Expedia Estimates Strong Summer Travel Recovery, Stock Drops 13%

Expedia Group reported first quarter 2022 revenues increased 82% to $2.25 billion and net loss shrank 80% to $123 million from a year ago. 

Diluted loss per share in the quarter fell to 78 cents from $4.17 a year ago. 

Gross bookings in the quarter jumped 58% to $24.4 billion but still 15% below record $29.4 billion bookings in the first quarter 2019.

Gross bookings surged 40% from $17.4 billion in the fourth quarter 2021. 

Domestic revenues jumped 65% to $1.6 billion and international revenues soared 142% to $593 million. 

Lodging revenues increased 78% to $1.61 billion, air travel related revenues jumped 50% to $74 million, advertising and media revenues advanced 88% to $166 million, and other revenues soared 94% to $399 million. 

Lodging revenue increased in the first quarter driven by a significant increase in room nights stayed across hotels and alternative accommodations as well as average daily rate growth.

Revenue per night growth in the quarter increased to 17% from 10% in the year ago. 

Stayed room nights in the quarter increased 52% to 56.5 million from a year ago. 

Average daily revenue increased to 20% in the quarter from 8% a year ago. 

Worldwide airline tickets sold in the quarter increased 48% from a decline of 50% in the quarter a year ago. 

Airfare revenue growth in the quarter increased to 39% compared to 26% decline in the period a year ago. 

Expedia Group stock fell 14% to $150.42 after several analysts lowered the price target and cited the ongoing war in Europe and rising inflation added to uncertainties.  

Travel Stocks, Chegg, Shutterstock Drop; Medifast, Western Digital Rise

Chegg, Inc plunged 32% to $16.99 after the higher education support services provider sharply lowered its annual revenue outlook but reported quarterly earnings that exceeded expectations. 

Clorox Co jumped 2.4% to $146.71 after the consumer products maker reported March quarter sales rose 2% to $1.81 billion and adjusted profit declined to $1.31 from $1.61 a share a year ago. 

The company said it is still estimating full-year ending June sales to decline between 1% and 4% and lowered the earnings outlook to between $3.60 to $3.85 a share. 

Higher material costs are expected to lower gross margins by as much as 8%. 

Expedia Group, Inc declined 13.4% to $151.43 after the online travel services provider reported a March-quarter loss of 48 cents a share compared to $2.02 a year ago. 

Revenues in the first quarter rose 80% to $2.25 billion and gross bookings were $24.4 billion and the company guided a strong summer season and added that the demands for home rentals on Vrbo site are running ahead of the 2019 levels.    

Hyatt Hotels Corp fell 5.6% to $88.89 and Hilton Worldwide Holdings fell 4.8% to $147.91 after Hilton said it expects full-year 2022 earnings to be between $1 billion and $1.07 billion or $3.56 and $3.81 a share. 

2022 Revenue per available rooms to rise between 32% and 38% from 2021 but shy between 5% and 9% of 2019 levels. 

J&J Snack Foods Corp dropped 14% to $126.05 after the maker of snack foods and frozen beverages reported record quarterly sales but fell short of estimates. 

Second quarter, ending in March, sales increased 10% to record $282 million, net income declined 46% to $3.3 million, and diluted earnings per share fell to 17 cents from 32 cents a year ago. 

Medifast, Inc jumped 9.7% to $191.52 after the nutrition and weight loss company reported first quarter sales increased 22.6% to $417.6 million and net income edged up 1.7% to $41.8 million. 

The company lifted its annual revenue guidance to between $1.78 billion and $1.84 billion and earnings per share between $14.60 and $16.05. 

Monolithic Power Systems, Inc jumped 8.9% to $443.45 after the maker of power circuits reported March quarter sales increased 48% and earnings rose 68%. 

The power circuit maker for cloud computing and other automated systems also lifted second quarter revenues guidance to between $420 million and $440 million and adjusted gross margin between 58.7% and 59.3%. 

Shutterstock, Inc fell 12.6% to $67.41 after the online image marketplace operator reported March quarter sales increased 8.6% to $199.10 million and reported $1.00 earnings per share. 

The business services provider also lifted its annual earnings per share range between $3.65 and $3.80 and 2022 revenues between $835 million and $850 million. 

Western Digital Corporation gained 11% to $60.26 after an activist investor Elliott Investment Management asked the company to separate its flash memory and hard disk drive businesses. 

Elliott has about 6% stake in the company and said that the fund is prepared to invest additional $1 billion in its flash business at a $17 billion or $20 billion enterprise valuation. 

U.S. Stocks Brave Higher

U.S. stocks open higher a day after market indexes reversed early sell-off in the final hour of trading. 

Anxious investors digest t latest batch of earnings, China lockdowns, rising inflation, ongoing war in Europe, and persistent global supply disruptions.  

After 30 minutes of trading in New York, the S&P 500 index gained 0.4% to 4,170.64 and the Nasdaq Composite index added 0.5% to 12,593.52. 

All eyes are on the Fed's policy meeting scheduled tomorrow and the Fed is widely expected to raise interest rate at least 0.5% in an announcement at 2 p.m. ET.  

10-year U.S. Treasury bond yield hovered near 2.93%. 

Crude oil edged down 34 cents to $104.79 a barrel and Brent crude fell 26 cents to $107.29 a barrel.  

Russia is expected to formally declare war on Ukraine and mobilize large scale armed forces to the eastern and southern border of its neighbor. 

China's tight lockdown in Shanghai faced a setback after the local government reported 58 new Covid-19 cases beyond the strict lockdown areas. 

The financial capital has been in a lockdown for more than a month and the authorities are also conducting mass testing in Beijing. 

About 1,500 companies are scheduled to release earnings this week and most companies are reporting a growth deceleration and sales increase largely driven by substantial price increases. 

Chegg Inc plunged 33% after reporting better-than-expected but the higher education support services provider lowered annual revenues outlook and said students are foregoing learnings for earnings. 

BP Plc took $25.5 billion of accounting charge after the oil giant decided to sell its stake in Rosneft in Russia. 

Airbnb, AMD, Akamai, and Startbucks are expected to report earnings after the close.  

World Markets Face Rising Interest Rates

World markets remained focused on the U.S. Federal Reserve as investors shift focus to interest rate regime. 

Financial markets in India were closed to mark Ramzan Eid. 

U.S. Fed policy committee is scheduled to meet on Wednesday and financial markets are anticipating interest rate hike of at least 0.5%, the first such increase in 20 years.  

The Fed has been severely lagging in taming inflation after saying that last two years of energy price increases are transitory. 

U.S. consumer prices are rising at the fastest pace in four decades and annual inflation is hovering between 8.5% and 10%. 

10-year U.S. Treasury yield is trading at 2.89%, resulting in a negative interest rate of as much as 7%. 

The Bank of England is scheduled to lift its interest rate to the highest since 2009 on Thursday.  

The Reserve Bank of Australia lifted the cash rate for the first time since 2011.

The central bank raised the rate by 0.25 percentage point from record low of 0.1% in 2020 to 0.35% and said additional rate hikes are likely to follow. 

Australian market indexes closed higher and banks closed down 1%. 

The central bank rate decision was announced after the market closed. 

In Asian markets, Hang Seng index gained 0.06% and markets in Japan, China, and India were closed.  

The Bank of Japan is the only central bank sticking to its ultra-low rate policy and said last week it will support 10-year Japanese government bond at 0.25% yield. 

European markets traded higher and market indexes in Germany and in France gained 0.1% but in London eased 0.75% ahead of the rate decision on Thursday. 

Chegg Inc Sharply Lowers Annual Revenue Guidance

Chegg Inc reported first quarter 2022 revenues increased 1.9% to $202,1 million and swung to net income of $5.7 million compared to a loss of $65.2 million. 

Diluted earnings per share in the quarter was 4 cents compared to 49 cents loss a year ago. 

After adjusting for stock-based compensation and other items, adjusted earnings per share rose to 32 cents from 28 cents a year ago and above the average estimate of 24 cents set by analysts according to FactSet.   

Chegg Services revenue growth in the quarter plunged to 13.8% from 61.8 % in the year ago. 

The company ended the quarter with 5.4 million Chegg services subscribers, an increase of 12% from a year ago. 

The total subscriber count included 0.6 million subscribers of the newly acquired language services provider Busuu for $422 million. 

Guidance and Outlook 

The company guided second quarter revenues between $188 million and $192 million and gross margin between 73% and 74%. 

The company also estimated adjusted EBITDA between $66 million and $68 million. 

For the full-year 2022, the company estimated revenues between $740 million and $770 million compared to the previous estimated range of $830 million to $850 million. 

Gross margin to hover in the range of 73% to 74%. 

Adjusted EBITDA to fall between $220 million and $235 million or 30% adjusted EBITDA margin.  

The company also anticipates capital expenditure in the year between $120 million and $130 million. 

U.S. Construction Spending Inches Higher 0.1% in March

Construction activities inched up modestly in March according to the latest data released by the Commerce Department. 

U.S. construction spending rose 0.1% in March to $1.73 trillion annual rate from the upwardly revised 0.5% spending in February. 

 Residential construction rose 1.0% to a rate of $882.0 billion, but spending on non-residential construction dropped 1.2% to a rate of $497.6 billion. 

Public construction eased 0.2% to $351 billion. 

Late Afternoon Reversal Lifts Stocks In Volatile Session, Bond Yield Reaches 3%

U.S. indexes closed higher but swung in choppy trading with the S&P 500 index reaching a new intraday low before the market reversal in the late afternoon. 

The S&P 500 index rose 0.6% to 4,155.05 and the Nasdaq Composite index jumped 1.63% to 12,536.02.  

The S&P 500 index touched a new intra-day low. 

Construction activities inched up modestly in March according to the latest data released by the Commerce Department. 

U.S. construction spending rose 0.1% in March to $1.73 trillion annual rate from the upwardly revised 0.5% spending in February. 

 Residential construction rose 1.0% to a rate of $882.0 billion, but spending on non-residential construction dropped 1.2% to a rate of $497.6 billion. Public construction eased 0.2% to $351 billion. 

The market indexes extended losses after the 10-year U.S. Treasury bond yield reached 3% for the first time since 2018 ahead of Fed policy meeting on Wednesday. 

Nearly 1,500 companies have reported quarterly results and most companies are reporting strong growth deceleration. 

The consumer products makers, retailers, and manufacturing companies are reporting weaker-than-expected earnings for the rest of 2022. 

Market indexes in Paris dropped 1.7%, in Frankfurt fell 1.2%, and in London edged up 0.5%.   

European Union growth is also on the skid after the April estimate of factory activities showed a decline in growth rate from March. 

Crude oil inched higher 32 cents to $105.01 in New York trading and gained 22 cents to $107.36 a barrel. 

In Asia, the Nikkei index declined 0.1% in April and factory activities expanded at a slower rate from the previous month in April. 

The Sensex index in India fell 0.2% on the worries that the rising food and energy prices, largely inflicted by the U.S. and European sanctions, are stoking higher worldwide food prices inflation.  

Hub Group Lifts Annual Outlook On Intermodal Transportation Strength

Hub Group reported first quarter 2022 revenues increased 41% to $1.3 billion and net income surged five-fold to $87.5 million from a year ago. 

Diluted earnings per share increased to $2.58 from 51 cents a year ago. 

Intermodal and transportation solutions revenues increased 35% to $774 million and Intermodal volume increased 4% and revenue per load increased 35%.

Truck Brokerage revenue grew 132% in the quarter to $296 million due to the acquisition of Choptank Transport as well as revenue growth from truckload and LTL.

Logistics revenue increased 6% to $229 million driven by growth in the final mile and consolidation services, as well as the contribution from new managed transportation customer onboardings.

Capital expenditure in the quarter totaled $31 million.

Guidance and Outlook 

The company also guided 2022 revenues between $5.3 billion and $5.5 billion and diluted earnings per share between $9.00 and $10.00. 

Gross margin between 15.6% and 16.0% in 2022 and costs and expenses to range between $440 million and $450 million. 

Capital expenditure to range between $240 million and $265 million. 

National Instruments Quarterly Sales Up 16%, New Orders Jumped 27%

National Instruments Corp said first quarter 2022 revenues increased 16% to $343.6 million and net income surged six-fold to $25.2 million a year ago. 

Diluted earnings per share in the quarter rose to 19 cents from 3 cents a year ago. 

The company also lifted quarterly dividend per share to 28 cents from 27 cents a year ago. 

 Total new orders in the quarter rose 27% driven by a surge of 40% in the Americas 22% in the EMEA region, and 17% in APAC. 

Gross margin in the quarter was 17% and operating margin was 8%. 

As of March 31, 2022, the company had $143 million in cash and cash equivalents. 

During the quarter, the company paid $37 million in dividends and repurchased approximately 772,000 shares of its common stock at an average price of $40.74 per share.

Guidance and Outlook 

The test and measurement system maker estimated 2022 revenues between $370 million and $410 million and diluted earnings per share between 1 cent and 15 cents. 

The non-GAAP diluted earnings per share in 2022 are estimated between 25 cents and 39 cents. 

Movers: Activision, Global Payments, Hub Group, Moody's, National Instruments. Spirit Airlines

Activision Blizzard, Inc jumped 2.8% to $77.75 after Warren Buffett controlled Berkshire Hathaway reported 9.5% stake in the company in the hope that Microsoft will be able to complete its merger offer at $95 a share or $69 billion. 

Global Payments declined 9.5% to $123.85 after the company reported first quarter 2022 revenues increased 8% to $2.16 billion and diluted earnings per share increased to 87 cents from 66 cents a year ago. 

The software company also lifted its 2022 revenues between $8.42 billion and $8.50 billion and adjusted earnings per share between $9.45 and $9.67.  

HSBC Holdings plc traded down 2% in New York but gained 4% in London after China controlled an insurance company and the largest shareholder in the bank proposed a plan to break the company up. 

Ping An, the Chinese insurance giant proposed a plan to separate its Asian business from European and U.S. and said that the global network outside Asia adds little incremental value. 

Hub Group gained 6.7% to $71.72 after the transportation management company reported revenues in the first quarter 41% to $1.3 billion. 

In the quarter, net income increased to $88 million or $2.58 a share from $17 million or 51 cents a share. 

The company also guided 2022 revenues between $5.3 billion and $5.5 billion and diluted earnings per share between $9.00 and $10.00. 

Moody's Corp declined 4.4% to $301.10 after the rating agency reported quarterly profit per share of $2.89 and lowered its annual revenues outlook on the continued market volatility. 

National Instruments declined 4.5% to $34.50 after quarterly revenues rose 15% to $385 million and earnings per share rose to 19 cents from 3 cents a year ago. 

The instrument maker guided 2022 earnings per share in the range between 1 cent and 15 cents. 

Spirit Airlines declined 8.8% to $21.50 after the company rejected a takeover proposal from JetBlue and the company confirmed its plan to merge with rival budget airline Frontier. 

The move was widely anticipated by investors and the company's board cited antitrust reasons in rejecting the takeover overtures.  

Ping An Suggests Break Up of HSBC

HSBC Holdings plc traded down 2% in New York but gained 4% in London after China controlled an insurance company and the largest shareholder in the bank proposed a plan to break the company up. 

Ping An, the Chinese insurance giant proposed a plan to separate its Asian business from European and U.S. and said that the global network outside Asia adds little incremental value. 

China is also worried about the rising tensions with the U.S. and EU-member nations.

The London-based bank earns about two-thirds of its profit from Asia and 52% of revenues in the region.  

The news was first reported by British media two weeks ago and Ping An's spokesperson confirmed the proposal in a talk with Reuters. 

Stocks in Holding Pattern With Fed Meeting On Wednesday

Futures of U.S. stock indexes show weak opening as investors focus on latest batch of earnings and investors reprice asset prices with economic recession in view. 

The S&P 500 index declined 3.6% and the Nasdaq Composite index fell 4.2% in Friday's trading. 

Both leading indexes closed at their 2022 lows. 

The Fed was also in focus ahead of Wednesday's policy meeting and the Fed is expected to release its plan to lower $9 trillion government bond and mortgage securities.

March construction spending data is scheduled to be released today at 10:00 a.m. ET and economists are accepting 0.8% increase. 

China growth worries also dominated early market sentiment with several large and mid-size cities are in either lockdown or stringent controls. 

On Saturday, China reported a sharp fall in economic activities as measured by the Purchasing Managers' index. Factory orders, inventories, and service activities showed large declines in April. 

In Europe, the DAX index in Germany fell 0.7% and CAC 40 index declined 1.4% after the eurozone manufacturing activities rose at the slowest pace in April in a year. 

The Purchasing Managers' Index declined to 55.5 in April from 56.5 in March on supply shortages and producers passed on higher prices to consumers. 

In Asian markets, the Nikkei index declined 0.1% in April and factory activities expanded at a slower rate from the previous month in April. 

Berkshire Hathaway Net Plunged 54% On Portfolio Losses

Berkshire Hathaway Inc reported first quarter 2022 revenues increased 10% to $70.8 billion and net earnings plunged 54% to $5.4 billion from $11.2 billion in a year ago. 

Diluted earnings per Class A share declined to $3,702 from $7,638 and per Class B share fell to $2.47 from $5.09 a year ago. 

The company repurchased $3.2 billion of Class A and Class B common stock during the first quarter of 2022. 

On March 31, 2022, there were 1,470,875 Class A equivalent shares outstanding. 

The conglomerate operates in four business segments including insurance, railroads, utilities and energy, and manufacturing, services and retail. 

At March 31, 2022, insurance float (the net liabilities we assume under insurance contracts) was approximately $148 billion, an increase of approximately $1 billion since yearend 2021.

Operating earnings were stable at $7 billion from a year ago but net investment income declined to a loss of $1.6 billion from $4.7 billion gains a year ago. 

Manufacturing, services, and retail business segment operating earnings rose 15% to $3.0 billion, railroad rose about 10% to 1,3 billion, insurance investment income was nearly flat at $1.2 billion but underwriting fees plunged 93% to $47 million, and utilities and energy rose 6.6% to $750 million. 

China's Economic Activities Plunge in April On Covid Restrictions

China's economic activities fell sharply in April according to the latest data released by the National Bureau of Statistics today. 

The Purchasing Managers' Index declined for the manufacturing sector falling to 47.4 in April from 49.5 in March. 

A reading above 50 indicates expansion in activities and below shows contraction. 

Economic activities shrank for the second month in a row after China implemented Covid Zero policy in several cities. 

The sub-index measuring production declined 5.1 percentage points to 44.4 and for new orders fell 6.2 points to 42.6. 

The PMI index measuring construction and services declined even deeper to 41.9 in April from 48.4 in March, reaching the lowest since February 2020. 

Fed's Preferred Measure Shows Sustained and Elevated Inflation

On the U.S. economic front, the latest report from the Commerce Department showed personal income rose less than expected but the spending was ahead of expectations. 

Personal income increased 0..5% in March after rising by upwardly revised 0.7% in February. 

Personal spending rose 1.1% in March after climbing by upwardly revised 0.6% in February. 

The latest reading on inflation faced by consumers showed sustained and elevated inflation pressures. 

Personal Consumption expenditures index, the Fed's preferred gauge of inflation, in March increased 6.6% after rising 6.3% in February. 

Core expenditure excluding food and energy rose 5.2% in March after rising 5.3% in February.