Klarna (KLAR)
Shares fell almost 20% in early trade after earnings. Klarna is a UK-based buy now, pay later company that drew strong interest at its IPO late last year, but the stock has struggled since.
The results beat on the bottom line. EPS came in at 1 cent versus the market's expected minus 5 cents, so the company swung to a net profit. Revenue rose to $1.04 billion versus $993.4 million expected, up 27% year over year. Gross merchandise value (GMV) grew 18% year over year to $36.6 billion.
The drop is tied to a cut outlook. Full-year revenue guidance was lowered from prior guidance and missed the consensus estimate, and full-year GMV guidance was also trimmed. Management blamed currency headwinds and weak retail sales in Germany, a large and central market for its European business. Leadership changes are also weighing on the stock. Barron's noted that the C-suite changes are pressuring the company. The stock's story has been about balancing fundamentals and profitability against the macro pressure hitting fintech firms.
Baidu (BIDU)
Shares fell 7%, with revenue and profit still declining for the Chinese company often called the Chinese Google. Net profit dropped 68% to about $334 million, and revenue fell 4.2% year over year.
Baidu is spending heavily on artificial intelligence, autonomous driving, and chip design, and that spending has been slow to pay off. The market sees AI as Baidu's biggest opportunity and its biggest threat, because the heavy spend comes at the cost of its traditional search business. Its online ad business is under pressure. The shares have lost nearly a third of their value in Hong Kong this year and were hit in overnight trade, with the ADR down 7%. The market is watching monetization proof - the same question will come up with Alibaba (BABA) this week. The key item traders are watching is the planned spin-off of Baidu's chip unit, Kunlun, expected to make progress at year end.
Norwegian Cruise Line (NCLH)
Mizuho downgraded the stock to neutral from outperform, cutting its price target to $17 from $22, near where it currently trades. Mizuho says the company is in a turnaround facing "self-inflicted wounds": adding ship capacity faster than demand can keep up, changes in the types of customers it attracts, and delays in construction, plus broader macro headwinds. Cruise lines also buy islands as part of their strategy.
Mizuho stays positive on the broader cruise sector and believes Norwegian will come out of its turnaround successfully. For now it expects the stock to trade sideways as the company works things out, with a chance to buy at lower prices given the uncertain environment and downside risk to street estimates. The view: still like the cruise industry, just not convinced Norwegian will beat the market now.
By performance, Norwegian is down about 19% year to date, Carnival (CCL) is down 9%, and Royal Caribbean (RCL) is up 8%.
Broader read
Airlines in Asia were down, and higher oil prices feed into everything. Pricier gasoline can cut how much people spend, which hits cruise lines and travel across the board. Royal Caribbean is the year's cruise winner, while Norwegian and Carnival lag.
