What's going on?
A swath of American companies reported third-quarter results on Tuesday. Sportswear company Under Armour (UA)’s shares lifted 25% and Coca-Cola’s stock bubbled up 3%; but General Electric (GE)’s fizzled, falling 9%.
What does this mean?
Coke’s results were sweet, beating expectations on both profit and revenue – especially impressive given that similarly global US companies have been struggling with a strong dollar making international sales worth less. After falling for a long time, soda sales finally fizzed back up, partly thanks to a focus on healthier beverages.
UA also had a good workout, beating expectations and raising its forecasts for the rest of the year. With strong competition Stateside from fan favorite Nike, UA has invested heavily elsewhere – and it’s paying off. The buzzkill was GE – the struggling conglomerate fell short of expectations and disappointed investors by slashing its 119-year-old dividend payout from 12 cents per share to a single penny. Don’t spend it all at once, now!
Why should I care?
For you personally: The penny drops.
GE has a lot of “retail investors”, i.e. normal people rather than money managers – they own nearly half of its shares. GE’s dividend may be an important source of income for some of these investors – the stock is popular among baby boomers – and now, after many years of payouts, it’s all but gone. The dismal dividend likely led some investors to sell GE’s stock – but with the stock already having lost over 80% of its value since 2000, others might be hoping for happier days ahead.
For markets: Knights in shining Under Armour.
Investors seemed to be looking at tech to pick up stock market slack this quarter. Tech stocks make up about a quarter of the market, so when they do well they often drag the rest of the market up too. Amazon and Alphabet didn’t quite do the trick last week, but Coke and UA aren’t exactly market minnows either – and their success helped US stocks overall end Tuesday higher.