Why Is Berkshire Hathaway Up 5%?

Why Is Berkshire Hathaway Up 5%?

Happy Friday folks! 

Phew, we’re happy that week of earnings is behind us. Across the board, financial results have been positive for Wall Street’s biggest players. So how come stocks are still slipping?

Well, Wall Street is still shaking off the wider tech sell-off and the rotation out of growth stocks. However, on Thursday, the Dow Jones Industrial Average reached a fresh high, proving that money is still going in cyclical stocks. Meanwhile, the tech-heavy Nasdaq ended a four-day losing streak as growth stocks recovered some of their losses caused by concerns over inflation hikes. The S&P 500 also traded higher, led by gains in the financials and consumer staples industries. 

As always, we’ve got the lowdown on the wider implications affecting this week’s biggest movers.

Here were the biggest movers in the MyWallSt shortlist this week:

Moving Up ⬆️

Duluth Trading (DLTH) +8.3%

FedEx (FDX) +7.1%

Berkshire Hathaway (BRK.B) +5.4%

Nordstrom (JWN) +4.7%

The Home Depot (HD) +4.3%

Moving Down ⬇️

Redfin (RDFN) -25.9%

Etsy (ETSY) -20.7%

Cloudflare (NET) -18.5%

Twilio (TWLO) -17.3%

Roku Inc. (ROKU) -17.1%

What you need to know

Berkshire Hathaway (BRK.B) +5.4%

The jump in Berkshire stock came as Wall Street trades out of growth shares and into cyclical businesses — of which Berkshire holds many positions — in anticipation of a reopened economy. In addition, Warren Buffett’s company also had its annual shareholder’s meeting on Saturday where it discussed current market conditions, Charlie Munger’s view on Bitcoin, the rise of the retail investors, and how trading apps like Robinhood are impacting the market. Berkshire repurchased 5% of its shares in 2020, which Buffett explained at the meeting as the simplest way for investors to “own an ever-expanding portion of exceptional businesses.” Read more here: ‘What Happened At Berkshire's Annual Shareholder's Meeting?’

The Home Depot (HD) +4.3%

Home Depot stock is hot property right now as investors scramble to buy shares in the home improvement retailer before it reports earnings later this month. Wall Street expects the company to post strong revenue growth, spurred on by higher sales in power tools and appliances as consumers continue to make home improvements during the pandemic. Looking forward, the forecast gets even brighter as analysts believe the upcoming housing cycle will also increase interest in the already-popular stock. In addition, experts also explained that a backlog of professional businesses requiring construction enhancements after COVID-19 should increase the company’s profits throughout 2021. 

Redfin (RDFN) -25.9%

Despite reporting strong earnings this week, Redfin shares are down due to the iBuying specialist missing expectations on the bottom line and giving a forecast of a wider-than-expected loss for Q2. The company posted revenue of $268 million in Q1, up 40% compared to the year prior, but its loss per share of $0.37 missed estimates. Given Redfin’s solid revenue growth, shareholders should not worry about this earnings miss as the company is wisely investing in its business. As the real estate market is booming, Redfin’s investments are likely to pay off in the long term. 

Etsy (ETSY) -20.7%

The craft supplier posted some impressive numbers this week with revenue up 141% from last year to $551 million. However, Etsy’s shares dipped due to a disappointing Q2 forecast which called for just $493 - $536 million in revenue, representing 15 - 25% growth. These figures missed Wall Street’s estimates, suggesting that user growth may be cooling off. At the start of the pandemic, Etsy saw a surge in sales thanks to users buying face masks on the platform. However, shareholders are now concerned that any pandemic-fueled gains that the e-commerce company previously enjoyed may have already been realized. 

Roku Inc. (ROKU) -17.1%

Despite reporting exceptional earnings for the first quarter on Thursday night, Roku stock slipped this week due to shareholders selling at-home entertainment stocks in anticipation of the economy reopening. This opinion appears to have been short-lived though, as investors are sending Roku stock soaring today. This is likely due to the realization that streaming isn't going anywhere post-pandemic, as evidenced by Roku's 2.4 million added active accounts in Q1. Roku stands to benefit the most from this trend as a neutral middleman for consumers to use for their many streaming subscriptions. Another factor feeding into Roku’s losses is the fact that investors are shying away from tech stocks amidst inflation fears.

NicoleNicole

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