JPMorgan Kicked Off Earnings Season With Better-Than-Expected Q1 Results

Plus, Goldman Sachs and Wells Fargo also delivered earnings beats, Coinbase is set to go public at $355 per share, and Kohl’s reached an agreement with a group of activist investors to add two new independent directors to its board. 

Stocks were flat at the open on Wednesday with the Dow trading just below the flatline before adding 200 points to an all-time high. The S&P 500 was flat, while the Nasdaq added less than 0.1%.

JPMorgan kicked off bank earnings this morning, delivering better-than-expected profit and revenue on robust trading results. The bank posted first-quarter profit of $14.3 billion, or $4.50 a share including a $1.28 per share benefit from releasing $5.2 billion in funds set aside for loan losses that didn’t materialize, compared to estimates for $3.10 per share, while revenue came in at $33.12 billion. “Overall, this was a great quarter for JPMorgan,” said Octavio Marenzi, CEO of consultancy Opimas. “It is now increasingly clear that the bank over-reserved, and that money is now flowing back into its earnings, concealing some of the weakness in consumer banking.” 

In other bank earnings news, Goldman Sachs also delivered a beat, posting earnings per share of $18.60 on revenue of $17.7 billion, compared to estimates for earnings of $10.22 per share on revenue of $12.6 billion. “We have been working hard alongside our clients in preparation for a world beyond the pandemic and a more stable economic environment,” CEO David Solomon said in an earnings release. “Our businesses remain very well positioned to help our clients reposition for the recovery, and that strength is reflected in the record revenues and earnings achieved this quarter.” And Wells Fargo shares are up 5% at the time of writing after it reported earnings of $1.05 per share on revenue of $18.06 billion, versus analysts’ expectations for earnings per share of $0.70 on revenue of $17.5 billion. “Our results for the quarter, which included a $1.6 billion pre-tax reduction in the allowance for credit losses, reflected an improving U.S. economy, continued focus on our strategic priorities, and ongoing support for our customers and our communities,” CEO Charlie Scharf said in a statement. “Charge-offs are at historic lows and we are making changes to improve our operations and efficiency, but low interest rates and tepid loan demand continued to be a headwind for us in the quarter.”

Bitcoin rose to another fresh record high above $64,000 today as Coinbase was indicated to open at around $355 per share today after providing a reference price of $250 per share yesterday. The stock is expected to begin trading this afternoon and will list directly, allowing employees and existing shareholders to sell shares immediately at a market-based price. At $250 per share, Coinbase would have a market value of around $47 billion based on the outstanding shares listed in its prospectus, though it is unlikely trades will happen at that price. Every major direct listing has so far opened significantly above its reference price, with Roblox shares debuting at $64 each, 42% higher than the price set by the exchange. Coinbase said last week that it expects to report first-quarter profit of $730 million to $800 million, more than double what it earned in all of 2020. “They are going to build out a full financial services company,” said Barry Schuler, a co-founder of Coinbase investor DFJ Growth. “Like a crypto version of a Goldman Sachs or a Morgan Stanley.”

A CDC advisory panel is expected to hold an emergency meeting today on Johnson & Johnson’s COVID-19 vaccine to discuss if the shot should be used after six women developed a rare blood clotting disorder that left one dead. The Advisory Committee on Immunization Practices will review data on the women, aged 18 to 48, who developed a rare blood-clotting disorder known as cerebral venous sinus thrombosis, or CVST, according to a draft agenda. The women developed the condition within around two weeks of receiving the J&J shot. In other COVID-19 vaccine news, Moderna said its shot remained more than 90% effective after six months. The company also said it hopes to have a booster shot for its two-dose vaccine available in the fall. “I want to make sure there are boost vaccines available in the fall so that we can protect people as we go into the next fall and winter season in the U.S.,” said Moderna CEO Stephane Bancel. “Our goal is to work really hard to get this ready before the fall.”

And Kohl’s said it has reached an agreement with a group of activist investors who have been pushing to seize control of the retailer’s board. As part of the agreement, two new independent directors—Margaret Jenkins, formerly chief marketing officer of Denny’s and El Pollo Loco, and Thomas Kingsbury, the former CEO of Burlington Stores—who were nominated by the investors will join Kohl’s board at the close of its 2021 annual shareholders meeting. Kohl’s also named an additional independent director in Christine Day, who served as the CEO of Lululemon from 2008 to 2013, with support from the investors. “We are pleased to have been able to reach this constructive resolution with the company, and we are confident these changes will help further our shared goal of creating long-term value for shareholders,” the group of investors, Macellum Advisors, Ancora Holdings, Legion Partners Asset Management, and 4010 Capital, said in a statement.

Stocks We’re Watching

Novocure (NASDAQ: NVCR): Novocure announced yesterday an update on its phase 3 pivotal LUNAR trial of Tumor Treating Fields (TTFields) in stage 4 non-small cell lung cancer (NSCLC) following platinum failure following a review from an independent data monitoring committee (DMC). “We are very pleased with the DMC recommendations, which we believe support the potential for TTFields to make a significant difference in treatment outcomes for patients with non-small cell lung cancer, whether used together with immune checkpoint inhibitors or docetaxel,” said William Doyle, Novocure’s Executive Chairman. “The accelerated interim analysis with an encouraging outcome adds to the accumulating evidence of Tumor Treating Fields’ broad potential across a range of hard-to-treat cancers.”

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