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- Masterworks | January 23rd, 2024
Masterworks | January 23rd, 2024
[ good morning ]
Here’s everything you need to know today
Welcome to the real meat of earnings season. We’ve got a wide range of the market reporting on their Q4 2023 numbers—and today the results are pretty mixed.
While United managed to crush revenue expectations—they’re going to be dealing with the fallout from the Boeing 737 Max 9 groundings for a while now.
At the same time—Netflix is making huge moves in the live sports world ahead of their Q4 report this evening.
And big names like GE and 3M are showing that there are still a lot of complications keeping our economy from fully recovering.
So, let’s dive into a pretty intense news day and find the most impactful headlines that you need to focus on to stay ahead.
Markets at a Glance
*Market data based on standard trading hours and calculated close to close
[ aerospace ]
United Faces Turbulence From Boeing
Even the Max 9 groundings can’t diminish a stellar quarter
BREAKING NEWS
United Airlines smashed earnings expectations for Q4 and the stock is surging in early trading. However, there may be storm clouds on the horizon as all the fallout from the Boeing Max 9 groundings takes shape. Let’s explore what’s happening:
WHAT HAPPENED
United managed to crush predictions by generating an adjusted $2 EPS from $13.63 billion in revenue. Revenue popped thanks to strong growth from premium tickets while earnings stayed strong due to solid fuel cost controls. For the full year of 2023, United just barely reached their expected EPS range, hitting $10.05.
WITH FRIENDS LIKE THESE
However, United tempered investor expectations by projecting a much wider loss in Q1 of 2024 thanks to the recent grounding of Boeing 737 Max 9 models. United operates with 79 of these models—so this grounding is honestly a huge hit to their flight capacity. United is bracing for a loss on Q1 revenue anywhere from $0.35 to $0.85 per share. Analysts were projecting a $0.23 per share loss—so these numbers are pretty steep. Fuel costs are compounding the pressure United faces to start the year.
WHY IT MATTERS
This is another bad blow to Boeing as well—showing how their aircraft can wreak extended havoc on their customers’ operations and ability to drive profit. At the same time, the market still loves United stock thanks to the great adjusted earnings beat. Investors boosted United by over 6% in early trading as folks bet on these headwinds being short-lived.
A Banksy got everyday investors 32% returns?
Mm-hmm, sure. So, what’s the catch?
We know it may sound too good to be true. But thousands of investors are already smiling all the way to the bank. All thanks to the fine-art investing platform Masterworks.
These results aren’t cherry-picking. This is the whole bushel. Masterworks has built a record of 20 exits, realizing returns of +16.0%, +21.5%, +35.0% and more.
But art? Really? Ok skeptics, here are the numbers. Contemporary art prices:
Outpaced the S&P 500 by 136% over the last 27 years.
Had the lowest correlation to equities of any asset class.
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Sectors at a Glance
| Sector | Day | Month | Year |
|---|---|---|---|
| Communications | 0.20% | 3.11% | 41.07% |
| Consumer Disc. | -0.44% | -3.20% | 24.95% |
| Consumer Stap. | -0.49% | 0.89% | -1.46% |
| Energy | 0.37% | -6.10% | -11.71% |
| Financials | 0.47% | 1.98% | 7.72% |
| Health Care | 0.44% | 3.82% | 4.54% |
| Industrials | 0.77% | 0.09% | 14.12% |
| Materials | 0.29% | -3.78% | -0.24% |
| Real Estate | 0.47% | -2.26% | -0.94% |
| Technology | 0.44% | 4.62% | 52.46% |
| Utilities | -0.51% | -2.96% | -12.06% |
*Market data based on standard trading hours and calculated close to close
[ world economy ]
Chinese Firms Surge On Stimulus Reports
New considerations could inject as much as $280 billion into the struggling Chinese economy
BREAKING NEWS
According to a new report out of Bloomberg, the Chinese government is gearing up to initiate a massive stimulus of their economy after reopening efforts stalled out. Tech stocks are ripping, let’s break it down:
WHAT HAPPENED
Initial plans for this stimulus would rely on 2 trillion Yuan (around $280 billion) that’s held in offshore accounts to boost spending and get growth back on track. It would also utilize another 300 billion Yuan of local funds within China.
While these are just reports for now—even a hint at this level of stimulus has been enough to send shares of major Chinese companies soaring in foreign markets.
GOVERNMENT INTERFERENCE
Tech firms are pushing even higher thanks to an additional report that the government arm focused on gaming has removed language describing new draconian gaming regulations from their website. Last month, the Chinese government kneecapped tech stocks like Tencent and NetEase with extremely harsh new curbs on gaming revenue.
There were already scattered mentions that these rules would be softened—but scrubbing them entirely from the internet is an even better sign.
WHY IT MATTERS
While this seems great at a glance, this isn’t the first time Chinese stocks have popped in response to stimulus rumors. Also, given how much the Chinese economy is struggling to restart—a confirmed stimulus may not be enough to fully re-engage the economic engine over there. In the short term, it’s a great sign that the government is moving quickly to try new methods of stimulus, but most investors should still be super cautious about investing in Chinese firms. Despite that, big tech firms like Alibaba popped in the single digits as trading in Western markets kicked off.
[ streaming ]
Netflix Bodyslams into Live Sports with WWE Deal
Netflix is finally making some real live sports moves.
BREAKING NEWS
In a seismic shift for the streaming wars, Netflix has agreed to pay $5 billion for streaming rights to the WWE Raw program.
WHAT HAPPENED
WWE Raw is the flagship broadcast of World Wrestling Entertainment, one of the biggest live sports properties in the world. Netflix and TKO group have agreed on a ten-year deal that will bring Raw to Netflix.
While services like Apple TV+ and Peacock have experimented with live sports, Netflix has been pretty silent on trying to own their own segment of the live sports world. This Raw deal is great for both parties, as WWE Raw has a huge, loyal fanbase while Netflix brings a much broader potential audience to the deal.
OLD MEDIA THROWS IN THE TOWEL
The biggest loser here is NBC Universal since Raw was the only thing really keeping their USA network alive. Raw brought in 17.5 million viewers a year for USA, and that audience is going to be tough to replace.
WHY IT MATTERS
Live sports is the last bastion of engagement for most content providers. The top 20 most-watched programs any given year are almost 100% NFL games. WWE has been a unique property in live sports with a lot of growth potential, especially since the WWE has joined forces with the UFC in the last year. Now, Netflix has a huge stake in this media property and incentives to build even more buzz around Raw in the same way they did for Formula 1. This is generating a lot of positive pressure for Netflix ahead of their earnings call this evening. Shares of the WWE parent company TKO surged over 20% in early trading, while Netflix shares were more flat as investors waited for tonight’s earnings presentation.
Extra Moby Snacks
Verizon stock also popped this morning as the telecom giant beat revenue expectations by bringing in $35.1 billion in Q4. This beat was largely driven by a massive boost in subscribers. Analysts expected around 200,000 new Verizon additions when the company actually drove over 449,000 postpaid net additions to their business. Nice.
GE stock is recovering after their earnings report briefly disappointed investors. While they beat expectations, their 2024 guidance is a little weaker than folks expected. Basically, with GE Aerospace and Vernova finalizing their split this year, the market was hoping for more projected efficiencies than we’re seeing right now. The initial selloff in premarket trading was brutal, but now GE stock is more flat than down.