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Today in the Market (11/16/2023)

Good Evening! On Thursday, US equities had a varied performance after a strong surge earlier in the week. This was due to investors processing information from corporate America earnings indicating a potential decline in consumer spending as well as a four-month low in oil prices.

The S&P 500 and the Nasdaq spent most of the day in the red but barely pulled ahead by 0.12% & 0.07%, respectively. It was almost the same story for the Dow Jones but it stayed in the red by 0.13%.

CAUTIOUS TIMES FOR WALMART

Despite continued customer influx, Walmart (WMT), the biggest retailer in America, is expressing prudence for the future due to an uncertain macroeconomic environment.

  • Revenue: $160.80 Billion vs. $159.13 Billion Expected
  • Same-Store Sales: 4.70% vs. 3.35% Expected
  • Foot Traffic: 3.40% vs. 1.50% Expected
  • Earnings Per Share: $1.53 vs. $1.52 Expected

Uncertain times… Although Walmart exceeded profit expectations, the company provided a cautious outlook for the remainder of the year. The company revised its projected profits per share for the entire year to a range of $6.40–$6.48, surpassing its prior estimate of $6.36–$6.46, but falling short of the anticipated $6.48.

Looking at the brighter side of life! CFO John Rainey emphasized that the retailer’s uneven sales results have prompted a need for more caution on the status of customers. Walmart anticipates a decrease in sales growth during the fourth quarter due to a slowdown in the rise of food prices. However, the company remains optimistic about the higher number of customers and market share it has gained and expects this trend to continue.

LINEAR ADS AREN'T IN RIGHT NOW

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Two sides of a coin for ad revenue… According to a recent note from Macquarie, media networks, such as Disney (DIS), Paramount Global (PARA), Warner Bros. Discovery (WBD), Comcast (CMCSA), and others, had a 12% decrease in earnings from linear advertisements during Q3. This reduction follows a 13% decrease in Q2.

On top of that… Companies cautioned that the unfavorable trend is expected to persist in the current quarter. Warner Bros. Discovery stock had a significant decline this week due to the company’s acknowledgment of continued fragility in the advertising industry, which may have negative consequences for its future prospects in 2024.

However, the other side of the coin is looking much brighter! Direct-to-consumer (DTC) services had a significant contrast, with a 29% average gain in advertising income. This was mostly due to the implementation of new advertising tiers by Netflix (NFLX) and Disney. Technology behemoths such as Alphabet, the parent firm of Google (GOOG, GOOGL), and Meta (META), saw a resurgence in the potency of digital advertising

Linear ads aren’t in right now! According to recent research from Magna Globa, non-linear TV ad revenues, which include advertising video-on-demand platforms, connected TV, and free ad-supported services, had a 7% growth in the first half of 2023. The growth rate of podcasting advertising increased by 14%, while digital out-of-home advertising had a 9% increase.

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