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Stocks - GM Rises in Premarket; Merck Falls on Spin-Off News

Published 05/02/2020, 14:14
Updated 05/02/2020, 14:51
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By Geoffrey Smith

Investing.com -- Stocks in focus in premarket trade on Wednesday, 5th February. Please refresh for updates.

8:50 AM ET: Ford Motor (NYSE:F) stock fell 8.3% after forecasting that this year’s earnings before interest and taxes would fall, without giving a clear explanation why.

JPMorgan (NYSE:JPM) and Royal Bank of Canada both downgraded their price targets for the stock on Wednesday, Reuters reported.

  • 8:41 AM ET: Snap Inc (NYSE:SNAP) stock fell 7.3% to a three-week low after the parent company of social media network Snapchat said its net loss widened and its revenue fell short of Wall Street expectations in the fourth quarter.

  • The results showed the company still struggling to lure advertising dollars away from Google (NASDAQ:GOOGL) and Facebook (NASDAQ:FB), even though daily average users hit 218 million, up some 16% on the year.

    • Walt Disney (NYSE:DIS) stock was up 0.6%, but underperforming the S&P 500 Futures and Nasdaq 100 futures contracts, after the company reported earnings after the bell that contained both good and bad news.

  • The good news was that quarterly earnings per share were ahead of forecasts, while the Disney+ streaming service now has 28.6 million subscribers, up from 10 million at launch in November.

  • The bad news was that Disney expects the closure of its theme parks in Shanghai and Hong Kong, caused by the coronavirus outbreak, to cost it some $175 million in operating profit in the current quarter.

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  • 8:27 AM ET: Spotify (NYSE:SPOT) stock fell 2.8% after the streaming company said it swung to an operating loss in the fourth quarter, despite a better-than-expected 29% rise in premium subscribers, who generate almost all of its revenue.

  • Revenue was some 2% below forecasts, and the company’s guidance for first-quarter revenue at around $1.81 billion was also some 5% below consensus forecasts, reflecting – among other things – some aggressive discounting to gain new subscribers in the face of increasing competition from the likes of Apple (NASDAQ:AAPL).

  • 8:15 AM ET: Merck (NYSE:MRK) stock fell 1.5% after the pharma giant said it will spin off its lower-margin businesses into a new company, allowing it to focus on higher-margin, higher-cost drugs. Pfizer (NYSE:PFE) and GlaxoSmithKline have taken similar steps in recent months.

  • The future Merck will concentrate on oncology, vaccines, hospital and animal health. It expects annual cost savings of $1.5 billion by 2024 and is targeting an operating margin of over 40%.

  • The company’s quarterly earnings were broadly in line with expectations.

  • General Motors (NYSE:GM) stock rose 1.1% after the company said it swung to a net loss of $194 million in the fourth quarter due to a six-week strike that took $2.6 billion of its basic operating profit. Adjusted earnings per share also fell short of expectations at 5 cents rather than the 11c consensus.

  • GM said it expects adjusted EPS of between $5.75 and $6.25, while cash flow will be between $13 billion and $14.5 billion.
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  • GlaxoSmithKline ADRs (NYSE:GSK) were down 1.0% after the company missed quarterly earnings forecasts by a wide margin. The company also said it expects additional costs from the proposed spin-off of its consumer healthcare unit of between 600 and 700 million pounds ($780-$910 million).

  • GSK said it expects adjusted earning per share to fall by as much as 4% at constant exchange rates, but said it would likely keep its dividend unchanged at 80 pence a share.

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