Plus, Home Depot said fewer customers visited its stores in the second quarter, Spirit Airlines said recent disruptions cost it around $50 million in revenue, and Bill Ackman’s SPAC was hit with a lawsuit this morning alleging “staggering compensation” to its sponsors.
Stocks were lower at the open on Tuesday with the Dow dropping 125 points, or 0.35%. The S&P 500 slid by 0.4%, while the Nasdaq traded 0.8% lower.
Walmart shares edged higher this morning after the big-box retail reported second quarter results. The retailer posted adjusted earnings per share of $1.78 on revenue of $141.05 billion, beating estimates for adjusted earnings per share of $1.57 on revenue of $137.17 billion. Walmart also sharpened its forecast for the full year, and said it now expects earnings per share to fall between $6.20 and $6.35, with same-store sales expected to increase 5% to 6%. “We had another strong quarter in every part of our business. Our global eCommerce sales are on track to reach $75 billion by the end of the year, further strengthening our position as a leader in omnichannel,” Walmart CEO Doug McMillon said in the earnings release. “We grew market share in U.S. grocery, added thousands of new sellers to our marketplace, rapidly grew advertising businesses around the world, and we’re finding innovative ways to commercialize our data and build technology. We have a unique ecosystem of products and services designed to serve customers in broader, deeper ways, and we’re grateful to our associates for making it all happen.”
Home Depot is down more than 5% at the time of writing even after reporting an earnings beat as the DIY retailer said fewer customers visited its stores during the second quarter. Home Depot said it earned $4.53 per share on revenue of $41.12 billion, while analysts were expecting a reading for earnings per share of $4.44 on revenue of $40.79 billion. While the average ticket price was 11.3% higher in the quarter, the company reported a 5.8% drop in customer transactions year-over-year. “Home improvement was a big COVID winner, and Home Depot performed masterfully through the crisis,” Brian Nagel, Oppenheimer Senior Analysts, said. “But I’ve got to believe that as the economy opens up, as people start to move around again, there’s going to be less of a focus on spending on the home. And that’s what we’re seeing in these numbers now.”
Spirit Airlines said recent flight disruptions impacting tens of thousands of customers cost it around $50 million in revenue. Spirit canceled more than 2,800 flights between July 30 and August 9 amid staffing shortages, bad weather, and technical problems. “On behalf of our entire leadership team, we offer an apology to everyone impacted throughout the course of this event,” Spirit Airlines CEO Ted Christie said in a filing. “We believe the interruption was a singular event driven by an unprecedented confluence of factors and does not reflect systemic issues.” Spirit also warned that customers are canceling more bookings as COVID-19 infections rise. “This behavior, together with the Company’s tactical cancellations, is expected to drive an additional $80 to $100 million of negative revenue impact during the third quarter,” Spirit added.
Bill Ackman’s Pershing Square Tontine Holdings special purpose acquisition company was hit with a lawsuit this morning that alleges the blank-check company awarded “staggering compensation” to its sponsors, and thus should have its special status revoked. The lawsuit’s plaintiffs are former SEC commissioner Robert Jackson, and Yale law professor John Morley, who claim that PSTH isn’t an operating company at all, but rather an investment firm much like Ackman’s hedge funds. The lawsuit alleges the SPAC’s sponsors received $880 million from repurchasing warrants, which is 13 times what they originally paid. “This staggering compensation was promised at a time when the returns to the Company’s public investors have starkly underperformed the rest of the stock market. That is hardly the arms’-length bargain the [Investment Company Act] and [Investment Advisers Act] demand,” the case filing said.
And sustainable shoe brand Allbirds debuted a new collection of activewear, making its entrance in the hotly competitive category ahead of its planned IPO, which could happen as soon as next month. The activewear line is free of polyester, which it says makes up 55% of all clothing, instead using eucalyptus tree fiber and merino wool. The line includes $98 high-waisted leggings, $68 biker shorts, $58 moisture-wicking tees, and $68 light-weight running shorts for men and women. “For us at Allbirds, the disconnect between what we wear to improve our personal health and its negative impact on the health of our planet seemed like an important space for us to tackle,” co-founder Tim Brown said. “Running apparel is typically made of synthetic materials, derived from barrels of oil.”
Stocks We’re Watching
Poseida Therapeutics Inc (NASDAQ: PSTX): Poseida Therapeutics shares are up 8.5% over the last week after the clinical-stage biopharma company reported second quarter results and program updates. “We made significant progress in the second quarter of 2021, advancing our science and operational capabilities and setting the stage to deliver on multiple key milestones,” CEO Eric Ostertag, M.D., Ph.D. said in the earnings release. “We are excited for the second half of the year when we plan to generate and report additional data on P-PSMA-101, our first solid tumor CAR-T; file two INDs for our fully allogeneic CAR-T programs, P-BCMA-ALLO1 for multiple myeloma, and P-MUC1C-ALLO1 for multiple solid tumor indications; update on our BCMA franchise later in the year and advance our in vivo gene therapy pipeline.”