Plus, Royal Caribbean reported a wider-than-expected loss as the COVID delta variant slows bookings, Kroger is teaming up with Kitchen United to put ghost kitchens in its grocery stores, and Zymergen shares plummet after company says product revenues would be “immaterial” in 2022.
Stocks were lower at the open on Wednesday with the Dow dropping 69 points, or 0.2%. The S&P 500 slid more than 0.1%, while the Nasdaq traded less than 0.1% lower.
Robinhood shares are up more than 34% at the time of writing after having surged more than 80% in earlier trading. The stock is making up for its lackluster Nasdaq debut from last week where it priced in the low end of its offering range at $38. “It’s a payment for order flow story with crypto as kind of a kicker,” Stephanie Link, chief investment strategist at Hightower, said of the Robinhood surge. “In their second quarter, total revenues grew 5 to 10% from the first quarter. Well if you look at payment for order flow data, that number actually fell 23% in the second quarter. So it tells me payment for order flow is very competitive by the crypto kicker is probably helping Robinhood and they’re probably gaining share. All that being said, it’s super expensive. It’s hard to get your hands around the valuation at 11x price-to-sales.”
In earnings news, Royal Caribbean reported a wider than expected second quarter loss as the spread of the COVID-19 delta variant slowed the rebound in near-term cruise bookings. The cruise operator posted a loss per share of $5.06 on revenue of $50.9 million, versus estimates for a loss of $4.39 on revenue of $149.7 million. “The return of cruising has been faster than anyone expected,” CEO and Chairman Richard Fain said. “We are watching the impact of the Delta variant and other likely variants, but overall, we remain optimistic in our mounting trajectory going forward.” And GM shares are down more than 8% this morning after it missed earnings expectations for the second quarter, even as it reported record operating profit and raised its guidance for the year. GM said its second quarter results were dragged down by $1.3 billion in warranty recall costs.
Kroger said it is teaming up with ghost kitchen start-up Kitchen United to set up ghost kitchens in its grocery stores. The kitchens will feature a mix of up to six local, regional, and national restaurants, and customers will be able to order their food for pickup or delivery. “Our customers’ appetite for fresh, on-demand meals continues to accelerate, and we remain focused on offering new and innovative products that provide anything, anytime, anywhere,” Dan De La Rosa, Kroger’s group vice president, said in a press release. “Our partnership with Kitchen United taps into restaurants’ growing use of off-premise kitchen space to increase customers’ access to their favorite foods.”
Target said it will offer workers a debt-free way to get associates, undergraduate, or graduate degrees beginning this fall. The big-box retailer will cover the cost of tuition, fees, and textbooks for part- and full-time workers who pursue a qualifying degree at more than 40 institutions, and will cover up to $10,000 per year in tuition for master’s programs at those schools. “Target employs team members at every life stage and helps our team learn, develop and build their skills, whether they’re with us for a year or a career. A significant number of our hourly team members build their careers at Target, and we know many would like to pursue additional education opportunities. We don’t want the cost to be a barrier for anyone, and that’s where Target can step in to make education accessible for everyone,” Melissa Kremer, Target’s chief human resources officer, said in a statement. “Our team members are the heart of Target’s strategy and success, and we have a long history of investing in industry-leading pay, extensive benefits and career opportunities to help our team thrive and have rewarding careers at Target.”
And Zymergen shares are down more than 76% at the time of writing after the biofacturing company warned that it no longer expects to generate product revenue this year, and that revenue next year will be “immaterial.” Zymergen also said co-founder and CEO Josh Hoffman was stepping down and will be replaced on an acting basis by Jay Flatley, former CEO of Illumina. “We are disappointed by these developments, and the Board and management team are focused on resolving the underlying issues to ensure Zymergen moves forward as a stronger company with a compelling operating plan,” Flatley said in a statement. “The Board has formed dedicated committees, including a Strategic Oversight Committee, and is working with outside experts to conduct an in-depth review of the Company’s operational, financial, product, and commercialization efforts to facilitate the development of an updated strategic plan for Zymergen. The underlying promise of our business and technology is sound, and I am proud of the work our teams are doing across the organization. We are confident in Zymergen’s opportunities and prospects, although it will take longer to accomplish our goals than previously expected.”
Stocks We’re Watching
Myriad Genetics Inc (NASDAQ: MYGN): Myriad Genetics shares rose as much as 14.5% yesterday after the genetic testing and precision medicine company announced fiscal second quarter results. “This was another solid quarter for Myriad Genetics as we delivered strong revenue growth and grew earnings ahead of our initial expectations, an important step towards demonstrating our ability to achieve our goal of sustainable long-term growth and profitability,” Paul J. Diaz, president and CEO, said in the earnings release. “These results reflect the hard work of our teammates, and their dedication to meeting the needs of our patients and provider partners, as we continue to advance our mission to empower every individual with the genetic answers inside each of us.”