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- [00:02]
Ann Barry
Hear that?
- [00:02]
John Croteau
That's me in Tokyo, learning to make sushi from a master. How did I get here? I invested wisely. Now the only thing I worry about is using too much wasabi. Get where you're going with spy, the world's most traded etf. Getting there starts here with State Street Investment Management.
- [00:18]
Ann Barry
Before investing, consider the fund's investment objectives, risks, charges and expenses. Visit state street.comim for prospectus containing this and other information. Read it carefully. Spy subject to risks similar to those of stocks. All ETFs are subject to risk, including.
- [00:28]
John Croteau
Possible loss of principal Alps Distributors Inc.
- [00:30]
Ann Barry
Distributor Uber reports record ridership but doesn't deliver on earnings we go through the numbers that sent the stock on a bumpy ride. One listener writes in asking why Monster Beverages has been on a tear. We break it all down and OpenAI spun up the tech trade is anthropic, the stone that cracks it for Wednesday, February 4, it's blue markets Daily, and I'm Ann Berry. Foreign. Details to come. But first, NASDAQ has had a week and it's only Wednesday, down 2% today, sliding 4% over the past five days and in the red year today. Now, they may not sound like huge percentages, but to our eyes it's representative of the irony of the phases of the tech trade and the volatility around this isn't going anywhere. We wanted to dig in before even more waves of commotion kick in. Well, OpenAI was instrumental in kicking off the incredible run in tech stock prices we've seen in the past few years. We all know that, capturing the imagination of both the companies and individuals looking to try to unlock the promise of chat GPT after it was launched in November 2022, it was the moment when generative AI came to the fore. Well, with that, we've seen, of course, the rise of chip data center, hyperscaler and energy stocks. And commensurate with that, we've seen the decline in share prices of software companies, most obviously at risk of displacement. That includes the likes of Adobe, which has lagged as Canva and Sora has bitten at its ankles, snowflake and C3AI dropping as the likes of Palantir saws that one in particular pushing beyond government contracts and into commercial applications. And while OpenAI has been dominating the headlines, I can't think of how many times on this show we've talked about the seeming lack of effort it has had to deploy. It's obviously hard work, but it seemed effortless just collecting check after check in sort of $10 billion slugs from blue chip public tech companies lining up to invest in it. Well, Anthropic and Gemini for that matter, has a little more quietly been working to disrupt the disruptors. Anthropic's rollout of new CLAUDE tools has been adding fuel to the fire of investor concern about the state of those software staples. Now, conventional wisdom has been that niche data management software companies like Legal Zoom are attractive cash flow machines, that they're protected or they're MO by the depth of their domain. In this case legal industry with sticky subscription models, meaning recurring revenue, and with upside to it if internal innovation drives either pricing or volume growth. But the new highly effective legal plugin for Anthropic's coworker system, which has been unveiled in recent weeks, is just one example of how CLAUDE is throwing that kind of thesis on its head. That has hit Legal Zoom stock hard, as well as those of data gathering companies like MSCI and FactSet, a slew of consultancies that companies typically employ to bring in to help them with data conversion and now even the bonds of software companies as lenders worry that the cash flow that was set to service debt is now in fact at risk. Now $300 billion of market cap was wiped from the sector yesterday. We've seen more declines and this is really why this is catching our eye. It's not just about whether the AI trade or the software trade is going to break, because at the same time as all of this is happening, we're seeing an incredibly stark contrast from dozens of other kinds of stocks which have hit intraday 52 week highs today and the market's not even closed yet. Well, that includes Walmart, Johnson Johnson, ExxonMobil, Caterpillar, Defense Business, RTX. Making it look as though when it comes to where the market is hunting for value, we boring is back. We're going to keep on watching. Coming up, Uber says it's positioned to win in the future of autonomous vehicle ride sharing. Wall street doesn't seem convinced. We're going to take a look at today's earnings. Plus we dig into the monster performance of the shares of Monster Beverage and more. But first, a word from our sponsor, iherb. John, what do you prefer? Mystery meat or meat from an organic farm that you know has high standards?
- [04:51]
John Croteau
Obviously the latter.
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Ann Barry
Well, do you hold your supplements to the same standards?
- [04:55]
John Croteau
I've never thought about it, but I guess not.
- [04:57]
Ann Barry
Well, you should. It's why Iherb buys direct from manufacturers and trusted distributors to ensure authenticity. No third party resellers allowed you can finally 2000 brands and tens of thousands of products to choose from on ihub.com what you won't find hidden membership fees. They make wellness accessible globally shipping to over 180 countries while accepting 80 plus currencies and more than 40 payment methods.
- [05:21]
John Croteau
Plus their eye tested products are continuously tested for purity and quality standards. Stock up on supplements from a trustworthy Source. Go to iherb@iherb.com that's iherb.com well, shares.
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Ann Barry
In Uber were down over 7% this morning. They've been jumping around after quarterly results that saw a leg up in revenue and record trips with 200 million monthly users completing more than 40 million trips every day. But earnings fell short of expectations and there was a disappointing outlook, although we can debate whether those expectations were high, resulting in the stock on a whipsaw ride today. Well, we're going to get into where Uber sees its future going, but first let's go into some numbers from the earnings report.
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John Croteau
That's right, Uber Technologies ticker Uber on the New York Stock Exchange market cap of $150 billion shares have been up 3% over the past 12 months. And from the report today, adjusted earnings per share of $0.71 as you mentioned fell short of $0.85 that the analysts have predicted. Hurt by a large change. Hurt by large charge tied to its equity investments. And the company reported revenue of $14 billion which just narrowly beat estimates. But here's the thing. Look at guidance 65 to 72 cents going forward in this quarter. Analysts had been expecting 81 cents. So that's a miss. And let's just go over some of the segments. The the company has three segments, mobility, delivery and freight. I'm going to start with the one that had the biggest growth and that's delivery. With Uber eats revenue up 30% to nearly $5 billion. And Uber Eats started with restaurant delivery and now includes groceries and retail with the super bowl coming up next week. It reminds me of the Uber eats ads from 2022 with Jennifer Coolidge and Nicholas Braun ordering and eating non food items like lipstick and candles with the tagline now delivering eats and don't eat.
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Ann Barry
I liked that. You remember the super bowl ads from last year? Didn't one have Victoria Beckham and David Beckham in it? Do you remember this?
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John Croteau
Yes. Has been a big super bowl advertiser for sure.
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Ann Barry
Yeah, it's really interesting to see how some of those stick. Well, delivery growth is a global phenomenon. We've seen it do well especially in Europe, the Middle east and Africa. We've also seen Uber partner in the United States with Shopify to offer one hour, same day or scheduled local delivery on products purchased through the Shopify platform. Proving that Uber can actually add value as some of the digital and E commerce players try to go head to head with the larger retailers with more of a physical footprint. Just one thing before we go into autonomous ride hailing, which did get a lot of attention today, I just wanted to talk, John, about something that you touched on up front. You said that adjusted earnings per share of $0.71 came in below expectations in part owing to large charges tied to its equity investments. I just wanted to dig in on that just a little bit more. It's so interesting because Uber, like many other tech companies, has taken equity stakes into startup businesses. If you take a look back to see what Uber's invested in, Lucid is one example of that. And so it just goes to show that one of the reasons why investors sometimes push on the size of investments made off the balance sheets of tech companies is it can create some of the volatility and the noise that you just flagged there. So interesting to see how that continues to pan out. Well, let's go back to Uber's original segment in mobility. That's ride share revenue is up 19% to just over $8 billion. Bookings up commensurate with that around 20%. But as we know, there's a narrative here which is Uber is trying to transition itself to be a player that goes beyond ride hailing to being a in robo taxis and autonomous vehicles. We have seen increased competition in this space. It's a big one. It could be a multi trillion dollar market. But we're seeing Waymo, for example, grab a lot of mind share in this one. Uber executives saying they're ready for battle, they're primed and ready to go. Saying that overall chip growth significantly accelerated in Atlanta and Austin, which is where Uber does offer autonomous rides. So they're sticking to their script on this one.
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John Croteau
They're sticking to the script and they are partnering. And that was part of what you said with the investments that they made. They are partnering Waymo in certain markets and Alphabet supplies the cars and tech. Alphabet obviously owns Waymo and Uber handles the fleet logistics. And by the end of this year, Uber is expecting to do more AV trips in 15 cities globally. Houston, LA, London and Hong Kong. That was the talking point today where I saw everywhere the executive saying we're going to keep these AV rides coming.
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Ann Barry
You know, once you actually start talking about Something you suddenly see it. It's like when you meet someone, if you never met them before, they live in your building and you meet them now. You see, every day I feel as though when I walk around New York, I'm just. Whether it's Waymo vehicles or others clearly scanning the streets, you know, the cars have got lots of visible sensors and things, cameras on them. I just feel as though everywhere I walk around the city now, all I see are sort of robo taxis or preparatory vehicles looking to pave the way for more of these to come into the mainstream. Well, this morning, Uber CEO did make the rounds. Saw him all over telly over the course of today. He did try to emphasize the following. Look, there was record free cash flow for the quarter of $2.8 billion. That the investment in the AV build out is something that again, strategically thinks is very important. Issued a quote, position us to win the AV future press release. And then the other thing sort of related to that, he did say, look, profitability, which of course drives that free cash flow generation up 35% year over year. So I'm sort of sympathetic to his frustration that with this kind of set of results, the stock didn't get a more favorable reaction.
- [10:59]
John Croteau
And I just wanted to say, as a user of Uber, you're also saying you start seeing these things. Yes, as a user, I see in the app the things that they're trying to push. One is a feature called wait and save, where you can wait a few minutes and get a cheaper car. And the incoming CFO of Uber pointed out that they're trying to get customers on the low end for this wait and save. Maybe they're less money to spend, but also they push the xxl, really nice Escalade cars that can pick you up. So they're trying to get Uber customers at every price point. And the third segment freight we talked about, that's relatively small, it brought in about $1.2 billion in the last quarter. But I used it on New Year's Day, had a New Year's Eve party.
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Ann Barry
Did you?
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John Croteau
And someone left their phone at my house. It was a great party. That's how good it was.
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Ann Barry
Yes.
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John Croteau
And the next day, instead of anyone having to get up and bring the phone somewhere, we used Uber Freight, which was just an Uber coming to my place. Yeah, I put the phone in the backseat and the phone was delivered to my friend.
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Ann Barry
No issues.
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John Croteau
No issues.
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Ann Barry
No issues.
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John Croteau
And at a fraction of the price, the ride for a human would have been maybe $30, and it was five and a half dollars to send this phone.
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Ann Barry
Oh, interesting.
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John Croteau
So anyway, that's another part that they.
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Ann Barry
Might be expanding that's maybe I can send myself as a Uber freight. How do they distinguish it?
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John Croteau
You know what I mean?
- [12:16]
Ann Barry
I'm like kind of little. I think that's John is dying laughing for those if you can't see him in, which is, yeah, I'm going to Uber Freight myself. Well, the outlook, again, is something that the market was hyper focused on. We've seen this. So let's see what Uber actually said about it. Staring into its own crystal ball. For the current quarter, Uber did forecast gross bookings of between 52 and 53 and a half billion dollars, which was actually better than Wall street models, which came in at just over 51 billion. But again, the adjusted earnings outlook did come in below estimates. Also because the company is just having to invest a ton behind some of these growth initiatives. One thing to look out for, rival Lyft is expected to report earnings next week. Now, I got to tell you, John, as you were detailing some of the initiatives that Uber is really pushing, I've seen those on Lyft a lot already, including the wait and see, which I use a lot, partly because I find the pricing so offensive sometimes that I'm just like, wait and see is the only way that it actually is compelling enough. But rival Lift is also doing things like expanding on its offering for teenagers to try and get parents comfortable that their children, their teenage children are going to be able to ride safely. And we had the Lyft CEO David Risher on our sister podcast after earnings May remember this, and we talked about how he wanted to put his mother and my grandmother safely into rideshares. And so having things like bigger font on the app to try and expand the palatability of these apps to different demographics. So lots and lots going on. I've got to tell you, I find Uber fascinating. I'm starting to really become mesmerized by the different tentacles it's got in different kinds of businesses far past.
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John Croteau
Just rideshare?
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Ann Barry
Yeah, absolutely. I mean, it's been doing, I know, for a long time, but I feel as though the way in which it's, I think it's picked up the pace and experimentation and it's, it's, it feels more Amazon like these days actually, in terms of the willingness to try things out and then let it go if it's not quite working. Well, let's take a quick break and when we come back, a quick spin through the headlines. Moving the markets today as well as a breakdown of what is going on with Monster Beverage. In response to a question From a listener, Public.com just launched generated Assets, which helps you turn any idea into an investable index. With AI. Start with any prompt say renewable energy companies with high free cash flow or semiconductor suppliers growing revenue over 20% year over year and it'll get to work.
- [14:35]
John Croteau
The AI can screen thousands of stocks and we'll build you a one of a kind index and lets you back test it against the S&P 500. Then you can invest in just a few clicks.
- [14:43]
Ann Barry
Just head to public.com brewmarkets to see it in action. That's public.com brewmarkets paid for by Public Investing. Full disclosure in Podcast Description John, we have a question from the audience.
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John Croteau
That's right, tyler wrote. With the changes in the food and beverage industry, I think it would be really interesting to look at Monster Energy. The stock has had a real run. What are they doing that's working so well?
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Ann Barry
The timing is impeccable because looking at Monster also is worth doing in the context of what's going on with Pepsi, which reported well, Starting with this 1 ticker MNST, the stock trades on the Nasdaq and Monster has a market cap of a whopping $80 billion, closing in on $8 billion of annual revenue. It's easy to forget just how large some of these consumer packaged goods companies are. Well, first and quick context. Who haven't heard of Monster Beverage before? The company primarily makes energy drinks, including its eponymous Monster brand, as well as others like Relentless Rain and Burn. Fantastic names, by the way. But it also has craft beers, hard seltzers and flavored malt beverages in its portfolio, with brands such as Dallas Blonde, Wild Basin and this one's particularly interesting, Nasty Beast Hard Tea. And Monster's reach is enormous. It sells products in more than 140 countries. Well, the history of Monster is pretty interesting for those of you who, like me, may like corporate origin stories. It was originally founded as Hanson's in 1935, selling juice products, and the company renamed itself monster beverage in 2012. Well, a transformational moment came in 2015, and this is really interesting. And that's when the Coca Cola Company transferred ownership of its worldwide energy business to Monster, which in turn transferred its non energy brands to the Coca Cola Company. And as part of this deal, Coca Cola paid monster over $2 billion in cash, became its preferred global distrib partner. It's quite a partner to have in your corner and crucially received an equity stake in the business. So roll forward to today. And Coca Cola still owns about 20% of Monster shares. So it has a huge say over major decisions. For example, in the event that Monster ever wanted to do a transformational acquisition. Now Monster has also outsourced much of its manufacturing to external partners, so it can focus instead on product innovation and brand development, something which has resulted in what is called an asset light model. Relatively speaking, it's spending low capex compared to what you might expect for a business that's making such a physical product. And as a result it's thrown off a lot of cash each year. So the way in which this is translated into the stock price performance is that cash is queen. The market always likes it. And Monster share price is up more than 85% over the past five years, more than 30% over the past six months alone. It has outperformed the broader beverage sector. And here are a couple of nuggets as to why. Well, first of all, revenue growth has been pretty steady. And in the most recently reported quarter those earnings came out in November hit 15% year over year. And that's even after stripping out currency benefits. Now Wall street analysts from the likes of Morgan Stanley and Goldman Sachs are bullish on Monster's future position in what is the growing non alcoholic beverage category in the United States. Something by the way, that Pepsi identified as a growth market for that company. Also just showing that a rising tide lifts or ships moment here. Now Monster is getting particular kudos for its focus on product innovation. Lots of positive noise around the way in which its product development cycle has been reduced in terms of the time it takes. And also it does seem to have opportunities to take share internationally, particularly in emerging markets. And of course part of the secret sauce here is the support of that partner and strategic investor, Coca Cola. Now, when it comes to profits, there's been good news there too. We've seen margins ticking up. Gross profit as a percentage of net sales for the 2025 third quarter increased over 55%. That's up 200 basis points from a year earlier, mainly because the company has been able to raise prices, proving its value proposition. It's had supply chain initiatives that have been beneficial and also product sales mix has been its side. All of which has helped to offset higher promotional allowances. It has spent more on marketing and tariffs that have caused increased aluminum can costs. So all of that drawing breath now because there's been a lot going on, we can see why Monster stock hit multiple 52 week highs in January. But and there's always a but because two sides always make a market. Valuation has been up as a result. So not everyone on the street is as bullish on this as you might think. The price to earnings ratio that the stock has been trading at has been above historical averages, which suggests that investors are pricing in future growth quite aggressively already. And that is why all eyes are on the earnings report due out from Monster later this month, because that is when the team over at Monster will basically update the market on how it's executing, on whether it's delivering against these high market expectations. And one of the things that John and I have talked about a lot is what is the guidance they give for the rest of the year, something that the market is going to be critically, critically focused on. We'll keep on watching. Well, it's 4pm on the east Coast. The markets have closed and we don't have a ticker tape. So let's throw it over to our human ticker, our producer John.
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John Croteau
The S&P 500 finished down half a percent. The Dow finished up half a percent and the Nasdaq ended the day down 1.5%. Some market headlines, shares in Eli Lilly ticker LLY were up over 10% today on a strong quarter that saw revenue bulge over 42% year over year, driven mainly by demand for its popular weight loss drugs Zepp Bound and Manjaro. And MGM Resorts International ticker MGM rose nearly 9% after strong results from its joint venture BetMGM, which reported 2025 net revenue revenue of $2.8 billion, up 33% year over year. And finally, shares in match group ticker MTCH were up over 5% after the company reported earnings that beat estimates even as the dating app issued soft guidance while ramping up spending on AI to rekindle growth in its Tinder brand. And before we go, we've got some great guests coming up later this week I wanted to flag tomorrow, Ann will be joined by Mark Kirkham, the chief marketing officer at PepsiCo Beverages US he's going to give us some context around the brand's super bowl spend. Then Friday, this is one you really won't want to miss. Kathy Lean will be here in studio for a breakdown of what's happening with the valuation of the US Dollar, its worldwide effects and what it actually means for investors. Kathy has a stellar background in forex trading and great energy. She's going to get us there. So looking forward to those conversations. But for now, that's all for today's Brew Markets Daily. Brew Markets Daily is hosted by Anne Barry and produced by John Croteau, Tarkab Delatif, Olivia Graham and Emily Milian. Our technical director is Uchena Wogu. Jim Orzo is our audio engineer. The president of Morning Brew, Inc. Is Devin Emery. If you have a question for Ann or a company you'd like us to COVID leave a message or send an email to brewmarketshoworningbrew.com and don't forget to wake up tomorrow with the Morning Brew newsletter and tune in to Neil and Toby on Morning Brew daily. See you back here tomorrow. Same time time, same place.