Buffalo Wild Wings' Wild Earnings, Twitter's Egg, Big M&A Drama, and the Week in Review

The four things you need to know on May 3.

May 3, 2014 at 7:00PM
Before you toss back a couple of Dos Equis before Cinco de Mayo (or some Buds before the all-American Kentucky Derby), check out what pushed the Dow up to its first record high of 2014 this past week -- and anticipation of the big, expectations-beating April jobs report that showed 288,000 new hires in America last month didn't hurt either.

1. Stock market winner ...
We're not just saying this because its NHL playoff hockey time and we just spent all of March watching NCAA basketball. But food/bar chain Buffalo Wild Wings (NASDAQ:BWLD) had a rousing performance this week after delivering a thirst-quenching first-quarter earnings report. Wild Wings has cooked up $367.9 million in revenues to kick off 2014, topping Wall Street's estimates of only $363 million.

So what's driving all the traffic to their bars? It isn't just the sports games. Buffalo Wild Wings has introduced a new "Guest Service" plan just a few months ago and the results have brought in the customers. The restaurant now offers table-side tablets for you to enjoy trivia games and guest experience "captains" who help you figure out how to use the aforementioned tablets. Welcome to the 21st century, sports bars.

But that wasn't the only news the company had to report -- CEO Sally Smith also took the opportunity to announce that she's sold over $214,000 of her own personal Wild Wings stock recently, which leaves her equity stake in the company at around $11 million. She doesn't have to give a reason, but keep in mind that, as a company insider, she did have to report this to the SEC and make public the news. We assume she'll spend the money by buying us a round.
2. ... And stock market loser
If you're on social media (and we assume you are), then you probably got word of the Twitter (NYSE:TWTR) earnings report -- and it wasn't worth retweeting. Twitter's first-quarter earnings indicated that the king bird of short-messaging is dropping more cash than it's raking in as its quarterly loss increased to $134 million, while revenues reached $250 million, twice as much as last year.

As any good Twitter user knows, there are good tweets, and there are bad ones -- similarly, this earnings report had some positives and some negatives. On the plus side, the number of users improved after shrinking over the past four quarters (monthly active users, of which there are 255 million, rose nearly 6% from last quarter). On the negative side, investors are getting worried that most Americans aren't flocking to Twitter like birds of a feather, and this could hurt the company's ability to become a big advertising player.

The bottom line is that investors are expecting a $25 billion company like Twitter to stop generating losses and become a huge advertising moneymaker ... soon. Twitter's execs though have heard the concerns and are making adjustments -- no wonder they recently changed the homepage to look more like competitor Facebook.

3. Big M&A drama for pharmaceuticals and telecom giants
Gossip on the Street was that AT&T (NYSE:T) will try to acquire DirecTV (NASDAQ:DTV) in a deal projected to be worth a cool $40 billion -- DirecTV's subscriber numbers have been dropping, and AT&T wants to get into the TV industry to compete with the recent behemoth of Comcast and Time Warner Cable (as long as the Justice Department is cool with it). And U.S.-based Pfizer (NYSE:PFE) tried to reach across the pond to buy UK-based AstraZeneca for a headache-inducing $99 billion, but on Friday AstraZeneca rejected the offer.

4. The Fed slashed stimulus (again)
The Federal Reserve didn't have any party treats for investors after its two-day, eight-times-per-year policy-setting meeting. Instead, the central bank announced that it's cutting its "quantitative easing" stimulus policy from $55 billion in monthly bond purchases (which keep interest rates low to encourage economy-boostin' borrowing) to $45 billion. Although Wall Street loves stimulus and has sold off stocks before when the stim was cut, investors didn't react this time around, because the policy change was expected.
MarketSnacks this week:
  • Monday: ISM Non-Manufacturing Index; first-quarter earnings reports: Kate Spade, Manchester United, Pfizer
  • Tuesday: earnings reports: DirecTV, Walt Disney, Whole Foods Market
  • Wednesday: Fed Chairwoman Janet Yellen speaks; earnings reports: Ceasars Entertainment, Hugo Boss, Molson Coors
  • Thursday: Weekly jobless claims; earnings reports: MercadoLibre, Monster Beverage, Wendy's
  • Friday: Wholesale trade report

As originally published on MarketSnacks.com

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John Mackey, co-CEO of Whole Foods Market, is a member of The Motley Fool's board of directors.

Jack Kramer and Nick Martell have no position in any stocks mentioned. The Motley Fool recommends Buffalo Wild Wings, DirecTV, MercadoLibre, Molson Coors Brewing, Monster Beverage, Twitter, Walt Disney, and Whole Foods Market and owns shares of Buffalo Wild Wings, MercadoLibre, Monster Beverage, Walt Disney, and Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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