Bear Market or Bull Trap? Markets Rebound on Tariff Truce, But Risks Remain
- May 16
- 20 min read
Updated: May 23
Friday, 16th of May
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What Moved The Market This Week
The trading week began with a bang in the tariff dispute, lifting market sentiment. Negotiations between representatives of the Chinese government and U.S. officials in Geneva, Switzerland, yielded surprisingly swift results: both sides agreed to reduce tariffs for 90 days. The U.S. will lower tariffs on Chinese imports from up to 145% to 30%, while China plans to cut tariffs on U.S. imports to 10%.
U.S. Treasury Secretary Bessent stated that the 90-day pause could be extended. "As long as there is good-faith effort, engagement, and constructive dialogue, we will keep making progress," Bessent said at a press conference. Investors cheered the announcement, though uncertainty about a final agreement remains.
The sharp rebound in market sentiment is evident in the S&P 500, which has risen over 20% from its April low this week alone. Technically, this signals the beginning of a bull market. The index has climbed more than 1,000 points within a month. In addition to tariffs, attention is turning to inflation data and the question of whether and when the Fed will cut interest rates. Recent data suggests the Fed has opened the door to rate cuts but is not rushing due to easing trade tensions.
The current rally is primarily driven by retail investors.
Is the bear market over?
Historically, bear markets last about 9.5 months. If it were over now, it would be one of the shortest bear markets in history. The current bear market began on April 2, 2025, following sweeping U.S. tariffs announced by President Donald Trump, which triggered a sharp global market sell-off. Over 40 days have passed since then.
While it’s too early to say definitively, several factors suggest the bear market may not yet be over.
Arguments for a bull market:
Institutional positioning remains low. Professional investors are now being forced into the market by their models.
The earnings season showed stable to rising profit expectations.
The U.S. labor market remains strong.
Inflation is moderate, with consumer prices relatively stable.
Long-term impact of tariffs: Even though tariffs have been lowered between the U.S. and China, they remain significantly higher than before and overall at elevated levels. If they stabilise around 10%, the economy and consumption might remain relatively stable. The economy could absorb this, but inflation will likely rise. That would make rate cuts increasingly unlikely.
Arguments for continued bear market:
Duration: At just over six weeks, this bear market has been relatively short.
Bear market rallies: Temporary recoveries, like the current one after the 90-day tariff truce, are common and often misleading.
Volatility and breadth: The VIX remains elevated, indicating ongoing nervousness. Market breadth is weak, with few stocks leading the rally.
No fundamental easing: Tariff policy is only temporarily relaxed. Economic consequences (e.g., to supply chains, profits, consumer behaviour) will emerge with a delay. Uncertainty remains high.
Macro indicators: Early signs of weakness in PMI data and corporate earnings. Credit spreads are widening slightly, with no clear signal of a sustained recovery.
Conclusion: The likelihood that the bear market has ended is low to moderate. A clear political or economic turning point is still missing. Caution is advised. It's not out of the question that we will see new lows later this year.
U.S. Economy
Inflation was slightly lower than expected in April. The consumer price index rose 0.2% from the previous month. Year-over-year inflation stood at 2.3%, compared to analysts' expectations of 2.4%. Core inflation (excluding food and energy) was 2.8%, matching consensus estimates.
What are the analysts saying?
JP Morgan: It looks very much like the S&P 500 is preparing to make a run toward new all-time highs (6,144 points). First: macroeconomic data. We’re currently in a market environment where good news is received as good – and bad news is simply ignored. The U.S. April jobs report showed no negative effects from the trade conflict – something that could change with future data. For now, the rule is: anything above consensus estimates is rewarded by the market; anything below is ignored, as it predates the recent easing in U.S.-China tensions. Second: even if yesterday's market movements were partly driven by short covering (or nerves?), high bond yields are likely to drive investors back into large-cap quality stocks rather than small- or mid-caps. Third: the JPMorgan Tech Momentum Conference may funnel additional capital into mega-cap tech stocks. Fourth: should the short-term rise in yields and the U.S. dollar continue (1–2 months), capital flows could increasingly return to the U.S. equity market – most easily via the tech sector. Fifth: a broader market rally could develop if the narrative shifts between "reflation" and a "Goldilocks" scenario. That would also support cyclicals – especially financials, industrials, and semiconductors. All in all, we see further upside potential.
Mike Gormley adds:
The 90-day window with China is likely to trigger another wave of front-loaded demand – especially in anticipation of tariffs potentially returning to 145% after the period ends. With prior focus on supply bottlenecks and the pressure on small businesses from China tariffs, there was hardly any time for preparation. Another quarter of front-loaded demand appears likely.
Even if one wonders “what’s the point?” if tariffs are eventually cut again – these now come with purchase commitments. Each of these agreements is GDP-positive and stimulates investment in the U.S. This also applies to future deals with other countries – as long as tariffs drop.
The de-escalation is not purely a U.S.-China phenomenon: over the weekend, Ukrainian President Zelenskyy agreed to meet with Vladimir Putin in Turkey on Thursday for ceasefire talks – possibly in the presence of Donald Trump. A ceasefire has also been agreed between Pakistan and India. Geopolitical tensions are easing globally.
Without tariff pressure, the first quarter shows a robust economic picture. Mislav Matejka points to solid earnings: with 85% of S&P 500 companies having reported, we’re seeing 4% revenue growth (50% beat by 1%) and 12% earnings growth year-over-year (77% beat expectations by 9%). U.S. exceptionalism may be fading in some areas – but it remains intact in equities. Without the drag of trade conflict, the focus returns to strong fundamentals.
Gormley’s conclusion: A sustainable move of the S&P 500 above the 6,000-point mark and beyond is realistic – supported by geopolitical de-escalation, renewed front-loaded demand in Q2, robust hard data, strong Q1 results, and supportive positioning. May could be the month where all these factors converge – before summer brings renewed complexity from debt ceiling issues, tax debates, and the expiry of the 90-day tariff truce.
J.P. Morgan Chief Economist Michael Feroli believes that "the recent softening of some of the more draconian tariffs on China by the administration should reduce the risk of the U.S. economy slipping into recession this year." Recession risks remain elevated, but now sit below 50%. Following the latest tariff cuts, the effective tariff rate is estimated to fall to 14% from 24%. Ultimately, this amounts to a kind of tax cut worth around $300 billion for U.S. consumers.
The removal of this “tax” should ease consumer spending pressures and, according to Feroli, shift growth prospects for the second half of the year “from mild contraction to modest growth.” At Goldman Sachs, the probability of a recession in the next 12 months has dropped to 35%, down from 45%, while the GDP forecast for the year has been raised from +0.5% to +1.1%.
Goldman Sachs reports in its latest "Pulse Check" analysis that market conditions have significantly improved. Volatility – as measured by the VIX – has dropped to 17, providing a constructive environment to renew hedges or take on new risk. At the same time, market liquidity has recovered sharply: order book depth in the S&P 500 is now around $9.8 million, eight times the April low and about 28% above the year-to-date average. These developments point to a “healing” market where investors are becoming cautiously more optimistic. Investor sentiment has also brightened somewhat – without tipping into euphoria.
Particularly notable is the continued strong participation of retail investors. Despite seasonal weakness in May, no capital outflows are visible. Retail investors remain active and are a key force behind current market strength – a phenomenon Goldman Sachs sees as a vital driver of the rally.
On the side of structural buyers, there are clear signs of increasing support. So-called CTAs – algorithmic trend followers – have significantly reduced their short positions in U.S. equities and could soon purchase up to $14 billion in stocks, potentially as much as $21 billion, if markets remain stable or improve. This would shift them from net short to net long. Key technical levels in the S&P 500 that could trigger such flows are currently 5,610 (short term), 5,746 (medium term), and 5,496 (long term).
Systematic strategies like volatility control and risk parity models are also increasing their risk exposure. Their current positioning is still about 40% below the historical average of the past two years – signaling further upside potential. Realized market volatility has also dropped sharply – in the S&P, from a yearly high of 43 to just 15.
On the hedge fund side, data from prime brokerage shows fading short covering, especially in ETFs. In equities, activity is nearly neutral. Short positions in traditional sectors like utilities, energy, healthcare, and industrials have been particularly covered. Fundamentally driven long/short hedge funds are up about 1.8% so far in May, while systematic funds are slightly negative but up 11% year to date.
Goldman Sachs currently recommends using short-dated call options on the S&P 500 and Nasdaq 100, as they are relatively cheap due to low implied volatility. For example: SPY June 610 calls are trading around $3 (implied vol: 13.4%). Alternatively, they suggest lookback puts – a specialised option structure offering better protection on pullbacks than traditional puts.
In fixed income markets, Goldman remains cautious: although rate volatility has had little effect on positioning so far, they note that it could regain relevance soon – particularly if new macroeconomic catalysts emerge.
Overall, the analysis paints a picture of a resilient and stabilising stock market. Market structure has improved, technical buyers are ready, and retail investors remain engaged. Despite the positive indicators, sentiment is still measured – there is no sign of euphoria. Analysts advise caution, but see further short-term upside potential.
Reported Quarterly Earnings This Week
Alibaba Group Holding Ltd. (NYSE: BABA)
Key Financial Highlights:
Revenue: Increased by 7% year-over-year to ¥236 billion (approximately $32.58 billion), slightly below the anticipated $33.24 billion.
Adjusted Net Income: Rose by 22% to ¥29.85 billion ($4.11 billion).
Adjusted Earnings per ADS: Came in at $1.73, marginally under the expected $1.74.
GAAP Net Income: Reported at $1.71 billion.
Segment Performance:
Taobao & Tmall (Domestic E-commerce): Revenue grew by 9% year-over-year, reflecting a modest recovery in China's consumer spending.
Cloud Intelligence Group: Achieved an 18% revenue increase, marking the seventh consecutive quarter of triple-digit growth in AI-related products.
International Digital Commerce: Sales surged by 22%, driven by strong performances from platforms like AliExpress and Trendyol.
Outlook:
Alibaba's management remains optimistic, emphasizing continued investments in strategic areas such as cloud computing and international expansion. The company also highlighted its commitment to returning value to shareholders through share repurchases and dividends.
Market Reaction:
Despite the positive growth in key segments, Alibaba's stock declined by approximately 7.6% following the earnings release. Investors reacted to the slight misses in revenue and earnings expectations, as well as concerns over a slowdown in Chinese consumer spending and intensified competition in the e-commerce sector.
Analysts:
Gary Yu, an analyst at Morgan Stanley, describes Alibaba as a “catalyst-driven idea” ahead of the e-commerce company’s fourth-quarter earnings release on May 15. According to the analyst, Alibaba continues to benefit from robust demand for AI inference in China. With its cloud offerings, Alibaba serves as an “AI enabler,” and with its applications, as an “AI adopter.”
Yu believes that AliCloud will benefit from growing demand for AI compute power, especially as other hyperscalers like Tencent and Bytedance are prioritising internal demand. This positions AliCloud as a “unique cloud service provider (CSP) with a substantial share of external customers.”
The analyst sees upcoming cloud revenue growth as the next key catalyst for Alibaba’s stock performance. He maintains an “Overweight” rating on the stock, with a price target of $180.
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American Eagle Outfitters (NYSE: AEO)
Key Financial Highlights:
Revenue: Approximately $1.1 billion, marking a 5% decrease compared to the same quarter last year.
Comparable Sales: Declined by about 3%.
Adjusted Operating Loss: Expected to be around $68 million, a significant downturn from the previously anticipated profit of $20–25 million.
Inventory Write-Down: The company incurred a $75 million charge due to unsold spring and summer merchandise.
Restructuring Charges: An additional $17 million was recorded, associated with the closure of two fulfillment centers.
Strategic Response:
In light of these challenges, American Eagle has withdrawn its full-year 2025 financial guidance, which previously projected operating income between $360 million and $375 million.
CEO Jay Schottenstein acknowledged the company's shortcomings, stating, "We are clearly disappointed with our execution in the first quarter." The company plans to realign its inventory and enhance its merchandising strategies moving forward.
Market Reaction:
The share price of AEO dropped by over 15% on the day of the announcement (May 13, 2025). This marked the stock’s sharpest single-day decline in over a year.
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Birkenstock Holding plc (NYSE: BIRK)
Key Financial Highlights:
Revenue: €574.3 million, a 19% year-over-year increase, exceeding analyst forecasts of €566.3 million.
Adjusted Earnings per Share (EPS): €0.55, up 34% from the previous year, surpassing the consensus estimate of €0.54.
Net Profit: €105.1 million, compared to €71.7 million in the same quarter the previous year.
Adjusted EBITDA: €200 million, reflecting a 23% year-over-year increase, with an adjusted EBITDA margin of 34.8%.
Regional Performance:
Americas: Revenue grew by 23%, driven by strong demand and new store openings.
Europe, Middle East, and Africa (EMEA): Revenue increased by 12%, reflecting steady market performance.
Asia-Pacific (APAC): Revenue surged by 30%, attributed to expanded retail presence and heightened brand awareness.
Updated Outlook:
In response to the strong quarterly performance, Birkenstock raised its full-year guidance:
Adjusted EBITDA Margin: Now projected between 31.3% and 31.8%, up from the previous range of 30.8% to 31.3%.
Revenue Growth: Expected to be at the higher end of the previously forecasted 15% to 17% range.
Market Reaction:
Following the earnings release, Birkenstock's stock price rose by approximately 5% in pre-market trading, reflecting investor confidence in the company's performance and outlook.
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Cisco Systems (NASDAQ: CSCO)
Q3 2025 Financial Highlights:
Revenue: $14.15 billion, up 11% year-over-year, surpassing the consensus estimate of $14.05 billion.
Adjusted EPS: $0.96, exceeding the expected $0.91 and up from $0.88 in the same quarter last year.
GAAP Net Income: $2.49 billion, or $0.62 per share, compared to $1.89 billion, or $0.46 per share, a year earlier.
Product Revenue: $10.37 billion, a 15% increase year-over-year.
Services Revenue: $3.78 billion, up 2.6% from the previous year.
AI Infrastructure Momentum:
Cisco's AI-related infrastructure orders exceeded $600 million in Q3, bringing the fiscal year-to-date total to over $1 billion—surpassing the company's full-year target ahead of schedule.
Updated Outlook:
Q4 Revenue: $14.5 billion to $14.7 billion.
Q4 Adjusted EPS: $0.96 to $0.98.
Full-Year Revenue: $56.5 billion to $56.7 billion, up from the previous range of $56.0 billion to $56.5 billion.
Full-Year Adjusted EPS: $3.77 to $3.79, revised from $3.68 to $3.74.
Leadership Transition:
Cisco announced that Chief Financial Officer Scott Herren will retire at the end of the fiscal year. Mark Patterson, currently Chief Strategy Officer, will succeed him as CFO effective July 27, 2025.
Market Reaction:
Following the earnings release, Cisco's stock rose 5.8% to $64.82, making it the top performer on the Dow Jones Industrial Average for the day.
Analysts:
Barclays analyst Tim Long has raised the price target for Cisco from $61 to $66 and maintains an "Equal Weight" rating on the networking specialist's stock. The company exceeded estimates for the third quarter in both revenue and earnings. Network growth, improved orders and gross margins, as well as a favourable tax rate, contributed to the results.
Citigroup analyst Atif Malik increased the price target for Cisco from $68 to $71 and continues to rate the stock as a "Buy." The company reported slightly better-than-expected results and guidance for the third quarter, supported by solid network demand, easy year-over-year comparisons, and "low-risk margins." Key positive factors cited by the analyst include continued growth in orders for networking and data centre switches, an acceleration in cloud-based AI orders, and the beginning of AI order conversion. Citi sees growing AI opportunities for Cisco going forward.
Samik Chatterjee, analyst at J.P. Morgan, raised the price target for Cisco from $70 to $73 and maintains an "Overweight" rating. The company delivered results and forecasts that should help ease investor concerns around IT infrastructure spending despite a challenging macroeconomic backdrop. The analyst notes that Cisco "pleasantly surprised" investors with $600 million in AI-related orders in the third quarter, significantly surpassing its $1 billion annual AI order target one quarter ahead of schedule.
Morgan Stanley analyst Meta Marshall increased Cisco’s price target from $65 to $67 and maintains an "Overweight" rating. Cisco posted a 1% increase in non-GAAP revenue and a 6% increase in EPS for the third fiscal quarter. The analyst believes these conditions will also apply to the fourth quarter and does not see the results as being driven by a pull-forward effect due to tariffs. There is potential for upward revisions to next year’s estimates if macro trends hold.
Piper Sandler analyst James Fish raised the price target for Cisco from $60 to $64 and maintains a "Neutral" rating. He said the quarter was roughly in line with his expectations and that Cisco had not gained much net traction. The analyst expects that 2025 won’t be the peak of cloud spending and that AI networks should provide more momentum. However, growth excluding Splunk and easy comps remains “sluggish.”
Aaron Rakers, analyst at Wells Fargo, upgraded Cisco from "Equal Weight" to "Overweight" and raised the price target from $72 to $75. He cited accelerating momentum in the AI space. Cisco’s orders from three of the six largest hyperscalers grew by triple digits year-over-year in Q3. With growing confidence in the normalisation of order growth, Wells Fargo sees ongoing earnings potential and a “value re-rating story” for Cisco.
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Deere & Company (NYSE: DE)
Key Financial Highlights:
Revenue: $12.76 billion, a 16% decline year-over-year, but above the consensus estimate of $12.37 billion.
Net Income: $1.8 billion, or $6.64 per share, down from $2.37 billion ($8.53 per share) in the same quarter last year, yet exceeding the expected EPS of $5.60.
Equipment Sales: $11.17 billion, surpassing analyst projections of $10.8 billion.
Segment Performance:
Production & Precision Agriculture: Revenue decreased by 21% year-over-year.
Small Agriculture & Turf: Revenue declined by 6%.
Construction & Forestry: Revenue fell by 23%.
Updated Fiscal 2025 Outlook:
Deere revised its full-year net income forecast to a range of $4.75 billion to $5.5 billion, slightly adjusting the lower end from the previous estimate of $5.0 billion to $5.5 billion. This revision accounts for anticipated tariff impacts and ongoing market softness.
Tariff Impact:
The company reported approximately $100 million in tariff-related expenses for the quarter and projects total tariff costs to exceed $500 million for the fiscal year. These costs are primarily associated with imported components for construction and forestry equipment.
Market Reaction:
Investors responded positively to the earnings beat, with Deere's stock rising 3.9% to close at $516.32 on May 15, 2025. The stock reached an intraday high of $531.00, marking a new all-time high.
Despite current challenges, Deere remains committed to investing in advanced products and solutions to deliver value to its customers.
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Hertz Global Holdings Inc. (NASDAQ: HTZ)
Key Financial Results:
Revenue: $1.81 billion, a 13% year-over-year decline, missing the consensus estimate of $2.02 billion.
Adjusted EPS: Loss of $1.12 per share, exceeding the anticipated loss of $0.95.
Net Loss: $443 million, compared to a loss of $272 million in Q1 2024.
Fleet Capacity: Reduced by 8% year-over-year, contributing to the revenue decline.
Operational Highlights:
Fleet Modernisation: Over 70% of the U.S. rental fleet is now less than a year old, leading to a 45% reduction in vehicle depreciation expenses.
Strategic Focus: Hertz emphasized its "Buy Right, Hold Right, Sell Right" strategy to enhance fleet efficiency and residual values.
Outlook:
Hertz anticipates continued challenges due to macroeconomic uncertainties and plans to maintain a disciplined approach to fleet management. The company aims to achieve positive adjusted corporate EBITDA by Q3 2025.
Market Reaction:
Following the earnings release, Hertz's stock price dropped over 16%, reflecting investor concerns over the company's financial performance and outlook.
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JD.com Inc. (NASDAQ: JD)
Key Financial Highlights:
Revenue: 301.1 billion yuan (~$41.8 billion), a 15.8% increase year-over-year, surpassing analyst expectations of 289.2 billion yuan.
Adjusted Earnings per Share (EPS): 8.41 yuan, exceeding forecasts of 7.03 yuan.
Net Income: 10.89 billion yuan (~$1.51 billion), up 53% from the previous year.
Adjusted Net Income: 12.76 billion yuan, reflecting a 43% year-over-year increase.
Growth Drivers:
Improved Consumer Sentiment: A rebound in Chinese consumer spending bolstered sales.
Supply Chain Enhancements: Investments in logistics and user experience increased efficiency and customer satisfaction.
Government Subsidies: Programs encouraging electronic trade-ins supported sales growth.
Market Reaction:
Following the earnings release, JD.com's U.S.-listed shares rose approximately 4.2% in after-hours trading, reflecting investor confidence in the company's growth trajectory.
Analysts:
Susquehanna analyst Shyam Patil has lowered the price target for JD.com from $45 to $40 while maintaining a "Neutral" rating on the Chinese e-commerce company.
Patil notes that JD.com delivered a solid first-quarter report, highlighting continued improvements in user experience. He remains cautiously optimistic that macroeconomic improvements and the rollout of new initiatives — such as grocery delivery — will help support future growth.
Bank of America analyst Joyce Ju lowered the price target for JD.com from $48 to $44 but maintained a "Buy" rating on the e-commerce giant. She said the company delivered strong Q1 results, driven by an acceleration in JD Retail. Revenue estimates have been raised, reflecting increased investment in grocery delivery.
Mizuho analyst Wei Fang cut the price target for JD.com from $50 to $48 but kept an "Outperform" rating. He highlighted a strong quarter, with accelerated user and revenue growth, and a 14% increase in consolidated operating income. The lower price target reflects higher investment spending.
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On Holding AG (NYSE: ONON)
Key Financial Highlights:
Revenue: CHF 726.6 million (~$808 million), a 43% increase year-over-year, surpassing analyst expectations of CHF 717 million.
Net Income: CHF 56.7 million (~$63.1 million), down 38% from CHF 91.4 million in Q1 2024.
Adjusted EPS: CHF 0.22 (~$0.23), slightly below the consensus estimate of $0.24.
Gross Profit Margin: 59.9%, up from 59.7% in the prior year.
Growth Drivers:
Product Innovation: New launches and collaborations, including a partnership with Zendaya, boosted demand.
Direct-to-Consumer (DTC) Sales: DTC revenue increased by 45.3% year-over-year, reaching CHF 276.9 million.
Geographic Expansion: Significant growth in Asia-Pacific markets, with sales up 130.1% year-over-year.
Updated Outlook:
Full-Year 2025 Sales Growth: Raised to at least 28% on a constant currency basis, up from the previous 27% forecast.
Adjusted EBITDA Margin: Revised to 16.5%–17.5%, slightly down from earlier guidance, due to anticipated tariff impacts.
Market Reaction:
Following the earnings release, ONON stock rose approximately 11.8%, reflecting investor confidence in the company's growth trajectory.
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Monday.com Ltd. (NASDAQ: MNDY)
Q1 2025 Financial Highlights:
Revenue: $282.3 million, a 30% year-over-year increase, surpassing analyst expectations of $275.8 million.
Adjusted Earnings per Share (EPS): $1.10, exceeding the consensus estimate of $0.70.
Net Income: $27.4 million, or $0.52 per share on a GAAP basis.
Gross Margin: 90%, maintaining strong profitability.
Guidance & Outlook:
Q2 2025 Revenue Guidance: $292 million to $294 million, representing 24% to 25% year-over-year growth.
Full-Year 2025 Revenue Guidance: Raised to $1.22 billion to $1.23 billion, up from the previous forecast of $1.21 billion.
Adjusted Free Cash Flow: Projected between $310 million and $316 million for the full year.
Market Reaction:
Following the earnings release, Monday.com's stock experienced a modest decline of approximately 1% in early trading, despite the strong financial performance.
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Nu Holdings Ltd. (NYSE: NU)
Q1 2025 Financial Highlights:
Revenue: $3.25 billion, surpassing analyst expectations of $3.09 billion.
Adjusted Net Profit: $606.5 million, a 37% year-over-year increase, though slightly below the company-provided consensus of $614 million.
Earnings Per Share (EPS): $0.11, missing the consensus estimate of $0.12 by $0.01.
Operational Metrics:
Customer Base: Expanded to approximately 119 million across Brazil, Mexico, and Colombia.
Credit Portfolio: Grew by 23% year-over-year to $24.1 billion.
Return on Equity (ROE): Annualized ROE stood at 27%, up 4 percentage points from the previous year but down 2 points from Q4 2024.
Challenges:
Delinquency Rates: The over-90-day delinquency ratio increased to 6.5%, up from 6.3% in the same quarter last year.
Market Position: Nu Holdings ceded its title as Latin America’s most valuable lender by market capitalization to Itau Unibanco.
Market Reaction:
As of May 16, 2025, Nu Holdings' stock is trading at $13.13 USD, reflecting a slight decrease of $0.37 (-2.74%) from the previous close.
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Sea Limited (NYSE: SE)
Key Financial Highlights:
Revenue: $4.84 billion, up 29.6% year-over-year, slightly below analyst expectations of $4.91 billion.
Net Income: $410.8 million, reversing a net loss of $23 million in Q1 2024.
Adjusted EPS: $0.65, surpassing the consensus estimate of $0.60.
Adjusted EBITDA: $946.5 million, a 136% increase from the previous year.
Segment Performance:
E-commerce (Shopee): Revenue grew 28.3% to $3.1 billion. Gross merchandise value (GMV) reached $28.6 billion, up 21.5% year-over-year.
Digital Financial Services (SeaMoney, rebranded as Monee): Revenue increased 57.6% to $787.1 million, driven by growth in the credit business.
Digital Entertainment (Garena): Bookings rose 51.4% to $775.4 million, with revenue up 8.2% to $495.6 million.
Market Reaction:
Following the earnings release, Sea Limited's stock surged nearly 14% in early trading, reflecting investor confidence in the company's performance.
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Tencent Holdings Ltd. (HKEX: 0700)
Financial Highlights:
Revenue: ¥180 billion (~$25 billion), a 13% year-over-year increase, surpassing analyst expectations of ¥174.6 billion.
Adjusted Earnings Per Share (EPS): ¥6.58, exceeding the consensus estimate of ¥6.35.
Net Profit: ¥47.82 billion, up 14% year-over-year, though slightly below the anticipated ¥52.12 billion.
Segment Performance:
Domestic Gaming Revenue: Increased by 24% to ¥42.9 billion, driven by titles like "Honor of Kings" and "Dungeon & Fighter Mobile."
International Gaming Revenue: Rose 23% to ¥16.6 billion, supported by successful titles such as "Delta Force."
Marketing Services Revenue: Grew 20% to ¥32 billion, attributed to higher user engagement and AI enhancements in advertising platforms.
FinTech and Business Services Revenue: Increased by 16% to ¥27.6 billion.
AI and Strategic Investments:
Tencent's investments in artificial intelligence (AI) have started to yield tangible benefits:
AI Integration: Enhanced performance advertising and gaming experiences through AI capabilities.
AI Applications: Developed and integrated AI tools like the Yuanbao application and the Hunyuan-T1 model into core products, including Weixin (WeChat).
Capital Expenditure: Nearly doubled to ¥27.48 billion, focusing on acquiring graphics processing units (GPUs) critical for AI development.
Market Reaction:
Following the earnings release, Tencent's U.S.-listed stock (OTC: TCEHY) rose approximately 3.5%, reflecting investor confidence in the company's growth trajectory.
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Walmart Inc. (NYSE: WMT)
Q1 2025 Financial Highlights:
Revenue: $161.5 billion, a 6.0% year-over-year increase, with constant currency growth of 5.8%.
Net Income: $5.1 billion, or $0.63 per share, up from $1.6 billion, or $0.21 per share, in the prior year.
Adjusted EPS: $0.60, surpassing analyst expectations of $0.52.
Operating Income: Increased by 9.6% to $7.1 billion, with adjusted operating income up 13.7%.
Segment Performance:
U.S. Same-Store Sales: Grew by 4.5%, driven by increased store traffic.
eCommerce Sales: Global eCommerce sales rose 21%, marking the 12th consecutive quarter of double-digit online growth.
Advertising Revenue: Advertising sales under Walmart Connect increased by 31%, highlighting the platform's growing monetisation potential.
Tariff Impact and Price Adjustments:
Walmart has indicated that recent U.S. tariffs on imports from China and Latin America are exerting pressure on its cost structure. CEO Doug McMillon stated that the company can no longer absorb these costs entirely, leading to anticipated price increases on various goods. CFO John David Rainey described the incoming price hikes as "unprecedented" in both scale and speed, with noticeable effects expected later in May and more significantly in June.
Market Reaction:
As of May 16, 2025, Walmart's stock (NYSE: WMT) is trading at $96.35 USD, reflecting a slight decrease of $0.43 (-0.44%) from the previous close.
What's Coming Up Next Week
Next week (May 19–23, 2025) is poised to be eventful for the stock market, with several major companies reporting earnings and key economic developments on the horizon.
Major Earnings Reports:
NVIDIA Corp (NVDA): Expected to report on May 28. Investors will be keenly watching for updates on AI and data center growth.
Target Corp (TGT): Scheduled for May 22. Insights into consumer spending and inventory levels will be focal points.
Lowe's Companies Inc (LOW): Reporting on May 21. The home improvement sector's performance amid housing market trends will be assessed.
Home Depot Inc (HD): Set to release earnings on May 20. Similar to Lowe's, market watchers will analyze home renovation demand.
TJX Companies Inc (TJX): Expected on May 22. As a major off-price retailer, its results may reflect consumer behavior in a value-focused shopping environment.
Foot Locker Inc (FL): Scheduled for May 23. Performance may indicate trends in athletic apparel and footwear retail.
Baidu Inc (BIDU), NetEase Inc (NTES), and PDD Holdings Inc (PDD): These Chinese tech companies are also expected to report next week, providing insights into China's consumer and digital sectors.
Key Market Events & Indicators:
Federal Reserve Outlook: Investors will be attentive to any statements or data that might influence the Federal Reserve's monetary policy decisions, especially in light of recent inflation trends.
Trade Developments: Ongoing trade negotiations and tariff discussions, particularly between the U.S. and China, remain a critical factor influencing market sentiment.
Disclaimer: This content is for informational and educational purposes only and does not constitute financial advice. It does not consider your personal objectives, financial situation, or needs. You should consider whether the information is appropriate for your circumstances and seek professional advice before making any investment decisions. Investing in stocks carries inherent risks, and the application of any strategy may not eliminate the risk of loss. Market conditions, volatility, and unforeseen events can impact outcomes, and past performance is not indicative of future results.
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