Wednesday January 26, 2022
Zillow Halts Homebuying
Zillow Group, Inc. (Z) released its latest quarterly earnings on Tuesday, November 2. Despite more than doubling its profit from the prior year, the company posted a net loss for the quarter.
Revenue came in at $1.74 billion for the third quarter. This was up 164% from $656.69 million in revenue last year at this time.
"We've determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too much earnings and balance-sheet volatility," said Rich Barton, co-founder and CEO of Zillow Group. "While we built and learned a tremendous amount operating Zillow Offers, it served only a small portion of our customers. Our core business and brand are strong, and we remain committed to creating an integrated and digital real estate transaction that solves the pain points of buyers and sellers while serving a wider audience."
The company reported a quarterly net loss of $328.17 million. Last year at this time, the company reported net income of $39.57 million.
Zillow announced this week that it is ending its iBuying service. The service, which entailed purchasing and selling homes throughout the country, was based on an algorithmic model. Company CEO Rich Barton noted the difficulty of predicting future home prices as a factor in the decision to shutter the service. Zillow's Homes segment posted a loss of $421.60 million for the quarter.
Zillow Group, Inc. (Z) shares ended the week at $66.06, down 35.8% for the week.
Under Armour Reports Earnings
Under Armour, Inc. (UA) released its latest quarterly earnings on Tuesday, November 2. The athletic apparel company increased its full-year outlook.
The company reported revenue of $1.55 billion during the third quarter. This was up from $1.43 billion during the same quarter last year.
"Our third-quarter results were driven by strong demand for the Under Armour brand and our ability to execute quickly to meet the needs of our consumers and customers," said Under Armour President and CEO Patrik Frisk. "With industry-leading innovations, increased marketing efforts to deepen our connection with Focused Performers, and consistent operational discipline – we're building greater brand affinity and are on track to deliver record revenue and earnings results in 2021."
Under Armour reported quarterly net income of $113.44 million. This was up from $38.95 million last year at this time.
The company's North America segment led the way with net revenue of $1.04 billion, up 7.6% from the prior year's quarter. This was followed by its Europe, Middle East and Africa segment and Asia-Pacific segment with $241.20 million and $211.95 million, respectively. Under Armour updated its full-year guidance noting that it expects revenue to increase approximately 25% and earnings per share to reach $0.55.
Under Armour, Inc. (UA) shares ended the week at $21.34, up 12.6%.
Airbnb Releases Earnings
Airbnb, Inc. (ABNB) posted its latest quarterly earnings on Thursday, November 4. The company reported record earnings for the quarter.
The company's revenue for the third quarter was $2.24 billion. This was up from $1.34 billion during the same quarter last year.
"The travel rebound that began earlier this year accelerated in Q3, resulting in Airbnb's strongest quarter ever," said the company in a letter to shareholders. "Revenue and net income were our highest ever. Adjusted EBITDA exceeded $1 billion, also our highest ever. This summer, we reached a major milestone of 1 billion cumulative guest arrivals as more people got vaccinated and travel restrictions were relaxed. Host earnings reached a record $12.8 billion in the quarter, and active listings continued to grow."
Airbnb reported net income of $834 million during the quarter. This was up from net income of $219 million last year at this time.
The San Francisco-based company was founded in 2008 and serves as an online platform for vacation rentals and lodging. The company's profile has risen significantly in recent years, quickly expanding from a Bay Area novelty to a global business. Airbnb's Nights and Experiences Booked category brought in $79.7 million during the quarter, a 29% rise from the same quarter in 2020.
Airbnb, Inc. (ABNB) shares ended the week at $201.60, up 18.2%.
The Dow started the week at 35,834 and closed at 36,328 on 11/5. The S&P 500 started the week at 4,611 and closed at 4,698. The NASDAQ started the week at 15,541 and closed at 15,972.
Treasury Yields Fall Following Jobs Report
Yields on U.S. Treasurys dropped on Friday following the release of the latest jobs report. The drop in yields occurred despite strong job growth and lower unemployment numbers.
On Friday, the U.S. Labor Department reported that nonfarm payrolls increased by 531,000 in October. The unemployment rate dropped to 4.6%. However, the labor force rose by just 104,000.
"The one cloud on the horizon was the stubbornly depressed participation rate," said Seema Shah, Chief Strategist at Principal Global Investors. "At this point, with reduced benefits, a return to in-person schooling and the drop in COVID rates, we should be seeing a recovery in participation."
The 10-year Treasury note yield was at 1.461% during trading on Friday, down from Thursday's high of 1.607%. The 30-year Treasury bond yield was 1.897%, down from a peak of 2.036% on Thursday.
The jobs report follows Wednesday's announcement by the Federal Open Market Committee (FOMC) that the Federal Reserve will begin tapering its bond purchases. The Fed will pull back by $15 million each month, from its current $120 billion per month.
"Today, the FOMC kept interest rates near zero and in light of the progress the economy has made toward our goals decided to begin reducing the pace of asset purchases," said Federal Reserve Chairman Jerome Powell. "With these actions, monetary policy will continue to provide strong support to the economic recovery."
The 10-year Treasury note yield closed at 1.45%, while the 30-year Treasury bond yield was 1.89%.
Mortgage Rates Decrease
Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, November 4. The report showed a drop in average mortgage rates for the week.
The 30-year fixed rate mortgage averaged 3.09% this week, down from 3.14% last week. Last year at this time, the 30-year fixed rate mortgage averaged 2.78%.
This week, the 15-year fixed rate mortgage averaged 2.35%, down from last week's average of 2.37%. During the same period last year, the 15-year fixed rate mortgage averaged 2.32%.
"While mortgage rates fell after several weeks on the rise, we expect future upticks due to stronger economic data and as the Federal Reserve pulls back on its stimulus," said Sam Khater, Freddie Mac's Chief Economist. "That said, the housing market remains favorable for consumers, as rates remain below pre-pandemic levels and continue to support sustainable purchase and refinance opportunities."
Based on published national averages, the savings rate was 0.06% as of 10/18. The one-year CD averaged 0.14%.
Published November 5, 2021
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