Spotify Surges as Q2 Earnings Pour In

Good morning. It's July 23rd, and today we'll look at Spotify and GE Aerospace's positive earnings reports. We'll also discuss Wiz's bold move to reject Google's $23 billion deal as they gamble on an IPO.

Previous Close 📈

All three indices were in the green yesterday as technology stocks rebounded after a week of heavy sell-offs.

Futures

S&P futures are trading slightly lower this morning as investors await the earnings reports of several large companies.

What to Watch

It’s going to be a busy day as Coca-Cola, GE Aerospace, Comcast, UPS, and Philip Morris will share their earnings reports before trading for the day begins.

We will get the S&P flash U.S. PMI for services and manufacturing at 9:45 a.m., while existing home sales data for June will be out by 10:00 a.m.

Alphabet, Tesla, Visa, and Texas Instruments will also be announcing their quarterly results after the day’s trading ends.

Aerospace

Strong Aftermarket Services Drive Up GE Aerospace's Profit Outlook

GE Aerospace has increased its annual profit forecast, driven by strong demand for aftermarket services, particularly jet-engine parts.

With airlines keeping older planes operational due to a shortage of new aircraft, maintenance needs have surged, benefiting GE Aerospace’s spare parts and services sector, which accounts for over 70% of its commercial engine revenue.

The company now expects its annual adjusted profit to be between $3.95 and $4.20 per share, up from its previous forecast of $3.80 to $4.05.

GE Aerospace holds a significant position in the jet-engine market through its CFM International joint venture with France's Safran. CFM supplies engines for Boeing's 737 MAX and competes with RTX's Pratt & Whitney for Airbus 320neo jets.

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Technology

Spotify Surpasses Q2 Subscriber and Earnings Expectations, Stock Surges

Spotify outperformed expectations for both subscriber growth and earnings in the second quarter, leading to a surge in its stock price during early trading.

The company added 7 million premium subscribers in the June quarter, exceeding analysts' predictions of 6.2 million. This brought Spotify's total paying subscribers to 246 million worldwide.

The streaming service reported 626 million monthly active users, slightly below Wall Street's target of 631 million.

For the June quarter, Spotify earned $1.43 per share on revenue of $4.1 billion. Analysts had anticipated earnings of $1.14 per share on sales of $4.16 billion. Following the earnings report, Spotify's stock jumped nearly 14% in premarket trading.

Technology

Wiz Abandons $23B Google Deal, Opts for IPO

Wiz has decided to forgo a $23 billion acquisition offer from Google, opting instead to pursue its initial public offering (IPO) plans. This deal would have been Google's largest-ever acquisition.

Wiz co-founder Assaf Rappaport informed employees of the decision in a memo, citing antitrust and investor concerns as reasons for stepping back.

Rappaport emphasized the company's focus on achieving its milestones of an IPO and reaching $1 billion in annual recurring revenue. The acquisition would have significantly increased Wiz’s valuation from its most recent funding round, nearly doubling it to $23 billion.

Wiz, known for its cloud security products, including prevention, active detection, and response, has rapidly grown, reaching $100 million in annual recurring revenue within 18 months and hitting $350 million last year.

Google’s cloud division, led by CEO Thomas Kurian, has been striving to maintain growth amid stiff competition from Microsoft and Amazon.

Packaging

Crown Holdings Exceeds Earnings Forecasts, Raises Future Guidance

Crown Holdings, Inc., saw a 7.8% increase in its stock price following the release of its strong second-quarter earnings report, which surpassed analysts' expectations and included optimistic future guidance.

For the second quarter, Crown Holdings reported adjusted earnings per share (EPS) of $1.81, outpacing the consensus estimate of $1.59. However, revenue came in slightly below expectations at $3.04 billion, compared to the anticipated $3.06 billion.

The company's performance was driven by a 6% rise in global beverage can shipments, with North America seeing a 9% increase. Additionally, the beverage segment income improved by 21%, highlighting Crown Holdings' strength in the global beverage market.

Frequency Electronics [FEIM] - Last Close: $10.10

Frequency Electronics’ stock is booming in pre-market trade.

The stock took off once it announced its quarterly and 12-month results after the market closed yesterday.

The company’s results showed solid profitability and cash generation, which has allowed it to offer a special cash dividend of $1.00 per share of common stock, payable on August 29, 2024, to stockholders of record as of August 8, 2024

Frequency Electronics specializes in high-precision timing, frequency generation, and RF control products for space and terrestrial applications.

The stock is trading at about +36.2% higher than its previous close.

Mammoth Energy Services [TUSK] - Last Close $3.50

Mammoth Energy Services’ stock has zoomed nearly 30% today.

The stock surged following the company's announcement that it would receive $188 million from a settlement agreement with the Puerto Rico Electric Power Authority and the Financial Oversight and Management Board for Puerto Rico.

The company plans to use part of these funds to pay off its term credit facility, which had a balance of $49.3 million as of June 30.

The remaining proceeds will be allocated for business and corporate purposes.

NXP Semiconductors N.V. [NXPI] - Last Close: $283.81

Shares of the semiconductor firm NXP dropped heavily in pre-market trade.

The company announced its second-quarter results yesterday, which left analysts disappointed.

It expects revenue to be in the range of $3.15 billion to $3.35 billion and EPS to be between $3.21 to $3.63. Analysts were estimating $3.35B and $3.56, respectively.

Shares are currently trading nearly 8% below their previous close.

Everything Else

• Porsche sees a 4% drop after aluminum alloy shortage leads to a weak 2024 forecast.

• A $100 million wave of funding hits Democrats following Biden’s exit.

• J&J is close to a settlement in its $8 billion talc case.

• India’s booming stock markets fall after its government raises the capital gains tax.

• Uneven demand and wage inflation cause UPS to miss profit estimates.

• Agilysys reports strong Q1 earnings and shares rise.

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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