It's been a tough market environment for investors, with big whipsaws in both directions reflecting the massive uncertainty companies face. Uncertainty once again showed up in the relative movements of different stock market indexes Friday morning. The Dow Jones Industrial Average (^DJI 0.40%) looked poised to open slightly higher, but other benchmarks weren't as fortunate.
Several stocks stood out from the crowd because of the extent of their big share-price moves. Pinterest (PINS 4.04%) distinguished itself favorably from other social media stocks lately with solid financial results. However, healthcare company DaVita (DVA 0.56%) was among the worst performers in the stock market early Friday. Below, you'll see more about what led to these big moves and what could lie ahead for the companies.
Pinterest posts strong gains
Shares of Pinterest were up 11% early Friday, with investors reacting favorably to the social media company's third-quarter financial report. Even though some of its numbers reflected the sluggish environment for advertising that its rivals have reported previously, Pinterest was able to do better than most investors had expected.
Pinterest reported revenue of $685 million during the third quarter, rising 8% from year-earlier levels. Global monthly active user counts were flat year over year at 445 million. However, adjusted net income fell sharply, down 60% to $76.5 million.
Boosting average revenue per user (ARPU) has been a priority for Pinterest, and the company did see some progress on that front throughout most of its geographical territory. Overall ARPU rose 11% to $1.56 per user, with 15% gains in the key U.S./Canada market to $6.13 per user. Europe eased lower due largely to currency concerns, but it was encouraging to see rest-of-world ARPU rise 38% year over year -- even though it remains at rock-bottom levels of $0.11 per user.
Pinterest expects continued headwinds, but it sees mid-single-digit-percentage growth in revenue in the fourth quarter. That won't necessarily help on the earnings front, as operating expenses are likely to keep rising sharply through the rest of the year. In the long run, though, investors seem comfortable with Pinterest spending more to unlock more efficient monetization.
DaVita sees a drop
The news wasn't nearly as good at DaVita, whose shares were down 20% early Friday. The dialysis treatment specialist disappointed investors with its third-quarter financial results, which continued to face pressure both on the labor front and from lingering concerns about the COVID-19 pandemic.
DaVita posted revenue that was roughly flat from year-ago levels, inching higher by about $10 million to $2.95 billion. A big jump in expenses, however, was detrimental to DaVita's profitability. Net income attributable to the company was down nearly 60% year over year, and that led to adjusted earnings of $1.45 per share, down sharply from the previous period.
Not all the news was bad for DaVita, though. Free cash flow moved higher, coming in at half a billion dollars. Business metrics were generally solid, with DaVita providing service to 243,800 patients at more than 3,100 outpatient dialysis centers worldwide. Roughly 43,000 integrated kidney care patients resulted in $3.3 billion in annualized medical spending.
However, what really hit DaVita investors hard was the company's cut in guidance. Reductions of $150 million to $225 million in adjusted operating income projections for the full 2022 year brought the new range down to $1.375 billion to $1.45 billion, and DaVita now sees earnings of between $6.20 and $6.70 per share. That compares unfavorably to the previous guidance for $7.50 to $8.50 per share in adjusted earnings, and investors now fear that 2023 might not bring any relief in terms of operating income. That could lead to a sustained slump in the share price for some time.
