The Rundown - Starbucks Profit Drop 50%, Waymo Partners with Toyota

Episode Date: April 30, 2025

Stock market update for April 30, 2025. This video is for informational purposes only and reflects the views of the host and guest, not Public Holdings or its subsidiaries. Mentions of assets are not recommendations. Investing involves risk, including loss. Past performance does not guarantee future results. For full disclosures, visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Public.com/disclosures⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Wednesday, April 30th. In today's episode, we'll dive into the latest GDP numbers and explain why the U.S. economy just shrunk for the first time in three years. We also recap earnings from Starbucks and Snap and tell you about a partnership between Waymo and Toyota. It's probably making Tesla kind of nervous. Then stick around to the end of the.

show to find out the impact that tariffs are having on exports from China. We got a great show for you today. Let's go. Stox were in the green again on Tuesday with the S&P and NASDAQ up about 0.6%. Stock's got a boost in the afternoon thanks to comments from Commerce Secretary Howard Lutnik in an interview with CNBC where he said the White House was close to announcing a trade deal. Now, again, he didn't name any specifics or what country it was. So we're going to I'm gonna have to wait for more details. But you know, the stock market has been on a pretty impressive win streak. The S&P 500 has gone up for six days in a row, which is the longest winning streak since

November. So it's been a while. Now, today is the last day of April. And what has been an absolutely wild month? I mean, just think back to Liberation Day when President Trump held up that giant poster board with the tariff rates, like it was a science fair project or something. That was on April 2nd. That was this month.

And it feels like a lifetime ago. Since then, it's been pure chaos in the stock market. The S&P 500 dropped more than 10% at one point, but then crawled all the way back. As of this morning, it's down less than 1% for April. And depending on how today goes, it might actually finish the month in the green. And in fact, the NASDAQ has already completed the comeback. It's currently up 1% for April. Now, unfortunately, we did get some macroeconomic data this morning that could kill the mood.

According to the latest numbers from the Commerce Department, the U.S. GDP shrank by 0.3% in Q1. That's the first time that GDP has gone negative since 2022. You know, GDP is a measure of the economy. It measures the total value of all goods and services in the economy. And one reason that it might have dipped into the negative in Q1 is because of increased imports. Imports spiked by 41% in Q1, probably because companies were racing to get in products into the country

before tariffs went into effect. And the way that GDP is calculated is that it subtracts imports from GDP, So when imports rise, GDP tends to go down. But look, now that the tariffs are in effect, imports are likely to drop, and the GDP number might flip positive in the next quarter. We'll have to see. The one silver lining from the report was that consumer spending was still pretty strong. It was up 1.8% in Q1.

But I think the big question here is, will consumer spending hold once prices start rising because of tariffs? So a lot of unknowns right now. This was the first real economic report card showing what kind of impact that tariffs are having. Again, it could be a one-off dip, I'm not trying to freak people out, or it could be signs of things to come. Either way, stay tuned because it's shaping up to be a pretty interesting summer. Let's run through some headlines, starting with Starbucks. The coffee giant is in the middle of a turnaround, but they're still facing some challenges.

According to Starbucks's Q1 earnings that dropped last night, their profits dropped 50% last quarter. The coffee chain attributed the sharp decline to hiring additional baristas and restructuring costs associated with, with its turnaround plan. But the problem is that Starbucks also posted disappointing sales. Total same store sales fell by 1% from a year ago. The company's sales have now fallen for four straight quarters in a row, and the financial results aren't giving investors reason to believe that the turnaround plan, led by newly appointed CEO Brian Nicol is on the fast track.

Now Starbucks hired Brian Nicol from Chipotle. He was known for leading companies through tough periods like he did with Chipotle, but it doesn't seem to be working out so far for Starbucks. Nichols' strategy for Starbucks is called Back to Starbucks, and he wants Starbucks to go back to the old ways that made us such a successful brand in the first place. To do that, he's having Starbucks expand their free refill policy. He's also bringing back more seating to encourage people to stay and drink their coffee.

And he's also beefing up at staff to ensure a more seamless experience. I guess that explains the increased cost and hit to profit. But, you know, the macroeconomic isn't helping Starbucks either. Coffee prices have hit a 50-year high this quarter, plus tariffs are now adding another layer of uncertainty. Starbucks sources its coffee from 28 different countries and coffee accounts for 15% of the company's total products and distribution costs. So with tariffs, that's probably going to go up.

And not to mention if there is a big economic slowdown, I think people are less likely to buy a $6 coffee slash milkshake. So investors are starting to get worried. Shares of Starbucks are down 10% this morning in reaction to these earnings. I think the Brian Nickel bumps seems to be wearing off. Let's shift gears and talk about some non-earning news. Waymo and Toyota announced a preliminary partnership that could bring Waymo's self-driving tech to Toyotas in the future.

See, up until this point, Waymo has been focused on building out their Robotaxy Service, which has been pretty successful so far. Waymo is doing over 250,000 paid rides per week across multiple cities, including Phoenix, L.A., San Francisco, and Austin. And they're expanding to Atlanta and Miami soon. But now, Waymo wants to bring this self-driving tech to personally own cars. That's a pretty big shift, and it could end up being a huge deal. Toyota is the world's largest automaker, and they say their goal is to integrate Waymo's

autonomous tech into Toyota's next-gen vehicle platform. Toyota is even thinking about launching a Toyota branded Robotaxy Fleet. Now, we'll have to see how long it takes Toyota to release a car with Waymo's self-driving tech, and we'll have to see how much it costs. But this does put more pressure on Tesla to launch its Robotaxy service and improve their full self-driving tech. Tesla's FSD is pretty decent. I've used it on my Tesla, but it still requires the driver to pay attention to the road. But Waymos are currently the only cars that operate without a driver behind the wheel.

If that tech comes to a Toyota soon, it might differentiate them from Tesla moving forward. So we'll see how Tesla responds and if they can get their FSD to improve and match the level of Waymo. By the way, Tesla is launching a Robotaxy Service in Austin this summer, and apparently they're not going to have any driver behind the wheel. So we'll see how that goes. But yeah, it looks like the Robotaxy Wars are starting to heat up. Let's talk about some stocks making moves today. Caterpillar shares are up this morning after they reported earnings

and kept their full-year outlook intact even in the wake of tariffs. Caterpillar makes those giant construction equipment like excavators. You've probably seen their big yellow machines every time you drive by, construction site, and they don't expect to slow down in their business. Now Caterpillar did miss on earnings for Q1, but investors seem to be pretty happy with the guidance news. And as a result, Caterpillar shares are up nearly 2% this morning in reaction to these earnings. Now, on the flip side, snap shares are down big after the messaging app slash social media giant held back on providing any business outlook due to question marks surrounding future economic health.

Now, they did beat on Q1 earnings. Their daily active users grew by 9% year over year to 4.4. $460 million, but Snap is worried that a global economic slowdown might force advertisers to cut back on spending. And, you know, advertising is how Snap makes most of its money. So Snap is not providing guidance. And as a result, shares of Snap are down more than 16% this morning. And that kind of makes me nervous about meta's earnings, which come out tonight. We're going to recap them in tomorrow's episode. So you definitely don't want to miss that.

Let's wrap the show with a fun fact. Export orders from Chinese factories just hit their lowest, level since the COVID lockdowns in 2022. So it looks like the 145% tariffs are starting to have a real impact. American businesses are beginning to cancel orders from China and this slowdown is showing up elsewhere too. We're starting to see cargo volumes drop at the port of LA. According to the port's director, he expects a 35% drop in incoming cargo from China next week. And that has some economist's warning about fewer options on store shelves and higher prices for whatever is left. And that's not even accounting for the ripple effects on the trucking and retail industry.

So we might not know the full impact of these tariffs for a few more weeks. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. We've got a big episode coming out tomorrow. Microsoft and Mehta both report earnings tonight. I'm really looking forward to seeing what they both have to say. We're going to be recapping those earnings in tomorrow's episode, so you definitely don't want to miss that.

And later in the week, we're hearing from Amazon and Apple. And the next week, we had the Fed meeting. So things are about to get real interesting. 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.