Top US stocks to watch: eBay, NIO and Coupang

eBay, NIO and Coupang all release results after the markets close, Coinbase beats expectations, Southwest Airlines set to slip back into the red, NortonLifeLock to buy Avast, FibroGen’s new drug application is rejected by the FDA, and Wix downgrades its guidance.

USA (1)

eBay

eBay releases second quarter earnings later today, with investors hoping the company can build momentum after reporting 42% revenue growth in the first three months of the year, marking the fastest topline expansion since 2005.

However, year-on-year growth in revenue will slow to just 4.3% to 5.9% in the second quarter as it comes up against tougher comparatives from when demand exploded last year when the pandemic erupted. This is expected to see revenue to come in broadly flat from the first quarter at $3.0 billion and for non-GAAP EPS to fall to $0.95 from $1.08 the year before.

Guidance for the next quarter will also be watched to see how it fares to market expectations, with Wall Street anticipating eBay can swiftly return to growth as the peak in demand during the second quarter eases in the third. Analysts currently expect eBay to report over 11% year-on-year growth in third quarter revenue to $2.89 billion and a 5.8% increase in non-GAAP EPS to $0.90.

NIO

NIO will also publish second quarter earnings after the closing bell today, with investors hoping the record number of electric cars sold in the period will not only drive topline growth but lead to improved profitability.

The company achieved a vehicle margin of 21.2% in the first quarter and this will be closely-watched this week. Investors are hoping NIO can retain a strong margin despite several headwinds, including the problems in the supply chain amid the global shortage in semiconductors and rising prices for the key commodities used to make cars and their batteries.

Analysts are expecting revenue in the second quarter to rise to RMB8,322 million from RMB3,719 million the year before, and for the loss per share to narrow to RMB0.53 from RMB1.15. That would be at the higher end of NIO’s target to make RMB8,146.1 and RMB8,504.5 million in revenue.

You can read our full earnings preview ahead of the NIO earnings here.

Coupang

South Korea’s largest ecommerce firm Coupang will release second quarter results later today and is expected to continue growing its user base and squeezing more money out of them.

It had over 16 million active customers at the end of March that spent an average of $262 in the first three months of 2021. A year earlier, it had only 13.3 million customers that were spending an average of $182. These numbers will be closely-watched today.

Analysts are expecting Coupang to report quarterly revenue of $4.46 billion and a bottom-line net loss of $265.6 million. That would compare to revenue of $2.61 billion and a net loss of $105 million the year before.

You can read our full earnings preview ahead of the Coupang earnings here.

Coinbase

Coinbase beat expectations when it released second quarter earnings late yesterday and said it was closely watching regulatory developments after the head of the SEC called for the cryptocurrency trading market to be brought under tighter rules.

Net revenue jumped to $2.03 billion from just $178 million the year before and $1.59 billion in the previous quarter. That was well ahead of the $1.7 billion forecast by analysts as monthly transacting users grew to 8.8 million from 6.1 million three months earlier. Subscription and service revenue also improved markedly to over $100 million from just $56 million in the first quarter. Adjusted EPS came in at $3.45 per share, ahead of the $2.33 expected by markets.

Coinbase warned it expects trading volumes to be lower in the third quarter compared to the second, but painted bright prospects by stating it wanted to grow the number of assets available to trade on its platform, including all cryptocurrencies, as it looks to become the ‘Amazon of assets’.

Southwest Airlines

Southwest Airlines said it managed to remain profitable in July as the recovery in travel continues, but warned it is unlikely to escape the red during the third quarter as a whole as the pandemic continues to hamper the industry’s ability to bounce back.

Leisure travel was above pre-pandemic levels in July and performed in-line with expectations, although the lag in business travel meant overall operating revenue was down 12% on 2019 levels. However, it warned it expected August revenue to be 15% to 20% below pre-pandemic levels, having previously said it would be 12% to 17% lower.

‘The company was profitable again in July 2021; however, the company believes the recent negative effects of the pandemic on August and September revenue trends will make it difficult for the company to be profitable in third quarter 2021, without taking into account the benefit of temporary salaries and wages cost relief provided by payroll support program proceeds,’ said Southwest Airlines.

Pfizer

Pfizer shares hit another all-time high yesterday and have risen over 20% in the last month alone, driven by positive sentiment building for its coronavirus vaccine.

The stock ended up 4.8% yesterday at $48.18, surpassing the previous all-time high hit back in 1999. Its coronavirus vaccine is also proving to be one of the more popular jabs on the market, with news breaking yesterday that India was in talks about buying 50 million doses of the jab it has developed with European partner BioNTech.

Fellow vaccine maker Moderna has also hit new highs recently and jumped over 90% in the past month as its jab also emerges as one of the favourites around the world. Higher vaccine prices and the spread of the Delta variant are driving sentiment as investors see long-term opportunities from coronavirus vaccines.

Boeing

Boeing is thought to have conducted a test flight of its 737 MAX plane in China as it looks to try and overcome the grounding order that has kept the model out of action for two and half years, according to reports from Reuters.

Flight-tracking website Flightradar24 showed a 737 MAX 7 test plane took off from Shanghai and landed at an airport around 150 kilometres away. The plane had arrived from Seattle last week following two refuelling stops. Boeing said it was still working with officials about getting the model validated but declined to comment on the test flight.

The 737 MAX planes have slowly started to come back into action since being grounded following two fatal crashes, with around 30 airlines having returned the planes to service, but it is still grounded in China.

FibroGen

FibroGen this morning warned that the Food & Drug Administration has turned down its New Drug Application for roxadustat, its candidate designed to treat anaemia of chronic kidney disease.

‘The letter indicates the FDA will not approve the roxadustat NDA in its present form and has requested additional clinical study of roxadustat be conducted, prior to resubmission,’ said FibroGen in a statement.

FibroGen said it was ‘deeply disappointed’ with the decision and that it will discuss what to do next with its partner on the drug, London-listed AstraZeneca. The drug is already approved in China, Japan, Chile and South Korea.

Wix.com

Website builder Wix.com downgraded its expectations today as it warned it was unsure whether it was approaching the end of the pandemic or if a ‘massive new wave’ was about to hit, having seen a slowdown in growth during the latest quarter.

Revenue rose 34% in the second quarter to $316.4 million and turned to a net profit of $38 million from a $57.7 million loss the year before. It said it expected revenue growth to slow to 22% to 25% in the third quarter to a range of $311 to $317 million. Wix said there was a ‘mild slowdown’ in the number of new websites being created and said this came in lower than expected, but flagged that growth is still well above pre-pandemic levels overall.

Wix lowered its full year guidance and said it is now targeting annual revenue of between $1.25 to $1.27 billion and free cashflow of $35 to $40 million. It was previously aiming for revenue of $1.28 to $1.29 billion and cashflow of $62 to $72 million.

Wendy’s

Wendy’s raised expectations today after beating forecasts in the second quarter as momentum continues to build and the restaurant chain recovers from the pandemic.

Sales grew 22.9% in the second quarter of 2021, accelerating from the first as international orders jumped 48% and the US grew by 20.6%. US same-store sales rose 16.1%, having contracted 4.4% the year before as lockdown hit, and came in ahead of the 15.3% growth expected by analysts.

Wendy’s said the quarter beat its own expectations and delivered ‘record profits’, with adjusted Ebitda rising to $131.1 million from $97.4 million. Wendy’s said it is now aiming for global sales to grow 11% to 13% over the full year and adjusted Ebitda of $465 to $475 million.

Chesapeake Energy

Chesapeake Energy has agreed to buy natural gas company Vine Energy in a deal valued at around $2.2 billion in cash and shares, as it raised expectations for the full year after beating expectations in the second quarter.

The offer is equal to $15 per share, split between 0.2486 Chesapeake shares and $1.20 in cash for each Vine share. This means 92% of the deal is being paid in stock and just 8% in cash. Chesapeake said it was making its move to consolidate activity in the Haynesville and Bossier regions in northwest Louisiana. The deal is expected to boost Chesapeake’s free cashflow by $1.5 billion over the next five years and will deliver around $50 million in annual savings. It will also allow Chesapeake to bump up its base dividend by 27% to $1.75 post-completion, with the deal set to close before the end of 2021.

The news came as Reuters reported that Exxon Mobil has launched a campaign to start selling its US shale properties in order to accelerate its delayed divesture programme to help reduce debt. A spokesperson said it was starting with 5,000 gas wells in Arkansas. Chesapeake reported second quarter results that showed it delivered adjusted profit of $1.64 per share, ahead of the $1.20 expected by analysts, and upped its adjusted Ebitdax target for the year by 16%.

NortonLifeLock

NortonLifeLock has agreed to buy London-listed Avast for around $8.6 billion to create a new cybersecurity software giant.

The offer is for $7.61 in cash and 0.0302 of a new share in NortonLifeLock for each Avast share currently held. But it also offered another option for Avast shareholders to accept $2.37 in cash and 0.1937 shares depending on what mix of cash and stock they want. This comes after the pair entered talks last month.

NortonLifeLock has been focused on the consumer side of the business since selling its enterprise software division to Broadcom back in 2019, leading it to be attracted to Avast’s freemium model that has seen its software downloaded by 435 million people by the end of 2020, around 16.5 million of which were paying subscribers.

ChargePoint

Electric vehicle charging firm ChargePoint has agreed to buy ViriCiti for around EUR75 million in cash, expanding its push into Europe.

ViriCiti provides the likes of smart charging, fleet management and battery health solutions for electric buses and commercial fleets of electric vehicles.

‘Adding ViriCiti’s vehicle management capabilities to our fleet portfolio allows ChargePoint to deliver more functionality to eBus and commercial fleet operators, while remaining open to integration with existing telematics systems. The combined solution underscores the importance of software to EV charging and will ensure operational readiness at low cost as fleets of all types across North America and Europe continue to electrify,’ said president and chief executive Pasquale Romano.

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