Top US stocks to watch: Tesla, Nike and FedEx

Panasonic has sold its stake in Tesla, Nike smashes expectations, FedEx performs well but warns of labour shortages, Blackberry enters the red as expected, CarMax’s revenue more than doubles, Virgin Galactic is given the green light to fly people to space, and Pony.ai mulls an IPO.

USA (1)

Tesla

Panasonic sold its entire stake in Tesla for around $3.6 billion during the year to the end of March, according to a company spokesperson.

Panasonic originally bought 1.4 million shares in the company for around $30 million back in 2010 and has cashed-in following a strong rise in the share price. Tesla shares have jumped over 240% in the last year alone, although have lost steam since hitting an all-time high in January.

Notably, Panasonic’s battery business is heavily reliant on Tesla but the company said the sale will not impact the relationship between the two companies. It comes amid reports that Panasonic is keen to wean its battery business off Tesla and as the electric car maker looks to diversify its own supply of batteries.

Nike

Nike smashed expectations in the final quarter of its financial year covering the three months to the end of May, as it delivered a record performance in North America and sales in China continued to grow despite a recent boycott.

Revenue jumped 96% year-on-year to $12.3 billion. That was helped by the fact it came up against extremely weak comparatives, but still came in way above the $11.0 billion expected by analysts. Diluted EPS of $0.93 improved from a $0.51 loss and was much better than the $0.51 profit forecast by Wall Street.

The performance in North America was strong as expected, with revenue rising 141% and hitting a new record as restrictions ease to allow stores to reopen to consumers flush with cash from stimulus cheques and tax refunds. Sales in China rose 17%, a marked slowdown from the 40%-plus growth delivered in the previous quarter as it was hit by a boycott in May. Nike shares are on course to open at a new all-time record high when markets open today.

FedEx

FedEx reported record results yesterday as it published its fourth-quarter earnings covering the period to the end of May and said it expects the strong momentum to continue into the new financial year, but warned a shortage of workers could pose a problem going forward.

Quarterly revenue jumped to $22.6 billion from $17.4 billion the year before, coming in well ahead of the $21.5 billion expected by Wall Street. Adjusted EPS almost doubled to $5.01 from $2.53 and was slightly better than the $4.99 forecast by analysts. Reported EPS was also well ahead of estimates.

The strong growth at the top line will help alleviate any concerns that FedEx could lose steam as the wider economy reopens, while the growth in the bottom line will also allay fears about profitability coming under pressure despite rising costs. Still, labour is now the main concern as a shortage of workers threatens its ability to capitalise on growth, with its new outlook coming in lower than expected. FedEx shares are on course to open markedly lower after falling in after-hours trading when the results were released.

Blackberry

Blackberry reported first-quarter results yesterday, posting lower revenue and swinging to a loss as expected.

Revenue fell to $174 million from $214 million the year before, but came in slightly better than the $171.25 million expected by analysts. The non-GAAP loss per share of $0.05 compared to a $0.02 profit the year before and came in line with Wall Street forecasts.

Operationally, its QNX operating system continues to be deployed in more vehicles and the royalty backlog jumped 9% year-on-year. The IVY platform developed with Amazon Web Services has now officially been launched and it launched two new cyber security products in the period.

CarMax

Used car retailer CarMax revealed it significantly beat expectations in the first quarter to the end of May as it sold twice as many vehicles in the period thanks to people rushing to buy cars using their stimulus cheques and tax refunds as lockdown eases.

Revenue rose 138% in the quarter to $7.70 billion and blew past the $6.2 billion expected by analysts. EPS of $2.63 jumped from the $0.03 reported the year before and was also well ahead of the $1.66 expected by Wall Street.

Amazon and Alphabet

The UK’s Competition & Markets Authority has opened a formal investigation into Amazon and Alphabet’s Google over concerns that they are not doing enough to battle fake reviews online.

The regulator is now collecting information to determine ‘whether these two firms may have broken consumer law by taking insufficient action to protect shoppers from fake reviews.’ There are added concerns that Amazon isn’t doing enough to stop sellers on its site from manipulating reviews of their products.

‘If, after investigating, the CMA considers the firms have broken consumer protection law, it can take enforcement action. This could include securing formal commitments from the firms to change the way they deal with fake reviews or escalating to court action if needed,’ the CMA said.

Virgin Galactic

Virgin Galactic has become the first company ever to secure approval from the US aviation safety regulator to fly people into space.

The news came as it said it was ‘incredibly pleased’ with the results from its most recent test flight and said the license from the FAA marks the ‘full commercial launch’ ahead of its first fully-crewed flight this summer.

Roche

Drugmaker Roche has secured emergency use authorisation from regulators that will allow its Actemra drug to be used to treat coronavirus patients in hospital after the latest test results showed it could improve people’s breathing.

The medicine has already been used on compassionate grounds for severely-ill patients but is likely to be used more widely following the formal approval.

Actemra sales jumped 22% in the first quarter to CHF779 million, having jumped by around one-third to CHF2.9 billion in 2020.

Pony.ai

A self-driving tech company backed by Toyota is considering launching an IPO in the US to help fund its ambitions in an increasingly competitive space, according to reports from Reuters.

Pony.ai operates in the US and China and is hoping to install its technology into hundreds of vehicles next year and into tens of thousands by the middle of this decade. The company’s chief executive told Reuters they were still debating a listing and said it was ‘just a different way of raising funds’.

The company is thought to have earned a valuation of around $5.3 billion in its funding round late last year and is thought to have tapped investors for over $1 billion so far.

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