Lyft, Qualcomm Soar Upon Strong Earnings Outlook

Author

Adam Garcia
November 07, 2024

Good morning. It's November 7th, and today we’ll take a look at Lyft and Qualcomm’s rallies after posting impressive earning outlooks and an AI stock that is surging nearly 30% in premarket trade.

Previous Close 📈

Stocks soared on Wednesday following Donald Trump’s presidential victory, with the Dow jumping over 1,500 points to a new all-time high. The S&P 500 and Nasdaq Composite also reached record levels, while the Russell 2000, focused on small-cap stocks, surged over 5%.

Futures

U.S. stock futures are slightly higher as traders turn their attention to the Federal Reserve’s upcoming rate decision. Dow futures are up 12 points (0.17%), with S&P 500 futures gaining 0.13% and Nasdaq 100 futures rising 0.22%.

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What to Watch

Duke Energy Corporation (NYSE: DUK), TransDigm Group (NYSE: TDG), and CRH plc (NYSE: CRH) will report their earnings before the market opens today.

At 8:30 a.m. ET, the Initial Jobless Claims for November and preliminary U.S. Productivity for Q3 were released.

Following that, Wholesale Inventories for September will be published at 10:00 a.m. ET, with Consumer Credit data for September expected at 3:00 p.m. ET.

After the market closes, earnings reports will come from Arista Networks (NYSE: ANET), Airbnb (NASDAQ: ABNB), Motorola Solutions (NYSE: MSI), EOG Resources (NYSE: EOG), and Fortinet, Inc. (NASDAQ: FTNT).

Ride Hailing

Lyft Rises 21% in Premarket as Earnings Beat Boosts Confidence in Growth

Lyft Inc. shares are surging 21% in premarket trading upon the ride-hailing service’s robust fourth-quarter earnings outlook, driven by a record-breaking number of trips and strategic commuter initiatives.

The company now anticipates adjusted earnings of up to $105 million for Q4, easily surpassing analysts’ predictions of $85 million. Lyft also revised its full-year guidance upwards, projecting growth in both bookings and earnings margins.

This positive forecast stands in contrast to the recent results of its main competitor, Uber, which saw slower-than-expected growth in its ride-hailing division last month, dragging Lyft’s shares down with it.

Lyft, however, has rebounded as commuters accounted for almost half of weekday rides last quarter, boosted by the new “Price Lock” feature. This feature, which allows users to avoid surge pricing, has already attracted over 200,000 active pass holders, according to CEO David Risher.

In Q3, Lyft reported 217 million rides taken by 24.4 million unique riders, a record for both metrics. The company also reported a narrower net loss of $12.4 billion compared to the $15.4 billion analysts had expected.

Additionally, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 17% to $107.3 million year-over-year, surpassing estimates.

Looking ahead, Lyft aims to integrate autonomous vehicles into its ridesharing network by 2025 through partnerships with Mobileye and May Mobility as the company works to keep pace with Uber’s similar initiatives and Tesla’s entry into the robotaxi market.

Technology

Qualcomm Stock Rises 8% on Forecast Beat, Smartphone Market Recovery

Qualcomm’s shares are rallying by over 8% in premarket trade as the company’s first-quarter forecast exceeded Wall Street estimates, driven by a recovery in the smartphone market and recent Chinese handset launches.

Qualcomm anticipates Q1 sales and adjusted earnings per share with midpoints at $10.90 billion and $2.95, respectively, topping analyst expectations of $10.59 billion in revenue and $2.86 in earnings.

The holiday shopping season in the U.S. and Europe is expected to boost demand, and new device launches in China have already given Qualcomm’s handset business a strong end to the year.

Qualcomm’s ongoing contract with Apple, extending to 2026, remains a steady revenue stream, but the company is focusing on new opportunities in laptops and AI applications in data centers. These efforts aim to balance potential future declines in Apple-related revenue.

Qualcomm’s shares have gained 19.6% this year, significantly outperforming Intel, down by 50.2%, and riding alongside NVIDIA’s impressive near-tripling in value amid rising demand for AI and advanced computing solutions.

Semiconductors

Arm Holdings’ Shares Slip Upon Cautious Revenue Outlook Despite AI Demand Surge

Shares of Arm Holdings are falling 6% in premarket trading after the chip design firm’s third-quarter revenue forecast failed to meet the lofty expectations of investors.

Arm, a Cambridge-based company whose designs power nearly every smartphone globally, projected revenue between $920 million and $970 million for the fiscal quarter, closely aligning with analyst estimates of $944.3 million.

Despite strong year-to-date stock growth, up 92.5% since its initial public offering in September, Arm’s guidance is short of the ambitious targets set by investors eyeing the company as a beneficiary of the AI computing boom.

Arm earns revenue through licensing its chip designs and collecting royalties on each chip sold using its technology. The company’s second-quarter revenue grew 5% to $844 million, surpassing analysts' predictions of $808.4 million.

However, Arm’s forward price-to-earnings ratio of 75.4 remains significantly higher than competitors like Advanced Micro Devices (30) and Qualcomm (14.9), raising questions about valuation sustainability.

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Movers and Shakers

AppLovin [APP] - Last Close: $168.55

AppLovin shares are surging in premarket trade, up 28.8% over the previous close. The company posted impressive Q3 earnings powered by its AI-driven ad tech platform, AXON.

The Software Platform segment, where AXON plays a central role, saw a staggering 66% year-over-year growth, driving total revenue up 39% to $1.2 billion and beating expectations of $1.13 billion.

AppLovin’s adjusted EPS came in at $1.25, slightly above analysts' estimates, and it anticipates strong revenue for Q4, projecting between $1.24 billion and $1.26 billion.

My Take: This is a good stock to keep on your radar. It has already grown 335% YTD, and given its focus on AI driven end-to-end solutions for app monetization and advertising, the firm’s rapid growth aligns with the broader surge in AI stocks.

Emergent BioSolutions [EBS] - Last Close: $9.20

Emergent BioSolutions is up 21.74% in premarket trading after the company reported stronger-than-expected Q3 earnings and raised its revenue guidance.

The company reported an impressive non-GAAP EPS of $1.37, well above the expected $0.14. Revenue grew by 9% to $293.8 million, close to analysts' forecast.

Emergent adjusted its 2024 revenue outlook, increasing the lower end of its range from $1.050 billion to $1.065 billion, signaling strong business momentum.

Additionally, it announced an upcoming study for its antiviral drug brincidofovir in treating mpox.

My Take: EBS is already up 255% YTD, and with the latest increase in guidance, this stock could definitely go places in the near future. Keep this on your watchlist.

Dutch Bros Inc. [BROS] - Last Close: $34.94

Dutch Bros stock is rising 17.34% in premarket trading on the back of impressive Q3 2024 results.

The coffee chain, known for its unique drive-thru model and handcrafted beverages, saw its revenue jump 28% year-over-year to $338 million.

Same-store sales grew 2.7%, net income reached $21.7 million, and company-operated shop revenues surged by 30.4%.

Dutch Bros also raised its revenue and adjusted EBITDA guidance for the full year, signaling confidence in its expansion strategy and the planned acceleration of new shop openings.

My Take: Dutch Bros has been rapidly expanding in revenue over the last few years. The stock is up 12.49% YTD, but there are concerns regarding profitability. Keep this stock on your wait-and-watch list for now.

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Everything Else

  • Thousands of indirect jobs at Audi may be cut as the company targets a 15% workforce reduction.

  • Airbag inflator issues prompt Volkswagen to recall certain Beetle and Passat models.

  • Rising costs and falling output impacted Barrick Gold’s third-quarter profits.

  • Perenco will boost gas exploration in Africa with a majority of a $2-billion investment.

  • Wood Group seeks a Deloitte probe as its stock nosedives following contract write-offs.

  • Adyen faces investor concerns over a third-quarter slowdown in payment volumes.

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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