The Rundown - FTC Sues to Block Kroger-Albertsons Merger, Unity Earnings Disappoint

Starting point is 00:00:00 Welcome to the rundown, your daily market update in under five minutes. My name is Zaid Mani, and today is Tuesday, February 27th. In today's episode, we're going to talk about a merger that is being blocked by the FTC. And no, this time it's not a tech merger. We're also going to talk about some stocks making moves today, like a pharma company that is up huge today because they might have developed the next OZemPEC, and investors are very excited about that. Then we wrap the show with some fun facts about the cruise industry.

Starting point is 00:00:27 All right, let's get into it. Let's start with the quick recap of stocks on Monday. Stocks got off to a bit of a sour start. The Dow, S&P, and NASDAQ all dipped slightly on Monday to start off the week coming off the record highs from Friday. And there wasn't really any major news causing the drop. I think investors are just like in a holding pattern right now just waiting for more major economic news to come out this week. Like the Q4 U.S. GDP data is coming out on Wednesday. And I think more importantly, the PCE inflation report is coming out on Thursday.

Starting point is 00:00:55 And remember, the PCE report is the Fed's preferred inflation. We've seen some signs of inflation is starting to tick back up a little bit. If the PCE report comes in a little too hot, Thursday is going to be a wild day for sure. Now, all three major indices are on track to finish February in the green. That would make it four months in a row of gains. As for the stock market today, stocks are a mixed bag. The Dow is trading lower. The NASDAQ is actually in the green, and the S&P is pretty much flat at the time of this recording

Starting point is 00:01:22 around noon Eastern. All right, so let's talk about the FTC. The FTC is out here doing their best Mutumbo impression because they're are blocking another merger. It's not a tech company. No, this time it is a grocery chain. The FTC is blocking the $24.6 billion merger between Kroger and Albertsons. Now, this merger was announced initially back in like October of 2022, so it's been a minute. The FTC claims that the merger would result in higher grocery prices and worse pay for workers. Now, Kroger and Albertsons, on the other hand, disagree, obviously. They say that this merger would allow them to

Starting point is 00:01:54 better compete with giants like Costco, Walmart, and Amazon. Kroger and Albertson's, even agreed to sell 400 of their locations to piggly wiggly, but the FTC isn't satisfied. And so this case might end up in court, just like the other mergers that were blocked by the FTC, like the JetBlue and Spirit merger that was ultimately denied by the courts earlier this year. Now, look, I'm not surprised to see the FTC block this merger. That's just kind of what they've been known to do right now. You know, I feel a little conflicted about this one because Walmart would still have more locations than Kroger and Albertsons combined.

Starting point is 00:02:24 We'll see if Kroger and Albertsons decide to fight this merger in court, or if they just end up dropping it. Let's talk about some stocks that are making moves today in the markets. Starting with Viking Therapeutics. This pharma company stock is at more than 90% today after their weight loss drugs so some promising results in mid-stage trials.

Starting point is 00:02:43 Patients lost up to 14% of their body weight after 13 weeks, and the side effects appear to be minimal so far. So right now, Viking Therapeutics is in talks with the FDA on next steps to bring this drug to market. Now, after seeing the popularity of Ozempic in Manjaro, other pharma companies are trying to get in this space. And investors are ready to hop on the next promising drug, because the demand for these weight loss drugs are massive right now.

Starting point is 00:03:08 And that's one of the reasons why Nova Nordus, the makers of OZempic stock, jumped 70% over the last year. And the stock for Eli Lilly, the maker of Manjaro, is up more than 140% over the last year. So investors are quick to react to any sort of possibility of a new weight loss drug coming to market. Some analysts think the weight loss drug industry could be over a $100 billion market by the end of the decade. Honestly, I probably take the over on that number. You hear that noise?

Starting point is 00:03:32 That is the noise of snack companies shaking in their boots right now. All right, let's talk about another stock that's having a great day today. That would be Norwegian Cruise. The stock is up more than 15% today at the time of this recording around noon eastern after the company reported better than expected Q4 earnings. But not just that, the company is also expecting a strong 2024. In 2023, the company did $8.55 billion in revenue. That was up 32% from 20%. From 20,000, 2019, the last normal year before the COVID shutdowns. And Norwegian Cruise also had their first profitable year since 2019. They generated $166 million in profit last year.

Starting point is 00:04:09 But this is what makes investors super excited. Norwegian Cruise is projecting their 2024 profits to be around $635 million. That would be almost four times higher than 2023. So I think it's safe to say that cruising might be all the way back. Let's shift gears and talk about a stock that's kind of sinking right now. No pun intended. That would be Unity Software. The company reported Q4 earnings and the reaction has been negative.

Starting point is 00:04:34 The Q4 earnings were a mixed bag. But more importantly for investors, the company is projecting disappointing forecast for their business in 2024. Like, for example, in Q1, the company's expecting revenues between $415 and $420 million. Analysts were expecting numbers of at least $500 million. So that was a disappointment. Unity right now is in a bit of a company-wide reset. If you're not familiar with them, they make game engines that are used. and video game development.

Starting point is 00:04:59 And it's been kind of a tough few months for them. Like last September, they faced immense backlash after they announced pricing changes. It upset a lot of game developers. It got so bad that the CEO of the company ended up stepping down. So I think they're still recovering from that backlash. They also are trying to make the company more profitable. They announced that they were cutting 25% of the workforce at the start of the year. It's around 1,800 jobs.

Starting point is 00:05:21 But investors aren't happy with the turnaround efforts so far. And it's one of the reasons why the stock is down today, and it's been down more than 20% from the start of the year. All right, it's time for everybody's favorite segment. The Fun Fact of the Day. Today's fun fact is about the cruising industry. In 2023, it is projected that the cruise ship industry made about $25 billion in revenue combined. And apparently over 30 million passengers went on our cruise ship last year.

Starting point is 00:05:45 And cruising continues to be a growing industry. Analysts expect revenues in the cruise industry to grow to $35 billion by 2028. I'm not going to lie, I'm starting to get the itch. Don't be surprised if you catch me and the family on a cruise ship this year. This podcast might be coming to you from the middle of the Atlantic Ocean sometime later this year. All right, guys, that's all I got for you guys today. Thank you guys so much for listening. And I'll see you guys back here tomorrow.

Starting point is 00:06:07 This is Public Live, 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. Public live hosts 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 slash disclosures. In paid 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.

The Rundown - FTC Sues to Block Kroger-Albertsons Merger, Unity Earnings Disappoint

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