The Investing Week Ahead: 4/25/22
Twitter might actually sell to Musk, Big Tech attempts to keep the market afloat, Australia adopts crypto ETFs, and Apple Car rumors are running wild.
Good morning, and prepare for fireworks.
This Elon Musk character sure doesn’t give up. It was announced early this morning that Twitter could reach a deal with the Tesla CEO as soon as today to sell him the company.
“The financing included more than $25 billion in debt coming from nearly every global blue-chip investment bank aside from the two advising Twitter. The remainder was $21 billion in equity Mr. Musk would provide himself, likely by selling existing stakes in his other businesses such as Tesla. The speed at which the financing came together and the market selloff in recent days—which makes the all-cash offer look relatively more attractive—likely contributed to Twitter’s greater willingness to entertain Mr. Musk’s proposal.”
— Wall Street Journal
While the company had priced its IPO at $26/share, the first trade that regular investors could take part in came in was ~$45. Today, Twitter shares are changing hands at ~$51 in early-market trading, up +11% from where Elon Musk first announced the potential takeover on April 14.
Twitter (TWTR) reports earnings Thursday morning, so there’s speculation that the board members foresee a disappointing outlook and are becoming increasingly inclined to sell the company to sell to the world’s richest man.
If you want to read more about what’s going on with Twitter, be sure to visit the Public app, go to Twitter, and scroll down for trending posts. It’s a great way to see viewpoints on the potential acquisition through the lens of fellow retail investors.
The Investing Week Ahead - Too Long, Didn’t Read:
⚡ If you’re ever going to pay attention to a week of earnings reports — this is the one.
⚡ The first Bitcoin and Ethereum Spot ETFs are set to launch in Australia.
⚡ Fed rate hike expectations are getting as high as +75 basis points per meeting.
Key Earnings Announcements:
The craziest earnings week of the year.
Monday (4/25): Activision Blizzard, Coca-Cola, Philips, Whirlpool
Tuesday (4/26): 3M, Alphabet, Chipotle, GE, GM, JetBlue, Microsoft, Pepsi, QuantumScape, Raytheon Technologies, Valero, Visa, UPS
Wednesday (4/27): Boeing, Ford, Humana, Meta, PayPal, Pinterest, Qualcomm, ServiceNow, Spotify, Teladoc Health, T-Mobile
Thursday (4/28): Amazon, Apple, Caterpillar, Domino’s Pizza, Gilead, Intel, Mastercard, McDonald’s, Merck, Nokia, Robinhood, Roku, Southwest Airlines, Twitter
Friday (4/29): Abbvie, AstraZeneca, Chevron, Colgate-Palmolive, ExxonMobil, Honeywell
What we’re watching:
Tech Giants Lead the Way — Reports from Amazon, Apple, Google, Microsoft, Intel, Spotify, and more will give a true gauge on the success of the spring earnings season. The market needs high-quality guidance out of these companies to keep from falling further — something that Bank of America is betting won’t happen.
Apple Car Rumors — Apple’s earnings will feature important takeaways on supply chain perseverance, its annual capital return, and recent product launch successes. What’s crazy is that a recent patent filing from Apple sought protection for a "vehicle that has a plurality of cameras, a network interface, a memory, and one or more computer processors." Listen for remarks about this during their earnings call.
Roku’s Outlook — Analysts expect Roku to deliver year-over-year declines in earnings on higher revenues. The company makes up 1% of my overall portfolio, so I’ll be looking closely at the company’s forward-looking guidance. A lot of this pessimism is coming from the downfall Netflix is experiencing, despite having an entirely different business model compared to Roku.
Burrito Blowout — As of Dec. 31, 2021 — Chipotle had 2,950 locations. During its most recent earnings call, the Mexican restaurant chain shocked investors when saying that there is enough room for 7,000 Chipotle locations in North America. Despite Covid impacts and labor shortages, the company added +215 restaurants in 2021 — an impressive feat. We’ll be watching if the company remains confident that they can add new locations at a rate of +8-10% per year.
A few things to keep an eye on other than earnings reports.
Monday (4/25): The National Association of Broadcasters (NAB) Show continues (world's largest annual conference for broadcast and entertainment professionals)
Tuesday (4/26): Appian World 2022 Event, Callaway Golf Investor Day
Wednesday (4/27): First spot Bitcoin & spot Ethereum ETFs launch in Australia
Thursday (4/28): Activision Blizzard shareholders vote on Microsoft’s buyout offer
What we’re watching:
Crypto Down Under — Curious to see if the crypto world sees any immediate impact from new ETFs launching in Australia on the CBOE Exchange. As you can see in the image above, Australia hasn’t been known as a major crypto hub over the last few years.
Tee It Up — If you love Topgolf — you should probably be a fan of Callaway (ELY) as well! In March 2021, the company completed its all-stock acquisition of Topgolf — valued at $2.6 billion.
Major Economic Updates:
Many important metrics are expected to be overshadowed by FOMC speculation.
Tuesday (4/26): Consumer Confidence Index, Durable Goods Orders, New Home Sales
Wednesday (4/27): Home Ownership Rate, International Trade Balance, Pending Home Sales
Thursday (4/28): Real GDP (First Estimates)
Friday (4/29): Consumer Spending, PCE Price Index, Personal Income, UMich 5-Year Inflation Expectations
While the economic calendar includes a variety of key updates - the broader focus will remain on Federal Reserve expectations. FOMC members will be in a pre-meeting blackout period from giving speeches, but analysts will continue to speculate.
Bank of America expects the Fed will raise rates by +50 basis points at each the next three meetings and +25 points thereafter until the fed funds rate reaches 3.50% in May of 2023.
Nomura has an even harsher outlook — predicting a +75 basis point hikes at the June and July FOMC meetings after a +50 basis point increase in May.
What specific events are moving stocks the most?
Our friends at LevelFields scrub through thousands of data points each week to determine how events impact stock prices.
They also just created a popular "Added to S&P SmallCap 600" tracker. It's a good example of how watching the events can not only bring some quick one-day gains but also put up-and-coming companies on your watchlist.
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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.