Investors got some encouraging news on the inflation front Thursday as the April Producer Price Index (PPI) rose only 0.2% compared the consensus forecast of 0.3%. On a year-over-year basis the PPI rose 2.3%, under the forecast of 2.5%. Unfortunately, that did not translate in to a broad-based stock market rally yesterday. The Nasdaq did rise a third of one percent but both the S&P 500 and Dow Jones had slight losses by the market close.
Worries about the regional banking system once again became a significant headwind for equities. PacWest Bancorp (PACW) was the epicenter of these concerns. The stock of this California-based bank fell over 20% in trading yesterday as management reported it continues to see some deposit flight. Hopefully, PacWest will not go the way of Silicon Valley, Signature and First Republic banks.
The problems in the regional banking system are just one reason I am 'Maximum Bearish' at the moment, to rip off a phrase from Doug Kass. However, we are going to end the trading week on a more optimistic note. Today, I will highlight a few of the limited amount of high beta small-cap names I hold as they all reported better-than-expected first quarter results this week.
We will start with Blade Air Mobility (BLDE) . I took my initial small stake in this urban air mobility concern in February. The shares have grinded down some since then and I have added a bit to my initial holdings. The company reported stellar quarterly results yesterday as revenues rose some 70% on a year-over-year basis, easily exceeding expectations. Blade's short haul revenues were up better than 140%.
The acquisition of Blade Europe was a significant factor in sales growth, but the company would have produced overall revenue growth of 43% without it. The company saw improvements in Blade Canada and robust demand and pricing from its Blade Airport operations. Blade is not profitable yet, but is heading in the right direction.
Nextdoor Holdings (KIND) also had solid results this week and boosted forward guidance as well. The company provides what can best be described as a community-based Facebook experience. I have a small stake in the equity as I have found the application to be quite 'sticky' and a good place to keep tabs on events in the community, any crime in the area and it is a medium I can get recommendations from neighbors on who is a good handyman or electrician.
Sales were down slightly, but that is a reflection of the ad market right now. Active users increased 16% from the same period a year ago. Profitability is ways off in the future but the company has a cash hoard of approximately $575 million. Nextdoor is one of biggest high risk/high reward plays in my portfolio and it is a small bet.
Finally, we have Magnite (MGNI) , which also is navigating the vagaries of the current ad market. The company operates an independent sell-side advertising platform that offers applications and services for sellers of digital advertising inventory as well as publishers of content.
The company posted an unexpected profit in the first quarter of four cents a share as revenues rose 10% from 1Q2022 to $130 million, nearly $20 million above the consensus. Management also guided that it expects at least $100 million in free cash flow this fiscal year. The stock's market cap is approximately $1.6 billion.
