Morning Toast - 8 August
Anticipations are set for a more promising week in the stock market, aiming to outperform the previous week's downturn, during which the S&P 500 and Nasdaq experienced their most challenging week since March. However, shifting attention away from equities to bonds unveils a captivating development: the yields on the 10-year Treasury note have surged, reaching a level almost unmatched in over a decade.
This suggests that investors are placing their bets on sustained higher interest rates in the foreseeable future (posing challenges for prospective home buyers, yet signalling positive prospects for robust economic expansion).
On Monday, Paramount Global surprised the market by announcing an unexpected profit for the second quarter, propelled by the ongoing success of its streaming content investments, which have continued to attract new subscribers and foster growth.
Following the release of the report, Paramount's (NASDAQ:PARA) stock surged more than 3% in after hours trading.
In the realm of media and entertainment, the company reported adjusted earnings per share (EPS) of $0.10 for Q2, accompanied by revenues of $7.62 billion. These figures exceeded expectations, as analysts had projected a loss of $0.02 per share on revenue totalling $7.45 billion.\
The company commented, "During Q2, our robust revenue expansion was fueled by the increase in subscribers, coupled with enhancements in engagement and monetization. The Direct-to-Consumer (DTC) sector remains on course to drive substantial improvements in earnings by 2024."
Subscription revenue exhibited remarkable growth, surging by 47% to surpass $1.2 billion. This was driven by the expansion of subscribers on Paramount+, which saw an addition of 0.7 million subscribers in the quarter, amassing a total of 61 million subscribers.
Global viewing hours on Paramount+ and Pluto TV witnessed a noteworthy 35% year-over-year increase.
The momentum behind the success of its streaming platform was reflected in a 21% rise in advertising revenue.
After reporting its Q2 results, Beyond Meat (BYND) witnessed a significant drop of over 9% in after-hours trading. The company's revenue for the quarter was $102.1 million, marking a 30.5% decline compared to the previous year. This performance fell short of the consensus estimate of $108.74 million. The reported Q2 loss per share (EPS) was ($0.83), which was marginally better than the consensus estimate of ($0.84).
The decline in revenue was primarily attributed to a 23.9% reduction in the volume of products sold, coupled with an 8.6% decrease in net revenue per pound. This decrease in product volume was mainly driven by soft demand within specific categories, particularly evident in the U.S. retail and U.S. food service channels. The comparison also included the effect of cycling against an exceptionally strong Q2 in the previous year.
Ethan Brown, the CEO, remarked, "While we are revising down our full-year 2023 net revenue projection, we still anticipate achieving moderate year-over-year growth in revenues during the third and fourth quarters of 2023. We also foresee a notable reduction in cash consumption and an increase in gross margin relative to the first half of 2023."
However, the company's outlook on achieving cash flow-positive operations by the second half of 2023 has become less promising. This shift is attributed to more substantial-than-anticipated challenges stemming from consumer trends and category dynamics, and their anticipated impact on net revenues.
For the entirety of 2023, Beyond Meat expects revenue to fall within the range of $360 million to $380 million, deviating from the consensus projection of $388 million.
Germany is reportedly planning to increase its funding for climate-protection initiatives and semiconductor production by approximately €20 billion ($22 billion), bringing the total allocation to over €200 billion. Individuals familiar with the matter have revealed that Chancellor Olaf Scholz and his cabinet are set to endorse this supplementary financial commitment on Wednesday, covering the period until 2027. The proposal will subsequently be submitted to parliament for formal approval. Those privy to this confidential information have chosen to remain anonymous.
Representatives from the finance and economy ministries have refrained from providing specific insights into the plan, citing its ongoing deliberations as the reason for their reticence.
The bulk of the funds within the Climate and Transformation Fund, which falls under the oversight of Economy Minister Robert Habeck from the Green Party and operates independently of the regular federal budget, are designated for climate-protection endeavours. These encompass endeavours such as sustainable building renovations, incentives for the replacement of fossil-fuel heating systems, and an expansion of Germany’s hydrogen infrastructure.
This financial injection aligns with a broader pattern observed across Europe, where governments are striving to expedite the reduction of harmful emissions in order to meet the continent’s ambitious climate targets.
Quote of the Day
"We need to take responsibility of our future together, and now companies and governments have to collaborate closer than ever before. Transparency and circularity must be the core of the leadership we need in the transition to a fossil-free economy." — Helena Helmersson, CEO, H&M Group
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