Is That an AI Lab? Nope, Just a Walmart
If we've told you once, we've told you a thousand times: A booming economy and strong consumer sentiment have been great for retailers.
So instead of only telling you about Walmart's (-2.01%) third-quarter financials (which, BTW, featured 3.4% U.S. sales growth and $124.9 billion in revenue), let's talk about how Walmart, the world's largest retailer, is trying to innovate.
There's a major focus on winning customers online. With annual e-commerce sales growth clocking in at 43% in Q3, Walmart looks ready for the prime-time holiday season.
Walmart is set to pass Apple to become the third largest e-commerce retailer by sales this year (behind Amazon and eBay), according to eMarketer.
It'll snag 4% of U.S. e-commerce sales, up from 3.3% last year.
And that takes tech investment. Stores are morphing into tech powerhouses, complete with distribution hubs to speed up deliveries, employees trained to work in tandem with AI/robots, and handy apps to help customers find what they need.
Report four consecutive quarters of sales growth at existing locations?
Boost earnings guidance for the year?
Invest more than $200 million renovating a specific set of stores (called "magnets") with new technology and more varied merchandise?
Expect to hit $1 billion in mobile sales this year?
Apparently. But we're also guessing a 7.2% drop in share price isn't part of the job description.
So why did investors knock Macy's yesterday? Because everything's relative.
Bloomberg's Sarah Halzack points out investors have set a high bar for retailers given a high-flying economy and strong consumer sentiment.
Plus, keep in mind financials are often compared year-over-year. Q3 2017 for Macy's was "grisly." The true test will be how it performs during this holiday season.
Natural gas futures skyrocketed as much as 20% yesterday. Traders are worried about skimpy supply levels (which are at a 15-year seasonal low) heading into what could be a frigid few months.
Of course, new weather forecasts and supply concerns aren't the only factors at play here. Wonky hedge fund strategies also contributed a great deal to the market volatility, according to some analysts.
Still, natural gas prices are up more than 50% this year. And that could mean a higher heating bill this winter (especially if you're in the Northeast, which suffers from Pipeline Deficiency Syndrome).
+ The more you know: A common unit of measurement for natural gas is "mmBtus," or one million British Thermal Units. A Btu is the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.
Uber's Losses Keep Growing
Uber's main refrain from its (self-reported) Q3 earnings? It takes money to make money.
On the top line...the ride-hailing firm raked in $2.95 billion, up 38% annually (though growth is slowing). And gross bookings reached $12.7 billion, up 34% YoY.
UberEats was a standout—the food delivery service earned $2.1 billion in gross bookings, up more than 150% from a year ago.
But on the bottom line...things look a little different. Uber's net loss (on a GAAP basis) for the quarter hit $1.07 billion (it lost $891 million in Q2).
So what's going on? What was in 2010 just a ride-hailing service now does food delivery, bike-sharing, scooter-sharing, autonomous vehicles, "vomit fraud," and more. After all, becoming an all-inclusive "urban mobility platform," as CEO Dara Khosrowshahi likes to call it, is expensive.
Zoom out: Uber is attempting to prove itself in "competitive markets" ahead of a slated 2019 IPO. But these growing losses might make it harder for bankers to back what some expect to be a $120 billion valuation.
PG&E Corp.—California's biggest utility—is on the brink of a crisis in light of the possibility a power failure on one of its transmission lines sparked the deadliest wildfire in US history.
The Camp Fire in Northern California has killed at least 56 people (while more than 130 remain missing) and destroyed a record 7,600 homes and other structures.
So what happened? The cause of the fire hasn't been pinpointed just yet, but authorities are looking into PG&E's equipment as a possible source. It reported an "electric incident" about 15 minutes before the first blaze was reported...and in the same area, too.
PG&E said it's got $3.46 billion of cash on its balance sheet, plus another $1.4 billion in wildfire insurance coverage.
But damages from the fire could climb as high as $15 billion, Citigroup estimated.
Needless to say, if PG&E's equipment problems are to blame for the fire, the cost of the damage would exceed its insurance coverage.
Remember: PG&E already faces up to $17.3 billion in potential liabilities for wildfires from last year, according to JPMorgan.
PG&E stock is down 46% in November, putting it on track for its worst month in at least 46 years. That's including a 21.8% drop yesterday.
And it could get worse. Evercore ISI said, "Every $1 billion of higher exposure to Camp fire liability would impact our [price target for PG&E stock] by a little over $1 per share."
"The utility could be subject to significant liability in excess of insurance coverage," PG&E said.
But keep in mind: California enacted a law earlier this year to help utilities (like PG&E) cover the costs of last year's catastrophic fires. And while that measure doesn't address the handling of 2018 fires...
"We think Sacramento will likely step in to protect the utility and its customers," Citigroup said.