The Rundown - Disney Streaming Turns First Profit, Airbnb Warns of Soft Travel Demand

Episode Date: August 7, 2024

Stock market update for August 7, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Wednesday, August 7th. In today's episode, we tell you about the comments from the Bank of Japan that are causing stock markets to bounce back all over the world. Also, we're recapping earnings from Disney, Airbnb, Super Micro, Reddit, and more. Markets are having mixed reactions here. Then stick around to the end of the show to find out how much money pit bull, Mr. 305 himself, paid for naming rights to a football.

I'm kind of surprised by the amount. All right, let's go. Markets had a nice bounce back on Tuesday after starting the week off in a panic. The S&P and NASDAQ both jumped more than 1%. It was nice to see the markets finally get back into the green. That Monday panic might have been an overreaction from investors, so shout out to everyone that bought the dip. Now, the S&P and NASDAQ are still down for the week, but at least the bleeding is stopped,

for now. You know, one of the main drivers of the panic on Monday was the unwinding of the Japanese Yen carry trade, which really got to the last. underway after the Bank of Japan hinted at raising interest rates. We covered this in more detail on yesterday's show, so go check that out if you missed it. Well, the Bank of Japan saw the carnage happening in the markets, and they're walking back plans of increasing interest rates, at least for now. The deputy governor of the Bank of Japan said they don't want to raise interest rates when financial markets are unstable. So these comments from the Bank of Japan

should bring some more calm to the markets for the time being. Markets all over the world are continuing to bounce back today. The Japanese stock market was up more than 1% today, and European stock markets are also in the green. And as for the U.S., I'm recording this pre-market. I'm looking at the stock market futures. I've seen a lot of green there. So hopefully it ends up being a good day. But shout out again for anyone that bought the dip on Monday. You're probably feeling pretty good right now. Let's run through some headlines. And let's start by talking about Disney. Disney just released their earnings and reported a profit for their streaming business for the first time ever. That's one quarter ahead of schedule. Now, the streaming business consists of Disney Plus, ESPN Plus,

and Hulu, that hit a revenue of $6.4 billion and a net income of $47 million. That's a big turnaround from a year ago where losses were more than half a billion dollars. But just to be clear, this isn't all due to Disney Plus's performance. ESPN Plus actually brought the streaming business to profitability. If you take it out of the equation, the division would have lost around $19 million. Now, what's funny is back in May, Disney said that ESPN Plus was holding the streaming division back from profitability. So pretty interesting to see that turnaround. But Disney's feeling pretty good about their streaming business.

They recently announced another price hike for the Disney Plus ad free tier to $1599, which is a $2 jump from previous prices. So that should help solidify Disney's profitability within the streaming business. Unfortunately for Disney, though, other divisions weren't doing so good. Their experienced division, which includes their parks, saw some softness. And the company said the weakness there could last several quarters. Revenues increased by 2%, but operating income profits dropped by 3%. It's definitely worth monitoring because his.

Historically, the parks and cruise lines have become a profit engine for Disney, making up more than 70% of total operating income last year. So some softness there could be a cost for concern. Investors overall are reacting negatively to this earnings report. Disney stock is down around 2% in the pre-market. There are a lot more earnings to dig into, but I want to give you guys a quick update on mortgage rates. The rate on a U.S. 30-year mortgage dropped last week to 6.55%, the lowest level in 15 months, according to the Mortgage Bankers Association. Markets are expecting the feds to cut rates pretty aggressively, and that's resulting in mortgage rates coming down. So hopefully that'll be some relief to potential homebuyers.

Let's talk about some stocks making moves today. Now, usually we like to start this segment off by highlighting the winners, but today we're going to be doing a lightning round of companies that reported earnings and saw their stock drop. Let's start with Airbnb because they can be on pace for their worst trading days since going public. Airbnb's revenues were up 11% beating estimates. their profits were down 15% to $550 million. That was a miss. But the concerning part is the company provided weak guidance moving forward. They're seeing slower demand and shorter booking times from U.S. travelers.

This is the third straight quarter that Airbnb has provided disappointing outlooks. And as a result, shares are down 14% in the pre-market at the time of this recording. Let's talk Super Micro. Shares of the AI stock are down sharply after reporting earnings and missing on profits and revenue. And the big concern for Super Micro might be the drop in gross market. margins for their AI servers, which dropped from 17% a year ago to 11% in their latest quarter. That's sparking some concern about long-term profitability of the equipment. Now, the company did announce a 10-1 stock split, which might explain why the stock initially

popped like 18% right after earnings, but now the stock is down 14% at the time of this recording in the pre-market. So it's been a pretty volatile few hours for the stock. Now, the stock was up more than 100% for the year as if market closed on Tuesday and up more than 243% in 2023. So the last year and a half has been pretty good for super micro investors. Let's move on to Reddit. Their shares are down after reporting earnings,

even though they beat expectations on both top line and bottom line. Reddit's revenue was up 54% versus a year ago, and losses came in lower than expected at just over $10 million. On top of that, daily active users jumped 51% than $91 million, also better than expected. And Reddit has been capitalizing on licensing their data to train AI models. They've reached deals with OpenAI and Google so far, and that grew to 28 million.

million dollars in the recent quarter. But despite all those numbers, the stock dropped in reaction to those earnings. Actually, never mind the stock just turned green. So, good job, Reddit. I was going to say, it didn't make any sense for the stock to go down after those earnings. Lastly, Rivian is another company that reported earnings. They beat on revenues and earnings, but the report wasn't strong enough to send the stock higher. The EV maker expects Q3 deliveries to drop, but they still expect to hit their 2024 production target of 57,000 vehicles. The company's also focused on making a profit on each car they sell, which they currently don't do, but they expect to do that by Q4 of this year. Still, markets weren't loving it.

Rivian stock is down 9% in the pre-market. Let's wrap the show with a fun fact. And this might be my favorite fun fact of the week. Pitbull, the singer, international superstar, Mr. 305, the soundtrack to my college life is back making a big splash. He's paying $1.2 million a year to name a football stadium after himself. He bought the naming rights of the Florida International University, FIU's Football Stadium, which is a college in Miami, so perfectly fitting for Mr. 305. And honestly, $1.2 million a year for naming rights, not that bad. For some reason, I thought that it'd be a lot more. Now, along with the naming rights, the deal also allows Pitbull to use the stadium for 10 days every year. I have no idea what he's going to use the stadium for, but I'm looking forward to it.

So shout out Pitbull, man. Honestly, I'm surprised that more celebrities and influence just aren't buying naming rights than random stadiums all over the U.S. I mean, at this point, Taylor Swift should just buy the naming rights to Arrowhead Stadium in Kansas City. I'm sure she could get a discount, too. Well, all right, guys, that's the rundown for today. I want to give a shout out to all the listeners. We've seen a lot of engagement, a lot of growth this week.

I think the podcast has now ranked top seven business podcasts on Spotify. So thank you to everyone that's been listening all year. Thank you to all the new listeners. It's been really awesome to see the growth. And we're going to keep producing short, entertaining, podcast about the markets every single day. So if you enjoy this show, please share it with a friend. Hit us with that five-star rating on Apple or Spotify or wherever you listen to your podcast. Thank you guys again for all the support. Shout out to Connor and Mike for all the help behind

the scenes. And we'll see you guys back here tomorrow. This is the rundown. Your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell or hold that security. Run-down guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals. Learn more at public.com disclosures. In partnership with Zayidimani, brokered services for U.S. listed, registered securities are offered by Open to the Public

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