It’s possible that I shall make an ass of myself. But in that case one can always get out of it with a little dialectic. I have, of course, so worded my proposition as to be right either way (K.Marx, Letter to F.Engels on the Indian Mutiny)
Sunday, September 18, 2022
Palantir Technologies Inc.'s top owners are
individual investors with 52% stake,
while33% is held by institutions
Simply Wall St
Every investor in Palantir Technologies Inc. (NYSE:PLTR) should be aware of the most powerful shareholder groups. And the group that holds the biggest piece of the pie are individual investors with 52% ownership. That is, the group stands to benefit the most if the stock rises (or lose the most if there is a downturn).
Institutions, on the other hand, account for 33% of the company's stockholders. Institutions often own shares in more established companies, while it's not unusual to see insiders own a fair bit of smaller companies.
In the chart below, we zoom in on the different ownership groups of Palantir Technologies.
What Does The Institutional Ownership Tell Us About Palantir Technologies?
Many institutions measure their performance against an index that approximates the local market. So they usually pay more attention to companies that are included in major indices.
We can see that Palantir Technologies does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at Palantir Technologies' earnings history below. Of course, the future is what really matters.
We note that hedge funds don't have a meaningful investment in Palantir Technologies. The Vanguard Group, Inc. is currently the largest shareholder, with 7.7% of shares outstanding. Meanwhile, the second and third largest shareholders, hold 7.1% and 4.4%, of the shares outstanding, respectively. Peter Thiel, who is the second-largest shareholder, also happens to hold the title of Top Key Executive. Additionally, the company's CEO Alexander Karp directly holds 2.6% of the total shares outstanding.
Our studies suggest that the top 25 shareholders collectively control less than half of the company's shares, meaning that the company's shares are widely disseminated and there is no dominant shareholder.
Researching institutional ownership is a good way to gauge and filter a stock's expected performance. The same can be achieved by studying analyst sentiments. Quite a few analysts cover the stock, so you could look into forecast growth quite easily.
Insider Ownership Of Palantir Technologies
While the precise definition of an insider can be subjective, almost everyone considers board members to be insiders. The company management answer to the board and the latter should represent the interests of shareholders. Notably, sometimes top-level managers are on the board themselves.
Most consider insider ownership a positive because it can indicate the board is well aligned with other shareholders. However, on some occasions too much power is concentrated within this group.
Our most recent data indicates that insiders own a reasonable proportion of Palantir Technologies Inc.. Insiders own US$1.7b worth of shares in the US$16b company. That's quite meaningful. It is good to see this level of investment. You can check here to see if those insiders have been buying recently.
General Public Ownership
The general public, mostly comprising of individual investors, collectively holds 52% of Palantir Technologies shares. With this amount of ownership, retail investors can collectively play a role in decisions that affect shareholder returns, such as dividend policies and the appointment of directors. They can also exercise the power to vote on acquisitions or mergers that may not improve profitability.
Public Company Ownership
It appears to us that public companies own 4.0% of Palantir Technologies. This may be a strategic interest and the two companies may have related business interests. It could be that they have de-merged. This holding is probably worth investigating further.
NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.
Joe Biden Has Called for Social Security Benefit Cuts 2 Times By Sean Williams – Sep 17, 2022 - Motley Fool
KEY POINTS
The vast majority of Americans are, or will be, reliant on Social Security income during their golden years.
On two previous occasions, Biden has offered suggestions to strengthen Social Security that would ultimately reduce benefits.
However, Biden's current four-point proposal to "fix" Social Security doesn't cut monthly payouts.
Tough choices will need to be made to tackle Social Security's estimated $20.4 trillion cash shortfall over the next 75 years -- and President Biden knows it.
For most Americans, Social Security is, or will become, a vital source of income during retirement. According to surveys conducted by national pollster Gallup, nearly 90% of current retirees lean on their Social Security income to make ends meet. Additionally, 84% of nonretirees expect to rely on Social Security as a "major" or "minor" source of income during their golden years.
But even though it's been our nation's most successful retirement program for more than eight decades, Social Security finds itself in some pretty serious financial trouble. According to the 2022 Social Security Board of Trustees Report, the program is facing a jaw-dropping $20.4 trillion cash shortfall over the next 75 years. While this doesn't mean Social Security is insolvent -- the program, thankfully, can't go bankrupt as long as Americans continue working -- it does portend the growing likelihood of steep benefit cuts on the not-too-distant horizon if nothing changes.
Social Security needs to be "fixed" so it can thrive for many more generations, and that means making the hard decision to collect more revenue, cut benefits, or enact some combination of the two.
While most lawmakers have shied away from directly calling for Social Security benefits to be cut, President Joe Biden has previously done so on two separate occasions.
1. Biden leaves the door open to raise the full retirement age
Speaking in a very broad sense, Biden's political party (Democrat) prefers to raise additional revenue for Social Security by increasing the payroll tax paid by high-earning workers. But every once in a while, we see prominent lawmakers break with their party on key issues, which is exactly what happened when Joe Biden was a presidential candidate for the 2008 ticket.
In September 2007, Biden released a plan that was, among other things, designed to shore up Social Security. Keep in mind that lawmakers have known since the 1985 Board of Trustees Report that Social Security wasn't on track to bring in enough revenue over the next 75 years to cover its projected payouts. Although this plan called for an increase to the maximum taxable earnings cap on high earners, Biden was also open to discussing bipartisan options, such as raising the full retirement age.
The full retirement age is the age at which a beneficiary becomes eligible to receive 100% of their retired worker benefit. For roughly six decades after the first Social Security check went out in 1940, the full retirement age stood pat at 65. But following two rounds of gradual increases, everyone born in 1960 and later has a full retirement age of 67.
Raising the full retirement age, which is a core solution touted by Republicans, would require eligible beneficiaries to wait longer to receive their full monthly payout. Regardless of whether retired workers choose to take their payout early -- therefore accepting a permanently reduced monthly benefit -- or wait until full retirement age, increasing the full retirement age would lower the lifetime benefits paid to a retired worker.
2. Joe Biden calls for means-testing
The second time President Biden called for Social Security benefit cuts happened more recently.
In May 2018, nearly a full year before declaring his candidacy for president, Biden advocated for benefits means-testing while speaking at a Brookings Institution event. Said Biden:
Paul Ryan [the former Republican speaker of the house] was correct when he did the tax code. What's the first thing he decided we had to go after? Social Security and Medicare. Now, we need to do something about Social Security and Medicare. That's the only way you can find room to pay for it. Now, I don't know a whole lot of people in the top one-tenth of 1% or top 1% [who] are relying on Social Security when they retire.
While Biden's remarks primarily emphasize the need to progressively increase payroll taxation on high earners, they also alluded to the idea of means-testing for benefits.
Means-testing would involve partially or fully removing Social Security payouts to eligible recipients based on predefined annual income thresholds. In other words, it would ensure that individuals and couples who don't need Social Security benefits to live comfortably would receive a reduced payout, or perhaps none at all. Even though this would only affect a small percentage of beneficiaries, it's nevertheless a call for benefits to be cut. President Biden's four-point Social Security plan is a long shot to pass
The thing about our elected officials is that their views on policy tend to change over time. That's the case with President Biden, whose four-point plan to strengthen Social Security -- this plan was laid out during his campaign -- makes no mention of reducing or cutting Social Security benefits.
Increase payroll taxation on high earners: In 2022, all earned income between $0.01 and $147,000 is subject to Social Security's 12.4% payroll tax. However, well over $1 trillion in wages and salary above $147,000 is exempted from this tax. Biden has proposed creating a doughnut hole between the current payroll tax cap and $400,000 where earned income would remain exempt. Meanwhile, the payroll tax would be reinstated on all wages and salary above $400,000 to generate more revenue for Social Security.
Boost the special minimum benefit: Biden advocates increasing the minimum monthly payout to lifetime low-earners to 125% of the federal poverty level. If this proposal were law in 2022, it would mean a special minimum benefit of $1,416/month instead of $951 for a lifetime low-earner with 30 years of coverage.
Lift benefits for long-lived Social Security recipients: Biden's plan calls for the primary insurance amount (PIA) to be increased by 1% annually from ages 78 through 82, which would equate to a 5% aggregate lift to the PIA. This proposed benefit increase is designed to help aged beneficiaries cover higher expenses as they age, such as medical transportation costs.
Switch the inflationary tether to the CPI-E from CPI-W:
Lastly, Biden has called for the Consumer Price Index for the Elderly (CPI-E) to become Social Security's new inflationary measure. Though the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) has been the program's inflationary tether since 1975, it doesn't do a particularly good job of tracking the expenditures that matter most to seniors.
While these proposals have the potential to strengthen Social Security, Biden's plan doesn't have anywhere near the number of votes (60) that would be needed to amend Social Security in the Senate.
The conundrum of Social Security reform is that both of America's political parties have a working solution, which means neither is willing to cede an inch and find common ground with their opposition. Without cooperation on Capitol Hill and from the Oval Office, Social Security appears destined to spiral toward what could be a sizable benefit cut in as little as 12 years. Social Security: 4 Big Changes Biden Wants to Make for Retirees
KEY POINTS Social Security is an important source of income for millions of retirees.
While none of these proposals are law just yet, they could have a significant impact on seniors. Major changes could be coming to Social Security.
It's getting more difficult for seniors to live on Social Security, especially as inflation continues to surge. For years, lawmakers have been debating various proposals to improve Social Security for retirees. While none of these laws have been implemented yet, President Biden has big plans for Social Security. Here are four of the most significant changes he's proposing.
1. Find a better way to measure inflation
Most years, seniors will receive a cost-of-living adjustment (COLA) that's designed to help Social Security keep up with inflation. Historically, though, COLAs have done a poor job of that. Since 2000, benefits have lost around 40% of their buying power, according to the Senior Citizens League.
This is partly because the annual COLA is based on the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). That data examines the spending patterns of workers under the age of 62, which can be vastly different from the spending habits of retirees.
To solve this problem, President Biden and other lawmakers have proposed using the Consumer Price Index for the Elderly (CPI-E) to calculate annual COLAs instead. This metric is more aligned with how seniors actually spend, which could make it easier for benefits to keep up with inflation. 2. Increase taxes for wealthy Americans
Along with inflation struggles, Social Security is also facing a cash flow problem. It's currently paying out more money in benefits than it's receiving in taxes. As a result, benefits could potentially face cuts of up to 20% by 2035.
The only way to avoid cuts is to increase funding to the program. Biden has proposed increasing payroll taxes for those earning more than $400,000 per year.
Currently, income up to $147,000 per year is subject to Social Security taxes. That wouldn't change under Biden's plan. Those earning between $147,000 per year and $400,000 per year would not see a tax increase. But if you're earning more than $400,000 per year, you would need to pay Social Security taxes on that income.
This proposal would increase Social Security's funding significantly and could go a long way toward preventing future cuts. It's also one of the most likely plans to pass in Congress, as around 81% of Americans across both political parties are in favor of it, according to a 2022 survey from the University of Maryland. 3. Boost benefits for older retirees
Another proposal in the works is an increase in benefits for those who are age 80 or older. Not only will this help older adults maintain buying power, but it will also provide a boost for retirees who are running low on savings. While nothing is set in stone, this plan proposes increasing benefits by around 5%.
This is one of Washington's more divisive proposals, as only 53% of Republicans and 56% of Democrats are in favor of it, according to the University of Maryland. But if it were to pass, it could provide much-needed relief for older retirees.
4. Increase the minimum benefit amount
Finally, President Biden has proposed increasing the minimum benefit amount from $951 per month to $1,341 per month for those who have worked at least 30 years. This plan would increase Social Security's cash shortage by around 7%, according to the University of Maryland. For the millions of seniors who depend on Social Security to make ends meet, though, a few extra hundred dollars per month could go a long way.
None of these plans have passed in Congress just yet. But if they do become law, they could bring major changes to Social Security in the coming years and make retirement more affordable.
OLIGARCHS ORGANIZE PROTEST
Thousands take part in anti-government protest in Moldova
Donor conference for Moldova in Berlin
By Alexander Tanas
CHISINAU (Reuters) -Thousands of protesters denouncing high inflation and fuel prices massed outside Moldova's government on Sunday demanding the resignation of pro-Western President Maia Sandu and her government.
It was the largest protest in the small ex-Soviet state since Sandu was elected in a 2020 landslide on pledges to root out corruption. She has since promised to secure membership of the European Union, which has provided large amounts of aid.
The crowd in the city's main square appeared to number about 20,000 -- though opposition organisers said the number was twice as large and police estimated 6,500 were in attendance.
"Moldova is now in clinical death, to which the current authorities have brought it," said Dinu Turcanu, a politician from the opposition party of Ilan Shor, an exiled businessman convicted of fraud in connection with a $1 billion bank scandal.
The chief suspect in that fraud, business magnate Vlad Plahotniuc, is also outside Moldova, his whereabouts unknown.
Moldova buys its gas from Russian gas giant Gazprom under a contract drawn up last year. The price fluctuates monthly, calculated from the spot price for gas and oil depending on the season. Spot prices have soared this year.
Sandwiched between Ukraine and EU member Romania, Moldova's territory was, in turns, part of the Russian empire, "greater Romania" and the Soviet Union in the 19th and 20th centuries.
Its 3.5 million are enduring serious economic difficulties associated with energy prices, the cost of which has increased by 29% in September after surging almost 50% in August.
Since Sandu took power, Moldova's prosecutor general has been removed and its former president, who was close to Moscow, placed under house arrest.
Protesters accused Sandu of failing to negotiate a more reasonable gas price with Moscow. Many set up a tent camp outside government headquarters and vowed to remain in place until Sandu resigns and calls early elections.
The country has slashed its growth estimate to zero for 2022, hurt by record high inflation at 34.3% and interest rates at 21.5%.
Prime Minister Natalia Gavrilita said this month that Moldova's economy was expected to post moderate growth of 1.5% next year.
Analyst Vitalie Andrievschi dismissed suggestions by some commentators that Sandu resembled late Soviet leader Mikhail Gorbachev, a liberal praised in the West but unpopular at home.
"Sandu's biggest shortcoming is being unable to communicate with ordinary Moldovans," he told Reuters. "Sandu and her government are unable to assume their share of responsibility and punish those clearly unable to do their jobs."
(Reporting by Alexander Tanas, writing by Pavel Polityuk and Ron Popeski; editing by David Evans and Diane Craft)
Loop Energy says new hydrogen fuel cell more efficient than diesel engine
By Nick Carey
Sept 18 (Reuters) - Hydrogen fuel cell maker Loop Energy said on Sunday that its latest cell system can deliver better fuel economy than a diesel engine at current price levels.
The Burnaby, British Columbia-based company said that - based on a pan-European diesel cost of $1.91 per litre on Sept. 5 and $10 per kg of hydrogen - a truck could travel just over 111 miles (179 km) on $100 worth of fuel using its new S1200 hydrogen fuel cell system versus a little over 109 miles for an equivalent diesel truck.
As the auto industry makes the shift to zero-emission electric vehicles (EVs), big freight truck makers like Daimler Truck and Volvo are investing heavily in hydrogen fuel cells to haul freight long distances because batteries weigh too much to make electric trucks viable.
Hydrogen fuel cells run hydrogen through a catalyst that produces energy and heat to power a small battery that drives the truck - the only emission from these cells is water.
Hydrogen fuel cells have faced two challenges for broad adoption: they have so far been less efficient than diesel and fuelling infrastructure in Europe is virtually non-existent.
Nyland said the new cell system essentially addresses the first of those challenges.
"This brings the future forward," Loop Energy Chief Executive Ben Nyland told Reuters. "This product delivers the economics that are needed for adoption today."
Nyland said that Loop Energy aims to provide the fuel cell system to startup truck makers and as part of hydrogen powertrains provided to big truck makers by major suppliers.
The company's biggest shareholder is U.S. engine maker Cummins, which holds a more than 20% stake in Loop Energy. (Reporting By Nick Carey; editing by Jonathan Oatis)
An Adderall shortage is forcing some people with ADHD to reduce their work responsibilities, report says
Ryan Hogg
Ritalin and Adderall are both equally effective in treating ADHD.
Some retailers including Walgreens are facing problems getting enough Adderall, Bloomberg reported.
The shortage has forced some people with ADHD to pare back their duties at work.
One told BuzzFeed he was scared of turning into a "garbage monster" and getting fired.
Some people with ADHD are being forced to take a step back at work amid a national shortage of Adderall.
The drug used to treat people living with ADHD, or Attention Deficit Hyperactivity Disorder, is in short supply, with more than 60% of pharmacies struggling to obtain stock, according to a survey by the National Community Pharmacists Association.
"There are supply chain challenges with this drug," Walgreens spokesperson Rebekah Pajak told Bloomberg.
The Food and Drug Administration first reported a shortage of Adderall in September 2019, which was expected to last until May 2022, per multiple outlets. However, ongoing supply chain challenges have left those who use it struggling to cope with daily tasks.
"It has been kind of a nightmare," 36-year-old mother-of-two Camber Clemence told The Wall Street Journal. "I can't get enough done. I feel like I need to take way more breaks than I needed to take before, and I've had to shift how I work."
The shortage has been driven by both supply chain issues and rising demand. According to healthcare data company IQVIA, the number of Adderall prescriptions rose from 3 million a month in September 2019 to 3.5 million in December 2020, per LA Magazine.
Teva Pharmaceuticals, the biggest supplier of Adderall in the US, told Bloomberg in August that the rise of telehealth companies providing online mental health support during the pandemic paved the way for more ADHD diagnoses.
The company said a shortage could now last into the fall.
As Walgreens and CVS battle shortages, more people are finding their lives affected. Anthony Anderson told Bloomberg he too was struggling to maintain his productivity at work.
"I even spaced out when I'm trying to have a serious conversation with this girl to console her, but I spaced out because I'm not able to focus," he told Bloomberg. "This is a huge issue for me."
Another person called Kyle told BuzzFeed he was concerned about how his work performance would be affected without Adderall.
"I'm constantly nervous that I won't be able to get my medicine, and I'll get fired and not be able to find another job and turn back into a gross depressed garbage monster who hates himself for not being able to do his laundry," he told Buzzfeed. "I'll just be stressed and upset all the time."
COPS OUT OF CONTROL
North Dakota family is 'devastated' and fundraising for a lawyer after they say police killed their pet raccoon that was sought in a local rabies scare
Pocharapon Neammanee
Sun, September 18, 2022 Baby Raccoon in a tree, with its family near by
.@jaycubzuh Twitter/Skype/Facebook / Getty Images
Erin Christensen was arrested after she brought her pet Raccoon into a bar, according to The Bismark Tribune.
Authorities raided Christensen's home and killed the Raccoon on the spot, collecting his body to test for diseases, she said.
The family set up a fundraiser to pay for Christensen's legal fees and donate to a wildlife rehabilitation center.
The family of a woman in North Dakota who evaded police is raising money after she said local police shot and killed their pet raccoon in relation to a rabies scare.
Erin Christensen, 38, and her family is raising money on GoFundMe to cover legal fees after she was accused of causing a rabies scare at a local bar in Maddock, North Dakota when she brought in her family's pet raccoon, she wrote on the fundraiser.
The family had been nursing the raccoon, named Rocky, back to health for three months, according to The Bismark Tribune.
According to the fundraiser, Christensen found the animal on the side of the road in June.
"Rocky was found approximately 3 months ago in the evening, he was lonely, scared, hungry, we decided not to engage him because maybe his mom would come to help him, the next day he was still in the same spot, so we took him in," the family wrote on the fundraiser page.
"We were working very hard to rehabilitate him back into the wild we have bottle fed him, cared for him, he was still being bottle fed when he left and was still learning how to forage food we would place around trees and obstacles," the family added.
On September 6, police said that Christensen brought Rocky into a local bar in Maddock during happy hour, according to the Tribune.
Cindy Smith, who was bartending at the time, said that there were about ten people in the bar, and Rocky never bit anyone in the five minutes he was inside the bar.
"I saw she was carrying something, and I asked her what it was, and she showed me, and I said, 'You've got to get it out of here,'" Smith told the Tribune. "I had no idea what she was thinking."
According to the Tribune, the incident prompted the state Health and Human Services Department to issue a warning about potential rabies exposure.
"Rocky never left my arms when I visited the Maddock Bar, so who was at risk of rabies or other diseases?" Christensen stated on GoFundMe.
Christensen was arrested on Wednesday after the Benson County Sheriff's Office and the North Dakota Game and Fish Department executed a search warrant, according to the Tribune.
Scott Winkelman, the Division Chief of Game and Fish Enforcement, told the Tribune that Christensen tried to evade authorities.
The Benson County Sheriff's Office did not immediately return Insider's request for comment on Sunday.
According to the family's statement on GoFundMe, the authorities promised them that they would quarantine Rocky and let him go as long as he did not show any signs of rabies.
According to the Tribune, authorities raided Christensen's home in search of Rocky and killed the Raccoon on the spot, taking his carcass to test for diseases. "The police brought a battering ram to break down the front door of the house where Rocky was being housed at the time of his death," Christensen said on the GoFundMe. "The amount of manpower used to find and kill Rocky, with simultaneous raids on three different residences, is impressive. A shock-and-awe campaign."
Rocky tested negative for rabies, according to the statement on GoFundMe.
Christensen was arrested on charges of giving false information to law enforcement and tampering with evidence. She was also given a Game and Fish violation of unlawfully possessing a furbearer, according to the Tribune.
The charges are misdemeanors that together would carry a maximum punishment of several years in jail and fines totaling $7,500, the outlet reported. Christensen is currently free on a $1,500 bond, the Tribune said.
"The impact to my family is that my children are confused and traumatized because of the excessive force that was used during the acquisition of this animal," Christensen stated on GoFundMe. "This erodes the trust that they have in local law enforcement agencies. My children are devastated and inconsolable."
The family is raising money on GoFundMe to not only pay for Christensen's legal fees but also to donate a majority of the money to wildlife rehabilitation centers in memory of Rocky.
"Rocky was just a few months old, he was the sweetest, most loving little boy ever who everyone loved, there was never a dull moment being around him, he was so dang smart and always happy," she said on the GoFundMe.
FedEx to close stores, put off hiring as
demand slumps
FOX13 Memphis News Staff
FedEx said Thursday it is shuttering storefronts and corporate offices while putting off new hires in a belt-tightening drive brought on by drop-off in its global package delivery business.
The company based in Memphis, Tennessee, warned it will likely miss Wall Street’s profit target for its fiscal first quarter that ended Aug. 31. And it said it expects business conditions to further weaken in the current quarter amid weaker global volume.
Its stock fell more than 16% in after-hours trading following the announcement.
“Global volumes declined as macroeconomic trends significantly worsened later in the quarter, both internationally and in the U.S.,” FedEx CEO Raj Subramaniam said in a statement. “We are swiftly addressing these headwinds, but given the speed at which conditions shifted, first-quarter results are below our expectations.”
The company’s FedEx Express business was particularly hurt by challenges in Europe and weaker economic trends in Asia, which led to a roughly $500 million revenue shortfall for the segment. FedEx Ground revenue, meanwhile, came in about $300 million below the company’s forecasts.
High operating expenses were also a drag on the company’s results, FedEx said.
In response, it said it will cut costs by closing over 90 FedEx Office locations and five corporate offices, deferring new hires and operating fewer flights.
The company scrapped its forecast for its earnings in its current fiscal year that it had issued less than three months ago.
For the three months ended Aug. 31, FedEx now projects adjusted earnings per share of $3.44 and $23.2 billion in revenue. That’s below analysts’ consensus forecast of $5.14 adjusted earnings per share and $23.6 billion in revenue, according to FactSet.
Subramaniam noted that he remains confident FedEx will achieve its fiscal year 2025 financial targets.
For the current quarter, which ends in November, FedEx expects revenue to range between $23.5 billion and $24 billion, and adjusted earnings per share of at least $2.75. Wall Street analysts had expected adjusted earnings per share of $5.48 and $24.86 billion in revenue, according to FactSet.
The company still plans to buy back $1.5 billion of its common stock in fiscal 2023. It expects to buy back $1 billion of its common stock during the second quarter.
FedEx earnings miss 'the weakest set of results' Deutsche Bank has seen in 20 years
FedEx (FDX) gave investors a stark announcement on how business conditions continue to weaken on Thursday, withdrawing its full-year guidance while CEO Raj Subramaniam warned that global volumes “significantly worsened” and are likely to decline even further.
Wall Street noticed: FedEx stock fell more than 21% on Friday following the pre-earnings announcement. Shares are now down more than 37% year to date.
"FedEx preannounced the weakest set of results we've seen relative to expectations in our ~20 years of analyzing companies," Deutsche Bank analysts wrote in a note to clients.
In a statement, the logistics company said it now expects fiscal first-quarter earnings, excluding some items, to come in at $3.44 per share, 30% below the $5.10 consensus estimate compiled by Bloomberg. The company announced it will cut flights, trim labor hours, and cancel network capacity projects to cushion the expected blow of reduced demand for the next several quarters.
The company's air cargo market has shifted as inflationary pressures, elevated inventory levels in the U.S., the war in Ukraine, and COVID-19 lockdowns in China present ongoing challenges for the market. Air cargo volumes in August fell 5% year-over-year, according to a news release from Clive Data Services last week.
“Based on FedEx's pre-announcement, the biggest hit to margin came in their air express unit, not the ground unit," equity research analyst Jordan Alliger said on the Goldman Sachs "Making Logic of Logistics" webinar on Friday, adding: "That would imply that there could be some downshift — not necessarily absolute drops — in demand, maybe in total."
For FedEx Express, the company’s time-definite delivery segment that uses cargo aircraft, revenue came in $500 million short of its revenue target.
"The company did say that revenue in this segment was $500 million short vs. its forecast; but the decremental margins associated with this should not be 100%," Deutsche Bank added. "This implies a concerning inability to respond with cost mitigation, which we believe is more indicative of operating execution than macro forces. And this is not the first time we've observed weak execution from FedEx, but the magnitude of the numbers in today's release was simply staggering. We simply can't explain it, even after our discussions with the company this evening."
An all-electric FedEx delivery truck is seen in San Diego, California September 24, 2013. REUTERS/Mike Blake
Morgan Stanley research analyst Ravi Shanker said he was expecting a miss but "not of this magnitude." He added that the miss appears to be revenue driven and that this is not likely to be transitory. Although many of FedEx's issues are specific to the company, Shanker believes this is the start of the post-pandemic unwind and cost pressures will add another leg to the risk.
"We believe a discount is merited given the decelerating core and fuel pricing support in Ground and Express, in addition to increasing risks of a recession," JPMorgan’s Brian Ossenbeck wrote in a note. "The stock could trade at a higher multiple if management can deliver on the FY25 financial targets outlined in the 2022 Investor Day although the suspension of FY23 guidance is a step in the wrong direction."
Ossenbeck downgraded shares to Neutral.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
FedEx’s warning is a ‘black mark’
on CEO Raj Subramaniam, strategist says
Argus Director of Portfolio Strategy John Eade joins Yahoo Finance Live to discuss FedEx's dire profit warning and how it affects the CEO's reputation as chief executive.
Video Transcript
BRIAN SOZZI: All right, let's continue to follow this fallout over at FedEx. And let's bring in John Eade over at Argus. John, good to see you. As always, look, this has been this is a disaster quarter. Disaster pre-announcement from FedEx. Total reset of guidance. What should investors be doing here?
JOHN EADE: Well, yeah, Brian, it hurts on the guidance, for sure. But this is also a black mark on the brand new CEO, right? He came on a quarter or so ago replacing the legendary Fred Smith. There was an activist investor, you know, rattling sabers. So the company is gonna be focused more on shareholder returns, less on capital expenditures.
They did a big boost to the dividend. They announced a big share buyback, changes to the board, changes to the compensation policies. All of that really excited investors. And now, here we are a quarter later and it's the Asian economy, its troubles in Europe, it's missing expectations. So it's really the same old, same old for FedEx. And I think that's a big part of the disappointment this morning.
BRAD SMITH: What should some of the customers and business partners expect as FedEx is announcing some of these cost initiatives? You know, is that going to be factored into the prices that customers, and those business partners I was mentioning, are paying? Because that would lead to me, if I'm seeing a reduction in flight frequencies, temporarily parking aircraft, things of that nature that are going to help FedEx, that's also going to be at the detriment to me, the consumer, at the end of the day, too.
JOHN EADE: Absolutely, Brad. If you look at even last quarter, their revenue was up 8% year-over-year. That sounds great. But volume was down 11%. So they're only getting that on higher prices. And now, I think they've said in the announcement this morning that volume trends had weakened at the end of this latest quarter and remain weak going into the current quarter.
So if they're gonna have any growth at all, it's gonna be on higher prices. And as they focus also on that bottom line and cut back on some of the service levels and the capital expenditures, customers are gonna be paying more and maybe getting a little bit less high quality service for the next couple of quarters. That's a tough message.
JULIE HYMAN: John, it may be a tough message. Maybe also still having a buy rating on this is a tough message? I don't know. I mean, you know, you guys are still overweight on this stock, right? You still have a buy on this stock. Are you optimistic that tough message is gonna be accepted by FedEx clients.
JOHN EADE: Well, yeah, good point. And we still do have a buy on it. You know, the news came out last night. We'll be reviewing everything for sure.
But one message that also came out from the company, and this is that they set these five-year goals in June with the new CEO. Five year goals of high teens compound annual earnings growth, 20% shareholder returns every year. And the company said, it remains committed to those goals.
It also is focusing on less capital expenditures. And it's gonna be accelerating its share buybacks. So they didn't make any change to their strategic goals. And if they're gonna be able to hit them, you know, you've got a very low share price to be buying into that program right now. So those are some of the things we're going to be thinking about, you know, as we review our estimates and rating.
BRIAN SOZZI: John, I think a lot of investors right now in our platform are reading the FedEx news as bad for UPS. Is that a fair comparison? Or should these two companies not be put in the same boat anymore because FedEx is not operating that well and maybe UPS is doing a little bit better?
But I do think UPS is in a better situation right now, operationally, than FedEx. Although, the FedEx stock might be a better value here, certainly based on the price action this morning.
BRIAN SOZZI: John Eade, Director of Portfolio Strategy at Argus, always good to see you. Have a great weekend.
