Morning Toast 22nd Aug
Investors are feeling stressed after the S&P 500 experienced its third straight weekly decline, marking its most challenging period since February. However, there's little time for relaxation. The upcoming week holds two events that could strongly influence the market: Nvidia, a prominent player in the AI industry, will announce its earnings on Wednesday, and on Friday, Federal Reserve Chair Jerome Powell is set to deliver his yearly speech at the Fed conference in Jackson Hole. These events have the power to make significant waves in the financial landscape.
On Friday, WeWork (WE) introduced a new strategy in an attempt to rescue its plummeting stock from potential removal from the New York Stock Exchange. This move comes less than two weeks after the company expressed doubts about its survival to investors.
The troubled co-working space operator has decided to proceed with a 1-for-40 reverse stock split, which means that 40 existing shares of WeWork stock will be consolidated into a single share. This strategic manoeuvre is aimed at revitalising the declining stock price of WeWork and preventing the delisting of its shares. To remain listed on the NYSE, stocks are required to maintain a minimum closing price of $1. If a stock lingers below this threshold for an extended period, NYSE regulations allow for its potential removal.
WeWork's stock value has taken a drastic plunge since the beginning of the year, with a staggering 90% year-to-date drop. The downward trajectory continued on Friday, with the stock barely closing above 14 cents.
The reverse stock split plan is scheduled to go into effect at 4:01 pm Eastern Time on September 1, and the post-split trading will commence with the market open on September 5.
WeWork's efforts to restore its standing with the NYSE follow the company's recent announcement of having "substantial doubts" about its ongoing viability. Once valued at $47 billion, WeWork's failed attempt to go public in 2019 revealed massive losses and potential conflicts of interest with its co-founder and then-CEO, Adam Neumann. This setback has left the company in a precarious position.
WeWork has cited elevated costs, cash burn, and high membership turnover as significant challenges. In the second quarter, the company reported a net loss of $397 million.
WeWork's management has outlined a turnaround plan to bolster its financial stability. The success of this plan is critical to the company's survival over the next year. As part of this strategy, WeWork intends to renegotiate more favorable lease terms for its office spaces to lower rent expenses. Additionally, efforts will be made to minimize canceled memberships, as members rent desks within WeWork's office environments.
Zoom Video Communications Inc (NASDAQ:ZM) witnessed a more than 7% surge in its after-hours stock price following the release of its Q2 results. The company reported earnings per share (EPS) of $1.34, surpassing the consensus estimate of $1.06.
The revenue demonstrated a 3.6% year-over-year increase (4.5% on a constant currency basis), reaching $1.14 billion, which outperformed the projected estimate of $1.11 billion. Enterprise revenue experienced a notable 10.2% year-over-year rise to $659.5 million, while Online revenue saw a decline of 4.3%, totalling $479.2 million.
Throughout Q2, the company boasted around 218,100 Enterprise customers, marking a substantial 6.9% growth from the previous year. Furthermore, the count of customers contributing over $100,000 in revenue over the last 12 months expanded by an impressive 17.8% year-over-year to reach 3,672.
CEO Eric S. Yuan emphasised, "Our mission of delivering limitless human connection remains core as we continue to innovate and expand our platform to help bring value and enhanced productivity to our customers with new AI features like Zoom IQ Meeting Summary and Team Chat Compose, as well as Intelligent Director."
Looking ahead to Q3/24, Zoom anticipates an EPS within the range of $1.07 to $1.09, as opposed to the consensus of $1.03. The projected revenue for this period is between $1.115 billion and $1.12 billion, slightly below the consensus estimate of $1.13 billion.
For the entirety of the fiscal year, the company forecasts an EPS ranging from $4.63 to $4.67, surpassing the consensus estimate of $4.30. Additionally, the revenue for the entire year is projected to be within the range of $4.485 billion to $4.495 billion, slightly exceeding the consensus of $4.48 billion.
Dove has introduced the Dove Nature Regeneration Project, a fresh initiative aimed at safeguarding the environment and addressing climate change. This endeavour, in collaboration with the Rimba Collective, is set to protect and restore an expansive 123,000 acres of rainforest in Southeast Asia, an area equivalent to eight times the size of Manhattan, over a span of five years.
Dove's commitment extends towards fostering a future where nature flourishes. This entails creating beauty products that not only provide optimal care for hair and skin but also minimise their ecological impact, ensuring the safest care for consumers. As a brand, Dove has been at the forefront of redefining beauty industry standards, focusing on safeguarding the genuine beauty of nature.
Rainforests, covering approximately 8% of Earth's land surface and housing over half of its plant and animal species, play an essential role in climate change mitigation. They absorb carbon dioxide and release oxygen, contributing to climate stabilisation. In partnership with the Rimba Collective, the Dove Nature Regeneration Project, financed through Unilever's Climate & Nature Fund, will support endeavours aimed at preserving rainforests, revitalising their ecosystems, and combatting climate change.
Firdaous El Honsali, Dove Global Vice President for External Communications and Sustainability, affirms, "At Dove, we believe beauty should make our world more beautiful, not less. But the beauty of nature is at risk, and climate change remains one of the biggest challenges we face. Our scale demands that we act urgently to protect nature and play a critical role in the effort to stop climate change." She emphasises the need for significant action to restore nature's beauty and acknowledges that their work in reducing impact is ongoing.
Quote Of The Day
“No matter how complex global problems may seem, it is we ourselves who have given rise to them. They cannot be beyond our power to resolve.”
– Daisaku Ikeda, Japanese Philosopher
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