Top US stocks to watch: Uber, Robinhood and Moderna

Uber confident it can become profitable this year, Robinhood shares are set to remain volatile, Moderna shares could hit new all-time highs after beating expectations, EA feels more optimistic than ever, Regeneron’s Covid treatment boosts results, and Weber completes its IPO.

USA (1)

Uber

Uber released second quarter results after the markets closed yesterday, stating it remains on course to achieve profitability this year despite posting wider losses than expected.

Revenue more than doubled year-on-year and grew 35% from the previous quarter to $3.92 billion, beating the $3.75 billion expected by analysts. It posted an adjusted Ebitda loss of $509 million, which was larger than the $324.5 million loss Wall Street had expected. It said its take-rate and earnings were hit by increased spending on incentives for drivers, particularly in the US. Its food and grocery delivery operations, which have helped counter the decline in demand for its ride-hailing service over the last year, also remained in the red.

Uber said it expected its adjusted Ebitda loss to narrow to around $100 million in the third quarter, with investors hoping that it can turn a profit in the fourth. The driver shortage remains the threat going forward, although Uber did manage to grow the number of US drivers by 480,000 over the last three months. That 30% growth in drivers outpaced the increase in the number of trips being made.

Robinhood

Robinhood shares remain in focus after the stock exploded yesterday and ended up over 50% at $70.53, having listed at just $38 last week.

After a lacklustre response from the markets during its first two days as a publicly-traded business, interest from retail investors and traders has surged. They may have been prompted into action by news that Cathie Wood’s Ark Invest had increased its holdings in the stock, providing some confidence that institutions believe in the company’s prospects.

Robinhood shares were called to open lower today and markets can expect things to remain volatile going forward. The company revealed in an amended filing today that existing investors plan to sell 97.9 million shares over time in relation to convertible notes held by the investors from its IPO. It said the maximum selling price would be $35.12.

Moderna

Moderna shares could be on course to hit yet another all-time high today after releasing second quarter results that beat expectations as demand for its coronavirus vaccine continues to grow.

The company reported revenue of $4.4 billion compared to just $66 million the year before as its coronavirus vaccine transformed its results. Net income of $2.78 billion turned from a $117 million loss the year before. That beat expectations for $4.2 billion in revenue and profit of $2.46 billion.

It said it has signed advance purchase agreements worth $20 billion for delivery in 2021 including what has been shipped out in the first half. It is aiming to deliver 80 to 100 million doses of its coronavirus jab this year before ramping up to 2 to 3 billion doses in 2022. It also said it would buyback $1 billion of shares over the next two years.

EA

Electronic Arts said it was feeling more optimistic than ever as it posted a better than expected outlook yesterday, defying the disappointing guidance provided by peers Activision Blizzard and Take-Two earlier this week.

Revenue rose to $1.55 billion in the first quarter from $1.45 billion the year before and net income dropped to $204 million from $365 million. EA said it delivered a ‘big beat this quarter’ and raised its guidance, spurred on by the upcoming release of new sports titles and Battlefield 2042. It is expecting second quarter revenue of $1.77 billion, ahead of the $1.51 billion expected by analysts.

EA’s results come after Activision Blizzard reported yesterday and revealed large jumps in revenue and earnings but disappointed with its outlook. Meanwhile, Take-Two Interactive’s results earlier this week also revealed a rise in earnings despite a drop in revenue, but this was overshadowed by news it has decided to delay two key titles.

Thomson Reuters

Thomson Reuters revealed it beat expectations for the fifth consecutive quarter, prompting it to raise its guidance for the rest of the year and launch a new share buyback programme.

Revenue rose 9% to $1.53 billion in the second quarter and adjusted EPS followed 9% higher to $0.48 from $0.44, both coming in slightly ahead of Wall Street’s expectations. It said momentum had gained traction as its three core divisions – Legal Professionals, Corporates, and Tax & Accounting Professionals – all delivered growth.

It said revenue should grow 3.5% to 4.0% in the third quarter, with its three core divisions to grow at a faster rate of 5.0% to 5.5%. It also launched a new $1.2 billion buyback programme following the $200 million programme completed earlier this year.

Tesla and electric vehicle stocks

Tesla and other electric vehicle stocks will be in play today ahead of US president Joe Biden signing an executive order later that will set a target for at least half of new vehicles sold from 2030 to be electric and tighten rules of emissions.

Although the move was backed by many leading automakers including General Motors, Ford and Stellantis, Tesla chief executive Elon Musk said it ‘seems odd that Tesla wasn’t invited’ to the electric vehicle event at the White House.

Exxon Mobil

Exxon Mobil is considering going net-zero by 2050, according to reports from the Wall Street Journal.

The oil and gas giant is reported to be considering how quickly it wants to get to net-zero and cut its emissions and that no final decision had been made. It comes following a shake-up to the board after three directors were ousted by shareholders in May after failing to deliver the boost in returns and the plan needed to go green.

Walmart

Flipkart has been asked why it shouldn’t face a hefty $1.35 billion fine for breaking foreign investment laws in India, according to reports from Reuters.

Walmart is the majority owner of the Indian company, which has been under fire alongside Amazon over a number of issues that the government has with the two firms. The report said Flipkart is accused of attracting foreign investment from a company and then selling its goods on its platform, which is against the law.

A Flipkart spokesperson told Reuters that the company was in compliance with Indian laws and regulations, and that it plans to cooperate with authorities as they look into alleged breaches between 2009 and 2015.

Cigna

Health services company Cigna reported lower earnings in the second quarter as the pandemic continues to weigh on results, prompting it to trim its guidance for the year.

Revenue rose to $43.13 billion from $39.26 billion the year before and adjusted net income fell to $1.47 billion from $1.75 billion. It said profits were impacted by the rise in medical care costs after they dropped last year when the pandemic erupted. Total medical customers fell to 16.95 million from 17.08 million the year before, although demand for its pharmacies increased.

Cigna warned it expected the pandemic to hit earnings by around $2.50 per share this year and trimmed its adjusted net income expectations for 2021.

Regeneron

Regeneron reported stellar growth in revenue and earnings in the latest quarter, driven by demand for its coronavirus treatment and other products in its portfolio.

Revenue jumped 163% in the second quarter to $5.14 billion, with over half coming from its coronavirus antibody cocktail REGEN-COV. Stripping out the boost in sales provided by that, revenue was up 22% as demand for other products like EYELEA and Dupixent increased. Net income jumped to $2.89 billion from $854 million the year before.

Regeneron said it intends to spend slightly less on R&D this year than previously thought, but said this will be offset by slightly higher administrative and selling costs. It is expecting a gross margin of 87% to 88%, having been tightened from the previous range of 86% to 88%.

Weber

Weber is going public by completing its initial public offering today, having decided to slash the price of its offering at the last minute.

The barbeque firm said it was selling almost 18 million shares at $14 apiece, below the $15 to $17 range it had originally hoped for. This will give Weber an initial valuation of around $4 billion.

The company comes to the market at a time when the pace of IPOs seems to be cooling down following a bumper couple of years, but joins as it continues to deliver strong growth. Annual revenue was up 18% last year to $1.5 billion and profits jumped 77% to $89 million.

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