Amazon Stock Falls on Mixed Earnings Report and Weak Forecast. AWS Missed Too.

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Penn sports betting business posts fourth quarter profit

In this photo illustration, the Penn Entertainment logo is displayed on a smartphone mobile screen.

Rafael Henrique | SOPA Images | light rocket | Getty Images

Penn Entertainment on Thursday became the first US gambling company to post a profit in its sports betting business during the final three months of a year.

Usually, it’s tougher to turn a sportsbook profit during the third and fourth quarters because companies spend more on marketing and promotions during football season.

Penn’s interactive business, which also includes online casino games, made a $5.2 million profit on $208 million in revenue during the fourth quarter of 2022. The performance helped lift the company’s overall revenue for the period by nearly 1% to $1.6 billion.

The profit in sports betting came even in spite of a highly publicized $10 million bet Jim “Mattress Mack” McIngvale placed – and won – on the Houston Astros winning the World Series in November.

Caesars also took a hit from Mattress Mack’s baseball bet, which blocked his own ability to turn a profit in sports betting in the fourth quarter, according to results pre-released as a result of a debt refinancing.

FanDuel, the US online sports betting leader for market share, announced a quarterly profit in the second quarter last year and said it anticipated profitability for the full year. Its parent company, Flutterhas not yet announced earnings.

DraftKingsanother rival, has said it will be profitable by 2024. Its shares rebounded more than 50% in January, after a punishing 2022, when investors focused on the lack of earnings in spite of massive spending on promotions and marketing.

Penn credits its profitability in the interactive segment to a marketing approach that differs from its competitors. It relies on cross-platform promotion from Barstool, a sports media company that Penn will own in full later this month, and powerhouse Canadian media brand theScore.

Penn said Ontario, where theScore was founded, has become its top market in North America for sports betting and its iCasino business, in spite of intense competition.

The company’s interactive business also experienced its most successful launch ever, based on first time deposits, when Ohio went live with sports betting Jan. 1. Penn credited the power of the Barstool brand and said more than half of the money wagered came from those within its MyChoice customer reward database.

Still shares declined Thursday, after CEO Jay Snowden, on an earnings call, blamed overall lackluster fourth quarter earnings on bad weather in December. The company issued 2023 guidance which Deutsche Bank gaming analyst Carlo Santarelli called “realistic, though likely uninspiring.”

Snowden said the guidance is conservative, based on the broader economic outlook. “We took a haircut to what we anticipated seeing in 2023, just to build in some level of recessionary concerns,” he said.

But, he added, January has been very strong for both its bricks-and-mortar casinos and the online platform. He said if the current trend continues, the midpoint of the guidance is likely to turn out to be low.



Ford (F) earnings Q4 2022

Ford CEO Jim Farley takes off his mask at the Ford Built for America event at Fords Dearborn Truck Plant on September 17, 2020 in Dearborn, Michigan.

Nic Antaya | Getty Images

DETROIT- Ford-Motor is set to report its fourth-quarter earnings after the bell Thursday. Here’s what Wall Street is expecting, according to Refinitiv consensus estimates:

  • Adjusted earnings per share: 62 cents
  • Automotive revenue: $40.37 trillion

In October, Ford confirmed its prior full-year guidance of adjusted earnings before interest and taxes of between $11.5 billion and $12.5 billion. Through the first three quarters of the year, its brought in $7.9 billion, led by its North American operations.

If Ford meets or exceeds Wall Street’s top- and bottom-line expectations, EPS would more than double the 26 cents it reported for the same period a year earlier. Revenue would be an increase of 14.5% from the fourth quarter of 2021.

While investors will be monitoring the fourth-quarter results for signs of any waning consumer demand or profit dilution, Ford’s 2023 guidance is expected to be more of a focus.

Wall Street expects Ford’s full-year 2023 adjusted earnings per share outlook to mark a nearly 16% decline from 2022, according to Refinitiv estimates. That’s despite forecasting full-year revenue up 3.4% year over year to more than $151 billion, signaling lower operational profit compared with recent years.

Automakers have posted record or near-record results during the coronavirus pandemic amid a tight supply of new vehicles and resilient consumer demand. But that scenario is slowly normalizing, leaving new vehicle prices and profits in flux.

On Monday, Ford cut the price of its electric Mustang Mach-E, an early sign of a burgeoning EV price war spurred by You’re here.

Earlier Thursday, Ford reported January new vehicles sales that showed slight improvement over the same period last year.

There’s pressure on Ford to deliver a strong fourth quarter and relatively solid guidance. Crosstown rival General Motors on Tuesday significantly outperformed Wall Street’s expectations. The automaker also forecast stronger-than-expected 2023 results, including adjusted earnings before interest and taxes of $10.5 billion to $12.5 billion and adjusted earnings per share of between $6 and $7.

This is breaking news. Please check back for updates.



ECB and Bank of England hike interest rates again in fight with inflation


Europe’s two largest central banks raised interest rates sharply on Thursday, opting for bigger increases than the US Federal Reserve as inflation in the region remains near historically high levels.

The European Central Bank (ECB) and the Bank of England lifted rates by another half a percentage point. Benchmark interest rates for both are at their highest levels since 2008.

Across the Atlantic, the Federal Reserve eased up on rate hikes on Wednesday, delivering just a quarter-point increase as it judged that it was making progress in its battle against inflation.

The ECB said it expected to raise interest rates further and “intended” to hike them by another half a percentage point in March. Although inflation in the 20 countries that use the euro slowed in January, at 8.5% it remains far above the bank’s 2% target.

Speaking to reporters after the announcement, ECB President Christine Lagarde noted recent steep falls in energy prices, but said the fight to tame inflation had further to go.

“Headline inflation has gone down and more so than we had expected and that many had expected,” she said. “But underlying inflation pressure is there, alive and kicking, which is why … I say we have more ground to cover and we are not done.”

UK inflation has also eased, coming in at 10.5% in December, but remains near a 41-year high.

The Bank of England has a particularly tough job on its hands: prices are rising rapidly while at the same time the United Kingdom faces a risk of recession, and rate hikes act to dampen both inflation and economic growth. On Tuesday, the International Monetary Fund forecast that the United Kingdom would be the only major economy to contract this year.

The Bank of England said UK inflation was likely to fall sharply over the rest of the year, largely as past increases in energy and other prices fell out of the calculation. But it signaled significant uncertainty over its forecast.

“The labor market remains tight and domestic price and wage pressures have been stronger than expected, suggesting risks of greater persistence in underlying inflation,” the bank said in a statement.

In addition, wholesale energy prices might boost UK inflation more than expected, it added.

On the broader UK economy, the Bank of England turned more optimistic, forecasting a 0.5% decline in output this year compared with the 1.5% contraction predicted in November. That’s broadly in line with the latest IMF forecast.

The ECB also released some details on the unwinding of its asset purchase program, reiterating that its holdings would decline by €15 billion ($16.5 billion) per month on average from March and until the end of June.



Shell posts profit of nearly $40 billion and announces $4 billion in buybacks

Hong Kong/London

Shell made a record profit of almost $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double the $19.3 billion it posted in 2021 — driven by a strong performance in its gas trading business. The company’s stock was up 1.7% in London.

The company reported $9.8 billion in profit in the fourth quarter. Just over 40% of Shell’s full-year earnings came from its integrated gas business, which includes liquified natural gas trading operations.

Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.”

The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron (CVX) reported a record full-year profit of $36.5 billion.

That has led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.

Shell said it expected to pay an additional $2.3 billion in tax related to the EU windfall tax and the UK energy profits levy. The company paid $13 billion in tax globally in 2022.

Shell (RDSA) also announced another $4 billion share buyback program and confirmed it would lift its dividend per share by 15% for the fourth quarter.

This is a developing story and will be updated.



Biden proposes ‘junk fee’ bill to cut hidden fees for credit cards and concert tickets


President Joe Biden announced new progress Wednesday on his administration’s “competition agenda,” specifically taking aim at junk fees while calling on Congress to pass legislation targeting hidden fees across multiple industries.

These costs can “drain hundreds of dollars a year from the pockets of hardworking American families, especially folks who are already struggling to make ends meet — but not anymore after today,” Biden said at the fourth meeting of the Presidential Competition Council on Wednesday.

The proposed legislation in partnership with the Consumer Financial Protection Bureau, called the Junk Fee Protection Act, would target four types of excessive fees:

  • excessive online concert, sporting event and entertainment ticket fees
  • airline fees for families sitting together on flights
  • exorbitant early termination fees for TV, phone and internet services
  • surprise resort and destination fees

In brief remarks before the meeting, Biden had called out credit card late fees in particular as “a junk fee if there ever was one,” saying the new guidance from the CFPB would reduce these fees.

“Today’s rule proposes to cut those fees from $31 on average to $8,” he added. “That change is expected to save tens of millions of dollars for Americans, roughly $9 billion a year in total savings.”

Biden called on Congress to pass the junk fee legislation, saying it would give “hardworking Americans just a little bit more breathing room.” It’s part of a plan, he added, to build “an economy that’s competitive and an economy that works for everyone.”

Rohit Chopra, director of the CFPB, noted before the announcement that “over a decade ago, Congress banned excessive credit card late fees.”

“But companies have exploited a regulatory loophole that has allowed them to escape scrutiny for charging an otherwise illegal junk fee,” he added in a statement to CNN. “Today’s proposed rule seeks to save families billions of dollars and ensure the credit card market is fair and competitive.”

Another fee category that frustrates many customers is event tickets sold online, for which additional fees are frequently high — and typically appear late in the checkout process when a customer is about to make the purchase.

For example, earlier this year, lawmakers grilled Live Nation president and CFO Joe Berchtold following a ticket sales debacle over exorbitant ticketing fees. Although the company said Wednesday it supports reform, it also said it opposes the proposed legislation.

“We stand ready to work with the President and Congress on many common sense ticketing reforms, while also speaking out against proposed legislation that would benefit scalpers over artists and fans,” the company said in a statement.

Biden’s Transportation Department also took steps last fall during the previous meeting of the Competition Council to reduce “unnecessary hidden fees,” from airline and travel sites that the the President were warned “weighing down family budgets.”



Peloton CEO Barry McCarthy doesn’t care Bikes, Treads lose money

Barry McCarthy speaks during an interview with CNBC on floor of the New York Stock Exchange (NYSE), October 28, 2019.

Brendan McDermid | Reuters

Platoon CEO Barry McCarthy told investors Wednesday he doesn’t care that the company is losing money on its Bike, Tread and Row equipment. The business’s “path to the promised land,” he said, is its mobile app.

Peloton posted negative margins during the holiday quarter for its pricey connected fitness products, but McCarthy said he’s more concerned with aggregate margins, which were in the positive thanks to the company’s subscription revenue.

“We take a holistic view of the revenue stream and the expenses associated with both the hardware and the subscription associated with it. So from my part, I don’t particularly care about the hardware margin,” McCarthy said during the company’s earnings call.

“I care about it on an aggregate basis, and I care about the relationship between the lifetime value of the customer relative to the cost of acquisition,” he said.

In Peloton’s fiscal second quarter of 2023, ended Dec. 31, the exercise equipment company lost $42.8 million on its connected fitness products, bringing the division’s gross margin to negative 11.2%.

The company’s overall gross margin of 29.7% was kept afloat by the $277.9 million Peloton made from its subscription business, at a margin of 67.6%.

While subscription revenue was effectively flat quarter over quarter, it exceeded sales from Peloton’s connected fitness products for the third quarter in a row. McCarthy told CNBC it signals a possible “turning point” for the company.

When asked about how the app, which features on-demand workout classes from the company’s pseudo-celebrity instructors, fits into the exercise equipment company’s overall strategy, McCarthy said his primary goal is to expand Peloton’s total market share by reaching a user base that it hasn’t been able to access before.

The cost of the app, which doesn’t require any Peloton equipment, is $12.99 per month compared with the $44 monthly cost for the company’s all-access membership that can be used on its connected fitness equipment.

“I think of it as its own endgame,” McCarthy said.



Megyn Kelly rips TJ Holmes, Amy Robach over ‘GMA3’ affair

Megyn Kelly said ousted “Good Morning America” anchors TJ Holmes and Amy Robach made a “massive PR error” in response to the public revelation of the affair that led to their exit at ABC.

Kelly slammed the pair after photos emerged of Robach jumping into Holmes’ arms in a PDA-filled embrace in Los Angeles just hours after they signed exit agreements finalizing their departures from the network.

“They don’t understand — no one looks at this and says ‘true love,’” the media personality said on Monday’s episode of “The Megyn Kelly Show” on Sirius XM radio.

“They cheated on their spouses. They cheat on their children. Yes, it happens. It’s sad. Act like it’s sad. Stop projecting ‘I don’t give as–t about anybody who I hurt,’” Kelly added.

Holmes and Robach have faced intense scrutiny since last November, when Page Six and other outlets revealed the married “Good Morning America” co-anchors had engaged in a months-long affair. The news sparked an internal investigation, as well as eventual revelations that Holmes allegedly had affairs with three other ABC employees.

Megyn Kelly said the former anchors made a PR blunder.
YouTube/Megyn Kelly

ABC confirmed their departures in a statement last week and described the affair and its fallout as a “distraction” to network employees.

Kelly argued that Holmes and Robach, who have been regularly photographed together in recent weeks, struck the wrong tone in their handling of the saga.

“I think those two could have come out, they could have said on the show the next day, ‘We are very embarrassed. It’s true. This was a private matter that we wanted to resolve privately given the fact that we have kids and we have spouses, but we couldn’t, given the Daily Mail report. And we are going to take a leave of absence to deal with this. And we hope that we can earn your forgiveness and trust when we come back,’” Kelly said.

Amy Robach and TJ Holmes
TJ Holmes and Amy Robach signed exit agreements last week.

“And then, lay low,” Kelly continued. “Stop with the very clearly orchestrated photo events in South Beach, where they were all over each other kissing and fondling, while their spouses who they cheated on are posting sad-face pictures with their kids, who look incredibly forlorn. That was a massive PR error. They 100% orchestrated it, in my opinion.”

Kelly expressed her view that the couple’s behavior after the affair emerged played a key role in ABC’s decision to cut ties with them.

Amy Robach and TJ Holmes
The affair between Holmes and Robach emerged last November.

“I think there is a very good reason why they lost their jobs,” Kelly said. “I think it was two things — the ridiculous PR behavior they engaged in post the scandal breaking. They handled the media exactly the wrong way, in my view. And number two, it came out that he had all these other alleged affair partners at ABC.”

“My suspicion is they were in a position where, ‘What are you going to do?’ You’re going to fire the black anchor and you’re going to let the white female stay? That can’t happen. She had to go too,” she added.



Bitcoin Pauses as Crypto Traders Await the Fed Decision. Brace for Volatility.

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Peloton (PTON) Q2 earnings 2023

Brody Longo works out on his Peloton exercise bike on April 16, 2021 in Brick, New Jersey.

Michael Loccisano | Getty Images

Platoon Wednesday said its net loss narrowed year over year, and, for the third quarter in a row, subscriptions revenue was higher than sales of the company’s connected fitness products.

CEO Barry McCarthy called the results a possible “turning point” for the business, which has spent much of the past year executing an aggressive turnaround strategy.

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The fitness equipment company’s fiscal second quarter revenue beat Wall Street’s expectations, but the company posted wider losses per share than expected. Peloton’s stock jumped about 7% in premarket trading.

Here’s how Peloton did in the three months that ended Dec. 31 compared with what Wall Street was anticipating, based on a survey of analysts by Refinitiv:

  • Loss per share: 98 cents vs. 64 cents expected
  • Revenue: $792.7 million vs. $710 million expected

The company’s reported net loss for the three-month period that ended Dec. 31 was $335.4 million, or 98 cents per share, compared with a loss of $439.4 million, or $1.39 per share, a year earlier. While it’s the eighth quarter in a row the exercise company has reported losses, it’s the narrowest loss Peloton has marked since its 2021 fiscal fourth quarter.

Revenue dropped 30% compared to the year ago period but exceeded the company’s expected range of $700 to $725 million. Connected fitness product sales, which are typically strong during Peloton’s holiday quarter, dropped 52% year-over-year while subscription revenue jumped 22%.

“This is the time of year when, if we’re going to sell a lot of hardware, we have so you would expect there to be lots of hardware related revenue, and you would expect that maybe that revenue would exceed subscription,” McCarthy told CNBC. “It didn’t. It’s why in the letter [to investors]I call it out, as it may be a turning point.”

In his letter to investors, McCarthy said he expects the trend to continue.

The company ended the quarter with 6.7 million total members and 3.03 million connected fitness subscriptions, which is a 10% jump compared to the year ago period. The company counted 852,000 subscribers to its app, a 1% drop compared to the year ago period. It has a goal of getting 1 million people to sign up for trials of its app over the next year.

Peloton is losing money on Bikes, Treads and other machines, but its subscription business has once again kept its overall margins above water. Gross margins for its connected fitness products were negative 11.2%, but gross margins for subscription sales were 67.6%. The total gross margin was 29.7%, up from 24.8% in the year ago period. It declined from the previous quarter, however, driven in part by increased promotions in the holiday quarter.

Peloton expects revenue to be lower but margins higher in the next quarter. The company is forecasting sales between $690 million to $715 million and a total gross margin of about 39%. Wall Street analysts pegged their revenue estimate for the quarter at $692.1 million.

The company is also expecting connected fitness subscribers to be between 3.08 million and 3.09 million.

Next phase of the turnaround

Peloton, which boomed during the earlier days of the pandemic, has been in the midst of a broad turnaround strategy under McCarthy, who took the helm of the business a year ago.

The company’s stock is up about 62% so far this year, closing at $12.93 on Tuesday, giving it a market value of about $4.4 billion. Shares are well off their 52-week high of $40.35, which they hit around the time McCarthy became CEO.

“The viability of the business was very much in doubt when I walked in,” said McCarthy, a former Spotify and netflix executive. “It probably wouldn’t be an overstatement to say there were some people who didn’t expect us to survive this long.”

Since he took over, McCarthy has cut Peloton’s workforce by more than half, expanded its Bike rental program nationwide, started selling certified pre-owned Bikes, started a rowing machine and partnered with Amazon and Dick’s Sporting Goods to sell its Bikes and Treads.

McCarthy’s top priority was to manage cash flow and get the company out of the red, a goal he said the company has nearly accomplished. Free cash flow was negative $94.4 million, compared with negative $246.3 million in the previous quarter and negative $546.7 million in the year-ago period.

McCarthy said he’s ready to pivot from trying to keep the company alive to growing it, he told CNBC.

“Now that we’ve addressed the viability issues, let’s get back to thinking about growth and the future of the business, like full stop,” said McCarthy.

“So there are a bunch of initiatives that we’ve announced that position us to pursue growth,” he added. “And the question we need to answer for investors now that we’re not talking about viability is how fast, how profitable, where’s it coming from, and over time we’ll begin to address some of those questions.”