Tesla (TSLA) shares are soaring in premarket trading after CEO Elon Musk said at today’s annual meeting that shareholders approved his $55.8 billion compensation package and supported the electric vehicle (EV) maker’s move to reincorporate in Texas. Adobe (ADBE) shares are modestly higher ahead of the Photoshop maker’s second-quarter earnings release after the close, which will focus on AI monetization. The Producer Price Index (PPI) release is scheduled for this morning and is expected to confirm the trend of easing inflation. Broadcom (AVGO) shares are surging after second-quarter earnings beat expectations, driven by sales of AI products, and a 1-for-10 stock split. Gaming-themed restaurant chain Dave & Buster’s Entertainment (PLAY) shares are tumbling after first-quarter earnings fell short of expectations. U.S. stock futures were mixed after the Nasdaq and S&P 500 closed at record highs again on Wednesday after Consumer Price Index (CPI) data showed inflation slowed in May and the Federal Reserve tentatively forecast one interest rate cut by the end of the year. Here’s what investors need to know today.
1. Tesla shares surge as Musk claims victory in shareholder vote on $55.8 billion compensation package
Tesla ( TSLA ) shares are up more than 6% in premarket trading after CEO Elon Musk said late Wednesday that shareholders are expected to approve a $55.8 billion compensation package and the electric vehicle maker’s reincorporation in Texas at the company’s annual meeting today. “Both Tesla shareholder resolutions have now passed by large margins! Thank you for your support!” Musk said in a post on X late Wednesday. The compensation plan was approved by investors in 2018, but a Delaware court earlier this year sided with investors who sued Tesla over what they said was excessive compensation. The shareholder vote could affect Musk’s ranking as the world’s richest person and Tesla’s stock price, and analysts at Jefferies and Piper Sandler have warned that a rejection of the compensation package could cause Tesla’s shares to fall.
2. After Bell, Adobe AI monetization will be in focus in Q2 results
Adobe (ADBE) shares are modestly higher after the close ahead of the company’s fiscal 2024 second-quarter earnings report. Investors are looking for continued momentum in the company’s digital media division as well as insights into the Photoshop maker’s artificial intelligence (AI) monetization strategy. Adobe recently announced it would add an AI assistant subscription add-on to its other products, which could help the company more effectively monetize the emerging technology and compete with other big tech companies. Still, the company’s shares have fallen by more than a fifth this year and are “weakened by competitive concerns and disappointing near-term genAI monetization expectations,” Deutsche Bank analysts said recently.
3. The Producer Price Index (PPI) due to be released today is likely to confirm the moderating trend in inflation.
The Producer Price Index (PPI) is scheduled for release at 8:30 a.m. Eastern time and is expected to continue the trend of subdued inflation reflected in yesterday’s May CPI reading. The report will be closely watched as wholesale prices rose 2.2% year-over-year in April, the biggest increase in a year. Economists surveyed expect inflation to rise 0.1% in May, down from 0.5% in April. Dow Jones Newswires and Wall Street Journal, Meanwhile, core PPI, which excludes volatile food and fuel prices, is expected to rise 0.2% from 0.4% in April. The Federal Reserve on Wednesday kept interest rates unchanged and lowered its forecast for one rate cut this year to one, even though May CPI data suggested price pressures were easing. The weaker-than-expected PPI reading could affect Fed officials’ plans for rate cuts this year.
4. Broadcom soars on top-selling revenue and stock split plans
Shares of chipmaker Broadcom (AVGO) soared more than 13% in premarket trading after the company reported better-than-expected second-quarter earnings, helped by record sales of AI products. Broadcom Chief Executive Officer Hock Tan said demand for AI and VMware, the cloud-computing company it acquired late last year, also boosted results. Following in the footsteps of Wall Street darling Nvidia (NVDA), Broadcom has also announced a 10-for-1 stock split, which the company said is intended to make its shares “more accessible to investors and employees.”
5. Dave & Buster’s reports weaker-than-expected first-quarter results
Shares of Dave & Buster’s Entertainment (PLAY), the gaming-themed restaurant and entertainment chain, fell more than 10% in premarket trading after the company reported weaker-than-expected first-quarter results amid what CEO Chris Morris described as a “complex macroeconomic environment and consumer demand curve.” The company reported diluted earnings per share of 99 cents, well below analysts’ expectations of $1.73 per share. Revenue for the quarter was $588.1 million, down 1.5% from a year ago and below the $616 million consensus estimate. Additionally, same-store sales fell 5.6% from a year ago, a bigger drop than the consensus estimate of a 3.8% decline.
