U.S. Movers: Ally Financial, American Airlines, Las Vegas Sands, Netflix, Pool Corp, Tesla

Scott Peters
19 Oct, 2023
New York City

Stocks rebounded in the afternoon and benchmark indexes  scaled higher after investors reviewed rececnt comments from Federal Reserve Chairman Jerome Powell. 

The S&P 500 index increased 0.1% to 4,318.15 and the Nasdaq Composite rose 0.2% to 13,332.71. 

The yield on 2-year Treasury notes increased to 5.21%, 10-year Treasury notes inched higher to 4.94% and 30-year Treasury bonds edged up to 5.02%. 

Tesla  Inc decreased 7.5% to $224.30 after the electric vehicle maker reported a sharp decline in its quarterly profits and weaker margins. 

Revenue in the third quarter increased 9% to $23.4 billion from $21.5 billion and net income attributable to shareholders plunged 44% to $1.9 billion from $3.3 billion and diluted earnings per share dropped to 53 cents from 95 cents a year ago. 

Moreover, free cash flow plunged to $848 million from $3.3 billion as the company continued its investment in Artificial Intelligence based products, autonomous vehicles and its much delayed Cybertruck vehicle. 

Netflix Inc soared 15% to $397.60 after the video streaming platform operator reported sharply higher revenue and earnings growth and added that the company is likely to exceed its annual free cash flow estimate.   

Revenue in the third quarter increased 7.8% to $8.5 billion from $7.9 billion and net income surged to $1.7 billion from $1.4 billion and diluted earnings per share advanced to $3.73 from $3.10 a year ago. 

Global streaming paid members increased by 8.76 million to 247.15 million, an increase of 10.8% from a year ago.

Free cash flow soared to $1.9 billion from $472 million a year earlier. 

The streaming platform estimated revenue in the fourth quarter to jump 11% to $8.7 billion and paid net additions to match the increase in the third quarter. 

Pool Corporation declined 2.3% to $329.03 after the pool  supplies company reported mixed quarterly results. 

Revenue in the third quarter declined  9% to $1.5 billion from $1.6 billion and net income fell 27% to $137.8 million from $190 million and diluted earnings per share fell to $3.51 from $4.78 a year ago. 

The pool supplies wholesaler guided its annual earnings per share in the range between $13.15 and $13.65, compared to pre-pandemic $6.14 per share in 2019. 

American Airlines Group Inc increased 2.8% to $11.67 after the company reported record quarterly revenue but swung to a loss. 

Revenue in the third quarter edged up 0.1% to $13.5 billion and net income swung to a loss of $545 million from a profit of $483 million and diluted earnings per share was ($0.89) compared to 69 cents a year ago. 

The airline is focused on lowering its debt from record  high during the height of  pandemic disruptions and using the rebound in cash flow to pay down its debt. 

American reduced total debt by $1.4 billion in the third quarter  and the company is more than 70% of the way to its goal of reducing total debt by $15 billion by the end of 2025. 

As of Sept. 30, 2023, American had reduced its total debt by approximately $10.9 billion from peak levels in mid-2021. 

The company estimated a fourth quarter adjusted operating margin between 2% and 4% and full-year 2023 margin of 7%. 

Ally Financial Inc declined 1.2% to $25.31 after the automobile loans provider reported weaker-than-expected revenue growth. 

Revenue in the third quarter declined 2% to $1.96 billion from $2.06 billion and net income dropped 1% to $269 million from $272 million and earnings per share was unchanged at 88 cents.

In the vehicle financing business, the core driver of the company's revenue,  net interest margin declined 57 basis points from a year ago to 3.24% and loan loss provision increased by $70 million to $508 million from a year ago. 

In the quarter, the company originated $10.6 billion of auto loans, including $6.9 billion of used retail volume, or 66% of total originations, $2.9 billion of new retail volume, and $0.7 billion of leases. 

Estimated retail auto loans are estimated to yield 10.7% in the quarter, an increase of 193 basis points from a year ago. 

In the quarter the company added  95,000 new retail bank customers, increasing the total to 3 million with a total deposit of $140 billion and 92% of balances are FDIC insured. 

Las Vegas Sands Corp added 3.7% to $46.26 after the casino operator reported a rebound in revenue at its international locations. 

Revenue in the third quarter soared to $2.7 billion from $1.0 billion and swung to a net income of $380 million from a loss of $239 million and diluted earnings per share  rose to 50 cents from ($0.30). 

The company increased its stock repurchase program to $2 billion and extended expiry to 2025 from the current $916 million and announced a quarterly dividend of 20 cents, matching the rate in the previous quarter.