Analysis: SUNL VLTA CHPT HNNMY

Following Wednesday's market bounce, investors are once again contending with several issues that raise questions and uncertainties over what lies ahead. While providing some relief, the Bank of England's (BoE) move to support U.K. treasury equivalents (Gilts) feeds into the conundrum facing governments right now. While providing some temporary relief, properly functioning markets need to be left to find their natural clearing prices.

Despite what we saw unfold in equities yesterday, the underlying footing remains less than firm. OPEC is reportedly considering production cuts at its October 5 meeting, Russia is looking to annex four territories in Ukraine tomorrow, and the EU is preparing another round of sanctions while inflation continues to soar in the eurozone. At the same time, we have another round of companies pulling guidance for the balance of 2022 while others offer fresh reminders as to the impact of rising costs and slowing spending.

Shares of point-of-sale finance company Sunlight Financial (SUNL) fell in after-market trading last night following the company's withdrawal of its 2022 guidance. Per reports, one of the company's key installers is closing and higher interest rates are also impacting its business. We suspect Sunlight won't be the only company feeling the pain of the more costly borrowing environment.

Volta (VLTA)  , an EV charging station company, issued downside revenue guidance for the current quarter, withdrew its 2022 revenue and install guidance and announced another 10% reduction in current full-time employees. The company is also implementing additional cost savings initiatives through tightening business processes, limiting the use of outside consultants, consolidating teams and its three San Francisco offices into one, and managing marketing and administrative costs. While this announcement could weigh on shares ofAction Alerts PLUS holding ChargePoint (CHPT) this morning, ChargePoint is a far more well capitalized company than Volta, something we pointed out a few months back when we identified Volta's cash burn rate against its balance sheet.

Meanwhile, H&M (HNNMY) , the world's No.2 fashion retailer, announced a $177 million cost savings drive after reporting weaker-than-expected profits due to soaring input costs, slowing consumer spending, and its exit from Russia. The company did not give details of where it hoped to make cost savings but said the benefits should be felt in the second half of 2023. In our view, this is another example of consumers pivoting their spending amid higher inflation and food costs.

With that in mind, this morning Spain's preliminary estimate of consumer price inflation dropped to 9.0% YoY in September, moving further away from a 38-year high of 10.8% hit in July and compared with market expectations of 10.1%. While moving in the right direction, those figures remain a great distance from the European Central Bank's target. Offsetting that somewhat positive news, the preliminary September inflation rate for Germany clocked in at +10% YoY, up from 7.9% the prior month and the expected reading of 9.4%.

When we examine all of the above, we continue to think the soon-to-be-upon-us September-quarter earnings season will be a challenge for equities and investors that haven't factored these and other recent events into their thinking.