Mid-Morning Look

Wednesday, November 13, 2024

U.S. stocks were lower overnight, bounced following the October consumer price index (CPI) inflation data at 8:30 AM, then pared gains as stocks are lower but not far off all-time highs following a monster run last week post-election and FOMC rate cut. Treasury yields ease following the in-line CPI report to lows of 4.36% on the 10-yr from 4.44% while the dollar holds strong with the DXY above 106. Gold prices bounced while oil prices fell to 2-week lows. Traders now forecast a chance of Fed Dec rate cut at about 75%, vs 60% before inflation data. Crypto gains continue as Bitcoin tops $91,000 for the first time as upside momentum picking up steam since the Presidential election outcome. NYSE breadth positive led by gains in Consumer Discretionary, REITs and Industrials while Energy and Technology lag (SOX -0.8%). In stocks news a tie-up in cable space as CHTR merges with Liberty, and earnings results moving a handful of names (see below for details). Other top news headlines include various appointments to Donald Trump new cabinet. Producer Price index (PPI) inflation data tomorrow, but today’s in-line CPI data taken in stride so far.

• In Aerospace: RKLB shares surged after reported revenue at the high-end of its prior guidance, while also delivering better-than-expected Adj. EBITDA loss and announced it recently signed a launch contract with a confidential customer for its initial revenue-generating Neutron launches slated to begin in 2026. SPIR shares jumped after entering into an agreement to sell its maritime business for $241 million (5.8x trailing twelve months revenue) and said intends to eliminate debt through sale proceeds. ACHR said it may offer, sell shares of Class A common stock of up to $70M from time to time.
• In Gaming/Casino: FLUT delivered a solid Q3 result and raised FY24 guidance as generated EBITDA of $450M, exceeding consensus expectations by 27%, including a 10% beat from its ex-U.S. segments. Management increased guidance outside the U.S., and its Q424 implied U.S. guidance was better than expected. LNW reported fiscal Q3 results that aligned with expectations and reaffirmed its FY2025 AEBITDA guidance of $1.4 billion. In OSB betting (DKNG, PENN, FLUT, CZR), Louisiana is considering a major tax increase on sports betting revenue as Rep. Roger Wilder’s new bill, HB 22, proposes raising the tax rate from 15% to 51% and removing promotional deductions.
• In Crypto miners: HOOD crypto expands offering with Solana (sol), Pepe (pepe), Cardano & XRP for U.S. customers; MARA Q3 revs $131.6M misses $151.7M estimate on wider Q3 EPS loss (-$0.42) and reports 63% rise in hosting and energy costs due to deployment and energization of more crypto mining rigs; WULF posted a top-line & EBITDA miss as mining came in lighter than expected; Q3 adj EBITDA $6Mm vs est. $11.2Mm on revs $27.1Mm vs est. $34.28Mm; HUT Q3 EPS $0.01 improved from loss (-$0.10) y/y and revs jump 101% to $43.74M above ests $34.6M as mined 234 bitcoin during the quarter with an average revenue per coin of $61,025, compared to the mining cost of $31,482; HIVE EPS loss improved while revs slip y/y to $22.65M vs. est. $25M and mined 340 bitcoin during the quarter, with a total bitcoin holding of 2,604 coins.

• CAVA +16%; following earnings beat on top and bottom line with comps well above the firm’s estimates, raised its same-restaurant sales growth and AEBITDA guidance for the year and provided some initial targets for 2025.
• DAVE +23%; after raising its FY revenue view to $340M-$343M vs. prior range of $310M-4325M and forecast adjusted Ebitda between $71M-$74M above prior guide $40M-$50M; said ExtraCash demand, credit performance, and customer acquisition costs remain solid thus far in Q4.
• NTRA +15%; reported beat and raise as 3Q revenue rose 63.9% y/y to $440M, topping ests $362M on narrower EPS loss while raised their FY24 revenue guidance to $1.61B-$1.64B, from previous expectations of $1.49B-$1.52B and raised gross margin expectations to 58% to 61%, from previous expectations of 54% to 56%.
• PAY +22%; shares jumped on Q3 beat and better guidance as sees Q4 revenue $215M-$220M, above consensus $203.6M and sees Q4 adjusted EBITDA $22M-$24M; sees FY24 revenue $829M-$834M, vs. consensus $776.6M.
• RIVN +15%; and Volkswagen launch a joint venture with an expanded and revised $5.8 billion agreement size, up from the previous $5.0 billion estimate. The JV’s six investment tranches align with specific milestones, including a $1 billion loan targeted for 2026 and a $460 million equity investment in 2027.
• RKLB +36%; after reported revenue at the high-end of its prior guidance, while also delivering better-than-expected Adj. EBITDA loss and announced it recently signed a launch contract with a confidential customer for its initial revenue-generating Neutron launches slated to begin in 2026.
• SPOT +7%; after posted a strong 3Q print with gross margins that once again came in well above expectations as flow through from the recent price increases more than offset weakness in ad-supported driving gross margins to 31.1ahead of the street’s estimate of 30.2%.

• PGNY -19%; after cutting FY rev and EBITDA guide; Q3 revs and EBITDA also light of expectations; sees FY revenue $1.14B-$1.15B down from prior $1.17B-$1.2B and lowers FY adjusted Ebitda to $189M-$194M from $199-$209M.
• RKT -13%; as 3Q adjusted earnings per share of $0.08 missed est. $0.09 due to weaker GOS margins and volumes while the 4Q revenue guide is ~15% lower than current Street estimates at the midpoint.
• SAVE -57%; after a report the U.S. carrier is preparing to file for bankruptcy protection, while the company said it is in talks with creditors.
• SMCI -1%; said it is unable to file its quarterly report on form 10-Q for the quarter ended Sept. 30, 2024 in a timely manner, amid its ongoing delay in filing an annual report.
• SYRS -85%; after announces topline data from select-mds-1 phase 3 trial of tamibarotene in higher-risk myelodysplastic syndrome with rara gene overexpression; select-mds-1 did not meet its primary endpoint; said to discontinue study and review full data set.
• ZI -13%; following quarterly results and commentary.