2023-04-21 07:02:13 ET
Listen on the go! Subscribe to Wall Street Breakfast on Apple Podcasts and Spotify AT&T ( T ) posts worst drop in years as analysts weigh another hard cash-flow road ahead. U Power ( UCAR ) surges 1,150% intraday in its market debut. Clorox ( CLX ) announces job cuts , joining a growing list of layoffs in 2023. Learn more about these stocks with Seeking Alpha Premium .
This is an abridged transcript of the podcast.
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AT&T dropped more than 10 percent Thursday. Analysts are weighing the company’s free cash flow
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UPower surges more than 1,000% in its market debut. Ticker symbol UCAR.
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What happened to no backsies? Hasbro is reportedly discussing selling its EOne studio back to its founder.
OUR TOP STORY
AT&T stock (NYSE: T ) ended Thursday’s trading day down 10.4%.
This was after first-quarter earnings , which was largely solid across several metrics, but saw subscriber growth slow a bit, and it spooked dividend-focused investors who hoped for significantly higher free cash flow.
Revenues were close to Street expectations, ticking up slightly year-over-year, and non-GAAP earnings per share topped consensus by a penny, though the company's adjusted earnings before interest, taxes, depreciation and amortization largely fell short of consensus.
Free cash flow ( FCF ) came in at just $1B while analysts had expected $2.6B, thanks to higher capital expenditures than expected.
There is no shortage of articles on AT&T’s dedicated stock page on Seeking Alpha. There’s also no consensus on whether the stock is a sell, hold, buy or strong buy.
The latest article is by Gary Gambino. It’s entitled “AT&T Free Cash Flow Freak Out.” In the article Gary rates the stock a hold. He says, “The company is delivering on its strategy to expand 5G wireless and fiber. While the $1 billion FCF was even worse than expected, it does not necessarily indicate the company will miss FCF targets for the year.”
I’ll leave a link to that article in show notes.
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NOW MORE ON THE MARKET
A poorly received earnings report from Tesla ( TSLA ) weighed on stocks on Thursday, as did concern that the Federal Reserve would continue raising rates into a slowing economy.
The Nasdaq ( COMP.IND ) closed -0.8%, the S&P 500 ( SP500 ) ended -0.6% and the Dow ( DJI ) finished -0.3%.
Ten of the 11 S&P sectors staged retreats. Only the Consumer Staples segment ended in positive territory, and that advance was only fractional. Consumer Discretionary led the decline, falling 1.5%. Real Estate dropped 1.2%, while Energy, Communication Services and Info Tech posted modest weakness.
Leo Nelissen is a market expert. He told Seeking Alpha that "Markets faced a challenging day Thursday due to various factors. Unemployment claims came in high, the Philadelphia Fed manufacturing survey painted a bleak picture, and comments from Cleveland Fed President Mester reinforced the belief that the Federal Reserve is not done with its rate hikes,".
TSLA dropped almost 10% after its quarterly report showed narrower-than-expected margins . This weighed down the overall EV sector, as well as legacy automakers like GM ( GM ) and Ford ( F ), as investors worried about a pricing war in the industry.
Dow components IBM ( IBM ) and American Express ( AXP ) also announced their quarterly reports. IBM was little changed on the news, while AXP edged lower.
On the economic front, initial jobless claims advanced to 245K in the latest week, topping the 242K that economists had predicted.
New data also came out about the housing market. Existing home sales dropped in March and came in below the amount predicted by economists.
Turning to the fixed-income market, Treasury yields pushed lower. The 10-year yield ( US10Y ) declined 6 basis points to 3.54%, while the 2-year yield ( US2Y ) slumped 10 basis points to 4.16%.
MORE OF OUR TOP STORIES
Chinese EV battery-swapping tech developer U Power (NASDAQ: UCAR ) jumped more than 1,100% intraday Thursday in the stock's first session following an initial public offering.
Shares rose to as high as $75 -- up 1,150% from UCAR's $6 IPO price -- before pulling back to end the session at $43.18. U Power, ultimately closed 619.7% above its IPO price, but 42.4% below its $75 intraday peak.
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Just last month we told you about T-Mobile's planned purchase of Mint Mobile, which is backed by actor Ryan Reynolds.
The $1.35B deal is said to be under review by the Dept. of Justice, which is considering a potential lawsuit to block the deal.
According to a NYPost report, which cited unidentified sources, The DOJ's antitrust division is looking closely at the transaction as the regulator is concerned that an acquisition could increase prices for wireless customers.
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United Airlines (NASDAQ: UAL ) noted a delay in expected Boeing ( BA ) deliveries in a 10-Q filing released on Thursday evening.
According to the filing, Boeing has notified United that 37 Boeing 737 MAX aircraft scheduled for delivery in 2023 will be pushed to 2024.
United estimates that 11 Boeing 737 MAX aircraft scheduled for delivery in 2023 will now arrive in 2024 and another 30 scheduled for delivery in 2024 will be delivered in 2025.
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Earlier in the show we told you that Tesla ended Thursday’s trading day down nearly 10 percent.
Well, after Tesla's ( TSLA ) disappointing quarterly results, ARK issued a report late Thursday that valued the company at $2,000 per share by 2027 as the base case.
Cathie Wood's ARK Invest issued a new price target on Tesla (NASDAQ: TSLA ) that would value the EV maker at more than $6T in fewer than four years.
The target is bookended by a 25% chance of a bear case where TSLA hits $1,400 or less in 2027 and a 25% chance of a bull case where it reaches $2,500 per share or more.
The $2,000 target would value Tesla ( TSLA ) at about $6.34T, compared with the current market cap of $516.6B.
While we’re on the topic of Tesla, we’ve been telling you about price cuts on certain models but the price of some models has increased.
I’ll leave a link to that article we just published in show notes.
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Hasbro (NASDAQ: HAS ) is reportedly talking to the founder of its Entertainment One studio about selling the assets back to him.
The toymaker was reported late last year to be seeking a buyer for most of the unit , which it acquired in 2019 for more than $4B. And it's been selling off pieces of EOne it hasn't considered core to its strategy, such as the unit's music business.
Bloomberg reported, Hasbro is talking to EOne founder Darren Throop about transferring most of the assets, adding that Throop has backing from private-equity name CVC Capital Partners.
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The CEO of Clorox announced in a blog post that the company eliminated 200 positions.
However, she said “Thankfully, the total number of people impacted is less than that.” The company was able to redeploy some workers to other areas of the business and close some open positions.
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Now let’s take a look at the markets as of 6:20 am. Ahead of the opening bell today, Dow, S&P and Nasdaq futures are mixed. The Dow is down a fraction. The S&P 500 is up a small fraction and the Nasdaq is flat. Crude oil is down 0.3% at more than $77 a barrel. Bitcoin is down 2.5% at $28,132.
In the world markets, the FTSE 100 is up 0.2% and the Dax is down a fraction.
On today’s economic calendar, at 9:45 AM the PMI Composite Flash.
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Wall Street Breakfast Podcast: Analysts Weigh AT&T Free Cash Flow