RTX Earnings And How Does The Media Figure Out What's Happening With A Volatile Stock When There's No Obvious News?

Benzinga

We look at how the media finds a catalyst for a volatile stock and iceberg orders and also review Raytheon Technologies earnings.

Transcript

00:00 All right, let's go to it. Raytheon Technologies, Q2 adjusted EPS at $1.29, beat the $1.18

00:07 estimate, sales of $18.32 billion, beat the estimate here of $17.68, so big beat there on

00:16 sales. Raytheon raised their outlook here for fiscal year '23 adjusted EPS at the EPS of $4.95

00:25 to $5.05, up from $4.9 and $5.5 prior. The sales also guided up there towards $73.74 billion from

00:36 $72.73. Yet, it seemed like the stock couldn't get a lift here. What happened there?

00:42 Got a little bit of a lift. It got a little bit of a lift, and then she just started going down

00:47 and going down hard. I'll tell you what I saw, and I'll tell you what the media is seeing.

00:55 Because what happens is when you get a beat-beat raise, and that's basically what RTX just did,

00:59 and the stock starts going down, everybody's asking questions, "Why is the stock down?"

01:05 So then they dig. These 30-page reports, you can always, always find something if you want to really

01:17 dig. I'll tell you from the trading action here, though, in this, it was very obvious that it was

01:23 one player, one market participant that was selling this stock hard. Why they were selling,

01:30 we have no idea. Maybe they read something that they found in the 30 pages. Maybe they just don't

01:37 want the stock anymore. Maybe they didn't like the report. Maybe it was ever... But the reason

01:42 you could tell it was one person was because it was an iceberg order that was walking the stock

01:47 down. They went offer 97, offer 96.50, offer 96. And then they're trying to lift it because people

01:54 think it's a good report. Not moving, not moving. 95.50, not moving, not moving. 95, 94. Now the

02:00 people who bought 96 are like, "Oh my God, I thought this was a good report. Now I'm killed."

02:04 Now they're panicking. So they're just forcing it down, forcing. Boom, you are going down.

02:10 Big hedge funds, don't kid yourself, can push price around on the reports. Why do we know this

02:16 was one player? Because you think there's two coincidental players that have icebergs at the

02:21 same time walking down? It wasn't just trading like Microsoft. This isn't Microsoft. It's RTX.

02:29 It doesn't trade a lot during the pre-market. In the pre-market, yep.

02:32 In the pre-market. And it's traded a lot here because somebody has just kept their finger

02:38 on the sell button and they are relentless. They are still selling out here. We don't know why

02:43 they're selling. They could be selling. You're allowed to sell stocks. It's allowed. So we don't

02:46 know why they're selling, but I can tell you there was one participant, and maybe they're gone now,

02:50 but there was one participant that just would not let off the sell button. So then you go and you're

02:55 like, "Okay, well, why are they selling? Why is the stock down?" So what happens is when there's

03:00 no obvious reasons, immediate companies, we take. Is there a fundamental reason here? Read the

03:06 report. Get away from the headline and dig deeper. So it's funny. Becky Quick was on CNBC and she's

03:11 like, "They're covering the stock. RTX, beat, beat, raise." And then she's going to say, "Oh,

03:17 this is why it's down." She's looking, "It's down 3% though." She's like, "Well, I don't know why

03:20 it's down 3%. We'll have to get back to you on that." So then you go to another segment.

03:24 So you know in the background, the producer's like, "Why is RTX down?

03:30 Don't go, 'No, that's not good enough. Find me a fundamental reason. Why is RTX down? Dig."

03:35 So then they're digging. That's how it goes. Dig. They got the diggers. They're digging into the

03:41 report. They found some significant portion of GTF engines powering the A320 NEO aircraft may

03:50 need inspection nine to 12 months from now. Maybe that's the reason. But it's funny. Another media

03:57 source was finding, "Oh, we have a little bit of light on the free cash flow." Reported almost

04:03 the same time, two different headlines justifying the reasons. You know why? Because they got the

04:08 diggers out there and they're trying to dig. Meanwhile, it was one participant knocking it

04:14 down. And maybe they were the first to see that the engine aircraft headline there. Or maybe,

04:20 just maybe, there was one participant that just wanted this stock down. That happens too. It's

04:25 down five, but ask yourself, it's down 5.3% here right now. RTX, which doesn't move that much,

04:31 getting absolutely killed because some engines may need inspection nine to 12 months from now.

04:37 That is maybe it's down for that reason. It might be. Maybe that is the reason. But I can tell you

04:43 that one person was the reason it was really going down. Maybe they read that and that's why they

04:48 were selling. But a lot of times, stocks move and we actually don't know the reason. 90% of the time

04:57 we probably do. They lowered guidance, obvious. The stock's downgraded, obvious. Just sometimes

05:02 it's not that obvious. And sometimes they want to find a fundamental reason. And the diggers will

05:08 dig and they will find a fundamental reason. I get called from Reuters reporters all the time,

05:12 or from other reporters, "Why is this happening? Why is this happening?" And sometimes you got a

05:17 pretty good feeling of why it's happening. And sometimes you're guessing. It's a little bit of

05:21 guesswork too. When it's not obvious, it's nothing against the media. We're a media company too.

05:25 But sometimes behind the scenes, there is some guessing to why a stock is doing what it's doing.

05:31 And sometimes to JC Perrette's point, sometimes it's just doing whatever the hell it wants to do

05:36 because supply and demand. Tim Qua. Sometimes it's not a fundamental reason. Sometimes-

05:41 Dennis, explain iceberg orders.

05:43 Sometimes it's not a fundamental reason.

05:45 Yeah. Let's take icebergs orders here to a beginner's level, Dennis. So what are you

05:51 seeing on the level twos? What are you looking at?

05:53 Let's go to the Titanic analogy here. So you got the tip of the iceberg. So you got the iceberg,

05:59 there's your water, tip of the iceberg, but it's really big below. So they show 100 or 200. In this

06:05 case, they were showing 500 shares and they were knocking it down. They lift 500. Oh, it refreshes.

06:10 That's more five. They lift another 500. It has more. So it's only showing part of the order.

06:16 I can tell you that two, three, four, 500 share orders that were coming down like that were a lot

06:22 bigger than 500 shares. And the majority of that volume in the first 20 minutes was one participant

06:28 just selling. There you go. What a graphic. Where did you grab that from?

06:32 I got you, my friend. I got you.

06:33 Oh my gosh, Money Mitch. You dig. Dig Money Mitch. He dug quick, man. That Money Mitch is a good

06:38 digger. But look, that's what it is. So you're showing 2000, but you really got 80,000 to go.

06:45 So that 2000 will just keep refreshing until 80,000 is gone. Because you don't want to show

06:49 80,000 shares. But it's like, oh my gosh, they're selling the world here. And then the high frequency

06:54 trader comes in and hammers the bids in front of you. So the institutions are going to hide their

06:59 hands to a certain extent and bring it down. And that's in this case, what was happening.

07:04 And that participant just maybe wanted out. They didn't like what they read. They wanted out. They

07:08 were working. It's not like they showed big size and were trying to really push it down like that

07:12 way. But they were using icebergs and were just trying to get out. One person, we don't know who

07:16 it was. We probably never will know who it was on RTX. But one person wanted out in that first 20

07:22 minutes. And they kept just walking it down. And maybe they got out of all of it now. But they

07:27 wanted out of the stock.

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