March 2nd - The Week Ahead

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The Week Ahead Of Us 🔍

Welcome back!

The stock market may be closed, but Crypto is 24/7 and we just had a MASSIVE rally. Let’s get into why in a moment.

Here’s a look at earnings this week. We’re in the Retail part of earnings season:

• Monday: Sphere Entertainment

• Tuesday: Target, Box, Crowdstrike, Flutter, On Holding, Best Buy, Ross Stores, AutoZone

• Wednesday: Marvell, MongoDB, Abercrombie & Fitch, Grindr, Victoria’s Secret, Zscaler, Campbells, Foot Locker

• Thursday: Costco, Kroger, Broadcom, Venture Global, Macy’s BJ’s, Gap, HPE, JD.com 

Here’s a look at economic data this week.

• Monday: Feb. PMI (previous was 51.6), Feb. ISM Manufacturing (50.6% est.)

• Wednesday: Feb. Employment (143k est.)

• Thursday: Initial Jobless claims (243k est.), U.S. trade deficit (-$100B est.)

• Friday: Feb. Jobs (160k est.), Feb. unemployment (4.1% est.), hourly wages y/y growth (+4.1% est.)

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Earnings Corner 📜 

Trending Up 📈 

Warner Bros. Discovery (WBD) reported earnings that missed estimates, with revenue of $10.03B down 2.5% y/y (vs. $10.16B expected), and EPS of -$0.20 (vs. $0.01 expected). WBD reported that its TV networks, which includes CNN, did not see the expected ratings bump during the presidential election and revenues fell 5.4% y/y. However, streaming was a bright spot, as Max added 6.4MM global subscribers, for a total of 116.9MM. Adjusted EBITDA for the segment was up to $409MM from a loss of $55MM in Q4 2023. Mgmt. projected adjusted EBITDA from streaming of $1.3B in 2025 and sees a clear path to 150MM subscribers by the end of 2026. The stock was up 4.2%

Rocket Companies (RKT) reported earnings that beat estimates. The firm closed 29% more mortgages than it did a year ago. The stock was up 9.1%

Monster Beverage (MNST) reported mixed results, with record revenues but EPS missing estimates. The stock was up 5.3%

Trending Down 📉 

Dell (DELL) reported mixed results, with revenue of only $23.9B (vs. $24.55B expected) but EPS of $2.68 (vs. $2.53 expected). Dell has seen surging demand for its AI server products, recording $10B in sales in FY 2025, and expecting $15B in the current year. Mgmt.’s Q1 outlook was short of analysts’ expectations, but FY 2026 projections were in line with estimates. The stock was down 4.7%

HP (HPQ) reported earnings that beat estimates, with revenue of $13.5B up 2.4% y/y (vs. $13.35B expected) and EPS of $0.74 (vs. $0.74 expected). However, mgmt.’s Q2 outlook disappointed analysts, projecting EPS of $0.75-$0.85 due to tariffs on Chinese goods and costs of mitigation. By the end of 2025, Dell expects that 90% of its products will be made outside of China. The stock was down 6.8%

Duolingo (DUOL) reported mixed results, with revenue up but earnings disappointing investors. The firm added 900K paying subscribers for a total of 9.26MM (vs. 9.5MM expected) and saw 116.7MM active monthly users (vs. 116.5 expected). The stock was down 17%

Today’s Headlines 🍿 

• The Trump Administration is planning a U.S. Crypto Reserve: President Trump gave us a first look at what a Crypto reserve may look like, naming Bitcoin, Ethereum, Ripple, Solana, and Cardano as among the coins that will be in the reserve. Naturally, these coins, and broader crypto shot up higher, ending a recent drawdown in Crypto.

• U.S. spending falls on cold temperatures. The Commerce Department announced that consumer spending decreased by 0.2% in January, the most in four years. Though attributed to unseasonable weather, the drop may reflect broader anxieties about the economy

• The Atlanta Fed is now expecting a decline in GDP. The agency’s GDPNOW model lowered its forecast for the first quarter, now projecting an annualized 1.5% contraction. Weaker growth is partially due to a larger than expected trade deficit

• The Knock-On Effects of DOGE Cuts: The Acting GSA Administrator said that agencies haven’t take enough action to terminate consulting contracts. This could spell significant trouble for several top consulting firms such as Deloitte, Accenture, General Dynamics, Booz Allen, Leidos, Guidehouse, and IBM. Agencies need to provide a list of the top 10 firms they plan to eliminate working with by March 7th

• Tariffs go live on Tuesday, March 4th: A 25% tariff on imports from Mexico and Canada, and an additional 10% tariff on Chinese goods are coming on Tuesday

• Citi accidentally credited a client with $81 Trillion. Yes, you read that right. The bank meant to send just $280, raising alarm bells again after more than three years of glitches at Jane Frasers’ firm

• Meta is launching a standalone Meta AI app. Positioning his firm’s AI capabilities as a direct competitor to ChatGPT and Gemini, Mark Zuckerberg hopes to roll out the app in Q2 along with a paid subscription tier for the firm’s flagship model

• Apollo and State Street launched their Private Credit ETF, but the SEC has questions. This week regulators expressed concern in a letter to the firms, asking for more details about the fund’s liquidity, name, and ability to comply with existing valuation regulations

• Apollo is leading $35B of financing for Meta’s ambitious datacenter plans. KKR may also be part of the investor group. Although alternative asset managers have backed tech giants before, the size of Zuck’s plans makes this partnership stand out

• Diameter Capital has likened AI to the Shale Boom, noting how it could hurt Private Credit. The analogy refers to some tech companies raising debt to benefit from the AI boom that they won’t be able to refinance or repay

• Bank of America’s High-Yield Credit Strategy head Oleg Melentyev is leaving the firm. Both Bofa and Melentyev declined to comment

• The SEC has ruled that meme coins are not securities. Likening the coins to “collectibles,” the agency noted that they “typically have limited or no use or functionality,” and do not fall under SEC regulatory oversight

• MSFT problems resolved. A global outage left tens of thousands of users unable to access email and other apps, primarily in New York, Chicago, and LA

• Rents in Austin have been tumbling. Now, rents are down 22% from their 2023 peak. Austin has been aggressively building new housing supply, drawing a stark contrast to most of the country. In under-supplied housing markets, consumers are still dealing with high sticker prices despite the cooled economic environment

• Skype is shutting down after 14 years. Microsoft previously acquired Skype for $8.5B. Skype most notably missed out entirely on the initial remote work boom in 2020. In May the platform will become obsolete, as Satya Nadella doubles down on Teams

• Andrew Cuomo, New York’s disgraced former governor, has launched a campaign for NYC mayor. Cuomo resigned after 11 women came forward accusing him of sexual harassment. In a 17-minute video, he told New Yorkers he was here to "save our city”

• Katy Perry is joining Lauren Sanchez in space. Jeff Bezos’ Blue Origin is sending the duo up in its New Shepard rocket as part of an all-women flight crew, the first since 1963

M&A Transactions💭 

Westbrick Energy, provider of energy exploration services, was acquired for $1.0B by Vermilion Energy (TSE: VET). EV/Revenue was 33.44x. RBC Capital Markets and Scotiabank advised on the sale.

TradePMR, provider of technology, brokerage and custodial services, was acquired for $300.0M by Robinhood (NAS: HOOD). Lazard advised on the sale.

T’way Air (KRX: 091810), an airline service provider, reached a definitive agreement to be acquired for $172.92M by Sono Hospitality. EV/EBITDA was 2.77x and EV/Revenue was 6.97x.

Horizon Quantum, developer of computer programming tools, has reached a definitive agreement to be acquired for $500.0M by dMY Squared Technology Group.

Greenscreens.ai, developer of an AI-based software, reached a definitive agreement to be acquired for $160.0M by Triumph Financial Services.

De Tomaso Automobili, manufacturer of sports and luxury vehicles, reached a definitive agreement to be acquired for $103.0M by ESGL Holdings (NAS: ESGL).

SEI Family Office Services, developer of investment management and reporting software, has entered into a definitive agreement to be acquired for $120.0M by Aquiline.

MANTL, developer of cloud-based enterprise software, has reached a definitive agreement to be acquired for $400.0M by Alkami (NAS: ALKT).

ID Quantique, developer of quantum-based cybersecurity systems, has reached a definitive agreement to be acquired for $250.0M by IonQ (NYS: IONQ).

Heartland National Bank, provider of banking services, has reached a definitive agreement to be acquired for $110.0M by Horizon Bank (NAS: HBNC). Hovde Group advised on the sale.

HashiCorp, engaged in solving infrastructure challenges, was acquired for $6.399B by International Business Machines (NYS: IBM). EV/Revenue was 9.77x. Qatalyst Partners.

GoZero Group, operator of zero-emission fleet, was acquired for $400.0M by United H2.

Barba Stathis, producer of frozen food, was acquired for $135.36M by Ideal-Group (ATH: INTEK).

Arbonia Climate, manufacturer of indoor climate systems, was acquired for $772.58M by Midea Group (SHE: 000333). Jefferies, and UBS Group advised on the sale.

Micromine, developer of modular data management, has reached a definitive agreement to be acquired for $822.1M by The Weir Group (LON: WEIR).

Connexa, operator of mobile tower business, was acquired for $519.7M by Caisse de depot et placement du Quebec.

BANGL, operator of natural gas liquids, has reached a definitive agreement to be acquired for $715.0M by MPLX (NYS: MPLX). Barclays advised on the sale.

AstroBank, operator of financial services, has reached a definitive agreement to be acquired for $213.45M by Alpha Services and Holdings (ATH: ALPHA).

Private Placement Transactions💭 

Enveda, developer of a drug analysis platform, raised $150.0M of Series C venture funding led by FPV Ventures and Kinnevik at a pre-money valuation of $490.0M.

Eikon Therapeutics, operator of a drug discover and development platform, raised $350.7M Series D venture funding led by Foresite Capital, Lux Capital, and The Column Group.

Odds of the Day 🍒 

Kalshi traders are trading on whether Bitcoin gets to $150k.

New Traders on Kalshi receive a $20 bonus of trading credit when depositing $100+ with the code “HYH”.

Noteworthy Chart 🧭

Meme Cleanser 😆 

Finance Merch Referrals ☕️ 

Until next time!

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