Key Market Moves: Nio, General Mills, Beyond Meat

The S&P 500 and Nasdaq are on track for their second straight positive week. Stocks marched higher yesterday, despite some wobbles earlier in the week.

As we near the end of the US earnings season, here are the market’s top headlines.

Nio’s battery is half empty? 

Chinese electric car maker Nio (NIO) reported its fourth-quarter results after market close yesterday. Although Nio topped revenue estimates, the company’s fourth-quarter loss was wider than expected.

Supply and production challenges, as well as the global chip shortage, weighed on Nio’s Q4 2021 sales. Vehicle sales for Q4 came in just 7% higher than Q3.

Nio expects to deliver a total of 25,000 to 26,000 vehicles in Q1 2022, representing an increase of around 25% to 30% from the same quarter of 2021. Deliveries for the company’s luxury ET7 sedan are scheduled to start on 28 March. Meanwhile, ET5, a smaller version of ET7, is expected to start delivery in September 2022.

Shares of Nio have fallen about 40% over the past year, partly due to fears that US-listed Chinese stocks might get delisted. As Chinese stocks rallied over the past week, Nio is up 17% as of Thursday’s close. 

Nio shares are currently traded both on the Main Board of The Stock Exchange of Hong Kong and the New York Stock Exchange.

General Mills pops

Shares of General Mills (GIS) are up almost 5% for the week after Thursday’s market close. The maker of Cheerios cereal and other packaged foods reported better-than-expected third-quarter earnings and raised its sales and profits forecast for the year ahead. 

Despite cautioning investors about supply chain issues in February, the company took measures to address such shortages.

“We worked quickly to address those disruptions, driving a faster-than-expected rebound in service in the final weeks of the quarter, which translated into Q3 results that were ahead of our latest guidance,” Chief Executive Officer Jeff Harmening said in prepared remarks released after the earnings announcement. 

General Mills joins fellow packaged food makers Kraft Heinz and Kellog in reporting robust quarterly profit amid continued home-cooking demand and inflation-induced price hikes.

Beyond’s meatless jerky  

Beyond Meat and PepsiCo will be launching a new meatless jerky this month as part of their PLANeT Partnership joint venture. A successful reception could help the company bolster its grocery sales, which have lagged as Beyond focused on fast-food launches. 

In the US, the company has struck deals with KFC, McDonald’s, Subway, and more to roll out offerings like Beyond Fried Chicken. However, Beyond’s US retail sales declined nearly 20% in its fourth-quarter.

Shares of Beyond are up almost 5% this week after Thursday’s market close. But the stock has slid more than 60% over the past one year. 

Berkshire Hathaway’s biggest acquisition in years

Warren Buffett’s Berkshire Hathaway is buying insurance company Alleghany Corporation for US$11.6 billion. The deal will expand Berkshire’s already sizable portfolio of insurance companies, which includes auto insurer Geico and reinsurer General Re. Insurance typically generates more than 20% of operating profit at Berkshire. 

Warren Buffett has often lamented the lack of good investment opportunities. 

“Today, though, we find little that excites us,” he wrote in his most recent Berkshire annual shareholder letter.

Instead of acquisitions, Berkshire has mostly been investing in quality stocks the past few years. Most recently, the company increased its position in Occidental Petroleum as oil prices continue to surge. 

BuzzFeed loses its buzz

BuzzFeed’s first earnings report as a public company was lacklustre to say the least. 

When it went public last June, the digital media company told potential investors that it expected to achieve revenues of $521 million and profits of $57 million for 2021. However, BuzzFeed reported just $398 million in revenue and a $26 million profit.

The company has three revenue drivers: Commerce, content, and advertising. While content and advertising both saw revenue increases in Q4 2021, commerce revenue declined 26%. The commerce segment (which BuzzFeed is aiming to prioritise) operates through article commissions, merchandise and other events.

BuzzFeed partially attributed the commerce slowdown to Facebook’s shrinking platform and declining engagement; the company relies on Facebook to help spread its viral quizzes and listicles. 

Since it began trading publicly, BuzzFeed’s share price has fallen almost 50%.

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