Stock Market Today: Stocks Drop Ahead of CPI, WeWork Tanks on Bankruptcy Concerns

Stocks ended the day in the red yet again on Wednesday as investors analyzed the latest batch of corporate earnings and anticipated tomorrow's crucial inflation update. The Nasdaq Composite experienced further losses in its already substantial decline this August, mainly due to a number of tech companies and those closely related to the industry performing poorly.

In the absence of significant economic updates, investors shifted their focus towards a new set of earnings reports, only to find that most of them were unsatisfactory. One such example is Roblox (RBLX), which experienced a substantial decline of 21.9% following the announcement of their second-quarter results. The gaming company revealed a loss of 46 cents per share, contrasting with their loss of 30 cents per share during the same period the previous year. Although their revenue increased by 15.2% compared to last year, reaching a higher-than-expected $680.1 million, their bookings fell short of analysts' predictions, rising only by 22% to $780.7 million.

However, Shreya Gheewala, an analyst from CFRA Research, continues to hold a positive view on the communication services stock and recommends buying it. Gheewala points out that besides experiencing significant growth among older age groups, RBLX has recently introduced an ad platform in its early stage. This move is expected to contribute to an increase in advertising revenue for the company during the latter half of 2023, according to Gheewala's communication to clients.

Sign Up For Kiplinger's Financial Advice

Become a wiser and more knowledgeable investor.

on your purchases with our exclusive sale! Enjoy significant discounts of up to 74% off when you shop with us during our special promotional event. This amazing opportunity allows you to save a substantial amount of money on a wide range of high-quality products. Don't miss out on this incredible chance to get more for your money and upgrade your shopping experience. Hurry and take advantage of these unbeatable deals before they're gone!

Get Kiplinger’s Free E-Newsletters Now!

Make a financial gain and flourish with top-notch guidance from specialists regarding investments, taxation, retirement planning, personal finance, and additional valuable information sent directly to your email.

Make money and thrive with top-notch professional guidance - delivered directly to your inbox.

In the meantime, WeWork (WE) experienced a 38.6% decline in its stock value following the release of its earnings report. During the second quarter, WeWork incurred a larger loss than anticipated, amounting to 21 cents per share. Additionally, the company fell short of revenue expectations, with only $844 million generated. However, the most troubling aspect of the report was WeWork's acknowledgment that its future viability is at risk due to its substantial financial requirements, high member turnover rates, and limited access to liquid funds.

Steve Clayton, the head of equity funds at Hargreaves Lansdown, stated that this particular business did nothing out of the ordinary that hasn't been done multiple times before. However, it claimed to have initiated a groundbreaking revolution with unique financial measurements to justify its excellence, even though it failed to generate the typical profits one would anticipate from a real estate company. Now, the company has acknowledged the strong possibility that WeWork lacks substance.

PENN Entertainment Joins Forces With ESPN

In unrelated financial updates, PENN Entertainment (PENN) experienced a 9.1% surge following the online sports-betting company's negotiation of a $1.5 billion contract with ESPN, a division of Walt Disney (DIS, -0.7%). As per the conditions stated in the deal, PENN will undergo a rebranding process this autumn and transform its online sportsbook into ESPN Bet.

According to CFRA Research analyst Zachary Warring (Buy), we are confident that this agreement has the potential to propel the recently rebranded online sports betting platform among the leading three in terms of market share throughout the United States and Canada within the next five years. By utilizing ESPN, PENN will be able to attract a fresh wave of customers, leading to substantial growth in its market presence.

In terms of the main indicators, the Nasdaq, which is dominated by technology stocks, saw a decline of 1.2% at a level of 13,722. This was primarily driven by decreases in the shares of Nvidia by 4.7% and Tesla by 3.0%, causing the index to experience a loss of 4.4% for the month so far. The S&P 500 and the Dow Jones Industrial Average also concluded the day with a decrease, standing at 0.7% and 0.5% respectively, with values of 4,467 and 35,123.

Up next is the July CPI report, scheduled for release before the market opens tomorrow, while the PPI, which gauges wholesale inflation, will be made available on Friday morning.