In this article, we discuss 5 companies that recently cut their profit forecast. If you want to see more companies that recently slashed their guidance for the year, see These 10 Companies Recently Cut Their Profit Forecast.
5. Upstart Holdings, Inc. (NASDAQ:UPST)
Number of Hedge Fund Holders: 25
Upstart Holdings, Inc. (NASDAQ:UPST) was founded in 2012 and is headquartered in San Mateo, California, operating as a cloud-based artificial intelligence lending platform in the United States. Although the company posted above consensus Q1 earnings and revenue, it pulled back its full-year forecast in May 2022.
Upstart Holdings, Inc. (NASDAQ:UPST) cited climbing interest rates for the slashed guidance, claiming that they are impacting loan volume. The uncertain macro environment has added higher conservatism in the company’s forward expectations. The inflation has also led to higher than pre-pandemic loan default rates, which are hurting the balance sheet and profitability as well.
Among the hedge funds tracked by Insider Monkey, 25 funds reported owning stakes in Upstart Holdings, Inc. (NASDAQ:UPST) at the end of March 2022, compared to 20 funds in the prior quarter. Vikram Kumar’s Kuvari Partners is a significant shareholder of the company, with 296,738 shares worth $32.3 million.
Here is what Vulcan Value Partners has to say about Upstart Holdings, Inc. (NASDAQ:UPST) in its Q1 2022 investor letter:
“Upstart Holdings Inc. is an artificial intelligence (AI) and cloud-based lending platform. Upstart’s stock price has been very volatile, but its value has grown steadily. Last year, the company grew its revenue by over 250% organically, which materially exceeded our expectations. In addition, the company continues to generate robust free cash flow and is launching new products to expand its business. Upstart’s value has increased consistently since we first purchased it. Following our discipline, we have added to our position when its stock price has declined and its price to value ratio has improved, and we have reduced our stake when its stock price has risen faster than its value.”
4. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 60
Walmart Inc. (NYSE:WMT) is one of the biggest American wholesalers. On May 17, Walmart Inc. (NYSE:WMT) reported its Q1 results, posting earnings per share of $1.30, missing estimates by $0.18. The GAAP EPS of $0.74 also fell short of analysts’ predictions by $0.76.
On May 17, Walmart Inc. (NYSE:WMT) announced a 25% decline in quarterly earnings and lowered its full-year profit forecast on the back of soaring fuel and labor costs that compressed its bottom line. In addition to that, the rampant inflation has led customers to switch to basic products that have lower margins. The supply chain constraints are also impacting inventory levels.
According to Insider Monkey’s database, Walmart Inc. (NYSE:WMT) was part of 60 hedge fund portfolios at the end of Q1 2022, compared to 63 funds in the prior quarter. Rajiv Jain’s GQG Partners is the leading stakeholder of the company, with 15.4 million shares worth about $2.3 billion.
3. Hewlett Packard Enterprise Company (NYSE:HPE)
Number of Hedge Fund Holders: 43
Hewlett Packard Enterprise Company (NYSE:HPE) offers expertise in financial technology, computer hardware, computer software, cloud computing, internet of things, artificial intelligence, and computer networking. On June 1, Hewlett Packard Enterprise Company (NYSE:HPE) reported financial results for Q1 2022, posting an EPS of $0.44 and a revenue of $6.71 billion, falling short of analysts’ predictions by $0.01 and $86.58 million, respectively.
The company slashed its full-year profit forecast, attributing it to unfavorable currency movements, supply chain challenges, and the lost market share in Russia after the war. Profit for the year is expected to clock in at $2.10 per share, which is $0.07 lower than the prior guidance issued in March.
According to Insider Monkey’s database, 43 hedge funds were bullish on Hewlett Packard Enterprise Company (NYSE:HPE) at the end of March 2022, compared to 35 funds in the earlier quarter. Richard S. Pzena’s Pzena Investment Management is the largest stakeholder of the company, with 37.5 million shares worth about $628 million.
2. PayPal Holdings, Inc. (NASDAQ:PYPL)
Number of Hedge Fund Holders: 100
PayPal Holdings, Inc. (NASDAQ:PYPL) operates a fintech platform that assists with digital payments for merchants and consumers worldwide. On April 27, PayPal Holdings, Inc. (NASDAQ:PYPL) posted its Q1 results, with GAAP earnings per share of $0.43, missing consensus estimates by $0.05.
Along with its Q1 report, PayPal Holdings, Inc. (NASDAQ:PYPL) reported its guidance for 2022. The company lowered its full-year profit forecast given the payments volume could be impacted from soaring inflation and the war in Ukraine. The company forecasts adjusted profit of $3.81 and $3.93 per share, down from its earlier expectations ranging between $4.60 and $4.75.
According to Insider Monkey’s Q1 data, PayPal Holdings, Inc. (NASDAQ:PYPL) was part of 100 public hedge fund portfolios, compared to 110 funds in the preceding quarter. Ken Fisher’s Fisher Asset Management is the leading shareholder of the company, with 16.7 million shares worth $1.9 billion.
Here is what Aristotle Capital Management Small Cap Equity has to say about Paypal Holdings, Inc. (NASDAQ:PYPL) in its Q1 2022 investor letter:
“We sold our position in PayPal due to the uncertain twelve-month horizon the company faces due to market headwinds from inflation and supply chain issues impacting e-commerce. On a more fundamental level, we sold due to the seismic shift in strategy and our disappointment with management credibility. The company reported weak 2022 guidance, and a strategic shift announced on the fourth quarter 2021 earnings call. The global payments space is undergoing a massive transition due to new technology introduced by both private and new Initial Public Offerings prospects, and we believe that the significant amount of private capital underwriting the new technology will continue to pressure incumbent players, even those as large and seemingly in the sweet spot of e-commerce payments, as PayPal currently is.”
1. The Gap, Inc. (NYSE:GPS)
Number of Hedge Fund Holders: 23
The Gap, Inc. (NYSE:GPS) is a California-based apparel retail company, selling its products under the Old Navy, Gap, Banana Republic, and Athleta brands. On May 26, the company announced its Q1 financial results, reporting a loss per share of $0.44, missing estimates by $0.31. The revenue of $3.48 billion dropped 12.88% year-over-year, falling short of consensus estimates by $12.52 million.
The company slashed its full-year profit outlook after the Q1 results were disclosed, citing poor design and execution issues at its Old Navy line and weak demand as a result of record-high inflation. The company also posted weak numbers due to increased cost of air freight and extended discounts to balance inventory. The Gap, Inc. (NYSE:GPS) now projects fiscal 2022 profit per share to lie between 30 cents and 60 cents on an adjusted basis, compared to the prior forecast of $1.85 to $2.05.
According to Insider Monkey’s database, 23 hedge funds were bullish on The Gap, Inc. (NYSE:GPS) at the end of March 2022, down from 30 funds in the last quarter. Billionaire Ken Griffin’s Citadel Investment Group is the leading stakeholder of the company, with 5.2 million shares worth $73.8 million.
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