The Rundown - Spotify and Cava Soar on Earnings, Klarna Files for IPO

Episode Date: November 13, 2024

Stock market update for November 13, 2024. Check out the new Leading Indicator episode with the first-ever patient of the Neuralink brain chip.

Public.com presents the rundown. Your daily market update in five minutes. My name is Zadmani, and today is Wednesday, November 13th. In today's episode, we recap the latest inflation report and what the markets think the Federal Reserve will do next. We also dive into earnings from Spotify and Kava and tell you my Spirit airline stock is tanking. Then stick around to the end of this show to learn about a new government agency

inspired by a meme that will be led by Elon Musk. All right, let's go. Well, the markets took a bit of a breather yesterday. Stocks were down across the board, the first time since the election. The S&P was down 0.3%, the NASDAQ dropped 0.1%. So a tiny pullback, nothing too drastic. Small caps ended up taking the biggest hit yesterday with the Russell 2000 down 1.8%. And Bitcoin and Tesla, two of the biggest winners post-election also saw a pullback as well.

So I think markets might finally be feeling some post-election fatigue. Let's talk a little inflation because the October CPI report just dropped this morning. I should have mentioned this earlier in the week. And according to this report, the numbers came in line with expectations. Nothing too shocking. Inflation in October hit 2.6% compared to last year and it was up 0.2% compared to September. Core CPI, which removes volatile categories like food and energy, was up 3.3%, which also came in line with expectations.

So no surprise in the inflation report, not quite at 2%, which is the Fed's target, but it's not noticeably getting worse either. I do wonder, though, if inflation remains sticky at these levels, you know, 2 and a half, 3%, if that will impact the Fed's policy decision moving forward. Right now, the markets are expecting an 80% chance of a 25 basis point cut. This is according to the CME Fed Watch tool. But we still have a few more weeks until we hear from Jerome Powell again. So I wonder how this plays out.

Let's run through some headlines. Let's talk Spotify. We love Spotify here at the rundown, and they just reported earnings yesterday. and their numbers were pretty solid. The revenues are up, their users are up higher than expected, and most importantly, their profits continue to climb. In fact, their net income this last quarter was four times higher than it was a year ago.

The music streaming platform reported a record high gross margin of 31.1% up from 26.4% a year ago. So I think their improving profitability is at the center of their earning story, and it's making investors very excited. But Spotify also beat expectations when it comes to user growth. The company added 14, million total monthly active users beating their own estimates of 13 million, and they have a total of 640 million users worldwide. 252 million of those are premium subs. So Spotify has a lot of paying

subscribers just to give you some context here. Netflix has 283 million paying subscribers globally. So Spotify's numbers are pretty comparable. Spotify says there are 3 billion people globally who care about music. So Spotify still thinks there's room for growth, and that's why their stock is up around 8% this morning. If you zoom out, you'll see that their stock has doubled in value this year. So big year for Spotify. And again, we're big fans of Spotify here at the rundown. Please go like and subscribe to our podcast on Spotify.

Thank you. Shift gears and talk about Apple. We're also big fans of Apple here on the rundown. Please go like and subscribe to our podcast on Apple Podcasts as well. But today we're talking about Apple's plans for the smart home. They're ready to take it over. Apple is reportedly working on a smart home device and they're going to show it off in March. This is recording through reporting from Mark Germann at Bloomberg.

According to the Bloomberg report, this device is essentially going to be be an iPad that's going to be mounted to the wall and it will have the ability to control your smart home appliances like smart locks, smart lights, your cameras, things like that. And Apple's going to integrate Apple intelligence into this device so you'll be able to control your smart home appliances with Siri, which might be a deal breaker, honestly. I mean, come on, Siri still isn't great. So yeah, Apple's next innovation is going to be an iPad mounted to the wall that can control your lights. Now, there have been other products like this that have hit the market before. meta, in fact, had a product called the Meta Portal, and it failed.

Amazon also has their echo devices, Google has their home devices, and the smart home market is kind of strange. Like, I don't really know how successful Amazon and Google have been. Sure, a lot of people have bought an Alexa or a Google home device, but Amazon and Google don't seem to be making that much money from it. In fact, Amazon cut back on their Alexa division at the end of last year, laying off hundreds of employees. Reportedly, Amazon lost close to $25 billion from his push into gadgets between 27,000,

in 2021. So we'll see if Apple can make this work or if Apple's going to have another flop on their hands. Apple hasn't had a hit new product in a while. And I also wonder what they're going to price this device at.

Like if it's going to cost $1,000, I don't think it's going to work because an Amazon Echo costs $150 bucks. But who knows, maybe Apple will surprise this and this thing will be actually useful. As an Apple stand, my expectations are pretty low.

And we got some breaking news as I record this show, Kalarna, the popular buy now pay later service, announced today that it's filing for an IPO. The Swedish company was recently valued at $15 billion. So yeah, it'll be interesting to see how that goes. Maybe the IPO window is opening back up again.

Let's talk about some stocks making moves today. Shares of Kava are surging this morning as the fast casual restaurant continues to surprise investors with strong earnings. Kava pulled off the earnings trifecta. They beat expectations on revenue, profits, and raise their guidance moving forward. Kava's revenues were up 39% compared to last year. their same store sales were up 18%. Their traffic was up 13% and the company's net profit more than doubled to $18 million. And what makes these results more impressive is the fact that there's an overall slowdown in the restaurant category because of pullback and consumer discretionary

spending. But that slowdown doesn't seem to be impacting Kava. I think their secret sauce is their pita chips because they are so addicting that it's hard not to go back all the time. Every time I go, I think I eat like four bags of pita chips. So yeah, it looks like, people can't seem to get enough of Kava's food and their stock because Kava shares jump 15% this morning in reaction to these earnings. Here's a fun fact. Kava's stock has outperformed Nvidia this year. Open up the public app and check it out yourself.

It's kind of nuts. Now on the flip side, shares of Spirit Airlines are tanking today as the struggling airline prepares to file for bankruptcy. Now, Spirit filing for bankruptcy has been floating around for the last few weeks now, but there was a little bit of hope that Spirit might be able to pull off a merger with front tier airlines and avoid bankruptcy. But it looks like those merger talks have broken down, according to reporting from the Wall Street Journal. So now Spirit's only option is to file for bankruptcy. And that's why Spirit stock is down 60% this morning. I've said this before, but Spirit Airlines

came in clutch for me in my 20s. I remember flying to Vegas and Miami and New York for like $39 round trip. Sure, I only packed a backpack, but it was amazing for someone in their 20s not making a lot of money. And I think I even flew to Cancun one time for like 60 bucks. So yeah, Spirit Airlines will always have a special place in my heart. These days, though, a lot of airlines are offering them. Like even some of the bigger ones like United, Delta, and American Airlines offer these bare bones economy tickets for a reasonable price. And that's why Spirit's business has struggled over the last few years. They just haven't been able to compete with these bigger airlines. Let's wrap the show with a fun fact. Elon Musk has been named by President-elect Donald Trump to co-lead the newly created Department of

efficiency. In a statement, Donald Trump said that this department intends to, quote, dismantle government bureaucracy slash excess regulation, cut wasteful expenditures, and restructural federal agencies. So pretty big task, but Musk will lead the group alongside Vivek Ramoswamy. He's another entrepreneur who backed Trump on the campaign trail. And yes, if you look at the acronym of this agency, it spells Doge. So we now have a government organization inspired by a meme. Now, if you thought this was going to result in Dogecoin making a big move. It actually hasn't. Dogecoin is still hovering around 39 cents. But it is up nearly 100% from where it was a week ago. But yeah, memes are taking over the world. We had meme stocks, meme coins, and now we have meme government agencies.

Well, all right, guys, that's the rundown for today. If you guys enjoyed today's episode and you have like 12 seconds, consider giving us a five-star rating on Apple or Spotify. And if you're listening on Spotify, vote in today's Spotify poll, leave a comment. All the that engagement really helps us out and it helps other people find the show. 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 subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals. Learn more at public.com disclosures. In partnership with Zaitidimani, Brokered services for U.S. listed, registered securities are offered by Open to the Public Investing Incorporated, member FINRA and SIPC.