This Restaurant Stock Grew By More Than 45%🚀

Good morning. It's July 18th, and today, we look at United Airlines' poor Q3 estimates, Domino's disappointing quarterly results, and Warner Bros. Discovery’s plan for a strategic split.

Previous Close 📈

The Dow continued its positive run, but the Nasdaq fell to its worst level since 2022 as investors indulged in a rotation trade out of big tech stocks. The S&P also fell sharply.

Futures

Futures went up slightly despite poor performance by benchmark indices. Dow Jones Industrial Average futures rose by 0.16%, Nasdaq 100 futures by 0.33%, and S&P 500 futures by 0.2%.

What to Watch

The morning will be action-packed. We’ll get the Initial Jobless Claims data at 8:30 a.m., followed by U.S. Leading Economic Indicators report at 10:00 a.m.

Abbott Labs will be sharing its quarterly earnings in the morning session. In the evening, look out for Netflix’s earnings report as well.

Media

Warner Bros Discovery Explores Strategic Split to Revitalize Collapsing Stock

Warner Bros. Discovery, the company that owns HBO and CNN, is contemplating a strategic reorganization to address its falling stock price. CEO David Zaslav is reviewing options that include separating the company's Max streaming service and Warner Bros. movie studio from its traditional television networks.

If the company proceeds with the split, the bulk of its $39 billion debt could be assigned to the TV Networks division. Warner Bros.' stock is down by nearly 27% over the course of this year, bringing its market value down to $20.39 billion.

The consideration comes after Warner Bros. reported higher-than-anticipated losses last quarter due to decreased advertising revenue and impacts from Hollywood labor strikes.

Conversely, the streaming division experienced a significant profit boost, increasing adjusted core profit by 72% and adding 2 million new subscribers.

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Airlines

United Airlines Posts Strong Q2 Earnings, Lowers Q3 Forecast Amid Capacity Issues

United Airlines saw its second-quarter profits increase by over 20%, driven by rising demand for international travel. However, the airline's forecast for the third quarter fell short of analysts' expectations due to an oversupply of flights affecting fare prices.

For Q2, United reported adjusted earnings per share of $4.14, surpassing the expected $3.93. Revenue reached $14.99 billion, a 5.7% increase from the previous year but slightly below the anticipated $15.06 billion.

Despite these gains, United's Q3 forecast predicts adjusted earnings between $2.75 and $3.25 per share, less than the $3.44 per share expected by analysts. The company maintained its full-year adjusted earnings forecast of $9 to $11 per share.

Both United and Delta Air Lines have increased international flights to meet high demand post-pandemic and introduced premium services to attract travelers willing to pay more. United's premium revenue grew by over 8%, while sales of basic economy tickets surged 38%.

CEO Scott Kirby noted that airlines are starting to reduce schedules, predicting an adjustment in capacity by mid-August. Other airlines like Spirit and Southwest have also recently adjusted their forecasts due to weaker revenue expectations.

Fast Food

Inflation Fears Impact Dominos’ Quarterly Sales, Shares Drop

Dominos Pizza reported disappointing quarterly same-store sales on Thursday, as inflation fears kept U.S. consumers, especially those with lower incomes, from dining out or ordering in. This led to an 11% drop in its shares during premarket trading.

Despite a stronger-than-expected overall U.S. retail sales report suggesting economic resilience, the food service sector saw slower growth in June as consumers continued to budget carefully. Domino's U.S. same-store sales grew by 4.8% in the quarter, slightly below the anticipated 4.91%, according to LSEG data.

To attract budget-conscious customers, Dominos revamped its loyalty program and introduced several promotions. However, analysts had anticipated tougher competition, with other fast-food chains also increasing their deals and discounts.

Despite these challenges, Domino's benefited from lower supply-chain costs and stable same-store sales in the U.S., resulting in a profit of $4.03 per share, surpassing the expected $3.68. CEO Russell Weiner highlighted that the company's strategy is resonating with customers across all income levels, with positive order counts in both delivery and carry-out services.

Chuy’s Holding [CHUY] - Last Close: $25.27

Chuy’s Holdings was the biggest mover in the pre-market today.

The Tex-Mex chain’s shares are gaining after the announcement that Darden Restaurants, Inc., will be acquiring the firm.

The agreement will see Darden get all of Chuy’s stock at $37.50 in an all-cash deal. The approximate value of the deal is $605 million.

Chuy’s shares jumped by more than 45% on the news.

Onconetix [ONCO] - Last Close: $0.15

Onconetix was up by more than 40% in pre-market trade.

The company’s shares rose after it announced that it had closed the exercise of certain existing warrants to purchase 7 million shares of its common stock.

The exercise price ranged from $1.09 to $2.546 per share, but they were exercised at a reduced price of $0.15 per share.

The aggregate gross proceeds from exercising the existing warrants were approximately $1.11 million.

Apollomics [APLM] - Last Close: $0.23

Apollomics, Inc., shares saw a major rally in the pre-market today.

The stock has been rising up since the company announced that it has received approval from Nasdaq for a 180-day extension to address non-compliance with its listing requirements.

It had also seen a 13% increase during yesterday’s market hours.

The stock was up by more than 20% today, with a volume of about 1.06 million.

Everything Else

• Volvo Cars jumps 7% after reporting a record core operating profit.

• Nasdaq set for small bounce after TSMC profit beat.

• Oil Holds Advance after U.S. Crude Stockpiles post another drop.

• TSMC posts 36% profit jump, hikes revenue outlook.

• China pledges industrial modernization, raft of other reforms.

• U.K.’s Starmer aims to overhaul EU relations as Trump specter looms.

• Nokia shares slide 8% after posting lowest quarterly net sales figure since 2015.

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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