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Liberty Media Formula One Group, Volkswagen, Twitter and Facebook highlighted as Zacks Bull and Bear of the Day

Zacks Equity Research
Is (WM) Outperforming Other Business Services Stocks This Year?

For Immediate Release

Chicago, IL – July 10, 2018 – Zacks Equity Research highlights Liberty Media Formula One Group FWONA as the Bull of the Day, Volkswagen VLKAY as the Bear of the Day. In addition, Zacks Equity Research provides analysis onTwitter TWTR and Facebook FB.

Here is a synopsis of all four stocks:

Bull of the Day:

The market has bounced back with a vengeance after bottoming out last Tuesday. Something about the Fourth of July has investors cheering the domestic market. I’m sure easing of trade fears has a little something to do with that. Today’s Bull of the Day is a stock that’s in the media business but also runs one of the most famous racing championships in the world. I’m talking about Liberty Media Formula One Group.

The group owns 100% of the iconic Formula One motorsports business. In addition, it owns 15% of the MLB’s Atlanta Braves, 33% of Associated Partners LP, a 34% stake in Live Nation Entertainment and a chunk of a host of other businesses. A detailed list of their assets is available on the company’s website.

The company is a Zacks Rank #1 (Strong Buy) stock in an industry that ranks in the Top 7% of our Zacks Industry Rank. The reason for the favorable Zacks Rank stems from a series of increased earnings estimates coming from analysts. Over the last thirty days, analysts have dramatically increased their estimates for the current quarter and current year. Our Zacks Consensus Estimate for the current quarter has jumped from 39 cents to 57 cents. The current year consensus number went from a 71-cent loss all the way to a 36-cent gain.

This is coming on the heels of last quarter’s earnings report where the company reporting just a 7-cent loss versus expectations calling for an 80-cent loss. The previous quarter, earnings came in at $1.79 despite analysts expecting a 26-cent loss.

Bear of the Day:

The dramatic scandal of “Dieselgate” has been well documented. It refers to Volkswagen’s use of cheat devices to trick emissions testing equipment into believing their diesel automobiles were much better for the environment than they really were. The fallout has been terrible for Volkswagen, leading to fines, firings, and even indictments for former board members. Despite all that negativity, that’s not why I’m naming Volkswagen today’s Bear of the Day.

Volkswagen together with its subsidiaries, manufactures and sells automobiles primarily in Europe, North America, South America, and the Asia-Pacific. The company operates through four segments: Passenger Cars, Commercial Vehicles, Power Engineering, and Financial Services. It provides its products under the Volkswagen Passenger Cars, Audi, SKODA, SEAT, Bentley, Porsche, Volkswagen Commercial Vehicles, Lamborghini, Bugatti, Ducati, Scania, and MAN brands, as well as under the MOIA brand.

The reason for naming it the Bear of the Day lies in the recent negative activity coming from analysts. It’s a Zacks Rank #5 (Strong Sell) in an industry that ranks in the Bottom 9% of our Zacks Industry Rank. Looking at the earnings estimates for the current year and next year, two analysts have cut their numbers. The negative moves have brought down our Zacks Consensus Estimate for the current year from $6.68 to $6.15. Looking at the next year’s numbers, the estimates have come down from $6.90 to $6.62.

Additional content:

Here’s Why Twitter (TWTR) Dropped Yesterday

Shares of Twitter were down more than 5% Monday after reports suggested that the social media company has suspended more than 70 million accounts during May and June.

That figure was first reported in an investigative piece from The Washington Post which detailed Twitter’s recent efforts to “lessen the flow of disinformation on the platform.” Data obtained by The Post reportedly showed that Twitter has been suspending more than 1 million accounts per day in recent months. This suspension rate was later confirmed by Twitter, The Post said.

What’s more, an anonymous person familiar with the situation cited by The Post mentioned that the removal of unwanted accounts may result in a rare decline in Twitter’s monthly active user (MAU) count for the second quarter.

Twitter, like domestic social media peer Facebook, has faced scrutiny after its platform was used as a tool in Russia’s disinformation campaign during the 2016 U.S. elections. Among other things, a so-called “troll factory” based in St. Petersburg used platforms like Twitter to deceive voters and exacerbate tensions among the public.

Twitter’s aggressive removal of harmful or fraudulent accounts underscores a company-wide shift for the San Francisco-based firm, which long resisted content curation in favor of operating a totally free speech platform.

Management has suggested that Twitter’s crackdown would not have a significant impact on the platform’s MAU total—which was at about 336 million at the end of Q1—but The Post said its data creates questions about the company’s previous estimates.

“But Twitter’s increased suspensions also throw into question its estimate that fewer than 5 percent of its active users are fake or involved in spam, and that fewer than 8.5 percent use automation tools that characterize the accounts as bots,” wrote Craig Timberg and Elizabeth Dwoskin.

Investors might also be concerned that Twitter’s user crackdown is adding to the company’s labor costs. We have seen Facebook increase its headcount and ramp up spending to counteract abusive behavior, and it seems logical that Twitter might face similar headwinds.

But up to this point, earnings trends have been favorable for Twitter’s second quarter. The Zacks Consensus Estimate for the period has trended five cents higher over the past 90 days, with analysts now calling for adjusted quarterly earnings of 17 cents per share.

This result would represent year-over-year growth of 112.5%. Revenue estimates are projecting net sales of $700 million, which would mark growth of 22.0& from the prior-year quarter.

Twitter is expected to announce its Q2 results before the market opens on July 27.

Want more market analysis from this author? Make sure to follow @Ryan_McQueeney on Twitter!

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About the Bull and Bear of the Day

Every day, the analysts at Zacks Equity Research select two stocks that are likely to outperform (Bull) or underperform (Bear) the markets over the next 3-6 months.

About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous analyst coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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