The Rundown - Google Investors Brace for Ad Slowdown, Spotify Gets a Bullish Call from Wall Street

Episode Date: October 28, 2024

Stock market update for October 28, 2024.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zad Admani, and today is Monday, October 28th. In today's episode, we recap last week's wild week in the markets and tell you what to look forward to this week. This week might be the craziest week of the year. We also tell you about troubles brewing at Volkswagen and why the company is announcing layoffs. Then stick around to the end of the show to find out why Spotify shares are up and why you'll soon be able to trade stocks at 3 o'clock in the morning.

All right, let's go. We are coming off a wild week in the stock market, especially for the NASDAQ. The NASDAQ finished last week in the green for the seventh straight winning week in a row, closing at record highs in the process, first time since July. And honestly, it was thanks in large part to Tesla. Their stock jumped 22% for the week after reporting an impressive Q3 earnings report. If you want to learn more about Tesla, we talked about them in detail on Thursday and Friday's episode, so go check that out if you missed it.

Now, unfortunately, Tesla's monster week wasn't enough to push the S&P into the green, which dropped by 1% last week, snapping a six-week win streak. But the S&P has a shot to get back on track this week because this is the busiest week of the Q3 earnings season. Over 150 S&P 500 companies are reporting earnings this week. We're going to be hearing from some of the biggest names across multiple sectors. Big Tech will be the one that dominates the headlines. We're going to be hearing from Apple, Microsoft, Google, Amazon, and meta.

We're also going to be hearing from restaurants like McDonald's. Donald's Chipotle and Starbucks. A couple of big pharma companies are also reporting, Eli Lilly and Bristol Myers. And then big oil caps off the week on Friday when we get reports from Chevron and Exxon. I'm telling you, man, this week is like a John Wick movie. Like, it's nonstop action.

Oh, I almost forgot that Halloween is happening on Thursday as well. My wife actually asked me yesterday when I was dressing up for Halloween. And I think I might just carry around my mic and headphones and dress up as a podcaster. I'm sure my kids are going to love that. Let's run through some headlines. Let's start with Volkswagen.

They announced this morning that they are planning to shut down three factories in Germany and lay off tens of thousands of workers. This is according to a German Union. This would mark the first time that Volkswagen has closed the factory since 1988. Volkswagen is Europe's largest automaker, and they've been kind of struggling recently. They trimmed their sales and profitability forecast for the year due to tough competition in China and higher production costs. Now, on top of the layoffs happening of Volkswagen,

the company also plans to do a 10% cut in wages and freeze wages in 2025 and 2026. So it's not great for Volkswagen right now. In fact, it's been pretty tough for German automakers across the board. Last Friday, Mercedes-Benz shares fell 7% after delivering a profit warning. They also blame their issues on the Chinese market. Now, back here in the States,

the story has been a bit different. US automakers have fared pretty well. In fact, GM stock had its best day last week since 2020 due to their strong earnings, and Tesla had their best day since 2013. You know, we've talked about that a lot. So, U.S. automakers, doing pretty solid. German automakers, not doing so hot right now. Let's shift gears and talk about Google.

Now, on the surface, Google seems to be having a pretty good year. But we're going to learn more about the company tomorrow because they report earnings tomorrow morning before the market opens, and expectations going into these earnings don't seem to be so bright. Right now, expectations call for slower growth in search and advertising. One of the concerns is YouTube. losing out on some ad money, with advertisers shifting more money

towards these ad-supported streaming platforms like Netflix and Amazon Prime. Other concerns have to do with Google's search business, which until a couple years ago, seem to be untouchable. But lately, there seems to be more competition in that space from companies like Amazon, TikTok, and AI search engines like perplexity.

In fact, Amazon is expected to report a 24% growth for their 2025 ads business. And young people now are turning to TikTok and chat GPT and Perplexity AI to do searches. And that might be having a meaningful impact on Google's search dominance, which is going to affect how much money they make from search ads. And to make matters worse, Google has been dealing with a ton of regulatory issues. Now, I don't want to be a complete Debbie Downer. Okay, Google still has some good stuff going for it. They're still a leader in the AI space.

On top of that, they had their way most self-driving cars, which some people say is the best in the world. So we'll officially see how Google's business is doing tomorrow morning. And we'll recap the numbers and the market reaction on tomorrow's episode. Google stock this year is up 20%, which is pretty good, but it is underperforming the S&P 500. And it's underperforming other big tech companies like Apple and Amazon, which have gone up more than 25% this year. Let's talk about some stocks making moves today. Shares of McDonald's are rising after the fast food giant announced that the quarter pounder is coming back to the Midwest restaurants that were affected by the E. coli outbreak last week. McDonald's pulled the quarter pounder from about 20% of the restaurant.

in the U.S. because there was concerns that the beef might have been the source of the E. coli outbreak. But McDonald's announced that health authorities have determined that the likely source of the E. coli outbreak seems to be the onions and not the beef patties. So the burgers are coming back, but they're not going to be served with onions. I just don't know how many people are going to be rushing to their closest McDonald's to buy one right now, you know? Investors seem to be pretty optimistic this morning. McDonald's shares are up about 1% on this news. And we're going to learn more about McDonald's overall on Tuesday as they report earnings before the market. it opens. Let's talk about Spotify. Their stock is up this morning after Wells Fargo named them a top

pick and projected a 20% upside for the company's stock. Wells Fargo raised the price target from $420 up to $470. Wells Fargo says the reason for the upgrade is a compelling margins backdrop. They expect Spotify's margins to increase because of price increases, audio books, and bundles. Spotify stock is up around 2% in reaction to this upgrade. Now on the flip side, shares of Phillips aren't doing so good this morning, the Dutch electronics maker warned of weak demand in China, which is putting a drag on their sales. Now, this warning from Phillips came during the company's earnings report, which also missed expectations. Now, most of us know Phillips as a general electronics maker. You know, they make some pretty good toothbrushes, shavers, things like that,

but their main business is making medical equipment. And they said that orders from Chinese hospitals have not been as strong as expected. As a result, shares of Phillips are down 15% in the pre-market. You know, leading up to this report, Phillips was having a great year. Actually, their stock was up 40% as of closed last week. So this report is coming as a real shocker to investors. Let's wrap the show with a fun fact. The stock market might be open for 22 hours a day pretty soon. The New York Stock Exchange announced that they're planning to extend their trading hours for the ARCA Electronics Exchange

from 1.30 in the morning all the way to 11.30 p.m. Eastern time on the weekdays. Currently, the extended trading on the New York Stock Exchange starts at 4 a.m. Eastern time and goes until 8 p.m. So yeah, we might get 22 hours a day trading soon. And I have mixed feelings about this. Like on one hand, yeah, it's kind of weird that we don't have 24 hours a day trading. Like crypto trades 24-7. But on the other hand, it is kind of nice that the stock market isn't open all the time. But that might just be a boomer take by me. Maybe the kids these days want 24-hour trading, you know? Now, these extended trading hours isn't official yet. It still needs to get approval by the SEC. But once it goes live, things could get interesting. Like, what are the volumes going to be like?

at 3 o'clock in the morning. You know, I can't imagine professional Wall Street traders liking this move. I mean, they're going to have to stack up on energy drinks and coffee and whatever else they used to stay awake, you know? I'm like getting trouble for that one. Well, all right, guys, that's the rundown for today. Like I said, we have an action-packed monster week coming up. Markets are going to be moving like crazy.

And we're going to be covering it all here on the rundown. So you are not going to want to miss an episode this week, especially Friday's episode because I will be coming off an insane sugar high from all the holidays. Halloween candy that I take for my kids. They have to learn about the dad tax, okay? And if you have like 12 extra seconds, give us a five-star rating on Spotify and Apple, leave a comment on Spotify, vote in the polls. You know, all that engagement really does help us out. It's going to be a fun week. 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 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 Zaidamani, brokerage services for U.S. listed registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.