The Rundown - McDonald's Sales Hurt by Middle East Turmoil, Eli Lilly's Weight-Loss Drugs Drive Guidance Higher

Episode Date: April 30, 2024

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Public.com presents the rundown your daily market update in five minutes. My name is Zadadmani, and today is Tuesday, April 30th. In today's episode, we recap Q1 earnings from McDonald's and Eli Lilly. One was pretty good. The other one, not so great. Then stick around to the end of the show to find out how much money lotteries in the U.S. made last year. Spoiler alert, it was more than Amazon. All right, let's go.

The stock market was off to a nice start this week. the Dow, S&P, and NASDAQ all moved higher on Monday. And the big winner yesterday was Tesla, which jumped more than 15% because of their wins in China. If you don't know what I'm talking about, go listen to yesterday's episode of the rundown where we break all that down. We are now in the middle of one of the busiest weeks on Wall Street because more than 150 companies report earnings this week. Some of them have already reported earnings and we're going to talk about them in a bit. The Fed meeting also kicks off today and concludes tomorrow with the Jerome Powell Press conference. and we have a jobs report that comes out on Friday,

which is going to tell us how many jobs were added in the U.S. economy for the month of April. Economists are estimating a gain of 210,000 jobs, so I guess we'll see. Today is also the last day of April and wasn't so great for the stock market. Unless we get an epic rally today, the S&P and NASDAQ will finish the month in the red. But we'll have the final numbers for you on tomorrow's show and what to look forward for for the month of May. All right, let's run through some headlines. Let's start with McDonald's. They reported their Q1 earnings this morning and it was kind of a mixed back. Revenues were up 4.6% to $6.17 billion that came in line with estimates and their profit for Q1 came in at $1.93 billion, which came in below estimates.

McDonald's is dealing with a few issues right now. Their menu prices have gone up. In fact, one research reports that McDonald's have raised their menu prices by over 100% over the past decade. That's three times higher than inflation. And while that's led to consumers, spending more on average when they visit the store, it's coming at the expense of less lower income buyers going to McDonald's. McDonald's same store sales in the U.S. were up 2.5%. That was less than expected and much lower than the 12.6% growth that they had last year.

And globally, sales growth declined for the fourth straight quarter, one reason being the volatility in the Middle Eastern markets. So yeah, McDonald's business is facing some challenges right now. Investors weren't loving this. McDonald's stock is down more than 3% in pre-market trading and down more than 7%. for the year. So it's been a tough year for McDonald's. But you know, at least they still got the best fries in the game, all right? This might be a controversial take, but McDonald's, best fries in the game, hands down. Enough about McDonald's, let's shift gears from fast food

to talking about a company that's making billions of dollars from weight loss. I'm talking about Eli Lilly. They reported their Q1 earnings this morning, and investors were liking what they heard. Eli Lilly, which is the world's largest pharmaceutical company, did miss expectations for revenue, but they did beat on quarterly profits and raised their full year guidance. And usually that's what investors care about the most. How is the company going to be doing moving forward? The raised guidance came because of strong demands for their diabetes drugs, Manjaro, and their new weight loss drug Zetbaum.

I mean, at this point, these drugs have become a household name. Demand for these drugs have been so high that it's caused a shortage. So a lot of the future sales growth hinges on how much Eli Lilly can actually produce and ship these drugs. The company said it's raised forecasts, which leads to the company. lifted its revenue expectations by $2 billion reflects more clarity about its production capacity. These blockbuster drugs by Eli Lilly have sent the stock to the moon over the last year or so. Eli Lilly's stock is up more than 80% over the last 12 months,

and their market cap is now almost $700 billion, making it the eighth largest publicly traded company in the U.S. And the stock is up another 5% today in reaction to these earnings. So these diabetes and weight loss drugs don't seem to be a fad. They're continuing to soar in popularity. I mean, Eli Lilly literally can't make enough of them. Let's talk about some stocks making moves today. PayPal stock is up more than 5% this morning after the company reported strong Q1 earnings.

PayPal's total payment volume increased by 14% to nearly $404 billion in Q1, and their revenues grew by 10%. The company's raising its profit forecast on the back of strong consumer spending. And the company's also really dialing in on cost savings, too. The CEO said this morning that 2020, remains a transition year that will position PayPal for highly profitable growth in the future.

Sounds very buzzwordy, but investors were loving it. Now, as part of the cost-cutting plan, PayPal did say earlier this year that it plans to lay off 9% of its staff this year. Now, a stock not doing so great this morning is Chegg. Chegg stock is down more than 14% in pre-market trading. After reporting the Q1 earnings, the revenues are down 7%, which did be Wall Street estimates, but they also reported a loss of $1.4 million. that came in higher than Wall Street estimates. Also, their current CEO is stepping down June 1st.

Now, the worst part for check is that they expect their Q2 revenues to be lower than what Wall Street was estimating. And what did I say earlier? Investors care about most how the company is going to be doing moving forward. So, tough here for check continues to get worse. Stock is already down 36% as of yesterday and it's down another 15% today. But maybe the new CEO can turn things around. I don't know. Let's wrap the show with a fun fact. Today's fun fact is about U.S. state-run lotteries. A record $113 billion was spent on U.S. state-run lot of lotteries in 2023. That is a lot of money. And what's crazy is the government keeps 30% of ticket sales. So that's nearly $34 billion in government revenue. To put that in a perspective,

that's more net income than what Amazon, Nvidia, and Bank of America made in 2020. In fact, if these U.S. state-run lotteries was one single company, it would be the ninth most profitable company in the U.S., according to the economists. Yeah, lottery, very profitable for the government. And I don't know about you guys, but I feel like every time I see a billboard for the lottery, the jackpot's like always over a billion dollars these days. I think that might be one reason why people are spending a record amount of money on lotteries these days. All right, guys, well, that's the rundown for today. Hope you guys enjoyed that episode. If you did, please consider giving us a five-star rating on Apple and Spotify. Tomorrow's episode should be a great one.

We have Amazon and AMD reporting earnings tonight. We're going to be recapping all that info for you in tomorrow's episode, and we're going to get you ready for the Fed meeting as well. So big episode coming tomorrow. Make sure you guys are subscribed to the podcast. Turn on the notification bell. If you guys want to be notified right when the episode goes up. Thank you guys again for listening. 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 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 Zayid Mani, brokerage services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.