• Race for U.S. Congress is tight, no Republican ‘red wave’
Republicans made modest gains in U.S. midterm elections but Democrats did better than expected, and control of Congress and President Joe Biden’s agenda was unclear on Wednesday morning.
• Meta to cut more than 11,000 jobs in one of the biggest layoffs this year
Meta Platforms said it will let go of 13% of its workforce, or more than 11,000 employees, in one of the biggest layoffs this year as the Facebook parent battles soaring costs and a weak advertising market.
• Elon Musk sells Tesla shares worth $3.95 billion days after Twitter deal
Tesla top boss Elon Musk has sold $3.95 billion worth of shares in the electric-vehicle maker, regulatory filings showed, days after he closed the $44-billion deal for Twitter.
• COP27: Regulators plan closer scrutiny of carbon markets
Global securities regulators proposed closer scrutiny of carbon trading to deepen liquidity and prevent greenwashing in markets used by companies to offset their emissions to drive the transition to a net-zero economy.
• Homebuilder D.R. Horton quarterly profit jumps on higher property prices
D.R. Horton posted a 22% rise in quarterly profit, as the largest U.S. homebuilder benefited from elevated property prices amid tight supply.
BEFORE THE BELL
Wall Street futures were lower, and world stocks stalled as results from midterm elections rolled in, with investors bracing for a political gridlock in Washington that would make it harder for drastic policy changes to come through. The dollar steadied, while gold traded with losses. Oil prices fell on rebound in COVID-19 cases in China and after data showed higher-than-expected crude stockpiles in U.S.
STOCKS TO WATCH
• AMC Entertainment Holdings Inc: The company said its third-quarter loss widened, with the theater chain operator burning through more cash to keep its 950 theaters running as fewer blockbuster releases reduced footfall in cinemas. The company also said it raised just $36.4 million from the sale of 14.9 million of its preferred shares APE, listed in August. Adjusted revenue during the third quarter was $1.01 billion. Analysts on average had expected total revenue of $961.1 million. Net loss was $226.9 million, compared with $224.2 million a year earlier.
• Capri Holdings Ltd: Michael Kors-owner Capri Holdings lowered its annual sales forecast, blaming a slow demand recovery in the key Chinese market due to persistent COVID-19 curbs and uncertainty about the global economy. Capri forecast fiscal 2023 revenue of $5.7 billion, compared with its prior estimate of about $5.85 billion. Total revenue rose 8.6% to $1.41 billion in the second quarter ending Oct. 1, slightly above analysts’ average estimate of $1.40 billion.
• Corebridge Financial Inc: The company reported a jump in quarterly profit in its first earnings report after going public, as higher premiums offset a decline in investment returns. The life insurer also paid out fewer claims tied to mortality compared with last year as COVID-19 vaccinations, booster shots and other medications lowered the number of deaths. Profit attributable to its common shareholders for the three months ended Sept. 30 was $2.35 billion, or $3.63 per share, compared with $1.42 billion, or $2.20 per share, a year earlier.
• D.R. Horton Inc: The company posted a 22% rise in quarterly profit, as the largest U.S. homebuilder benefited from elevated property prices amid tight supply. Homebuilders have benefited as demand has far outpaced supply, which has been hampered by raw material and labor shortages, although analysts say demand could taper as central banks hike interest rates to contain inflation. D.R. Horton’s total revenue rose 19% to $9.64 billion in the fourth quarter. Net income attributable to the company rose to $1.63 billion, or $4.67 per share, from $1.34 billion, or $3.70 per share, a year earlier.
• Honda Motor Co: The company posted a 16% rise in second-quarter profit and lifted its full-year outlook, as better pricing, strong sales of motorcycles and a weak yen helped it ride out semiconductor shortages. While Japanese automakers, like many of their overseas rivals, have been hit by shortages of chips and supply chain snarls, Honda has been helped by robust performance in its motorcycle business, particularly in Asia. Honda raised its full-year operating profit forecast to 870 billion yen from 830 billion yen for the year ending March 31 mainly helped by weak yen. Operating profit totalled 231.2 billion yen in the three months to end-September, short of the average estimate of 243.3 billion yen. The same period a year earlier, the company earned 198.9 billion yen.
• Lucid Group Inc: The company said on Tuesday orders for its luxury electric cars slipped in the third quarter from the second, partly due to canceled orders and people fearing long waiting period, sending shares down more than 10% after market hours. The company said it had more than 34,000 orders in the reported period, down 3,000 reservations from the second quarter, after it delivered about 1,400 vehicles and saw cancellations. Lucid said it had $3.85 billion in cash, which would sustain the company at least into the fourth quarter of next year. Lucid’s revenue rose to $195.5 million in the third quarter after it delivered 1,398 vehicles, up from 679 vehicles last quarter. The company’s net loss for the third quarter widened to $670.2 million, or 40 cents per share, from $524.4 million, or 43 cents per share, a year earlier.
• News Corp: The company on Tuesday reported first-quarter revenue and profit that fell short of Wall Street estimates, even as the media conglomerate recorded growth in advertising and subscription sales. Total revenue decreased 1% to $2.48 billion in the quarter ended Sept. 30, while analysts were expecting $2.50 billion. On adjusted basis, revenue grew 3%. Overall revenue from advertising grew to $406 million, a $1 million jump from a year-ago period. Net income, however, slumped 75% to $66 million. On an adjusted basis, News Corp reported earnings per share of 12 cents, missing analysts’ estimate of 15 cents.
• Novavax Inc: The company cut its full-year revenue forecast on Tuesday for the second time in three months, hurt by a global supply glut in COVID-19 vaccine and waning demand. The company now expects annual revenue to be near the low end of its prior forecast range of between $2 billion and $2.3 billion. The company is now “pushing forward” on developing a vaccine targeting Omicron subvariants BQ.1 and BQ.1.1 which they would also formulate as a bivalent vaccine with another coronavirus strain, Filip Dubovsky, Novavax’s chief medical officer, said on a conference call with investors. The company also reported revenue above analysts’ estimates for the third quarter.
• Occidental Petroleum Corp: The company on Tuesday posted a four-fold increase in third-quarter profit from a year earlier, while receding from the previous quarter as energy prices eased from peaks. Net income in the third quarter was $2.55 billion, or $2.52 a share, a four-fold increase from $628 million, or 65 cents per share, from a year earlier. But profit decreased 29% from the $3.6 billion posted in the second quarter. Lower crude oil and natural gas liquids prices contributed to the reduction from the second quarter, which was partially offset by higher sales volumes across all commodities and higher gas prices, the company said. Occidental reduced debt to less than $19 billion in the quarter, meeting its short-term target that would enable a potential upgrade to investment grade by rating agencies.
• Perion Network: The Advertising technology firm reported a 53% rise in quarterly profit as advertisers continue to shift to new ways of targeting customers. The Israel-based company earned 61 cents per diluted share excluding one-time items in the third quarter, up from 40 cents a share a year earlier. Revenue rose 31% to $158.7 million. Perion narrowed its 2022 outlook to $630 million-$635 million from $620 million-$640 million for annual growth of 32%. It also lifted its estimate for 2022 adjusted earnings before interest, taxes, depreciation and amortisation to more than $120 million from at least $102 million.
• Walt Disney Co: The company missed Wall Street earnings forecasts on Tuesday as the entertainment giant racked up more losses from its push into streaming video, sending its shares tumbling. The company gained more streaming customers than analysts had expected from July through September, but media investors have increasingly focused on profits over streaming subscription numbers. Disney’s net income from continuing operations rose 1% to $162 million in the quarter. Excluding some items, Disney earned 30 cents per share, missing Wall Street’s target of 55 cents per share. Revenue of $20.15 billion fell short of the consensus estimate of $21.25 billion. Disney has amassed 235 million subscriptions across Disney+, Hulu and ESPN+ streaming services, a gain of 14.6 million from the previous quarter.
In Other News
• Albertsons Companies Inc: A U.S. federal court on Tuesday denied requests to temporarily block Albertsons’ $4 billion dividend payment to shareholders before closing of the proposed merger with Kroger, but the payout remained blocked due to another court order. The federal court in Washington D.C. denied issuing a restraining order in the case, which was filed by the attorneys general of California, Illinois and Washington D.C and sought to block the payout until antitrust reviews of the proposed merger were completed. However, the payment remained blocked as a state court in the state of Washington last week barred Albertsons from paying the special dividend until Nov. 10, saying that it would weaken its ability to compete as the antitrust reviews go on.
• Amazon.com Inc & Microsoft Corp: Microsoft faces a new antitrust complaint over its cloud computing practices as trade group CISPE, whose members include Amazon, took its grievance to European Union antitrust regulators. CISPE has alleged that Microsoft’s new contractual terms imposed on Oct. 1 together with other practices are irreparably damaging the European cloud computing ecosystem. “Leveraging its dominance in productivity software, Microsoft restricts choice and inflates costs as European customers look to move to the cloud, thus distorting Europe’s digital economy,” CISPE secretary general Francisco Mingorance said in a statement.
• Boeing Co: The company urged regulators on Tuesday to subject a new generation of air taxis to the same strict safety standards as commercial jets, saying the aircraft designed for short flights on demand should not be judged on a par with small planes. Boeing Chief Strategy Officer Marc Allen’s address at the International Civil Aviation Organization (ICAO) marks the U.S. planemaker’s first intervention on such issues in the electric vertical takeoff and landing (eVTOL) market. “We have to unify around the importance of bringing all advanced air mobility vehicles and operating systems to market with airliner levels of safety, with air transport levels of safety, with commercial levels of safety,” he said at ICAO’s Remotely Piloted Aircraft Systems (RPAS) Symposium.
• Carlyle Group Inc: The company has agreed to make $3.34 million in severance payments to its former chief executive Kewsong Lee, as part of an agreement that brings to a formal end his tenure at the helm of the private equity firm, regulatory filings showed on Tuesday. In August, Lee abruptly stepped down as Carlyle CEO after its board, controlled by the group’s founders, unexpectedly declined to renew his contract, which was set to expire at the year’s end. Carlyle said it will pay Lee $1.405 million as base salary and bonus as well as $1.95 million as stock dividends as a part of the separation agreement that terminates at the end of this year. The firm also agreed that most of Lee’s restricted stock options would be allowed to vest between November and February next year.
• Citigroup Inc & Deutsche Bank AG: Citigroup said on Tuesday it would purchase Deutsche’s Mexican license in order to continue its corporate and investment banking operation in the country, following the planned sale of its local retail unit. Financial details were not disclosed, and Deutsche Bank said it would continue to grow and invest in Mexico through its broker dealer business there. “The acquisition of this license, which is subject to the receipt of all regulatory approvals, facilitates the pursuit of our consumer exit and ability to continue our institutional operations in Mexico,” Citi said in a statement to Reuters.
• Exxon Mobil Corp: The company said it had isolated a unit at its 270,000 barrel-per-day Fawley oil refinery in southern England following an incident that led to gas flaring on Tuesday. The refinery remains operational, it added. “Our own onsite teams safely and effectively addressed the matter, isolating the unit from operation. There were no injuries and there was no fire,” a spokesperson said. “Fawley remains operational and there is no impact on fuel supply to customers.”
• FedEx Corp: The company said on Tuesday that current-quarter package volumes in the United States have been below its projections, as the pandemic-driven e-commerce bubble deflates. In September, the company had outlined cost cuts of up to $2.7 billion after falling demand hammered first-quarter profit. FedEx said it is cutting back on vendor headcount and deferred a number of projects, along with taking steps such as reducing flights and parking planes, as it looks to boost profitability. The company expects the changes at its Express air network to drive savings, which are projected to be between $2.2 billion to $2.7 billion in 2023.
• International Business Machines Corporation: Germany’s Bosch has formed a partnership with IBM to use quantum computing and simulation technology to find alternatives to the rare earths and metals needed for electric vehicles. The minerals used in magnets in electric motors, membranes in fuel cells for hydrogen technology as well as in aerospace and defence are expensive and often mined in unsustainable ways. China supplies 98% of European Union demand for magnets made from rare earths, and battery minerals lithium, nickel and cobalt are also almost entirely imported from abroad. The research cooperation will use quantum computing to explore which different materials could partially or fully replace those currently used, Bosch’s corporate research and development chief Thomas Kropf said. The aim is to achieve results within a decade.
• Meta Platforms Inc: The company said it will let go of 13% of its workforce, or more than 11,000 employees, in one of the biggest layoffs this year as the Facebook parent battles soaring costs and a weak advertising market. “Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected,” Chief Executive Officer Mark Zuckerberg said in a message to employees. The company also plans to cut discretionary spending and extend its hiring freeze through the first quarter. But it did not disclose the expected cost savings from the moves. Meta will pay 16 weeks of base pay plus two additional weeks for every year of service, as well as all remaining paid time off, as a part of the severance package, the company said. Impacted employees will also receive their shares that were set to vest on Nov. 15 and healthcare coverage for six months, according to the company.
• Tesla Inc: The company’s top boss Elon Musk has sold $3.95 billion worth of shares in the electric-vehicle maker, regulatory filings showed, days after he closed the $44-billion deal for Twitter. The latest sale brings total Tesla stocks sold by Musk to about $36 billion since November last year, leaving him with a roughly 14% stake in the world’s most valuable automaker, according to a Reuters calculation. Musk unloaded 19.5 million shares between Friday and Tuesday, filings published by the U.S. Securities and Exchange Commission showed on late Tuesday.
• Taiwan Semiconductor Manufacturing Co Ltd: The world’s largest contract chipmaker and a major supplier to Apple said it was constructing a building that could serve as its second chip factory in Arizona in the United States. TSMC said in an emailed statement to Reuters that it could use the building for future expansion but has not yet arrived on a final decision for a second chip manufacturing plant. “In light of the strong customer demand we are seeing in TSMC’s advanced technology, we will consider adding more capacity in Arizona with a second fab based on operating efficiency and cost economic considerations,” the company said. The Wall Street Journal first reported that TSMC’s investment in Arizona is expected to be around $12 billion which it committed two years ago, citing sources.