Your portfolios in brief
Founded in Boston, Massachusetts, Toast Inc. offers an all-in-one, cloud-based digital platform designed specifically for the restaurant community. The company offers a full range of software-as-a-service (SaaS) products and financial technology solutions covering point-of-sale systems, payments, operations, digital ordering and delivery, marketing and loyalty, and team management. The company reported strong quarterly results this week.
- Toast in 2024 highlights
First-quarter results: Toast reported sales of $1.08 billion for the first quarter of fiscal year 2024, up 31.3% year-on-year. This exceeds analysts' estimates of $1.04 billion, testifying to robust growth despite an uncertain economic environment.
Corporate restructuring: The company has announced a layoff plan affecting around 10% of its workforce, mainly in non-customer service roles. The cuts are expected to result in restructuring charges of $45-55 million, but are aimed at achieving annual savings of $100 million, while reducing the pace of hiring.
Financial forecasts: Following these changes, Toast has raised its full-year profit forecasts, now anticipating adjusted gross profit for subscription services and financial technology solutions of between $1.325 and $1.345 billion, representing growth of 25-27% compared with 2023.
- Why is this a stock to watch?
Impressive share price growth: Toast has recorded a remarkable 48.9% increase in its share price since the beginning of the year.
Strong start to 2024: As CEO and co-founder Aman Narang points out, Toast started the year with excellent results, showing significant sales growth and expanding margins. These results are not isolated, but part of an ongoing trend that is set to strengthen throughout the year.
Strategic expansion: In the last quarter, Toast added 6,000 net new locations, bringing the total to around 112,000, an increase of 32% year-on-year. This rapid expansion shows that Toast is not only growing, but also strengthening its market presence at an accelerating pace.
- Conclusion
In conclusion, Toast Inc. stands out as a valuable stock to hold in our portfolio, thanks to its proven ability to generate robust growth and innovate in a rapidly evolving sector. Not only has the company demonstrated a formidable ability to expand its market presence, but it has also proved that it can adapt effectively to market changes, while continuing to respond effectively to the complex needs of restaurateurs.
Toast's strategy to simplify restaurant operations, improve customer engagement and optimize revenues has had a significant impact on its growth and financial performance. These efforts have enabled Toast to strengthen its market position and distinguish itself as a leader in the restaurant software sector. Continued sales growth and margin expansion, coupled with strategic initiatives such as automation and the extensive integration of new technologies, illustrate the company's long-term growth potential.
Investing in Toast therefore represents a strategic opportunity to benefit not only from the company's future growth, but also from its ability to remain at the forefront of innovation in foodservice technology.
Market Brief
Monday
Dow: The index climbed 0.46% to close at 38,852.27 points, following four consecutive sessions of gains.
NASDAQ: The index posted a robust 1.19% gain, ending the day at 16,349.25 points.
S&P 500: The index advanced 1.03% to 5,180.74 points, helped by less robust than expected employment data, suggesting a possible moderation in monetary policy.
The Wall Street trading session ended on a positive note, largely influenced by several key factors. Firstly, the announcement of a ceasefire between Hamas and Israel, supported by Egypt and Qatar, brought a sense of optimism and contributed to the markets' rise in the early afternoon. In addition, Friday's US non-farm payrolls data, which showed fewer jobs added in April than expected and a slight rise in the unemployment rate to 3.9%, reassured investors that the economy was not overheating.
These economic indicators reinforced hopes that the US Federal Reserve (Fed) might cut interest rates later in the year, an action aimed at bringing inflation back towards its 2% target. This prospect was supported by comments from several influential Fed members, including John Williams of the New York Fed, who suggested that current rates were adequate and that rate cuts could eventually be considered. These speeches encouraged a climate of optimism in the markets, contributing to the positive momentum observed during the session.
- Stockss in brief
Apple (-0.91%): Apple shares retreated slightly after rising sharply the previous session, reflecting profit-taking following better-than-expected financial results.
Tesla (+1.97%): Tesla gained nearly 2% after announcing the addition of a new version to its Model Y, sparking investor interest in the electric vehicle manufacturer.
Rivian (+2.58%): On the eve of its quarterly results, Rivian also saw its share price rise, with investors optimistic about the company's performance.
Nvidia (+3.77%), AMD (+3.44%), and Arm Holdings (+5.19%): These microprocessor manufacturers saw their shares rise, providing a significant boost to the technology sector thanks to positive expectations for their results and technological innovations.
Tuesday
Dow: The index edged up 0.08% to close at 38,884.26 points. This modest rise extended the Dow's winning streak, marking its longest period of continuous growth since December.
NASDAQ: Dropped slightly by 0.10% to end at 16,332.56 points. This decline reflects investor caution in the technology sector.
S&P 500: Up 0.13% to 5,187.70 points, thanks to increased interest in certain non-technology stocks.
This session was marked by low volatility and moderate trading volume, typical of a period of consolidation after days of significant gains. Mixed financial results from major companies such as Disney and Palantir influenced market sentiment, but without causing any dramatic movements on the main indices. Caution was palpable among investors, who are awaiting more clarity on the economic outlook and the future direction of interest rates by the Federal Reserve.
- Stockss in brief
Disney (-9.52%): The drastic fall in Disney shares reflects investor disappointment after the company reported massive write-downs affecting earnings, despite revenues increasing only modestly.
Palantir Technologies (-15.09%): The sharp drop in Palantir's share price was due to disappointing forecasts despite a significant increase in earnings, highlighting delays in the growth of government contracts.
Peloton Interactive (+15.53%): Peloton saw its share price rise following rumors of a takeover by private equity firms, signaling a possible reversal of fortune for the company after years of losses.
Spirit AeroSystems (-0.33%): Despite an initial loss of nearly 3% during the session, Spirit AeroSystems limited its losses, ending slightly down after quality control problems were revealed at Boeing, its main customer.
Rivian (-0.77% closing, -3.41% after trading): Rivian suffered a decline after announcing mixed results, but confirmed its production targets, leading to increased volatility in post-close electronic trading.
Electronic Arts (-0.25%, -4.78% after the bell): EA shares fell on the announcement of lower-than-expected quarterly results and outlook, leading to a significant drop after the market close.
Reddit (+2.34%, +17.11% after close): Shares in Reddit surged, continuing their rise after the close, boosted by better-than-expected revenue forecasts for the second quarter.
Wednesday
Dow: The Dow gained 0.44% to close at 39,056.39 points, recording its sixth consecutive day of gains and closing in on its all-time record.
NASDAQ: Dropped 0.18% to end at 16,302.76 points, affected by losses in the technology sector.
S&P 500: Ended practically at equilibrium, with a negligible variation of -0.03 points, at 5,187.67.
The bond market saw an increase in yields, with 10-year government bonds rising to 4.49%, reflecting continued pressure on interest rates. This pressure on rates limited investor enthusiasm, despite the good performance of some companies in the industrial and consumer sectors.
- Stockss in brief
Kyndryl (+27.83%): The company, which inherited IBM's consulting and maintenance activities, enjoyed a strong rise, achieving a notable catch-up.
Uber (-5.72%): The share price fell sharply following the publication of higher-than-expected losses, mainly due to write-downs on investments.
Tesla (-1.74%): Shares retreated following a report indicating a significant drop in its sales in China, exacerbating concerns about its overall performance.
Shopify (-18.59%): Despite better-than-expected results, the company announced a loss and forecast deteriorating margins, leading to a strong negative market reaction.
Tripadvisor (-28.73%): Suffered a drastic fall after reporting larger-than-expected losses and failing to find a potential buyer.
Reddit (+4.05%): The social network saw its shares rise after a financial release that positively surprised investors, although losses doubled compared to revenues.
Lyft (+7.11%): Exceeded expectations with optimistic forecasts for the future, supported by strong demand, contrasting with the performance of its competitor Uber.
- Shopify shares fall sharply on disappointing quarterly results
On Wednesday, Shopify's share price suffered a significant drop, losing $19.59 or 18.5%, ending the day at $86.16. This notable fall came after the company reported a loss for the past quarter and revised downwards its revenue growth forecasts for the following quarter. This slowdown is partly attributed to the sale of its logistics business, a strategic decision taken the previous year that continues to influence the company's financial projections.
In addition, the company anticipates a slight drop in gross margin, as well as a negative influence from a strong US dollar and a decline in consumption in Europe, particularly in the UK where the economy is showing signs of slowing. Nevertheless, Shopify's management remains optimistic about the future, pointing to increased efficiency thanks to the use of artificial intelligence to support merchants, and a more robust infrastructure that enables a high rate of product releases to be maintained.
Net loss: Shopify reported a net loss of US$273 million, or 21 cents per diluted share.
Year-on-year comparison: This loss contrasts with a profit of US$68 million, or five cents per diluted share, achieved in the same quarter last year.
Sales: Sales reached US$1.86 billion, up 23% from US$1.51 billion in the same period of 2023.
Revenue growth forecast: For the next quarter, sales growth is set to slow, with an expected increase of over 10%.
Thursday
Dow: The DJIA rose 0.85%, gaining 331.37 points to close at 39,387.76, marking its seventh consecutive day of gains, the longest streak since December.
NASDAQ: The NASDAQ edged up 0.27%, ending the day at 16,346.26 points.
S&P 500: The S&P 500 index gained 0.51%, closing at 5,214.08 points, helped by less robust than expected employment data.
Wall Street closed higher, buoyed by a fall in bond yields following higher-than-expected weekly jobless claims figures. The unexpected rise in weekly jobless claims to their highest level in nine months at 231,000, against 214,000 expected, initially dampened spirits, but ultimately buoyed the stock market, as it could indicate an easing of the labor market, aligned with the Federal Reserve's goals of cooling the economy and controlling inflation.
Bond yields retreated, with the yield on 10-year Treasuries falling to 4.45%, helping to alleviate concerns about rising interest rates and supporting equity gains. The successful underwriting of a $25 billion 30-year T-bill issue also helped lower yields, boosting stock market sentiment.
- Stockss in brief
Airbnb (-6.87%): Airbnb's share fall reflects investor disappointment after lower-than-expected sales forecasts for the next quarter, despite strong travel demand.
Arm Holdings (-2.34%): Despite better-than-expected revenues for the quarter, Arm's disappointing full-year forecasts led to a fall in its share price.
Roblox (-22.06%): Roblox shares fell sharply after its annual forecasts were revised downwards, casting doubt on the strength of the consumer market.
Tripadvisor (-28.73%): Tripadvisor fell drastically after reporting higher-than-expected losses and failing to find a potential buyer.
Lyft (+7.11%): Lyft exceeded expectations with optimistic forecasts for the future, supported by strong demand, contrasting with the performance of its competitor Uber.
Donald Trump Media (DJT) (+10.41%): Shares in Donald Trump's media company climbed after the announcement of the appointment of a new auditor, despite earlier problems with the stock market regulator.
Ferrovial (-17.10%): The Spanish construction giant got off to a rocky start on the New York Stock Exchange, losing significantly after its IPO.
- Oil prices rebound on lower US inventories and geopolitical tensions
Oil prices rebounded on Thursday, buoyed by a fall in US crude oil inventories and hopes held out for a ceasefire between Israel and Hamas. Brent North Sea crude for July delivery rose 0.53% to $84.02 a barrel, while West Texas Intermediate (WTI) for June gained 0.58% to $79.45 a barrel.
This rebound follows the publication of the weekly report from the US Energy Information Agency (EIA), which revealed a 1.4 million barrel drop in US oil reserves for the week ending May 3. This was a notable drop, especially after an increase of 7.3 million barrels the previous week. Analysts also noted that preliminary data from the American Petroleum Institute (API) had shown a smaller increase, reinforcing the relevance of the EIA data.
Hopes of a ceasefire between Israel and Hamas also played a role in price volatility, although the prospects of this situation having a significant influence on global oil supply are limited. Geopolitical tensions continue to be a key factor in assessing risk on oil markets.
Friday
Dow: The index rose by 0.3% at the start of the session, and over the week, the Dow gained 2.1%.
NASDAQ: Also up 0.3%, with an increase of 1.5% over the week.
S&P 500: Like the Dow and NASDAQ, up 0.3% and 2% for the week.
This positive performance is underpinned by investor optimism following indications from the Federal Reserve that the next rate change is likely to be a stagnation rather than a hike, a favorable backdrop for equities.
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