Monday - Friday
Monday August 8, 2022
Airbnb Reports Earnings
Airbnb (ABNB) released its second quarter earnings on Tuesday, August 2. Despite experiencing its most profitable second quarter, the San Francisco based-company's stock fell more than 9% following the release of the report.
The online lodging booking company reported revenue of $2.10 billion for the quarter. This was an increase of 58% year over year and up from $1.34 billion reported at this time last year. The company fell short of analysts' estimates of $2.11 billion.
"The second quarter of 2022 demonstrates we have achieved growth and profitability at scale," said Airbnb CEO, Brian Chesky. "Over the last year, we generated $2.9 billion in free cash flow and our Q2 revenue is up more than 70 percent since Q2-2019. Our strength this quarter is the result of our ability to stay focused and disciplined while continuing to relentlessly innovate."
Airbnb posted net income of $379 million for the quarter or $0.56 per adjusted share. This marks Airbnb's most profitable second quarter ever, up from a net loss of $68 million or $0.11 per adjusted share at this time last year.
Airbnb continues to be a popular online tool used by many to reserve unique lodging accommodations. For the second quarter, Airbnb reported more than 103 million nights and experiences booked, making it the company's largest booking number in the company's history. As a result, gross booking value increased to $17 million, up 27% year over year. The company benefited from an increase in consumer spending activities in 2022, however it was highly impacted by flight cancellations at the end of the quarter. Airbnb recorded its highest single day revenue on July 4, signaling a strong summer season ahead.
Airbnb (ABNB) shares ended the week at $117.11, up 6.6% for the week.
Starbucks Brews Strong Earnings
Starbucks Corporation (SBUX) reported its quarterly financial results on Tuesday, August 2. The coffeehouse chain's shares remained relatively unchanged following the release of the report despite exceeding analysts' revenue estimates.
The company reported third quarter net revenue of $8.15 billion, up 9% from $7.49 billion reported in the same quarter last year. This surpassed analysts' expected revenue of $8.11 billion.
"We have clear line-of-sight on what we need to do to reinvent the company, elevate our partner and customer experiences and drive accelerated, profitable growth all around the world," said interim CEO, Howard Schultz. "The Q3 results we announced today demonstrate the early progress we have made in just four short months."
Starbucks' net income for the quarter fell to $912.9 million. On an adjusted per share basis, earnings were $0.79. This was down from $1.15 billion or $0.97 per adjusted share in the same quarter last year.
Starbucks opened 318 new stores in the first quarter, generating 4% year-over-year unit growth. The company ended the quarter with 34,948 stores globally. Revenue and net income growth was aided by comparable sales for the quarter, increasing 3% with a 6% increase in average ticket prices. There were 27.4 million active loyalty program members in the first quarter, up 13% year-over-year.
Starbucks Corporation (SBUX) shares ended the week at $85.73, up 1.8% for the week.
PayPal Posts Earnings
PayPal Holdings Inc. (PYPL) issued its second quarter earnings report on Tuesday, August 2. The tech company's stock rose more than 13% after reporting better-than-expected earnings.
The company reported quarterly net revenue of $6.81 billion, a 9% increase from $6.24 billion in revenue during the same quarter last year. This exceeded analysts' expectations of $6.79 billion.
"Our second quarter results were solid with currency-neutral revenue and non-GAAP earnings growth exceeding expectations," said PayPal CEO, Dan Schulman. "We continue to gain share as we execute across our key strategic initiatives, even as we drive operational efficiency across our business."
PayPal's net loss for the quarter came in at $341 million or $0.29 per adjusted share. This is down from the $1.18 billion or $1.00 per adjusted share during the same quarter this time last year.
PayPal added 400,000 net new accounts (NNAs) during the second quarter, bringing total active accounts to 429 million. Payment transactions increased 16% during the quarter to a total of 5.5 billion payment transactions. The company updated its guidance for 2022 and expects full-year revenue to grow 10% to $27.9 billion and anticipates adding approximately 10 million NNAs in 2022.
PayPal Holdings, Inc. (PYPL) shared ended the week at $95.32, up 9.5% for the week.
The Dow started the week at 32,756 and closed at 32,803 on 8/5. The S&P 500 started the week at 4,112 and closed at 4,146. The NASDAQ started the week at 12,318 and closed at 12,658.
Treasury Yields Fluctuate
Treasury yields fell this week as an increase in jobless claims exacerbated concerns about an economic slowdown. Yields rose on Friday as the job market shows signs of improvement.
On Friday, the Bureau of Labor Statistics released data for July's job market. The report revealed that hiring in July improved as nonfarm payroll rose 528,000 for the month while the unemployment rate came in at 3.5%. This exceeded market estimates of 258,000 and was under the 3.6% expected unemployment rate.
"The combination of strong job growth, an extremely tight labor market and stubbornly high wage inflation suggests the Fed's rate hike cadence will likely remain hefty next month," said deputy chief economist at BMO Capital Markets, Michael Gregory.
The benchmark 10-year Treasury note yield opened the week of 8/1 at 2.651% and traded as high as 2.839% on Wednesday. The 30-year Treasury bond yield opened the week at 3.009% and traded as low as 3.857% on Tuesday.
On Thursday, the U.S. Department of Labor reported that initial claims for unemployment increased by 6,000 to 260,000 for the week ending July 30, up from an adjusted 254,000 claims in the week prior. This marks an eight-month high as the labor market continues to reflect inflation's impact on economic growth and recovery.
"We think initial claims are more likely to rise from current levels than decline, but we don't expect a surge in new claims," said lead U.S. economist at Oxford Economics, Nancy Vanden Houten. "While the labor market may be getting marginally cooler, overall demand for workers continues to exceed the supply."
The 10-year Treasury note yield finished the week of 8/1 at 2.83%, while the 30-year Treasury note yield finished the week at 3.07%.
Mortgage Rates See Slight Drop
Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, August 4. The U.S. mortgage rates experienced a slight decline but continue to be affected by record high inflation.
The 30-year fixed rate mortgage rate averaged 4.99%, down from 5.30% last week. At this time last year, the 30-year fixed rate mortgage averaged 2.77%.
This week, the 15-year fixed rate mortgage averaged 4.26%, down from 4.58% last week. Last year at this time, the 15-year fixed rate mortgage averaged 2.10%.
"Mortgage rates remained volatile due to the tug of war between inflationary pressures and a clear slowdown in economic growth," said Freddie Mac's Chief Economist, Sam Khater. "The high uncertainty surrounding inflation and other factors will likely cause rates to remain variable, especially as the Federal Reserve attempts to navigate the current economic environment."
Based on published national averages, the savings rate cap was 0.10% as of 7/18. The one-year CD averaged 0.31%.
Published August 5, 2022