The Rundown - Amazon Falls on Soft Sales Forecast, Tesla Sales Slip in China

Episode Date: February 7, 2025

Stock market update for February 7, 2025.**Follow us on Instagram!⁠@TheRundownDaily

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadadmani, and today is Friday, February 7th. In today's episode, we dive into the latest jobs report and tell you what it means for the economy and the Federal Reserve. We also dive into earnings from Amazon, Pinterest, and Elf Beauty. Then stick around to the end of the show to find out how to stream the Super Bowl for free this weekend. All right, let's go. Well, guys, we got some more green on Thursday.

The markets moved higher with the S&P 500 up 0.4%. And the NASDAQ was up 0.5%. You know, it's crazy. The stock market is on track to finish the week in the green, which if you told someone that on Monday morning when we were in the thick of the tariffs drama, they would be so relieved right now. Now, it'll be interesting to see how the markets close out the week

because we just got the January jobs report. The U.S. economy added 143,000 jobs in January, which is less than the 170,000 jobs that was expected. So that's not great. But the unemployment rate did drop from 4.1% down to 4%. On top of that, December's jobs was revised higher from 256,000 jobs to 307,000 jobs. So December was a huge month. And I'd say overall, the January jobs report was a pretty decent report. It doesn't seem to be any sign of weakness in the labor market. In fact, wage growth is increasing faster than expected. So I wonder how the market's going to digest this news, because on one hand, a strong labor

market is great. You know, I think more people having jobs is a good thing. But on the other hand, this does decrease the chance of further rate cuts by the Federal Reserve. I don't think the Fed's going to be cutting rates with the labor market this strong. But we'll see how it all plays out. There's a lot of things for investors that digest right now. The markets are still trying to get a feel for what's going to happen with tariffs. We're still getting a ton of earnings. And we're going to get more economic data next week. The January CPI report comes out next Wednesday. So we're going to feel for how inflation was in January. And even though all the major tech names have reported earnings already, except for Nvidia, which doesn't

report until February 26th. There's still some interesting names to look forward to. So we are going to be locked in here on the rundown. So make sure you guys subscribe to the podcast to stay in the loop. Let's run through some headlines. Starting with Amazon earnings. The e-commerce giant reported earnings last night, and I'd say it was a mixed bag. Their revenues grew by more than 10% to $187 billion beating expectations. Their net income more than doubled. And this was the eighth consecutive quarter that Amazon's revenues increase faster than their cost, which means that Amazon's cost-cutting efforts have been working. Amazon's advertising business is turning into a juggernaut. It grew by 18% in Q4 to $17.3 billion. So on the surface, Amazon's earnings look pretty good,

but yet the stock is still down in reaction to these earnings. Now, diving a little bit deeper, Amazon's cloud business saw the revenues increase by 19% to $28.8 billion, which slightly missed estimates. But to be fair, AWS continues to be a profit machine for Amazon. It accounts for over half of their operating profit. You know, I think what's giving investors pause right now is Amazon's plans to spend over $100 billion on CAPEX in 2025. That's up 29% from 2024. A hundred billion dollars. That's more than what Google and Microsoft plan on spending. You know, despite the earlier freak out from DeepSeek, Amazon's not slowing down on their AI spend. They're pushing hard to build out their AI data centers to meet demand. In fact,

Amazon CEO Andy Jassy thinks that lowering cost of AI will result in more demand for AI. Google and Microsoft executives have said the same thing. But I think investors are starting to become slightly hesitant of the insane AI spend right now. And that could be one reason why Amazon stock is down more than 2% this morning. On top of that, there's also concerns about how tariffs against China might impact Amazon's e-commerce business. There are a ton of third-party Chinese sellers on Amazon. So if this 10% tariff decreases the number of sellers, that could reduce the revenue that

Amazon collects. So overall, I'd say solid quarter for Amazon, but there are some concerns around the potential impacts of tariffs, and I think more importantly, the really high Kappex spend. But hey, Amazon stock is still hovering near all-time high, so it's hard to complain as an investor. Let's shift gears and talk about Tesla. Tesla sales in China fell by more than 11% year-over-year in January. Compare that to the Chinese EV giant BYD reporting a 47% increase in vehicle sales year over year. So competition is heating up. Just to give you some more numbers, BYD sold more than 296,000 EVs in January compared to just 63,000 sold by Tesla. Tesla has cut the prices of the Model Y to try boost demand in China. That could be one reason why Tesla's earnings are struggling. Tesla missed on

their earnings reports for Q4 last week. But hey, Tesla's not just sitting idly by. The company recently released a new revamp Model Y in China. Tesla's new affordable model is slated for release this year, And they're also working on bringing full self-driving to China as well. Last year, Tesla reached an agreement with Chinese internet company Baidu to provide navigation service software, which should help pave the way for the Chinese government's approval of its FSD software. It always comes back to their software, right? Tesla is hoping that their full self-driving software is so great that people will choose to go

with a Tesla. That seems to have worked out in the U.S., but we'll see if that plays out over in China. And finally, I want to talk real quick about SoftBank and OpenAI. SoftBank is getting real close to finalizing a $40 billion investment in Open AI at a $260 billion valuation. This is according to David Faber from CNBC. This investment from SoftBank would make them the biggest investor in OpenAI overtaking Microsoft. You know, I've said this before, but when SoftBank starts throwing money around like that, I start getting nervous. Let's talk about some stocks making moves today.

Pinterest shares are soaring this morning after the company beat earnings. and grew monthly active users by 11%. Pinterest management said that people are coming to the platform more often, and the platform has never been more actionable. The company has been investing in AI to target ads and content, as well as emphasizing shopping opportunities as part of the platform. Pinterest monthly active users reached $553 million in Q4, and revenue grew by 18% year over year.

Shares are up more than 20% on this news. You know, I never became a Pinterest guy. My wife and sister are obsessed with it. I never got into it. Now, something that I am obsessed with is GTA. And me, along with Take 2 interactive shareholders, are so pumped this morning because the company announced that GTA6 is coming this fall. There has been a ton of hype around the new GTA with expectations calling for $3 billion

in sales over the first year, according to DFC intelligence. I mean, it's hard to believe that the first GTA6 trailer came out more than a year ago. I've been waiting for this game for like a decade. Take 2 also reported mixed earnings for the quarter with sales missing estimates. But investors overlooked all of that because of the GTA announcement and shares of Take 2 Interactive are up more than 7% this morning. Now on the flip side, shares of Elf Beauty are down big this morning after cutting its full year guidance and warning of softer than expected sales trends from January.

The cosmetics retailers set two main factors for their slow start to the year. The first is that consumers are taking a breather from shopping after a highly promotional holiday period. And the second is that social commentary around Broody products on platforms like TikTok was way down. That's impacting their sales and shares of Elf Beauty are down around 18% this morning. Let's wrap the show with the fun fact. The Super Bowl is this weekend and for the first time ever, you'll be able to stream it for free. The game's going to be broadcast on Fox, but the company's also going to simulcast it on their streaming platform, Tooby. No, Tooby is a free streaming platform

that the company bought back in 2020, and it's an underrated streaming giant. In fact, Tube was the fastest growing streaming service in 2023, and they finished 20, with 97 million monthly users. You know, I think these free streaming services like Tooby that are fully supported by ads have a promising future. In fact, more people watch Tobey than the paid services like Peacock, Paramount, Plus, and Max. Now, personally, I don't like watching ads, but if the streaming service is free, it's hard to complain.

I wouldn't be surprised if we see more free streaming services moving forward. Well, all right, guys, that's the rundown for today. What a wild week. I feel like I said that every week at this point. We'll see if we can get some calmness in the markets next week. We still got a lot of earnings to talk about. We got a CPI report. So we'll have a lot to cover.

So make sure you guys are subscribed to the podcast. And if you enjoy the show, consider giving us a five-star rating on Apple, on Spotify. All that engagement really does help us out. And it helps other people find the show. Thank you guys so much for listening. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here on Monday.

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