Friday's Headlines: Snap Plunges Post Q2 results
Here were the biggest movers in the MyWallSt shortlist yesterday:
Moving Up ⬆️
Tesla Motors (TSLA) 9.8%
Sea Limited (SE) 6.2%
Nordstrom (JWN) 6.0%
Farfetch (FTCH) 5.6%
Cloudflare (NET) 5.3%
Moving Down ⬇️
ShotSpotter (SSTI) -3.9%
Tripadvisor (TRIP) -2.8%
Chuy's (CHUY) -2.7%
Redfin (RDFN) -2.3%
Calavo Growers (CVGW) -2.2%
Here are the stories that you need to know ahead of market-open today, Friday the 22nd of July.
Snap Plunges Post Q2 results ⬇️
Shares of social-media company Snap are down 29% in pre-market trading today after it announced its Q2 results. In the June quarter, Snap reported revenue of $1.11 billion and an adjusted loss of $0.02 per share. Comparatively, analysts expected the company to report revenue of $1.14 billion and an adjusted loss of $0.01 per share in Q2.
Snap also disclosed plans to slow hiring due to lower-than-expected top-line growth. It did not provide guidance for Q3 or the rest of 2022 due to a challenging macroeconomic environment.
The company, however, did inform investors that revenue in the first half of July is flat year-over-year driving concern higher. Analysts tracking Snap estimates sales to rise by 18% to $1.24 billion in Q3.
Snap has burnt massive investor wealth in 2022 and is down over 70% year-to-date. In May, the stock plunged by 43% after Snap confirmed it would not meet its guidance for the June quarter.
Several tech companies that generate sales via online ads are trading lower in pre-market today. For example, shares of Alphabet, Meta, Twitter, and Pinterest are down 2.6%, 4.5%, 2.5%, and 6.6%, respectively, at the time of writing.
As enterprises are re-evaluating their cost structure amid rising borrowing costs, its likely marketing budgets will decline at the global level in the next 12 months.
Ford to Cut Jobs to Prepare for EV Pivot ✂️
It was reported on Thursday that Ford (F) will cut thousands of jobs in the coming weeks as the automaker attempts to boost profitability. This would mark a significant step towards CEO Jim Farley’s plan to decrease costs and increase cash generation in the hopes the legacy player can keep up with innovative newcomers like Tesla.
Ford aims to cut $3 billion in costs by 2026 and achieve a 10% pretax profit margin. Last year, the automaker had a 7.3% pretax margin.
Under Farley, Ford has split its operations in two, creating the “Model e” unit to scale up its electric vehicle offering and “Ford Blue'' to focus on traditional gas burners. According to the CEO, “Ford Blue” will become “the profit and cash engine for the entire enterprise”, helping fuel innovation in the EV unit.
Consequently, the remored job cuts are expected to impact “Ford Blue” units in the United States. Ford has about 43,000 salaried workers across North America.
On the EV side, Ford is currently focused on fortifying its supply chain, especially batteries. The American automaker has a long-term goal to produce 2 million electric vehicles annually, however, it has only secured 70% of the battery capacity necessary for this target. Ford announced on Thursday it plans to develop new battery chemistries to help overcome sourcing constraints on raw materials.
Ford declined to comment on the possible job cuts, simply stating it’s focused on reshaping the organization to capitalize on electric vehicles.
The exact number of layoffs is unknown and may change according to people familiar with the plan. Bloomberg News reported on Wednesday that 8,000 job cuts were to be expected while The Wall Street Journal reported 4,000 cuts on Thursday.
FaZe Stock Seesaws After Public Debut 📈
FaZe Holdings is enduring a very rocky start to life as a public company, with its stock price rocketing more than 30% after floating earlier this week before crashing heavily back down to earth.
Also known as FaZe Clan, FaZe is a U.S.-based esports and digital entertainment company. It started its journey in 2010 as a collective of ‘Call of Duty’ players that rose to fame with trick shooting.
Since then, it has grown to over 93 members, consisting of esports competitors and content creators. The company’s social creators have a combined following of over 500 million people across YouTube, TikTok, and Twitch. For comparison, Netflix has 220.6 million subscribers, while Disney+ has 87.6 million.
Earlier this week, FaZe went public via a SPAC, or a special purpose acquisition company. A method of going to market that has become more popular in recent years, a SPAC involves an already-listed shell company with no commercial operations ‘acquiring’ a private company, which then becomes the primary business. This is also known as a reverse merger and is the method through which other notable companies like Polestar, Buzzfeed, and Virgin Galactic became publicly-listed.
Investors have become wary of SPACs in recent months, however. Many investors consider SPACs as an easier way to get to the public market, especially as the companies involved do not face as much scrutiny as a traditional IPO process. The poor performance of many of the companies that went public via a SPAC in 2021 — the highest on record at 613 — means that investors are treating these investments with a lot more caution now.