The Rundown - Meta Rallies on Earnings Beat, Moderna Tanks After Slashing Guidance

Episode Date: August 1, 2024

Stock market update for August 1, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Thursday, August 1st. In today's episode, we'll tell you about Nvidia's record-breaking day and recap what Jerome Powell said at the Fed meeting. We also recap meta's earnings and their AI plans. Then stick around to the end of the show to find out how Zuck could have ended up working at Microsoft as a teenager. All right, let's go. The stock market had an epic bounceback on Wednesday. day. The S&P 500 jumped one and a half percent, and the NASDAQ was up more than 2.6 percent,

both of these indices having their best sessions since February. And one of the drivers of the market rally yesterday was the comeback from AI and semiconductor stocks, especially NVIDIA. Now, look, I talked some smack about NVIDIA on yesterday's show and how the stock is down more than 20 percent since its all-time highs back in June. Well, it looks like they took that personally because NVIDIA had a record-breaking day on Wednesday jumping almost 13%. In fact, Nvidia added $329 billion in market cap,

which is a single day record for any stock. So epic comeback from Nvidia, and congrats for anyone that bought the Nvidia dip over the last couple days. Now, even though tech had a nice bounce back yesterday, the NASDAQ still finished July in the red, down almost 1%. The S&P 500, though, did finish the month in the green, up 1%. And the Dow Jones did the best up 4.4%,

the best month for the Dow's since December. But, you know, nobody cares about the Dow. So. The other big news yesterday was the Fed meeting. The Federal Reserve kept interest rates unchanged, but Jerome Powell did hint at a September rate cut in his press conference. Now, I watched the press conference. It was kind of boring, to be honest.

Jerome Powell talked a lot about the job market this time and how the Fed is keeping an eye on it to make sure that it continues to stay strong. And he also said directly that a September rate cut was on the table, but the Fed would still look at the data before making a final decision. To me, that's a pretty clear hint that the Fed is placed. to cut rates in September, unless we get some catastrophic inflation data between now and the next Fed meeting. So that news probably contributed to the market rally yesterday. Oh, and Jerome Powell,

by the way, was rocking a purple tie, as usual. I thought he might switch it up, but no, still went with purple. Maybe he'll switch it up for the September meeting when they actually do cut rates. Let's run through some headlines. Let's start with meta's earnings. Meta reported their Q2 earnings after the market closed yesterday, and the story was pretty similar to the other big tech companies that have reported earnings so far. Their numbers were great, and they also planned to increase their investment in AI. But instead of meta stock dropping

like it did for Google and Microsoft, meta stock actually jumped in response to these earnings. On top of that, meta also issued a better than expected guidance for Q3, so their core business doing great stuff. Now, as for investments in AI, meta's not backing down. They plan to spend more money on AI.

They raise their forecast for their 2024 CAPEX to be between $37 and $40 billion. The higher cap-back spending will be used to build out meta's AI capabilities. Meta has been releasing a lot of great stuff when it comes to AI. They recently released their new version of Lama, the Lama 3.1 model, which is to help with advanced math and coding questions. And it's already being integrated into WhatsApp, Instagram, and other meta platforms. You might have seen it, actually.

And Zuck has high hopes for Lama 4.0. He's hoping for that model to take on tasks to take a long period of time. So you'll ask the AI to do something and return in a week or so for a detailed response. Sounds pretty cool, but it's going to take a lot of money. to train that model. But thankfully for Meta, their underlying advertising business is strong. Like I mentioned earlier, it's growing by more than 20%. So, you know, they can afford to make this investment. Let's just hope that Meta's AI investments pay off and doesn't end up like their investments in the Metaverse. Like the Reality Labs Division lost $4.5 billion last quarter,

and it's lost over $50 billion since 2020. And there really isn't much to show for it. I don't think many people are rocking their Oculus headsets. And I think a lot more people are going to use meta's AI features, whether on Instagram or WhatsApp. I mean, I've actually messed around with some of the features. I'm curious to know, have you guys used any of the AI features on Instagram or WhatsApp? We'll make that the poll on Spotify today. Let us know if you guys have by voting in today's poll. Overall, though, investors seem pretty optimistic on meta's future with AI. The stock jumped more than 8% in reaction to these earnings. And I still don't think we talk enough about how meta pivoted the entire company to be about the metaverse a couple years ago. They even

changed the name and now they pivoted again to be about AI. Like, we can't even make metaverse jokes anymore. They've kind of totally abandoned the whole metaverse thing. Honestly, brilliant move. meta, I gotta say. Let's shift gears and talk about another social platform Reddit. Reddit announced that they're acquiring Memorable AI, which is a company that helps improve the creation of advertisements. Memorable AI's tech helps analyze characteristics, looks and designs of an ad in order to predict how well it will perform. I think Reddit is hoping that this will help improve the ad experience for marketers on Reddit. I mean, Reddit does generate 98% of its sales from ads, according to Bloomberg. So this acquisition does make sense. By way, Reddit's stock has

sneakily been doing pretty well since they IPO back in March, it's up over 24%. And the stock jumped another 4% in the pre-market in reaction to this acquisition news. Let's talk about some stocks making moves today. Shears of Carvana are soaring this morning after the company reported earnings and beat expectations. Carvana's revenues were up and they sold over 101,000 cars last quarter, up 33% from the same quarter last year. And the company also reported a surprise profit of $48 million for the quarter. Wall Street estimates were expecting them to make a loss. So fantastic quarter for Carvana. They expect 2024 to be a record year for the company. Not a surprise here, but shares are up more than 10% in the pre-market on this news. On the flip side, Moderna's stock is down this morning after

they reported earnings. Their second quarter revenues beat estimates and they posted a smaller than expected loss, but the stock is still down big because the company is cutting their full year sales guidance. Remember, investors care about how the company is going to be doing looking forward, not just what the company has done in the past. The biotech company lowered its forecast to the range of $3 to $3.5 billion, down from the initial estimates of $4 billion. Moderna is citing soft sales in Europe in a competitive market for respiratory vaccines. As a result, the stock is down more than 14% in the pre-market in reaction to these earnings. All right, let's wrap the show with a fun fact. Today's fun fact is about Mark Zuckerberg. AOL and Microsoft tried to hire Mark Zuckerberg while he was still in high

school because he made an AI that helps analyze music listening behavior. I mean, I guess Zuck was way ahead of the game when it comes to this AI stuff. Obviously, he didn't take the job, went to Harvard, dropped out, created a trillion dollar company. I mean, you guys have seen the social network, right? Could you just imagine, like, an alternative life? Like, Mark Zuckerberg is like a senior executive at AOL or Microsoft or maybe he goes on to like Spotify or something? There's an interesting outcome. And speaking on the social network, if Mark Zuckerberg ever decides to make like a biopic, is Jesse Eisenberg going to play him in that biopic. Like, it has to be Jesse Eisenberg, right? Like, you can't have anybody else play Zuckerberg. Well, all right, guys, that's the rundown for today. We're getting

pretty close to the end of this action pack week, but we still got two huge earnings coming up. Apple and Amazon report earnings today after the bell. We're going to be recapping both those earnings in tomorrow's episode. So make sure you guys are subscribed to the podcast. Hit that notification bell on Spotify so you guys are notified as soon as the episode goes up. And if you enjoy the show, don't forget to hit us with a five-star rating and vote in today's poll. That engagement really does help us out. Thank you guys again for listening. Shout out to Connor and Mike for all the help behind the scenes. 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

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