May 11th - The Week Ahead

Together With Hebbia

The Week Ahead Of Us 🔍

Welcome back!

Folks…we may have de-escalation with China coming. Obviously, everything has to come with a grain of salt, but the White House put out a press release noting that the U.S. and China have made progress and come to some sort of preliminary agreement. There are no quantifiable details out currently - we will receive this Monday. But it’s marketed by the Administration as a trade deal. China has stated that a “trade consultation mechanism” has been agreed to as well. S&P futures are up 1.3% and Nasdaq futures are up 1.7% on the news.

• This announcement was preceded by Howard Lutnick earlier this weekend implying the U.S. would shake out to 34%-54% reciprocal tariff rates on China (which was preceded by Trump suggesting cutting the China tariff rate to 80% ahead of the talks). There’s obviously a lot of numbers being thrown around on China, so we’ll see the formal announcement tomorrow.

Separately from China, I needed to flag immediately that Trump announced an hour ago that he will be reducing prescription drug and pharmaceutical prices, almost immediately, by 30%-80%. Pen will hit paper at 9am EST tomorrow but outside of the tweet, we have no idea on the details and efficacy surrounding the price controls in this executive order.

That’s a lot - let’s take a look at earnings this week.

• Monday: Simon Property Group, Fox, Monday.com, DaVita, StandardAero

• Tuesday: Sony, JD.com, On Holding, Vodafone, Venture Global, Under Armour

• Wednesday: Cisco, CoreWeave

• Thursday: Walmart, Alibaba, Deere, Applied Materials, Take-Two Interactive, Doximity, Cava, Brikenstock, Advanced Drainage Systems

Here’s a look at economic data this week.

• Tuesday: April Consumer Price Index (0.2% est.), April CPI y/y (2.3% est.), April Core CPI (0.3% est.)

• Thursday: Initial jobless claims (227k est.), April Retail Sales (0.1% est.), April PPI (0.3% est.), Core PPI (0.3% est.), May Homebuilder confidence index (est. of 40)

• Friday: April Housing Starts (1.36mm est.), April Building Permits (1.45mm est.), May Consumer Sentiment (53 est.)

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Earnings Corner 📜 

Trending Up 📈 

DraftKings (DKNG): DraftKings revenue rose 20% y/y to $1.409B. The sportsbook handle climbed 16% y/y to $13.9B, but customer-friendly March Madness outcomes dragged actual hold below expectations. Despite that, live betting topped 50% of total handle for the first time, and management cited improving ad efficiency. FY25 guidance was trimmed, with revenue cut by 1.5%–1.6%, and free cash flow pegged at $750M. Shares were up 2.5% on Friday.

Warner Bros. Discovery (WBD): Warner Bros missed big on both lines. Revenue fell 9.8% y/y to $8.98B (–4% miss), and EPS came in at –$0.18 vs. –$0.13 expected. Despite weak TV and ad trends, streaming added 5M subs, offering a bright spot. Guidance was reiterated, but the path to profitability remains unclear. Shares rose 0.7%, but are still down 29% from the 52-week high.

Paramount Global (PARA): Revenue rose 2% y/y ex-Super Bowl to $7.2B, topping estimates, and EPS of $0.29 beat by $0.02. Growth was led by Paramount+ subs, franchise content, and better DTC margins, though management flagged ad pressure from digital supply. Shares rose modestly after earnings.

Anheuser-Busch Inbev SA (BUD): Anheuser-Busch sales rose 1.5% y/y to $14.55B but missed estimates as volume fell 2.2% on calendar shifts. EPS had a 7.1% increase helped by pricing and strong growth in non-alc beer, led by Corona Cero. Management held FY25 guidance and noted limited tariff exposure. Shares were up 0.40%.

Monster Beverage (MNST): The energy drink giant missed sales by 2.3% y/y on bottler timing and FX, though core energy rose 1.9% FX-adjusted. EPS beat at $0.47 due to solid pricing and supply chain tailwinds. Alcohol brands also fell, but management remains bullish on global innovation. Shares traded up to an all-time high on Friday.

Trending Down 📉 

Expedia (EXPE): The bookings platform revenue rose 3% y/y to $3B but fell short of guidance; EPS came in at $0.84 vs. $1.34 expected. Expedia has called out weak demand trends. They also noted that people may be going to ChatGPT and other AI companies to find booking. Shares were down -7.3% on Friday.

Shopify (SHOP): Beat on revenue, miss on EPS. 1Q revenue rose 27% y/y , but net loss widened by a $900M investment loss. Gross profit came in light and management flagged tariff “uncertainty”, noting that less then 1% of GMV is tied to now-taxed China imports. Shares fell 2.4% on Friday

Cheniere Energy Inc (LNG): Cheniere revenue beat at $5.44B vs. $4.69B, but EPS missed badly by 40% on softer margins and contract timing. Management held FY guide and highlighted strong project progress, but the market wasn’t thrilled. Shares went down by 1.3%.

Coinbase (COIN): Coinbase revenue rose 24.2% y/y on stronger crypto activity and subscription growth, but missed estimates by 4%. EPS beat at $1.94 driven by consumer and institutional trading strength. Shares dropped 3.5% and slipped another 0.2% after close.

Today’s Headlines 🍿 

• Inside the USA & UK Trade Deal: The first trade agreement came with one of our closest allies (who we didn’t even have reciprocal tariffs on), with a 10% tariff on the UK remaining in the place. The administration has communicated that 10% is going to be the best deal folks are going to get.

  • The deal is actually pretty friendly for British automakers (reducing a tariff from 27.5% to 10%) and Steel & aluminum producers (eliminating 25% tariffs). On the flip side, the U.K. will increase beef imports and remove ethanol import tariffs of 19%. In a photo posted by Trump, he expects $6B in annualized tariff revenue from the U.S.

• Newark Airport safety concerns continue: This morning, there was a 45 minute grounding at Newark due to an air traffic control equipment outage. Newark is expected to drastically cut flight activity, and Transportation Secretary Sean Duffy warned that these technological issues may impact other airports throughout the country. Duffy warned that it may take 3-4 years to build new infrastructure to improve system resilience, with a lot of needed new equipment unavailable, with the government having to go on eBay for replacements..

  • On early Friday morning, air traffic controllers at Newark Airport lost communications and radar displays for 90 seconds. The infrastructure worries in this airport have air traffic controllers quitting, passengers rethinking trips, and even United Airlines (a major carrier at Newark) warning about the location

• Conclave IRL: Pope Leo XIV, formerly Cardinal Robert Prevost, was elected as the 267th pope following the death of Pope Francis. Prevost, a 69-year-old American missionary and former head of the Vatican’s office of bishops, became the first U.S. citizen to ascend to the papacy in the Catholic Church's two-millennia history

• Missteps in the Middle East: Saudi Aramco cut its dividend by $10B after a 5% drop in first-quarter profits, reducing a key funding source for Saudi Arabia’s budget amid fluctuating oil prices. This decrease in payouts adds pressure to the country's economic diversification efforts, as the government faces a widening budget deficit and aims to fund major infrastructure projects like Neom and Expo 2030

• BlackRock MDs are ordered back in the office 5-days-a-week. The world’s biggest asset manager is reportedly ordering 1,000 of its senior managers to return to full-time in-person work. Under the updated guidelines, more junior employees will still have the option to work from home one day per week

• IPO latest: Omada Health and the Ryan Reynolds affiliated MNTN are looking to IPO. Omada, a digital health company, offers virtual care programs to support patients with chronic conditions like prediabetes, diabetes and hypertension, while MNMT, with its celebrity Chief Creative Officer, is a connected TV operator

• Wall Street Bonuses are expected to decline. After heading into 2025 with optimism and momentum, bonuses across investment banks, hedge funds and asset- and wealth-management may fall as much as 20% this year

• Citadel’s 4-year non-competes: Ken Griffin is lobbying for four-year non-competes in Florida for anyone making over $140k. This is a relatively egregious amount relative to firms that have 6-month to a 1-year-long non-competes for more seasoned professionals

• Veritas in Distress: Anthology, a Veritas Capital backed education-software provider, is exploring a potential sale - at the same its negotiating with lenders regarding a restructuring. PJT is the advisor

• More Private Credit M&A: Man Group is in talks to acquire Bardin Hill Investment Partners, a $3.3B AUM middle-market manager, with a potential deal coming this month. Man Group, the $167B AUM giant, previously acquired Varagon Capital for $183mm in 2023

• CoreWeave 🤝High Yield: CoreWeave is in talks to raise $1.5B in high-yield bonds, with the offering led by JP Morgan

• Swimming in Secondaries: Wealthy retail investors are driving up prices for stakes in PE funds, allowing institutions to sell their holdings at attractive prices despite a sector downturn. Evergreen funds, which allow regular deposits and withdrawals, are particularly active in the secondary market, offering higher prices than traditional buyers to deploy capital quickly

• The Father of Shareholder Activism Passed Away: Robert Monks, the pioneer of shareholder activism, reshaped corporate governance by empowering shareholders to demand better management and social responsibility from companies.

• Klarna regrets AI: Klarna, the BNPL provider that went all-in on AI, says it focused too much on cost, which hurt quality. They replaced 700 customer service reps with AI last year, but customers wanted to talk to real humans…leading to a reversal and customer service re-hiring

• The King of Watches: A rare 1999 platinum Rolex Daytona is set to be auctioned at Sotheby’s for as much as $1.7mm. As demand for rare watches continues to grow, particularly among younger and international buyers, such investments have seen a rise of over 125% in value over the past decade

• Trump poised to accept a luxury jet from Qatar: The Trump administration is accepting a luxury Boeing 747-8 Jumbo Jet from Qatar’s royal family. This gift is set to become the new Air Force One and is drawing fierce pushback as a potential bribe

• There’s no crying in baseball: The Colorado Rockies are enduring a historically bad 2025 MLB season with a 6-33 record, putting them on pace for a 137-loss season, far worse than the 2024 Chicago White Sox

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Here are the issues we’re facing right now: tariffs, inflation, & volatile markets… What’s going to happen to your money?

Prices may climb higher. Retirement plans could be forced to change. If not now, then maybe a few years down the road.

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M&A Transactions💭 

Fortress Investment Group entered into a definitive agreement to acquire The Loan Portfolio of Upstart Holdings through a $1.2B LBO.

Sound United, manufacturer of audio and entertainment products has reached a definitive agreement to be acquired for $350.0M by Samsung Electronics (KRX: 005930). Centerview Partners and Morgan Stanley advised on the sale.

Barmag, provider of filament spinning systems, has reached a definitive agreement to be acquired for $856.51M by Rieter Holdings (SWX: RIEN). EV/Revenue was 1.22x. UBS Group advised on the sale.

M&C TechGroup Germany, provider of gas analyzing systems and process control, was acquired for $200.0M by MSA Safety (NYS: MSA). EV/Revenue was 3.64x. Livingstone advised on the sale.

Goodyear Dunlop Tires Europe was acquired for $735.0M by Sumitomo Rubber Industries (TKS: 5110). Barclays advised on the sale.

Dunlop Tyres Australia & New Zealand, manufacturer and distributor of tires catering and a subsidiary of Goodyear Tire & Rubber (NAS: GT), was acquired for $735.0M by Sumitomo Rubber Industries (TKS: 5110). Barclays advised on the sale.

PHX Minerals (NYS: PHX), an oil and natural gas mineral company, has entered into a definitive agreement to be acquired for $182.325M by WhiteHawk Energy. EV/EBITDA was 8.93x and EV/Revenue was 4.95x. RBC Capital Markets and Intrepid Financial Partners advised on the sale.

Greenscreens.ai, developer of an AI-based freight software designed to increase broker margin contribution, was acquired for $160.0M by TBK Bank (NAS: TFIN). BG Strategic Advisors advised on the sale.

An Industrial Portfolio of Blackstone was acquired by a Joint Venture between Bain Capital and Oliver Street Capital for $208.0M.

4Refuel Canada, provider of refueling services catering, has entered into a definitive agreement to be acquired for $450.0M by H.I.G Capital. CIBC Capital Markets advised on the sale.

VAG, manufacturer of valve products for supply and waste management companies, has reached a definitive agreement to be acquired for $241.37M by Georg Fischer (SWX: GF). EV/Revenue was 1.12x.

Private Placement Transactions💭 

Rippling, developer of a workforce management platform, raised $450.0M at a post-money valuation of $16.8B.

PB Healthcare, provider of healthcare services, raised $218.0M of Seed Funding led by General Catalyst at a pre-money valuation of $25.0M.

Function Health, developer of a health empowerment platform, raised $300.0M of Series B venture funding from BroadLight Capital, Andreessen Horowitz, and Redpoint Ventures at a pre-money valuation of $2.2B.

A Joint Venture between International Holding, BlackRock, and Lunate was formed for $1.0B to operate an AI-powered reinsurance platform.

Odds of the Day 🍒 

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Noteworthy Chart 🧭

Hiring Alert ⏰ 

We’re hiring one more Intern (Starting in the Summer). Sadly, one of our great interns are graduated.

Therefore, we’re looking to add 1 more intern that is entrepreneurial in nature, passionate about finance news and earnings, are excited about growing this newsletter (we’ve grown from 13k readers to 77k readers in under 14 months), and can help out throughout the rest of their collegiate career. Obviously, we favor regular readers of the newsletter.

If you’re U.S. based and a rising junior or rising senior, please reply and express further interest. The process will kick off in mid May.

Meme Cleanser 😆 

Until next time!

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