Plus, Walmart delivered an earnings beat, Home Depot said its sales rose 32.7% in the first quarter, and JPMorgan named Lake and Piepszack to run its consumer banking division.
Stocks were higher at the open on Tuesday with the Dow adding 23 points, or less than 0.1%. The S&P 500 also rose less than 0.1%, while the Nasdaq gained nearly 0.3%.
Amazon is reportedly in talks to buy MGM, the last big independent Hollywood movie studio, for $9 billion. The deal would beef up Amazon’s Prime Video content portfolio as the industry’s consolidation accelerates with AT&T announcing yesterday that Discovery would buy its WarnerMedia assets. MGM was reported to be looking for a buyer in December and the studio has been a long-time acquisition target. Amazon’s interest in acquiring the studio has taken on a new tenor beyond the typical rumor mill, with Amazon Studios and Prime Video senior VP Mike Hopkins orchestrating the deal directly with MGM board chairman Kevin Ulrich.
Michael Burry of “The Big Short” fame revealed a $530 million bet against Tesla in a Monday regulatory filing. Burry, who was one of the first investors to call and profit from the subprime mortgage crisis, was long bearish puts against 800,100 shares of the electric carmaker at the end of the first quarter, according to the filing. The investing legend said in a now-deleted tweet that Tesla’s reliance on regulatory credits to generate profits is a red flag, and also advised Tesla CEO Elon Musk to sell shares to raise capital while the stock was at what Burry called “ridiculous” levels. “Tesla is down 14% since the end of the first quarter, so on balance, these puts have been profitable, though it’s impossible to know for sure,” said Steve Sosnick, chief strategist at Interactive Brokers LLC. “He’s expressing the type of skepticism that many have on Tesla. I would have to believe that he accumulated various Tesla options at various strikes, and some of them probably have expired.”
Walmart shares are up more than 2% this morning after reporting an earnings beat, posting earnings per share of $1.69 on revenue of $138.31 billion, versus analysts’ calls for earnings of $1.21 per share on revenue of $131.97 billion. CFO Brett Biggs said customer purchases have begun to reflect the reopening economy, pointing to gains in sales of personal care, celebrations, and travel items. “You’re seeing customers definitely get out and spend again,” Biggs said on Walmart’s earnings call. “Spending rates are good. Income rates are good. The savings rates are actually still almost at an all-time high, which would lead you to believe there is going to be some pent-up demand as we get to the back half of the year.”
In other earnings news, Home Depot also delivered a beat with net sales up 32.7% in the first quarter as customers rang up larger purchases. The home improvement retailer reported earnings per share of $3.86 on revenue of $37.5 billion, compared to estimates for earnings of $3.08 per share on $34.96 billion. “Fiscal 2021 is off to a strong start as we continue to build on the momentum from our strategic investments and effectively manage the unprecedented demand for home improvement projects,” said CEO Craig Menear. “The current shortage of new housing clearly is helping to drive improvements in the home values, which is a good thing for spending in the home.” And Macy’s reported a surprise first-quarter profit with earnings per share of $0.39 on revenue of $4.71 billion, while analysts had expected a loss of $0.41 per share on revenue of $4.37 billion. “We don’t see this as a short-term pop,” said CEO Jeff Gennette during an earnings conference call. “There are pent-up demand opportunities… that give us confidence for accelerated profitable growth in 2021 and beyond.”
And JPMorgan named Marianne Lake and Jennifer Piepszack to run its consumer bank, taking over from Gordon Smith who is set to retire. The move shores up the succession planning for CEO Jamie Dimon, with Lake and Piepszack both considered front-runners to eventually succeed Dimon. “We are fortunate to have two such superb executives in Marianne and Jenn – they both are examples of our extremely talented and deep management bench,” Dimon said in the statement. “Both have proven track records of working successfully across the firm and both are well known and respected within the financial industry for their exceptional character and capabilities.”
Stocks We’re Watching
Net Element Inc (NASDAQ: NETE): Net Element shares rose as much as 11.8% yesterday after the company reported first quarter results and gave an update on the pending merger with privately held Mullen Automotive. “We are pleased to report that we filed a Form S-4 registration statement with the SEC on May 14, 2021, a milestone furtherance of the proposed merger with Mullen,” said Oleg Firer, executive chairman of Net Element. “We want to thank our shareholders for their patience through this process, and we will continue working diligently to conclude the transaction as soon as regulatory and stockholder approvals are received.”