The Rundown - Lyft's Earnings Mishap, Walmart's TV Expansion

Starting point is 00:00:00 Welcome to the rundown, your daily market update in under five minutes. My name is Zadadmani, and today is Wednesday, February 14th. In today's episode, we discussed what caused the brutal drop in the stock market on Tuesday. We also dive into why Walmart is looking to buy a TV company, and it's not to sell more TVs. And then we recap earnings from Airbnb, Zillow, and Lyft. Weirdly enough, there was some drama regarding Lyft earnings. Finally, we end the show with a fun fact about Valentine's Day. Turns out it's a big day for spending.

Starting point is 00:00:29 All right, let's get into it. Well, guys, the stock market decided to celebrate Valentine's Day a bit early this week because we got blasted with red everywhere on Tuesday. All three major indices were down big in reaction to the hotter than expected inflation data that came out Tuesday morning. I guess investors were surprised that inflation is still kind of sticky. One thing is clear, though, the odds of a Fed rate cut in March probably not happening. And now there's some chatter that it might not even happen in May. And that's why stocks were seeing red on Tuesday.

Starting point is 00:00:57 The timing of this is kind of brutal, though, because Valentine's Day is today, and Valentine's Day can get pretty expensive as it is. You know, with marked up prices of roses and chocolates, we're going to talk about how much money we spent on Valentine's Day later in the show. So it just heard a little bit more that the markets decided to hit our portfolios by 1 or 2% yesterday as well. But the good news is the markets are bouncing back today. All three major indices are seeing a nice bounce back today. They're all in the green at the time of this recording around 11 a.m. Eastern. I have noticed that every time we have a day where there's a major drop in the markets, stocks tend to bounce back pretty quick.

Starting point is 00:01:28 At least that's what's been happening lately. So fingers crossed that that keeps happening. All right, let's run through some headlines. So there's a report that came out yesterday that Walmart is looking to buy TV maker Vizio for $2 billion. Now, initially, when this headline came out, I was a little confused of why Walmart wants to buy a TV company. But after looking into it, they want to do it to serve more ads.

Starting point is 00:01:48 Hear me out here. Vizio owns about 7% of the TV market share in the U.S. And all the TVs these days are smart TVs, right? So by Walmart buying Vizio, they can use Vizio's operating system to serve more ads for Walmart products. Sneakly, these retail companies like Amazon and Walmart have growing advertising businesses. For example, Amazon's advertising business is growing by more than 20% every year. They did $15 billion in ad revenue just last quarter. Walmart's ad business is a lot smaller. They generated about $3 billion all of last year, but they want to grow that pie. I guess one way

Starting point is 00:02:20 they can do that is by buying a TV company and just blasting ads all over it. Interesting strategy. Vizio stock jumped more than 25% when this news came out. But this deal could still fall apart. It's still in the early stages right now. But just keep an eye on Walmart's advertising revenue because they seem to be making that a priority. We're going to find out more about Walmart's business next week because they report their Q4 earnings.

Starting point is 00:02:39 Excited to see what they say. I'll recap it in one of the episodes next week. So make sure you tune in. By the way, I own a few Vizio TVs. Can't wait to get hit with the Walmart peanut butter jelly ad as I try to watch Netflix or something. Let's recap some earnings because Airbnb, Zillow and Lyft reported earnings. And there was some drama regarding Lyft earnings.

Starting point is 00:02:55 Let's start with Airbnb. Their Q4 earnings came in best. better than expected. The revenues were 17% higher to 2.22 billion, and they reported a loss of $349 million for the quarter. Both those numbers were better than Wall Street estimates. And Airbnb executives seemed to be pretty optimistic about the business this year as well. But yet the stock is down more than 4% today at the time of this recording around 11 a.m. Eastern. Guess the earnings just weren't good enough to satisfy investors. Let's talk Zillow. Zillow reported better than expected Q4 earnings. The revenues were up 9% to 474 million, and their net loss came in at $73 million. Both

Starting point is 00:03:26 those numbers were better than Wall Street estimates. There seems to be some optimism moving forward with Zillow because there should be some more activity in the housing market as interest rates continue to drop. And that's one of the reasons why the stock is up more than 7% today at the time of this recording. Could you imagine what would happen if Zillow could figure out how to make money from people that just browse listings for properties that they're never actually going to buy, but, you know, it's fun the daydream about. Like, I've spent a lot of time looking for properties in Hawaii. I'm never going to actually buy it. All right, let's talk about Lyft, because there was some drama here. Let's first talk about the numbers. Lift earnings were, you know, came in line with estimates.

Starting point is 00:03:57 The revenues were up 4% to $1.22 billion. They reported a loss of $26.3 million. Not great, but it's much less than the $588 million in loss that they reported in the same quarter from last year. But then this is where things got a bit weird. Right when the earnings came out, the stock jumped 60% in after-hours trading. And everyone was like, what's going on here? Well, there was a statement made in the earnings report that said that Lyft expects their profit margins to increase by 500 basis points. 500 basis points is a fancy way of saying 5%. Lift margins last year were 1.6%. So increasing margins to 6.6% would be a huge increase. Turns out that number was a typo. In the earnings call, the Lyft CEO said they expect their profit margins to increase by 50 basis points. Again,

Starting point is 00:04:39 that's a fancy way of saying half a percent. So they expect their profit margins to go from 1.6% to 2.1%, not all the way to 6.6%. Obviously, that's a huge difference. And the stock dropped from its highs right after that correction was made on the earnings call. It's crazy what a typo can do, right? Just remember, if you mess up something at work today, at least you weren't the person working on the Lyft investors' relation team. Now, Lyft stock is still having a nice day today. The stock is up more than 30% at the time of this recording around 11 a.m. Eastern,

Starting point is 00:05:06 making it one one of the top winners for today. Let's talk about one more winner in the stock market today. That's not earnings related. We just talked about Lyft having a great day today. Well, their bitter rival Uber is also having a fantastic day. The stock is up more than 12% at the time of this recording around 11 a.m. Eastern after announcing $7 billion in share buybacks. This is the first time ever that Uber will buyback their shares. Investors love share buybacks because if they signed that the company thinks

Starting point is 00:05:31 that their shares are undervalued, and it also reduces the total amount of outstanding shares of the company. So whenever a company buybacks their shares, each share that you own in the company becomes a bigger percentage ownership in that company. I hope that makes sense. You know, it's been a great few months for Uber. They got added to the S&P 500 back in December. They had great Q4 earnings, and now they just announced share buybacks. No wonder the stock is it. all-time highs. All right, let's wrap up the show with a fun fact. Today's Valentine's Day, so this is a Valentine's Day related fun fact. According to the National Retail Federation, it is estimated that we're going to spend $25.8 billion this year on Valentine's Day related

Starting point is 00:06:04 stuff. That's an average of $185 per person. Now, funny enough, that also happens to be around the same price for one share of Apple. So I wonder how my wife would react if I gave her one share of Apple for Valentine's Day. I mean, it's pretty romantic, right? I'd personally be flaccount. I'd personally be ladder. No, I'm not going to try that. I'm just going to get her flowers. Another fun fact, the domain name YouTube.com was activated on February 14th, 2005, 19 years ago. Honestly, feels like a lot longer. I'm not going to lie. All right, guys, that's all got for you guys today. The show ran a little bit long today, but there was a lot to cover. Hope you guys enjoy the show. Thank you guys so much for listening. Enjoy your Valentine's Day, and we'll see you

Starting point is 00:06:40 guys back here tomorrow. 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.

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The Rundown - Lyft's Earnings Mishap, Walmart's TV Expansion

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