Finance

A Dick’s Sporting Goods store in Niles, Illinois, May 20, 2014.
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Check out the companies making headlines in midday trading.
Dick’s Sporting Goods — The retail stock tumbled 24.1% after Dick’s reported a rare earnings miss and slashed guidance for the year, due in part to an uptick in store theft. Earnings per share for its fiscal second quarter was $2.82, far short of the $3.81 consensus estimate, per Refinitiv. Revenue was $3.22 billion, versus the $3.24 billion expected.

Macy’s — The department store stock sank 14% after Macy’s reiterated its cautious full-year outlook. Macy’s said it expects adjusted earnings per share between $2.70 and $3.20, adding it sees comparable store sales falling between 6% and 7.5%.
Lowe’s — Lowe’s shares gained nearly 4% after the home improvement retailer topped earnings expectations and reiterated its full-year guidance. The company reported earnings of $4.56 per share, versus the $4.49 expected by analysts surveyed by Refinitiv. Revenue came in at $24.96 billion, shy of the $24.99 billion anticipated.
Charles Schwab — Shares of the brokerage firm slid 5% after it said Monday that it plans to cut jobs to save $500 million in costs. Bloomberg also reported the company is looking to raise debt in the bond market.
American Airlines — The airline stock dipped 2.2% after American Airlines’ pilots approved a new labor deal that includes a 21% pay bump.
Baidu — U.S.-listed shares of the Chinese internet company gained nearly 3% after Baidu reported stronger-than-expected results for the second quarter, with revenue rising 15% on a year-over-year basis. Baidu attributed artificial intelligence to a boost in online marketing sales growth for the period. 

Microsoft, Activision — Shares of Microsoft and Activision rose 0.2% and 1%, respectively, after the tech giant submitted a new deal for the takeover of the video game company, offering a spate of concessions after U.K. regulators rejected its initial proposal. Under the restructured deal, Microsoft will not acquire cloud rights for existing Activision PC and console games, or for new games released by Activision over the next 15 years. 
AppLovin — The marketing stock rose 1.2% to a 52-week high following a Jefferies upgrade to buy from hold. Jefferies said the company should continue to win market share and grow its software business. 
Emerson Electric — The engineering company climbed 1.1% after an upgrade to overweight from JPMorgan. Analyst Stephen Tusa highlighted improving earnings visibility after Emerson completed a merger of its software business with AspenTech last year.
Fabrinet — The advanced manufacturing services company surged 31.6% on the back of its fiscal fourth-quarter results. The company beat both top and bottom lines. Fabrinet CEO Seamus Grady cited strong growth in data communications revenue and new AI products.
Zoom Video — Shares of the video communications platform lost about 2% even after the company posted better-than-expected second-quarter results. Zoom Video also issued a stronger-than-expected earnings per share guidance for the third quarter and full year. The company reported adjusted earnings of $1.34 a share on revenue totaling $1.14 billion.
Madison Square Garden Entertainment — Shares rose 5.1% after Bank of America initiated coverage with a buy rating, calling it an “attractive opportunity” for investors to own a growth-focused and “pure-play” live entertainment stock.
Aramark — The food service stock rose about 1.6%. UBS upgraded it to buy from a neutral rating, and said Aramark is approaching a margin inflection point.
— CNBC’s Alex Harring, Yun Li, Hakyung Kim, Brian Evans, Michelle Fox and Sarah Min contributed reporting. More

Only eight months ago China’s economy was expected to roar back to life. Zero-covid had been abandoned; the country’s shoppers and tourists allowed to roam free. Yet the hoped-for rebound has fizzled out. gdp growth, which some economists had expected to hit an annualised rate of 10% in the second quarter of the year, instead struggled to just over 3%. The economy has tumbled into deflation. A strangely slow official response, and a property crisis that is going from bad to worse, have provoked fears of a prolonged downturn. What happens in the world’s second-largest economy matters everywhere else. Because China is so big, its changing economic fortunes can drive overall global growth figures. But a slowing China also directly affects other countries’ prospects. Its households and companies will buy fewer goods and services than they would have otherwise, with consequences both for the producers of these goods and the other consumers of them. In some places, China’s difficulties will be a source of pain. In others, though, they will bring relief. Commodity exporters are especially exposed to China’s slowdown. The country guzzles almost a fifth of the world’s oil, half of its refined copper, nickel and zinc, and more than three-fifths of its iron ore. China’s property woes will mean that it requires less of such supplies. That will be a knock for countries such as Zambia, where exports of copper and other metals to China amount to 20% of gdp, and Australia, a big supplier of coal and iron (see chart 1). On August 22nd bhp, an Australian firm and the world’s biggest miner, reported its lowest annual profit in three years, and warned that China’s stimulus efforts were not producing changes on the ground. Weak spots in the West include Germany (see chart 2). Faltering demand from China is one reason why the country’s economy has stagnated of late. And some Western firms are exposed through their reliance on the country for revenues. In 2021 the 200 biggest multinationals in America, Europe and Japan made 13% of their sales in China, earning $700bn. Tesla is more exposed still, making around a fifth of its sales in China; Qualcomm, a chipmaker, makes a staggering two-thirds. Provided the slowdown does not escalate into full-blown crisis, the pain will remain concentrated. Sales to China account for only 4-8% of business for all listed firms in America, Europe and Japan. Exports from America, Britain, France and Spain come to 1-2% of their respective outputs. Even in Germany, with an export share of 4%, it would take China collapsing to generate a sizeable hit to its economy. Moreover, China’s struggles come at a time when the rest of the world is doing better than expected. In July the imf revised its forecast for global growth, compared with its projections in April. Most notable has been the rude health of the world’s biggest importer, America, which some surveys suggest is growing at the red-hot pace of nearly 5%.When set against this backdrop, China’s slowing growth should even provide some relief for the world’s consumers, since it will mean less demand for commodities, bringing down prices and import costs. That in turn will ease the task faced by the Federal Reserve and other central banks. Many have already raised rates to their highest level in decades, and would not relish having to go further still. But what if things go badly wrong in China? Under a worst-case scenario, a property meltdown could reverberate through the world’s financial markets. A study by the Bank of England in 2018 found that a “hard landing” in China, where economic growth fell from 7% to -1%, would cause global asset prices to fall and rich-world currencies to rise as investors rushed in the direction of safer assets. Overall, British gdp would drop by 1.2%. Although most Western financial institutions have relatively little exposure to China, there are exceptions, such as hsbc and Standard Chartered, two British banks. A longer slowdown could lead China to turn inwards, reducing investments and loans. Having become the world’s biggest bilateral creditor in 2017, it has already cut back as projects turn sour. Officials may become fussier still if they are fire-fighting at home. Observers will watch celebrations of a decade of the “Belt and Road Initiative”, the label under which China has splurged on bridges in Mozambique and ports in Pakistan, for signals of intent. Real difficulties at home would also change how the world sees China. Rapid growth, along with generous lending, boosted the country’s reputation. According to a recent survey of 24 countries by Pew, a pollster, people in rich places had a generally unfavourable view of China. The picture was different in much of the emerging world: Mexicans, Kenyans, Nigerians and South Africans all saw China in a more favourable light, and welcomed Chinese investment. The question is whether that will still be true in a year’s time. ■ More

A Dick’s Sporting Goods store stands in Staten Island on March 09, 2022 in New York City.
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Check out the companies making headlines before the bell:
Fabrinet — Fabrinet surged 21% after its fiscal fourth-quarter results late Monday topped analysts’ estimates. The advanced manufacturing services company posted non-GAAP earnings of $1.86 per share, greater than the $1.80 earnings per share expected by analysts polled by FactSet. Revenue came in at $655.9 million, greater than the $641.4 million consensus estimate.

Dick’s Sporting Goods — Shares plunged nearly 20% after the retailer reported an earnings miss and cut guidance for the year, due in part to an increase in retail theft. Earnings per share for its fiscal second quarter came in at $2.82, well below the $3.81 expected from analysts polled by Refinitiv. Revenue also fell short.
AppLovin — Shares climbed 4% in premarket trading after Jefferies upgraded the marketing stock to buy from hold. Jefferies said the company should continue to win market share and grow its software segment.
Nordson — Shares fell 3% after Nordson reported fiscal third-quarter revenue that missed analysts’ expectations, and lowered its fiscal year earnings guidance. The adhesive dispensing equipment maker posted revenue of $648.7 million, lower than the $664.9 million expected by analysts polled by FactSet. It issued full-year earnings per share guidance of $8.90 to $9.05, lower than the prior guidance of $8.90 to $9.30, as well as the $9.06 per share consensus estimate on FactSet.
Macy’s — Shares of the department store chain slid about 1.6% after the company reported second-quarter earnings. Macy’s beat estimates on the top and bottom lines, but issued weak third-quarter guidance. The company reported per-share earnings of 26 cents, greater than the 14 cents earnings per share consensus estimate from FactSet. Revenue was $5.13 billion, higher than the $5.07 billion estimate. Macy’s issued third-quarter guidance in the range of 3 cents loss per share to 2 cents earnings per share, far below the 27 cent earnings per share estimate from FactSet. It guided for revenue from $4.75 billion to $4.85 billion, lower than the $4.86 billion expected by analysts.
Lowe’s — The stock gained about 2.4% after earnings beat second-quarter expectations. The home improvement company reported $4.56 earnings per share, greater than the $4.47 expected by analysts polled by FactSet. However, revenue was slightly lower, at $24.96 billion instead of the $24.97 billion estimate. Lowe’s also reaffirmed fiscal year revenue expectations in the range of $87 billion to $89 billion, while analysts expected $87.98 billion, according to FactSet. Lowe’s CEO Marvin Ellison said, “[We] remain confident in the mid- to long-term outlook for the home improvement industry.”

Zoom Video Communications — Shares of the video conferencing company rose just over 1% after Zoom’s second-quarter results topped expectations. The company reported $1.34 in adjusted earnings per share on $1.14 billion of revenue. Analysts were expecting $1.05 per share on $1.12 billion of revenue, according to Refinitiv. Zoom’s earnings guidance for the third quarter and the full year also topped expectations.
Emerson Electric — The stock rose 1.6% after JPMorgan on Tuesday upgraded the engineering company to overweight from neutral and raised its price target to $107 from $83. That implies roughly 13% upside from Monday’s close.
— CNBC’s Michelle Fox, Alex Harring and Jesse Pound contributed reporting More

U.S. Secretary of Commerce Gina Raimondo is set to visit China from Aug. 27 to 30, both countries announced Tuesday.
The Chinese side’s readout said Raimondo’s forthcoming visit was at the invitation of Chinese Minister of Commerce Wang Wentao.

U.S. Commerce Secretary Gina Raimondo speaks during a Senate hearing in Washington, D.C., on May 16, 2023.
Bloomberg | Bloomberg | Getty Images

BEIJING — U.S. Secretary of Commerce Gina Raimondo is set to visit China from Aug. 27 to 30, both countries announced Tuesday.
Her planned trip will be the third by a high-ranking U.S. official since U.S. Secretary of State Antony Blinken traveled to China in June.

The Chinese side’s readout said Raimondo’s forthcoming visit was at the invitation of Chinese Minister of Commerce Wang Wentao.
The U.S. side did not mention such detail, and said Raimondo is to meet with “senior PRC officials and U.S. business leaders.”
She is also set to discuss “issues relating to the U.S.-China commercial relationship, challenges faced by U.S. businesses, and areas for potential cooperation,” the U.S. readout said. More

Chinese tech company Baidu reported better-than-expected revenue, up by 15% year-on-year in the second quarter and bolstered by growth in advertising.
“In the second quarter of 2023, Baidu Core accelerated revenue and profit growth, driven by the solid performance of online marketing business and operating leverage,” said Robin Li, Co-founder and CEO of Baidu, said in a release.

A Baidu Apollo robotaxi passes by a Baidu office building in Beijing on Aug. 21, 2023.
Bloomberg | Bloomberg | Getty Images

BEIJING — Chinese tech company Baidu on Tuesday reported better-than-expected revenue, up by 15% year-on-year in the second quarter and bolstered by growth in advertising.
This was the fastest quarterly year-on-year growth pace in two years, according to Refinitiv data.

Baidu’s U.S.-traded shares were up by more than 4% in pre-market trading.
Here’s how Baidu did in the June quarter versus Refinitiv consensus estimates:

Revenue: 34.1 billion yuan ($4.7 billion) versus 33.28 billion yuan expected.

Within Baidu’s core businesses, online marketing revenue rose by 15% to 19.6 billion yuan in the second quarter, and non-online marketing revenue added 12% to 6.8 billion yuan.
Earnings per American Depositary Share on a non-GAAP basis were 22.55 yuan, versus 15.79 yuan in the year-ago period.
“In the second quarter of 2023, Baidu Core accelerated revenue and profit growth, driven by the solid performance of online marketing business and operating leverage,” said Robin Li, Co-founder and CEO of Baidu, said in a release.

“Generative AI and large language models hold immense transformative power in numerous industries, presenting a significant market opportunity for us,” he said.

Baidu has been making progress with a Chinese-language ChatGPT alternative called Ernie bot, which is open to the public and was launched in March. OpenAI’s wildly popular rival chatbot isn’t easily accessible in the country.
Last week, Baidu announced that five Ernie bot plugins — including ones for quickly converting text to video and for PDF search — would become more widely available to users. Three of the plugins can also be used simultaneously, according to the company.
Baidu last week also revealed an AI-powered assistant that could help with tasks including booking meetings, air tickets and hotels. It was not immediately clear how users could obtain the assistant product.
The company is also looking to expand the reach of AI into the automobile sector. This month, the company announced a strategic agreement with state-owned Changan Automobile to develop autonomous driving capabilities based on the AI model behind Baidu’s Ernie bot.
Baidu is not alone in its foray, as other Chinese tech giants are also pushing into AI-related products. Earlier this month, e-commerce giant Alibaba claimed that “strong demand” for training artificial intelligence models on the cloud and the related business opportunity was just beginning.
Internet titan Tencent said during its earnings release last week that it plans to launch its own AI model later this year, for use in products such as gaming and advertising.

Robotaxi business

Baidu also operates self-driving taxis under the Apollo Go brand in China. In the second quarter, Baidu said it ran roughly 714,000 robotaxi rides, up from 660,000 in the first quarter.
The company was allowed to start charging fares for public robotaxi rides in Beijing in November 2021. Passengers can book the rides, which are typically highly subsidized, via an app.
Most of the robotaxis, which are available in parts of many major Chinese cities, still have human staff inside.
In June, the company said it received approval to operate robotaxis without employees in a suburb of Shenzhen. That followed similar approval in August 2022 to remove human staff in some robotaxis in parts of Wuhan and Chongqing. More

An exterior view of the Nvidia headquarters in Santa Clara, California, May 30, 2023.
Justin Sullivan | Getty Images

Check out the companies making headlines in midday trading.
Palo Alto Networks — The security software provider jumped 14.8% after Palo Alto beat expectations for earnings when reporting after the bell Friday. Goldman Sachs reiterated the stock as buy following its report.

Earthstone Energy, Permian Resources — Earthstone Energy jumped 16.7% following the announcement that Permian Resources is buying the oil and gas company in an all-stock deal valued near $4.5 billion, including debt. Permian shares added 2.3.
Nvidia — Shares climbed 8.5% after HSBC reiterated a buy rating and raised its target price on the chipmaker. Baird also named Nvidia a top pick. The company reports earnings Wednesday after the bell.
Napco Security Technologies — The security tech stock plummeted 45% after Napco said Friday that an audit found errors in recent financial statements, with gross profit, operating income and net income overstated.
Xpeng — The Chinese electric vehicle maker jumped 9.7% following an upgrade to buy from neutral by Bank of America. The firm said Xpeng should see improvements in China given its partnership with Volkswagen and better cost structure.
Tesla — The electric vehicle maker added 7.3%, regaining ground after tumbling about 11% last week following news of more price cuts in China.

VMware, Broadcom — VMware and Broadcom added 4.9% and 4.8%, respectively. Broadcom obtained final transaction approval from the U.K.’s Competition and Markets Authority for an acquisition of the cloud computing company and expects other required regulatory approvals before Oct. 30. 
Farfetch — The e-commerce fashion company’s shares jumped more than 3.8% Monday. The stock tumbled more than 45% during Friday’s trading session after posting a revenue miss in the prior quarter. Farfetch’s full-year revenue guidance also came in below analysts’ expectations.
Acushnet Holdings — The golf equipment maker and owner of Titleist added 5% after Jefferies upgraded the company to buy from hold. The Wall Street firm excepts Acushnet to defend its top position while expanding margins and growth.
— CNBC’s Sarah Min, Hakyung Kim and Samantha Subin contributed reporting. More

Someone who finds gold coins, meteorites or something else of value must report it as taxable income, experts said.
The same tax principle for “found” property applies to sports memorabilia (like a home-run ball) and game show winnings.
The tax rule has its roots in a 1960s court case involving cash found in an old piano.

Maki_shmaki | Istock | Getty Images

Consider this a public service announcement for all treasure hunters: Uncle Sam wants a piece of your loot.
Someone who makes a valuable discovery — whether gold coins, meteorites or even cash — generally owes tax on that haul, which is known as “found” property.

The tax is twofold: a levy upon acquisition and, if eventually sold, on the profit.
Its taxability is due to a basic premise of tax law: Income is taxable unless the Internal Revenue Code excludes it from taxation or allows for a tax deferral, said Troy Lewis, an associate professor of accounting and tax at Brigham Young University.
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“Is there a treasure-hunter exclusion?” Lewis said. “No, there’s nothing like that.
“As a result, it’s ‘miscellaneous income.'”

The haul would therefore be taxed at ordinary-income tax rates. These tax rates (which also apply to income like job wages) are up to 37%.

How cash in an old piano established taxation

The taxation of found property has its roots in a court case from the 1960s, according to TurboTax.
A married couple — Ermenegildo and Mary Cesarini — bought a used piano in 1957. Seven years later, when cleaning the instrument, they found $4,467 of old currency inside. The couple, who exchanged the currency for new notes at a bank, paid $836 of income tax on the find but later requested a tax refund, claiming it wasn’t taxable income. A federal judge rejected the premise, siding with the IRS in federal court.
Valuable discoveries happen more often than you might think.

For example, in June, a man found more than 700 Civil War-era gold coins in a Kentucky cornfield, a treasure that may reportedly be worth more than $1 million. In April, after a meteorite landed near the U.S.-Canada border, a museum in Maine offered $25,000 to anyone who found a piece of the rock weighing at least 1 kilogram. In 2020, a Michigan man found $43,000 stuffed in a donated couch.
The same tax concept also applies to sports memorabilia — say, catching Derek Jeter’s 3,000-hit ball or Tom Brady’s 600th touchdown pass — or winning a car on a game show.

Legal ownership starts the clock

There are some caveats. For one, there may be questions of legal ownership: Does the discovery truly belong to you?
“When you have a legal right to the property you find, that becomes Tax Day,” said Lewis, who also owns an accounting firm in Draper, Utah.
This could become a challenge for taxpayers who don’t have the money on hand to pay perhaps hundreds or thousands of dollars in income tax, Lewis said.

The date of legal acquisition also starts the clock relative to one’s holding period and cost basis (i.e., value), he added.
These become important if the finder later sells the object. That’s because tax code offers preferential tax rates on profits from investments and other property like collectibles that are held for more than a year. (In such a case, taxes on “long-term” capital gains would kick in.) If held for a year or less, those preferential capital gains tax rates disappear.
Many found items, like gold coins and meteorites, would likely be considered collectibles, Lewis said. Federal long-term capital gains taxes on collectibles can go as high as 28%, while those on other assets like stocks and real estate can reach 20%. More

Shares of Adyen plummeted 39% on Thursday, erasing 18 billion euros ($20 billion) from the company’s market capitalization after reporting its slowest revenue growth on record.
Concerns that competitors in local markets, particularly in North America, are muscling in with cheaper offerings have heavily weighed on the company’s prospects.
Adyen has typically been viewed as a growth stock, after consistently reporting revenue growth of 26% each half-year period since its 2018 stock market debut.

Adyen reported a big miss on first-half sales Thursday. The news drove a $20 billion rout in the company’s market capitalization .
Pavlo Gonchar | Sopa Images | Lightrocket | Getty Images

Spirits were high when Dutch payments firm Adyen floated on the Amsterdam stock exchange in 2018.
The company was riding a wave of growth in Europe’s technology sector and snapping up competition from its mega U.S. rival PayPal.

Since then, the company has weathered a turbulent ride, including a global pandemic that knocked volumes from travel clients significantly.
The firm expanded aggressively in North America, where some of its most high-profile merchants are based, and hired hundreds of employees to turbocharge growth.
As the macroeconomic environment shifted in 2023, Adyen’s growth strategy has been challenged in a big way.
The company’s shares plummeted 39% on Thursday, erasing 18 billion euros ($20 billion) from Adyen’s market capitalization, as investors dumped the stock after the firm reported its slowest revenue growth on record.
The stock closed down a further 2.9% on Friday after the precipitous decline of Thursday.

What is Adyen?

Identified as one of the top 200 global fintech companies globally by CNBC and Statista, Adyen is a payments services firm that works with customers including Netflix, Meta and Spotify.
It also sells point-of-sale systems for physical stores and handles payments online and in-store.
More than a processor, Adyen is what is known as a payment gateway — meaning that it uses technology to enable merchants to take card payments and transactions through online stores.
The company takes a small cut off every deal that runs through its platform.
It was co-founded by Pieter van der Does, the firm’s chief executive officer, and Arnout Schuijff, former chief technology officer.

What just happened?

Adyen last week reported results for the first half of the year that came in well below expectations. The company’s revenue of 739.1 million euros ($804.3 million) for the period was up 21% year over year — but showed Adyen’s slowest sales growth on record.
Analyst had expected 853.6 million euros of revenue and 40% of year-on-year growth, according to Eikon Refinitiv forecasts.
Adyen has typically been viewed as a growth stock, after consistently reporting revenue growth of 26% each half-year period since its 2018 stock market debut.
“With higher inflation, leading to higher interest rates, there has been a bit of a shift of focus — less focus on growth, more focus on bottom line,” Adyen Chief Financial Officer Ethan Tandowsky told CNBC’s “Squawk Box Europe” Thursday.
Tandowsky insisted that the company had “limited churn” and that none of its large customers had left the platform.
But concerns that competitors in local markets, particularly in North America, are muscling in with cheaper offerings have heavily weighed on company prospects.
Adyen said in a letter to shareholders this week that its EBITDA (earnings before interest, tax, depreciation and amortization) margin fell to 43% in the first half of 2023 from 59% in the same period a year ago.
The company said this was down to softer growth in North America and to higher employment costs such as wages, as it ramped up hiring during the period.
Tandowsky insisted the company had more of a focus on “functionality” than its peers, even though those peers may offer cheaper services.
“The efficiency of which we can develop new functionality, functionality that out performs our peers will lead us to gaining the market share that we expect.”

Structural challenges

At the heart of Adyen’s woes is a business heavily dependent on customers’ willingness to stick to a single platform for their all their payment needs. The company also needs to convince those users that what it sells is better than what’s on offer from a competitor.
In its half-year 2023 report, Adyen said that many of its North American customers are cutting back on costs to weather economic pressures like rising interest rates and higher inflation.
“Enterprise businesses prioritized cost optimization, while competition for digital volumes in the region provided savings over functionality,” Adyen said in a letter to shareholders.
“These dynamics are not new, and online volumes are easiest to transition back and forth. Amid these developments, we consciously continued to price for the value we bring.”
Adyen also said its profitability had suffered from a push to aggressively ramp up hiring. EBITDA came in at 320 million euros, down 10% from the first half of 2022.
Adyen added 551 employees in the first half of the year, taking its total full-time employee count up to 3,883.
Some of the company’s rivals have cut back on hiring significantly. In November 2022, Stripe laid off 14% of its workforce, or about 1,100 people.
The main challenge Adyen now faces is competition from challengers that are willing to offer lower rates than it provides.
Speaking with the Financial Times on Thursday, Adyen CEO Pieter van der Does said that merchants are “trying to explore local providers” to cut down on costs.
“It’s not that we’re shrinking — we’re just growing at a slower rate,” he added.
Adyen has historically been a lean business, opting to hire fewer people overall than its main competitor Stripe, which has roughly double the staffing.
Simon Taylor, head of strategy at Sardine.ai, said that Adyen might face a “natural ceiling” to what business size it can reach before having to reduce its margins to grow again.
“Ultimately they’re subject to the same macro headwinds everyone in e-commerce is,” Taylor told CNBC. “And they still grew 21%. Incumbents would kill for that.” More