☹️🔻 Bad Day For Big Tech
Happy Wednesday all,
Rickie checking in with you. Today was a tough day for Big Tech as the Magnificent Seven lose the most market value in a single day on record - causing the S&P 500 and the Nasdaq to have their worst days since late 2022. The market was disappointed in earnings reports from Tesla and Alphabet. We still await to see earnings from Nvidia and Microsoft next week but it seems as though the bar to exceed expectations is pretty sky high.
In other news, Humphrey is busy preparing for his trip to London/Scotland next week. It’s been a while since we’ve had some time off on the channel so this will be a well deserved break for him! Myself, I’m going to Germany and Switzerland so maybe I’ll include pictures from my travels when I’m there!
Enjoy this week’s Hump Days!
- Humphrey, Rickie & Tim
👀 Eye-Catching Headlines
🇨🇳 China’s Proposal to Raise Retirement Age Sparks Worker Unease (BBG)
🚗 EV Output Is 45% Below What Carmakers Expected, Supplier Says (BBG)
🤖 Elon Musk wants Tesla to invest $5 billion into his newest startup, xAI (CNBC)
✈️ Southwest Airlines Faces FAA Audit Over Safety Incidents (BBG)
🏎️ Alphabet to invest $5 billion in self-driving car unit Waymo (CNBC)
🛒 Kroger-Albertsons Deal Is Haunted by ‘Spectacular’ Past Failure (BBG)
The Weekly Brief
US Existing-Home Sales Drop to One of Slowest Paces Since 2010
Existing-home sales in the US declined for the fourth consecutive month in June 2024, falling 5.4% from May, one of the slowest paces since 2010.
This slowdown occurred despite the median sales price reaching an all-time high of $426,900, up 4.1% from a year ago.
The housing market is showing signs of a gradual shift from a seller's market to a buyer's market, with homes staying on the market longer and sellers receiving fewer offers.
Total housing inventory at the end of June increased to 1.32 million units, up 23.4% from a year ago.
The decline in sales is largely attributed to affordability challenges, with high mortgage rates and rising prices continuing to be significant obstacles for buyers.
Alphabet’s Revenue Boosted by Cloud Computing, Search Ads
Alphabet, Google's parent company, reported strong second-quarter results that exceeded analysts' expectations.
The company's revenue, excluding partner payouts, reached $71.36 billion, surpassing the projected $70.7 billion, while earnings per share hit $1.89, above the estimated $1.84.
This performance was primarily driven by robust demand for cloud-computing services and search engine advertising.
Google Cloud achieved profitability, generating $1.17 billion in operating income, while search advertising revenue rose to $48.5 billion. Despite facing increased competition in AI and some setbacks in AI-generated search results, Alphabet's core businesses remained resilient.
The company's total revenue grew by 14% year-over-year to $84.74 billion, with advertising sales increasing by 11% to $64.6 billion.
Tesla Profit Falls Short Again as Musk Demands Investor Patience
Tesla reported its fourth consecutive quarter of disappointing profits, with Q2 2024 earnings of $0.52 per share falling short of expectations.
However, the company beat revenue forecasts with a record $25.5 billion, partly due to $890 million in regulatory credit sales. Tesla's automotive gross margin (excluding credits) declined to 14.6%, reflecting increased spending on AI and restructuring costs.
CEO Elon Musk emphasized the company's focus on autonomy and AI, announcing plans for a robotaxi prototype unveiling on October 10 and production of a lower-cost vehicle starting in the first half of 2025.
Despite these future plans, Tesla warned of "notably lower" growth in 2024 compared to the previous year. The company also put its Mexico factory plans on hold pending the outcome of the U.S. presidential election.
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