The Rundown - Meta Spooks Investors with User Growth Miss, Uber Plunges as Bookings Fall Short

Episode Date: October 31, 2024

Stock market update for October 31, 2024.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadadmani, and today is Thursday, October 31st. In today's episode, we talked some macroeconomics diving into GDP numbers and the latest inflation data. We also recap earnings from Meadow, Microsoft, Uber, Peloton, and more. Then stick around to the end of the show to find out how much money Americans are expected to spend on Halloween this year, and the costume that I'm thinking about going with this year, that involves a purple tie and a pair of glasses.

All right, let's go. Wednesday was not a great day for the stock market. The S&P 500 was down 0.2% and the NASDAQ dropped 0.6%. Investors got an early Halloween scare yesterday after AI Darling's Super Micro dropped 33% because their accounting firm, Ernest and Young, straight up quit on them. You know, it's never great when you have your accountant quit on you, but it's especially bad when you're already under investigation by the DOJ for shady accounting practices like Super MicroWiz. So I don't know what's going on over there, but it doesn't look so great.

And since Super Micro is part of the S&P 500 and NASDAQ, it was added to both these index earlier this year. This big drop in their stock price dragged the entire index down as well. Whose idea was it to include Super Micro when these indices? Come on. Now, zooming out a bit, we also got some macroeconomic data to talk about. Let's start with the GDP. The third quarter GDP numbers came out. And the U.S. economy grew by 2.8% in Q3, which is pretty good. It is slightly less than the 3% growth that we had in Q2.

But what's encouraging, though, is that consumer spending continues to be strong, jumping 3.7% in Q3. And we also got some jobs data, too. The ADP report showed that private companies hired 233,000 new workers in October. That's much higher than expected and better than the 159,000 workers that were hired in September. So hiring seems to be accelerating, which is nice to see. And this morning we got the PCE inflation report, which is the Fed's preferred inflation metric, and that came in at 2.1% right in line with estimates.

And remember, the Fed's inflation target is 2%, so we're pretty much right there. So yeah, overall, some solid macro data as we wrap this busy week. Now, today could be the make or break day for the stock market. We're getting earnings from Apple and Amazon after the market closed today. So depending on what those numbers are, that can make or break the week. Trick or treat for me and a lot of investors starts at 4 p.m. Eastern time today. Really hoping we get a nice bag of treats. Let's run through some headlines.

And I think we should start with meta because they reported earnings last night and investors seemed to be a bit disappointed. Their numbers were pretty decent. The revenues were up 19% and their net income was up 35% to over $15.7 billion. Both those numbers were higher than expected. The company did miss on user growth. they reported 3.29 billion daily active people for the third quarter, which was up 5%, but less than the 3.31 billion that was expected. It still kind of blows my mind that over 3 billion people

use meta applications every day. That's wild. Now, investors also saw some other areas of concern, like how much money meta expects to spend on artificial intelligence. Meta plans to spend close to $40 billion on CAPEX by the end of this year. And they're not planning to slow down either. Meta plans to spend significantly more on CapEx next year. And look, it looks like some of this AI spending is starting to pay off. Zuck said that Meta's emphasis on AI has helped bolster its advertising technology, and he attributed that to the company's upbeat quarter. So you can see why they're spending so much money on AI.

But Meta is also burning a ton of money in the Reality Labs Division. That's the division that's working on the Metaverse and some of these cool AR projects, like the Orion Glasses, which they showed off a few weeks ago. Meta said that the Reality Labs Division lost more than $4.4 billion. dollars last quarter. So overall, I said that meta's core business is doing pretty well. It continues to grow, continues to be very profitable. But they are spending a lot of money on AI and AR. And I think that's making investors kind of nervous, which is why the stock is down around 3% in reaction to these earnings. Let's shift gears and talk about Uber. Their shares are also falling after they reported their

Q3 earnings. Pretty similar story to meta. Their Q3 results beat analyst expectations. The revenues grew by 20% to $11.2 billion. And they posted a record $1.06 billion. in operating profit. On top of that, the number of active users on Uber's platform jumped 13% to 161 million. So overall, their numbers are pretty good, but their forecast for Q4 came in below analyst expectations. And I've said this before, but investors just don't care about what the company did in the past. They want to know how the company plans to do moving forward. And if Uber's projecting slower growth than what Wall Street was expecting, that's freaking out some investors. In fact, Uber's stock is down close to 8% in reaction to these earnings. You know what? I'm going to do

my part and order a ton more Uber Eats. Let's talk about some stocks making moves today. And we're going to do some quick hitting earnings recap. Let's start with Carvana. Their shares are popping this morning after the company boosted its guidance with expectations for strong vehicle sales in Q4. Carvana sold nearly 109,000 vehicles in Q3, which is a 34% jump from last year. Revenues also increased 34% year over year, and the company beat earnings expectations in the period. Carvana shares are up more than 18% on this news. It's crazy to think that Carvana almost went bankrupt a couple years ago. You could have bought Carvana stock for under $5 in 2023,

and now it's trading at $245. It's crazy. This might be the comeback stock of the decade. Speaking of comebacks, Peloton shares are popping this morning after the exercise company announced a new CEO is taken over the company. Peter Stern, one of the creators of Apple Fitness, will be taken over the CEO role in January. Stern is currently at Ford, serving as the head.

head of the company's subscription business. So it seems like it could be a pretty good fit for Peloton since subscriptions are Peloton's main bread and butter now. Now, many people are buying bikes with an iPad on it these days, you know? Shares of Peloton are up nearly 20% this morning in reaction to this news. Unfortunately, for them, their stock is still down more than 90% from its peak back in 2021. Now, on the flip side, shares of Microsoft are dipping after the company reported decent earnings, but disappointing guidance. Microsoft's revenues were up 16% their profits were up 11%. But Microsoft's projections moving forward

called for a 10% growth, which disappointed some investors, sending Microsoft shares lower around 5% in reaction to these earnings. It's a classic case of solid numbers, but poor guidance. Roku shares are also plummeting after these streaming giant

said that it would stop giving their streaming subscription growth numbers starting in Q1 of 2025. They're kind of following the Netflix model here. Netflix is going to stop doing that as well. Roku reported two million additional households in the quarter putting Roku's total streaming households at 85 million. Roku's earnings numbers weren't so bad, though. They beat Esmits, but again,

that wasn't enough for investors. Roku's shares are down close to 20% in reaction to these earnings. And finally, shares of Robin Hood are down 13% this morning after they reported earnings. Oh, you know what? I'll just leave it at that. Let's wrap the show with a fun fact. Americans are expected to spend $11.6 billion on Halloween this year. This is according to the National Retail Federation. Spending, on Halloween is up more than $5 billion from 10 years ago. Spending on adult costume is expected to reach $1.8 billion while spending on children's costume is expected to be $1.3 billion. The most popular kid's costume this year is expected to be Spider-Man. Classic, can't go wrong

with that. Now, surprisingly, a Jerome Powell costume didn't rank anywhere in the top 10. You know, kind of shocking, because if I was doing a costume this year, I would definitely be Jerome Powell. You know, I get the white wig, his signature glasses, a purple tie, maybe. be a podium, maybe a sign that says soft landing or something. I'm sure everyone would know exactly who I was. Well, all right, guys, that's the rundown for today. This action pack week is almost over, but we still got Apple and Amazon earnings. We'll be recapping those and more on tomorrow's episode, so make sure you guys tune in for that. And if you guys enjoy this show and have like 15 extra seconds, consider giving us a five-star rating on Apple and Spotify.

Leave a review on Apple, leave a comment on Spotify. All that engagement really helps us out. 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.

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