CE 100 Index Gains 1.3% as Ocado’s Surge Offset by LendingClub, Snap Declines

Earnings season is now in full swing, dominating headlines, moving stocks in our ConnectedEconomy™ 100 Index up double-digit percentage points — and to the downside, too.

The index was up 1.3%, led by the Shopping pillar, which surged by 6.9%.

And within that segment, Ocada posted an impressive 42% leap. 

Ocado Sees Potential in the U.S.

As reported here, Ocado CEO Tim Steiner during the company’s most recent earnings report that the U.S. has “a lot of growth to go” when it comes to the economics of online grocery, relative to other countries.

“There’s a lot for [the U.S.] to learn and there’s changes they need to make on their own software front … to drive the type of efficiencies that we would look for in other markets. But it is theoretically still the goal that those warehouses in the U.S. will generate higher EBITDA and higher PBT returns than the stores can,” he said during the conference call with analysts. And as noted within those results, for the first half of the year, delivery sales were up by 30% year over year (YoY). 

Ocado’s earnings materials show that revenue was up 9%; Technology Solutions’ top line surged 59%, and Ocado Logistics gained 2%. Customers were up 10.6% YoY in the first half to 959,000.

Pinduoduo rallied 17.6% on the heels of its latest report that showed 58% growth in sales YoY, buoyed by a 4% increase in average monthly active users to 751.3 million. Active buyers were up 7% to 881.9 million.

But the Communicate pillar slid 4.2%, as Snap lost 16%.

The company’s earnings showed a second straight quarterly decline in sales, at $1.07 billion, a 4% decrease YoY.

During the earnings call, Evan Spiegel, CEO of Snap, acknowledged, “We are still far from achieving the revenue growth to which we aspire.” Average revenue per user was $2.69 in the second quarter of this year, compared to $3.20 in the same period a year ago. The revenue declines came despite the fact that daily active users were 397 million in the second quarter, up 14% YoY. In North America, the growth rate came in at 2% to 101 million daily active users. Revenues from North America slid by 13% YoY to $687 million. 

And within earnings related news, LendingClub led declining stocks, off 18%, in turn taking the Bank segment down 0.5%. 

LendingClub’s looking ahead to testing and launching an integrated mobile app that combines lending, spending and savings activity into what CEO Scott Sanborn depicted on the company’s earnings call as a “a single experience.”

Users can also monitor their debt and prioritize payments to manage costs. But in the meantime, there’s pressure on loan origination volumes.

Presentation materials and the earnings release show that loan originations in the most recent quarter were $2 billion, down 13% from the first quarter and down 47% from a year ago. 

Banks, said Sanborn, are “moving to the sidelines” as they address capital and liquidity concerns, and the pullback is having an impact on LendingClub’s loan origination volumes. Banks are selling loan portfolios at deep discounts, which in turn is adding supply into a saturated market.

“The environment will continue to challenge our ability to drive meaningful growth for at least the remainder of 2023,” Sanborn said.

Elsewhere, iRobot’s stock lost 16.6%, helping drag the Live segment down 1.5%. Amazon is reportedly paying 15% less to acquire the company — at $51.75 per share, from $61.00 per share. In an announcement, Amazon said the amended agreement comes as iRobot has entered into a $200 million financing facility to fund its ongoing operations.