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Texas Instruments slumps on disappointing Q4 revenue and profit outlook

Texas Instruments is down a little over 8% in premarket trading as investors react to the weaker-than-expected fourth-quarter guidance the company gave in its Q3 earnings yesterday.

The world’s biggest analog chipmaker said that Q4 revenue would come in between $4.22 billion and $4.58 billion, where analysts had expected $4.5 billion on average, per Bloomberg. TI’s profit forecast for the period also disappointed, after the company said that earnings would be in the region of $1.13 to $1.39 per share, compared to reported Wall Street estimates of $1.41.

While its actual third-quarter numbers were broadly solid all told, with adjusted EPS at $1.59 meeting expectations, the Q4 outlook is a clear signal to some that recovery will likely be a little more sluggish than they expected. As the company’s CEO, Haviv Ilan, put it on an analyst call:

“The overall semiconductor market recovery is continuing, though at a slower pace than prior upturns, likely related to the broader macroeconomic dynamics and overall uncertainty.”

Texas Instruments counts more customers than anyone else in the semiconductor business and has a broader range of products, too, making it something of a bellwether for the industry more broadly, with its softer outlook weighing modestly on stocks like Analog Devices, AMD, and Intel.

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Max Knoblauch1m

Carvana plunges as investors respond to another subprime lender’s bankruptcy filing

Used car retailer Carvana is plunging on Wednesday, with the stock on pace for its worst day since auto tariffs took effect in April.

Likely spooking investors is a fresh bankruptcy filing by PrimaLend, which specializes in financing for dealerships focused on subprime borrowers (customers with lower credit scores, typically below 600, as defined by Experian). The news follows last month’s bankruptcy filing by another subprime auto lender, Tricolor Holdings.

Carvana doesn’t appear to work directly with PrimaLend, but it does likely have significant exposure to subprime loans. According to a January report by Hindenburg Research, which was shorting Carvana, 44% of the loans Carvana packages into asset-backed securities (ABS) are classified as non-prime (601-660 credit scores). More than 80% of its recent non-prime ABS deals had average FICO scores in the “deep subprime” range, or the riskiest levels, according to the report. Carvana at the time called the report "intentionally misleading and inaccurate.”

Carvana has massive growth goals, saying earlier this year that it aims to sell 3 million retail units per year within 5 to 10 years (Wall Street expects it to sell about 580,000 units this year). Lower-income buyers could be a significant part of that growth.

Following Tricolor’s implosion last month, JPMorgan CEO Jamie Dimon said: “When you see one cockroach, there are probably more. Everyone should be forewarned on this one.” With investors pouring out of Carvana on Tuesday, it seems Wall Street isn’t taking that warning lightly.

There is likely also some momentum pullback baked into Carvana’s drop: The stock, which has been a favorite among retail traders, is still up 58% this year, even after Wednesday’s drop.

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Beyond Meat halted for downside volatility after daily gain of more than 100% disappears

When the broad market turned shortly after 10 a.m. ET, the meme stocks were not immune from the carnage for long.

Beyond Meat, which was up 112% at its peak during regular trading hours on Wednesday amid another day of insanely high volumes and call activity, was halted for downside volatility after briefly erasing all of those gains.

As of 11:49 a.m. ET, the retail trader who posted their “YOLO” buy of 10,000 shares at a price of $7.50 on r/WallStreetBets is now down more than 40% (or $30,000) on the day.

markets

The momentum unwind accelerates in megacaps, with MTUM on its longest streak of underperformance since 2023

First, high-flying speculative stocks took a nosedive. Then gold lost some of its shine. Now, the megacap components of the momentum trade are also looking wobbly.

The iShares MSCI USA Momentum Factor ETF, which holds stocks with the best risk-adjusted price performance over the past six months and one year, is trailing the SPDR S&P 500 ETF by more than 1 percentage point today through 11:27 a.m. ET.

As of 11:23 a.m. ET, more than one-fifth of its 125 members are down more than 2%, headlined by big tumbles in Netflix, Carvana, GE Vernova, Rocket Lab, Quanta Services, and Robinhood Markets.

(Robinhood Markets Inc. is the parent company of Sherwood Media, an independently operated media company subject to certain legal and regulatory restrictions.)

The momentum ETF is in the midst of its seventh straight session of lagging the SPDR S&P 500 ETF, its longest such streak of underperformance since Q4 2023.

The negative reactions to GE Vernova and Netflix’s earnings reports — both MTUM constituents — may be the catalyst for the big retrenchment in the space, the same way Walmart’s disappointing outlook sank the group (and the overall market) in the first quarter.

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Matt Phillips3h

Oklo, nuke stocks battered amid speculative stock and momentum unwind

Amid a broader unwind of momentum trades, stocks tied to the nuclear-powered AI trade — Oklo, Nano Nuclear, and Centrus Energy among them — are taking a particularly hard beating.

JPMorgan strategist Arun Jain estimates that retail traders have dumped $24 million in Oklo shares through 11 a.m. ET.

This tumble comes alongside a tough-minded story from the Financial Times examining the prospects of this zero-revenue company, which as of yesterday had a market value of $20.6 billion. (It’s below $18 billion after today’s drop.)

Of Oklo’s plans to build smaller nuclear reactors using liquid sodium as a coolant rather than water, the salmon-toned periodical wrote:

“Some experts point to the failure of sodium-cooled reactors built in the US between 1950 and 1976.

Critics also note proliferation risks because Oklo’s plans would see plutonium move into private industry hands, where it could be at risk of diversion or theft by those who seek to build an atomic bomb. A decision by the US Nuclear Regulatory Commission to reject a previous Oklo application to build a sodium-cooled reactor in 2022 has also raised questions.

‘That NRC deemed Oklo beyond help should be a red flag,’ said Allison Macfarlane, a geologist and former chair at the regulator now at the University of British Columbia.

‘Liquid sodium is highly corrosive, flammable and explosive on contact with air and water,’ she said. ‘Many countries have tried to build these reactors before but they haven’t managed to prove they are commercially viable at scale.’”

“Some experts point to the failure of sodium-cooled reactors built in the US between 1950 and 1976.

Critics also note proliferation risks because Oklo’s plans would see plutonium move into private industry hands, where it could be at risk of diversion or theft by those who seek to build an atomic bomb. A decision by the US Nuclear Regulatory Commission to reject a previous Oklo application to build a sodium-cooled reactor in 2022 has also raised questions.

‘That NRC deemed Oklo beyond help should be a red flag,’ said Allison Macfarlane, a geologist and former chair at the regulator now at the University of British Columbia.

‘Liquid sodium is highly corrosive, flammable and explosive on contact with air and water,’ she said. ‘Many countries have tried to build these reactors before but they haven’t managed to prove they are commercially viable at scale.’”

markets

Retail traders hit the sell button on quantum computing stocks

In a parallel universe, retail traders are doubling down on the long-term potential of quantum computing companies. But in this one, they’re very much heading for the exits after these companies, which are in the early stages of commercialization, have enjoyed a monster run that’s beginning to sour.

JPMorgan strategist Arun Jain estimates that retail traders are net sellers of single stocks today to the tune of $336 million, as of 11 a.m. ET. And quantum stocks Rigetti Computing and D-Wave Quantum are among the names seeing the biggest outflows, with $26 million and $20 million in net sales, respectively.

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