S&P 500 Falls On Tax Fears; Snap Crash Offsets Nvidia, Roku, M&A Buzz: Week In Review
The S&P 500 index and other major averages edged lower through Thursday as tax reform concerns weighted on the market. Snapchat parent Snap (SNAP) crashed on weak revenue and user growth. As for M&A, Broadcom (AVGO) made a $130 billion bid for fellow Apple (AAPL) supplier Qualcomm (QCOM), while reports surfaced that Walt Disney had held talks to buy much of 21st Century Fox (FOXA).
XAutoplay: On | Off
S&P 500 Falls On Tax Doubts
The S&P 500, Nasdaq composite and Dow industrials gave up weekly gains on Thursday on fears that tax cuts would be delayed, but the major averages still traded near record highs. Earnings remained heavy, with Nvidia (NVDA) rallying while recent IPOs Snap and The Trade Desk (TTD) crashed. Bank stocks were notable losers for the week. Crude oil futures hit a 2-year high amid Saudi turmoil, but U.S. production hit record highs.
Broadcom Offers To Buy Qualcomm
Broadcom (AVGO) launched an unsolicited bid to buy wireless-chip maker Qualcomm (QCOM) in a deal worth $130 billion, which would make it the largest technology acquisition ever. Qualcomm is likely to reject the $70-a-share offer on the basis that it’s too low. A deal also would have big antitrust hurdles. Qualcomm rose 4% to 64.30 as of Friday morning after spiking nearly 13% on Nov. 3 as deal reports first hit. Broadcom retreated but stayed in a buy range.
Nvidia Leads Strong Chip Earnings
Chipmakers Nvidia (NVDA), Microchip Technology (MCHP) and ON Semiconductor (ON) posted beat-and-raise quarterly reports. Skyworks Solutions (SWKS) beat Wall Street’s targets for the September quarter, but gave in-line guidance. Among chip-gear makers, Brooks Automation (BRKS) beat fiscal fourth-quarter forecast and guided current-quarter forecasts higher, but shares still tumbled Thursday.
Roku Delights With First Quarterly Report
Roku (ROKU) rocketed 55% Thursday after the streaming video firm reported much better-than-expected results for the third quarter, its first as a publicly traded company. Roku then rose to a record high Friday morning. Roku ended the third quarter with 16.7 million active users on its content distribution platform, up 48% year over year. Average revenue per user grew 37% year over year to $12.68. Roku makes hardware and software for accessing internet video services like Netflix (NFLX), Hulu and Amazon (AMZN) Prime Video.
Snap Dives On Weak Results; Tencent Buys Big Stake
Analysts tore into Snapchat-owner Snap (SNAP) after a third-quarter earnings report that missed estimates on many metrics, including revenue and user growth. Snap CEO Evan Spiegel acknowledged complaints that Snapchat is “hard to use” and said that the app will be redesigned. Shares crashed 19% through Thursday, even with Tencent Holdings (TCEHY) buying a 12% stake in the social media firm.
Trio Of China Internets Report Strong Earnings
Three China internet companies, Sina (SINA), Weibo (WB) and Autohome (ATHM), all reported quarterly results that beat expectations. Sina owns a controlling stake in Weibo. Chinese video game publisher NetEase (NTES) said it will push deeper into e-commerce, with plans to spend $11 billion on products from the U.S., Europe and Japan to sell to local consumers.
China Search-Engine Sogou Rallies In Debut
Search-engine company Sogou (SOGO) raised $585 million in an initial public offering, selling 45 million shares at 13, the high end of its estimated range. Shares rose to 13.51 in Thursday’s debut and kept climbing Friday morning. China-based Sohu (SOHU), an internet service company that includes gaming, holds the largest stake in Sogou, which is also backed by Tencent (TCEHY). Tencent leads China’s messaging services field and aims to deepen its relationship with Sogou, posing a threat to China search-engine leader Baidu (BIDU).
Nordstrom (JWN) roundly topped profit and revenue forecasts. But same-store sales disappointed and the upscale department store trimmed the high end of profit outlook. Meanwhile, Macy’s (M) missed revenue estimates and comps sank 4%, but beaten-down shares soared on better-than-expected earnings. Kohl’s (KSS) EPS missed views but the retailer lifted the bottom end of EPS targets. J.C. Penney (JCP) reported better-than-expected Q3 results after recently slashing full-year guidance.
Disney Misses, Touts Future Plans
Walt Disney (DIS) disclosed a surprise drop in Q4 profit and revenue amid reports of more upcoming ESPN layoffs, but CEO Bob Iger announced that there would be a brand-new “Star Wars” trilogy, gave its ESPN streaming platform a name and launch date, and said its Disney-only over-the-top service would be priced “substantially below” Netflix (NFLX), reversing shares higher late Thursday. Meanwhile, reports surfaced that 21st Century Fox (FOXA) had held talks to sell the bulk of itself to Disney. Iger refused to address “press speculation” on the call. Disney rose solidly more than 6% as of Friday morning. 21st Century Fox, which reported solid results, shot up 18%.
Oil Prices Hit 2-Year High Even As U.S. Output Hits Record
On Monday, oil prices rose to their highest levels since mid-2015 on political unrest in the Middle East. Saudi Arabia arrested several members of the royal family over the prior week and said that a missile attack from Yemen and supported by Iran could be considered an “act of war.” Oil then settled lower later in the week. U.S. crude production rose to 9.62 million barrels per day, the highest since Energy Information Administration began tracking weekly data in 1983. Domestic crude supplies unexpectedly rose. Continental Resources (CLR), Diamondback Energy (FANG), Matador Resources (MTDR), and Carrizo Oil & Gas (CRZO) topped quarterly forecasts, while Parsley Energy (PE) turned in mixed results as shale producers continued to stress capital spending discipline in their Q3 reports.
Take-Two Gives Upbeat Holiday Guidance
Video game publisher Take-Two Interactive Software (TTWO) reported better-than-expected September-quarter results and guided higher for the holiday sales quarter after Activision Blizzard (ATVI) and Electronic Arts (EA) recently gave disappointing guidance. Take-Two is benefiting from continued demand for its “Grand Theft Auto” franchise and strong sales of basketball game “NBA 2K18.” Meanwhile, Activision said “Call of Duty: WWII” surpassed $500 million in global sales in its first three days of availability.
Sage Therapeutics (SAGE) rose to a record high on upbeat data for a postpartum depression drug while Teva Pharmaceutical (TEVA) popped on news a British billionaire could buy a stake. Supernus Pharma (SUPN) topped expectations late Monday and boosted its 2017 product sales guidance. Ionis Pharmaceuticals (IONS) dove on its third-quarter miss and Mallinckrodt (MNK) offered a mixed report Tuesday, causing it to lose a third of its value. Nektar Therapeutics (NKTR), Acadia Pharmaceuticals (ACAD) and Tesaro (TSRO) all beat top- and bottom-line views, but Tesaro plunged after sales of ovarian cancer drug Zejula lagged. Meanwhile, AstraZeneca (AZN) had strong ovarian cancer drug and overall revenue, but adjusted profit was soft. Regeneron Pharmaceuticals (REGN) on Wednesday topped revenue and earnings views and confirmed guidance for 10% yearly Eylea growth.
Priceline Dives On Outlook
Priceline Group (PCLN) topped third-quarter estimates but the online travel agency’s weak earnings outlook sent shares plunging 13.5% on Tuesday. Priceline’s accommodation business booked 178 million room nights, up 19%. TripAdvisor (TRIP) also fell after reporting missing Q3 revenue estimates, as its hotel business slowed.
Square Earnings Top
Square (SQ) reported Q3 adjusted EPS of 7 cents, two cents above consensus. The digital payment processor said net revenue rose 33% to $585 million, topping estimates. The maker of credit card readers that plug into mobile phones and tablets raised its full year revenue and adjusted EBITDA outlooks by 4% and 8%, respectively, at the midpoint of guidance.
Trade Desk Keeps Falling After Weak Guidance
The digital ad placement company’s adjusted third-quarter earnings rose 46% to 35 cents a share, with revenue climbing nearly 50% to $79.4 million, topping consensus estimates. But The Trade Desk (TTD) forecast Q4 revenue of $101 million vs. estimates of $102 million, and also gave weak EBITDA guidance. The Trade Desk crashed 12% early Friday after already tumbling 8.3% through Thursday.
News In Brief
Homebuilder D.R. Horton (DHI) met earnings estimates and topped revenue forecasts. Shares rose to record highs.
Alarm.com (ALRM) plunged after the home security and automation software firm forecast full-year earnings at 87-88 cents per share vs. estimates of 97 cents.
Match Group (MTCH) stock jumped after the dating site operator forecast December-quarter revenue above expectations, owing to mobile app Tinder Gold, despite a miss on Q3 earnings.
Planet Fitness (PLNT) put up Q3 results and a full-year forecast above consensus. However, Wedbush said that it was still cautious, given concerns about “decelerating growth as the store base matures.”
Monster Beverage (MNST) beat third-quarter sales estimates, but earnings missed. Shares initially fell Thursday below a recent buy point but closed modestly higher.
General Electric (GE) may sell or spin off its aircraft leasing business as new CEO John Flannery looks to slash more than $20 billion in assets and costs at the troubled industrial giant in 1-2 years. GE’s locomotive and health care IT units were also recently said to face the knife.
Industrial laser maker Coherent (COHR) saw its shares blast past a buy point after delivering better-than-expected September-quarter sales and earnings and guiding higher for the current quarter. Coherent is a play on OLED display production growth.
Global Payments (GPN) expects full-year adjusted net revenue of $3.505 billion to $3.53 billion, up about 23%. But most of that gain is due to the payment processor’s recent acquisition of Active Network, analysts said.