Raphael Stevens

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  • 88 Shares149 Views

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    Boeing aircraft orders, deliveries slipped in April

    Boeing’s April aircraft orders and deliveries fell in April.
    Handovers of its 787 Dreamliners remain on hold after a series of manufacturing flaws.
    Boeing’s year-to-date deliveries are trailing those by rival Airbus.

    A Boeing 737 MAX 9 is pictured outside the factory in Renton, Washington.
    Stephen Brashear | Getty Images

    Boeing’s aircraft deliveries fell last month as handovers of its 787 Dreamliner planes remain paused after a series of manufacturing flaws.
    The company delivered 35 jets in April, down from 41 in March, bringing its total so far this year to 130. That trails rival Airbus’ 188 aircraft deliveries for the first four months of 2022.

    Boeing’s gross orders for April fell to 46 from 53 in March. Most of the new orders were for 737 Max planes.
    Customers of both major aircraft manufacturers have cited delays in getting new planes.
    “Both Airbus and Boeing are experiencing rising challenges in delivering aircraft on time, primarily due to supply chain and labor issues,” Air Lease CEO John Plueger said during an earnings call last Thursday.

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    'We're doing a job. We're connecting people': Emirates CEO defends continued flights to Russia

    Emirates Airline has defended its decision to continue its flights to Russia saying that people and government decisions should not be conflated.
    Speaking to CNBC Tuesday, the Dubai state airline said that it had not received any instruction from the government to cease operations and, therefore, had a duty to maintain its service.
    A number of international airlines moved to suspend flights to Russia earlier this year in response to the country’s invasion of Ukraine.

    Emirates Airline has defended its decision to continue its flights to Russia even as other international carriers have halted service, saying that people and government decisions should not be conflated.
    Speaking to CNBC Tuesday, the chairman and CEO of the Dubai state airline said that it had not received any instruction from the government to cease operations and, therefore, had a duty to passengers to maintain its service.

    “At least we’re doing a job. We’re connecting people between the two countries,” said Sheikh Ahmed bin Saeed Al Maktoum.
    “We shouldn’t really mix up between people and government decisions,” he told CNBC’s Dan Murphy.
    Many major international airlines, including British Airways and Air France-KLM, moved to suspend flights to Russia earlier this year in response to the country’s invasion of Ukraine. The move was swiftly reciprocated by Russia’s flagship airline Aeroflot, which halted all international flights — except to Belarus.
    Many Western allies, meanwhile, have banned direct flights from Russia from entering their airspace as part of a growing package of sanctions against President Vladimir Putin and his regime.

    Dubai-owned Emirates is one of few major airlines to continue its direct flight service to Russia as other carriers cease operations over Moscow’s invasion of Ukraine.
    Nurphoto | Getty Images

    Still, the United Arab Emirates has been reluctant to take sides in the ongoing war, and has so far resisted sanctioning Moscow.

    Al Maktoum said that until such time as the government changed its stance, Emirates would continue to operate its flights to Moscow and St. Petersburg.
    “That is a government decision. We haven’t got any instruction really to stop flights there,” he said.
    Al Maktoum added that the war and resultant sanctions had no doubt piled further weight on airlines as they attempt their post-pandemic recovery.
    However, he said that Emirates was continuing to see strong demand overall and it expects to return to full pre-Covid operations by the end of the financial year.

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    Peloton shares fall after company posts huge loss and offers weak guidance

    Peloton on Tuesday reported a wider-than-expected quarterly loss and a steep decline in sales, as inventory piled up in warehouses and ate away at the company’s cash. 
    The connected fitness equipment maker also offered up a weak sales outlook for the fourth quarter, citing softer demand.
    The company anticipates that planned subscription price hikes may lead some users to cancel their monthly memberships. 

    A Peloton stationary bike for sale at the company’s showroom in Dedham, Massachusetts, U.S., on Wednesday, Feb. 3, 2021.
    Adam Glanzman | Bloomberg | Getty Images

    Peloton on Tuesday reported a wider-than-expected quarterly loss and a steep decline in sales, as inventory piled up in warehouses and ate away at the company’s cash. 
    The connected fitness equipment maker also offered up a weak sales outlook for the fiscal fourth quarter, citing softer demand. The company anticipates planned subscription price hikes may lead some users to cancel their monthly memberships. 

    Peloton’s excess inventory forced the company to rethink its capital structure, Chief Executive Officer Barry McCarthy said in a letter to shareholders. Peloton finished the quarter “thinly capitalized” with $879 million in unrestricted cash and cash equivalents, he said. 
    To address this, the company earlier this week signed a binding commitment letter with JPMorgan and Goldman Sachs to borrow $750 million in five-year term debt, according to the CEO. The two banks led Peloton’s IPO in 2019.
    With the fresh capital infusion from the term loan, McCarthy said he’s confident the company can return to free cash flow positive by fiscal 2023. “We’ve got plenty of capital to do that,” he said on a post-earnings conference call. “Regardless of what happens in the economy. Full stop.”
    McCarthy said he is focused on stabilizing Peloton’s cash flow, getting the right people in the right roles and growing the business again. Expanding subscription revenue is a centerpiece of McCarthy’s strategy, something he takes from his prior experiences at Spotify and Netflix. He also said Peloton will soon be selling its products through third-party retailers, a step the company has not taken before. 
    Here’s how Peloton did in the three-month period ended March 31 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv: 

    Loss per share: $2.27 vs. 83 cents expected 
    Revenue: $964.3 million vs. $972.9 million expected 

    Peloton’s losses widened in the fiscal third quarter to $757.1 million, or $2.27 per share, from a net loss of $8.6 million, or 3 cents a share, a year earlier. That came in larger than the per-share loss of 83 cents that analysts had been looking for. 
    Revenue dropped to $964.3 million from $1.26 billion a year earlier. That was short of expectations for $972.9 million and marked the company’s first year-over-year decline in sales since it went public in 2019.
    Peloton said the drop was primarily driven by a steep reduction in consumer demand coming off of the Covid-19 pandemic’s peak. That was partially offset by higher treadmill sales, it said. 
    But Peloton also noted that it faced higher-than-anticipated returns of its Tread+ machine, which was recalled last May, that totaled about $18 million and weighed on the company’s results in the quarter. 
    Peloton generated $594 million in sales from its connected fitness products and $370 million from subscriptions in the latest period. 
    The company ended the quarter with 2.96 million connected fitness subscribers, representing a net addition of 195,000. Connected fitness subscribers are people who own a piece of the company’s equipment and also pay a fee to access live and on-demand workout classes, ranging from cycling to yoga to meditation.
    Average net monthly connected fitness churn, which Peloton uses to measure its retention of connected fitness subscribers, improved to 0.75% during the period, compared with 0.79% in the second quarter.
    A lower churn rate is good news for Peloton, as it means people are sticking around and continuing to pay for their memberships. The risk that Peloton faces, however, particularly as it hikes subscription prices, is that the churn rate will begin to rise.
    “Our users are highly engaged, and our subscriber churn rate is less than 1%, which is the best I’ve seen,” McCarthy said in his letter. “The challenge and the opportunity today is to sustain and extend this success.”

    ‘Turnarounds are hard work’

    Most disappointing to investors was likely Peloton’s bleak outlook for its current quarter, which ends on June 30 and marks the end of Peloton’s fiscal year.
    McCarthy noted in his letter to shareholders “turnaround are hard work.” When he first arrived at Peloton, the company’s supply chain was much weaker than he anticipated, McCarthy told analysts on a post-earnings conference call.
    However, McCarthy said the business is working as quickly as possible to right any wrongs, including by right-sizing production levels. He noted that Peloton’s free cash flow should be “meaningfully better” in the fourth quarter compared with the third.
    Shares of the company at one point tumbled as much as 30% in premarket trading Tuesday, after touching at an all-time low Monday and ending the day with a market value of roughly $4.7 billion.
    Peloton is calling for fourth-quarter revenue to be between $675 million and $700 million. Analysts had been looking for $821.7 million, according to Refinitiv estimates. 
    The company expects connected fitness subscribers to total 2.98 million, which would represent just a 1% increase from the third quarter. 
    Peloton said it has seen softer demand since February that has been partially offset by accelerated sales since it recently cut the prices of its Bike, Bike+ and Tread machines.
    Meanwhile, the soft subscriber forecast takes into account a “modest negative impact” from subscription price hikes that are set to go into effect next month, it said.
    Peloton noted that it has seen a “small increase” to date of subscription cancellations since it announced the price increases in mid-April, but it expects the impact to subside in fiscal 2023. 
    In the coming months, McCarthy said Peloton will seek to raise awareness around its digital app, which allows people to pay for access to the company’s workout content without owning a Bike or Tread.
    “We’re still known primarily as a stationary bike company. The app has never been a focal point of our marketing campaigns or growth strategy,” he said. “The digital app needs to become the tip of the spear.”
    He also said that Peloton plans to expand a recent test where customers can pay a combined flat rate for one of the company’s stationary bikes and access to its fitness membership. It allows people to return the Bike when they chose to cancel.
    The CEO also emphasized Peloton must expand into more international markets in order to one day reach its goal of 100 million members.
    Peloton shares have tumbled more than 60% this year, not including Tuesday’s premarket losses. The stock closed trading on Monday at $14.13 a share, well below its IPO price of $29.

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    Visa's top crypto executive Terry Angelos leaves for Softbank-backed brokerage start-up DriveWealth

    Terry Angelos, Visa’s global head of fintech and crypto, will take over as CEO of start-up DriveWealth next week, CNBC has learned.
    The $3.7 billion broker-dealer provides infrastructure that lets Block’s Cash App offer fractional stock trading, and is now focused on global expansion.
    “Traditionally, people outside the U.S. don’t have the ability to open up a brokerage account. That’s something that we think we can help solve,” Angelos says.

    Terry Angelos, Visa’s global head of fintech and crypto.
    DriveWealth

    One of Visa’s top executives is leaving the payments giant for a brokerage technology start-up, CNBC has learned.
    Terry Angelos, Visa’s global head of fintech and crypto, will take over as chief executive officer of start-up DriveWealth next week. Angelos joined Visa seven years ago as part of its acquisition of TrialPay, which he founded and led as CEO.

    DriveWealth lets consumer finance apps like Block’s Cash App and Revolut offer stock trading by providing necessary behind-the-scenes infrastructure. The Jersey City-based broker-dealer was one of the first to allow fractional investing, or buying stocks in smaller dollar amounts vs. whole shares.
    While retail trading boomed during the pandemic, Angelos said the long-term opportunity is in taking U.S. equities international. He estimated roughly a billion people across the world, outside of China, access financial services from a digital wallet or a fintech app and are looking for exposure to blue-chip stocks.
    “If you were to think about the single, most reliable long-term asset that people around the world want to own, it’s equity in U.S. companies,” Angelos said. “Traditionally, people outside the U.S. don’t have the ability to open up a brokerage account. That’s something that we think we can help solve.”
    U.S. companies have been less of a safe haven this week with the Dow hitting its lowest level of the year on Monday. Still, over the past six decades, U.S. stocks have seen a roughly 10% annual return.
    DriveWealth was last valued at $3.7 billion and is backed by Softbank, Fidelity’s venture capital arm and Citi Ventures among others, according to Pitchbook. The company operates as a licensed broker-dealer, providing clearing and settlement on behalf of its fintech customers, which handle the consumer experience and apps.

    DriveWealth also provides custody for individual accounts and stocks. To connect to these apps, it uses software known as an API, or Application Programming Interface. The company said it doubled its customer base year over year, with 140% growth in international partners. While it’s starting with stocks, DriveWealth also offers crypto investing infrastructure.
    Individual investor activity has slowed significantly from its 2021 peak at the time of the GameStop frenzy. The retail participation rate, measured by retail volume as a percentage of total trading volume, recently fell to its lowest level since the pandemic began, according to Rich Repetto, managing director and senior research analyst at Piper Sandler.
    That pullback has hurt shares of Robinhood, which recently said it was cutting 9% of its workforce after ramping up hiring to keep up with demand, and other publicly traded brokerage firms.
    Still, Angelos said DriveWealth has seen increased participation and account growth during the recent downturn, and pointed to the long-term value of U.S. stocks.
    “We’re still in the growth cycle of making equities available to people who otherwise wouldn’t have had access and will continue to see growth, even though there may be volatility or pullbacks among more active traders,” he said.
    As for an initial public offering, Angelos said it’s “potentially on the road map.” But for now, he said he’s focused on increasing its footprint and returning to the chief executive role after almost a decade at Visa.

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    Bitcoin investors are panicking as a controversial crypto experiment unravels

    Watch Daily: Monday – Friday, 3 PM ET

    Crypto investors are keeping a close eye on UST, a controversial stablecoin, as the organization that supports it is sitting on billions of dollars in bitcoin.
    Terra’s UST token sank below 70 cents late Monday, as holders continued to flee the controversial stablecoin.
    Traders worry the project might have sold, or will sell, a large portion of its bitcoin to prop up UST.

    Bitcoin is now down 50% from its November all-time highs.
    Artur Widak | Nurphoto | Getty Images

    Investors in bitcoin are in panic mode as the controversial terraUSD stablecoin slips further from its intended $1 peg.
    TerraUSD, or UST, sank below 70 cents for the first time late Monday, as holders continued to flee the token in what some have described as a “bank run.” The token fell as low as 62 cents before regaining ground to trade at 90 cents Tuesday, according to Coinbase data.

    Created by Singapore-based Terraform Labs in 2018, UST is what’s known as an “algorithmic” stablecoin. Part of the Terra blockchain project, it’s meant to track the value of the dollar, like fellow stablecoins tether and USDC.
    However, unlike with those cryptocurrencies, Terra doesn’t have cash and other assets held in a reserve to back its token. Instead, it uses a complex mix of code — alongside a sister token called luna — to stabilize prices.
    It’s important for bitcoin investors as Luna Foundation Guard, an organization supporting the Terra project, is sitting on billions of dollars in bitcoin that could potentially be dumped onto the market at any point.
    “Every professional investor in crypto has one eye on UST today, watching to see if it can maintain its peg to the dollar,” said Matt Hougan, chief investment officer at Bitwise Asset Management. “There’s clearly significant risk in the market.”

    In simple terms, the Terra protocol destroys and creates new units of UST and luna to adjust supply. When the price of UST falls below the dollar, it can be taken out of circulation and exchanged for luna, making UST’s supply more scarce and boosting its price — at least, that’s how it should work in theory.

    To further complicate things, Terra’s creator Do Kwon bought $3.5 billion worth of bitcoin to provide a backstop for UST in times of crisis. The theory was that UST could eventually be redeemed for bitcoin instead of luna, but this is untested and hasn’t yet been put into practice.
    On Monday, Kwon’s Luna Foundation Guard said it would lend $750 million worth of bitcoin to trading firms to “help protect the UST peg,” while a further 750 million UST will be lent out to buy more bitcoin “as market conditions normalize.”
    In a follow-up tweet, the organization said it had withdrawn 37,000 bitcoins — worth over $1 billion at current prices — to lend out. “Very little” of the borrowed bitcoins have been spent, Luna Foundation Guard said, but it is “currently being used to buy” UST.
    Several crypto investors are also worried that Luna Foundation Guard might have sold, or will sell, a large portion of its bitcoin to prop up UST. Amid all of this uncertainty, UST’s decline has sent shockwaves throughout the crypto market.
    Bitcoin, the world’s largest digital currency, briefly fell below $30,000, hitting its lowest price since July 2021. As of 7:00 a.m. ET, bitcoin was trading at $31,324, down around 5% in the last 24 hours. It’s now down more than 50% from its November all-time high.
    Luna, UST’s counterpart, has roughly halved in value in the past 24 hours. It was last trading at a price of $32.
    Adding to UST holders’ woes, Binance, the largest crypto exchange by market volume, temporarily suspended withdrawals of both UST and luna “due to a high volume of pending withdrawal transactions,” citing network congestion.
    Binance has since resumed withdrawals, and says it “will continue to monitor” network conditions.
    “I think the market is expecting some forced selling here on the part of Terra and the reserve,” Nic Carter, co-founder of Coin Metrics, told CNBC. “It is a calamity but very expected. No algorithmic stablecoin has ever succeeded and this is no exception.”
    He added that the problem with UST is that it’s largely “backed by faith.”
    “It’s not fully guaranteed, it’s certainly not fully backed by reserves,” he told CNBC. “It was really just backed by faith in the issuer effectively.”
    Terraform Labs did not respond to multiple requests for comment. More

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    National average for gasoline hits record $4.37 a gallon

    Prices at the pump hit a record on Tuesday, unadjusted for inflation.
    The national average is now $4.37 per gallon, according to AAA.
    In California, the state average is $5.84.

    A customer refuels at a Chevron gas station with prices above $4 a gallon in Seattle, Washington, U.S., on Monday, March 7, 2022.
    David Ryder | Bloomberg | Getty Images

    Gasoline prices surged to the highest level on record Tuesday as oil holds steady above $100 a barrel, contributing to inflationary pressures across the economy.
    The national average for a regular gallon of gas hit an all-time high of $4.374 on Tuesday, according to AAA. The price is not adjusted for inflation.

    Prices have been rising at a fast clip, with the ascent accelerating after Russia invaded Ukraine, sending energy markets reeling.
    The national average crossed above $4 in March for the first time since 2008, and has remained above ever since.
    Consumers are now paying $1.41 more at the pump than last year.
    In some places, the move is far more extreme. In California, for instance, the state average now stands at $5.84. A handful of counties in the state have topped $6.
    Diesel prices, meantime, are also surging. The national average hit $5.55 per gallon on Tuesday, also a record. Prices have hit a new high for at least the past seven days.

    West Texas Intermediate crude futures, the U.S. oil benchmark, traded around $101.66 per barrel Tuesday. That’s significantly off its recent high around $130 per barrel in March.
    But while oil accounts for more than 50% of the cost per a gallon of gas, it’s not the only factor. The industry is grappling with the same pressures playing out in the rest of the economy, including labor constraints.
    Refiners, which turn oil into everyday products including gasoline and jet fuel, are running near maximum capacity. The U.S. refining capacity has declined over the last few years, and now Europe is competing for the same petroleum products as it seeks to move away from Russian energy.
    Andy Lipow, president of Lipow Oil Associates, forecasts prices for regular gasoline rising another 15 to 20 cents over the next two weeks, ultimately hitting $4.50 per gallon.

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    How the digital sneaker boom changed Foot Locker's business

    Foot Locker dominates the brick-and-mortar footwear category as the largest footwear retailer in the world. Its 2,900 stores worldwide span several brands, including Lady Foot Locker, Kids Foot Locker and Champs Sports.
    Since 2015, however, digital sneaker retailers have grown rapidly with the establishment of online marketplaces like StockX and GOAT. New brick-and-mortar streetwear stores like Flight Club and Stadium Goods have also entered the market.

    The sneaker business saw unprecedented growth in 2020 and is expected to reach $120 billion by 2026, according to research firm Statista. Cowen and Company this year dubbed sneakers an “alternative asset class.” But sneaker bots have wreaked havoc upon the industry, posing an additional challenge to Foot Locker’s business.
    Watch the video above to learn more about Foot Locker’s business.

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    A.I. lender Upstart shares plummet 55% after company cuts full-year revenue forecast

    Shares of Upstart plummeted Tuesday after the AI consumer lending platform cut its full-year revenue outlook.
    The company lowered its 2022 revenue estimate to $1.25 billion from $1.4 billion previously.
    Upstart, which uses artificial intelligence to gauge creditworthiness, cited climbing interest rates and the risk of a recession.

    In this photo illustration an Upstart Holdings logo is seen on a smartphone screen.
    Pavlo Gonchar | SOPA Images | LightRocket | Getty Images

    Shares of Upstart plummeted about 55% premarket Tuesday after the artificial intelligence lending platform cut its full-year revenue outlook, citing rising interest rates and an uncertain economy.
    The company had reported better-than-expected first-quarter results Monday after the bell, but also slashed its 2022 revenue forecast to $1.25 billion from a prior estimate of $1.4 billion.

    Upstart expects second-quarter revenue of $295 million to $305 million, while analysts surveyed by Refinitiv predicted $335 million, on average.
    “Given the general macro uncertainties and the emerging prospect of a recession later this year, we have deemed it prudent to reflect a higher degree of conservatism in our forward expectations,” said CFO Sanjay Datta on Upstart’s earnings call Monday.
    The company, which uses artificial intelligence to gauge creditworthiness, said climbing interest rates are hurting loan volume.
    “In addition to increasing rates for approved borrowers, this also has the effect of lowering approval rates for applicants on the margin,” said CEO David Girouard on the earnings call.
    Upstart management indicated further economic challenges ahead as the Federal Reserve continues to hike rates and cut its balance sheet to tamp down on persistent inflation.

    “Given the hawkish signals from the Fed, we anticipate prices will move even higher later this year, which will have the effect of reducing our transaction volume, all else being equal,” Girouard added.
    Plus, the company noted borrower defaults are normalizing. During the pandemic, charge-off and delinquency rates reached decades-long lows amid government aid and stimulus programs.
    “After remaining at historically low levels for the past 18 months, loan default rates rose quite abruptly towards the end of last year, and are now back to or in some cases above pre-pandemic levels,” Datta said.
    Upstart received a slew of downgrades from Wall Street analysts at Piper Sandler, Citigroup and Stephens after the quarterly report.
    Piper Sandler analyst Arvind Ramnani on Tuesday downgraded the stock to a neutral rating from overweight and slashed its price target on the stock to $44 from $230. The new price projection implies 75% downside from Upstart’s closing price Monday.
    “The range of outcomes for UPST has increased, given macro uncertainties,” Ramnani said in the note. “We expect there could be further downside based on the speed and intensity of a recession.”

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