Wall Street Breakfast Podcast: Delta Q3 Earnings In Focus

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Delta Air Lines (DAL) Q3 preview: Can lower fuel prices offset the July outage. (00:23) BlackRock (BLK) said to be exploring an acquisition of private credit firm HPS. (01:41) OpenAI (MSFT) projections suggest no profits until 2029: report. (02:26)

This is an abridged transcript of the podcast.

Delta Air Lines (NYSE:DAL) is expected to report its third quarter earnings during market hours today, and investors will look to assess the CrowdStrike outage, which hampered the airline’s operations in July.

The consensus EPS Estimate is $1.55 (-23.6% Y/Y) and the consensus Revenue Estimate is $15.09B (-2.6% Y/Y).

Airlines are, however, expected to benefit from momentum, with near-term bookings and lower jet fuel prices providing some margin relief.

The firm adjusted its outlook after the flight disruptions caused by the CrowdStrike (CRWD) outage, which took place early in the third quarter.

The outage is expected to cost Delta Air Lines (DAL) $0.45 per share to third quarter earnings and increase the airline’s cost per available seat mile for the quarter.

Shares in the company are up 26% YTD.

Over the last 2 years, DAL has beaten EPS estimates 63% of the time and has beaten revenue estimates 88% of the time.

Over the last 3 months, EPS estimates have seen 0 upward revisions and 15 downward. Revenue estimates have seen 1 upward revision and 5 downward.

BlackRock (NYSE:BLK) is among firms that are considering acquiring HPS Investment Partners.

This is a deal that would give the world’s biggest asset manager a significant position in the private credit market.

Bloomberg News reported, citing people familiar with the matter, that HPS and BlackRock have held talks, as HPS pursues a possible initial public offering.

Bloomberg previously reported that an IPO could value HPS at $10B or more, and an all-out purchase of the company would likely command a higher valuation.

A deal isn’t imminent, and the talks could end without a transaction, some of the people told Bloomberg.

Another potential acquirer is private equity firm CVC Capital Partners, the report said.

Microsoft-backed (NASDAQ:MSFT) OpenAI is not expected to earn annual profits until 2029, according to company financial documents obtained by The Information.

The documents show annual losses could strike as high as $14B in 2026, the report said.

The projections showed the company reaching annual revenue of $100B in 2029. OpenAI also expects to spend about $200B through the end of the decade, minus stock compensations. Losses between 2023 and 2028 are projected to total $44B.

The report also found that Microsoft is entitled to 20% of OpenAI’s revenue.

Last week, OpenAI completed its latest funding round totaling $6.6B, which propelled the company to a $157B valuation. Microsoft and Nvidia (NVDA) both participated in the round.

More articles on Seeking Alpha:

Texas Instruments, Infineon added as new Nvidia suppliers: analyst

Costco reports 9% increase in September net sales and comp sales

Peter Todd denies claims of being bitcoin’s mysterious creator – reports

Catalyst watch:

• Hewlett Packard Enterprise (HPE) will hold its AI Day event. Management said the talks will focus on the company’s industry-leading technology and capabilities that are powering the company’s growth in AI.

• Guidewire Software (GWRE) will hold its Analyst Day 2024 event.

• Advanced Micro Devices (AMD) will hold its Advancing AI 2024 event to showcase the next-generation AMD Instinct accelerators and 5th Gen AMD EPYC server processors. The company said it will also discuss networking and AI PC updates, in addition to highlighting its AI solutions ecosystem.

• Tesla (TSLA) will hold its highly anticipated robotaxi event at 10pm ET (7pm PT). The update could impact other companies with big robotaxi or autonomous vehicle plans such as Waymo (GOOG), Uber Technologies (UBER), Aurora Innovation (AUR), Amazon’s (AMZN) Zoox, Baidu’s (BIDU) Apollo, and GM’s (GM) Cruise.

On today’s economic calendar:

8:30 am, The September Consumer Price Index report will be released. CPI is expected to rise 0.1% M/M, according to economists’ consensus, cooling from the 0.2% pace in August. That would slow the Y/Y increase to 2.3% from 2.5% in the prior month.