The stock market has been falling steadily for weeks, and Wednesday morning didn't bring immediate relief. News that the U.S. consumer price index (CPI) rose 0.3% in April with core figures climbing at a faster pace led to a reversal in futures markets. As of 9 a.m., futures on the Dow Jones Industrial Average (^DJI 0.17%) were down 100 points to 31,987. S&P 500 (^GSPC 0.80%) futures had dropped 20 points to 3,976, while Nasdaq Composite (^IXIC 1.37%) futures were down 114 points to 12,235.
Even with news that was encouraging for the market overall, investors continued to see substantial declines in several stocks reporting their latest financial results. Rocket Companies (RKT 0.78%) and Fiverr International (FVRR -0.56%) were among stocks seeing significant drops on Wednesday morning. Here's more about what made them lose ground and what their longer-term prospects look like.
Rising rates are rocking Rocket
Shares of Rocket were down more than 8% Wednesday morning. The mortgage lending specialist has seen a lot of its business dry up in the wake of rising interest rates, and the future doesn't look all that much brighter right now.
Rocket's first-quarter numbers weren't pretty. Total revenue plunged 41% to $2.67 billion. Net income fell to $1.04 billion, down 63% year over year. The figures on an adjusted basis were even worse, as adjusted earnings of $0.15 per share compared to the year-ago profit of $0.91 per share.
Just about every business metric worked against Rocket. Closed loan origination volume was down by nearly half to $54 billion, while Amrock title insurance closings fell by more than half to 168,300. Rocket Auto unit car sales held up reasonably well, but margins in the core business were weaker, and Rocket projected further weakening in the second quarter.
Rocket tried to point to positives, including solid customer retention and gains in affiliated businesses like the Rocket Homes real estate agent network, the Truebill personal finance app, and the Rocket Solar installation business. Nevertheless, investors seem focused on the ailing mortgage segment, and rising rates won't help that business in the foreseeable future.
Fiverr falls despite business growth
Meanwhile, shares of Fiverr International gave up another 14% in premarket trading Wednesday. The gig work platform provider continued to see its business metrics grow, but the pace of that growth wasn't enough to satisfy investors.
Fiverr's first-quarter results included a 27% year-over-year rise in revenue to $87.6 million. Active buyers rose 11% to 4.2 million, while spending per buyer was up 17% year over year. Take rates continued to climb, approaching the 30% mark, and adjusted earnings of $0.11 per share compared favorably with a modest $0.01 loss in the year-earlier period.
However, Fiverr expects macroeconomic uncertainties will hurt its performance in the remainder of 2022, especially with respect to its European business. Full-year projections for fiscal 2022 include sales of $345 million to $365 million, which would represent growth of just 16% to 23% from 2021 numbers. The width of the range also reflected the extent of Fiverr's uncertainty, adding to shareholder anxiety.
The gig economy isn't going anywhere, and Fiverr will play a key role in its growth worldwide. However, that's not stopping shareholders from being cautious as economic uncertainty takes shape around the world.