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Block outages, Kroger sells stores, RH outlook: Trending Tickers

Mobile payment company Block (SQ) has restored its systems after widespread outages reported over the past two days. Supermarket chain Kroger (KR) will be selling over 400 stores to C&S Grocers while juggling a $1.4 billion opioid settlement and plans to go ahead with an Albertsons (ACI) merger. Lastly, Restoration Hardware (RH) shares tumble after a strong second-quarter earnings beat and CEO Gary Friedman's warnings on housing market headwinds.

Yahoo Finance Live shines a light on several of the top trending stocks after Friday's closing bell.

Video Transcript

SEANA SMITH: Shares of Block, the payments platform in the red after experiencing widespread outages over the last two days. Many sellers were not able to access the platform. And therefore, could not process their payment service. Has now been restored. But it has done little here for the stock, closing the day off just about 5%.

And, Akiko, we saw shares fall to the lowest level that we've seen since last year, since about November. And you talk about the fact that Block has had some trouble already this year. The stock in the red since the start of the year, well off about 80% off the highs that we saw back in 2021. So obviously, a bit of a concern here for investors.

AKIKO FUJITA: Yeah. And, Seana, on a personal level, I saw the impact, right? There are millions of small businesses that use that white square, as we know it, to process payments. And so many of them had to turn to cash because of that shutdown. So certainly, a widespread impact. Yes, things have been restored.

But Block releasing or Square, I should say, releasing a statement saying once the outage has been fully investigated. We plan to publish a full review of this issue and determine what steps we can take to prevent it from happening. Worth noting, the cash app also owned by Block also experienced an outage. So certainly, not a good look at a time when we have seen that stock really pull back in a big way. And, again, worth repeating that stock at its lowest close since October of last year.

Shares of Kroger closing the day in the green despite the grocer seeing sales come in below expectations in the second quarter. The company also announcing a $1.4 billion opioid claim settlement. Investors though, rallied behind the announcement that Kroger is selling more than 400 stores to C&S Wholesale Grocers.

It's interesting to me, this is kind of the latest company to report that writedown that comes from that opioid settlement. But at least for today, it does seem like those 400 stores being sold off certainly what investors are focusing on while we're seeing that stock up more than 3%.

SEANA SMITH: Yeah, certainly. And I think that payment and the fact that inflation is still very much a challenge here for these consumer-facing companies. They were a little bit cautious here in their guidance. But you're right, the news of the fact that they're planning to divest more than 400 stores to C&S Wholesale Grocers really is what's driving today's price action at least.

And Kroger, this is just the latest step, right, doing everything they can to get regulatory approval for that $24.6 billion deal with Albertsons.

I was going through some Wall Street commentary here. And Bernstein out with a note saying that this is the first tangible signal that a successful outcome of the Albertsons deal closing is near. So optimistic tone there from the Street. We'll see whether or not they are able to get approval for their deal, again, almost a $25 billion deal.

All right. Well, RH shares selling off today after CEO Gary Friedman warning about more trouble ahead. He also doesn't see the environment stabilizing until next year, pointing to weakness in the housing sector, higher mortgage rates. Mortgage rates at the highest level that we've seen just about 20 years, significantly slowing activity within the housing sector.

And that trickling down to what the activity RH is seeing. I guess, people are not moving. They're less likely then to go out to RH Restoration Hardware, as many people know it and buy new furniture. So they're clearly having a very tough time, Akiko. The stock closing off just about 15%.

But on the second quarter earnings report, when you take a look at that top and bottom line numbers, the numbers were pretty decent. So it's that cautious commentary here that's really driving the direction of shares today.

AKIKO FUJITA: Yeah. It is really about the outlook. You pointed to what we heard from the company. The company now operating under the basis that rates, current rates are likely to remain unchanged until the second quarter of 2024. So I mean, this is a company that competes right at the heart of that luxury housing market. Things certainly haven't been looking good.

And we've talked so much about that discretionary spending being pulled back. You know, RH really at the center of that as well. So that stock now more than 15% today on the back of those numbers.