Markets
markets
Kelly Cloonan

Carvana tumbles as weakness under the hood overshadows earnings beat

Carvana’s supercharged rebound just shifted into lower gear as its latest earnings report failed to impress investors’ sky-high expectations and justify the stock’s 444% rally over the past year, sending shares on a 12% tailspin. A top- and bottom-line beat from the used-car seller disguised some points of softness under the hood.

Of note: its wholesale business failed to move as many units as analysts expected. However, the used-car seller reported $3.55 billion in fourth-quarter revenue after market close on Wednesday, marking a 46% rise from a year prior and coming in above forecasts of $3.34 billion, according to analysts polled by Bloomberg.

The company’s adjusted earnings also exceeded expectations, coming in at $359 million for the quarter after a loss of $200 million a year prior. The latest figure brings the company’s full-year adjusted earnings to $1.38 billion, roughly in line with the company’s expectations for earnings “significantly above the high end” of a range between $1 billion to $1.2 billion.

In its forward outlook, Carvana said it expects another strong year, with significant growth in both units sold and adjusted earnings, but did not specify any exact numbers.

The stock’s downward move marks a slight dent in the tremendous rally that’s seen shares rise 6,859% from an all-time low in 2022. After nearing bankruptcy amid slowing sales and mounting debt, Carvana has seen its used-car sales rebound — up 33% over the course of last year — as new-car prices continue to rise since pandemic-era disruptions limited supply.

The turnaround hasn’t been without controversy, though. Last month, short seller Hindenburg Research accused the company of accounting manipulation and lax underwriting standards to boost results, all while shielding investors from the risk underlying the loans it originates and sells to lenders. Carvana said those accusations were nothing new, and stood firm on its accounting practices.

Kelly Cloonan is a journalist who has written for Business Insider and Fast Company.

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markets
Max Knoblauch

United beats Q1 earnings and revenue estimates, lowers full-year profit guidance amid surging jet fuel prices

United Airlines reported its first-quarter earnings results after the bell on Tuesday. The carrier’s shares ticked down in after-hours trading.

For Q1, United reported:

  • Adjusted earnings of $1.19 per share, compared to the Wall Street estimate of $1.08 per share compiled by FactSet.

  • $14.6 billion in revenue, compared to the $14.39 billion consensus estimate.

In the first quarter, United’s fuel expense grew 12.6% from the same period last year to $3.04 billion.

For the second quarter, United expects adjusted earnings per share of between $1 and $2, shy of Wall Street expectations of $2.08. For the full year ahead, United said it expects earnings between $7 and $11 per share, compared to its prior guidance of between $12 and $14 per share.

“Guidance assumes United’s revenue recovers 40% to 50% of the fuel price increases in the second quarter, 70% to 80% of the fuel price increases in the third quarter and 85% to 100% of the fuel price increases in the fourth quarter 2026,” read the company’s investor update.

Earlier this month, United was among the first major US airlines to hike its bag fees amid higher fuel costs. Its shares have fallen more than 15% from a February high days before the war in Iran began.

United has also made waves this month following reports that CEO Scott Kirby had floated the idea of a merger with American Airlines to President Trump. A merger between two of the big four airlines would create a true US behemoth, controlling more than a third of the American market. American Air last week said it wasn’t interested in merging with United and hadn’t held talks on the idea. On Tuesday, Trump told CNBC that he doesn’t like the idea either.

Tasha Matsumoto
12h
Stocks slip as peace prospects dim

Stocks swung from positive to negative as Vice President Vance’s trip to Pakistan for Iran peace talks was canceled.

Grizzly bear growling USA.
markets
Luke Kawa

Hedge funds are following retail traders into the Magnificent 7

Hedge funds are following retail traders into the stocks the masses never stopped buying.

“As we kick off earnings for megacap tech stocks, this stood out: [hedge funds] have started buying Mag7 stocks again this month though positioning remains well below the peak levels seen in early 2016,” wrote Goldman Sachs’ Cullen Morgan.

Goldman PB Mag 7
Source: Goldman Sachs

In early April, JPMorgan strategist Arun Jain noted that retail investors had basically been selling everything but the Magnificent 7 stocks as part of a more cautious stance due to the Iran war.

(Apple has been a long-standing exception to this trend, presumably because retail traders aren’t fond of its hands-off approach to AI.)

JPM Retail flows

Last August, Jain discussed how retail activity tended to “crowd in” institutional buyers in meme stocks, while Goldman’s John Marshall advised clients to piggyback on stocks beloved by retail traders. Speculative, retail-geared assets proceeded to go on a tremendous run that soured in October.

But there are some early indications that a similar bout of speculative fervor is bubbling up once more.

markets
Luke Kawa

POET Technologies surges above $10 for first time in 4 years amid explosion in call volumes

POET Technologies is up nearly 40% this week as options market activity goes haywire in a faint echo of what got the stock on retail traders’ radars in October.

As of 11:12 a.m. ET, more than 10 calls have changed hands for every put traded. This bullish impulse has propelled the stock above the $10 threshold for the first time since March 2022.

Shares of the optical communications firm briefly dipped last week after Wolfpack Research said it was short the company because its investors would be exposed to an “IRS tax nightmare.”

The company responded that day saying it was taking measures for US shareholders that “should mitigate certain potential adverse US federal income tax consequences to it that could otherwise result from the Company’s status as a passive foreign investment company.”

Luke Kawa
18h
The parabolic surge in Avis reached new heights, with shares halted for volatility

More motivated buyers than motivated sellers.

Travelers at Sacramento International Airport (SMF)

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