The higher stock market indices like the Dow Jones and S&P 500 (SPY) rise, the more the downside risks for underperforming businesses.
In the communications sector, Viasat (VSAT) fell on May 22, 2024, after posting a 24-cent EPS loss. The stock managed to regain some of the decline as bargain hunters stepped in. Investors need to wait for a key milestone on its ViaSat-3 F2. The F2 service will not come online until the calendar year of 2025. It has corrective actions scheduled for late CY 2024.
Viasat projects accelerated revenue and adjusted EBITDA growth in FY 2026, driven by new satellites entering service.
In China technology, Alibaba (BABA) lost post-earnings momentum when it issued $4.5 billion senior convertible notes. Shareholders assume that the firm needs to raise offshore cash because onshore cash is inaccessible to foreign shareholders. Fierce competition from JD.com (JD) and especially PDD (PDD), which runs Temu globally, is Alibaba’s primary headwind.
In the fintech sector, PayPal (PYPL) risks re-testing lows below $60. The stock climbed briefly above $70 after posting quarterly results. On May 21, 2024, the firm entered an underwriting agreement to sell $1.25 billion in senior notes. Notes maturing in 2034 will cost 5.15% in interest, while those due in 2054 have a 5.5% interest rate.
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