Tech Declines Are a Symptom of Trader Nerves After Big Rally
It's a sign of just how nervous investors are about the equity market here that an essentially tiny dip in tech – the Nasdaq 100 Index is down 2.5% from its record of just over a week ago – has some traders wringing their hands over whether this is the start of the big selloff.
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3 minutes ago
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Default Warnings Start to Pile Up in Private Credit Market
(Bloomberg) -- Warnings on defaults are starting to pile up in the $1.7 trillion private credit market, prompting at least some analysts to raise concern about underappreciated risks in one of Wall Street's favorite money spinners. For years, losses have been contained by the fact that private credit firms have more room than many other investors to be patient with borrowers when times are tough. During the pandemic direct lenders granted companies more time to pay their obligations, often by negotiating behind the scenes with private equity owners. Why New York City Has a Fleet of New EVs From a Dead Carmaker Trump Takes Second Swing at Cutting Housing Assistance for Immigrants Neom's Desert Ski Resort Strains Saudi Prince's $1.5 Trillion Plan Chicago Schools Seeks $1 Billion of Short-Term Debt as Cash Gone We Need a Reality Check on Crime, Safety and Transit But a number of analysts this month are holding up a light to underlying stress, including from lenders themselves. While there is no universal definition of what constitutes default in private credit, default rates for the market are currently in the 2% to 3% range. If so-called non-accrual loans — those on which lenders expect to book losses — are added to the mix, that rate climbs to 5.4%, according to a JPMorgan Chase & Co. report that's based on data from KBRA DLD. The adjustment puts the default rate for private credit broadly in line with that observed in the broadly syndicated loan market. Returns above 8% are still luring investment, although private credit funds are not the cash magnet they once were. Fundraising has slowed this year to $70 billion in the period through July 22, accounting for just a tenth of the alternative asset inflows, according to JPMorgan, the smallest share since at least 2015. 'Inflows into the asset class meant too much capital was committed far too quickly,' JPMorgan analysts including Stephen Dulake wrote in a report this month. 'Underwriting corners were surely cut; and losses will be outsized come the downturn.' Private companies and their lenders have been able to keep payment defaults at bay through payment-in-kind arrangements that allow borrowers to defer cash interest payments until debt comes due, leaving them with one big bill at the end. Another way is by setting covenants at 'generous' levels that make it hard to act on early signs of weakness, according to S&P Global analyst Zain Bukhari. 'A major selling point of private credit is the low default rates,' Bukhari wrote in a report this month. 'This reputation hinges on a narrow definition of default.' If actions such as maturity extensions and conversions of interest payments from cash to PIK — so-called selective defaults — are added to the calculation, the rate at which borrowers are failing to meet debt obligations is much higher, according to S&P. Defaults may have been 'disguised by significant amendment activity,' as lenders can tweak credit agreements to forestall defaults, according to a report this month by valuation firm Lincoln International. Lincoln's 'shadow default rate' for the market, which is calculated by looking at 'bad' PIK investments as a proportion of total investments, stood at 6% in the second quarter, compared to 2% back in 2021. Officially, the default rate for private credit rose to 3.4% in the second quarter from 2.9% in the prior period, according to the report. Complicating matters further, the set of borrowers monitored by credit graders and advisory firms can differ widely from shop to shop, making it difficult for any one institution to have visibility on the entire market. While that creates some dissonance, research from a variety of players seems to chime when it comes to the direction for defaults: Up. 'Higher concentrations of borrowers in weaker credit rating categories and a recent uptick in defaults suggest ongoing headwinds,' said Michael Dimler, an analyst at Morningstar DBRS. Nevertheless, some market participants remain upbeat. They say falling interest rates have relieved pressure on companies with heavy debt loads, and that interest coverage ratios in lending portfolios are healthy. 'When interest rates were pointing up our market research suggested there were certain sectors that looked more exposed, but now rates are heading in a downward direction,' said Christopher Bone, head of private credit for Europe and Asia at Partners Group. 'A resilient company with strong cash flows can afford interest rates today.' Deals Rappi Inc., one of Latin America's most valuable startups, secured a $100 million loan from Banco Santander and Kirkoswald Capital Partners Banks and direct lenders are in discussions to refinance the debt of Gridiron Capital-backed Leaf Home as private equity firms hold onto assets for longer Digital wealth management platform Endowus is partnering with Macquarie Asset Management to introduce private infrastructure investments to eligible investors in Singapore and Hong Kong The direct lending arms of BlackRock and Morgan Stanley Investment Management are providing a unitranche loan of around €200 million to finance the buyout of French software-as-a-service business Brevo A group of private credit firms are providing nearly $1.4 billion of loans to support Centerbridge Partners' acquisition of financial software platform MeridianLink Inc. Fundraising Neuberger Berman launched its first interval fund, focused on private asset-based credit, as alternative asset managers look to raise more capital from retail investors Job Moves JPMorgan Chase & Co. has lost two Hong Kong-based credit traders recently along with its local head of credit sales, according to people familiar with the matter Did You Miss? US Private Credit Default Rate Fell to 5.2% in July, Fitch Says Apollo Seeks to Double India Assets to $4 Billion in Credit Boom How Pimco Outmaneuvered Apollo, KKR to Win $29 Billion Meta Deal Trez Capital Halts Redemptions Across Five Real Estate Funds Private Credit-Powered AI Boom at Risk of Overheating, UBS Says Apollo's Fox Hedge Is Taking Financial Wizardry to a New Level Private Credit Is Using Football Transfer Fees as Collateral Apollo's Head of European Credit Eyes Deals in Defense, AI Lure of 'Free Money' in Secondaries Nears a Mania: Credit Weekly --With assistance from Isabella Farr and Rene Ismail. (Updates with broadly syndicated market comparison in fourth paragraph. A prior version of this story corrected the description of non-accrual loans in the same paragraph.) Foreigners Are Buying US Homes Again While Americans Get Sidelined Volkswagen EVs Outsell Tesla in Europe a Decade After Dieselgate What Declining Cardboard Box Sales Tell Us About the US Economy Survived Bankruptcy. Next Up: Cultural Relevance? Women's Earnings Never Really Recover After They Have Children ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
3 minutes ago
- Yahoo
Why Navitas Semiconductor Stock Was Sinking This Week
Key Points An analyst dealt quite the blow to the chipmaker, in the form of a recommendation downgrade. These days, he's rating it hold rather than a buy. 10 stocks we like better than Navitas Semiconductor › Specialty chipmaker Navitas Semiconductor (NASDAQ: NVTS) was looking anything but special over the past few trading days. The company was the subject of a recommendation downgrade, which pushed the stock well down in price and kept it there. As of Thursday evening, Navitas's shares were down by over 10% week to date, according to data compiled by S&P Global Market Intelligence. Cut down to size Although the downgrading party wasn't a large, famous financial institution, the move nevertheless impacted Navitas stock, and not in a pleasant way. It was made on Wednesday by CJS Securities's Jonathan Tanwanteng, who reset his recommendation on the stock to market perform -- hold, in other words -- from his previous ranking of market outperform (buy). He did not set a price target. Tanwanteng's reasoning behind the downgrade wasn't immediately apparent, but it was likely influenced by the dispiriting second-quarter results Navitas announced near the start of August. For the period, management reported that the company suffered a year-over-year revenue decline of nearly 30%. In what was hardly more encouraging news, the company's $0.25 per share net loss was double the deficit in the second quarter of 2024. Memories of a hot deal fading The resulting investor sell-off was quite the comedown for the company, which, as recently as May, was riding high on news of a deal with chip giant Nvidia. The two announced they were teaming up to develop hardware solutions for the coming wave of data centers outfitted to service the needs of artificial intelligence (AI) technology. Should you buy stock in Navitas Semiconductor right now? Before you buy stock in Navitas Semiconductor, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Navitas Semiconductor wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $654,624!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,075,117!* Now, it's worth noting Stock Advisor's total average return is 1,049% — a market-crushing outperformance compared to 183% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 18, 2025 Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy. Why Navitas Semiconductor Stock Was Sinking This Week was originally published by The Motley Fool Se produjo un error al recuperar la información Inicia sesión para acceder a tu portafolio Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información Se produjo un error al recuperar la información
Yahoo
3 minutes ago
- Yahoo
Amplitude Energy Limited Reported A Surprise Loss, And Analysts Have Updated Their Forecasts
Explore Amplitude Energy's Fair Values from the Community and select yours Last week saw the newest full-year earnings release from Amplitude Energy Limited (ASX:AEL), an important milestone in the company's journey to build a stronger business. Things were not great overall, with a surprise (statutory) loss of AU$0.016 per share on revenues of AU$268m, even though the analysts had been expecting a profit. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Amplitude Energy after the latest results. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. After the latest results, the nine analysts covering Amplitude Energy are now predicting revenues of AU$305.9m in 2026. If met, this would reflect a solid 14% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with Amplitude Energy forecast to report a statutory profit of AU$0.016 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of AU$311.1m and earnings per share (EPS) of AU$0.019 in 2026. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates. See our latest analysis for Amplitude Energy It might be a surprise to learn that the consensus price target was broadly unchanged at AU$0.29, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Amplitude Energy analyst has a price target of AU$0.38 per share, while the most pessimistic values it at AU$0.20. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business. These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Amplitude Energy's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Amplitude Energy's revenue growth will slow down substantially, with revenues to the end of 2026 expected to display 14% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 6.0% annually. Even after the forecast slowdown in growth, it seems obvious that Amplitude Energy is also expected to grow faster than the wider industry. The Bottom Line The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at AU$0.29, with the latest estimates not enough to have an impact on their price targets. Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Amplitude Energy going out to 2028, and you can see them free on our platform here. You can also see whether Amplitude Energy is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
