C (4:48)

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B (5:08)

Well, the markets drifted lower throughout the day on escalating tensions in the Middle east, with reports of Iran firing on a US Navy ship potentially putting a ceasefire in peril. Now some other major headlines that have been moving money. Shares in logistics companies fell today after E Commerce and Amazon expanded its own suite of logistics offerings called Amazon Supply Chain Services. The retailer announced it is opening that network to businesses beyond Amazon sellers. It will offer freight, distribution and fulfillment and parcel shipping to standalone customers like 3M and Lands End. The move will turn Amazon into a major competitor for parcel carriers and air freight companies and also impact truckers and third party brokers.

C (5:51)

And we saw that impact immediately today. Shares of FedEx and UPS dropped around 10% and trucking firm Old Dominion Freightline fell more than 6%. Amazon has been steadily building its own delivery network. Last year, Amazon delivered more than a quarter of its U.S. parcels. FedEx and UPS combined for about a third. Here in Manhattan, the streets are already flooded with Amazon delivery trucks, carts and bikes. With this move, the company could also become the face of congestion.

B (6:18)

Shares in Amazon ticking up over 1%. And now to some earnings results. We saw shares of Norwegian cruise line ticker NCLH dropping around 9% after slashing its full year guidance.

C (6:29)

The cruise operator painted a bleak picture for the year ahead. Its CFO said the third quarter is expected to be significantly weaker than the second, with the consumer environment remaining pressured into the fourth.

B (6:40)

Aside from external factors that could be affecting sentiment on the sector generally, Norwegian acknowledged that it's got internal issues that include ineffective marketing efforts that haven't been driving sufficient demand. Norwegian said it plans to recruit new leadership to address those concerns. Meanwhile, over at Tyson, food ticker TSN reporting earnings this morning and it's become A Tale of Two Proteins. Shares gained around 5% after the food giant beat earnings estimates and raised its full year income forecast. Well, that strength is coming from chicken, specifically strong demand for nuggets and wings. Operating income in its poultry business leapt to $523 million.

C (7:19)

But on the flip side, soaring cattle prices continue to be a major headwind for the company and the industry at large. Tyson's beef Division posted a $240 million loss in its second quarter. I think of Tyson as a chicken company, Tyson Chicken. But both beef and poultry represent about 30% each of the company's revenue. Finally, shares in stablecoin issuer circle ticker CRCL jumped over 18% today. That's after U.S. lawmakers reached a consensus on a core question of the Clarity act, whether crypto companies can pay interest to users on stablecoins.

B (7:50)

Well, the updated language restricts firms from offering savings account like yields on passive stablecoin holdings, so they can't act like banks without being regulated like banks but it does stop short of a full ban, which means that users can still earn rewards through activity like trading and transacting. Well, the market had feared rewards might be banned completely, and this middle ground is seen as keeping stable coins like USDC somewhat competitive. Coinbase, the main distributor of Circle's USDC stablecoin, seeing its stock up around 7% today. Well, let's take a quick break and when we come back, shares in Roblox dropped nearly 20% after earnings. We explore the site's new safety measures driving some of that decline. Let's face it, major medical might not have been designed to cover everything, and unfortunately, sometimes all it takes is an unexpected medical or dental bill to throw your carefully curated financial world into disarray.

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B (9:39)

Well last week we saw dramatic moves in the share prices of two Internet platforms. Those are Roblox and Reddit, both built on user generated content. That's ugc, both with similar scale. But their earnings reports last week told very different stories. One stock got crushed while the other is rallying. So John, give us some context. Starting off with what's going on at Roblox.

C (10:03)

Yes, Roblox ticker RBLX on the New York Stock Exchange market cap of 34 billion. And like you said, it's a user generated gaming platform with a virtual economy with in game spending. And 20 years ago it launched with an aim at kids participating on that platform and the user base has grown up a bit over the years. But of the 132 million daily active viewers, over half the users are 16 or under. So it's still very youth oriented and the company is Rolling out age checks in order to use the chat features that they have on the website. And that goal is to limit chat conversations to only those within similar age and peer groups. But by the end Of March, only 51% of the worldwide users had undergone this age verification process, meaning half of the user base was unable to use Roblox as a social platform did not have access to that chat. And the players who chat spend as much as seven times more on the platform than those who don't engage.

B (11:00)

Got it. So less chat, more obstacles to chat. Less chat, less spend. And just side note, it's amazing that this started 20 years ago. I sort of forgot that Roblox had been around for such a long time. Right? So the company reported earnings last week. Revenue hit 1.4 billion, doll up nearly 30% year over year. But the problem wasn't the actual performance. The fact was that the revenue number and the hours engaged missed estimates all about how you do relative to expectations. And the company did cut its full year guidance as it expects, quote, safety headwinds to continue. There's one quotation from Roblox. They said, quote, while our aggressive push to enhance safety lowers our expectations for top line growth in 2026, it makes our platform fundamentally better. And this is one of these ironies of the market, right? Something that, quote, makes it fundamentally better sends roadblock shares down 18% right after that announcement.

C (11:53)

Yes, exactly. Investors are saying we may not value safety over the short term.

B (11:57)

Exactly.

C (11:58)

But we've been seeing this across the sector. Metta recently has been advocating for the safety on their platforms after a wave of lawsuits alleging its platforms harm children's safety and mental health. There was that recent case in New Mexico where a jury found that Meta misled users about risks and failed to protect minors. And we talked about this last week. Meta put numbers around it in its quarterly earnings. The company warned that these legal challenges, particularly around youth safety, could, quote, ultimately result in a material loss.

B (12:27)

So much going on when it comes to social media and these protection measures. But let's take a quick look at Duolingo just to sort of talk about how different growth strategies or analogous growth strategies can impact outcomes, perhaps in ways that aren't expected. Earlier this year, the CEO of Duolingo said that the Learning app would sacrifice near term revenue growth to improve the user experience. So this is not safety related, but it's much more about paring back certain functionality. And the idea was to drive long term user growth by scaling back ads that were impacting engagement. So again, shorter term Revenue growth coming down because that ad revenue gets capped in terms of ability to expand. But the idea being if it brings more users and over time that scale back more than pays for itself. Well, just to put some numbers around this, the share price went down of Duolingo over 20% in response to this. The stock is down 70% year over year and the Little Green Owl Company, the mascot, right Duolingo reporting earnings after the bell today. So we're going to be watching pretty closely for an update to see if that approach is paying off in longer term ways. Well, at roadblock, shares down 40% year to date. Some analysts saying it's a buying opportunity as an overall age of user keeps on ticking up and ultimately becomes able to spend more and to spend more autonomously. And so there is some bullish sentiment that in the long term the site could flourish as a social networking platform.

C (13:55)

And then meanwhile over at Reddit, the both companies announced earnings last week. Ticker RDDT on the New York Stock Exchange market cap, very similar to Roblox 32 billion. And Reddit saw its shares jump 12% after earnings last week. Revenue of 633 million was up 69% year over year. And this marked the seventh consecutive quarter for the social forum posting revenue growth above 60%. Those numbers are astounding. Adjusted earnings per share of A$1 nearly doubled what was expected.

B (14:27)

Well, let's talk about the actual user numbers. There are 127 million daily active users. That's up 17% year over year did beat estimates. So just to put that in context, coming in pretty close to Roblox as 132 million daily active users. Quite a different demographic though when you think about Reddit, a lot more adult on there as Redditors. And the headline is the growth in advertising revenue which Reddit saw up nearly 75% to hit $625 million. Now there had been concern that Reddit might see the same slowdown in monetization growth that Snap and Pinterest have been suffering from. And Steve Huffman, who's the founder and CEO of Reddit, said, and I'm going to read this out, Reddit is a one of one business powered by deeply engaged communities and authentic human conversation. That foundation is driving a rare comb combination of growth, profitability and efficiency and giving Reddit a unique advantage in the age of AI. So I think to encapsulate that authentic human conversation as a unique advantage in the age of AI, I think it's very well put actually. I enjoyed listening to that yes, absolutely.

C (15:34)

That's the advantage that Reddit has. But we've heard over the last two years as Reddit has cut deals with Google and OpenAI to harvest that conversation for the LLMs.

B (15:44)

Great point.

C (15:44)

Some of the users and moderators on the website have pushed back. They feel like they're being taken advantage of and monetized where this used to be a community, but these results are showing that the community is still flourishing. Despite that backlash, Reddit is still growing.

B (15:59)

Reddit versus Roadblocks different demographics, similar in scale, but very interesting to see how their lifecycles continue to pan out. We're definitely going to keep on watching those two. Well, it's 4:00pm on the east Coast. The markets have closed. There it is, the closing bell. And so while everything is wrapping up and we don't have a ticker tape, we'll instead throw it over to our human ticker, our producer John all the

C (16:21)

major indices finishing down for the day, the S&P 500 down 4.10of a percent, the Dow down over a full percent, and the NASDAQ finishing down 2.10of a percent for the day.

B (16:33)

Well tune in tomorrow for our Money Movers segment which is going to feature a conversation I'm having with Adam Pitty, the CEO of Vistashares. We explore the ETFs he's created specifically around the investing strategies of the three famous investors, Warren Buffett, Bill Ackman and Stanley Druckenmiller. With another one on the way. Really interesting conversation, great energy, fun insights. So come back and join us tomorrow. That's it for today's Blue Markets Daily.

C (17:01)

Brew Markets Daily is hosted by Anne Barry and produced by John Curto, Tarkabatif Avenue LaRoy and Emily Millard. Our Technical director is Luis Farias, Brittany de Taco is our audio engineer and the President of Morning Brew Inc. Is Devin Emery.

B (17:13)

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, same place.

E (17:24)

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