Finance

Check out the companies making headlines before the bell:
Wendy’s (WEN) – Wendy’s shares fell 1% in premarket trading following a mixed quarter, which saw the restaurant chain report better-than-expected earnings while revenue fell short of Street forecasts. U.S. same-restaurant sales rose 2.3%, less than analysts had estimated, as consumers spent more cautiously.

Coinbase (COIN) – The cryptocurrency exchange operator’s shares slid 5% in the premarket after the company reported a wider-than-expected quarterly loss, with business impacted by the slide in crypto prices during the spring months. Coinbase saw volumes fall as the number of active traders declined during the quarter.
Buzzfeed (BZFD) – The digital media company reported a wider-than-expected quarterly loss amid a pressured advertising market and rising expenses. Buzzfeed fell 3.7% in premarket trading.
Twitter (TWTR) – Twitter added 3.6% in premarket action following news that Elon Musk sold nearly $7 billion in Tesla (TSLA) shares over the past few days. The move comes amid uncertainty over whether a court will force Musk to follow through on his $44 billion deal to buy Twitter. Tesla shares gained 1.3%.
Roblox (RBLX) – The videogame company’s stock tumbled 15.1% in the premarket after Roblox reported a quarterly loss that was wider than expected and bookings – a key sales metric – fell short of analyst forecasts.
Wynn Resorts (WYNN) – The resort operator reported a smaller-than-expected quarterly loss, but revenue was shy of expectations as results in Macau continue to be pressured by Covid-related shutdowns. Wynn Resorts fell 2.9% in premarket trading.

Trade Desk (TTD) – The digital advertising firm’s stock surged 16.3% in the premarket after it reported better-than-expected quarterly revenue and gave an upbeat forecast for the current quarter. The company said its performance gives it confidence that it can gain market share in any economic environment.
H&R Block (HRB) – The tax preparation firm’s stock jumped 4% in premarket action after quarterly results were better than expected, helped by a strong tax season. H&R Block also announced a 7% dividend increase and a new $1.25 billion stock buyback program.

WATCH LIVEWATCH IN THE APP More

Prices of pork, a food staple in China, rose by 20.2% in July from a year ago. The month-on-month gain was the highest on record, according to official data accessed through Wind Information.
However, China’s headline consumer price index rose by 2.7% in July, missing expectations for a 2.9% increase, according to analysts polled by Reuters.
“Non-food prices actually declined in July [by 0.1%] from their June level, which reflects weak demand,” Zhiwei Zhang, president and chief economist, Pinpoint Asset Management, said in a note.

Customers buying pork at a food market in Shanghai, China. Prices of pork, a food staple in China, rose by 20.2% in July 2022 compared to a year ago, official data showed.
Qilai Shen | Bloomberg | Getty Images

BEIJING — China’s consumer price index hit a two-year high in July as pork prices rebounded, according to official data released Wednesday.
Prices of pork, a food staple in China, rose by 20.2% in July from a year ago. It marked the first increase since September 2020, according to official data accessed through Wind Information.

In fact, pork prices posted their largest month-on-month surge on record — up by 25.6%, the data showed.
Farmers’ reluctance to sell — in hopes of getting higher prices in the future — contributed to July’s pork price surge, said Bian Shuyang, agricultural products analyst at Nanhua Futures, in a statement.
Looking ahead, Bian expects it will be difficult for pork prices to surpass July’s levels.
Two Chinese holidays in September and October will help support consumer demand for pork, Bian said.
According to the analyst, live hog producers are now operating at a profit, an indication of more supply to come.

Pork prices have swung wildly over the last three years as hog farmers have had to battle deadly disease and many new producers.
Fresh fruit and vegetable prices also jumped in July, up by 16.9% and 12.9% from a year ago, respectively, according to the National Bureau of Statistics.

Ex-food price slump

While food prices rose, Wednesday’s inflation data continued to reflect lackluster demand in China’s economy.
The headline consumer price index rose by 2.7% in July, missing expectations for a 2.9% increase, according to analysts polled by Reuters.

The Covid outbreaks in many cities and the lack of further policy stimulus may have led to weaker growth in July.

Zhiwei Zhang
chief economist, Pinpoint Asset Management

“Non-food prices actually declined in July [by 0.1%] from their June level, which reflects weak demand,” Zhiwei Zhang, president and chief economist, Pinpoint Asset Management, said in a note.
“The Covid outbreaks in many cities and the lack of further policy stimulus may have led to weaker growth in July,” he said.
Despite the summer holidays, the tourism price component only rose by 0.5% in July from a year ago.
Covid outbreaks in the last few weeks have disrupted vacations with cancelled flights and venue closures in tourist spots ranging from Hainan island to the Tibetan plateau.

Read more about China from CNBC Pro

China’s CPI print for last month was still the highest since July 2020, when the index also rose by 2.7%, according to Wind data.
China’s inflation data has run far below that of the U.S., which is set to release its consumer price index data overnight. Economists polled by Dow Jones expect the U.S. consumer price index to rise by 8.7% in July from a year ago, down from 9.1% in June.
Wednesday’s data showed China’s producer prices continued to moderate, also coming in below expectations.
The 4.2% year-on-year increase reported for July missed the Reuters’ poll forecast of 4.8% growth.
“Falling PPI inflation also points to limited potential upside to CPI inflation” in China, Nomura’s chief China Economist Ting Lu said in a note.
— CNBC’s Patti Domm contributed to this report.

WATCH LIVEWATCH IN THE APP More

In this photo illustration, the Coinbase logo is displayed on a smartphone screen.
Rafael Henrique | SOPA Images | Lightrocket | Getty Images

Check out the companies making headlines in after hours trading.
Coinbase – Coinbase fell more than 3.5% in afterhours trading after reporting quarterly earnings. The company missed analyst expectations on both revenue and earnings, partially due to the “crypto winter” seen in the second quarter.  

Roblox – Roblox shed nearly 14% postmarket Tuesday after the company’s quarterly earnings came in below Wall Street expectations. Roblox reported a loss of 30 cents per share and $639.9 million in revenue, versus analysts’ estimate of a loss of 21 cents on $644.4 million in revenue. In addition, Roblox reported 52.2 million daily active users in the quarter, less than expected by Wall Street and down from the first quarter.
Wynn Resorts – Shares of Wynn Resorts slipped more than 2.5% late Tuesday after the gaming company missed Wall Street’s estimates for revenue. Wynn reported a loss of 82 cents per share and revenue of $908.83 million, against analysts’ estimates of a loss of $1.11 and revenue $980.85 million.
Unity Software – Unity Software shed nearly 3% after the closing bell after disappointing quarterly earnings that missed Wall Street expectations. Unity reported $297 million in revenue and a 69-cent loss per share, versus expectations of $299 million in revenue and a 21-cent loss.
Sweetgreen – Shares of the salad company lost more than 20% in afterhours trading Tuesday after it lowered its full-year outlook, said it would layoff 5% of its workforce and downgrade its office space. The company met earnings expectations, reporting 36 cents per share, but fell short on revenue, reporting $124.9 million versus $130.2 million expected.

WATCH LIVEWATCH IN THE APP More

The german mathematician David Hilbert once imagined a hotel with an infinite number of rooms. Even if all of the rooms were occupied, he pointed out, the hotel could accommodate a new arrival, simply by asking each guest to move into the room next door. One guest would move into a second guest’s room, freeing up a spot for the new arrival. The second guest would move into a third guest’s room, and so on. With an infinite number of rooms, the sequence would never end.For years, China’s property developers operated along similar lines. They would sell flats far in advance of building them. The money raised for these flats was supposedly reserved for building them, just as each room in Hilbert’s hotel was supposedly reserved for an existing guest. But developers would instead use the money for other purposes, such as buying land. When the time came to pay for construction, they would sell more unbuilt flats and use that money instead. Just as Hilbert’s hotel accommodated each guest in the room next door, China’s property developers built each pre-sold flat with the money from the next pre-sale. As long as there were always new buyers, the sequence could go on.Unfortunately, China’s developers are now running out of rooms. Their sales in the 12 months to June fell by 22% compared with the previous 12 months. Advance sales fell even faster (see chart). This painful brush with finitude has left many developers without enough cash to continue building the flats their customers have already bought. China’s developers have started work on over 6bn square metres of property in the past three years. They have completed less than half that amount. In the past homebuyers could do little about these delays. They had already handed over their money, after all.But although they have paid their developers, they are still paying their banks. In recent months, angry homebuyers have threatened to stop repaying their mortgages if developers do not resume work on their flats. According to a crowdsourced document circulating online, this mortgage strike has spread to nearly 100 cities and over 320 projects, including a Dragon City, a Peacock City and a Phoenix City. Over 40 of these projects are in Zhengzhou, the capital of Henan province.How widespread could boycotts become? There are some limits to their growth. Striking mortgage-holders could end up on credit blacklists, damaging their access to loans. And in China, points out s&p Global, a rating agency, most individuals cannot declare bankruptcy, since “their debts will never be forgiven”.In a gloomy scenario, mortgage loans worth about 2.4trn yuan ($350bn) could turn sour, reckons s&p Global. That amounts to roughly 1.3% of total bank loans, enough to endanger some smaller lenders, but not enough to pose a systemic threat to the banking system.The true significance of the boycotts lies elsewhere. They show that Chinese households no longer believe that a flat bought in advance will necessarily be delivered. This loss of faith is not confined to the protesters. It is also showing up in weakening pre-sales, especially for distressed developers. A reluctance to buy new homes poses a bigger threat to China’s economy than the more conspicuous refusal to repay existing mortgages. Weak sales will further squeeze the revenues of developers, adding to construction delays and deepening disillusionment.How can this vicious circle be broken? In Henan, two state-owned enterprises (a developer and a “bad bank”) have set up a relief fund to acquire distressed projects and see them through to completion. But China’s local governments lack the cash to revive confidence, according to Andrew Batson of Gavekal Dragonomics, a research firm. He believes a credible plan will require the central government to step in. It is understandably reluctant to plough more resources into a sector that already commands too big a share of the economy. But new money invested in stalled projects could yield a double dividend, helping both to build unfinished flats and rebuild confidence in pre-sales.In the longer term, developers will need a less frenetic business model. They will have to rely less on selling flats in advance and starting the next project before finishing the last. In China, the demand for housing is vast. But it is not infinite. ■ More

The Apple Card’s rapid growth and the platform Goldman Sachs built to service it resulted in some failures more reminiscent of a traditional issuer than a customer-first disruptor, according to people with knowledge of the matter.
Regulators are focused on customer complaints from the past few years, and the biggest source of those came from attempted chargebacks, said the people.
While the bank had automated ways for customers to log disputes through their iPhones, it had done less work on streamlining the resolution of such cases, according to the people.

Apple CEO Tim Cook introduces Apple Card during a launch event at Apple headquarters on Monday, March 25, 2019, in Cupertino, California.
Noah Berger | AFP | Getty Images

When it unveiled its new credit card in 2019, Apple touted it as a gamechanger, with unheard-of levels of simplicity and transparency.
Behind the scenes, however, the card’s rapid growth and the new platform built by Goldman Sachs to service it created difficulties, resulting in failures more reminiscent of a traditional issuer than a customer-first disruptor, according to people with knowledge of the matter.

Goldman struggled to handle a bigger-than-expected influx of disputed transactions, known in the industry as chargebacks, according to the people. Chargebacks happen when a customer seeks a refund for a product or service billed on their card for any of a number of reasons. The disputes, which put banks in the middle of disagreements between customers and merchants, have surged during the pandemic, according to payments consultants.
When an Apple Card user disputes a transaction, Goldman has to seek a resolution within regulatory timelines, and it sometimes failed at that, said the people, who requested anonymity to speak candidly about the situation. Customers were sometimes given conflicting information or had long wait times, the people said.
Goldman got more disputes than it counted on, said one source. “You have these queues that you need to clear out within a certain amount of time. The business was getting so big, suddenly we had to create more automation to deal with it.”
Goldman Sachs declined to comment for this article, and an Apple representative didn’t immediately answer a request for comment.

‘A complete nightmare’

Problems at Goldman’s card business burst into public view Aug. 4, when the New York-based investment bank disclosed a Consumer Financial Protection Bureau probe over a range of billing and service issues. Goldman made no mention of Apple in the filing, but most of its $11.84 billion in card loans to date are from the Apple Card; the bank launched a GM-branded card in January.

The regulator is looking into Goldman’s customer dealings, “including with respect to the application of refunds, crediting of nonconforming payments, billing error resolution, advertisements, and reporting to credit bureaus,” the bank said.
Regulators are focused on customer complaints from the past few years, and the biggest source of those came from attempted chargebacks, said the people.
The disputes can be thorny to resolve: Customers sometimes try to game the system by seeking refunds on legitimate purchases. In other cases, its merchants who aren’t always forthcoming. While refunds involving identify theft or items that were never received should be clear-cut, there are also more nuanced cases where customers complain that an event like a music festival didn’t live up to its billing.
In online credit-card forums, several users complained that Goldman initially refused to side with them even though they provided evidence of fraud.
“Goldman Sachs is holding me responsible for a $930 charge that was made at an Apple store with Apple Pay that I did not make,” according to one Reddit post. “Until now, I’ve never experienced less professional service from a major company, and this has been a complete nightmare.”

Edge cases

While the bank had automated ways for customers to log disputes through their iPhones, it had done less work on streamlining the resolution of such cases, according to the people. The bank hadn’t initially accounted for what insiders deemed “edge cases,” or situations that break from the norm among the vast majority of transactions, they said.
“We were making the case that we have a seamless way to dispute transactions,” the source said. “But we got no credit for the front end, and we had some failures on the back end.”
Another part of the puzzle is that Goldman relied on three outside vendors to help service Apple Card customers. Known as business process organizations, or BPOs, the sector often struggles with high worker turnover, increasing the odds that a representative is new or not fully trained.
In February, Apple sent some card users notice giving them a chance to resubmit old disputes, according to industry publication 9to5Mac.
The email acknowledged that Apple had “identified that some customer-initiated disputes may not have been resolved correctly,” according to the report.

Growing pains

There are also plenty of customers on Reddit who say they’ve had good experiences with the Apple Card. The product won an award from J.D. Power for customer satisfaction last year.
The people with knowledge of the matter referred to the bank’s issues as the growing pains of a new business that saw an unprecedented surge in customers. Apple Card users doubled to 6.4 million by May 2021 from a year earlier, according to Cornerstone Advisors. Outstanding loans by Goldman nearly doubled last year, according to the Nilson Report.
Goldman is still a relative newcomer to the U.S. credit card industry, and the Apple Card represented its biggest step yet into the financial lives of ordinary Americans. While the major card players rely on decades-old technology systems, the investment bank opted to build its own platform, said the people.
In response to the regulatory scrutiny, Goldman redirected resources to automate more of the chargeback process, one of the people said.
Meanwhile, frustrated Apple Card users in online forums said there was one surefire way to improve Goldman’s response.
After “6 phone calls, 3 supervisors, and 4 months of waiting it was magically resolved,” one Reddit poster wrote. “Suspiciously, it was resolved a few days after I filed a CFPB complaint stating all of my issues. If you run into the same thing, FILE A COMPLAINT with the CFPB.”

WATCH LIVEWATCH IN THE APP More

A view of the Norwegian Encore cruise ship during its inaugural sailing from PortMiami, which took place from Nov. 21-24, 2019.
Orlando Sentinel | Tribune News Service | Getty Images

Check out the companies making headlines in midday trading.
Norwegian Cruise Line — Shares sank nearly 12% on Tuesday after the company reported second-quarter results that missed Wall Street’s expectations and showed occupancy rates of only 65%, compared to more than 100% in the same quarter in 2019. In addition, the cruise line said that it wouldn’t return to pre-pandemic occupancy levels until next year, signaling losses will continue.

Micron Technology — The chipmaker’s shares lost 5% after the company reported a decline in demand for its DRAM and NAND chips and said it expects a challenging market environment in in the fiscal fourth quarter of 2022 and fiscal first quarter 2023. Several other chip stocks fell with Micron. Applied Materials, On Semiconductor and Teradyne each fell about 7%.
Signet Jewelers — The jeweler saw shares fall about 11.5% after it cut its financial forecast for the second quarter and full-year fiscal 2023, saying it saw softer sales in July as inflation drove consumers to rein in their spending. The company also announced its acquisition of Blue Nile but said the deal will likely not be accretive to the business until the fourth quarter of fiscal 2024.
Nielsen — Shares of the audience data analytics firm soared more than 21% after the company postponed its court meeting and special meeting of its shareholders, where it was expected to finalize a preliminary agreement between a private equity consortium and WindAcre. WindAcre currently owns about 27% of Nielsen shares.
Ralph Lauren — The luxury retailer dropped 7% even after the company reported strong-than-expected quarterly results. The company posted fiscal first-quarter adjusted earnings of $1.88 a share, beating the $1.71 estimate analysts were expecting, according to FactSet. Ralph Lauren also topped expectations for its revenue, helped by solid demand for its higher-priced clothing.
Principal Financial Group — The investment and insurance firm saw shares rise 7% after it reported strong quarterly results. The company reported non-GAAP operating earnings of $1.65 per share. That was higher than the $1.39 cents per share estimated by analysts, according to FactSet.

News Corporation — Shares gained 5% after the company’s quarterly earnings of 37 cents per share beat estimates of 9 cents per share, according to Fact Set. Revenue of $2.67 billion came in higher than estimates of $2.58 billion.
Novavax — Shares plunged 29% after the biotech company slashed its full-year revenue guidance nearly in half because of weak demand for its coronavirus vaccines. Novavax expects it will generate $2 billion to $2.3 billion in revenue in 2022, in comparison to prior guidance of $4 billion to $5 billion.
Allbirds — The shoemaker’s stock price tumbled more than 23% after the company cut its financial forecast for the year, citing a slowdown in consumer spending. It also announced a number of efforts to cut costs after reporting a wider quarterly loss compared with a year earlier.
Occidental Petroleum — Occidental’s stock gained 3.8% on news that Berkshire Hathaway upped its stake in the oil giant to over 20%. Warren Buffett has been increasing the stake in the energy producer since March.
 — CNBC’s Carmen Reinicke, Yun Li, Sarah Min and Samantha Subin contributed reporting.

WATCH LIVEWATCH IN THE APP More

Take a look at some of the biggest movers in the premarket:
Novavax (NVAX) – The drugmaker’s stock plummeted 32.3% in the premarket after posting an unexpected quarterly loss and cutting its full-year revenue guidance in half. Novavax said it did not expect any further U.S. sales of its Covid-19 vaccine this year amid soft demand and a supply glut.

GoodRx (GDRX) – GoodRx soared 39.6% in premarket trading after the provider of prescription drug comparison software reported better-than-expected quarterly results, and also said an issue with a major grocery chain had been resolved.
Allbirds (BIRD) – The sneaker maker’s shares dived 11.8% in the premarket after it cut its full-year forecast, with the company saying external headwinds could pressure consumer spending in the back half of 2022.
Micron Technology (MU) – The chip maker said it expected negative free cash flow for the current quarter, as well as declines in revenue and profit margins. Chip shipments are falling due to weakening demand from PC and video game companies. Micron lost 3.7% in premarket action.
Take-Two Interactive (TTWO) – Take-Two fell 3.4% in the premarket after the video game publisher issued a weaker-than-expected revenue forecast. Take-Two is the latest company to see its results impacted by a general slowdown in gaming following a pandemic-era boom.
Occidental Petroleum (OXY) – The energy producer’s stock added 2.3% in the premarket following news that Berkshire Hathaway (BRK.B) had increased its stake in Occidental to more than 20%. That means that Berkshire can record part of Occidental’s profits as its own.

Signet Jewelers (SIG) – The jewelry retailer announced a deal to buy online jewelry seller Blue Nile for $360 million in cash. Signet shares added 2% in the premarket.
Upstart (UPST) – Upstart stock tumbled 12.2% in premarket trading after the cloud-based lending platform company missed Wall Street’s estimates on both the top and bottom lines for its latest quarter. It also issued a weaker-than-expected revenue forecast, saying that banking partners have turned more cautious due to the uncertain economy.
CarGurus (CARG), Vroom (VRM) – Both online used car sellers saw their stocks plunge in premarket action after reporting weaker-than-expected quarterly results. CarGurus sank 14.9% while Vroom slid 11.4%.
SoFi (SOFI) – The online financial services company’s stock fell 3.4% in premarket trading after Japan’s SoftBank said it would some or all of its 9% stake in SoFi.

WATCH LIVEWATCH IN THE APP More

The Hong Kong Stock Exchange acknowledged Monday Alibaba’s application to convert locally traded shares to primary listing from the current secondary status, according to a filing.
The expected effective date is by the end of 2022, the document said.
Gaining primary status in Hong Kong would make Alibaba eligible for inclusion in a stock connect program with mainland China.

A filing Monday showed Chinese internet tech giant Alibaba is another step closer to letting mainland Chinese investors trade its shares directly.
Kuang Da | Jiemian News | Visual China Group | Getty Images

BEIJING — Chinese e-commerce giant Alibaba is making Hong Kong a “primary” listing for its shares, paving the way for mainland China investors to trade the stock directly.
The Hong Kong Stock Exchange acknowledged Monday Alibaba’s application to convert locally traded shares to primary listing from the current secondary status, according to a filing.

It is expected to take effect by the end of 2022, the document said.
Gaining primary status in Hong Kong would make Alibaba eligible for inclusion in a stock connect program with mainland China.
The stock briefly rose more than 2% in Hong Kong trading Tuesday morning.
“We expect that the Primary Conversion will allow us to broaden our investor base and facilitate incremental liquidity, and in particular expand access to China- and other Asia-based investors,” Alibaba said in Monday’s filing.

Alibaba listed on the New York Stock Exchange in 2014 in the biggest IPO at that time.

Nearly three years ago, the Chinese internet tech giant began to tap investors closer to home with a secondary listing in Hong Kong.
Last month, Alibaba took advantage of recent rule changes in Hong Kong to apply for a dual primary listing there.
Just over a week ago, the U.S. Securities and Exchange Commission added Alibaba to a list of U.S.-listed Chinese companies that face delisting if they cannot meet audit requirements within three years. Alibaba said it would work with regulators to maintain its listings in New York and Hong Kong.

WATCH LIVEWATCH IN THE APP More