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Matt Phillips4/4/25

Morgan Stanley analysts say TikTok a “strategic fit” with Amazon

It’s official, the TikTok divest-or-dark law is legal, and analysts at Morgan Stanley think they know the perfect buyer: Amazon.

Analyst Brian Nowak wrote:

“We believe the combination of AMZN’s strong ad tech stack, advertiser/third party seller base, first party data and logistics assets put together with TikTok’s estimated ~32bn hours of US consumer engagement could build a viable social shopping network.”

Nowak noted that he has no knowledge of any deal discussions, and that neither ByteDance nor Amazon have commented on the chance for a tie-up.

But with US regulators unlikely to approve Meta or Alphabet building any more dominance in the online-ad space, the list of potential acquirers is slim:

“The number of companies (or individuals) who could fund a potential $80bn + acquisition (and its risks) is limited. AMZN with its $33bn of net cash on books and ~$69bn/82bn of FCF in ’25/’26 could (in theory) handle a purchase like this.”

Update April 4, 2025: Corrected article to reflect that Brian Nowak is an analyst at Morgan Stanley, not JP Morgan, as the article originally stated.

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Max Knoblauch7m

Rental car companies drop amid volatile demand following an “unacceptable” Q4 from Avis

Rental car company Avis shed roughly $1 billion in market cap on Thursday as its stock fell more than 23% following the company’s Q4 results, which CEO Brian Choi called “unacceptable.”

Avis’ adjusted earnings before interest, taxes, depreciation, and amortization came in at $5 million on the quarter, a massive miss compared to the $145.4 million expected by Wall Street analysts polled by FactSet.

Avis said commercial rental days fell 11% in November, as thousands of flights were cancelled amid the government shutdown. That led Avis to reduce its fleet size in Q4, “the most difficult period to sell used vehicles.” The company also took a $500 million write-down on its EV fleet at year-end.

“When operational performance speaks for itself, we earn the right to focus on the bigger picture. This quarter, we didn't earn that right. We fell significantly short of guidance. That's unacceptable, and I have no excuses to offer,” said Choi on the company’s earnings call.

Avis said it expects lower earnings in the first quarter, as January was also impacted by weather-related flight cancellations. Rival Hertz was dragged down in the sell-off, dropping more than 14%.

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AppLovin gains amid report on its plans to launch a social networking platform

Ad tech company AppLovin has designs on starting a social networking platform of its own after it was unable to get its hands on TikTok’s US operations.

Shares are up today on the heels of a massive gain on Wednesday, though it’s unclear whether this has much to do with this potential foray or if traders are aiming to call a bottom in the stock after last week’s post-earnings tumble took shares below $360 for the first time since July.

These social plans were discussed in a podcast days ago, and the company has had a job posting for a software engineer to build this platform, though a Bloomberg headline on the subject was only shared this morning.

“We aim to build a completely new next-generation social media platform,” Chief Product and Engineering Officer Giovanni Ge said on the “Valley 101” podcast.

He described the course the company is charting as the opposite of Meta’s, which started by gathering eyeballs and then built advertising around it.

Presumably, such a venture would give AppLovin more digital real estate to run ads, and any data it collects from its users may be useful in offering better targeted ads on other apps.

Last April, CNBC’s Marc Faber reported that the ad tech firm had made an offer for TikTok, and that the Trump administration had been “fully aware” of its interest.

AppLovin’s post-earnings swoon last week, despite solid Q4 results and a better-than-expected Q1 outlook, came as investors have worried about competitive threats to its business from new AI entrants as well as Meta.

Max Knoblauch3h

Airline stocks fall as US-Iran tensions push oil prices up

President Trump on Thursday said “bad things will happen” if a “meaningful deal” is not reached between the US and Iran, escalating tensions between the two countries as well as the threat of a possible conflict.

“Now we may have to take it a step further or we may not. Maybe we are going to make a deal [with Iran]. You are going to be finding out over the next probably 10 days,” Trump said. West Texas Intermediate crude futures climbed more than 2% on Thursday morning.

Oil’s reaction sent airline stocks, which are sensitive to fuel costs, downward. JetBlue, Allegiant, American Airlines, Delta Air Lines, Alaska Air, and United Airlines all experienced a sell-off on Thursday morning. Other airlines including Frontier and Southwest Airlines also dipped.

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Super Micro jumps above 50-day moving average on elevated call activity

A jump in call activity has propelled shares of Super Micro Computer sharply higher, above their 50-day moving average.

As of 10:45 a.m. ET, call volumes of 114,333 are on track to handily surpass the 20-day average of 166,558 for a full session (a period that encompasses the release of its quarterly results earlier this month).

The action has a bullish tilt, with a put/call ratio of less than 0.16 compared to a 20-day average of 0.38. Call options that expire this Friday and next Friday with strike prices between $32 and $33.50 are seeing the most activity.

The AI server company’s post-earnings bounce had been short-lived, with shares returning to near a 52-week low before today’s surge.

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Klarna sinks after Q1 guidance for revenue and gross merchandise value comes in short of estimates

Buy now, pay later, issue guidance that Wall Street likes even later.

Shares of Klarna are tumbling in early trading after the fintech payments company’s Q1 outlook came in below analysts’ projections.

Management sees Q1 revenues between $900 million and $980 million, the midpoint of which is below Wall Street’s call for $965.1 million. The company’s range for gross merchandise value in the current quarter of $32 billion to $33 billion is fully below the consensus estimate for $33.37 billion.

(Gross merchandise value is the dollar figure associated with all purchases made via Klarna’s different modes of payment.)

This disappointing outlook outweighed a solid set of Q4 top-line results. Revenues of $1.08 billion came in $10 million above expectations, gross merchandise volume beat estimates at $38.7 billion (consensus: $38.06 billion), and active consumers of 118 million were nearly a full million above what Wall Street had penciled in.

The stock is poised to open at an all-time low.

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