Earnings and revenue guidance are up among S&P 500 companies for the first quarter of 2021.
A Chinese mobile charging device provider is on the calendar to price its initial public offering (IPO).
Here’s more of what to look for in the week ahead on Wall Street:
On the IPO Front: Smart Share Global Ltd.
There is one IPO expected to price this week.
Smart Share Global Ltd. ADR is expected to price on Thursday, April 8. It plans to trade on the Nasdaq under the ticker symbol EM.
What it is: The company is billed as one of the largest mobile device charging service providers in China, in terms of gross revenue.
The Shanghai-based company operates under the name Energy Monster.
These power banks are similar to ones located inside U.S. airport terminals. You pay a fee, get the power bank, use it, then return it.
It operates through an offline and online network in China.
Several partners, such as restaurants, shopping centers and hotels, host the company’s on-ground power banks.
In its F-1 filing with the Securities and Exchange Commission, it had revenue of $437 million in 2020. That was up from $308 million in revenue reported in 2019.
Smart Share’s net income dropped from $25 million in 2019 to $11.5 million in 2020.
It reported an operating profit of $20.2 million in 2020, compared to $33.6 million in 2019.
Smart Share Global said, in its prospectus, that its operations were impacted by the COVID-19 pandemic as many of their service partners shut down temporarily or even permanently.
The offering: The company is offering 17.5 million American Depository Shares at a price range of $10.50 to $12.50 per share.
Insiders plan to purchase $110 million worth of the shares at the offering.
It hopes to raise around $201 million with its IPO, which will be used to expand both its workforce and its overall business.
According to Renaissance Capital, at a mid-point of $11.50 per share, the company would see a market value of $3 billion.
Bookrunners on the deal are Goldman Sachs, Citi and China Renaissance.
The skinny: According to its F-1 statement, the company has a 34.4% market share in China, which is impressive.
A market research report commissioned by the company ahead of its prospectus said mobile device charging services were worth about $1.3 billion in 2020.
That is expected to hit $15.4 billion by 2028.
The company said it has 219 million registered users and 5.4 million power banks in the field.
The price point for this IPO seems in a good range, and its valuation is attractive, but the company is experiencing a slight legal hiccup.
According to Reuters, two venture capitalists are suing the company’s chief executive, claiming he did not give them a joint 3% stake in the company, as promised.
It’s a company that already has an established market share with the potential to grow.
Deeper Dive: S&P 500 Companies Issue Positive Guidance
We’re nearing a slow crawl of earnings reports as the fourth quarter 2020 reporting inches to an end.
So, I wanted to take a little time and talk about quarter one 2021.
I read an intriguing report on the number of companies issuing positive sales and earnings-per-share guidance.
FactSet, a stock research company, analyzed S&P 500 company earnings and found something interesting.
S&P 500 Companies Issuing Positive EPS Guidance Rises
While fourth-quarter reporting isn’t quite finished, 60 companies have reported positive earnings-per-share guidance for the first quarter of 2021 already … a record.
The previous record was 57, which was set in the fourth quarter of 2020.
S&P 500 Companies Reporting Positive Revenue Guidance Hits Record
Sixty-nine companies are expecting to increase revenue in the first quarter. The previous record was 62, set in the fourth quarter of 2020.
All told, more companies expect better results in the first quarter of this year compared to last year … a sign of more business confidence moving forward.
Money & Markets Week Ahead: Data Dump
On Friday, the Labor Department’s Bureau of Labor Statistics will release the Producer Price Index for the month of March.
The index measures the price of goods sold by manufacturers in the United States.
It is one of the leading indicators of consumer price inflation.
Prices of Goods On the Rise
Producer prices jumped up 1.3% in February 2021, beating analysts’ expectations of just a 0.4% increase.
It was the seventh consecutive month of producer price increases.
Analysts are projecting another 0.5% increase in producer prices for March.
To finish off the Money & Markets Week Ahead, here’s a look at some of the key earnings reports due out this week:
Duck Creek Technologies Inc. (Nasdaq: DCT)
Planet 13 Holdings (OTC: PLNHF)
Paychex Inc. (Nasdaq: PAYX)
Maxeon Solar Technologies Ltd. (Nasdaq: MAXN)
1933 Industries Inc. (OTC: TGIFF)
Lamb Weston Holdings Inc. (NYSE: LW)
Simply Good Foods Co. (Nasdaq: SMPL)
Constellation Brands Inc. (NYSE: STZ)
Conagra Brands Inc. (NYSE: CAG)
Levi Strauss & Co. (NYSE: LEVI)
JinkoSolar Holding Co. Ltd. (NYSE: JKS)
Corus Entertainment Inc. (OTC: CJREF)
That’s all for this week.
Until next time…
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He’s the host of our podcast, The Bull & The Bear, as well as the Marijuana Market Update. Before joining the team, he spent 25 years as an investigative journalist and editor — covering everything from politics to business.