Investors don't like inflation, and when the Bureau of Labor Statistics released consumer price index data that showed a fresh 40-year high in year-over-year price changes, Wall Street wasn't happy. After having been up most of the morning on Wednesday, stock futures fell sharply after the report. As of 8:45 a.m. ET, futures contracts on the Dow Jones Industrial Average (^DJI -0.98%) were down 283 points to 30,683. S&P 500 (^GSPC -0.46%) futures were off 55 points to 3,769, and Nasdaq Composite (^IXIC -0.64%) futures dropped 248 points to 11,531.
Even companies that have seen huge gains in sales as a result of pent-up demand finally getting released are struggling. Delta Air Lines (DAL 4.05%) is dealing with too much of a good thing right now, as the flood of customers is overwhelming its slimmed-down fleet of aircraft and its labor force. On the other hand, interest in acquisitions to foster growth has been a theme that's gaining traction across the market, and IronSource (IS) was the beneficiary of that trend Wednesday morning. Read on to learn more about both companies.
Delta loses altitude
Shares of Delta Air Lines were down about 5% in the premarket session on Wednesday morning. The airline reached a key milestone, but investors still weren't pleased with everything they saw in the latest financial report from Delta.
Delta's second-quarter results showed a continuing rebound from the blow that the COVID-19 pandemic dealt the company. Adjusted operating revenue of $12.3 billion marked a 99% recovery from pre-pandemic levels in the second quarter of 2019, as Delta has restored 82% of the capacity it lost during the worst of the pandemic. However, even though Delta announced adjusted operating income of $1.4 billion that translated into earnings of $1.44 per share, investors had hoped to see an even stronger bottom-line recovery given high travel demand.
Delta is still far from being back to normal. The airline's domestic business in the U.S. has led the way higher, but international passenger volume has been slower to return due to ongoing pandemic-related restrictions, particularly in the Asia-Pacific region. Business travelers are slowly returning to the skies as well, although there's a lot more room for improvement on that front.
Cargo volumes have been at record levels due to supply chain issues, and Delta's co-branded credit card with American Express has generated extra money for the airline as well. Yet with capacity expected to remain at depressed levels in the third quarter, it'll be tough for Delta to maintain as steep an ascent as investors would like to see.
IronSource becomes the latest buyout candidate
On the upside, IronSource shares were up nearly 50% Wednesday morning. The mobile content specialist got a bid from a potential buyer, and investors were pleased with the implications of the merger plans.
Unity Software (U -1.06%) and IronSource announced that they had reached a deal to combine forces. Under the terms of the agreement, IronSource shareholders would receive 0.1089 shares of Unity stock for every IronSource share they own. The all-stock deal values IronSource at roughly $4.4 billion, which is nearly 75% higher than where the company has traded on average over the past 30 days.
Unity expects the merger to create a platform that will help content creators in all of their development efforts, from the planning stages all the way through to releasing content, managing its distribution, monetizing it, and fostering growth in their audiences. In addition, key institutional investors have committed to capital infusions via convertible debt to give the combined companies an additional boost in investing in further growth.
As often happens with all-stock deals, shares of acquirer Unity were down sharply, falling 16%. Yet despite the jump, many IronSource investors might end up being the most disappointed, given that the stock is still down 75% from its highs late last year.
