← The Rundown
The Rundown
AMD Earnings Fail to Impress, Novo Nordisk Cuts Outlook Amid Obesity Drug Pricing Pressure
00:08:48
Loading summary
Transcript1 lines
- [00:00]
A
Public.com presents the rundown, your daily market update in under 10 minutes. My name is Zadod Mani and Today is Wednesday, November 5th. In today's episode, we'll tell you why the markets are selling off. We'll also recap earnings from amd, Novo, Nordisk and more, then stick around to the end of the show to find out about the surprising economic impact of marathons. We got a great show for you today. Let's go. Markets took a dive on Tuesday. The S&P 500 dropped 1.2% and the NASDAQ lost 2%. Tech stocks dragged the entire market down yesterday. Six of the seven Magnificent Seven stocks were in the red, with Apple as the only one in the green. Other notable losers from yesterday include palantir, which dropped 8% despite reporting solid earnings with we actually covered those earnings on yesterday's show, so go check that out if you missed it. And look, it wasn't just tech stocks taking a hit yesterday. Crypto continued to slide. In fact, at one point, Bitcoin dropped below $100,000, which hasn't happened since May. So yeah, yesterday was brutal. Stocks, crypto, everything was down. In fact, stocks haven't had a down day like that since early October when President Trump threatened China with even more tariffs. But unlike that time, there wasn't one major headline triggering the loss this time. Now I think there's just growing concerns around the AI hype and the valuations being a little too froth. So we're starting to see a pullback. Now we'll have to see if this is a temporary pullback or a start of a long term sell off. Let's see if the markets bounce back this week. We're going to be keeping an eye on all the moving pieces. There's still a ton of earnings to talk about as well, so make sure you guys are subscribed to the podcast and tuning in every day to stay in the loop. Let's run through some headlines, starting with amd. AMD reported big numbers in their earnings report last night, but investors weren't that impressed. The numbers were pretty good. Sales in Q3 were up 36% year over year to $9.25 billion, beating Wall street estimates. And the company's data center business, which makes its AI chip, saw revenues jump 22% to a record $4.3 billion. But despite the solid revenue numbers, AMD stock dropped 3% following the earnings. And I think it's for a couple of reasons. For one, AMD's profits came in at $1.1 billion, which was lower than expected. And the margins in their data center segment dropped to 25%, which is, which is down from 29% last year. So chip maker missed on profits and they're having shrinking margins. Probably spooked investors despite the strong revenue growth. Also, AMD stock has already doubled this year. So I think investors wanted to see a strong earnings beat, which AMD didn't really do. Now AMD still expects sales to continue to accelerate. They expect $9.6 billion in revenue in the current quarter, which is ahead of Wall street expectations. And it's a sign that the AI demand is still going strong. CEO Lisa Su told investors she expects AMD's AI business to generate tens of billions of dollars a year by 2027, backed by the massive deals they signed with OpenAI and Oracle a couple of months ago. Also outside of AI, AMD is still crushing it with their PC and gaming division. Their client and gaming segment jumped 73% to $4 billion. But yeah, I think the reaction from the market to AMD's earnings could be another sign that investors are starting to finally come out of their AI trends and are starting to look at the valuations quickly of these AI companies. We saw it with Palantir yesterday, they crushed earnings, the stock still dropped 8% and now we're seeing it with AMD. So definitely going to be watching this now. Could be a sign that the tides might be turning when it comes to the AI story. Let's shift gears and talk about Novo Nordisk. The Danish pharma giant reported earnings this morning and they lowered their full year sales and profit guidance, blaming growing competition in the weight loss drug market and pricing pressure from the US government. Sales of their blockbuster obesity drug WeGovy climbed 18% last quarter to $3 billion, but that did miss analysts estimates. Now the company did beat on overall earnings, but they narrowed their annual sales outlook for the fourth time this year and a part of the pressure on their business is coming from Washington D.C. according to the Washington Post, the White House is closing in on a deal with Novo Nordisk and Eli lilly to cap GLP1 drug prices for Medicare patients at about $149 a month. Right now WeGovy costs around 13 $50 per month. So this would be a massive discount and a massive hit to their profit margins if it goes through. Now as Novo Nordisk is dealing with all this in their business, they're also in a bidding war with Pfizer to take over the weight loss drug maker Medsara. Novo Nordisk has raised their offer to buy the company for $10 billion, which tops Pfizer's $8 billion bid. What's wild is that Medcera doesn't even have an approved drug on the market. Now. They are working on a variety of weight loss drugs, but as of right now, nothing is on. I think Novo wants to take them over so Meter doesn't become another competitor they have to deal with in the weight loss space. So, yeah, Novo Nordisk has a lot going on right now. They're dealing with falling drug prices, more competition in the weight loss space, a new CEO, and a multi billion dollar bidding war. Investors are a bit nervous. Nova Nordis stock is down around 2% this morning following the earnings and it's down more than 40% for the year. Let's talk about some stocks making moves today. Rivian stock is up this morning after the EV maker beat on both top line and bottom line in their Q3 earnings. The company actually posted a surprise gross profit for the second time this year. Now what's interesting is that the profit was mostly fueled by its joint venture with Volkswagen, which focuses on in car software and digital systems for Volkswagen's next generation vehicles. Rivian's automobile side is actually still losing money. They lost about $130 million in Q3, but the company is working toward the launch of the R2 vehicle next year. But yeah, it seems like Rivian might be quietly pivoting from a car company to a software business. Software business is doing what their car business can't, which is actually making a profit. Investors seem to be somewhat excited about this Pivot shares are up more than 4% this morning at the time of this recording. Now on the flip side, Pinterest stock is getting cooked this morning after the company missed earnings expectations and issued weak guidance moving forward. Their adjusted earnings came in at 38 cents per share, short of the 42 cents estimate that Wall street was expecting while revenue was in line at $1.05 billion. Now on the bright side, the Pinterest did hit 600 million monthly active users, which is more than expected. But clearly they're not monetizing the growing user base very effectively. Now management says they have a plan that they're leaning into the AI powered shopping assistant strategy, whatever that means. They're saying that those investments are paying off, but right now investors aren't buying it. Pinterest stock is down nearly 20% this morning in reaction to these earnings. Let's wrap the show with the fun fact. About 59,000 runners participated in the New York City Marathon this past weekend, which is the most runners for any marathon ever. And the reason I bring this up is because the economic impact of the marathon is actually pretty significant. For one, each runner has to pay like $300 just to sign up. That's what, $17 million right there in signup fees. And then you add in all the out of town visitors, the hotels, the foods and shopping. The overall economic impact is more than $700 million to New York City. On top of that, the marathon also supports more than 5,000 jobs and raises tens of millions of dollars for charity. So, yeah, the New York City Marathon is pretty big business. Shout out to all the marathon runners, especially Kevin, who runs these socials for the rundown. He ran the marathon this past weekend. And then Connor, he ran the marathon last year. You know, every time I think about running the marathon, I say, see how much pain the runners are in the following day. And yeah, I think I'm totally out. I don't think I'm gonna be running a marathon anytime soon. If ever. Paying 300 bucks to not walk for a week. I don't know if I want to sign up for that. Well, all right, guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like five extra seconds, consider giving us a five star rating on Apple, Spotify, YouTube, wherever you listen to your podcast. And if you are listening on Spotify, don't forget to vote in today's Spotify poll. Leave us a comment on Spotify. All that engagement really does help us out and it helps other people find the show. Now, I'm still in New York for a couple more days. I got a chance to hang out with Mike and Connor at the public offices yesterday. Shout out to them for taking me to a fantastic pizza spot last night. But yeah, you're going to get a couple more hotel room episodes, but should be back to normal on Friday. Thank you guys again for listening, watching and commenting. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here tomorrow.