Bloomberg

(Bloomberg) — Roblox Corp. tumbled in its worst decline on record after a disappointing earnings report, marking a departure from the double-digit share gains the quarterly updates typically spur for the video-game company.

The 27% slump on Wednesday is the biggest decline for Roblox in a session following its results. In November, the stock surged 42% after the company reported third-quarter bookings, a measure of sales, that topped analysts’ estimates even as Covid-19 restrictions eased.

Yet, in its fourth-quarter report released after markets closed Tuesday, Roblox reported bookings that fell short of Wall Street estimates. The company also posted bookings for January, which analysts said were weak and signaled decelerating growth. 

“Our prior view assumed RBLX would continue to grow users and bookings at outsized rates through reopening. We were wrong,” Morgan Stanley analysts led by Brian Nowak wrote in a note, downgrading the stock to equal-weight from overweight.

Roblox jumped 21% on May 11 after posting its first quarterly report as a public company. In August, when bookings missed Wall Street estimates, the stock slipped just 1.1%. 

Besides Morgan Stanley, other analysts remained unmoved by the report. Roblox has 16 buy ratings, three holds and one sell, according to data compiled by Bloomberg. Firms including Bank of America Corp. and Needham & Co. have touted the company’s growth potential for the metaverse.

The average price target among analysts tracked by Bloomberg is $100, implying more than 80% return potential for the next 12 months. Roblox shares are up 20% since the company made its public debut in March.

(Updates stock moves, chart and average analyst price target.)

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(Bloomberg) — Charlie Munger, Warren Buffett’s longtime business partner, called out the “wretched excess” in both venture capital and Bitcoin, and said that cryptocurrencies should be banned. 

“I wish it had been banned immediately, and I admire the Chinese for banning it,” Munger said Wednesday at Daily Journal Corp.’s annual meeting, which was held virtually. “I certainly didn’t invest in crypto. I’m proud of the fact I’ve avoided it. It’s like a venereal disease or something. I just regard it as beneath contempt.” 

The 98-year-old billionaire has long been a critic of Bitcoin, previously calling it “rat poison.” On Wednesday, he also warned of other “wretched” market excesses, including the flood of venture capital into startups. 

“Certainly the great short squeeze in GameStop was wretched excess, certainly the Bitcoin thing is wretched excess,” Munger said. “I would argue that venture capital is throwing too much money too fast, and there’s a considerable wretched excess in venture capital and other forms of private equity.” 

Munger touched on a range of topics at the Daily Journal meeting. The Los Angeles-based company sells software to court systems and justice agencies, and publishes newspapers. Munger has served as the firm’s chairman for years, in addition to being a vice chairman of Berkshire Hathaway Inc., where billionaire Buffett is chairman and chief executive officer.

Daily Journal has recently been building up its stake in China’s Alibaba Group Holding Ltd. Munger was repeatedly questioned about that investment and his views on investing in China. He said that he’s more comfortable investing in that country than Buffett is. 

“The companies we invest in are stronger relative to their competition and priced lower,” Munger said at the meeting, live-streamed by Yahoo Finance. “That’s why we’re in China.”

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(Bloomberg) — Shares of social-media companies fell on Wednesday, after comments from Alphabet suggested the potential for another headwind to online advertising revenue, months after a similar move at Apple weighed on the industry.

The Google parent said it was bringing its Privacy Sandbox initiative to Android phones, a change that could ban data tracking across multiple applications.

Shares of Facebook parent Meta Platforms fell 2%, extending its pronounced year-to-date underperformance. Snap dropped 3.4%, Pinterest fell 0.6%, and Twitter lost 2%. Digital Turbine fell 9.4%, even as Oppenheimer writes that the the company could see a positive from Alphabet’s move.

With the day’s decline, Meta is now down more than 35% in 2022, compared with a decline of roughly 6% for the S&P 500 Index. 

Much of Meta’s weakness this year has stemmed from a catastrophic quarterly report earlier this month, where among other headwinds, it said that Apple’s crackdown on targeted advertising may lower its revenue by $10 billion this year.

(Updates to market close.)

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(Bloomberg) — Verizon Communications Inc. returned to the green bond market with a $1 billion offering, its fourth transaction since the largest U.S. wireless service provider started raising funds earmarked for environmental projects in 2019.

The telecom giant sold the bonds in one tranche maturing in 30 years, according to a person with knowledge of the matter. It yields 1.55 percentage points above Treasuries after initial price discussions in the 1.7 percentage points range, said the person, who asked not to be identified as the details are private.

This is the fourth $1 billion green bond transaction from the phone company since it first tapped the market in 2019, according to data compiled by Bloomberg. Verizon plans to allocate an amount equal of the net proceeds to fund renewable energy facilities or purchase of renewable energy, the person said. 

Global sales of green bonds — the largest category of sustainable debt by dollar volume — reached a record $514 billion last year, from about $234 billion in 2020, according to data compiled by Bloomberg. Climate Bonds Initiative, a London-based nonprofit, estimates issuance could reach a high of as much as $1 trillion by the end of this year and up to $5 trillion by 2025.

Read more: Green Bonds Still Have Long Way to Go to Dent Climate Crisis

Bank of America Corp., Loop Capital Markets LLC, Ramirez & Co. and Siebert Williams Shank & Co. managed the bond sale, the person said.

(Updates with pricing details in second paragraph)

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(Bloomberg) — Okta Inc. Chief Marketing Officer Kendall Collins has left the company after less than a year in the role, one of the latest in a wave of high-level departures at the identity management software provider.

Chief Digital Officer John Zissimos, a former Google vice president, will replace Collins, who joined Okta last March as CMO, a company spokesperson confirmed.

Okta makes software that helps businesses verify the identities of employees and customers and connect them to corporate computer systems and websites. Shares more than doubled in 2020 as investors viewed the company as essential during the pandemic with the boom in remote work and online shopping. However, the stock fell 12% last year and has declined another 16% this year to $189.26 at 3:15 p.m. in New York. 

Collins’ departure comes in the midst of other executive exits in the past year that span job functions from communications and marketing, to sales and product management.

Among those who left Okta are Chief Financial Officer Bill Losch; Hector Aguilar, president of technology; Ryan Carlson, who preceded Collins as CMO and was an executive vice president; Levent Besik, senior vice president of product management; Charles Race, president of worldwide field operations; Patrick McCue, senior vice president of worldwide partners; Lennard Fisher, senior vice president of demand generation; and vice president of corporate marketing Alyssa Smrekar, according to their respective LinkedIn profiles. 

Some of those positions have been filled. For example, Okta promoted Brett Tighe to CFO in January. Others, like the post of senior vice president of North America sales, remain vacant.

“Okta has seen tremendous growth over the past year, including the acquisition of Auth0. As the company evolves and matures, we have brought in many new leaders to help carry forward Okta’s vision,” the company said in a statement.

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(Bloomberg) — Amazon.com Inc. and workers at a company warehouse in Staten Island, New York, have reached a tentative agreement to hold a union election, according to U.S. labor officials.

The National Labor Relations Board said in a statement Wednesday that it would announce the election timing and format in due course. Earlier, the fledgling Amazon Labor Union said an in-person vote would be held from March 25 to March 30. 

The ALU confronts daunting odds. Despite a spirited campaign, the far more established Retail, Wholesale and Department Store Union lost an election last year at an Amazon fulfillment center in Bessemer, Alabama. The labor board ordered a fresh election after the union appealed the outcome, but it’s far from assured that the RWDSU will prevail this time.

Still, Christian Smalls, the ALU’s president, has notched a significant achievement in New York despite lacking the money and organizing experience of the national unions. He worked at Amazon for more than four years before being fired in 2020 for what the company said was a violation of safety guidelines; Smalls said he was protesting Amazon’s inadequate Covid-19 policies. 

“We remain skeptical that there are a sufficient number of legitimate signatures to support this election petition,” Amazon spokesperson Kelly Nantel said in a statement. “But since the NLRB has decided the election will proceed, we want our employees to have their voices heard as soon as possible. Our employees have always had a choice of whether or not to join a union, and our focus remains on working directly with our team to make Amazon a great place to work.”

(Updates with NLRB confirmation, Amazon comment)

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(Bloomberg) — Aluminum rose to near the strongest level since 2008 as traders assessed the risk of geopolitical tension in Ukraine and the persistent pressure of soaring energy costs on global supplies.  High-level diplomacy continues in a bid to defuse the situation around Ukraine after western officials voiced reservations about Russian announcements that some of …

Aluminum Hovers Near 13-Year High as Trade Weighs Ukraine Crisis Read More »

(Bloomberg) — Oil rallied as U.S. and NATO officials reiterated they’ve yet to see evidence of a Russian pullback and a government report showed U.S. fuel demand rising.  West Texas Intermediate traded near $95 a barrel on Wednesday, clawing back from the biggest one-day loss since November. U.S. officials said they haven’t verified the claim …

Oil Jumps as Investors Track Ukraine Crisis, Rising Fuel Demand Read More »

(Bloomberg) — With major earnings letdowns from Netflix Inc. and PayPal Holdings Inc. still fresh in the memory, the bar is high for Nvidia Corp. given that the chipmaker’s valuation far exceeds most U.S. benchmarks and its rivals.

Even after being caught up in the selloff that’s pummeled fast-growing technology stocks, Nvidia trades at about 49 times projected profit and is 2-1/2 times more expensive than the Philadelphia semiconductor index average, according to Bloomberg data.

Wedbush analyst Matt Bryson expects a “strong” fourth-quarter and outlook when the maker of graphics processors reports later on Wednesday. “Our concern remains predominantly tied to valuation,” he said.

The stakes have never been this high for Nvidia as the Federal Reserve’s aggressive rate hike path has roiled stocks with extreme valuations. The shares have been a star performer over the past decade, returning a whopping 7,000%, although more than $170 billion in market value was wiped out in the recent selloff.

What’s more, analysts see more gains: 39 of the 47 that cover the stock have buy ratings and the average price target points to 33% upside in the next 12 months. However, the combination of rapid revenue growth and a lofty valuation has made Nvidia prone to violent swings, such as the final three months of 2018 when it tumbled more than 50%.

Nvidia shares were down 2.6% at 1:45 a.m. in New York trading on Wednesday, pushing year-to-date losses over 12%.

Rising Estimates

Investors will be looking for forecasts and commentary in the earnings that show Nvidia is expanding at a clip that can support its valuation, especially in its data center business. Despite the recent share-price drop, analyst estimates for revenue and profit in the current fiscal year have crept up in the past two months, according to Bloomberg data.

For the fourth quarter, Nvidia is projected to deliver earnings per share excluding some items of $1.22 on revenue of $7.4 billion. That would represent year-on-year growth of 58% and 48%, respectively.

“Nvidia is very expensive, but it is expected to grow much faster than other names in the space,” Deepon Nag, senior research analyst for technology hardware at Clearbridge Investments, said in an interview. “The near-term setup looks pretty favorable.”

Tech Chart of the Day

The NYSE Fang+ Index, home to the likes of Apple Inc., Amazon.com Inc. and Alibaba Group Holding Ltd., is underperforming the benchmark S&P 500 Index in the first quarter to date. If losses hold, it will mark a third straight quarter of decline. Investors have been reducing bets on these fast-growing stocks as central bankers prepare to raise rates rapidly.

Top Tech Stories

• Airbnb beat revenue and profit estimates in the fourth quarter, bucking a resurgent wave of Covid-19 infections and heading into this year even stronger than before the pandemic
• Roblox shares tumbled in premarket trading after fourth-quarter bookings missed analysts’ estimates, reflecting a retreat from the pandemic-inspired boost over the last two years
• Mark Zuckerberg unveiled a list of principles for work at Meta Platforms Inc. in which he calls its employees “Metamates”
• The U.S. Chamber of Commerce is taking up the cause of giant technology companies facing fresh antitrust threats from the Biden administration and Congress
• Alphabet’s Wing unit elevated its leading technology official to head the company as it seeks to rapidly expand its drone delivery operations, including in the Dallas suburbs

(Updates share performance and valuations throughout.)

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(Bloomberg) — Social media companies would be liable for harm to minors under a new bipartisan proposal introduced Wednesday in the Senate. 

Content-targeting, unlimited screen time, and engagement-driving features like auto-play also would be disabled by default for children under a measure proposed by Democratic Senator Richard Blumenthal of Connecticut and Republican Marsha Blackburn of Tennessee. Platforms would also be required to disclose more data to researchers and allow parents to control privacy and account settings.

The measure follows months of congressional discussions about the harms of social media to young people, which were accelerated by the disclosure of Facebook documents by whistle-blower Frances Haugen. “This legislation is the product of those hours of hearings,” Blackburn said during a press conference Wednesday.

If passed, the bill would require platforms to “give options to children and their parents to protect their info, to disable addictive features, and to opt out of the algorithm recommendations that often involve driving toxic content to kids,” said Blumenthal, who chairs the Senate subcommittee that led the whistle-blower hearings.

Read More: How a Facebook Whistle-Blower Is Stoking the Kids’ Screen Time Debate

Enforcement would be led by the Federal Trade Commission, whose chair Lina Khan has said she plans to pursue new rules on data security and privacy. In addition, companies believed to be violating the law could be sued by state attorneys general under the bill.

With a busy Senate schedule including other tech-focused bills and a Supreme Court nomination process, it’s unclear how quickly this proposal could advance. Blumenthal said that he hopes the bill could do so in the spring or summer given the bipartisan support and the high public interest in the congressional hearings.  

While any internet service used by minors would be subject to the new rules, the focus is on marquee social platforms owned by companies like Snap Inc. and Twitter Inc. The proposal, which could dampen teen engagement on these apps, comes as Meta Platforms Inc. frets about its declining popularity among young people. Last October, Bloomberg reported that teen activity on the platform was down, and the trend was accelerating.

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