Friday's Headlines: StoneCo Sinks As Another Exec Leaves

Friday's Headlines: StoneCo Sinks As Another Exec Leaves

Here were the biggest movers in the MyWallSt shortlist yesterday:

Moving Up ⬆️

Trupanion (TRUP) +4.5%

Pure Storage (PSTG) +3.9%

Farfetch (FTCH) +3.1%

Casey's (CASY) +2.7%

Arista Networks (ANET) +2.5%

Moving Down ⬇️

Upstart Holdings (UPST) -5.7%

DraftKings (DKNG) -4.8%

Nordstrom (JWN) -4.8%

Stitch Fix (SFIX) -4.1%

Redfin (RDFN) -3.8%

Here are the stories that you need to know ahead of market-open today, Friday the 19th of August.

StoneCo Sinks As Another Exec Leaves 👋

StoneCo (STNE) failed to impress shareholders last night in its quarterly earnings report, as earnings drastically underperformed expectations. The Brazilian payments company also now has to contend with the departure of long-serving CFO Marcelo Baldin, as he becomes the latest in a worrying line of board and management changes.

StoneCo announced earnings per share (EPS) of $0.05 on revenue of $469.68 million. While revenue surpassed analyst estimates by just over 10%, EPS missed by a whopping 54.5%, with Wall Street expecting earnings of $0.11 per share. According to Rafael Martins, the company’s vice president of finance, “we’re swimming against the tide of higher funding costs and our financial expenses rose significantly in the second quarter.”

A costly attempt to enter the lending space seriously hurt StoneCo’s stock, and the firm has been raising its payment prices in an attempt to display some level of profitability to investors. Martins explained that “investors grew skeptical following the issues faced by our credit business in the past, while the sharp increase in global interest rates sent fintech multiples lower.”

Now, with a harsh macroeconomic environment to contend with and waning shareholder trust, StoneCo will really need to reverse its fortunes if it wants to return to a semblance of its former glory. Its stock is currently down almost 12% pre-market on the back of yesterday’s earnings call, and it’s already down close to 40% year-to-date.

Roblox Poaches Meta Executive 🤖

The battle for the Metaverse is heating up. Video-game company Roblox announced yesterday that Steve Park, Meta’s longtime head of government relations for South Korea and Japan, will join their team.

Park will join Roblox as head of public policy for Asia-Pacific — a newly created role — as the company continues its international expansion. Park has been with Meta (formerly Facebook) for over eight years and previously worked on their Oculus virtual reality business.

Roblox is seen by many as a pioneer of the Metaverse — with over 58 million daily active users. Roblox allows gamers to create their own games within its ecosystem and generates revenue from its in-game currency, Robux. Roblox went public in March 2021 after pandemic lockdowns spurred a large increase in users. The company posted earnings last week that showed revenue growth of 30% — slowing since lockdown restrictions have eased.

Roblox’s CEO David Baszucki has long been bullish on the company’s opportunities in Asia with Roblox announcing a joint venture with Tencent in 2019 in order to break into China. Regulators in China have introduced restrictions around the amount of time children can play video games and had a month-long freeze on granting new licenses earlier this year. The company has previously tested its platform in the country under a different name, but removed it after a month citing no reasons. A successful push into China could be a huge growth opportunity for the business.

It's a Disco At Cisco As Its Stock Rallies 🪩

American tech conglomerate Cisco saw its biggest stock price rally since late 2020 yesterday as its stock jumped by almost 6%. A solid earnings report that outperformed analyst expectations and some strong guidance for the coming year were enough to prompt a flurry of buys from investors.

Revenue came in at $13.1 billion, exceeding analysts’ predictions of $12.79 billion, although still being slightly down on the year-ago quarter. Earnings per share also just finished above Wall Street’s estimates with a figure of $0.83 beating out an expected $0.82 per share. Guidance, however, was where this report really shone. Cisco has forecast revenue growth of between 4% and 6% for fiscal 2023 — massively outpacing the 2.3% that had been expected.

CEO Chuck Robbins explained that “we’ve been saying all along that we have a record backlog, and when the supply chain begins to ease that we would begin to see the revenues flow through” He added that “we saw some early easing in the supply chain which is positive, and we look ahead to the next year and we feel like it’s going to continue.”

Cisco designs, produces, and sells products that work to power networking, communications, and information technology. It was once the most valuable company in the world but has since fallen from grace somewhat as it struggled to contend with the shift from physical technology to cloud-based infrastructure. Currently down almost 22% year-to-date, Cisco will need continued solid performances to regain its lost ground in the coming years.

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