PayPal, Schlumberger, Super Micro Computer: Trending Tickers

Tue, Jan 30, 2024, 12:45 PM

JOSH LIPTON: Let's check in on some trending tickers here. We're gonna start off with PayPal rising higher as the company-- well, now we're ticking lower by about 2/10 of a percent. Headlines, that's going to reduce its workforce by about 9% this year, as chief executive officer, Alex Chriss, looks to cut costs and improve profits.

So that's the headline we're seeing here, Julie. PayPal will reduce its workforce by about 9% in a letter to staff on Tuesday. This per Bloomberg, Chriss saying the decision was made to rightsize the company. Affected staff apparently are going to be notified by the end of the week. We saw a similar round of cuts last year in this time, last January. And [INAUDIBLE] is going to affect about 2,500 workers.

JULIE HYMAN: Yeah, and we've been talking a lot about cuts recently, haven't we? You said the shares rose because they did rise, initially, after this headline came out, and then they kind of dipped back down again, maybe because PayPal has a lot of issues before it in the eyes of investors.

We also learned today that Block was cutting jobs, the artist formerly known as Square. It has a goal to cap its workforce at 12,000 people. And so that's why it was doing its cuts. We talked earlier about UPS, which announced cuts of 12,000 workers. So in other words, it's cutting the same number of workers that Block wants to cap its workforce at, which just shows you the size of UPS.

What struck me in the UPS announcement is, CEO Carol Tomé said, those workers are never coming back. This is not a temporary reduction. It's sort of a secular permanent change in the way they do business, that they want to be more efficient and use technology more. But it's just interesting in the context of all of these other cuts, all of these companies just really focusing on efficiency, and not in the case of UBS, but in a lot of these cases, being rewarded by investors.

JOSH LIPTON: Yeah, and PayPal specifically was interesting. We always talk about the kind of idiosyncratic puts and takes. I mean, PayPal is an interesting one. And we've talked a lot about this name because you do have a new CEO, Alex Chriss, named CEO over the summer. And we've talked about how the Street has actually become gradually more cautious on this name. You have seen a number of recent downgrades for different reasons, whether it's competition or pressure on profitability. But the stock, it's up about 4% or 5% this year, but still down about 20% over the last 12 months.

JULIE HYMAN: Yeah, definitely. Let's move to the oil patch, shall we? Shares of Schlumberger slipping today after Aramco, the Saudi Arabian oil company, said the Saudi government has ordered it to not ramp up its oil production capacity. Aramco said it had been working to increase its production capacity to 13 million barrels a day. Schlumberger and the other oil field services providers falling on the news. Now, why is this a big deal? Well, first of all, Saudi Aramco is huge.

JOSH LIPTON: It is the largest oil company on the planet.

JULIE HYMAN: Exactly. Secondly, this is a big reversal for the company. It had been planning to boost capacity. Now it's planning to draw back. So there are lots of implications. Obviously, there are implications for these companies and demand for their products, and there are implications for what the Saudi Kingdom believes is the long-term demand for oil, which is quite interesting.

JOSH LIPTON: Yeah, I mean, I thought it was a [INAUDIBLE] because, one, as you put it, Julie, the first question is, OK, that's really interesting, how the Kingdom is thinking about what global oil demand looks like in the future. Also, where the Kingdom is putting money to work. You know, I mean, crude is, of course, listen, it's still foundational, obviously, to the Saudi economy.

But we know they've been expanding natural gas, chemicals, right, renewables. Bloomberg, by the way, citing sources. It says it's those businesses I just named likely get a share of the money saved from the oil capacity expansion. So there are a lot of different, interesting threads. I would say, listen, Schlumberger got hit on this news, but a number of names did, too. Halliburton, I saw down. Baker Hughes as well.

JULIE HYMAN: Yeah, Weatherford as well. Yeah, really interesting story.

JOSH LIPTON: One to watch for sure. All right, let's finish it out here. Super Micro Computer shares surging today. Look at that pop. That's after earnings beat on the top and bottom lines. Company also raising guidance for the full year.

A couple interesting-- so obviously, the server maker here, they reported investors liked what they saw. Q2 net sales, 3.66 billion, Julie. That was a beat. They raised their revenue estimate for the year. They now, it looks like, see fiscal year revenue between $14.3 and $14.7 billion. Big move already this year. I mean, this stock jumped not only this year, but this follows a jump of about 235% in 2023.

JULIE HYMAN: Wow. This comment from the analysts at Barclays stood out to me. They said, one of the takeaways from the call with management is that AI demand is still outstripping supply, which, obviously, has potential takeaways for AMD, which reports after the close today, NVIDIA, and many of the other server and semiconductor companies that are servicing this booming AI universe, if you will. So we'll see if, indeed, there's the followthrough.

JOSH LIPTON: Yeah, and other analysts were saying, Julie-- I saw some notes-- yes, very strong demand with this name. No doubt you're seeing the reaction. How much is already priced in, they were asking, is worth noting after the kind of ramp you saw here.

JULIE HYMAN: Always a good question.

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PayPal, Schlumberger, Super Micro Computer: Trending Tickers

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