🦢Black Swan Street Weekly Stock Market Summary (Sept. 18th - Sept. 22nd 2023)

Welcome to Black Swan Street!

Fed hold rates steady, IPOs continue to be hot, Rupert Murdoch retiring from Fox, Cisco acquiring Splunk for roughly $28 billion in equity value, the Sam Bankman-Fried saga continues…

It was an action-packed week, so let’s get into it:

• Fed Interest Rate Decision🧐

• IPOs Continue Hot-Streak🔥

• Earnings Summary💰

• Headline Roundup🗞

• Next Week In The Stock Market🔮

Read time: 6 minutes

Fed Interest Rate Decision🧐

This week, we saw the Federal Reserve hold interest rates steady for the second time this year, pausing its continuous cycle of rate hikes.

Interest rates are currently at a 22-year high and we just saw the central bank maintain the range for its benchmark interest rate at 5.25%-5.5%, while also maintaining the projection for interest rates to finish the year in a range of 5.5%-5.75% (implying one more rate hike this year).

Twelve members of the FOMC saw one more rate hike needed this year, while seven members wanted to keep rates steady through year-end.

The latest Consumer Price Index (CPI) report shows prices in the U.S. rose 3.7% over the previous 12 months to August.

Also to note: The Bank of England left interest rates unchanged this week as well, breaking an also long run of continuous rate hikes.

IPOs Continue Hot-Streak🔥 

IPOs are hot-hot-hot. Last week we saw the biggest IPO of 2023 in ‘Arm Holdings’, you can read about it here.

This week has been no different. This week we saw long awaited ‘Instacart’ and ‘Klaviyo’ both go public.

Instacart IPO:

Instacart has had a rocky road to say the least. Back in 2021 the grocery delivery service reached a valuation of $39 billion, but this week they went public through an IPO at a valuation of $9.9 billion - more than a 70% decrease in valuation.

In the first half of this year, revenue for Instacart totaled $1.48 billion, while total orders grew less than 1% in the first half of 2023 when compared to the same period in 2022.

• Instacart’s shares finished the week declining -10.98%

Klaviyo IPO:

Klaviyo, the marketing automation platform , went public also this week, pricing its IPO at $30 per share, giving the company a fully diluted valuation of around $9.2 billion.

Klaviyo has 130,000 customers and reported net income of $15.2 million during the first half of this year, after losing money in 2021 and 2022.

• Klaviyo’s shares finished the week declining -0.98%

Looking ahead: Birkenstock is the next IPO to be watching for. About a week ago (no Bobby Shmurda), the company filed its IPO registration statement with the SEC.

Earnings Summary💰

In-Depth Earnings Dive:

AutoZone (AZO)

• Adj. EPS $46.46 beats $44.51 estimate

• Sales $5.69B beats $5.61B estimate

• Same-store sales up 4.5%, beating 2.4% estimate

• Oracle shares finished the week declining -9.82%

General Mills (GIS)

• Adj. EPS $1.09 beats $1.08 estimate

• Sales $4.90B beats $4.88B estimate

• Reaffirms FY24 sales growth of 3%-4%; Adj. EPS growth of 4%-6%

FedEx (FDX)

• Adj. EPS $4.55 beats $3.74 estimate

• Sales $21.70B miss $21.81B estimate

• Sees FY24 EPS of $17-$18.50 before MTM retirement adjustments and ex-costs of business optimization, vs previous forecast of $16.50-$18.50

• Expects to repurchase additional $1.5 billion of common stock during FY24

KB Home (KBH)

• Adj. EPS $1.80 beats $1.43 estimate

• Sales $1.59B beats $1.48B estimate

• Homes delivered down 7%

• Guides for FY23 housing revenue of $6.31B vs $6.19B estimate

Headline Roundup🗞

• Canopy Growth announces private placement of up to $50 million to boost liquidity - MW

• Moderna co-founder and board chairman, Nourbar Afeyan, sold 15,000 shares (valued at ~$1.64 million) - SEC

• Clorox warns product shortages after cyberattack will hurt its earnings - FB

• Instacart

• Cboe Global Markets CEO, Edward Tilly, resigns following undisclosed personal relationships with colleagues - BBG

• U.S. Housing Starts: 1.28M, from previous 1.45M, and below 1.44M forecast

• Disney plans to spend $60 billion on its theme parks and cruises over the next decade - ORLS

• Amazon adding 250,000 workers for the holidays and bumping average pay for warehouse and delivery workers to $20.50 an hour from $19 an hour - CNBC

• Pinterest expects a compound annual growth rate over the next three to five years in the mid to high teens - CNBC

• Hyundai to invest $12.6 billion in EV manufacturing, battery production in Georgia - MW

• Nio announces proposed offering of $1 billion convertible senior notes - IR

• Apple and Goldman Sachs were planning stock-trading feature for iPhones until markets turned last year - CNBC

• Textron and NetJets sign fleet agreement for up to 1,500 Cessna Citation jets - KWCH

• Bank of America will increase its minimum wage to $23 an hour - FB

• Cisco to acquire cybersecurity company Splunk for $157 per share or roughly $28 billion in equity value - FB

• Rupert Murdoch to retire from Fox and News Corp - BBC

• Report suggests Google wants to ditch Broadcom as a supplier of artificial intelligence chips and start producing in-house - TINF

• U.S. Existing Home Sales: 4.04M, from previous 4.07M, and below 4.10 forecast

Next Week in the Stock Market🔮

Earnings Calendar Next Week:

What the swan is watching:

Tuesday: TD Synnex, Costco

Wednesday: Micron

Thursday: Accenture, Nike, CarMax, Jabil, BlackBerry

Friday: Carnival Corp.

Economic Calendar Next Week:

The Swan’s Picks🦢

🤖Morgan Stanley announces new AI assistant is live: Morgan Stanley’s new assistant is created with OpenAI’s latest software and is now “fully live” for financial advisors and their support staff. The tool gives financial advisors access to a database of about 100,000 research reports and documents. This new assistant is called the “AI @ Morgan Stanley Assistant” - creative right?

🤬You thought it was over for Sam Bankman-Fried?: Think again. Sam Bankman-Fried’s parents are now being sued for money they allegedly received from FTX ahead of its collapse.

🛍 American Dream megamall loses ~$250 million in 2022: The 3.5-million-square-foot megamall that boasts shopping, an indoor ski slope, amusement park, water park, and much more, saw massive losses last year. Expenses for the year doubled to almost $428 million, which lead to losses quadrupling in one year.

The Wrap-Up🔄

That’s all we got this week!

As always, please let us know what you thought ⬇