Coffee With Greta: Stocks Rip Higher As Inflation Slows
DJIA Futures: +408 (+1.3%)
SPX Futures: +70 (+1.7%)
NASDAQ Futures: +313 (+2.4%)
Good morning friends!
Futures are rallying on better-than-expected inflation data.
Let’s get right to it!
Inflation Cools More Than Expected
U.S. inflation pressures slowed more than expected in July as gas prices fell from record highs.
The Bureau of Labor Statistics' consumer price index was unchanged on a monthly basis and rose 8.5% year-over-year.
That was better than economists’ expectations for a 0.2% increase monthly and 8.7% annually.
The slowdown was driven by a steep drop in oil and gas prices.
Fuel oil prices fell 11% monthly but were still up 75.6% year over year.
Gas prices dropped 7.7% monthly and were still 44% higher annually.
Those drops helped offset rising costs for food and housing.
Grocery prices rose 1.3% monthly and jumped 13.1% year over year.
Shelter prices rose 0.5% monthly and 5.7% annually.
The core CPI, which excludes food and energy prices, rose 0.3% monthly and 5.9% annually, unchanged from June.
Coinbase Loses Over $1 Billion In Q2
Coinbase (COIN) shares are up 2.9% ahead of the open despite reporting a $1.1 billion second-quarter loss.
The crypto exchange reported a loss of $4.98 per share on $808.3 million in revenue.
That was worse than analysts’ expectations for a loss of $2.65 per share on $832.2 million in revenue.
Revenue tumbled nearly 64% year-over-year as the crypto market collapsed.
The profit loss included a $377 million non-cash cryptocurrency-related impairment charge.
Coinbase’s own crypto assets were worth just $428 million at the end of Q2 compared to about $1 billion at the end of Q1.
In a letter to shareholders, the company said, “Q2 was a test of durability for crypto companies and a complex quarter overall. Dramatic market movements shifted user behavior and trading volume, which impacted transaction revenue, but also highlighted the strength of our risk management program.”
The company had 9 million monthly transacting users in Q2, down from 9.2 million in Q1.
Coinbase forecast it will have 7 million to 9 million monthly transacting users in 2022, down from its previous forecast for up to 15 million.
Roblox Plunges On Q2 Miss
Roblox (RBLX) shares are tumbling 10.6% in premarket trade after missing Q2 expectations on the top and bottom line.
The video game platform reported a loss of $0.30 per share on $639.9 million in revenue.
That was steeper than analysts’ estimates for a loss of $0.21 per share and missed revenue expectations of $644.4 million.
Roblox had 52.2 million average daily active users last quarter, down from 54.1 million in Q1.
Average bookings per daily active user tumbled 21% year over year to $12.25.
The Chief Business Officer remained optimistic about the future in an interview with CNBC saying, “We’re very much in investment mode and that’s going to put a little bit of drag on earnings, but these are investments that are the right investments for us to make that will pay off in the three-to-five-year timeframe.”
Unity Software Cuts Outlook
Unity Software (U) shares are 3.6% ahead of the open after reporting mixed Q2 results.
The videogame software company reported an adjusted loss of $0.18 per share on $297 million in revenue.
That was better than analysts’ expectations for a $0.21 per share loss but revenue fell short of estimates for $299.7 million.
The results came hours after Applovin (APP) offered to buy Unity in an all-stock transaction worth $20 billion.
Unity forecast Q33 revenue between $315 million and $335 million with full-year sales ranging between $1.3 billion and $1.35 billion.
That was down from its previous full-year forecast for revenue between $1.35 billion and $1.43 billion.
Analysts were expecting Q3 revenue of $34.37 million and $1.36 billion for the full-year.
Sweetgreen Plummets After Slashing Outlook, Announcing Layoffs
Sweetgreen (SG) shares are plunging 20.8% in premarket trade after cutting its 2022 forecast and announcing layoffs.
The salad chain reported a loss of $0.36 per share on $124.9 million in revenue.
That was in line with analysts’ profit loss expectations but lower than estimates for $130.2 million in revenue.
Sweetgreen said it laid off 5% of its support center workforce and is downsizing to a smaller office building to lower operating costs.
The company forecast full-year revenue of $480 million to $500 million, down from its previous forecast of $515 million to $535 million.
Same-store sales are now expected to grow 13% to 19% year over year vs the prior forecast for 20% to 25% growth.
Oil Prices Flat As U.S. Inventory Jumps Unexpectedly
Oil prices are flat after an unexpected increase in U.S. inventories last week.
West Texas Intermediate crude futures are up 0.1% at $90 bbl while Brent crude futures are up 0.03% at $96 bbl.
The American Petroleum Institute reported Tuesday that U.S. crude stockpiles rose by 2.2 million barrels last week.
Analysts were expecting a 400,000 barrel decline in inventories.
The unexpected jump signals a potential drop in demand.
The Energy Information Administration reports official inventory levels today.
In Case You Missed It
- Confidence among small business owners rose more than expected in July. The NFIB Small Business Optimism Index rose to 89.9 from 89.5 in June. Economists were expecting the index to be unchanged. 37% of owners said inflation is their single most important problem, up 3% from June and the highest level since Q4 1979. NFIB’s Chief Economist said, “The uncertainty in the small-business sector is climbing again as owners continue to manage historic inflation, labor shortages, and supply chain disruptions.”