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Market Moves Yesterday
S&P 500 @ 5,555.74 ( ⬇️ 0.16%)
Nasdaq Composite @ 17,997.35 ( ⬇️ 0.057%)
Bitcoin @ $65,852.90 ( ⬇️ 2.12%)
Hey Scoopers,
Happy Wednesday! Are you ready to tackle the midweek hustle?
👉 Google’s YouTube misses estimates
👉 Tesla’s profit margins are under pressure
👉 Is the housing market cooling off?
So, let’s go 🚀
Market Wrap 📉
The S&P 500 index hovered near the flatline on Tuesday as traders gear up for earnings reports from major tech giants.
Meanwhile, Wall Street assesses the latest Q2 earnings reports after companies such as General Motors, UPS, and Coca-Cola reported Q2 earnings before the market opened yesterday.
UPS missed revenue and earnings estimates in Q2, sending the stock down by 12%, its worst day on record. Elsewhere, General Motors topped estimates, but the stock fell over 6% as it delayed plans for electric and autonomous vehicles.
Despite these disappointments, the earnings season is off to a strong start as 20% of the S&P 500 companies have reported Q2 results, 80% of which have beaten estimates.
Trending Stocks 🔥
Visa - Shares of the payment processor are down 3.3% in pre-market after it reported $8.9 billion in sales, below estimates of $8.92 billion.
Spotify - Shares of the music-streaming giant surged 12% as gross margin and operating income surpassed estimates. Analysts remain optimistic despite the softness in monthly active user counts as the company focuses on premium subscribers and bundles.
MSCI - The stock popped 8% after it reported revenue of $707.9 million and earnings of $3.64 per share, above estimates of $696.4 million and $3.55 per share.
Alphabet Slumps Despite Earnings Beat
Alphabet, Google’s parent company, announced its Q2 results and reported:
Revenue of $84.74 billion vs. estimates of $84.19 billion
Earnings per share of $1.89 vs. estimates of $1.84
YouTube ad revenue of $8.66 billion vs. estimates of $8.93 billion
Google Cloud revenue of $10.35 billion vs. estimates of $10.2 billion
Alphabet’s sales rose by 14% year over year, driven by growth across business segments. Google Cloud revenue surpassed $10 billion in quarterly sales and $1 billion in operating profit for the first time.
Despite a sluggish macro environment, Google’s ad sales rose from $58.14 billion to $64.62 billion in the last 12 months, while the company’s net income rose from $18.4 billion to $23.6 billion.
YouTube missed ad revenue estimates but rose from $7.66 billion in the year-ago period, as it continues to face competition from social media platforms such as TikTok.
Its “Other Bets” business, which includes the self-driving car company Waymo, earned $365 million, up from $285 million last year.
Alphabet stock is down around 2% in pre-market, possibly due to lower-than-estimated YouTube sales.
Tesla Continues to Struggle
Tesla reported weaker-than-expected earnings in Q2 as automotive sales fell for the second consecutive quarter. The EV maker reported:
👉 Revenue of $25.5 billion vs. estimates of $24.77 billion
👉 Earnings per share of $0.52 vs. estimates of $0.62
While sales rose 2%, automotive revenue fell by 7% to $19.9 billion. Its auto sales included regulatory credits totaling $890 million, an increase of over 200% year over year.
Tesla cut its headcount by more than 10% in 2024 and reported better-than-expected vehicle deliveries in Q2. However, shipments fell for the second consecutive quarter.
While rival automakers have seen a 33% jump in EV sales, Tesla’s sales have fallen by 9.6% in the first six months of 2024.
The EV giant is offering discounts and other incentives to boost demand. Alternatively, these deals have hurt the company’s profitability as its operating margin fell to 14.4% from 18.7% in the last 12 months.
Its falling operating income was attributed to lower average selling prices and rising competition in key markets such as China.
Moreover, Tesla continues to invest heavily in AI which includes upcoming projects such as the robotaxi and the Optimus humanoid robot. While operating expenses were up 39%, AI-related capital expenditures amounted to $600 million in the June quarter.
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Home Sales Fell 5.4% in June
According to a report from the National Association of Realtors:
Sales of previously owned homes fell 5.4% in June compared with May, to 3.89 million units.
Sales were also down 5.4% year over year, marking the slowest pace since December.
Inventory rose 23.5% to 1.32 million units, indicating a 4.1-month supply. Typically, a six-month supply is considered balanced between buyer and seller.
While the supply of homes has risen, the median price of an existing home sold in June was $426,900, up 4.1% year over year and a record high for the second straight month.
Sales of homes priced over $1 million were the only price category that saw year-over-year gains, and the biggest drop was in the $250,000 and lower range.
Headlines You Can't Miss!
China EV stocks drop on Tesla’s earnings miss
Tesla might invest $5 billion in xAI
Mattel CEO sidesteps takeover report
Alphabet to invest $5 billion in Waymo
Spot Ethereum ETFs attract $106.7 million on trading debut
Chart of The Day
In recent trading sessions, investors have rotated out of big tech companies while companies in other sectors are attracting capital.
The ongoing earnings season is crucial, and big tech will have to keep delivering to support their expensive valuations.
Meme of the Day
DISCLAIMER: None of this is financial advice. The newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.