Monday's Headlines: Disney Plans Hiring Freeze Despite Box Office Success
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Redfin (RDFN) +21.3%
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DocuSign (DOCU) +16.5%
Cloudflare (NET) +13.6%
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Duolingo (DUOL) -13.4%
ShotSpotter (SSTI) -4.7%
Texas Roadhouse (TXRH) -4.7%
FactSet (FDS) -3.4%
2U (TWOU) -3.4%
Here are the stories that you need to know ahead of market-open today, Monday the 14th of October.
Disney Plans Hiring Freeze Despite Box Office Success 🥶
Two very diverging headlines have emerged from The Walt Disney Company (DIS) this morning, with only one of them likely to be welcomed by shareholders. First to the good news, and the announcement that ‘Black Panther: Wakanda Forever’ grossed $180 million and $150 million in North America and overseas respectively across its opening weekend. This marks the highest-ever recorded November opening weekend at the box office and the 13th-highest debut weekend of all time.
However, not all is as rosy at Disney as this would make it appear. A memo circulated to various segment leaders by CEO Bob Chapek on Friday detailed a planned hiring freeze and potential job cuts at the company in the coming weeks and months. Chapek outlined that:
“Hiring for the small subset of the most critical, business-driving positions will continue, but all other roles are on hold… As we work through this evaluation process, we will look at every avenue of operations and labor to find savings, and we do anticipate some staff reductions as part of this review.”
These measures will be supplemented by the creation of a “cost structure taskforce” to oversee how money is being spent at the company. For now, Chapek has asked that business travel be limited to the essential only, and that meetings be virtual as much as possible to avoid unnecessary spending.
This comes less than a week after a disappointing earnings call saw Disney stock briefly slide to a new 52-week low. Disney is currently down just under 40% year-to-date and 51% off all-time highs seen in early 2021.
Softbank Shares Slide on Vision Fund Losses
Shares of Softbank Group fell 13% today as the Japanese conglomerate posted considerable losses in its Vision Fund. The investing arm of the company posted a loss of 1.4 trillion yen, or $9.9 billion, for the quarter. It was its third consecutive quarter of heavy writedowns for the tech-heavy fund famous for taking large bets on early-stage growth companies. One name of note from this quarter is the crypto-exchange FTX, whose spectacular capitulation last week led to Softbank writing down its $100 million investment.
It’s important to note that Softbank is not just the Vision Fund; the larger company actually turned a profit for the quarter. Posting net income of 3.03 trillion yen, or over $21.6 billion, the company’s fortunes are a sharp turnaround from its preceding quarter, in which it posted a loss of 3.16 trillion yen, or $22.5 billion. This is down to the decision to sell off a significant portion of its Alibaba holdings, reducing its stake from 24% to 15%.
That wasn’t enough to buoy investors, who were quick to sell off after a recent rally in the stock. From the start of October to Friday’s close, shares of Softbank were up 40%, ignited by the promise of more stock buybacks. However, management announced the completion of its 400 billion yen ($2.9 billion) buyback plan with no intention of another round, adding to the downward momentum. With the outlook for tech stocks bleak at the minute, question marks remain about the long-term outlook of the company and its infamous Vision Fund.
Polestar Doubles Down on Delivery Numbers ⚡️
Polestar, one of the most recent public additions to the clutter of electric-vehicle (EV) stocks, has announced its third-quarter earnings and shareholders seem rather impressed. Narrowing operating losses, a recommitment to proposed delivery numbers, and climbing revenue combined to send its stock soaring by over 20% in a welcome win for the firm.
Polestar reported earnings per share of $0.14 on revenue of $435 million, while analysts had expected a loss of $0.12 per share and revenue of $471 million respectively. While it should be noted that Polestar still has an operating loss of over $196 million, it was able to report a net profit due to an accounting credit resulting from reevaluating the payout of future shares.
This makes Polestar one of the rare EV companies turning a profit — aside from Tesla. This was driven by sales which were up 105% versus the year-ago quarter, and its operating loss shrinking by 33% year-over-year. CEO Thomas Ingenlath stated that “we are putting cars on the road today and we are delivering on our ambitious growth plan.”
Polestar also confirmed its product pipeline, with the hotly anticipated Polestar 4 SUV set to launch in 2023. However, the company also warned of the lingering effect of supply chain issues and foreign exchange headwinds. CFO Johan Malmqvist explained:
“As our cars are produced in China, the majority of our costs are in renminbi, which has strengthened against European currencies, leading to a higher cost of sale”
Despite the 20% boost following this earnings call, Polestar still remains down 54% since going public via SPAC in May.