Coffee With Greta: Earnings Anticipation
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DJIA Futures: +5 (+0.01%)
SPX Futures: +2 (+0.1%)
NASDAQ Futures: +33 (+0.2%)
Good morning friends!
Futures are slightly higher as traders await key earnings later today.
Let’s get right to it!
Goldman Sachs Misses Profit Estimates
Goldman Sachs (GS) shares are down 1.4% ahead of the open after missing Q2 profit expectations.
Here’s how the investment bank’s results compared to analysts’ estimates:
- EPS: $3.08 vs $3.18 expected
- Revenue: $10.9 billion vs $10.84 billion expected
Profit dropped 58% year over year due to steep declines in trading and investment banking plus losses related to commercial real estate deals.
The CEO said, “This quarter reflects continued strategic execution of our goals. I remain fully confident that continued execution will enable us to deliver on our through-the-cycle return targets and create significant value for shareholders.”
Fixed income trading revenue fell 26% to $2.71 billion vs $2.78 billion expected, equities trading revenue of $2.97 billion topped the $2.42 billion estimate, and investment banking fees fell 20% to $1.43 billion vs $1.49 billion expected.
Carvana Reaches Debt Deal
Carvana (CVNA) shares are surging 40.1% in premarket trade after announcing a debt restructuring deal.
The used car retailer said the agreement will reduce its total debt outstanding by more than $1.2 billion.
Carvana said the deal will eliminate over 83% of its 2025 and 2027 unsecured note maturities and lower its required cash interest expense by more than $430 million per year for the next two years.
The CFO said, “This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth.”
The company also announced plans to sell up to $1 billion in shares to raise capital.
Carvana reported its second-quarter results alongside the debt announcement.
Here’s a look at those numbers vs analysts’ expectations:
- Loss per share: $0.55 vs $1.15 expected
- Revenue $2.97 billion vs $2.59 billion expected
Carvana’s gross profit per unit jumped 94% year over year to $6,520.
The CEO said, “Our strong execution has made the business fundamentally better, and combined with today’s agreement with noteholders that reduces our cash interest expense and total debt outstanding, gives us great confidence that we are on the right path to complete our three-step plan and return to growth.”
Housing Starts, Building Permits Drop
New home construction slowed more than expected in June.
The Census Bureau reported housing starts tumbled 8% last month to a seasonally adjusted annual rate of 1.43 million units vs 1.48 million expected.
Single-family starts fell 7% while multi-family starts tumbled 11.6%.
The number of new permits issued was also weaker than expected.
Building permits fell 3.7% in June to a seasonally adjusted annual rate of 1.44 million units vs 1.48 million expected.
Single-family permits rose 2.2% while multi-family permits dropped 13.5%.
Mortgage Demand Jumps
Mortgage demand rose last week as lower rates boosted refinance activity.
The Mortgage Bankers Association reported total application volume rose 1.1% last week.
That increase was driven by refinance applications which jumped 7% weekly and were down 32% year over year.
Purchase applications fell 1% weekly and were down 21% annually.
The refinance share of applications rose to 28.4% vs 26.8% the previous week.
In Case You Missed It
- Microsoft (MSFT) shares hit an all-time high Tuesday after the company announced pricing for its new AI subscription service. The stock hit a high of $366.78 and settled at a new closing high of $359.49 at the end of the day. The new Copilot subscription service adds AI to Microsoft’s Office products like Word, Excel, and Teams. The subscription will cost an additional $30 per month for Office subscribers.