Podcast Summary
US Economy Adds 531,000 Jobs in October, Unemployment Rate Drops to 4.6%: The US economy added over half a million jobs in October, unemployment rate decreased, and wages increased. Despite concerns about inflation and labor force participation, the stock market reacted positively.
The US economy showed signs of improvement in October with the addition of 531,000 jobs and a drop in the unemployment rate to 4.6%. This report was met with positivity from the stock market as investors hope for progress in resolving labor shortages and supply chain issues. The leisure and hospitality sector led the way in job growth, and wages saw a year-over-year increase of 4.9%. However, there are still concerns regarding inflation and the labor force participation rate, which remains below pre-pandemic levels. The market reacted favorably to this news, with the Dow, S&P 500, and Nasdaq all hitting new highs. Effective communication skills are crucial in business and life, as highlighted on the Think Fast, Talk Smart podcast, where experts share tips on making small talk, managing anxiety, and taking risks in communication.
US Stock Market: Small Cap Sector Rebounds as Economy Reopens: US small cap stocks are rebounding as the economy reopens, with companies like Booking Holdings and Airbnb reporting strong Q3 earnings and revenue growth. The Fed's decision to taper bond purchases also signals a shift towards a more normal economic environment while keeping interest rates low.
The US stock market, particularly the small cap sector, is showing signs of a cyclical rebound as the economy begins to reopen. This is reflected in the strong performance of companies like Booking Holdings and Airbnb, which reported higher-than-expected profits and revenues for the third quarter. The Fed's decision to begin tapering its monthly bond purchases has also contributed to the market's strength, as it signals a shift towards a more normal economic environment while keeping interest rates low for the time being. Booking Holdings reported a rebound in travel demand, with gross travel bookings up 77% to nearly $24 billion and room nights booked up 44%. The company's revenues more than doubled from the previous quarter, driven by strong growth in agency, merchant, and ad revenues. Airbnb, meanwhile, saw record revenue, revenue growth, and host earnings, with gross bookings up almost 50% from the same quarter two years ago. The company is seeing growth in stays on Monday and Tuesday nights and outside of major markets, as travelers seek out alternative destinations. Despite these positive signs, it's important to note that both companies are still down from their pre-pandemic levels. However, their strong earnings reports suggest that consumers are starting to return to the travel marketplace, boding well for the industry's recovery.
Airbnb thrives amidst challenges while Peloton struggles: Airbnb, valued at $110B, innovates and grows despite market challenges. Peloton faces weaker demand, lower prices, and higher expenses, leading to losses and reduced revenue guidance.
Airbnb and Peloton had significantly different quarterly performances. Airbnb, with its $110 billion valuation and improving profit picture, continues to innovate and grow, despite market challenges. On the other hand, Peloton faced weaker demand, lower prices, and higher expenses, leading to a substantial loss and reduced revenue guidance. While Peloton's stock drop could present a buying opportunity, the company's own outlook suggests challenging quarters ahead. Meanwhile, MercadoLibre reported strong profits and payments volume growth, with shares up 9% this week.
MercadoLibre's Strong Quarter and Zillow's Setback: MercadoLibre experienced growth in active users, gross merchandise volume, and revenue, with mobile transactions increasing by 32%. Zillow announced the shutdown of its home buying business, resulting in significant losses and layoffs.
MercadoLibre had a strong quarter with significant growth in active users, gross merchandise volume, and revenue. Mobile transactions increased by 32%, and shipment and payments are driving stickiness to the platform. The company's credit portfolio also expanded, reaching 1.1 billion dollars in personal loans and credits for purchases. However, the stock has been flat for the year due to investments in acquisitions, network expansion, and shipping. MercadoLibre continues to be a long-term investment in the Latin American ecommerce space. In contrast, Zillow Group's quarter was a setback with the announcement of shutting down its home buying business and laying off 25% of its staff. The company is still valued at $16 billion, but the poor communication and handling of the situation resulted in significant losses and class action lawsuits. Zillow's problems with materials and labor capacity were more extensive than anticipated, leading to a wind-down that will take several quarters and a loss of over $550 million on homes bought. The unpredictability in forecasting home prices and the faulty algorithm used by Zillow added to the uncertainty surrounding the company's future.
Mixed Q3 results for Zillow and Pinterest: Zillow saw a 16% revenue increase and 130 million pretax profit, while Pinterest reported 43% revenue growth and a push towards commerce. Both companies continue to innovate, but concerns remain for Pinterest regarding home-related engagement and Bitcoin's impact on Square.
Both Zillow and Pinterest reported mixed Q3 results, with Zillow focusing on its legacy ad business and reporting a 16% increase in revenue and 130 million pretax profit, while Pinterest saw higher than expected profits and revenue despite a decrease in monthly active users. Pinterest reported revenue growth of 43% and a push towards commerce and out-of-home engagement, but the slowdown in home-related engagement remains a concern. For Zillow, the focus on its legacy business is not exciting from a growth perspective, with profits down 7% from last year. For Pinterest, the volatility surrounding Bitcoin's adoption and impact on Square's business remains uncertain, but overall, both companies are continuing to see growth and innovation in their respective areas.
The Next Evolution of the Internet: The Metaverse: The metaverse is a virtual environment connecting people, places, and things, merging physical and digital worlds, built upon Web 1.0 and 2.0 foundations, with examples in platforms like Roblox, enabling persistent content and merging digital and physical lives.
The metaverse is the next evolution of the Internet, connecting people, places, and things in a virtual environment that blends the physical and digital worlds. It builds upon the foundations of Web 1.0 and Web 2.0, which connected information and people, respectively. The metaverse is being constructed now, and examples of its development can be seen in platforms like Roblox, which offers community-driven virtual experiences. This future Internet will enable persistent content and be enabled by various technologies, ultimately merging our digital and physical lives.
Exploring the Future of Consumer Engagement in the Metaverse: Companies in fashion, entertainment, and tech are investing in the metaverse for immersive experiences, virtual spaces, and avatar customization, signaling a new era of consumer engagement.
Various industries, particularly fashion and entertainment, are increasingly embracing the metaverse, a virtual world where users can engage in immersive experiences. Companies like Roblox, Ralph Lauren, and Unity are leading the way, investing in virtual spaces, avatar customization, and underlying technologies. Metaverse projects, such as Gucci Garden and virtual concerts, offer a glimpse into the future of consumer engagement. Facebook, with its metaverse project and 10,000 new hires, is a significant player in this space. These developments suggest that the metaverse is becoming a key area for innovation and growth, as businesses explore new ways to engage with customers in virtual environments.
Companies exploring metaverse opportunities: Traditional tech giants and new players are investing in the metaverse, with potential roles for LIDAR scanning companies, hardware manufacturers, and social media platforms.
The metaverse, a virtual world where users can interact in a three-dimensional environment, is gaining attention from tech companies and investors. Companies specializing in LIDAR scanning for creating 3D assets, hardware manufacturers producing glasses, and social media platforms like Snapchat are potential players in this emerging market. Traditional tech giants like FAANG are also exploring their roles in the metaverse. Under Armour's recent earnings report showed growth in demand for their brands and improvements in their wholesale and direct-to-consumer businesses. Despite a slight decrease in their ecommerce sales, the average selling price increased, and promotions were fewer. This suggests that Under Armour's turnaround plan is showing progress. Stay tuned for more insights on investing ideas from Andy Cross and Ron Gross.
Under Armour and Etsy report stronger-than-expected Q3 results: Under Armour saw growth in North America and Etsy continued sales success, but PayPal faced a setback with eBay's transition away from its payment platform. All three companies remain optimistic about future growth.
Both Under Armour and Etsy reported stronger-than-expected third quarter results, with Under Armour experiencing significant growth in North America and Etsy seeing continued success despite cautious holiday quarter guidance. However, it's important to note that Under Armour's growth was driven largely by the recovery of its brand, while Etsy's growth was fueled by the anniversary of pandemic-driven sales. PayPal, on the other hand, faced a significant setback with eBay's decision to transition away from its payment platform, resulting in an 8 percentage point decrease in payment volumes. Despite this, all three companies remain optimistic about their future growth prospects.
PayPal's failed acquisition of Pinterest and Axon Enterprises' growth: PayPal continues expanding in ecommerce despite failed Pinterest acquisition, while Axon Enterprises grows in security solutions and evidence management platforms
PayPal's failed acquisition of Pinterest serves as a reminder of eBay's size and influence in the ecommerce space. Although the deal didn't go through, PayPal is expected to continue expanding its brand and business into various parts of the ecommerce platform. Meanwhile, Axon Enterprises, a company that develops, makes, and sells conducted energy weapons under the Taser brand, is a dominant player in the space and is seeing significant growth. With a focus on transparency and the need for security solutions, Axon's business is expanding beyond its core taser and body cameras into cloud-based evidence management platforms. As for Titan International, despite a recent downturn, the industrial wheels and tires manufacturer showed promising signs in its latest quarter with strong sales growth in agriculture and earthmoving segments. These developments suggest that both PayPal and Axon Enterprises are well-positioned to capitalize on emerging trends in their respective industries.
Titan International's Expected Full Year Adjusted EBITDA and Market Potential: Despite financial concerns, Titan International's expected full year adjusted EBITDA of over $100 million and market potential in farming, earth moving, and construction make it a relatively inexpensive investment. Axon is also recommended due to its potential value.
The company discussed, Titan International, is expected to have a full year adjusted EBITDA of over $100 million, making it relatively inexpensive considering its market cap of $500 million and the debt of $450 million. Although the balance sheet is a concern, the company's improvement in wheel technology, making them more round and efficient, is leading the way in the farming, earth moving, and construction segments. Another investment recommendation was made for Axon. Overall, the discussion highlighted the potential value of these companies despite their financial concerns.
