Friday's Headlines: Twitter Fires 30% of Hiring Team
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Avalara (AVLR) 16.5%
Duolingo (DUOL) 9.6%
Teladoc (TDOC) 8.8%
2U (TWOU) 8.3%
Moving Down ⬇️
Otis Worldwide (OTIS) -1.6%
Diageo (DEO) -1.1%
Coca-Cola (KO) -0.8%
Evolent Health (EVH) -0.6%
Here are the stories that you need to know ahead of market-open today, Friday, the 8th of July.
Twitter Fires 30% of Hiring Team 🐧
Shares of Twitter (TWTR) are falling in pre-market trading this morning after the Wall Street Journal revealed that the company has laid off a third of its talent-acquisition team.
The report, which has since been confirmed by Twitter, claims that these layoffs are coming ahead of the planned takeover by Elon Musk, whose $44 billion deal for the social media site is still awaiting completion.
As news of Musk’s takeover plans initially broke back in May, the company had said that it would be looking to reduce costs and pause its hiring — hence the reduction in staff on its talent-acquisition teams. Still, these layoffs come amidst a broader environment of tech hiring cuts, with the likes of Coinbase, Netflix, Robinhod and Peloton all cutting significant portions of their workforces in recent weeks.
The troubles don’t stop there for Twitter either. The company also confirmed yesterday that it was suspending as many as 1 million spam accounts a day from its platform — double the amount that CEO Parag Agrawal had said they were nixing back in May.
With Elon Musk threatening to walk away from the deal if Twitter doesn’t get a handle on the number of spam accounts on the platform, it seems as though the bot problem might be a lot worse than the company initially thought.
Costco Continues to Thrive 🛒
Everyone’s favorite wholesaler Costco (COST) announced its June sales figures on Thursday, and they were a thing to behold.
For the month, the retailer saw sales jump 20.4% year-over-year reaching $22.78 billion. This growth was across the board, but particularly strong in the United States, where same-store sales rose 21.5%. Internationally, comparable-store sales were up 4.7%.
Surprisingly, e-commerce sales also got a nice bump, increasing 7% year-over-year. This is great news for Costco, which has never been overly-focused on its online presence and only began building out its capabilities during the pandemic. It acquired Innovel in 2020, a “last-mile” delivery service specializing in bulky items such as appliances and exercise equipment.
Not one to take all the credit though, Costco noted in its press release that it did benefit from an extra day in the June shopping month due to the timing of Independence Day. Management believes this amounted to a roughly 2% benefit in overall sales.
Clearly, despite the macro-economic challenges, Costco remains an essential shopping destination for many consumers.
That being said, the company can’t fully escape the grip of inflation. This week, its famed food court raised the price of soda by 10 cents and of its chicken bake by $1. This is pretty shocking considering how hard management has fought against price hikes in the past, even going so far as to buy a hot dog factory to keep costs down.
Time will tell if the sting of inflation will be felt elsewhere in stores and if this will impact consumer behavior later in the year.
Upstart Reports Weaker-Than-Expected Q2 Numbers 💵
Shares of fintech company Upstart (UPST) are down more than 17% in pre-market trading today after it announced preliminary results for Q2 that disappointed investors. Upstart had initially lowered its forecasts for the second quarter in May, dragging the stock lower by 56% in a single trading session that month.
In a press release, Upstart revealed that it now expects revenue of $228 million this quarter, compared to its previous guidance of sales between $295 million and $305 million. Its Q2 loss is forecast to be between $27 million and $31 million. Its management team initially predicted a loss between $4 million and break even in the June quarter.
Wall Street estimated Upstart to report revenue of $335 million in Q2 and then lowered estimates to $298 million in May. Similarly, bottom-line forecasts stood at $1 million, down from estimates of $24 million two months back.
Upstart attributed its weak Q2 results to rising interest rates and recession fears that are weighing heavily on the lending sector. It also converted loans on its balance sheet into cash, negatively impacting its top line.
Upstart listed on the Nasdaq in December 2020 and was among the top-performing stocks last year, with its stock more than tripling in 2021. However, the sell-off surrounding the equity market and the company’s weak projections for Q2 have dragged Upstart shares down by 92% from all-time highs.
Upstart aims to disrupt the legacy lending system and offers a cloud-based platform powered by artificial intelligence. Its platform aggregates consumer demand for high-quality loans resulting in higher approval rates and lower interest payments for borrowers. Alternatively, banking partners get access to new customers while lowering loss rates.
Upstart’s model analyzes more than 1,500 variables containing over 21.6 million repayment events. Despite the massive growth prospects for Upstart, the company is part of a cyclical industry as demand for lending products nosedive during a recessionary environment.