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UBS Reported A Surprise Hit From Archegos Implosion

UBS Reported A Surprise Hit From Archegos Implosion

Plus, Crocs delivered blockbuster earnings results, Beyond Meat will launch the latest version of its measles burger patties in grocery stores next week, and Spotify launched its podcast subscription service.

Stocks were mixed at the open on Tuesday with the Dow dropping 49 points, or 0.1%. The S&P 500 traded just above the flatline, while the Nasdaq rose 0.2% before falling lower.

UBS reported a surprise hit from the implosion of Archegos Capital Management of $861 million. The loss overshadowed a better-than-expected profit, with strong performance in the key wealth management business. UBS CEO Ralph Hamers said the bank was “very disappointed” by the hit. “We are taking it very seriously,” Hamers said. “We have started a very detailed review of the different prime brokers’ relationships that we have, the family offices’ relationship that we have as well, the risk management processes that we have, in order to really get the lessons learned and make sure we implement them so that going forward it doesn’t happen again.”

Tesla’s record earnings were met with a shrug. The electric vehicle maker posted record net income of $438 million, reporting earnings per share of $0.93—versus estimates for EPS of $0.79—on revenue of $10.39 billion, up 74% year-over-year. Despite the big headline numbers, shares are down nearly 4% this morning. “It’s all good, but there’s not a lot of news and it wasn’t a blowout,” said Loup Ventures’ Gene Munster. “Everything happened that people thought would happen.” Tesla’s bitcoin holdings added $101 million in income in the quarter after the company sold around 10% of its holdings in the cryptocurrency. “We do believe long-term in the value of bitcoin,” Tesla CFO Zachary Kirkhorn said on an earnings call. “It is our intent to hold what we have long-term and continue to accumulate bitcoin from transactions from our customers as they purchase vehicles.” 

In other earnings news, Crocs shares are up nearly 19% this morning after the shoe maker delivered better-than-expected results. For its first quarter, Crocs reported earnings per share of $1.49 on revenue of $460.1 million, compared to estimates for earnings of $0.89 per share on revenue of $415 million. CEO Andrew Rees said of the quarter in press release, “Demand for the Crocs brand is stronger than ever with expected 2021 revenue growth of 40% to 50%. In the first quarter we achieved record revenues and profitability, with growth in all regions and all channels. We have raised full year guidance as we continue to see consumer demand for our product accelerate globally.” UPS also blew past expectations, reporting earnings of $2.77 per share from $22.7 billion in sales, while analysts were expecting earnings of $1.72 per share from $20.6 billion in sales. “I want to thank all UPSers for delivering what matters, including COVID-19 vaccines,” said CEO Carol Tomé in the company’s news release. “We continued to execute our strategy under the better not bigger framework, which enabled us to win the best opportunities in the market and drove record financial results.”

Beyond Meat shares are up nearly 1% today after the company said it will launch the latest version of its meat-free burger patties in grocery stores next week. The company’s chief growth officer, Chuck Muth, said that improving its meat alternatives helps the company hold onto its market share, even as more competitors offer meatless burgers. “As one of the first movers in the category, we do have a prominent position,” Muth said. “We’re only going to stay there if we continue to innovate, and we will always stay focused on our innovation and improving our products.” Beyond Meat is also reportedly telling customers that it is preparing to launch a chicken alternative this summer, which would mark a major expansion for its product lineup of beef, burgers, and sausages.

And Spotify launched podcast subscriptions this morning, giving creators more range in how they choose to make money. The move comes just a week after Apple announced its own subscription podcast offering. Spotify will not be taking a subscription revenue cut for the next two years in an effort to draw podcast creators to its platform, and will begin charging just 5% starting in 2023, undercutting Apple, which takes a 30% cut in the first year and a 15% cut beginning in the second year.

Stocks We’re Watching

Quotient Technology Inc (NYSE: QUOT): Quotient announced this morning that Matthew Krepsik has joined on as its new Chief Analytics Officer, leading the company’s data, analytics, and measurement practice. “Quotient has long been on my radar as a company that is leading innovation in the retail space through technologies and solutions that help retailers and advertisers deliver more valuable interactions with consumers,” Krepsik said in a press release. “Quotient is well-positioned to continue to lead in this exciting and fast-growing space, and I’m thrilled to be able to bring my background in data, products and analytics to this exceptional team.”

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