Shares in Indian tycoon Gautam Adani’s conglomerate plunged again on Wednesday as a rout in his companies deepened to $86bn in the wake of a US short-seller report, with the billionaire also losing his title as Asia’s richest person.
Wednesday’s stock losses saw Adani slip to 15th on Forbes rich list with an estimated net worth of $75.1bn, below rival Mukesh Ambani, the chairman of Reliance Industries Ltd who ranked ninth with a net worth of $83.7bn.
The losses mark a dramatic setback for Adani, the school-dropout-turned-billionaire whose fortunes rose rapidly in recent years in line withthe stock values of his businesses that include ports, airports, mining, cement and power. Now, the tycoon is fighting to stabilise his companies and defend his reputation.
The share slides came just a day after the Adani Group managed to muster support from investors for a $2.5bn share sale for flagship firm Adani Enterprises, in what some saw as a stamp of investor confidence at a time of crisis.
The group has denied the allegations, saying the short seller’s narrative of stock manipulation has “no basis” and stems from an ignorance of Indian law. It has always made the necessary regulatory disclosures, it added.
Shares in Adani Enterprises, often described as the incubator of Adani businesses, plunged 28 percent on Wednesday, bringing its losses since the Hindenburg report to more than $18bn. Adani Ports and Special Economic Zone dropped 19 percent. Both stocks marked their worst day ever.
“The kind of fall that we are seeing in Adani stocks is scary,” said Avinash Gorakshakar, head of research at Mumbai-based Profitmart Securities.
Adani Power and Adani Wilmar fell 5 percent each, and Adani Total Gas slumped 10 percent, with all three falling by their daily price limits. Adani Transmission was down 3 percent and Adani Green Energy was down 5.6 percent.
Adani Total Gas, a joint venture with France’s Total, has been the biggest casualty of the short-seller report, losing about $27bn.
Dollar bonds issued by Adani entities also resumed their slide on Wednesday. The US dollar-denominated bonds of Adani Ports maturing in February 2031 led the losses, falling 3.59 cents to 67.58 cents.
Underscoring the nervousness in some quarters, Bloomberg reported that Credit Suisse had stopped accepting bonds of Adani group companies as collateral for margin loans to its private banking clients.
Deven Choksey, managing director of KR Choksey Shares and Securities, said this was a big factor in Wednesday’s share slides.
Credit Suisse had no immediate comment.
After losing $86bn in recent days, equivalent to 16 percent of India’s annual budget spend of $550bn announced on Wednesday, the seven listed Adani Group entities now have a combined market capitalisation of about $131bn.
Confidence damaged
“There was a slight bounce yesterday after the share sale went through, after seeming improbable at a point, but now the weak market sentiment has become visible again after the bombshell Hindenburg report,” said Ambareesh Baliga, a Mumbai-based independent market analyst.
“With the stocks down despite Adani’s rebuttal, it clearly shows some damage on investor sentiment. It will take a while to stabilise,” Baliga added.
Asked whether he was concerned about wider losses on India’s equity markets because of the plunge in Adani Group shares, economic affairs secretary Ajay Seth said the government “does not comment on issues related to a particular company”.
India’s benchmark Nifty index has fallen 2.7 percent since the Hindenburg report. Data also shows that foreign investors sold a net $1.5bn worth of Indian equities after the Hindenburg report – the biggest outflow over four consecutive days since September 30.
Scrutiny of the conglomerate is stepping up, with an Australian regulator saying on Wednesday it would review Hindenburg’s allegations to see if further enquiries were warranted.
India’s markets regulator, which has been looking into deals by the conglomerate, will add Hindenburg’s report to its own preliminary investigation, sources have told Reuters. The regulator has not commented on the Adani-Hindenburg saga.
Indian credit rating agency ICRA Ltd, a unit of Moody’s Investors Service, said on Wednesday it was monitoring the impact of the developments on its rated portfolio in Adani Group. It added that while the group’s large debt-funded capital spending plan was a “key challenge”, some of it was discretionary in nature and could be deferred, depending on the liquidity position.
India’s state-run Life Insurance Corporation (LIC) said on Monday it would seek clarifications from Adani’s management on the short-seller report. LIC owned a 4.23 percent stake in Adani Enterprises as of end-December and more than 9 percent in Adani Ports and Special Economic Zone. The insurance giant was also a key investor in Adani’s recent share sale.
Shares in cement firms ACC and Ambuja Cements, which Adani Group bought from Switzerland’s Holcim for $10.5bn last year, fell 6.2 percent and 16.7 percent, respectively.
Hindenburg said in its report it had shorted US bonds and non-India traded derivatives of the Adani Group.
Netflix (NFLX) stock slid as much as 9.6% Friday after the company gave a second quarter revenue forecast that missed estimates and announced it would stop reporting quarterly subscriber metrics closely watched by Wall Street.
On Thursday, Netflix guided to second quarter revenue of $9.49 billion, a miss compared to consensus estimates of $9.51 billion.
The company said it will stop reporting quarterly membership numbers starting next year, along with average revenue per member, or ARM.
“As we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact,” the company said.
Netflix reported first quarter earnings that beat across the board on Thursday, with another 9 million-plus subscribers added in the quarter.
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Subscriber additions of 9.3 million beat expectations of 4.8 million and followed the 13 million net additions the streamer added in the fourth quarter. The company added 1.7 million paying users in Q1 2023.
Revenue beat Bloomberg consensus estimates of $9.27 billion to hit $9.37 billion in the quarter, an increase of 14.8% compared to the same period last year as the streamer leaned on revenue initiatives like its crackdown on password-sharing and ad-supported tier, in addition to the recent price hikes on certain subscription plans.
Netflix’s stock has been on a tear in recent months, with shares currently trading near the high end of its 52-week range. Wall Street analysts had warned that high expectations heading into the print could serve as an inherent risk to the stock price.
Earnings per share (EPS) beat estimates in the quarter, with the company reporting EPS of $5.28, well above consensus expectations of $4.52 and nearly double the $2.88 EPS figure it reported in the year-ago period. Netflix guided to second quarter EPS of $4.68, ahead of consensus calls for $4.54.
Profitability metrics also came in strong, with operating margins sitting at 28.1% for the first quarter compared to 21% in the same period last year.
The company previously guided to full-year 2024 operating margins of 24% after the metric grew to 21% from 18% in 2023. Netflix expects margins to tick down slightly in Q2 to 26.6%.
Free cash flow came in at $2.14 billion in the quarter, above consensus calls of $1.9 billion.
Meanwhile, ARM ticked up 1% year over year — matching the fourth quarter results. Wall Street analysts expect ARM to pick up later this year as both the ad-tier impact and price hike effects take hold.
On the ads front, ad-tier memberships increased 65% quarter over quarter after rising nearly 70% sequentially in Q3 2023 and Q4 2023. The ads plan now accounts for over 40% of all Netflix sign-ups in the markets it’s offered in.
Netflix reported first quarter earnings after the bell on Thursday. REUTERS/Dado Ruvic/File Photo (REUTERS / Reuters)
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on X @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Oil prices initially spiked on Friday due to unconfirmed reports of an Israeli missile strike on Iran.
Prices briefly reached above $90 per barrel before falling back as Iran denied the attack.
Iranian media reported activating their air defense systems, not an Israeli strike.
Oil prices gave up nearly all of early Friday’s gains after an Iranian official told Reuters that there hadn’t been a missile attack against Iran.
Oil surged by as much as $3 per barrel in Asian trade early on Friday after a U.S. official told ABC News today that Israel launched missile strikes against Iran in the early morning hours today. After briefly spiking to above $90 per barrel early on Friday in Asian trade, Brent fell back to $87.10 per barrel in the morning in Europe.
The news was later confirmed by Iranian media, which said the country’s air defense system took down three drones over the city of Isfahan, according to Al Jazeera. Flights to three cities including Tehran and Isfahan were suspended, Iranian media also reported.
Israel’s retaliation for Iran’s missile strikes last week was seen by most as a guarantee of escalation of the Middle East conflict since Iran had warned Tel Aviv that if it retaliates, so will Tehran in its turn and that retaliation would be on a greater scale than the missile strikes from last week. These developments were naturally seen as strongly bullish for oil prices.
However, hours after unconfirmed reports of an Israeli attack first emerged, Reuters quoted an Iranian official as saying that there was no missile strike carried out against Iran. The explosions that were heard in the large Iranian city of Isfahan were the result of the activation of the air defense systems of Iran, the official told Reuters.
Overall, Iran appears to downplay the event, with most official comments and news reports not mentioning Israel, Reuters notes.
The International Atomic Energy Agency (IAEA) said that “there is no damage to Iran’s nuclear sites,” confirming Iranian reports on the matter.
The Isfahan province is home to Iran’s nuclear site for uranium enrichment.
“Brent briefly soared back above $90 before reversing lower after Iranian media downplayed a retaliatory strike by Israel,” Saxo Bank said in a Friday note.
The $5 a barrel trading range in oil prices over the past week has been driven by traders attempting to “quantify the level of risk premium needed to reflect heightened tensions but with no impact on supply,” the bank said, adding “Expect prices to bid ahead of the weekend.”
At the time of writing Brent was trading at $87.34 and WTI at $83.14.
