Q1/2025 earnings starts - Preview of the week starting 31 Mar 2025

Public Holidays

The USA have no public holidays in the coming week.

Singapore is closed on 31 Mar 2025 as we celebrate Hari Raya Aidilfitri with our fellow Muslim citizens.

Hari Raya Aidilfitri, also known as Eid, is a joyous festival in Singapore marking the end of Ramadan. Muslims engage in acts of compassion, fast from dawn to dusk, and worship during this holy month. On the day of Hari Raya, families don new clothes, visit the mosque for prayers, seek forgiveness from elders, and indulge in home-cooked feasts

Hong Kong and China will be closed on 4 April 2025 for the Ching Ming Festival

The history of the Ching Ming Festival, Hong Kong's tomb-sweeping holiday - Young Post | South China Morning Post

The Ching Ming Festival, also known as Tomb Sweeping Day or Pure Brightness Festival, is a Chinese holiday honoring ancestors and the deceased, typically celebrated in early April, marked by visiting and cleaning ancestral tombs, offering food and burning incense.

Economic Calendar (31 Mar 2025)

Notable Highlights

• China’s Manufacturing PMI is an important reference for global demand for products when China accounts for about one-third of global manufacturing. S&P Global Manufacturing PMI has a forecast of 49.3, which represents “contracting global demand” for products ahead. Chicago’s PMI represents production demand inthe USA.

• S&P Global Services PMI and ISM non-manufacturing PMI reflect the demand for services. ISM non-manufacturing prices reflect the inflationary pressures seen by service providers.

• JOLTs job openings show the number of jobs available in the USA. ADP nonfarm employment changes show the number of nonfarm-related jobs. Average Hourly Earnings, Nonfarm payrolls, and Unemployment rates are the other job-related data that the Federal Reserve would consider for its coming interest rate decisions.

• Initial jobless claims will be announced. The Federal Reserve uses this as one of the key macro data references as it balances inflation and employment in the economy.

• Crude Oil Inventories can be seen as forward indicators of market demand and consumption. If the trend of excess inventories continues, demand erosion can lead to reduced production & weakened consumer spending.

Earnings Calendar (31 Mar 2025)

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I am interested in BlackBerry's and RGP's upcoming earnings.

Let us look at BlackBerry in detail.

The stock price rose by 42% from a year ago. Technical Analysis has a “Strong Sell” recommendation for the stock.

Here is an analysis of Blackberry with the help of GROK:

Revenue

• Growth Trend: BlackBerry's revenue has significantly declined over the decade, dropping from $3.335 billion in 2015 to $853 million in 2024. The 10-year compound annual growth rate (CAGR) for revenue is a negative 18.8%, reflecting a steep contraction.

• Key Milestones: Revenue saw sharp declines, particularly in 2015 (-51.0%), 2016 (-35.2%), and 2017 (-39.4%). There were brief periods of growth, such as 15.0% in 2020, but the overall trend is downward, with an 8.6% drop in 2023 and a 30.0% increase in 2024.

• Competitive Advantage: The consistent revenue decline indicates BlackBerry's struggle to maintain its market position after pivoting from hardware (smartphones) to software and cybersecurity. However, the 2024 revenue growth suggests potential stabilization in its new focus areas.

Operating Profit

• Growth Trend: Operating profit has been negative for most of the decade, with a loss of -$174 million in 2015, worsening to -$458 million in 2016, and peaking at -$66 million in 2020. By 2024, the operating loss was -$72 million.

• Operating Margin: The operating margin has remained deeply negative, ranging from -5.2% in 2015 to -34.1% in 2023, improving slightly to -8.4% in 2024. This reflects ongoing challenges in achieving profitability.

• Competitive Advantage: BlackBerry’s persistent operating losses highlight its struggle to achieve operational efficiency in its new software-focused business model. However, the slight improvement in 2024 may indicate early signs of cost management or revenue stabilization.

Earnings Per Share (EPS)

• Growth Trend: EPS has been volatile and mostly negative, starting at -$0.58 in 2015, peaking at $0.74 in 2018, and dropping to -$0.22 in 2024. The 10-year EPS CAGR is not provided, but growth rates show extreme fluctuations, such as 127.4% in 2017 and -335.5% in 2022.

• Volatility: EPS has been inconsistent, with significant declines (e.g., -100.0% in 2019) and brief periods of positive earnings (e.g., 2018). The negative EPS in 2024 reflects ongoing profitability challenges.

• Competitive Advantage: The lack of consistent EPS growth indicates BlackBerry’s difficulty in generating shareholder value during its business transition. However, its focus on high-growth areas like cybersecurity and IoT may offer long-term potential.

Price-to-Earnings (P/E) Ratio

• Valuation: The P/E ratio is negative at -18.2, reflecting the 2024 earnings loss. This suggests market uncertainty about BlackBerry’s ability to return to profitability.

• 10-Year Median Returns: The 10-year median return on assets (ROA) is -4.1%, return on equity (ROE) is -5.2%, and return on invested capital (ROIC) is -4.8%, indicating poor historical returns.

• Competitive Advantage: The negative P/E and returns highlight BlackBerry’s challenges in generating value. However, its low P/B (3.2) and P/S (3.4) ratios suggest the market may see some underlying value in its assets and revenue potential.

Free Cash Flow (FCF)

• Growth Trend: The EV/FCF ratio is -51.1, indicating negative free cash flow, and the 10-year CAGR for FCF is not provided but is likely negative, given the company’s financial struggles. The 10-year median FCF margin is 4.8%, suggesting some periods of positive cash flow.

• Capital Structure: The median debt/equity ratio is 0.3, and debt/assets is 0.2, reflecting a conservative approach to leverage.

• Competitive Advantage: Negative FCF limits BlackBerry’s ability to fund growth without external financing. However, its low debt levels provide financial flexibility to navigate its transition.

Other Key Metrics

• Gross Profit and Margin: Gross profit declined from $1.604 billion in 2015 to $520 million in 2024, but the gross margin remained strong, improving from 48.1% in 2015 to 61.0% in 2024. The 10-year median gross margin is 64.5%, reflecting a high-margin software business.

• Return on Invested Capital (ROIC): ROIC has been mostly negative, ranging from -5.9% in 2015 to -11.4% in 2024, with a brief peak at 13.6% in 2018. The 10-year median ROIC is -4.8%, indicating poor capital efficiency.

• Competitive Advantage: The high gross margin is a key strength, reflecting BlackBerry’s successful pivot to a software model with higher profitability potential. However, the negative ROIC underscores challenges in scaling this model profitably.

Overall Assessment

Over the past 10 years, BlackBerry has faced significant challenges, with revenue declining at a -18.8% CAGR as it transitioned from a hardware-focused company to a software and cybersecurity provider. Operating profits and EPS have been consistently negative, reflecting the difficulty of this pivot, and the company does not pay dividends, focusing instead on reinvestment. The negative P/E ratio (-18.2) and ROIC (-11.4% in 2024) highlight ongoing profitability struggles, but the high gross margin (61.0% in 2024) and low debt levels (debt/equity of 0.3) suggest potential for recovery. BlackBerry’s competitive advantages lie in its high-margin software business and its focus on growing sectors like cybersecurity and IoT, but it has yet to translate these into consistent financial performance.

The forecast for EPS and revenue are 0.003 and $129.26M, respectively. The recent performances are underwhelming and I prefer to monitor the stock for now.

Market Outlook of S&P500 - 31 Mar 2025

Let us monitor the volume of the S&P 500.

Chart of the S&P 500 dated 29 Mar 2025

Observations:

• The MACD indicator may experience a bottom crossover in a few days. This should form a “double bottom”. Typically, a “recovery” can happen after a double bottom.

• Moving Averages (MA). The MA50 line has started a downtrend, while the MA200 line is on an uptrend. This implies a downtrend in the mid-term and a bullish in the long term.

• Candle. The last candle is below the MA50 and MA200 lines, implying a bearish outlook for the medium and long term.

• The three Exponential Moving Averages (EMA) lines are showing a downtrend.

• Chaikin’s Monetary Flow (CMF) is in the “uptrend zone” (above the 0 line). However, it is possible to see a trend change as it hovers near the "0” line. It is pointing downwards

• The average volume is about 4.9 billion. The 28 Mar 2025 trading day closed out with a volume of 2.8 billion. The volume can be seen as the momentum of the trend. With weak volume, the trend may not be sustained.

• Let us monitor the magnitude of the rise and fall alongside the volume.

From the investing’s technical analysis page, they recommend a “Strong Sell” rating for the S&P 500. There is 1 indicator showing a “Buy” rating and 21 indicators showing a “Sell” rating.

Here are the recent candlestick patterns.

There are more (recent) bearish candlestick patterns.

Given the above indicators, the downward trend should continue with a recovery on the cards.

News and my thoughts from last week (31 Mar 2025)

Chinese antitrust regulators are investigating a US consortium’s deal for two ports in the Panama Canal zone, reportedly delaying the deal’s closing that was originally set for next week. - CNN

Consider Singapore (apart from Dubai, Monaco & Portugal). Safe, secure, and business friendly. Affordability depends on lifestyle.

Too big to fall or too big to save?

Analysts have decreased Q1 EPS estimates for $SPX companies by 4.0% since December 31, which is larger than the 10-year average (-3.2%) for a quarter - FactSet

66 $SPX companies have issued negative EPS guidance for Q1 2025, which is above the 5-year average of 56 and above the 10-year average of 62. - FactSet

The EU is set to accept a compromise that would allow companies to enter into a system of trading carbon credits instead of paying directly for their emissions - The Guardian

“It’s three years at best for brand new automotive capacity that could potentially span into a new administration, where the rules could change,” said the executive. “So just by the time that capacity was coming online, you might find that was no longer your optimal footprint.” - CNN

If Chinese-built container ship fines take effect, ‘we’re out of business in U.S.,’ ocean carrier says - CNBC

When the system fails the people, the people will replace the system.

February PCE inflation, the Fed's preferred inflation measure, was 2.5%, in-line with expectations of 2.5%. Core PCE inflation RISES to 2.8%, above expectations of 2.7%. January Core PCE inflation was also revised up to 2.7%. Core inflation is back on the rise. - X user The Kobeissi Letter

I was in Washington, DC this week, speaking with economic leaders of both parties to go over the mechanics of the serious debt problem, to see if they can agree on it, and to see if there can be agreement on what to do about it. While I’m happy to report that they all appreciated going over the mechanics and agreed with the need to cut the deficit to about ​3% of GDP, they are now in the middle of their debt limit and budget fights which need to be resolved before they can undertake discussions about how to hit that target. Interestingly, there was some openness to having people make the 3% pledge and even setting up a bipartisan commission to figure out how to achieve it. Stay tuned. - Ray Dalio

The US announced yesterday 25% tariffs on all cars made OUTSIDE the US: To put this into perspective, 16 million cars are sold every year in the US, of which 46% or 7.4M are imported. The US imported $474B in automotive products in 2024. New levies will take effect on April 3 - X user Global Markets Investor

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Mark Carney declares: The old relationship we had with the U.S. is over. - CPAC

Porsche and Mercedes-Benz will be hit hardest by President Donald Trump’s auto tariffs, facing a potential €3.4 billion blow from new US tariffs on imported cars, per Bloomberg

Ferrari to increase prices by 10% to offset President Trump's tariffs. - WatcherGuru

The US Federal government has a HUGE spending problem: Government expenditures' 6-month moving average has exceeded revenues for 17 years STRAIGHT. In fact, the government has recorded an annual budget DEFICIT for 24 YEARS. In effect, the public debt hit ~$36 TRILLION. The US government deficit hit $1.15 TRILLION in the first 5 months of the Fiscal Year 2025, the most EVER. This has even surpassed the 2021 fiscal shock after the 2020 Crisis.- X user Global Markets Investor

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The Federal Reserve reported a -$77.6 billion operating loss in 2024, building on a -$114.3 billion loss in 2023. Since Q4 2022, cumulative operating losses have reached a massive $224.4 billion. This comes as the central bank has paid hundreds of billions in interest to commercial banks and money market funds. On the other hand, interest income coming from Treasury and Mortgage-Backed Securities has declined as the Fed has shrunk its balance sheet. Meanwhile, the Fed’s cumulative unrealized losses on these assets jumped $112 billion in 2024 to $1.06 trillion as yields surged in the previous quarter. - The Kobeissi Letter

CHINESE EV GIANT BYD OUTPACES TESLA WITH ANNUAL SALES OF MORE THAN $100 BILLION - Investing

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Turkey’s Capital Markets Board has imposed a sweeping ban on short selling and loosened share buyback restrictions in an effort to stabilise markets following a sharp sell-off triggered by political tensions. - ShareCafe

New house prices in China fell 5.2% year-over-year in February, the 20th STRAIGHT monthly decline. This is one of the longest falling streaks in HISTORY. At the same time, existing home prices tumbled 7.5% last month. Used-home prices in top-tier cities also dropped, suggesting MORE PAIN AHEAD. The property market in China is still COLLAPSING. - X user Global Markets Investor

Only 63% of Americans would be able to come up with $2,000 to cover an emergency expense, the lowest share in 10 years. Historically low savings, skyrocketing debt, weakening labor market, and rising prices hit US consumers - X user Global Markets Investor

My Investing Muse (31 Mar 2025)

Layoffs & Closure news

Hundreds of Canadian workers, many in the steel and aluminum sectors, have been laid off as a result of U.S. President Donald Trump's tariffs, according to a major union and companies. - Reuters

Earlier this month, San Francisco tech company Niantic sold off its hit Pokémon Go and a few other video game titles in a $3.85 billion megadeal. Now, dozens of local workers are losing their jobs. - SF Gate

Buckle up, recession is coming - X user Darth Powell

The above are some of the layoff and closure news. Let us monitor this, as this can lead to market-wide concerns.

Microsoft stops Data Centre

MICROSOFT DITCHES DATA CENTER DEALS IN U.S. AND EUROPE The canceled leases, many of them recent, are reportedly tied to Microsoft’s decision not to expand support for OpenAI’s training workloads. The move comes as investor caution grows around big-tech AI spending, especially with cheaper rivals like China’s DeepSeek gaining attention. Analysts say Google and Meta are stepping in to absorb some of the freed-up capacity. Microsoft, which plans to spend over $80 billion on AI and cloud this year, declined to comment. Source: Reuters

Microsoft cancels up to 2GW of data center projects, says TD Cowen Follows reports of 200MW of cancellations last month Is this due to underutilization, oversupply and underperformance? - DataCenterDynamics

Microsoft has canceled this development. Is this due to optimization, undercapacity, oversupply or a lack of demand?

Should we consider hedging?

Here is some news about the market that suggests the need for hedging.

Hedge - Investopedia

Mohnish Pabrai: "The Odds That The S&P Delivers over 5%/YEAR For The Next 10-15yrs Approximates ZERO"

Retail flows into technology stocks have more than TRIPLED in just a few weeks. Mom-and-pop investors have bought the largest US tech stocks despite the Nasdaq 100 index falling into a correction. - X user Global Markets Investor

Institutional investors are SELLING Magnificent 7 stocks at a RECORD pace: Hedge funds' net exposure to Magnificent 7 stocks has dropped to a 2-year low. This is even faster-selling than during the 2022 bear market. - X user Global Markets Investor

US recession red flags everywhere? - Economic Times

Speculators are now short the U.S. Dollar for the first time since October

Recession can be felt first in the F&B, travel and entertainment sectors. Where else can there be leading indicators?

Investors are rushing to the EXIT: Fund managers' allocation to US stocks FELL by 40 ppts from February to March, to a net 23% underweight, the lowest since June 2023. Over the last 3 months, it has declined by 60 ppts, the biggest DROP this CENTURY - X user Global Markets Investor

My final thoughts

If the tariffs are not managed properly, China will build everything and partner with the rest of the world, including Canada, Europe, Mexico and more. Will America be left in isolation? Are the citizens willing to work in factories? To work together is better.

Let us review our expenditures, income, and savings. Let us spend within our means, invest with what we can afford to lose, and avoid leverage. I am reviewing my holdings and plan to cut losses with businesses losing their competitive advantages. I would also consider hedging and adding some defensive positions.

Let us do our due diligence before we take up any positions. Let us have a successful week ahead.

$BlackBerry(BB)$

$S&P 500(.SPX)$

$SPDR S&P 500 ETF Trust(SPY)$

@TigerStars