The Rundown - DOJ Sues Apple Over iPhone Monopoly, Tesla Cuts Back China Production

Episode Date: March 22, 2024

Stock market update for March 22, 2024. Get started with Public: ⁠Click here⁠ The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.The content of the podcast is for general and informational purposes only. All views presented in this show reflect the opinions of the guest and the host. You should not take a mention of any asset, be it cryptocurrency or a publicly traded security as a recommendation to buy, sell or hold that cryptocurrency or security. Guests and hosts are not affiliated with or endorsed by Public Holdings or its subsidiaries. You should make your own financial and investment decisions or consult respective professionals. Full disclosures are in the channel description. Learn more at Public.com/disclosures. Past performance is not a guarantee of future results. There is a possibility of loss with any investment. Historical or hypothetical performance results, if mentioned, are presented for illustrative purposes only. Do not infer or assume that any securities, sectors or markets described in the videos were or will be profitable. Any statements of future expectations and other forward-looking statements are strictly based on the current views, opinion, or assumptions of the person presenting them, and should not be taken as an indicator of performance nor should be relied upon as an investment advice.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadmani, and today is Friday, March 22nd. In today's episode, we talked about the U.S. government suing Apple for being a monopoly. And yes, it has to do with the green bubbles. I got all the details for you. Also, we talk some Tesla today. Their business is struggling in China. We talk about what's happening and what they plan to do about it.

And then we end the show highlighting some stocks making moves today, like why FedEx is up and Lulu. Lemon and Nike are down. All right, let's get into it. Well, another day, another record made. Stocks continued to pump higher on Thursday coming off to good vibes from the Fed meeting. The Dow, S&P, and NASDAQ were all in the green, all closing in at new record highs. Now, if you miss yesterday's show, go check it out because I recap the Fed meeting and talk about why investors are feeling so good right now. Also in yesterday's show, we previewed Reddit's IPO, which started trading yesterday, and the stock popped.

48% on its first day. I'm sure a lot of investors, myself included, were pretty surprised by that. I wonder how they're going to do on their second day of trading. As a reminder, you guys can track the performance of Reddit stock on the public app. Just look up ticker symbol RDDT. But yeah, overall, the vibes are good all around. And unless we get a huge drop in the markets today, stocks are on track for a winning week, which is much needed after two down weeks in a row.

Okay, enough about the stock market. Let's talk some Apple. On Thursday morning, like two hours before March Madden is tipped off, the U.S. Department of Justice, along with 16 other states, filed a lawsuit against Apple for being a monopoly. This 88-page lawsuit claims that Apple violated antitrust laws by keeping customers reliant on the iPhone and making it much harder to switch to competing devices. Well, that was just one of their complaints. They actually have a lot of complaints in this lawsuit.

They point to the fact that Apple makes messaging with Android phones a terrible experience. I mean, that's facts. Nobody likes a green bubble. The lawsuit also brings up the Apple Watch and how the Apple Watch doesn't work with Android devices. So if you buy an Apple watch, you have to keep buying an iPhone for it to keep working. And I think the most significant complaint is about the App Store. The DOJ claims that Apple has a distribution monopoly there because there are no other app stores allowed on the iPhone. And that developers have to comply with Apple's very strict App Store policies and they have to pay Apple a 30% cut on all sales from their apps. I mean, developers have been complaining about that for years now.

So the DOJ is coming after Apple's walled garden. And I think some of the complaints are valid, especially the App Store stuff. I think Apple does have some shady policies when it comes to the app store, like not allowing cloud-based gaming apps on there. But I think other complaints by the DOJ, like how Apple products work better with other Apple products compared to non-Apple products. I don't know. That seems kind of silly, right? Obviously, Apple products are going to work better with other Apple products, since Apple can create the whole experience. But if this lawsuit somehow gets Apple to bring I message to Android, I'm good with that. That would be awesome.

So all my Android friends can finally have blue bubbles. Apple has already come out and said they disagree with this case, obviously, and they're going to try to get it dismissed. But the whole thing is probably going to take years to sort out. But I don't know. What do you guys think? I mean, it's Apple, so a lot of people will have very strong opinions on this. Do you guys think that Apple is a monopoly? We'll make that the Spotify poll today.

So if you're listening to this episode on Spotify, tap today's episode and vote in today's poll. I think we're going to get a 50-50 split on this one. This lawsuit did spook investors, though. Apple stock dropped more than 4% on Thursday, wiping out over $113 billion in value. So tough day for Apple. Honestly, a tough year for Apple. Their stock is down for the year.

They got hit with the $2 billion fine. by the EU a couple weeks ago. Nobody seems to care about the Apple Vision Pro anymore. And now they got hit with this. It's tough right now for the second largest company in the world. Let's switch gears and talk about another company having a pretty tough year. That would be Tesla. Tesla announced that they are trimming their output in China because they're not selling that many cars over there. China is the largest auto market in the world. But Tesla has lost all their mojo there. The company has reportedly told employees at the Shanghai factory to slow down production on the Model Y and the Model 3. So now employees have been told to only work five days a week instead of the usual six and a half days a week.

Overall, China has been a struggling region for Tesla lately. Tesla's vehicle deliveries in China have dropped by 6% in the first two months of 2024. We talked about this in the show a lot. The competition for EVs in China is heating up big time and it looks like Tesla is struggling to compete right now. All right, let's talk about some stocks making moves today. Starting with FedEx, FedEx stock is up more than 12% today after reporting better than expected earnings. The strong performance came down to increased profits. Operating margins were at 6%, which is up 1% from a year ago, and they were able to achieve this by lowering costs. So investors are happy and the stock is up double digits this morning. On the flip side, we got two athletic apparel retailers not doing so hot today, Lulu Lemon and Nike.

Lula reported pretty solid Q4 earnings, but they had a weak guidance for their upcoming quarter. Lulu Lemon expects between 9 to 10% revenue growth in Q1, while estimates called for 12 and a half percent. And to make matters worse, Lulu Lemon's full year guidance projections also came below estimates. Lulu is calling for revenue to be between $10.7 and $10.8 billion. Estimates had it at $10.9 billion. I mean, just missing guidance by like what, 1% was enough to drop the stock more than 12% this morning. Like I always say, investors don't care how the company has done in the past. They care about how the company is going to do in the future. Lulu Lemon notes that there's been a big shift in consumer behavior. I guess we're not all buying

yoga pants anymore. So that's why Lulu is expecting a slower start to the year. Also, there's been a lot more competition in the athlete or space. That's also stealing market share from Lulu Lemon. Nike also having a tough day. The stock is down more than 5% this morning after they reported disappointing earnings. Actually, Nike stock was a bit of a roller coaster. So they reported earnings after the bell on Thursday. And the stock initially jumped 5% when investors learned the company beat expectations for both earnings and revenue. But then the stock took a U-turn after Nike delivered weak guidance for their current quarter and the rest of the year. Nike says that it's losing market share in the running shoes segment from competitors

like Hoka and on running. And then on top of that, they said that growth in China continues to show signs of slowing. All right, guys, now it's time to wrap the show with a fun fact. Today's fun fact is about Apple. This was crazy to me. 87% of American teenagers own an iPhone. That's according to a survey from Piper Sandler. 87% is a wild number.

And many Gen Zers don't plan on giving up their iPhone. phone anytime soon. Eighty-eight percent surveyed said they expect their next phone to be an iPhone. I think the main reason for that is that no one in the group chat wants to be the green bubble. Stuff like that matters a lot when you're a teenager, you know? So if the DOJ successfully gets Apple to put iMessage on Android, that I bet will hurt their market share with teenagers. All right, guys, that's all I got for you guys today. What another fantastic week.

This is the part of the show where I shill for five-star ratings. Your engagement has really helped the show grow. I mean, we are number 15 on Spotify's top business podcast. So that's amazing to see. If you guys enjoyed the show, please consider giving the show five stars on Apple or Spotify. And maybe one day we'll pop on the podcast charts, just like Reddit Stock did on its IPO.

Thank you guys again for listening. Have a great weekend. Enjoy some March Madness basketball. And we'll see you back here on Monday. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in this 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. Rundown 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 Zaid Admani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.