Here we look at some of the biggest movers last week, while only considering the companies with a market cap of at least $5 billion.
Rivian Automotive Inc
The American electric vehicle manufacturer Rivian’s (RIVN:US) shares closed more than 22% lower last week after the electric vehicle (EV) company revealed its intention to issue $1.5 billion in convertible debt.
The company plans to issue green convertible senior notes due in 2030 as part of a private offering to qualified institutional buyers. This move is aimed at securing additional capital for Rivian's operations and growth initiatives.
Moreover, Rivian also reported preliminary revenue for the third quarter of $1.29 billion to $1.33 billion, in line with the consensus of $1.3 billion. The information came after Rivian reported its Q3 deliveries of 15,564 vehicles, beating the estimate of 14,973. Production was 16,304 vehicles, surpassing the estimate of 15,545.
However, shares were hit by the fact that Rivian only maintained its full-year production of 52,000 vehicles, despite the fact it topped analyst expectations for Q3. Analysts were looking for an updated full-year production guidance exceeding 53,600.
The AES Corp
The utility and power generation firm AES Corp (AES:US) stock fell more than 18% to print a new 52-week low last week. The plunge in the stock is a result of a wider selloff in the S&P 500 Utilities Industry Group (GICS) Index, which also fell sharply last week.
The utility stocks are falling due to rising interest rates and the Fed’s signal that they are prepared to keep higher rates for longer. The utility sector often relies heavily on debt financing to fund its operations and expansion.
When interest rates rise, the cost of servicing debt increases, which can put pressure on the profitability of utility companies. Moreover, higher interest rates can make dividend yields from utility stocks less attractive to investors, potentially leading to a decline in their stock prices.
Historically, utility stocks have been considered bond-like investments due to their relatively stable cash flows and high dividend yields. As a result, they are often sensitive to changes in interest rates.
NextEra Energy Inc
For the same reason, shares in NextEra Energy (NEE:US) closed over 12% lower. In addition to the difficult macro environment for utilities, Wall Street analysts were slashing ratings on NEE stock and expressing concerns about the company's long-term earnings guidance.
One significant concern is NextEra Energy's exposure to interest rate risk. While the company has hedged some of this risk, it still has approximately $18.5 billion in interest rate swaps coming due between 2023 and 2025. This exposure could create a headwind of $0.10 to $0.15 per share, according to Bank of America’s (BAC:US) analysis. This represents a potential financial challenge for the company.
McCormick & Co Inc
The American food company McCormick’s (MKC:US) shares fell nearly 15% last week despite the company raising its full-year EPS guidance. McCormick now anticipates adjusted EPS in the range of $2.62 to $2.67, up from the previous guidance of $2.60 to $2.65. This updated forecast is in line with the consensus estimate of $2.64.
Net sales for the third quarter amounted to $1.68 billion, marking a 5.6% year-over-year increase, though it slightly missed the estimate of $1.7 billion. McCormick reported a 5.2% increase in adjusted operating profit. However, its adjusted EPS for the quarter was $0.65, compared to $0.69 in the same period the previous year. This result only met the estimate of $0.65.
Formula One Group - The Liberty Media Group
Motorsport giant Formula One Group (FWONK:US) saw its stock rally over 10% after analysts at Citigroup (C:US) moved the rating to Buy from Neutral. Analysts at the firm argue that recent concerns about the Vegas Grand Prix and disappointing U.S. sports rights renewals are overdone, hence they see a buying opportunity.
“We believe investors have become incrementally more nervous about the Vegas Grand Prix,” they write.
The company recently increased the capital expenditure outlook from approximately $270 million to around $400 million, resulting in a longer payback period of approximately three years due to Formula One's new guidance.
However, Citi analysts say that if Apple (AAPL:US) secures exclusive global rights for Formula One over the next five years, it could be worth about $9 per share in value to FWONA by 2028. This could potentially help shares to re-rate about 10% higher.
However, if this exclusive deal with Apple does not materialize, Citi anticipates that the stock may experience a decrease of around 5%.