What You Need to Know for January 23rd

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Welcome back!

Earnings season is kicking off, so let’s get into the shakers and movers.

Earnings Corner 📜 

Trending Up 📈 

Netflix (NFLX) reported earnings that beat estimates, with revenue of $10.25B up 16% y/y (vs. $10.11B expected) and EPS of $4.27 (vs. $4.20 expected). Paid subscription growth blew out expectations, with 19MM new subscribers boosting the total to 301.6MM (vs. 290.9MM expected). Mgmt. attributed the gains to its stellar Q4 content offering, which included the Paul v. Tyson fight, Squid Game season 2, and Christmas day NFL programming. Netflix raised its 2025 FY revenue outlook to $43.5B-$44.5B (vs. $43B-$44B previously), as the company looks forward to subscription hikes and further high-profile releases. The stock was up 9.7% at Wednesday’s close

Procter & Gamble (PG) reported earnings that beat estimates. Revenue grew 2%, despite some setbacks, including Hurricane Milton, the dockworkers’ strike, and a 2-week outage of P&G’s transportation management system. Chinese sales were down just 3%, a major improvement from last quarter’s 15% decline. Mgmt. reiterated its FY 2025 forecast of 2%-4% revenue growth and EPS of $6.91 to $7.05. The stock was up 1.9% at Wednesday’s close

3M (MMM) reported earnings that beat estimates, as mgmt. stressed their new commitment to R&D to drive growth and innovation. The stock was up 5.1% at Wednesday’s close

Charles Schwab (SCHW) reported earnings that beat estimates, as the firm saw strong net interest income and an 11% surge in trading activity following November’s election. The stock was up 4.3% at Wednesday’s close

Discover (DFS) reported earnings that beat estimates, on elevated revenue, strong loan origination, and reduced provisions for credit losses. The stock was up 4.4% at Wednesday’s close

Capital One (COF) reported earnings that beat estimates, as elevated consumer spending boosted net interest income. The stock was up 4% at Wednesday’s close

Ally Financial (ALLY) reported earnings that beat estimates, with mgmt. noting that it “took significant action” to cut costs and announcing the sale of the firm’s credit card segment. The stock was up 3.8% at Wednesday’s close

 GE Vernova (GEV) reported earnings that beat estimates. While the wind segment experienced challenges, strong overall performance helped drive the stock up 2.7% at Wednesday’s close

Abbott Laboratories (ABT) reported earnings that missed estimates, but strong FY projections helped drive the stock up 1% at Wednesday’s close

Trending Down 📉 

United Airlines (UAL) reported earnings that beat estimates. Revenue was up 8% y/y, as loyalty program, basic economy class, international, and domestic sales all saw strong growth. Profits soared 64%, as United made progress in targeting high-spending travelers typically cultivated by Delta. Mgmt. was optimistic about the impact of the Trump administration on their business. The stock was down 2.3% at Wednesday’s close

Electronic Arts (EA) slashed full-year guidance due to underperforming games, particularly in FC25. EA expects to report $2.2B in quarterly bookings, well below their previous guide of $2.4-$2.55B. Shares are down -11.5% afterhours

Johnson & Johnson (JNJ) reported earnings that beat estimates. Yet, reported revenue growth of 4.3% was dampened by JNJ’s ongoing talc powder lawsuit. The Texas case begins hearings Feb. 18 and will last about a month. Mgmt. expects negative impact from FX over the coming year, as well as a slowdown in demand from Chinese procedures. The stock was down 1.9% at Wednesday’s close

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Today’s Headlines 🍿 

• Trump tariffs are ratcheting up. The President announced a plan to impose tariffs on February on Canada (25%), Mexico (25%), and China (10%). Together the three countries account for 1/3 of U.S. trade. Surprisingly, Jamie Dimon is a fan of this move..

• Meet Stargate: The $500B investment project spearheaded by Softbank’s Masa Son, Oracle’s Larry Ellison, and OpenAI’s Sam Altman will be investing in building the U.S.’s AI infrastructure. The $500B will be spent over 4 years, with OpenAI and Softbank each contributing $19B and each holding 40% stakes.

  • Elon Musk quickly challenged Stargate, saying they don’t have the $500B to make this investment. Sam Altman replied to Elon’s claims, but this is the first example of Elon going against one of President Trump’s initiatives

• Wildfires are still ablaze in California. Part of the key I-5 highway has been shut as flames have spread to 8,00 acres. Authorities are warning of new threats to residents’ lives as the winds are also picking up

• Apple shares have been under pressure following Jefferies downgrading the stock. Weakness in China and a lack of user interest in Apple’s “Apple intelligence” AI solution are key drivers

• Meta is pushing deeper into glasses. Meta is planning Oakley-branded glasses for athletes. Additionally, Meta is now an investor in Databricks, serving as a strategic investor in the latest $62B round.

• Williams Sonoma is already mitigating tariffs. At Davos, CEO Laura Alber shared that during the first Trump term, the company reduced China exposure by 50% and is currently expanding manufacturing capacity outside the country (including in the U.S.)

• Barron Trump is entering the family business, starting a luxury real estate business, with a focus on purchasing golf

• Gold rush: Trading just $35 below its all time high, bullion jumped 2% this week as investors are wary that the next Administration’s tax, immigration, and tariff policies could jumpstart inflation

• Snow slams the South: As much as 10 inches of snow has been falling in Louisiana and Florida, the worst snowstorm in 130 years is overwhelming the South. Freezing temperatures and precipitation are disrupting flights and power grids

• David Einhorn wrote in an investor letter that "we have reached the ‘Fartcoin’ stage of the cycle. The hedge fund manager noted, "Other than trading and speculation, it serves no other obvious purpose and fulfills no need that is not served elsewhere."

• Goldman Sachs announced 17 key promotions this month. The next generation of leaders includes 14 men and 3 women

• Mr. Beast’s biggest act yet? The YouTuber is reportedly in talks to join a group of buyers of TikTok, which has a little over two months to sell itself before facing a ban

• Brookfield is looking into acquiring Divvy Homes for $950mm. Originally valued at $2B by Andreessen Horowitz, the rent-to-own company has floundered in a higher interest and mortgage rate environment

• New tech from Korea: Samsung unveiled the S25, powered by Google’s Gemini AI models, hoping to compete with Apple in the U.S. and western markets. Both tech giants have bet big on AI after they struggled to boost phone sales in 2024

• Federal DEI workers have been placed on leave. The Trump White House issued a series of executive orders on Tuesday focused on ending programs designed to expand opportunities for women, LGBTQ+ individuals, and minorities

• CNN will lay off hundreds of employees as its post-inauguration transformation begins. CNN has 3,500 employees, but fewer people are watching cable and broadcast news

• Polestar’s new partners: The carmaker, backed by China-based Geely, is looking for new suppliers after the US government banned Chinese software in new high tech car. The company, spun out of Volvo, is looking into building out new manufacturing facilities in America

• IPO Headwinds: Venture Global, an LNG Exporter, is cutting prices on their shares by 40% to a $65B valuation. The move is a blow to deal runners at Goldman, JPM, and BofA, as well as to broader IPO market activity

  • Still, banks are ready for the show: A top JPM executive explained that financial services firms are in “go-mode,” prepping for a new wave of dealmaking under a lighter regulatory regime

• PWP’s dirty laundry is out in the open: Perella Weinberg founders Joe Perella and Peter Weinberg are testifying this week in a case surrounding allegations that the founder of the firm’s restructuring arm, Michael Cramer, who was fired a decade ago, had been plotting to start a rival firm

• Cocoa loco: Driven by extreme weather events and disease in the Ivory Coast and Ghana (where 2/3 of cocoa is grown), cocoa prices have 3x in the past year. Now, buyers are attempting to renegotiate pricing, delaying orders, and passing costs onto consumers

M&A Transactions💭 

Bora Biologics, operator of a contract development and manufacturing organization platform, was acquired for $137.56M by Tanvex Biopharma (TAI: 6541).

Oosto, developer of a visual recognition platform, was acquired for $125.0M by Metropolis. EV/Revenue was 6.25x.

Edge Autonomy, manufacturer of unmanned aircraft vehicles, has reached a definitive agreement to be acquired for $925.0M by Redwire (NYS: RDW). EV/EBITDA was 12.85x and EV/Revenue was 4.17x.

BrightSpring Health Services (NAS: BTSG), a home and community-based healthcare services platform, has entered into a definitive agreement to be acquired for $835.0M by Sevita. EV/EBITDA was 2.18x and EV/Revenue was 0.08x. Guggenheim Investments and Leerink Partners advised on the sale.

Blackstone entered into a definitive agreement to acquire The Kimpton Hotel Eventi of DLJ Real Estate Capital for $175.0M.

Form Technologies, provider of component contract manufacturing, was acquired for $1.05B by Ares Management, The D. E. Shaw Group, Onex and Tipple Industries.

Kantar Group is selling its Kantar Media Unit to H.I.G. Capital for $1.0B.

Private Placement Transactions 💭 

InventChip Technology, developer of silicon carbide chips, raised $136.68M of Series C venture funding led by China Development Bank Capital.

Odds of the Day 🍒 

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Noteworthy Chart 🧭

Meme Cleanser 😆 

Finance Merch Referrals ☕️ 

Until next time!

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Obviously, none of this constitutes financial or investment advice.