SPOT - Hot Stocks: FRC plunges on deposit drop; SPOT XRX climb on earnings news; PKG declines

2023-04-25 17:46:15 ET

Wall Street experienced a wave of selling on Tuesday, following a recent string of uncertain sessions. Amid concerns about corporate results, the Nasdaq posted a decline of nearly 2%, while the S&P 500 dropped about 1.6%.

Earnings news remained a key driver. Packaging Corporation of America ( PKG ) slumped after releasing disappointing results and a weak forecast. Meanwhile, a sharp drop in deposits caused First Republic Bank ( NYSE: FRC ) to lose almost half its value.

On the other side of the spectrum, Xerox ( XRX ) posted a double-digit percentage gain following the announcement of its financial figures. Spotify ( SPOT ) also advanced in the wake of its quarterly update, with strong subscriber stats driving the stock to a new 52-week high.

Standout Gainer

Despite sluggish revenue growth, Xerox ( XRX ) posted an earnings figure that came in above the amount predicted by analysts. Bolstered by the results, XRX jumped 14%.

The print and digital documents company reported Q1 non-GAAP EPS of $0.49, easily topping expectations by $0.32. Revenue rose 3% to $1.72B, with an adjusted operating margin that improved from last year.

XRX finished Tuesday's trading at $15.45, rising $1.86 on the session. The advance reversed losses the stock posted headed into the results, with shares rising to their highest close since the first half of March.

Standout Decliner

The release of quarterly results spurred selling in Packaging Corporation of America ( PKG ), with shares of the maker of containerboard and corrugated packaging products plunging about 7%.

PKG missed expectations on both its top and bottom lines. This came as revenue dropped almost 8% from last year to reach $1.98B.

Looking ahead, the company raised red flags about demand and lower prices, leading to a Q2 EPS projection of $1.96. Analysts are looking for a figure of around $2.55.

On the news, shares dropped $10.47 to close at $134.38. This reversed some of the gains posted in late March and through most of April. The stock recorded its lowest close since late March.

Notable New High

While the firm posted a wider-than-expected Q1 loss, Spotify ( SPOT ) surged to a new 52-week high in the wake of its quarterly results. Strong subscriber statistics sparked a 5% increase in shares of the music streaming company.

SPOT said it added 5M premium subscribers in March, ending the quarter with 210M. Meanwhile, the firm added that it finished the three-month period with 515M monthly active users .

The earnings news drove the stock higher by $6.75, with shares finishing at $138.20. During the session, SPOT reached an intraday 52-week high of $145.88.

The earnings-inspired advance added to gains posted earlier in the year. SPOT has climbed 69% since the end of 2022.

Notable New Low

First Republic Bank ( FRC ) suffered a major investor exodus, as the release of quarterly results sparked a 49% drop in the company's share price. The slide, which came amid a steep drop in deposits, took the stock to a new 52-week low.

San Francisco-based bank reported deposits that dropped by more than $70B in Q1, reaching a level of $104.5B. This was well below the figure expected by analysts.

"With the closure of several banks in March, we experienced unprecedented deposit outflows," the company's CFO said. "We are working to restructure our balance sheet and reduce our expenses and short-term borrowings."

In other news, FRC was reportedly considering selling securities and mortgages as part of a larger restructuring.

The release of the financial figures sent FRC to an intraday 52-week low of $7.92. Ticking just off that mark late in the session, shares closed at $8.10, a decline of $7.90 compared to the previous day's close.

With losses posted during the height of the banking crisis, shares have now fallen about 93% since the start of the year.

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