EARNINGS PANEL: SPCX, NFLX & UAL

Sam Vadas (0:00)

Mixed performance across our major averages right now. The Nasdaq did underperform as tech. It was very much a lopsided, kind of bifurcated trade today with the Mag-7 underperforming there, but the Dow Jones are holding its head above water, up 1% and the Russell 2000 up 1.7% as well. So the S&P, 77.12, up 3 tenths of 1%. So a mixed performance for US equities today, but we're starting to get these earnings coming in through by the wire. So let's just get over to Marley with the numbers for United Airlines Q3 report.

Marley Kayden (0:33)

Just looking at them as they're coming across Sam and it appears to be a bit of a mixed picture here for United. EPS coming in for the third quarter at 254 The expectation was for 261, so they missed there. Revenue is at 17.98, that's 17.9 billion even, excuse me. That is in line to perhaps maybe slightly a little under the 17.91 that was expected. Their CapEx they're saying is up 46% year over year at 2.14 billion. Available seat miles for the quarter coming in at 88.54 billion. The estimate was looking for 88.74. Passenger revenue at 16.24 billion. The street was looking for 16.3.

Third quarter passenger miles here, 74.28 billion. The estimate looking for 74.91, so a little bit under there as well. Their third quarter fuel expenses they're saying were up to $1.8 billion overall for the fourth quarter. They're seeing EPS between 50 cents to $1.50, so a very wide range, but the range itself entirely misses the street estimate, which was looking for $1.88.

So they are falling now. We're down about 2.4% as we take a look at these numbers here. I want to bring KG back into the conversation. Kevin, I mean, as you look over these numbers, United was arguably expected to be one of the top performers in terms of the read-through on the consumer and the airlines overall. And this is a mixed picture at best.

Kevin Green (2:04)

Yeah, and you know, this is not only just dependent on the fuel surge that they've seen as far as the cost, and that's eating into margins, obviously. If you take that aside, you are actually seeing an environment where United Airlines, as well as other airline companies, have actually constricted some of their capacity in order to reduce some costs, but also kind of give a little bit more pricing power when it comes to the consumer. This is kind of reflecting that the consumer is coming in a little bit light here. The passenger mile number actually did miss the street's expectations. So even you take the fuel costs outside of this, they are not actually meeting the street's expectations when it comes to actual demand. And that's why we are seeing the shares move to the downside. And their guidance moving forward, obviously is going to come in a little bit light, but this is going to be a very interesting move when it comes to UAL tomorrow.

Marley Kayden (2:51)

Yeah, I mean, it certainly is. Sam, I want to jump to you just really quickly for thoughts here on United as we're getting a barrage of earnings coming across here.

Sam Vadas (3:00)

Yeah, I'll just let you stomach those. My two cents, obviously, it is a good read on the consumer to KG's point. So obviously, we've had an update on that, but it's also a very good corporate read on how they're managing these fuel prices. I mean, Delta had already set the tone. It cut its outlook. They don't have a demand problem. They've obviously got a fuel problem. That was alarming to some degree because that was a better hedged airline, as far as the exposure to refineries. This isn't as hedged like Delta. So the big question was whether they could offset some of those higher fuel costs as well, whether they could hang on to that profitability in the face of, yes, revenue growing across the board, although perhaps coming off as far as the estimates, but costs rising even quicker here. I'll just throw something in here. I heard Ryan Ayers, CEO today, saying that European airfares will see their biggest increase in history next year, particularly with the airlines that are unhedged against higher fuel costs. So I just thought that that would be interesting to add there as that's what the Europeans are currently dealing with in the face of these higher fuel costs.

Marley Kayden (4:02)

We've had a lot of conversations about whether or not that pressure on the traveler and the consumer is going to show up, and this may be a glimpse that it is starting to show up with some of those passenger miles and passenger revenue misses here. But SpaceX has come through, so I want to jump to SpaceX right now. We saw a pretty significant pop right away, up about 2%. They've given a lot of that back. We're still higher, but let's go through these numbers. The street was looking for revenue growth about 60% year over year. Well, they missed that by about 100%.