Delta and Domino's Slip Amid Poor Earnings

Author

Adam Garcia
October 10, 2024

Good morning. It’s October 10th, and today we’ll look at Delta and Domino’s poor quarterly results, an AI data center infrastructure firm that soared 15% yesterday, and all the top gainers and losers.

Previous Close 📈

Stocks closed at a high on Wednesday, with the S&P 500 rising 0.71% and the Dow jumping over 400 points. Tech stocks led the rally, helping the Nasdaq Composite gain 0.6%.

Futures

Futures are slightly lower Thursday morning as traders await the CPI report. Dow futures are trading near the flatline, while S&P 500 futures are down 0.2% and Nasdaq 100 futures have slipped 0.25%. The CPI data, expected to show a 0.1% monthly increase, could play a key role in the Fed’s next policy move.

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What to Watch

Delta Air Lines (NYSE: DAL) and Domino's Pizza (NYSE: DPZ) will report their quarterly earnings before the market opens.

Several key reports were released at 8:30 a.m. Eastern, including Initial Jobless Claims for October, the Consumer Price Index (CPI) for September, and Core CPI for September, providing insights into inflation and labor market conditions.

After the closing bell, Oil-Dri Corporation of America (NYSE: ODC), Aehr Test Systems (NASDAQ: AEHR), and Voxx International (NASDAQ: VOXX) will announce their results.

Airlines

Delta Lowers Q4 Revenue Outlook, Shares Drop 6% Amid Travel Slowdown

Delta Airlines forecasted lower-than-expected revenue for the fourth quarter, leading to a 6% drop in its shares in premarket trading today.

The airline predicts revenue between $13.9 billion and $14.2 billion, slightly below analysts' average estimate of $14.22 billion.

Despite this, Delta projects adjusted earnings per share of $1.60 to $1.85, with the midpoint exceeding expectations of $1.71.

CEO Ed Bastian is optimistic, stating that strong travel demand positions Delta for a solid year-end. The airline attributed the slower revenue outlook to reduced travel spending, particularly as the upcoming U.S. presidential election impacts consumer behavior.

Delta's third-quarter earnings were affected by flight cancellations caused by a global cyber outage, resulting in a 45-cent per share hit.

The company canceled approximately 7,000 flights, disrupting 1.3 million travelers. Despite these setbacks, Delta expects overall revenue to grow 2% to 4% year-over-year in the fourth quarter, driven by a 3% to 4% increase in capacity.

F&B

Domino’s Misses Revenue Target, Highlights Future Growth Strategy

Domino’s Pizza posted mixed third-quarter earnings today, falling short on revenue but exceeding earnings expectations. Its stock is falling by more than 1.5% in premarket trading.

The company reported revenue of $1.08 billion, slightly below the anticipated $1.1 billion, as higher supply chain revenue was offset by product mix shifts in stores. However, Domino’s adjusted earnings per share of $4.19 is better than the $3.65 forecast by analysts.

CEO Russell Weiner emphasized that Domino's value-driven strategy remains a "primary focus" as the company seeks to grow its market share, especially in a competitive landscape.

U.S. same-store sales rose by 3%, falling short of Wall Street’s expected 3.55%, while international same-store sales saw a modest 0.8% growth, well below the projected 2.84%.

Despite a challenging market, Domino’s aims to end 2024 with global retail sales growth of around 6% and operational income growth of 8%, maintaining these targets for 2025.

Looking ahead, the company expects annual global retail sales to grow by more than 7% and operational income to increase by over 8% between 2026 and 2028.

Semiconductors

Astera Labs Shares Surge 15% After Unveiling New AI Data Center Switches

Astera Labs shares surged by over 15% on Wednesday following the announcement of its new Scorpio Smart Fabric Switch portfolio, including the industry's first PCIe 6 switch, designed for AI data center infrastructure.

The PCIe 6 switch offers double the bandwidth and power efficiency compared to its predecessor, PCIe 5, positioning Astera Labs as a key player in AI and cloud computing.

The company, based in Santa Clara, California, aims to optimize AI dataflows with its Scorpio switches, promising maximum performance per watt, high reliability, and cost efficiency for cloud-scale deployment.

Astera Labs stock rose 15.6% to close at $61.22 after the news, continuing its strong performance since its initial public offering in March.

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Movers and Shakers

BloomZ Inc. [BLMZ] - Last Close: $0.72

BloomZ’s stock is surging 63% in premarket trading.

The company has been selected as the primary animation production contractor for a new anime project, "Kakushite! Makina-san!," which is set to air in 2025.

This is a significant opportunity for BloomZ, as they have also acquired several important rights, including overseas distribution, commercialization, and digital content rights.

These rights could open up multiple revenue streams for the company through the anime's international release, merchandise, and even video games.

My Take: The contract could offer potential for growth in the company's animation production business. Keep an eye on this stock for future growth.

Tempest Therapeutics [TPST] - Last Close: $1.35

Tempest Therapeutics shares are up 25% before the opening bell today.

The company announced a major agreement with Roche to advance a key cancer treatment, amezalpat, into a pivotal Phase 3 trial for liver cancer.

This combination therapy has already shown promising results in earlier trials, including improved survival rates for patients with advanced liver cancer.

My Take: The news is exciting for investors because this agreement with Roche boosts confidence in the therapy’s potential to succeed in the final stages of testing. Keep this stock on your radar.

Faraday Future Intelligent Electric [FFIE] - Last Close: $2.45

Faraday Future is up by 12% in premarket trading today.

The firm announced that it has accepted a 10% share donation from Grow Fandor, a global IP commercialization company founded by YT Jia, who is also the founder of Faraday Future.

This donation signals potential collaborations between the two companies, leveraging their strengths in technology, electric vehicles, and international business growth.

My Take: The stock is on a downtrend and has moderate volatility. It might be best to keep it on your wait-and-watch list for now.

Government Reports

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Everything Else

  • Alibaba's Lazada seeks to expand its luxury segment to compete against Shopee and TikTok in Southeast Asia.

  • Used cooking oil futures may soon debut on Bursa Malaysia as part of a push for sustainable biofuel production.

  • Air India seeks to accelerate expansion with an additional 85-jet order from Airbus.

  • Eli Lilly targets telehealth and compounding pharmacies with cease-and-desist letters amid weight-loss drug demand.

  • Unilever finalized the sale of its Russian business to Arnest Group, completing the exit strategy.

  • IKEA sees store visits rise but annual sales fall, as lower interest rates are expected to boost future furniture purchases.

  • Tata Group patriarch Ratan Tata, who led the conglomerate through significant global expansion, has died at the age of 86.

  • Whitehaven Coal's diversification strategy attracts insurers back to the coking coal market.

That’s all for today. Thank you for reading. If you have any feedback, please reply to this email.

Best Regards,

— Adam Garcia
Elite Trade Club

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