Coffee With Greta: Traders Still Assessing Economic Risks
DJIA Futures: +151 (+0.5%)
SPX Futures: +23 (+0.6%)
NASDAQ Futures: +68 (+0.6%)
Good morning friends!
Futures are higher as traders continue to assess the risk of an economic downturn.
Let’s get right to it!
GameStop Reports Steeper Loss, Weaker Sales Than Expected
GameStop (GME) shares are up 0.4% ahead of the open despite reporting weaker-than-expected Q3 results.
Here’s how the video game retailer’s results compared to analysts’ expectations:
- Adjusted loss per share: $0.31 vs $0.28 expected
- Revenue: $1.186 billion vs $1.345 billion expected
Revenue was down 9% year over year and this marked GameStop’s seventh consecutive quarterly loss.
The CEO said the company remains focused on achieving profitability in the near term and growth in the long term.
He said, “We’re seeking to transform a legacy brick-and-mortar business that was on the brink of bankruptcy. The company is a stronger business today than at any time in the recent past.”
Rent the Runway Sales Jump
Rent the Runway (RENT) shares are rallying 14.8% in premarket trade after reporting strong Q3 sales than expected.
Here’s how the fashion rental and subscription company’s results compared to analysts’ expectations:
- Loss per share: $0.56 as expected
- Revenue: $77.4 million vs $72.9 million expected
Revenue was up 31% year over year while active subscribers jumped 15%.
Rent the Runway’s CEO told CNBC that inflation is making the company more appealing to customers.
She said, “Rent the Runway’s business model is fundamentally about delivering an enormous amount of financial value to the consumer. So there’s no other place that the consumer can go to get as much financial value as she receives from our offering.”
The company forecast Q4 revenue of $72 million to $74 million, higher than analysts’ estimates of $72 million.
Rent the Runway also hiked its full-year revenue forecast to between $293 million and $295 million vs $285 million to $290 million previously.
Weekly Jobless Claims Jump
Weekly jobless claims rose as expected last week as the U.S. labor market remains relatively stable.
The Labor Department reported 230,000 Americans filed initial claims for unemployment benefits.
That was up by 4,000 from the previous week and in line with economists’ expectations.
But continuing claims hit the highest level since February, rising by 62,000 to 1.671 million in the week ending November 26.
Gas Prices Continue Decline
U.S. average gas prices are now lower than they were at this same time one year ago.
AAA shows the national average for a gallon of regular gas dipped to $3.329 today.
That’s lower than $3.343 a year ago and down sharply from the record $5.01 per gallon earlier this year.
The latest drop in gas prices comes as refineries are running at high capacity because of the diesel shortage in the U.S.
That is resulting in excess regular gas with demand down about 7% compared to a year ago.
But diesel prices are still high, with the national average at $5.00 per gallon.
Analysts expect the national average for regular gas to fall below $3 a gallon by Christmas.
Oil Prices Rebound
Oil prices are rebounding today on fresh demand hopes in China and signs of Russian oil tankers being delayed.
West Texas Intermediate crude futures are up more than 4% to over $75 bbl while Brent crude futures are up 2.3% to just under $79 bbl.
China announced the most significant relaxation of its Covid restrictions on Wednesday.
The country will now allow infected people with mild symptoms to quarantine at home and dropped testing requirements for those traveling domestically.
China is the second-largest crude importer in the world.
Tesla Slides On Report Of Slowdown At Shanghai Plant
Tesla (TSLA) shares are falling 1.3% ahead of the open following a Bloomberg report the company is shortening shifts and delaying hiring at its Shanghai plant.
The electric automaker is reportedly cutting shifts by about two hours as the plant grapples with elevated inventory levels due to slowing demand in the Chinese auto market.
The China Passenger Cars Association reported a 10.5% drop in car sales in November from October.
Sales were down 9.2% year over year.
But Tesla’s Shanghai factory still delivered a record 100,291 electric vehicles in the month.
In Case You Missed It
- The CEOs of Bank of America (BAC) and Wells Fargo (WFC) warned of a slowdown in consumer spending Wednesday. Speaking at a financial conference, both executives said they have seen slowing growth in both credit card and debit card purchase volumes. Both joined JPMorgan Chase (JPM) CEO Jamie Dimon in predicting a recession in 2023.
- Carvana (CVNA) shares plummeted 42.9% on Wednesday amid growing bankruptcy concerns. Bloomberg reported the online used car retailer’s largest creditors signed a deal that binds them to act together in negotiations with the company. That agreement will last 3 months and such deals are usually viewed as a way to streamline negotiations around debt restructurings.