TPX.B:CC - Hot Stocks: CHGG craters ~50% on AI worries; TREE plunges; WWD TAP jump on earnings

2023-05-02 18:06:05 ET

Worries about the debt ceiling and lingering uncertainty ahead of the upcoming Federal Reserve decision sparked a Wall Street slide on Tuesday. The S&P 500 dropped 1.2% ahead of the central bank's interest rate announcement, due out Wednesday.

Earnings news remained a major catalyst for individual stocks. This included Woodward ( WWD ) and Molson Coors ( TAP ), which both rallied in the wake of their quarterly results.

On the other side of the spectrum, Chegg ( NYSE: CHGG ) lost nearly half its value as the company warned that ChatGPT has started to impact its sales. Meanwhile, LendingTree ( TREE ) plunged after issuing a weak forecast with its quarterly update.

Standout Gainer

Woodward ( WWD ) surged 15% in the wake of its quarterly results. The provider of control systems for aircraft and industrial engines beat projections on both its top and bottom lines, along with issuing increased guidance.

WWD reported non-GAAP EPS of $1.01, surpassing estimates by $0.30. Revenue rose 22% from last year to reach $718M. Looking ahead, the company raised its revenue forecast to $2.7B-$2.8B, compared to its previous target of $2.6B-$2.75B.

The earnings news sent WWD higher by $15.17 to close at $113.81. This came after the stock touched an intraday 52-week high of $116.24.

Standout Decliner

Worries about the impact of AI alternatives on Chegg ( CHGG ) sent shares of the online-learning firm spiraling. The stock cratered by 48%.

The company reported Q1 earnings and revenue that topped analysts' expectations. However, CHGG warned that ChatGPT has started to have an effect on its market.

"Since March we saw a significant spike in student interest in ChatGPT," the company's CEO stated. "We now believe it’s having an impact on our new customer growth rate."

Amid fears that AI technology could pose an existential threat to the edtech firm, CHGG plunged $8.52 to close at $9.08. During the session, the stock reached an intraday 52-week low of $8.72.

Adding to the weakness seen earlier in the year, shares have fallen about 64% so far in 2023.

Notable New High

The release of quarterly results sparked buying in Molson Coors ( TAP ). Shares of the beer manufacturer climbed 8% to reach a new 52-week high.

The company easily topped analysts' expectations , thanks to a 6% rise in revenue. The top-line figure reached $2.35B, with the firm pointing to "positive net pricing and favorable sales mix driven by premiumization."

TAP rode the earnings figures to an intraday 52-week high of $66.67. Shares eventually finished at $65.08, rising $4.63 on the day. Overall, the stock has climbed 32% so far in 2023.

Notable New Low

LendingTree ( TREE ) slumped to a new 52-week low, dragged down by revenue guidance included in its latest earnings report. TREE plummeted 25% on the news.

The online lending marketplace issued a mixed Q1 report, which featured stronger-than-expected earnings but also included a larger-than-projected 29% drop in revenue. Meanwhile, the firm gave a weak revenue forecast, citing a difficult economic environment.

TREE projected 2023 revenue of $760M-$800M. Analysts were looking for a figure of around $946M.

Prompted by the earnings news, TREE retreated to an intraday 52-week low of $16.02. With a mild recovery late in the session, the stock finished at $17.51, a decline of $5.86 on the day.

TREE traded above $350 in early 2021 but declined steadily through much of 2021 and 2022. An attempted rebound early in 2023 halted in February. The stock is now down about 19% year to date.

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