturer Northvolt, to secure supplies for its upcoming electric models as competition for core components heats up.
The premium carmaker, which has already spent €10bn on battery cell contracts with China’s CATL and Korea’s Samsung SDI, said the order would be fulfilled from 2024 when Northvolt’s Skelleftea plant is scheduled to have expanded its capacity.
BMW added that it would work with Northvolt to source the raw materials for cell production, including cobalt and lithium, “from mines that fulfil the high sustainability standards of both companies”.
Last week the Munich-based group signed a contract worth €100m with Moroccan mining company Managem Group to meet about a fifth of its cobalt requirements for its next generation of electric cars. It will source the rest of its cobalt, and much of its lithium supply, from Australia.
BMW’s move comes a few weeks after rival Daimler announced that it would invest “a multimillion-euro amount” to take a 3 per cent stake in the Chinese battery cell maker Farasis.
In May, Volkswagen became the first large carmaker to buy directly into a domestic Chinese battery maker, signing a €1.1bn deal to take a 26 per cent stake in the Shenzhen-listed manufacturer Gotion High-Tech and become the company’s largest shareholder. VW already has an agreement with Northvolt, with which it is building a battery cell factory in the German city of Salzgitter.
The country’s top three carmakers have been scrambling to secure supply of batteries as they ramp up their electric car production in the wake of strict EU carbon emissions regulations. VW alone is planning to produce about 70 new electric models over the next ten years, while BMW has pledged to have 25 plug-in hybrid or pure electric cars on the market by 2023.
However, European carmakers are heavily reliant on Asian companies for battery cells, which are the most expensive part of an electric car.
The German government has pledged to support homegrown cell manufacturers, and last month awarded its first grant — worth €300m — to battery company Varta. Chemicals groups BASF and Umicore, PSA brand Opel and BMW are also set to receive state subsidies.
Tesla is looking for new locations in order to expand its service capacity in several markets, including Bay Area, Atlanta, Puerto Rico and more.
Last year, Tesla has made several statements about expanding service after CEO Elon Musk admitted a “foolish oversight” of Tesla’s service coverage and plans to open many more service centers around the world.
The growth has been relatively slow with Tesla opening only 21 new locations worldwide between October 2019 and March 2020.
As of the last report, Tesla stores and service centers were growing at 15% year-over-year versus 40% for global deliveries.
Tesla Automotive President Jerome Guillen took to LinkedIn to seek “immediately available” spaces in at least 6 markets to open new service centers:
“Tesla continues to grow its service presence. Some exciting openings coming up in the coming weeks. Still looking for suitable spaces in Los Gatos/Campbell (CA), South Atlanta, Glendale/NW Phoenix (AZ), Naples (FL), and Puerto Rico. If you know some space immediately available, please contact me.”
Musk previously noted that he believes the service centers are one of Tesla’s biggest assets to drive demand.
People feel more comfortable buying cars if they have a Tesla service center within a reasonable distance, and therefore, the CEO says that expanding service centers and the Supercharger network is going to help Tesla reach more customers.
Some markets also need more service capacity in order to support their growing customer base.
In the past, especially following the launch of Model 3, some owners were experiencing weeks of wait time to get service appointments.
The automaker is not only expanding its service center locations in order to address this issue but Tesla is also expanding its fleet of mobile service vehicles and technicians.
As of March 2020, Tesla had 756 mobile service vehicles, which can perform the most common service tasks on the go – helping with the local service center’s workload.
With the pandemic, the automaker started offering ‘no-touch’ service by remotely unlocking cars for the mobile technicians.
Floored by COVID-19, Cirque du Soleil eyes return to the high-wire
MONTREAL/HANGZHOU, China (Reuters) - As the coronavirus pandemic ripped around the globe, Cirque du Soleil, a circus troupe formed by Quebec street performers that become a global powerhouse, saw most of its operations grind to a halt in barely 48 hours.
The company, which gained international renown for extravagant shows featuring acrobats, jugglers, firebreathers and musicians, was forced to shut down productions in China, Italy and the United States, among other countries. This month, it filed for bankruptcy protection and is close to reaching a restructuring deal..
“I never thought in my life that I would wake up one day and basically in 48 hours we end up with no shows, no revenues,” CEO Daniel Lamarre told Reuters.
“It was very tough because from hour to hour I was learning that one country was shut down and then the other country was shut down.”
Lamarre, who joined Cirque in 2001 as an executive scouting for new opportunities for its high-flying acts, was left scrambling to help performers get home from closed productions abroad and find warehouses to store its 50 trucks of equipment per show.
Before the pandemic, the entertainment company had 44 performances running worldwide and generated about $1 billion in annual revenues from shows that featured underwater performances and others based on Michael Jackson, Lionel Messi and The Beatles.
Show cancellations led the company to permanently or temporarily lay off 95% of workers.
“My whole Facebook feed was just sadness,” said Chris Gatti, a former high-bar performer and consultant for the company.
Privately held Cirque declined to divulge ticket sales but court documents show the company had nearly $1.5 billion in liabilities.
He Guowei, a performer at the company’s Land of Fantasy show in China, practiced his human body juggling specialty at home after the show shuttered in January due to the pandemic.
“We feel frustrated when we know the show is suspended,” he recalled while training in Hangzhou. “And we also have fears because we have no idea how bad the epidemic is.”
COVID THREAT
The coronavirus pandemic is the biggest threat to face Cirque du Soleil, which was created in the early 1980s as “The Stiltwalkers of Baie-Saint-Paul” in Quebec, before becoming a global entertainment company thanks to sold out Las Vegas shows, touring productions and acquisitions.
The shows, which have no animals or star performers, helped some key troupe members become wealthy. Guy Laliberté, a performer and co-founder of the company, is on Forbes list of Canadian billionaires.
While Cirque sees a potential reopening in the fall for its resident productions in Las Vegas and Orlando, Lamarre only expects the company to get back to where it was in terms of the number of shows, revenues and profits in 2023.
“We think that it will take a year to 18 months before we’re back to normality which means having a vaccine or a cure that makes people feel safe in a theater. And then from there we think that within a couple of years we’ll be able to bring back the company where it was.”
The Cirque is seeing some green shoots of recovery with the reopening of the Chinese production last month, and another show opening in early July in Mexico.
In Hangzhou, China, He Guowei said he thinks attendance is higher than before the pandemic, except the audience now wears masks. Cirque du Soleil did not immediately respond to questions about ticket sales.
“When we stepped on the stage again, we felt almost the same (as) when we made our debut in last August,” he said. “The effort we made during this time was not in vain.”