Weekly Financial Market Insights 📈
Trading Week 35 ... Snapchat and Bed Bath & Beyond Layoffs, OpenSea Volume Down 99%, China Covid Lockdowns, US Weapon Sale to Taiwan, and CrowdStrike + Okta + MongoDB + Lululemon Earnings
Sunday Morning Markets ☕
Your weekly financial markets update, in less than 5 minutes. Market coverage for Monday, August 29 - Friday, September 2.
Last Week ⏪
A resilient US labor market and a hawkish Fed pushed the 10Y yield back above 3.2%. Equities have since broken their uptrend and retreated across the board. Layoffs continue with Snapchat and Bed Bath & Beyond both dropping 20% of their employees. A new set of labor market data, Elon continues his fight against Twitter, Russia shuts down Nord Stream 1, US orders Nvidia to halt sales to China — all that and more in this week of Sunday Morning Markets…
US Markets 🇺🇸
Snapchat ($SNAP) lays off 20% of its workforce as part of a financial restructuring plan as the ad industry combats macro headwinds. CEO Evan Spiegel said the company’s current year-over-year revenue growth rate for the quarter of 8% “is well below what we were expecting earlier this year.”
Bed Bath & Beyond ($BBBY) lays off 20% of its corporate employees and closes 150 of its worst-performing stores. To strengthen its balance sheet, the company said it has secured more than $500 million in new financing. This news comes after their latest quarterly filing showed that same-store sales plummeted 26% versus the prior year.
US Payrolls jumped 315K last month and came in stronger than expected (298K) as companies keep hiring. A flush of people rejoining the labor force pushed participation up to 62.4% and unemployment to 3.7%, both up from 62.1% and 3.5% last month respectively.
Elon Musk’s lawyers subpoena Twitter whistleblower, Peiter Zatko, in an attempt to use his accusations of false statements and security shortcomings at Twitter, to break off Elon’s $44B acquisition agreement.
Job openings in the US jump to 11.2 million, much higher than the 10.5 million expected by polled economists. New hires were little changed at 6.4 million, while separations hit 5.9 million (4.2m quits, 1.4m discharges).
Jobless claims sink to 232K the lowest level since June, and well below economists’ expectations of 245K. Continuing claims jumped to 1.44m, up 26K from the previous reading.
Rest of World 🌏
US orders Nvidia ($NVDA) to halt sales of chips to China. The announcement signals a major escalation of the US crackdown on China's technological capabilities as tensions bubble over the fate of Taiwan, where chips for Nvidia and almost every other major chip firm are manufactured.
US approves $1.1B weapon sale to Taiwan after China stated there would be “counter-measures” if the deal were completed. The arms sale would include 60 anti-ship missiles and 100 air-to-air missiles, along with support for Taiwan's surveillance radar program.
Chengdu locks down 21.2 million citizens as Chinese cities continue to fight Covid-19. All residents were ordered to stay at home from 6 p.m. on Thursday, with households allowed to send one person per day to shop for necessities.
Russia closes Nord Stream 1 for maintenance work to take place between August 31st through September 3rd. The temporary halt reflects a deepening gas dispute between Russia and the European Union and underscores both the risk of a recession and a winter shortage.
Walmart ($WMT) looks to acquire MassMart’s ($MMRTY) remaining outstanding shares for 6.4B rand ($377.6M), representing a 53% premium. Walmart originally took a majority stake in the South African retailer in 2010 but the company still struggles to hit profitability today.
Sony ($SONY) sets up a mobile gaming division as the Japanese gaming giant makes a push to diversify away from consoles. They also announced the acquisition of Berlin-based mobile game developer, Savage Game Studios.
Crypto ⚡
OpenSea NFT trading volume is down 99% from its May peak. On May 1, OpenSea processed a record $2.7B in NFT transactions, but on Thursday the marketplace recorded just $8.44m worth, according to DappRadar.
BTC & ETH open interest ratio soars to record high, increasing the risk of future volatility in crypto markets. Both ETH and BTC’s perpetual futures open interest ratios stood at lifetime highs above 0.03x and 0.02x, respectively.
Over 10% of Ethereum’s nodes could get wiped out as German cloud provider ‘Hetzner’ says it does not allow mining or anything “even remotely related,” including staking on its network. According to ethernodes.org, Hetzner powers roughly 16% of all Ethereum nodes.
DC’s Attorney General sues Michael Saylor for tax fraud as well as his company, MicroStrategy, for allegedly helping him evade taxes on his earnings in the district.
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Earnings Reports 💰
Crowdstrike ($CRWD)
Revenue: $535.2m vs $516.4m expected and $337.7m year ago (+58% YoY)
Non-GAAP EPS: $0.36 vs $0.27 expected and $0.11 year ago (+227% YoY)
Non-GAAP Op. Income: $87.3m vs $35.3m year ago (+148% YoY)
Free Cash Flow: $135.8M vs $73.6M year ago (+84% YoY)
Guidance:
Q3 = Revenue of $569.1m - $575.9m and non-GAAP EPS of $0.30 - $0.32
FY = Revenue of $2.223B - $2.232B and non-GAAP EPS of $1.31 - $1.33
Important Notes: Ending ARR grows 59% YoY to reach $2.14B. Record net new ARR of $218M with accelerating YoY growth. Adds record 1,741 net new subscription customers. Stock-based compensation = 25% of revenue, 33% of gross profit.
Market Reaction (24hrs after report): -5.5%
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SentinelOne ($S)
Revenue: $102.5m vs $95.7m expected and $45.8m year ago (+124% YoY)
Non-GAAP EPS: ($0.20) loss vs ($0.25) expected and ($0.38) year ago (+47% YoY)
GAAP Operating Margin: (106%) vs (147%) year ago (+4,100 bps)
Total Customers: 8,600 vs year ago (+60% YoY)
Guidance:
Q3 = Revenue of $111m and non-GAAP op. margin of (57%)
FY = Revenue $415m - $417m and non-GAAP op. margin of (58%) - (55%)
Important Notes: Customers with ARR over $100K grew 117% to 755 as of July 31, 2022. Dollar-based net revenue retention rate was a record 137%. Stock-based compensation = 40% of revenue, 62% of gross profit.
Market Reaction (24hrs after report): -5.9%
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Okta ($OKTA)
Revenue: $451.8m vs $430.7m expected and $315.5M year ago (+43% YoY)
Non-GAAP EPS: ($0.10) loss vs ($0.30) expected and ($0.11) year ago (+10% YoY)
Free Cash Flow Margin: (5.3%) vs (1.2%) year ago (-410 bps)
Total Customers: 16,400 vs 13,050 year ago (+26% YoY)
Guidance:
Q3 = Revenue of $463m - $465m and non-GAAP EPS of ($0.25) - ($0.24)
FY = Revenue of $1.812B - $1.82B and non-GAAP EPS of ($0.73) to ($0.70)
Important Notes: Remaining performance obligations (RPO) grew 25% YoY to $2.79B. Current remaining performance obligations (cRPO) grew 36% YoY to $1.50B. TTM Dollar Based Net Retention Rate of 122%. Stock-based compensation = 38% of revenue, 55% of gross profit.
Market Reaction (24hrs after report): -33.7%
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MongoDB ($MDB)
Revenue: $303.7m vs $282.3m expected and $198.7M year ago (+53% YoY)
EPS: ($0.23) loss vs ($0.28) expected and ($0.12) year ago (-92% YoY)
Total Customers: 37,000 vs 29,000 year ago (+28% YoY)
Guidance:
Q3 = Revenue of $300m - $303m and non-GAAP EPS of ($0.19) - ($0.16)
FY = Revenue of $1.196B - $1.206B and non-GAAP EPS of ($0.35) to ($0.28)
Important Notes: Customers with ARR over $100K grew 30% to 1,462. Stock-based compensation = 33% of revenue, 47% of gross profit.
Market Reaction (24hrs after report): -25.3%
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Lululemon ($LULU)
Revenue: $1.87B vs $1.77B expected and $1.45B year ago (+29% YoY)
EPS: $2.20 vs $1.86 expected and $1.65 year ago (+33% YoY)
Gross Profit: $1.1B vs $0.84B year ago (+25% YoY) and margin -160bps to 56.5%
Operating Profit: $401m vs $291m year ago (+38% YoY) and margin +140bps to 21.5%
Guidance:
Q3 = Revenue of $1.78B - $1.81B (+24% YoY) and EPS of $1.90 - $1.95
FY = Revenue of $7.865B - $7.94B (+26% YoY) and EPS of $9.75 to $9.90
Important Notes: Repurchased 400K shares for a total cost of $125m. Opened 21 new company-operated stores during the Q2, ending with 600 stores. Comparable store sales increased 16% YoY, while direct-to-consumer net revenue increased 30%.
Market Reaction (24hrs after report): +6.7%
Week Ahead 📅
Monday
Labor Day Holiday. Market Closed 🇺🇸
UK Composite PMI 🇬🇧
Tuesday
S&P U.S. Services PMI 🇺🇸
ISM Services Index 🇺🇸
Australian GDP (Q2 final) & Interest Rate Decision 🇦🇺
Earnings Reports: UiPath ($PATH), GitLab ($GTLB) 💰
Wednesday
Cleveland Fed President Loretta Mester Speaks 🇺🇸
Euro Area GDP (Q3 est) 🇪🇺
Japan GDP (Q2 final) 🇯🇵
BoC Interest Rate Decision 🇨🇦
Earnings Reports: NIO ($NIO), Gamestop ($GME), Asana ($ASAN) 💰
Thursday
Jobless Claims 🇺🇸
Consumer Credit 🇺🇸
ECB Interest Rate Decision 🇪🇺
China Inflation Rate (Aug) 🇨🇳
Earnings Reports: Zscaler ($ZS), DocuSign ($DOCU), Bilibili ($BILI) 💰
Friday
Earnings Reports: Kroger ($KR) 💰
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Until next Sunday…