Connect with us

Business

Adidas HR chief out after reportedly calling worker racial concerns “noise” – CBS News

Employees complained that executive Karen Parkin was dismissive of racial concerns at the sportswear company.

Published

on

post featured image

Business

Citigroup shares rise after bank reports better-than-expected earnings on strong trading results – CNBC

Citigroup reported second-quarter results that surpassed analyst expectations thanks in part to a massive surge in trading revenue.

Published

on

post featured image

Citigroup reported on Tuesday second-quarter results that surpassed analyst expectations thanks in part to a massive surge in trading revenue that helped offset a slowdown in the company’s consumer banking business. 
Here’s how the company’s results compared to analyst estimates:

  • Earnings: 50 cents per share vs 28 cents per share expected by Refinitiv
  • Revenue: $19.77 billion vs $19.12 billion forecast
  • Fixed income, currency and commodities trading revenue: $5.6 billion vs $4.86 billion forecast by FactSet

The bank’s stock rose more than 1% in the premarket. 
Citigroup’s fixed income trading revenue represents a 68% year over-year surge and accounted for most of the company’s Markets and Securities Services revenues, which rose 48% to $6.9 billion.
Those elevated trading numbers come amid heightened market volatility during the coronavirus pandemic. They also come on the heels of massive monetary stimulus from the Federal Reserve. Equity trading revenue dipped 3% to $770 million, however. 
Citigroup’s global consumer banking division struggled during the second quarter, with revenues falling 10% to $7.34 billion on a year-over-year basis. Net credit losses, meanwhile, jumped 12% year over year to $2.2 billion. Ultimately, the company posted net income of $1.32 billion, which represents a 73% drop from the second quarter of 2019. 
“While credit costs weighed down our net income, our overall business performance was strong during the quarter, and we have been able to navigate the COVID-19 pandemic reasonably well. The Institutional Clients Group had an exceptional quarter, marked by an increase in Fixed Income of 68%,” CEO Michael Corbat said in a statement. 
“With a sharp emphasis on risk management, we are prepared for a variety of scenarios and will continue to operate our institution prudently given this unprecedented situation,” Corbat added.
Citigroup shares are up nearly 12% the last three months through Monday’s close, outperforming peers such as JPMorgan Chase, Wells Fargo and Bank of America. JPMorgan and Bank of America were roughly flat in that time and Wells lost 19.2%.
The bank announced in late June it would maintain its quarterly dividend after passing the Federal Reserve’s annual stress test. 
Citigroup’s results Tuesday come in what is expected to be the one of the worst earnings season on Wall Street. Analysts polled by Refinitiv expect S&P 500 earnings to have fallen by 44% on a year-over-year basis. 
Subscribe to CNBC PRO for exclusive insights and analysis, and live business day programming from around the world.

Click here to view the original article.

Continue Reading

Business

Delta Air stock slips after wider-than-expected loss – MarketWatch

Published

on

post featured image

Delta Air Lines Inc.
DAL,
-0.99%
stock fell nearly 1% in Tuesday premarket trading after the airline reported second-quarter losses that were wider than expected. Delta’s net loss was $5.72 billion, or $9.01 per share, after net income of $1.44 billion, or $2.21 per share, last year. Adjusted losses were $4.43 per share. The FactSet consensus was for a loss of $4.16. Revenue totaled $1.47 billion, down from $12.54 billion last year but ahead of the FactSet consensus for $1.39 billion. Passenger revenue for the quarter fell 94% to $678 million, and cargo revenue was down 42% to $108 million. “Given the combined effects of the pandemic and associated financial impact on the global economy, we continue to believe that it will be more than two years before we see a sustainable recovery,” said Delta Chief Executive Ed Bastian in a statement, emphasizing the “staggering impact of the COVID-19 pandemic on our business.” Delta ended the quarter with $15.7 billion in liquidity, and reduced its daily cash burn in June by 70% compared to late March, down to an average of $27 million. And the company has gotten $5.4 billion in grant funds and unsecured loans through the CARES Act, which will be paid in installments through July 2020. Maturities on $1.3 billion in borrowings on revolving credit facilities have been extended to 2022 from 2021. Delta has taken additional sanitation steps in the face of the coronavirus pandemic, has limited load factor at 60% and is blocking off middle seats. The company has provided more than $2.2 billion in cash refunds in 2020. Delta is positioning itself to be a smaller airline over the next couple of years, retiring MD-88 and other planes, and reducing headcount through early retirement and other programs. The company is also accelerating airport construction projects in New York’s LaGuardia Airport, in Los Angeles and other cities. At the end of the quarter, the company had total debt and finance lease obligations of $24.6 billion. Delta took a write down of $1.1 billion on its investment in LATAM Airlines and a write down of $770 million on its investment in AeroMexico after those companies’ losses and bankruptcy filings. The company took a $200 million write down in its investment in Virgin Atlantic, a $200 million charge. Delta stock has fallen 54.1% for the year to date while the Dow Jones Industrial Average is down 8.6% for the period.

Click here to view the original article.

Continue Reading

Business

5 Awful Stocks Robinhood Investors Are Buying – Motley Fool

Young investors are making a big mistake by chasing these terrible businesses.

Published

on

post featured image

No matter how long you’ve been an investor, there’s simply nothing that could have prepared you for what 2020 has offered thus far. In a roughly four-month span, investors have dealt with about a decade’s worth of volatility due to the unprecedented coronavirus disease 2019 (COVID-19) pandemic.
Of course, periods of panic and heightened volatility have generally served long-term investors well. That’s because every stock market correction in history (save for the current correction) has eventually been erased by a bull market rally. Buying great stocks and hanging onto them for a long period of time is a strategy with a high success rate.
Image source: Getty Images.
However, panic and volatility can have negative consequences, too. Online investment platform Robinhood, which has been especially successful in courting younger/millennial investors with the lure of commission-free trades and the gift of free stock once you open an account, is one such instance of the dangers that can arise during periods of heightened volatility.
While some of its members have a long-term mindset, the typical “Robinhood investor” is a short-term trader who’s usually chasing today’s hottest stocks. Since predicting short-term movements can’t be done with any accuracy, it’s a dangerous game for young investors to be playing.
Worst of all, some of the most popular stocks on the Robinhood platform are absolutely awful companies. Here are five such stocks that retail investors apparently love, but which you should avoid like the plague.
The Nikola Badger electric truck. Image source: Nikola.
Nikola
Being brutally honest, the entire electric vehicle (EV) industry, including NIO(NYSE:NIO), Tesla(NASDAQ:TSLA), Workhorse Group, and Tortoise Acquisition, look to be in one massive retail trader-fueled bubble. But none is priced more out of whack than Nikola(NASDAQ:NKLA).
Short-term traders have watched Tesla and NIO defy gravity for weeks, and they simply figure that Nikola and its $20 billion market cap can do the same. After all, Nikola did unveil its Badger EV truck, and initial deposit demand following that unveil was presumed to be strong.
But there’s a problem here: Nikola hasn’t sold a single EV or fuel-cell vehicle… ever.
The company hopes to begin production of the Badger next year, but it’s a veritable certainly that snags and hurdles will arise. Both Tesla and NIO have dealt with surprises of their own, such as NIO abandoning its plan to build a factory in Shanghai to make its own EVs, and Tesla delaying the debut of new models on countless occasions over the past decade. If investors think that Nikola is going from concept to full-bore production at the flip of a switch, they’re in for a big surprise. Expect Nikola to lose a substantial amount of money over the next few years. 
Image source: Getty Images.
Aurora Cannabis
Millennial-favorite marijuana stockAurora Cannabis(NYSE:ACB) is another one of those head-scratcher investments. While marijuana stocks have pretty much all performed poorly since the end of the first quarter of 2019, Aurora has been especially awful, with its share price down around 90% over the trailing 16-month period.
At one time, Aurora was expected to lead the world in cannabis output, and it had access to two dozen markets outside of Canada. This suggested that it would use economies-of-scale to produce very low-cost, high-quality weed, and be able to export a significant amount of this marijuana to medical marijuana-legal foreign markets. Unfortunately, regulatory-based supply concerns have led to bottlenecks in Canada, and very few overseas markets are accepting cannabis imports. As a result, Aurora has shuttered five production facilities, halted construction on two others, and sold a 1-million-square-foot greenhouse.
But the real disaster here is the company’s balance sheet. Aurora Cannabis continues to dilute the heck out of its shareholders with at-the-market offerings and all-share acquisitions. It’s also lugging around goodwill that accounts for more than half of its total assets. My expectation is that Aurora Cannabis will write down more than half of its total assets.
Image source: American Airlines.
American Airlines
Robinhood investors have also been obsessed with brand-name stocks as COVID-19 rebound candidates. Perhaps none fits this thesis more than American Airlines Group(NASDAQ:AAL). Before the stock market fell off a cliff in late February, approximately 14,000 Robinhood accounts owned American Airlines. Today this figure is above 659,000 accounts.
Although American Airlines was able to secure bailout funds from the federal government tied to the coronavirus pandemic, there’s little argument that it’s the worst-of-breed among major airlines. As of its most recent quarterly filing, it had close to $3.6 billion in cash and cash equivalents, but was sporting an unsightly $34.1 billion in total debt. Mind you, this doesn’t include a $3.5 billion bond offering dangled in late June that bore a 12% — yes, 12% — interest rate. With borrowing rates near record lows, this rate alone tells you everything you need to know about the risk tied to American Airlines’ business model. 
It’s also unclear when, exactly, things will return to normal for the airlines. It could take years before capacity returns to levels seen in 2019. That’s worrisome for shareholders, because American was required to halt share buybacks and its dividend as conditions of receiving financial assistance tied to COVID-19. There’s really no longer a viable reason to own any major U.S. airline stock, let alone the one with the worst balance sheet.
Image source: Getty Images.
Callon Petroleum
Robinhood investors have also been infatuated with trying to catch falling knives in the oil and gas industry. The highly volatile driller Callon Petroleum(NYSE:CPE) had fewer than 4,000 accounts holding its stock in early March. Today, more than 110,000 Robinhood members are onboard for the ride. The problem is, that ride may end up breaking hearts and emptying wallets.
In July 2019, Callon announced that it would acquire Carrizo Oil & Gas in an all-stock deal for a $3.2 billion price tag, more than half of which was tied to the assumption of Carrizo’s debt. The deal was hailed by both companies as transformational, with the combined entity having increased scale in the Permian Basin and Eagle Ford Shale in Texas, improved cash flow potential, and cost synergies. Then COVID-19 hit, and this bullet-point list of benefits has been thrown out the window. 
As of its most recent quarter, Callon Petroleum had nearly $3.3 billion in debt (most of which is due in 2023 or later) and only $14.8 million in cash and cash equivalents. If Q1 2020 was any indication, simply servicing the company’s debt is going to cost more than $80 million a year. And, to make matters worse, Callon’s creditor’s reduced its available line from $2 billion to $1.7 billion, with $1.35 billion already drawn down. Callon looks to be inching its way toward an eventual bankruptcy reorganization, and that’ll likely wipe out common stockholders. 
Image source: Getty Images.
Hertz
Finally — and maybe the most baffling investment of the group — Robinhood investors have piled into rental car giant Hertz(NYSE:HTZ). As a reminder, Hertz declared Chapter 11 bankruptcy on May 22, but has seen the number of Robinhood accounts holding its stock explode from around 44,000 to almost 148,000 since the announcement.
Though there has been some speculation that Hertz would issue common stock during its bankruptcy proceedings (a move that the company has now recanted), and that an outside party may be interested in acquiring some or all of its assets, the fact remains that Hertz is bankrupt. While it’ll be able to restructure its debt and remain in business during these proceedings, it’s very likely that shareholders aren’t going to receive anything when Hertz remerges from bankruptcy. In other words, some 148,000 Robinhood investors could see their Hertz investment go to $0.
And if you don’t believe me, take it straight from the horse’s mouth. Before Hertz shelved its share offering, a filing from the company with the Securities and Exchange Commission had this to say:
We also expect our stockholders’ equity to decrease as we use cash on hand to support our operations in bankruptcy. Consequently, there is a significant risk that the holders of our common stock, including purchasers in this offering, will receive no recovery under the Chapter 11 Cases and that our common stock will be worthless.
Avoid Hertz, and every other stock on this list, like the plague.

Click here to view the original article.

Continue Reading

Trending