By Akash Sriram

(Reuters) – Lyft forecast current-quarter bookings below expectations and reported third-quarter revenue slightly higher than estimates on Wednesday, as consumers pulled back on spending due to high interest rates and economic uncertainty.

The company’s shares fell more than 5% in extended trading after it projected fourth-quarter gross bookings between $3.6 billion and $3.7 billion, below estimates $4.09 billion, according to four analysts polled by LSEG.

Lyft said it was introducing gross bookings, which is the total value of transactions on the platform, in the third quarter.

Though Lyft only commands about 29% of the ride-hailing market as of September, its share has increased this year from 27% in January after it said it will price its rides competitively with larger rival Uber.

“While operating from a more efficient cost structure is certainly part of our formula, it is by no means the only part of the margin expansion equation,” Chief Financial Officer Erin Brewer told Reuters.

Brewer added that an improved mix of airport rides, scheduled rides and priority pickups also helped margin expansion.

Lyft forecast current-quarter adjusted core profit, a key profitability metric closely watched by investors, of $50 million-$60 million, higher than expectations of $48.8 million.

Lower prices helped Lyft serve 22.4 million active riders, which jumped 10% compared with a year earlier.

Uber on Tuesday predicted a strong holiday season after a third quarter that was impacted by accounting changes.

Since CEO David Risher took the top job at Lyft, the company has looked to cut costs aggressively. It posted higher core earnings in the second quarter and forecast further profitability improvement.

Lyft said it expects fourth-quarter revenue to grow in mid-single-digits sequentially, compared with market expectation of 4.6% growth, according to Reuters calculations.

Revenue grew 10% to $1.16 billion in the quarter ended Sept. 30, surpassing analysts’ average estimate of $1.14 billion, according to LSEG data.

Lyft’s adjusted core earnings of $92 million in the third quarter topped expectations of $82.6 million.

(Reporting by Akash Sriram in Bengaluru; Editing by Krishna Chandra Eluri)

UBS Strategists Tout Chinese Tech Stocks amid Valuation Concerns in the US

Chinese internet stocks present a solid investment opportunity compared to US big tech companies. That’s the sentiment echoed by strategists at UBS Group AG, who believe Chinese internet stocks will do much better in 2024 compared to their counterparts in the US. The sentiments come amid growing valuation concerns on the US tech stocks exploding in 2023 amid the artificial intelligence boom.

Tech Valuation Concerns

Tech heavy NASDAQ index is already up by more than 40% for the year at the back of a blockbuster year. While the rally has been fuelled by solid earnings results and the artificial intelligence boom; it’s starting to show some weakness amid valuation concerns and the high-interest rate environment.

The US Federal Reserve hinting at retaining the high-interest rates for longer is the most significant headwind that could take a toll on US tech giants heading into 2024. The high-interest rate environment is already posing significant risk to the economy, with economists worried about a mild recession amid reduced borrowing needed to fuel economic activity.

UBS strategists insist the rising earnings expectations and depressed valuation make Chinese tech stocks like Alibaba a solid prospect heading into the New Year. The stocks have struggled to gain traction in 2023 as US tech giants hit new highs, as investors turned to them in expectation that the Fed will cut interest rates at the end of the year.

With the high interest rates likely to stay put for long, investors must look elsewhere for opportunities. Chinese tech shares are only starting to bounce back after years of underperformance triggered by Beijing’s crackdown on internet giants.

Chinese Stock Recovery

A recovery of the Chinese economy from the COVID-19 slowdown has once again improved the stock’s prospects on the back of easing regulatory pressure. Taiwan Semiconductor and Samsung are some of the semiconductor players that UBS strategists believe provide a solid risk-reward as they trade cheaply despite their tech advantage.

Over the years, Chinese tech stocks have lagged behind US tech giants despite the company’s efforts to cut costs and shore up earnings. However, that is slowly changing as investors take note of the depressed valuation amid improving valuations. Nasdaq Golden Dragon China Index, which counts some of the biggest Chinese internet giants, trades at a 30% discount compared to the Nasdaq 100 Index on price-to-earnings ratio, affirming the cheap valuation in play.

UBS strategists maintain a cautious approach to US tech giants led by the magnificent seven that have been at the forefront in fuelling the rally in the US equity markets. The strategists have already dropped their outlook on the likes of Apple and Tesla, facing profit concerns despite commanding premium valuations in the market.

The strategists have raised concerns about the faltering earnings trend in most US tech giants that need help with saturation and competition in their respective fields. Apple is one of the companies struggling to sell as many iPhones as it used to amid smartphone saturation. Tesla is also under immense pressure amid stiff competition in electric vehicles, especially in China.

Tech stocks aside, US strategists are turning their attention to software companies. The strategists say the companies are well positioned to do well, given their defensive nature and high recurring revenue streams.

By Lananh Nguyen, Anirban Sen and Saeed Azhar

NEW YORK (Reuters) -Goldman Sachs expects dealmaking activity to stay subdued in the medium term as macroeconomic conditions weigh on private equity transactions, an executive said on Wednesday.

“For the medium term, the dealmaking environment will indeed be a little bit less robust,” Jim Esposito, co-head of Goldman’s global banking and markets division, said in an interview at the Reuters NEXT conference in New York.

The private equity industry over the past 18 months to two years has returned a lot less capital to their investors and have found it harder to monetize assets, he said.

“That flywheel of raising money, investing it, returning it, will be less efficient going forward,” Esposito said.

Mergers and acquisitions (M&A) activity globally showed few signs of improvement in the third quarter but a rebound in volumes in the United States – the world’s biggest investment banking market – gave dealmakers hope of a sustained recovery in the near term.

The total value of M&A fell slightly to $717.4 billion during the September quarter, according to data from Dealogic, from $738.1 billion last year during the same period.

Equity markets are feeling confident after the latest Federal Reserve meeting, he said. After the central bank kept rates unchanged, some companies decided to sell equity shares, he said.

The Fed earlier this month kept its overnight short-term interest rate target unchanged at between 5.25% and 5.5% and preserved the option to raise rates again as inflation is still well above its 2% target.

For initial public offerings, it will take a while for activity to pick up, with a potential recovery next year.

The trading environment for stocks and fixed income is far more interesting given the interest rate environment, inflation and escalating geopolitical tensions that are fueling volatility in markets.

“We’re sitting on what is one of the more interesting trading environments in my career,” he said.

Esposito addressed Goldman’s move to scale back its consumer ambitions.

Growing investor skepticism over the business — and $3 billion of losses — prompted CEO David Solomon to shift Goldman’s focus back to its traditional strengths of investment banking and trading.

The decision to move into consumer banking was made when the world was facing zero interest rates and no bank was earning its cost of capital, Esposito said.

“We realized that’s a hard business that we don’t necessarily have any differentiated or competitive advantage to be in,” he said.

“And so then there was a healthy debate about the sizing and scaling of our consumer ambition. And I think the firm under David’s leadership did something very, very brave.”

To view the live broadcast of the World Stage go to the Reuters NEXT news page: https://www.reuters.com/world/reuters-next/

(Reporting by Lananh Nguyen and Anirban Sen in New York and Saeed Azhar Editing by Chris Reese and Diane Craft)

By Granth Vanaik

(Reuters) – Instacart on Wednesday forecast fourth-quarter core profit above Wall Street estimates in its first earnings report since going public in September, powered by higher transaction and advertisement fees, sending its shares up over 2% after the bell.

The grocery delivery firm, whose stock has lost more than a third of its value since its debut, also announced a $500 million share repurchase program.

Instacart said it expects current-quarter adjusted EBITDA, a key measure of profitability, to be between $165 million and $175 million. Analysts expect $155.6 million, according to LSEG data.

The company, formally known as Maplebear, also beat third-quarter revenue expectations, on the back of higher delivery and service fees it charges to customers as well as advertisement spaces it sells, especially to packaged goods companies looking to reach a wider customer base.

“We have significant competitive advantages over newer, smaller entrants into our space,” CEO Fidji Simo said in an interview with Reuters.

Instacart’s gross transaction value (GTV) – the value of products sold based on prices shown – rose 6% over the year earlier to $7.49 billion in the third quarter. Analysts on average estimated $7.46 billion.

Advertising and other revenues rose 19%, while transaction revenues were up 12%. Total revenue rose 14% to $764 million, compared with analysts’ expectations of $736.9 million.

It posted a 4% rise in total orders to 66.2 million during the quarter.

Instacart posted a net loss of $2 billion, or $20.86 per share, in the third quarter, primarily due to the stock-based compensation expense that it incurred during the period of its initial public offering.

For full year 2023, Instacart anticipates GTV to grow in mid-single digits, versus analysts’ estimate of 4.7% growth at $30.18 billion. It expects three times more adjusted EBITDA for the period than the $187 million it had posted in 2022.

Last week, rival DoorDash also projected fourth-quarter core profit above estimates, aided by more orders as well as investments it made to improve services.

(This story has been refiled to remove the picture)

(Reporting by Granth Vanaik in Bengaluru; Editing by Shilpi Majumdar)

(Reuters) – Meta Platforms on Wednesday said come 2024, advertisers will have to disclose when artificial intelligence (AI) or other digital methods are used to alter or create political, social or election related advertisements on Facebook and Instagram.

Meta, the world’s second-biggest platform for digital ads, said in a blog post it would require advertisers to disclose if their altered or created ads portray real people as doing or saying something that they did not, or if they digitally produce a real-looking person that does not exist.

The company would also ask advertisers to disclose if these ads show events that did not take place, alter footage of a real event, or even depict a real event without the true image, video, or audio recording of the actual event.

The policy updates, including Meta’s earlier announcement on barring political advertisers from using generative AI ads tools, come a month after the Facebook-owner said it was starting to expand advertisers’ access to AI-powered advertising tools that can instantly create backgrounds, image adjustments and variations of ad copy in response to simple text prompt.

Alphabet’s Google, the biggest digital advertising company, announced the launch of similar image-customizing generative AI ads tools last week and said it planned to keep politics out of its products by blocking a list of “political keywords” from being used as prompts.

Lawmakers in the U.S. have been concerned about the use of AI to create content that falsely depicts candidates in political advertisements to influence federal elections, with a slew of new “generative AI” tools making it cheap and easy to create convincing deepfakes.

Meta has already been blocking its user-facing Meta AI virtual assistant from creating photo-realistic images of public figures, and its top policy executive, Nick Clegg, said last month that the use of generative AI in political advertising was “clearly an area where we need to update our rules.”

The company’s new policy will not require disclosures when the digital content is “inconsequential or immaterial to the claim, assertion, or issue raised in the ad,” including image size adjusting, cropping an image, color correction, or image sharpening, it said.

(Reporting by Katie Paul, Devika Nair and Shubham Kalia; Editing by Nivedita Bhattacharjee)

By Sabrina Valle

HOUSTON (Reuters) – Occidental Petroleum on Tuesday beat analysts’ third-quarter profit estimates on strong U.S. oil production, but its results were well below a year ago due to lower energy prices and weaker chemical and pipeline results.

The oil and gas company reported a $1.18 a share profit compared to average Wall Street analyst forecasts for an 84 cent a share profit, according to LSEG. Adjusted earnings fell by more than half to $1.13 billion compared to the same quarter last year.

U.S. oil producers are reporting weaker third-quarter profits on a drop in oil and gas prices from a year ago. But earnings are up compared to the second quarter on an improvement in prices.

Occidental sold its oil for an average $80.70 per barrel in the third quarter, down from $83.64 per barrel from a year earlier, but up 10% from the second quarter.

It bought back $342 million of Berkshire Hathaway’s preferred shares, bringing redemptions this year to 15% of the initial $10 billion investment by Warren Buffett’s firm that was used by Occidental to fund its acquisition of Anadarko Petroleum in 2019.

The payments came as Berkshire last month bought about $246 million in Occidental stock, raising its stake to 25.8%.

Shares were up 65 cents a share in late trading after closing down 2.5% at $60.20 apiece.

The U.S. oil and gas producer pumped 1.22 million barrels of oil and gas per day (mboed), well above the 1.19 mboed midpoint of its August forecast.

Results were helped by asset sales that generated $142 million in pre-tax proceeds.

Its chemical and midstream unit earnings fell compared to a year ago. Midstream swung to a loss of $130 million from a $104 million profit.

Its chemicals business profit fell to $373 million from $580 million a year ago.

Separately, the company said investment firm BlackRock agreed to invest $550 million in a proposed direct air capture carbon project in Texas.

Adjusted profit at rival oil producer Devon Energy was $1.65 a share, better than analysts’ estimate of $1.57 a share.

However, Devon shares fell in after-hours trading after the company forecast production in the fourth quarter and 2024 would be flat at about 650,000 barrels of oil and gas per day.

(Reporting by Sabrina Valle in Houston and Sourasis Bose in Bengaluru; Editing by Krishna Chandra Eluri, Stephen Coates and Jamie Freed)

By Sabrina Valle

(Reuters) -Occidental Petroleum on Tuesday beat analysts’ third-quarter profit estimates on strong U.S. oil production, but its results were well below a year ago due to lower energy prices and weaker chemical and pipeline results.

The oil and gas company reported a $1.18 a share profit compared to Wall Street analysts forecast for an 84-cent profit, according to LSEG. Adjusted earnings of $1.13 billion were below the year-ago’s $2.47 billion.

U.S. oil producers are reporting weaker third-uarter profits on a drop in oil and gas prices from a year ago. The company sold its oil last quarter for an average $80.70 per barrel, down from $83.64 per barrel a year-ago.

Shares were up 70 cents a share in late trading after closing down 2.5% at $60.20 apiece.

The U.S. oil and gas producer pumped 1.22 million barrels of oil and gas per day (mboed), well above the 1.19 mboed midpoint it was forecast in August. It also raised its full-year production guidance by 11,000 bpd.

Results were also helped by asset sales of $142 million after tax, including properties in the Permian Basin.

Its chemical and midstream units fell compared to a year ago. Midstream swung to a loss of $130 million from a $104 million profit a year ago.

Profit in its chemicals business fell to $373 million from $580 a year ago.

Separately, Occidental said investment firm BlackRock agreed to invest $550 million in a proposed direct air capture carbon project in Texas.

WTI crude prices increased 9.4% on a sequential basis during the quarter, on the back of the extension of production cuts by OPEC+ members led by Saudi Arabia and Russia.

On an adjusted basis, the company earned $1.18 per share, compared with average analysts’ estimate of 84 cents per share, according to LSEG data.

(Reporting by Sourasis Bose in Bengaluru; Editing by Krishna Chandra Eluri and Stephen Coates)

By Herbert Lash

NEW YORK (Reuters) -The dollar gained and world shares pared losses on Tuesday, as stocks on Wall Street surged and investors assessed Federal Reserve commentary about a too-strong U.S. economy that could require another interest rate hike to tame inflation.

Gold hit a two-week low as the safe-haven rally triggered by Mideast tensions ebbed and oil prices hit 2-1/2-month lows as mixed economic data from China offset the impact of Saudi Arabia and Russia extending output cuts.

Treasury yields fell as other Fed officials speaking on Tuesday suggested the U.S. central bank could be near the end of its tightening cycle, helping U.S. equity indexes to rise, with the Nasdaq up almost 1% as large-cap growth stocks surged.

The rally on Wall Street pushed the S&P 500 and Nasdaq to post their longest winning streaks in two years.

But Fed Governor Christopher Waller said “blowout” third-quarter U.S. economic growth at an annualized 4.9% rate warrants watching as the U.S. central bank considers its next policy moves, leading a colleague to explicitly call for another hike.

Fed Governor Michelle Bowman said she took the recent GDP number as evidence the U.S. economy not only “remained strong,” but may have gained speed and require a higher Fed policy rate.

“We’re in for a much longer cycle of higher rates than the most bullish people are expecting,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey. “Inflation is something that we’ve learned is hard to tamp down once it really gets going.”

But Meckler said the bigger investor concern is whether there will be a meaningful U.S. recession or not, a reason why investors are buying large-cap tech stocks with “iron balance sheets and the predictable cash flows,” as they’re seen as the least likely to be hurt in a recessionary environment.

The Nasdaq Composite advanced 0.9%, the S&P 500 gained 0.28% and the Dow Jones Industrial Average rose 0.17%.

But MSCI’s gauge of global stock performance closed down 0.15%, while the pan-European STOXX 600 index lost 0.16%.

The dollar advanced as last week’s rally in riskier currencies took a breather, gaining on the euro after a larger-than-expected fall in German industrial production in September.

“The dollar on a broad basis is still quite strong,” said Brad Bechtel, global head of FX at Jefferies in New York. “The economy’s going to hold in there, and then we get these dovish pendulum swings back the other way, which is where we’re at now.”

Against a basket of currencies, the dollar index rose 0.25% to 105.52, with the euro down 0.2% to $1.0694.

The euro and most other currencies gained sharply on the dollar last week after various data – most notably a U.S. labor report that showed job growth slowed in October.

Currency traders were also focused on the Australian dollar, which fell about 1.1% to $0.642 after the Reserve Bank of Australia announced a 25 basis point hike, as expected, taking the cash rate to a 12-year high of 4.35%.

But the central bank softened its language on the necessity of any further action.

Treasury yields slipped ahead of large bond auctions this week. U.S. benchmark 10-year yields have dropped in five of the last six sessions, and 30-year yields in four of the last five.

The two-year’s yield, which reflects interest rate expectations, fell 2.8 basis points to 4.913%, while the 10-year slipped 8.7 basis points at 4.575%.

Earlier, MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 1.2%, snapping three straight days of gains.

In China, data showed imports unexpectedly grew in October, while exports contracted faster than expected, in a mixed set of indicators that showed the recovery in the world’s second-largest economy remains uneven.

Hong Kong’s Hang Seng fell 1.7%, while mainland China blue chips fell 0.4%.

Crude oil fell more than 4%, with U.S. crude sliding $3.45 to settle at $77.37 a barrel and Brent falling $3.57 to settle at $81.61.

U.S. gold futures settled down 0.8% at $1,973.50 an ounce.

(Reporting by Tom Wilson in London and Tom Westbrook in Singapore; Additional reporting by Ankur Banerjee in Singapore; Editing by Lincoln Feast, Kim Coghill, Christina Fincher and Jonathan Oatis)

(Reuters) -Occidental Petroleum beat estimates for third-quarter profit on Tuesday, as the U.S. oil and gas producer was aided by higher output amid sustained demand for energy.

U.S. production of oil and gas has been on the rise since last year as strong prices have encouraged energy firms to drill more.

WTI crude prices increased 9.4% on a sequential basis during the quarter, on the back of the extension of production cuts by OPEC+ members led by Saudi Arabia and Russia.

Occidental’s total production for the quarter rose to 1.22 million barrels of oil equivalent per day (boepd) compared with 1.18 million boepd a year earlier, on higher production at the Rockies and the Gulf of Mexico.

On an adjusted basis, the company earned $1.18 per share, compared with average analysts’ estimate of 84 cents per share, according to LSEG data.

(Reporting by Sourasis Bose in Bengaluru; Editing by Krishna Chandra Eluri)

Bitcoin’s Dominance Eases amid Widespread Crypto rally

Bitcoin’s grip on the multibillion cryptocurrency sector has eased significantly as investors and traders take interest in other smaller coins. Immediate data indicates that speculation in the sector has spread beyond the flagship cryptocurrency. The largest 100 digital assets are up 14%, while the 30 mid-tier tokens are up 16%, exceeding the 4% gain of Bitcoin in November.

Widespread Crypto Rally

The widespread rally has seen Bitcoin’s share of the $1.38 trillion crypto market drop to 49% from 51.5% in October. The drop hints at a significant uptick in risk appetite in the market as investors turn their attention to other little-known coins trading at much more depressed valuations than Bitcoin.

Ripple is one of the smaller coins that has been one of the strongest performers for the month. The crypto has rallied by more than 14%, benefiting from Ripple Labs’ partial victory over the US Securities and Exchange Commission over whether XRP should be treated as a security under the agency’s purview. The crypto rally is also spreading beyond normal altcoins to decentralized finance, one of the fastest-growing segments in the market.

The fact that the rally is broader is also a good sign and most sustainable on any price action experienced for the better part of the year. According to Digital Asset Capital Management co-founder Richard Gavin, the widespread rally in an environment that’s relatively thin in regards to liquidity signals the maturity of the broader sector.

Sentiments in the broader cryptocurrency sector have improved in recent months on expectations of listing a Bitcoin exchange-traded fund. Such a fund is expected to attract more institutional investors into the nascent segment, affirming cryptocurrencies’ push for adoption in the mainstream sector. While Bitcoin has rallied by more than 28% over the past month, a sense of optimism in the broader sector has also seen other cryptocurrencies post double-digit gains.

Interest Rate Pause

Optimism that the US Federal Reserve has reached its peak on interest rate hikes is another factor that’s helping attract more investors into the crypto sector. Investors had fled the risky asset early in the year, opting to focus their attention on instruments that benefit from higher yields, such as bonds and treasuries.

With the Fed unlikely to hike interest rates, there is an expectation that dollar strength will ease significantly, something that could be of great benefit to cryptocurrencies. Bitcoin is already up by more than 100% for the year, bouncing back on coming under pressure last year as investors shunned risky assets amid soaring inflation. The Fed hiking interest rates at the fastest pace to tame runaway inflation resulted in dollar strength, all but piling pressure on Bitcoin and other cryptocurrencies.

Unlike in the past when Bitcoin was highly volatile, its move to the upside has been steady in recent months. The rally had affirmed constant buying in the market, with the focus also being on other cryptocurrencies compared to the past when Bitcoin was the center of attention. The more widespread shift in investor sentiment has helped tame the heightened volatility that was a concern in the past.