The Rundown - Oil Merger Mania, Cava Earnings Recap, & Slow Travel Outlook from American Airlines

Episode Date: May 29, 2024

Stock market update for May 29, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Wednesday, May 29th. In today's episode, we tell you why NVIDIA is single-handedly carrying the stock market right now. Also, energy companies are beefing and buying. Then stick around to the end of the show to find out why nobody is going to the movies anymore. All right, let's go. Well, guys, we had a pretty mixed start to the stock market this week. The Dow continued to slide.

S&P barely edged out a gain, but the NASDAQ made record highs, and that's mostly because of NVIDIA. NVIDIA stock was up almost 7% yesterday, single-handedly carrying the NASDAQ to record close and the S&P 500 into the green. If you look at the S&P 500 yesterday, if you take NVIDIA out of the equation, it really didn't have a great day. Only 133 of the 500 companies in the index were in the green yesterday. But NVIDIA makes up a really large chunk of the S&P 500, so when it makes moves like it

did yesterday, it tends to drag the rest of the index up with it. Since reporting earnings last week, Nvidia's stock has gone up 20% adding almost $500 billion in market cap in the process, which is like adding the value of Walmart in a week. Nvidia's market cap is now $2.8 trillion, and it's within 4% of overtaking Apple as the second most valuable company in the world. And with the momentum that Nvidia has right now, I mean, it almost feels inevitable. Let's run through some headlines.

Starting with the energy industry because there was a lot of big moves announced this morning. ConocoPhillips announced that they're acquiring Marathon oil for $17.1 billion in an all-stock deal. Now, both Conoco and Marathon are oil exploration companies, which means that these companies search for oil by drilling, fracking, and other methods. And Marathon oil has been struggling recently. They've reported declining profits for more than a year. So I guess Conoco thinks that they can acquire them and turn that around. The merger is expected to generate $500 million in savings in the first year through

reduced administrative and operating costs because these two companies' assets are pretty close to each other. Conical Phillips also expects to do $20 billion in share buybacks in the next three years, so they're pretty confident about this acquisition. The acquisition is expected to be finalized in the fourth quarter of this year, and Marathon stock is up more than 11% in the pre-market of the back of this news. We also had another merger go through. Hess also approved its sale to Chevron for $53 billion.

in another all-stock deal. These two companies are also oil exploration companies. But this deal could run into some issues because there is some beef with Exxon that could kill this deal. See, Exxon claims that it has a right to deny the deal from going through because of an exploration partnership

they have with Hess in Guyana. Guyana is in South America. This oil field in Guyana is worth around $40 billion with Hess, Exxon, and Chevron all operating there under a contractual partnership agreement. So Exxon's lawyers went to work and they're using that contract to deny the sale saying that the company,

The contract gives Exxon the right to a sale of refusal if it impacts business in Guyana. But Hess shareholders have approved the seal to Chevron. But it's likely the story isn't over yet. Good old-fashioned corporate beef. One thing's for sure, the lawyers for these two companies are going to make a killing. Let's shift gears and talk about another kind of beef, Mediterranean beef, because Kaba reported earnings yesterday and shares are sliding despite earnings beating analysts' expectations.

Kaba's revenues for the quarter were up 30% year over year. And same store sales were up 2.3%. Kava is also raising their sales guidance from 5% to 6.5%. So they think their business is going to grow faster than previously estimated. One of the reasons for the optimism is the upcoming launch of grilled steak on June 3rd, which is a premium price protein. The company sees will drive more traffic during dinner hours. And with fast food places like McDonald's raising their prices,

people might just prefer to splurge a bit and get their meal from places like Kava, sweet green, or Chipotle. Because the difference between getting a meal, at a fast food place versus a place like Kava, Sweet Green, or Chipotle is starting to shrink. But despite all this, shares for Kava dropped more than 4% in the pre-market. I guess investors were expecting an even better report. But zooming out of it, it's been about a year since Kava IPOed at a price of $22. And shares are now just under $80.

And the stock is up more than 90% year to date. So the sell-off could just be related to profit-taking. Let's talk about some stocks making moves today. Starting with Dick's sporting goods. Shares of the sporting goods retailer are up this morning after beating on first quarter earnings. The revenues grew by $6.2% to $3 billion, but their profits were down about 10% to $275 million. But still, both those numbers were higher than what Wall Street was estimating, and that's really all that matters, right? Now, the cherry on top was that the company is feeling pretty good about its business, and they raised their guidance for the rest of the year.

And investors love when companies do that. As a result, Dix sporting goods shares are up more than 7% in the pre-market this morning. And Dix quietly has been on a role this year. The stock is up more than 32% as of the close on Tuesday. On the flip side of stock not doing so great this morning is American Airlines. Shares are down this morning after the company said they expect lower profits in their current quarter because of a slower summer travel season. The airline initially expected a really busy summer travel season and we're hoping to raise ticket fares as a result.

Yeah, that's not happening. People are actually cutting back a bit on summer travel. So that's forcing the airline to cut back on prices, which is going to hurt their profits. The company now expects earnings for their second quarter to be between $1 and $1.15 a share, which is down pretty big from the $1.45 a share they previously expected. American Airlines is also dealing with rising costs in a short supply of new planes. And as a result, shares of American Airlines are down more than 8% in the pre-market. Not great for American airline investors, but hey, if you were planning on traveling this summer,

You might actually get some deals on airfare. All right, let's wrap the show with a fun fact. Today's fun fact is about the box office. Nobody is going to the movies anymore. This Memorial Day weekend was the worst for the box office in nearly 30 years. Obviously, not counting 2020 when movie theaters were literally closed. The top movie this weekend was Furiosa, which was a Mad Max prequel. It only made $32 million.

And the second best movie was Garfield, which made $31 million. If you compare that to last year, Disney's Little Mermaid made $117,000, million dollars at the box office over Memorial Day weekend. So I don't know if it's the movies or if people just have kind of moved on from movie theaters. Personally, I think that movie theaters are turning into like malls. They're just slowly dying. I think most people are only going to see a handful of movies every year now. Maybe the ones that are either a meme like Barbie and Oppenheimer were last year or movies that are worth seeing in IMAX. These days, I mean, most movies come out on streaming like a couple weeks after they're in theaters anyway. So is it really worth spending 15, 20 bucks

in a movie ticket plus extra for snack? when you can just wait two, three, four weeks when they come out on streaming and watch it at home? I think that's the big issue here. But yeah, not great for movie theaters. This has been a pretty bad year for the box office. All right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did, please consider giving us a five-star rating on Apple and Spotify.

Maybe even drop us a review on Apple as well, because everybody reads the reviews before they do anything these days, right? Also, if you're listening to this on Spotify, don't forget to vote in today's Spotify poll. Thank you guys so much for listening. Shout out to Connor and Mike for all the hard work 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 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.