Raphael Stevens

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Check out the companies making headlines in extended trading.
Disney — Shares fell 4.7% after the company reported mixed fiscal second quarter results. Earnings came in line with estimates, while revenue slightly beat analysts’ estimates, according to Refinitiv data. While the company said its losses from its streaming segment narrowed, it shed 4 million Disney+ subscribers.

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2 hours ago

Beyond Meat — The alternative meat manufacturer’s shares rose 8.5% after Beyond Meat posted better-than-expected results for the first quarter. Beyond Meat reported a loss of 92 cents per share and $92.2 million in revenue. Analysts had anticipated a loss of $1.01 per share on revenue of $90.8 million, according to Refinitiv.
Robinhood — Shares of the retail brokerage rose 4% in extended trading after Robinhood reported $441 million in revenue for the first quarter, above the $425 million predicted by analysts, according to Refinitiv. Transaction revenues for equities and options were both up from the fourth quarter, and monthly active users rose slightly to 11.8 million.
Unity Software – Unity Software shares popped 12% after the company beat revenue estimates for the recent quarter, according to Refinitiv. Unity also shared stronger-than-expected guidance for the current quarter, saying it expects revenue to range between $510 million and $520 million.
Groupon — Shares dropped 4% after the coupon company posted first-quarter revenue that came in below expectations, according to Refinitiv. Groupon reported revenue of $121.6 million, while the Street called for $134.9 million.
Sonos — The home sound system’s shares fell 18%. Sonos posted a loss of 24 cents per share, while analysts polled by Refinitiv called for a loss of 18 cents per share. Sonos CEO Patrick Spence announced the company is reducing its guidance for the second half of the 2023 fiscal year amid “softening consumer demand and channel partner inventory tightening.”
— CNBC’s Jesse Pound and Samantha Subin contributed reporting. More

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Check out the companies making the biggest moves midday:
Roblox — Shares added 7.41% after the video game company reported bookings, or revenue, of $774 million, topping the $766 million expected from analysts polled by Refinitiv. Average daily active users reached 66 million, a 22% year-over-year increase. However, Roblox reported a loss of 44 cents per share, larger than the 40 cents loss per share expected by analysts.

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Icahn Enterprises — Carl Icahn’s conglomerate saw its stock drop 15.14% after a regulatory filing revealed the U.S. Attorney’s office for the Southern District of New York contacted the company seeking information about corporate governance and other materials. Regulators sought information a day after notable short seller Hindenburg Research took a short position against Icahn’s company, alleging “inflated” asset valuations.
Rivian — Shares of the electric vehicle maker added 1.8% on Wednesday. On Tuesday, the company reported a smaller-than-expected quarterly loss and said it expects to still meet forward guidance targets. Its revenue of $661 million topped the $652 million expected from analysts polled by Refinitiv.
Airbnb — The vacation booking stock plummeted 10.92% the day after the company shared a soft outlook. While Airbnb beat top-and-bottom line expectations for the first quarter, it warned of lower average daily rates in the second quarter and slower growth in nights booked compared to a year ago.
Twilio — Shares sank 12.64%. On Tuesday, the software company announced its revenue forecast for the second quarter, which came in lighter than expected. Twilio anticipates between $980 million and $990 million in revenue, while analysts polled by Refinitiv were expecting $1.05 billion in revenue.
Syneos Health — The stock popped 8.84% after news that it will be acquired by a consortium of private equity firms, including Elliott Investment Management and Veritas Capital. The group will pay $43 a share.

Dutch Bros — Shares of the drive-through coffee chain dropped 11.96%. On Tuesday, the company reported same-store sales and revenue for the first quarter missed analysts’ expectations, according to FactSet.
Celsius Holdings — Shares jumped 19.76%. On Tuesday, the energy drink company posted earnings per share of 40 cents for the first quarter, more than doubling the 19 cents per share expected from analysts polled by FactSet. Revenue also beat analysts’ expectations. Bank of America upgraded the stock to buy from neutral as a result.
Occidental Petroleum — The oil giant’s stock dipped 3.58%. On Tuesday, Occidental posted first-quarter adjusted earnings per share of $1.09, which is less than the $1.24 estimate from analysts polled by FactSet.
Akamai Technologies — Akamai Technologies jumped 8.44% the day after the cloud services provider reported adjusted earnings of $1.40, greater than analysts’ calls for $1.32 per share, according to FactSet. The company posted revenue of $915.7 million, higher than expectations of $910.5 million. Akamai’s CEO, Dr. Tom Leighton, said the firm had “a strong start to 2023,” while reaching a “significant milestone during the first quarter when, for the first time in Akamai’s 25-year history, security became our largest revenue stream.”
First Citizens BancShares – Shares of the bank advanced 7.45% after the company posted financial results for the first quarter, which included an increase in deposits, thanks in part to the $49.26 billion it acquired from Silicon Valley Bank in March.
Topgolf Callaway Brands – Shares of the golf company tumbled 13.12%. On Tuesday, Topgolf lowered its earnings per share guidance for the full year, which is now below analysts’ estimates, according to FactSet.
Rockwell Automation — The industrial technology company’s stock shed 2.76% following a report in The Wall Street Journal that said the Biden administration is investigating whether the industrial technology company exposed U.S. military, infrastructure and government assets through one of its facilities in China. Rockwell Automation told CNBC there has been “no report or other indication that these practices and protocols have been breached or that any of our products have been intentionally compromised” and that it has not been notified of any investigation regarding the company’s work in China.
—CNBC’s Brian Evans, Yun Li, Alex Harring, Samantha Subin, Sarah Min and Tanaya Macheel contributed reporting. More

Most of the time, the impossibility of America defaulting on its sovereign bonds is taken as a fundamental axiom of the financial system. The country issues the world’s reserve currency, so investors always stand ready to lend it money. And if you are able to borrow more, you can pay back your debts.Yet Washington is once again reminding the world that, through sheer mulishness, a default is indeed possible. Every now and again—as in 2011, 2013 and today—America smacks into its “debt ceiling”, a political device that places a hard limit (currently $31.4trn, or 117% of gdp) on gross government borrowing. Congress must then agree to raise or waive the ceiling in order to prevent the Treasury from failing to make bond payments or meet spending obligations. This time round Janet Yellen, the treasury secretary, has warned that the government may run out of cash and accounting maneuvers as soon as June 1st. And so on May 9th, congressional leaders gathered in the Oval Office with President Joe Biden for the very first stage of negotiation. They are a long way from a deal.Thus the stage is set for a game of brinkmanship in which a Republican-controlled Congress tries to wring concessions from Mr Biden, as the nation’s creditworthiness hangs in the balance. The two sides will almost certainly find a way to avoid catastrophe. But as Washington’s staring contest intensifies, Wall Street’s finest are less inclined to get involved. The merest whiff of a default has already set traders to work finding a way to protect their investments.To understand why, consider what a default would mean. Short-term Treasuries, or “t-bills”, are the closest thing there is to a risk-free asset. This makes them a favourite of corporate cash managers (who want an ultra-safe return) and any trader needing to post collateral (which must hold its value and be easy to sell). If the government stiffs corporate treasurers, companies will miss payments to one another and the wheels of commerce will grind to an agonising halt. Make traders’ collateral vanish, and financial contracts of all stripes will start to fall apart, unleashing chaos in global markets.Small wonder, then, that investors are rushing to protect themselves. A clamour for t-bills maturing before any possible default has given rise to wild swings in the yield of the world’s safest asset. One-month bills yielded 4.7% at the start of April. Over the next three weeks that fell to 3.4%, even as the Federal Reserve prepared to raise its interest rate to 5-5.25%. But one-month bills now mature after June 1st, when the Treasury might have exhausted its cash. And so demand has cratered, with their yield soaring by more than two percentage points in a matter of weeks. One trading boss describes having her team attempt to manually override their settlement software, in order to ensure that bills which mature without being paid do not simply vanish from the system.Longer-term Treasuries have so far seemed safer, under the assumption that an actual default would shock politicians out of their stubbornness, and would be quickly rectified. Yet even they are not immune. The cost to insure five-year Treasuries against default, once the very definition of throwing away money, has quadrupled over the past 12 months (a fact admittedly explained in part by the market’s lack of liquidity).What next? If you think there is no chance of Washington careening over the precipice, it is time to snap up t-bills at a discount and sell pointless bond insurance to the nervous. But even if you think this, you might pause. Since the Treasury would have run down its cash reserves to virtually nothing, a deal would be followed by a glut of issuance to rebuild the buffer. Even the best-case scenario, in other words, would drain liquidity from the market and may push yields higher.The stockmarket, meanwhile, looks shaky either way. Analysts at pimco, an asset manager, note that over the past dozen years, the s&p 500 index has fallen by an average of 6.5% in the month running up to a debt-ceiling deadline—even though these have always been met. Under a default it would fare much worse. In 2013, during a previous debt-ceiling stand-off, Fed officials simulated the effects of a month-long default. They estimated that stock prices would fall by 30% and the dollar by 10%.In the meantime, expect traders to get even more jittery. America’s politics will prevent an early deal, and it could well take the markets freaking out to force one at all. Default remains the least likely outcome. But as investors are acutely aware, it is no longer unthinkable. ■ More

Carl Icahn speaking at Delivering Alpha in New York on Sept. 13, 2016.
David A. Grogan | CNBC

Icahn Enterprises, Carl Icahn’s conglomerate, saw its stock drop again Wednesday after a disclosure showed federal investigators are seeking information regarding its corporate governance.
The shares fell 15.1% Wednesday, following a near 25% loss last week. A regulatory filing revealed the U.S. attorney’s office for the Southern District of New York contacted Icahn Enterprises last Wednesday seeking information about corporate governance, capitalization, securities offerings, dividends, valuation, marketing materials, due diligence and other materials.

Investigators sought information a day after notable short seller Hindenburg Research took a short position against Icahn’s company. Hindenburg alleged “inflated” asset valuations last Tuesday, among other reasons, for what it says is an unusually high net asset value premium in shares of the publicly traded holding company.

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Icahn Enterprises

“The U.S. Attorney’s office has not made any claims or allegations against us or Mr. Icahn with respect to the foregoing inquiry,” Icahn Enterprises said in the 10-Q filing.
In a separate statement, the company called Hindenburg’s report “misleading and self-serving,” saying the Nathan Anderson-led firm used tactics of “wantonly destroying property and harming innocent civilians.”
“Mr. Anderson’s modus operandi is to launch disinformation campaigns to distort companies’ images, damage their reputations and bleed the hard-earned savings of individual investors,” Icahn Enterprises said. “But, unlike many of its victims, we will not stand by idly. We intend to take all appropriate steps to protect our unitholders and fight back.”
Icahn, the most well-known corporate raider in history, made his name after pulling off a hostile takeover of Trans World Airlines in the 1980s, stripping the company of its assets. Most recently, the billionaire investor has engaged in activist investing in McDonald’s and biotech firm Illumina.

Headquartered in Sunny Isles Beach, Florida, Icahn Enterprises is a holding company that invests in myriad businesses including energy, automotive, food packaging, metals and real estate.
Patrick Gadson, co-head of the shareholder activism practice at Vinson & Elkins, said there are a few ways Icahn can fight back and control the damage from here.
“He could use share repurchases or unit repurchases to create a floor in the stock by lowering the outstanding share count,” Gadson told CNBC. “That could be useful in stabilizing the stock price, and it would be painful for the shorts.”
Additionally, Gadson said there could be a high-profile third-party investor who could come out supportive of Icahn, which could also improve investor sentiment.
Icahn said that his firm’s performance has been lower than its historical averages and that’s mainly because of its bearish view on the market.
“We recently have taken steps to reduce the short positions in our hedge book and concentrate for the most part on activism, which has served us so well in the past,” Icahn said. “We believe our existing portfolio has considerable upside potential over the coming years.”
Shares of Icahn Enterprises are now down more than 36% year to date. More

The consumer price index rose 4.9% in April 2023, the smallest increase in two years, the U.S. Bureau of Labor Statistics said Wednesday in a monthly inflation report.
Inflation readings have weakened for 10 consecutive months, from its peak in June 2022.
Households seem to be getting relief in staple categories such as food, energy and housing.

A shopper in Greenville, New York, April 30, 2023.
Robert Nickelsberg | Getty Images News | Getty Images

Inflation in April notched its lowest reading in two years, as price pressures for consumers continue to moderate from multidecade highs and costs for household staples appear to be in retreat.
The consumer price index, a key barometer of inflation, increased 4.9% in April versus a year ago. That is the smallest annual reading since April 2021, the U.S. Bureau of Labor Statistics, or BLS, said Wednesday.

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The index also fell from 5% in March, marking the 10th consecutive month of declines.
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“Increasingly, we can be confident that inflation is coming back in” to target, said Mark Zandi, chief economist of Moody’s Analytics.
Inflation measures how quickly prices are changing across the U.S. economy. The CPI measures anything from fruit and vegetable prices to those for a haircut or concert ticket.

Since the CPI reading was a positive number in April, it means consumers didn’t see prices falling, in a broad sense. But it shows the rate at which they’re rising has slowed significantly from the 9.1% peak in June 2022.

Policymakers aim to keep inflation at about 2% a year. It may take another year or so to reach that target, but “we’re definitively headed in that direction,” Zandi said.

Where consumers saw prices fall in April

Consumers saw average prices decline outright in April in certain categories.
Grocery prices, for example, retreated 0.2% during the month, following a 0.3% decrease in March. This trend should continue as supply chains continue to normalize, as do costs for labor and diesel, a key input for transportation from farm to shelf, economists said.
Monthly prices also declined for airline fares, new cars, hotels and household energy (such as electricity, fuel oil and utility gas service), among others.

Where consumers saw prices rise in April

On the flip side, notable increases in monthly prices occurred in categories such as shelter, used cars and trucks, motor vehicle insurance, recreation and personal care, according to the BLS.
Gasoline prices also jumped 3% in April relative to March, though are down 12% in the last 12 months.
Housing, the largest component of the average household’s budget, was the largest contributor to inflation in April, the BLS said. Shelter costs rose 0.4% in April relative to the prior month, a decrease from 0.6% in March.
However, average rents have moderated or even decreased over the past six months, a trend that will soon be reflected in lower inflation readings for shelter, since those price dynamics typically take several months to feed through into federal data, economists said.

“It looks like inflation in the [shelter] category has peaked,” Andrew Hunter, senior U.S. economist at Capital Economics, said.
Overall, households are faring much better than they were months ago relative to inflation in staples such as food, energy and housing, according to Zandi.
“Gas prices are way down from where they were a year ago,” he said. “Food prices are no longer rising quickly.”
“And rents are now flat to down,” Zandi added. “Those are the key items in people’s budget and all of them feel pretty good at this point in time.”

Why inflation surged to multidecade highs

Consumer prices began rising rapidly in early 2021 as the U.S. economy started to reopen after the pandemic-related shutdown. Americans unleashed a flurry of pent-up demand for dining out, entertainment and vacations, aided by savings amassed from government relief.
Meanwhile, the rapid economic restart snarled global supply chains, a dynamic exacerbated by Russia’s invasion of Ukraine. In other words, supply couldn’t keep up with consumers’ willingness to spend.
Inflation, which increased in economies around the world during the Covid-19 pandemic era, was initially siloed in categories of physical goods such as used cars and trucks. But the dynamic has morphed.
Now, it’s largely being driven by the labor market, not a shortage of physical goods, economists said.

Increasingly, we can be confident that inflation is coming back in.

Mark Zandi
chief economist of Moody’s Analytics

As the economy reopened after the pandemic, businesses rushed to hire workers and job openings surged to record highs. That demand tilted the job market in favor of workers, who had ample opportunities. They saw wages grow at their fastest pace in decades as employers competed to hire them.
That strong wage growth has nudged employers, especially labor-intensive service businesses, to raise their prices, economists said.
But now, “the earlier extreme levels of excess demand for workers are easing,” Hunter said.
Those labor-market dynamics should continue to put downward pressure on overall inflation.
“The trend from here is definitely looking a lot better,” Hunter said. “I think we’re finally seeing clear signs of progress.” More