Podcast Summary
Learn communication skills from experts on the Think Fast, Talk Smart podcast: Develop essential communication skills with tips from experts on managing anxiety, taking risks, and harnessing nervous energy. Stay informed and focused on long-term goals during economic uncertainty.
Effective communication skills are essential in business and life, and the Think Fast, Talk Smart podcast can help you develop these skills. The podcast, which has received nearly 43 million downloads and is the number one career podcast in 95 plus countries, offers valuable tips from experts on various communication topics, including managing anxiety, taking risks, and harnessing nervous energy. With strong communication skills, you can make a lasting impression, keep your nerves in check during important meetings, and be more persuasive. The economy added 428,000 jobs in April, but high inflation and the Federal Reserve's interest rate hikes have caused uncertainty and market volatility. Despite these challenges, Ron's advice is to stay invested and keep putting money into the market. The Nasdaq, in particular, has had a rough start to the year, with year-to-date losses greater than any point this century. Overall, it's important to stay informed and focused on long-term goals.
Preparing for the future in a challenging market: Stay invested, consider acceptable valuations, and remember market swings between optimism and pessimism
We're currently experiencing a challenging time in the market, and it's important for investors to focus on preparing for the future rather than trying to predict it. The economic conditions that led to high valuations for certain businesses have changed significantly, so it's essential to consider what the acceptable valuations will be going forward. This is a difficult period, but staying invested and keeping money for near-term needs out of the market can help. The e-commerce sector has been hit hard recently due to consumers pulling back on spending, but there may be bright spots on the horizon despite the current hangover from inflated valuations. While some businesses have seen numbers decrease from the past year, their fundamentals continue to perform well. It's important to remember that the market swings between optimism and pessimism, and we're currently in a period of pessimism. However, history shows us that in the long term, the market tends to recover.
Companies thrive amidst economic challenges: Despite economic downturn, Wayfair, Etsy, Shopify, Marriott, Booking Holdings, AMD report strong growth. Advertising, travel demand resurgence, high-end server chips drive revenue.
Despite facing challenging economic conditions, companies like Wayfair, Etsy, and Shopify are maintaining their performance and even exceeding expectations. While there have been modest declines in gross merchandise sales for some, the strength of their advertising businesses has helped them maintain take rates. For instance, Etsy's take rate was up 17.8% in Q1 2023 compared to 17.5% in Q1 2022. Similarly, businesses in the travel industry, such as Marriott and Booking Holdings, are experiencing a resurgence in demand for leisure travel as people shift their spending away from e-commerce towards experiences. Marriott reported an impressive 81% revenue increase in Q1 2023, while Booking Holdings saw a 136% revenue growth. In the tech sector, AMD's first quarter revenue grew over 70% due to its high-end server chip business, and the stock is trading at an attractive 21x earnings. These companies are adapting to the changing economic climate and continuing to deliver solid results. Investors are encouraged to separate macroeconomic factors from the fundamentals of these businesses.
AMD's console market strength and Xilinx integration boost growth, while Zillow's iBuying profits decline and Block's Bitcoin exposure grows: AMD's console sales surge and Xilinx acquisition contribute to growth, while Zillow's iBuying profits decrease and Block's Bitcoin revenue rises
AMD's strong performance in the console market, driven by Xbox and PlayStation refreshes, and their successful integration of Xilinx, are key factors contributing to AMD's growth. Additionally, AMD's upcoming acquisition of Pensando for $2 billion will expand their presence in the data center market, providing further tailwinds for the company. Meanwhile, Zillow's Q1 revenue exceeded expectations, but costs are rising, leading to a decline in shares. The company's iBuying business, which has been a source of uncertainty, saw a 10% increase in revenue, but profits in this segment decreased by 24%. In contrast, Block, the fintech company formerly known as Square, reported a good quarter, with total net revenue up 44% if excluding Bitcoin. The core business, particularly Cash App and Square, performed well, with transaction-based revenue and gross profit up 28% and 41% respectively. However, it's important to note that Block's results are becoming increasingly Bitcoin-centric, which may impact investor sentiment.
Under Armour's weak first quarter results and shifting business direction: Under Armour faced reduced demand, supply chain disruptions, and shipping delays due to COVID-19 in China, leading to a net loss and disappointing profit guidance. In contrast, Starbucks showed resilience with a 15% revenue growth and stable earnings per share, driven by strong digital initiatives and a new CEO's enthusiasm for the hybrid economy.
Under Armour's business direction has shifted significantly in the past three years, leading to weak first quarter results and a slumping stock price. The company experienced reduced demand, supply chain disruptions, and shipping delays due to COVID-19 in China, causing a 14% decline in revenue from the Asia Pacific region. Under Armour reported a net loss and issued disappointing profit guidance, causing the stock to trade at a low valuation. In contrast, Starbucks showed resilience with a 12% increase in same store sales in the US and a strong performance in digital initiatives. Starbucks' new CEO, Howard Schultz, is enthusiastic about the company's adaptation to the new hybrid economy and the potential for growth in digital channels. Despite challenges, such as leadership succession, workplace investments, and uncertainty in China, Starbucks' revenue grew by 15% and earnings per share remained relatively stable.
Brutal April for Investors: High-Quality Tech Companies Hit Hard: Investors should focus on carefully selecting individual stocks rather than relying on broad market indexes during market volatility. Having a well-diversified portfolio is crucial for being prepared for market downturns.
The recent stock market sell-off, particularly in the tech sector, has resulted in a brutal April for investors. High-quality companies like Microsoft, Apple, AMD, and NVIDIA have seen significant declines, not just because of their connection to the broader tech market, but also due to algorithmic trading and indexing. These electronic sell signals have been triggered as investors look for asset preservation. Malcolm Etheridge, a certified financial planner and executive with CIC Wealth, noted on Motley Fool Money that this trend is driving quick and sharp declines across the board, rather than being particular about which companies get sold off. Etheredge also mentioned that we are now in a stock pickers market, meaning that investors should focus on carefully selecting individual stocks rather than relying on broad market indexes. Overall, the market volatility highlights the importance of having a well-diversified portfolio and being prepared for market downturns.
Market volatility forces investors to reconsider newer tech holdings: Investors are reevaluating their holdings in newer tech companies, particularly those that went public via SPACs, due to market volatility. Established blue-chip companies are also experiencing declines, leaving investors uncertain. Despite high inflation, stocks remain a relatively attractive option due to lack of alternatives.
The current market volatility is causing investors to reconsider their holdings, particularly those in newer public tech companies that may not have had a solid business foundation. Many of these companies went public through Special Purpose Acquisition Companies (SPACs) during the 2020 and 2021 market boom, but are now facing reversals. Meanwhile, even established blue-chip companies are experiencing declines, leaving investors questioning whether to stay or go. The lack of appealing alternatives, such as bonds or cash in the face of high inflation, keeps the stock market as the relatively less dirty option. As the market continues to fluctuate, some observers believe that the exit of weaker companies from the public markets could signal a potential bottom.
Increased PE activity with founder-led tech companies and VC-backed firms going private: The PE market is seeing heightened activity due to tech founders seeking privatization and VC-backed firms going public against their will in unfavorable conditions. Commercial real estate, specifically distribution centers, is a potential bright spot for investors as landlords hold pricing power amid supply chain disruptions.
The private equity space is experiencing increased activity due to founder-led tech companies considering going private, and some VC-backed companies being forced to go public despite unfavorable market conditions. Commercial real estate, particularly distribution centers, are seen as a potential bright spot in the market for investors, as landlords have pricing power and the supply chain disruptions continue to benefit industrial REITs. In the coming months, the economy and stock market will be closely watched for signs of improvement, with inflation, supply chain issues, and ongoing lockdowns in China being key factors to consider.
Comparing the Fed's interest rate hikes to a driver approaching a speed trap: The Fed's gradual approach to interest rate hikes may not be enough to avoid prolonged pain in today's market, and understanding what one invests in is crucial.
The Federal Reserve's handling of interest rate hikes is compared to a driver approaching a speed trap. The challenge is to slow down without causing a chain reaction or causing too much harm. However, given the market's prolonged growth and the Fed's previous promises of transitory inflation, the speaker believes a more drastic approach may be necessary to avoid prolonged pain. Elsewhere in the conversation, the speaker mentioned a book he's writing based on financial commandments. The book, which is nearing completion, will offer advice for high-earning young professionals. One of the tenets is not to invest in things one doesn't understand, a lesson that remains relevant in today's volatile markets.
Tropicana's New Cereal and Outset Medical's Earnings: Tropicana introduces a new cereal, Tropicana Crunch, designed for pairing with orange juice. Outset Medical reports a 33% revenue growth rate and projects full-year revenue between $144 and $150 million, with a new cartridge production source.
Tropicana is trying to innovate by creating a new cereal, Tropicana Crunch, designed to be paired with orange juice instead of milk. While the idea is clever, the hosts of Motley Fool Money were not impressed with the taste and expressed their doubts about the product's success. However, Tropicana seems to be hedging its bets with this unconventional breakfast offering. In the business world, Jason Moser is bullish on Outset Medical (OM), a company specializing in dialysis with a simplified Tabletop hemodialysis system. The company recently reported earnings with a 33% revenue growth rate and projects full-year revenue between $144 and $150 million, representing a 43% growth at the midpoint. Outset Medical is expanding its in-home presence, which aligns with the trend towards healthcare in the home and virtual healthcare. Additionally, the company recently announced a new source for cartridge production.
Young companies like Outset Medical face stock price volatility on the path to profitability: Outset Medical's stock price may be volatile as it grows, while Domino's current challenges offer potential value for investors at lower valuations
Young companies like Outset Medical may experience stock price volatility as they work towards gaining market share and profitability. Meanwhile, established companies like Domino's, despite recent challenges, can offer value to investors at more reasonable valuations. During the show, the hosts discussed the recent developments and their investment outlooks for these companies. Outset Medical, a young company in the dialysis space, has seen recent good news not fully reflected in its stock price. Dan Amoss pointed out that this is common for young companies and suggested that investors should expect volatility as the company grows and works towards profitability. Domino's Pizza, a longtime favorite of Ron Gross, has faced challenges due to the waning effects of COVID-19. The company is shifting its focus to carryout and expanding driver hours, which has led to a decrease in stock price. Despite these challenges, Ron remains a believer in the company's fundamentals and sees the current valuation as more reasonable than before. Dan Amoss shared his skepticism towards Domino's pizza, jokingly commenting on the company's past ad campaign and the perceived quality of their product. However, he did not mention adding Outset Medical to his watchlist during the conversation. Overall, the hosts discussed the investment opportunities and challenges presented by these companies, providing valuable insights for listeners.
