Daily stocks in the news

Costco (COST) experienced a decline in its comparable sales growth in June, primarily due to sluggish demand for expensive discretionary items. The growth rate slipped to 3.0% when excluding the impact of gas prices and foreign exchange, slightly lower than the figures from May and April. The decrease in average ticket size by 5.4% contributed to the slower growth, reflecting reduced spending on categories like electronics, appliances, jewelry, and home furnishings. Despite the dip in growth, Costco's overall business remains healthy. The company's sales performance should be seen in the context of challenging year-ago comparisons, where total company comps rose by 13.0%. In June, the e-commerce channel only declined by 0.4% compared to the previous year, representing an improvement from May. Customer traffic remained strong, increasing by 3.6% in the U.S., indicating that consumers continue to purchase food and everyday items in bulk. Costco's strong traffic growth is attributed to membership increases and high renewal rates. Although shares are currently declining, the positive sales results for June reflect continued success in the food and everyday item categories, while demand for big-ticket items has stabilized.

Levi Strauss (LEVI) saw its stock price decline significantly despite reporting Q2 results that were in line with expectations. The main issue was a notable drop in the company's FY23 earnings per share (EPS) guidance, which was revised down to a range of $1.10 to $1.20 from the previous range of $1.30 to $1.40. Levi Strauss also adjusted its FY23 sales guidance downward. The company experienced strong direct-to-consumer (DTC) and international sales, but its US wholesale segment continued to show weakness. The difficult quarter for Levi Strauss was expected due to the implementation of its ERP transition, which caused disruptions in shipping and a decline in Q2 revenue by 9% compared to the previous year. Excluding the ERP shift, revenue would have only decreased by 2%. The DTC channel achieved 14% growth, with positive comps across various regions. Company-operated e-commerce sales increased by 21%. However, global wholesale declined by 22% due to softer performance in the US and Europe. Levi Strauss attributed the slowdown in its US wholesale business to macroeconomic effects and inventory challenges. Despite stronger trends in its international and DTC businesses, the reduced guidance was primarily driven by weaker US wholesale performance. The company expects lower gross margins in the second half of the year due to targeted price cuts to capture market share in the US wholesale segment. Investors responded negatively to the reduction in FY23 EPS guidance, reflecting concerns about Levi Strauss' struggling US wholesale business. It is advisable to exercise caution before considering investment in the company until the US wholesale segment stabilizes.

Alibaba's (BABA) stock rallied following the news of a fine imposed on Ant Group by The People's Bank of China. The Chinese fintech company was fined 7.12 billion yuan for various violations, including financial consumer protection and corporate governance. Although the fine itself is not positive, it represents a significant turning point for Ant Group and Alibaba, as the latter holds a substantial stake in the company. Alibaba had faced increased scrutiny and a crackdown on anti-competitive behavior since Jack Ma, its co-founder and former CEO, criticized Chinese regulators in 2020. This led to the withdrawal of Ant Group's IPO, which had the potential to benefit Alibaba greatly. The regulatory challenges have impacted Alibaba's market share, resulting in losses to competitors and slower growth in its e-commerce and cloud businesses. However, Alibaba has made progress in addressing regulators' concerns by announcing a reorganization plan and appointing new leadership. Ant Group has also undergone its own transformation to comply with banking rules and capital requirements. The fine imposed on Ant Group signals the resolution of regulatory issues, potentially allowing the company to pursue growth strategies and consider revisiting an IPO in the future. This development removes a significant overhang for Ant Group and is viewed as a positive for Alibaba, as it increases the valuation of its stake in the company.

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Meta Platforms (META), under the leadership of Mark Zuckerberg, has seen significant investor enthusiasm with its stock, META, surging more than 230% since last November. Instead of focusing on extensive cost-cutting measures and layoffs, Zuckerberg aims to boost revenue and sustain the rally by launching a new app called Threads, similar to Twitter. Threads allows users to post text updates of up to 500 characters, including photos, links, and videos. META has an advantage over Twitter as it can tap into Instagram's vast user base of over 2.3 billion users. In just seven hours, Threads attracted 10 million sign-ups, indicating its potential. Twitter, on the other hand, has faced challenges with technical issues, controversial views expressed by its CEO Elon Musk, and a decline in advertising revenue by approximately 50%. Although there is no guarantee that Threads will be profitable or significantly impact Twitter's market share, META is well-positioned to roll out the app to millions of users, having already invested in infrastructure and workforce. While Threads currently does not have ads, META's focus is on building critical mass before implementing monetization strategies. META's investments in artificial intelligence (AI) should aid in expediting the process. META's lower expense guidance and the success of AI-powered features on Instagram demonstrate its potential for market share growth. Unlike META's costly metaverse plans, the development and expansion of Threads are not expected to heavily impact profits.

Perion Network, an Israel-based digital advertising platform provider (PERI), has seen a positive market response as its stock rose following an announcement of upside guidance for the second quarter. PERI expects its Q2 revenue to grow by 20% year-over-year to $176 million, surpassing analyst expectations. Additionally, the adjusted EBITDA margin is anticipated to reach 23%, up from 19% a year ago. PERI attributed this positive outlook to the continued momentum in its business and recent favorable market indications, resulting in improved margins and increased market share. This follows PERI's positive performance in Q1, where it achieved 15.9% revenue growth, and it demonstrates the company's resilience amid a challenging macro environment. PERI's expansion into the rapidly growing connected TV (CTV) space has contributed to its success, as video revenue increased by 26% YoY in Q1. Moreover, search numbers were bolstered by a significant rise in the number of publishers. Despite some skepticism from Spruce Point Capital, which issued a negative report on PERI in May, the company's robust margins and positive guidance are encouraging for investors, especially considering the headwinds faced by the advertising industry. While these results are specific to PERI, they may also indicate positive prospects for other AdTech companies as earnings season approaches in the coming weeks.