🦢 Black Swan Street Weekly Stock Market Summary (August 21st - August 25th 2023)

Welcome, Finance aficionados!

Housing crisis continues, important earnings, Nike on longest losing streak in nearly 25 years, Disney nears lowest close in 9 years, Instacart files for IPO, Charles Schwab new debt, Subway gets acquired, Model becomes the best-selling beer in the U.S.

Here’s what we got for you to wrap up the week:

• Housing Crisis Continues? 🏠

• Earnings Summary 💰

• Headline Roundup 🗞

• Next Week In The Stock Market 🔮

Read time: 5 minutes

Housing Crisis Continues? 🏠

It’s no secret rising interest rates have had a tremendous impact on the housing market. This week, we’ve seen:

• The national average Mortgage Rate hits 7.58%, the highest point since 2001

• Mortgage demand falls to lowest level since 1995, down 30% YoY

• Applications to refinance a home were 35% lower YoY

High interest rates and high prices are only part of the problem… there’s also extremely low supply.

Existing home sales, a monthly metric that measures the change in the annualized number of existing residential buildings that were sold during the previous month, is at the lowest level since 2010.

Why is supply so low?

People are locked-in to ~3% mortgages. Why sell your house if your mortgage rate will double? It wouldn’t make any sense.

Well, how are mortgage companies doing?

Bad. Very bad.

Online mortgage lender, Better.com (BETR), went public via SPAC on Thursday.

In one day, their stock crashed 93%

In one day, a $4 billion dollar company, turned to a $400 million company

Earnings Summary 💰

In-Depth Earnings Look:

Zoom (ZM)

• Adj. EPS $1.34 beats $1.05 estimate

• Sales $1.14B beats $1.11B estimate

• Sees FY24 Adj. EPS $4.63-$4.67 vs $4.30 estimate

• Sees FY24 Total Revenue $4.485B-$4.495B vs $4.48B estimate

• At the end of Q2, Zoom had 218,100 customers, up 6.9% YoY

• Zoom’s Stock Finished the Following Trading Session Declining -2.14%

Lowe’s (LOW)

• Adj. EPS $4.56 beats $4.49 estimate

• Sales $24.96B miss $24.99B estimate

• Sees FY Comparable Sales Down 2%-4%

• Maintains Full-Year Forecasts for $87B-$89B in Revenue and $13.20-$13.60 EPS

• Lowe’s Stock Finished the Following Trading Session Gaining +3.75%

Dick’s Sporting Goods (DKS)

• Adj. EPS $2.82 miss $3.81 estimate

• Sales $3.22B miss $3.23B estimate

• Lowers FY2023 Adj. EPS Guidance to $11.50 - $12.30 vs $13.50 estimate

• Eliminated 250 Corporate Jobs

• Dick’s Stock Finished the Following Trading Session Declining -24.15%

Macy’s (M)

• Adj. EPS $0.26 beats $0.13 estimate

• Sales $5.13B beats $5.09B estimate

• Reiterated 2023 Guidance of Net Sales between $22.8B-$23.2B, Sales are expected to continue to be negative YoY down 6%-7.5%

• CFO, Adrian Mitchell, said on a call with investors, “While we have seen an increase in revenues as interest rates have risen, that has been more than offset by higher bad debt assumptions and write-offs.” Also, “These bad debt assumptions and write-offs are the result of rising delinquencies, which leads to higher net credit losses over time and contributes to increased bad debt within the portfolio.”

• Macy’s Stock Finished the Following Trading Session Declining -14.05%

Nvidia (NVDA)

• Adj. EPS $2.70 beats $2.09 estimate

• Sales $13.51B beats $11.22B estimate

• Nvidia Board Approved an Additional $25B in Share Repurchases, Without Expiration

• Q2 Data Center Revenue at $10.32B vs $8.02B estimate

• Guides for Q3 Revenue of $16B, Plus or Minus 2% vs $12.4B estimate

• Nvidia is now the 5th most valuable public company

Headline Roundup 🗞

• Permian Resources to acquire Earthstone Energy in all-stock, $4.5 billion deal - GBNW

• 10-Year Treasury Yield rises to almost 4.32%, back near almost 16-year high - MW

• Nike on pace for its longest losing streak in nearly 25 years - MW

• UK clears Broadcom’s $69 billion deal to buy VMware - RT

• Charles Schwab raising $2.35 billion of fresh debt after revealing plans to cut jobs and close or downsize offices to curb $500 million in costs - BBG

• Activision Blizzard sells streaming rights to “Call of Duty” to Ubisoft Entertainment in a fresh attemt to win approval from Britain’s anti-trust regulator for $69 billion sale to Microsoft - RT

• Kenya eyes $81 million from African Development Bank after cutting domestic loans - BBG

• VCI Global shares soar after in announces collaboration with Microsoft Azure OpenAI services - MW 

• IMF Board approves $7.5 billion disbursement to Argentina - BBG

• Altria raises quarterly dividend by 4.3% to 98 cents/share - MW

• Disney’s stock flirting with lowest close in nearly 9 years - MW

• Walmart is partnering with Alphabet Inc’s Wing to expand drone delivery to 60,000 additional homes in Texas - FB

• T-Mobile slashing 5,000 jobs - FB

• Wells Fargo overcharged clients $27 million in fees, SEC alleges - BBG

• Instacart files for IPO - MW

• Rite Aid prepares to file for bankruptcy - FB 

Next Week in the Stock Market 🔮

Earnings Calendar Next Week:

What the Swan is watching:

Tuesday: Best Buy, Hewlett Packard Enterprise, HP Inc, Nio, Bank of Montreal, Bank of Nova Scotia

Wednesday: Salesforce, Crowdstrike, Chewy

Thursday: Dollar General, Broadcom, UBS, Lululemon, Dell Technologies

Economic Calendar Next Week:

🦢 The Swan’s Picks

🥖 Subway… SOLD: Private equity firm, Roark Capital, the exact terms are still unknown, but it’s rumored to be valued ~$9 billion. Roark Capital also owns stakes in chains like Jimmy John’s, Arby’s, Baskin-Robbins, and Buffalo Wild Wings

🇮🇳 India set to ban sugar exports for first time in 7 years: A lack of rain has cut cane yields, which in turn are halting shipments. This is putting pressure on global food markets and triggering fears of further inflation.

🍺 Down goes Bud Light, and here comes Modelo: This year, we saw the collapse of Bud Light. But, now it’s official. After two decades as the top-selling beer in the U.S. on an annual basis, Bud Light has officially been dethroned. Modelo has officially became the best-selling beer in the U.S.

🇺🇸 Former President, Donald Trump, becomes the first ever U.S. president to have a mugshot taken. Trump is facing 13 separate counts in Georgia, including a racketeering charge and several fraud and false statement counts. See the mugshot here.

🌺 Maui sues Hawaiian Electric over devastating wildfires: Maui County filed a lawsuit claiming Hawaiian Electric negligently left power flowing amid high winds and dry conditions and failed to properly maintain the grid, leading to the fires that killed at least 115 people.

⛲️ Blackstone is selling ~22% of the Las Vegas hotel Bellagio: Realty Income Corporation is buying a 21.9% stake in the hotel, while valuing the Bellagio’s assets at $5.1 billion.

The Wrap-Up 🔄

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