← The Rundown
The Rundown
Palantir Raises Outlook but Stock Tanks, Starbucks Sells 60% of China Business in Joint Venture Deal
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Public.com presents the rundown, your daily market update in under 10 minutes. My name is Zeydadmani and today is Tuesday, November 4th. In today's episode, we'll recap earnings from Palantir, Spotify and Uber. We'll also tell you about the move that Starbucks just made to save their business in China. Then stick around to the end of the show to find out what Nintendo is saying about the Switch 2. We got a great show for you today. Let's go. Stocks kicked off the week end the month of November on a positive note. The S&P 500 added 0.2% yesterday and the NASDAQ jumped more than half a percent. You know, it was another one of those days where more than 300 stocks in the S and P were actually in the red, but the overall index still finished in the green thanks to big tech stocks. Amazon stock jumped 4% yesterday, hitting record highs thanks to a cloud deal they signed with OpenAI. And Nvidia stock was up nearly 3%. We actually covered both those companies in detail on yesterday's episode, so go check that out if you missed it. Now I do want to mention crypto real quick. We haven't talked about crypto in a while, but the crypto markets have been taking a beating over the last month or so. Bitcoin has lost over 15 since early October and the price is now under 105, 000 for the first time since June and Ethereum is doing even worse with a price down over 20 past month. It seems like the crypto market is still a bit hungover from the early October crash, so I'm keeping my eye on it. We'll see if the markets turn around in the month of November. Now speaking of November, it's probably my favorite month of the year and the markets typically love it too. Over the past 30 years, November has been the best performing month for the S P with average gains of more than 1% and the NASDAQ sees average gains of nearly 2%. On top of that, in November you got Thanksgiving, which is the best holiday of the year. It's also my birthday month, which feels weird to say as a man almost in his mid-30s, but yeah, I got a lot to look forward to the month of November. Now I just took a peek at the pre market numbers. Not looking so great today, but I'll track it. Maybe I'll make a visit down to the New York Stock Exchange myself because I'm here in New York this week, so make sure you guys are subscribed to the podcast and tuning in every day to stay in the loop and follow us on Instagram because I'm gonna be hanging out with Mike and Connor. So we'll try to post some behind the scenes stuff on our Instagram stories. Let's run through some headlines, starting with Palantir. Palantir reported earnings last night and the company continues to put up impressive numbers. Q3 revenues were up 63% year over year to $1.2 billion and net profits topped $475 million. Both those numbers beating Wall street estimates and the cherry on top was the strong guidance. The company now expects to make over $4.4 billion in revenue this year. So yeah, Palantir seems to be firing on all cylinders right now. Their US commercial business more than double doubled to $397 million in revenue as more and more corporations start integrating. Palantir's AI tech and their US government segment grew by 52% to $486 million. Those government contracts are still Palantir's bread and butter, including the recent multi billion dollar deals with the army, the IRS and the State Department. Now there was some concerns that Palantir's business might take a hit from the government shutdown, which is now on its 35th day and 30 about to be the longest government shutdown in history. But that hasn't impacted Palantir's business so far. Again, Palantir raised their revenue forecast for the full year. Now the stock's reaction to this has been pretty interesting. Palantir stock initially jumped more than 4% right after the earnings came out last night, but now it's down more than 7%. You know, Palantir's valuation is nearly half a trillion dollars, which is pretty wild. And the stock has been on an absolute tear this year. It's up more than 170%. So, so despite the company beating earnings, I think investors were expecting an even bigger beat to, you know, justify that valuation. Let's shift gears and talk about Starbucks because they are teaming up with a local Chinese investment firm to turn around their struggling business in China. The coffee giant announced a joint venture deal with Boyu Capital, giving Boyu a 60% stake in Starbucks China operations while Starbucks will keep the remaining 40%. On top of that, Starbucks is getting $4 billion in cash from Boyu in exchan for rights to use Starbucks brand and intellectual property. Essentially, Starbucks is handing over the operations of their 8,000 locations in China over to Buyu, and the plan is that Boyu will take over and use Their expertise of the Chinese market to improve operations and expand locations to over 20,000 over time. Starbucks says this deal could ultimately be worth $13 billion. Factoring in Boyu's investments, licensing fees, and their 40% equity stake. You know, China is Starbucks second largest market. It makes up nearly 20% of the company's global locations. But growth there has been flat recently. In fact, same store sales in China dropped 1% last year, while local rivals like Luckin Coffee has exploded with more locations and cheaper options. So Starbucks is hoping that boy, you can come in and turn things around and make them more competitive compared to Luckin Coffee. Personally, I'm a bit skeptical. I mean, Luckin Coffee's essentially taken over China and other parts of Asia for that matter, with over 26,000 locations. So we'll have to see. I mean, investors aren't that excited about this deal. Starbucks stock has barely moved after this announcement. Let's talk about some stocks making moves today. Spotify stocks saw a bump this morning after reporting better than expected profits and strong subscriber growth. In Q3, Spotify said they added 17 million new monthly active users from bringing their total users to 713 million, which is more than their own projections. On top of that, Premium subscribers at 281 million, which is up 12% from a year ago. And looking ahead, Spotify expects to add 8 million paid users in the holiday quarter and 32 million monthly active users overall. The key takeaway for me in this earnings report was that the price hikes that Spotify did earlier this year didn't scare off users. Spotify raised their prices for their Premium plans across 150 markets earlier this year. But it turns out that people stuck around. I guess subscribers are willing to pay a bit more to skip ads. So because of that, Spotify is now raising their profit forecast for the rest of the year. Now, initially this earnings report sent Spotify stock up more than 3% this morning. But the stock has given all that back and is now down around 1%. Someone must have said something in the earnings call. I'll have to go back and check. Now, the other loser for this morning is Uber. Their stock is sliding this morning after the company gave a cautious outlook for the holiday quarter. Now, Q3 was pretty solid for them. Revenues jumped 20% to $13.5 billion. Their total trips hit a record 3.5 billion, which is up 22% from a year ago. And all their other metrics are solid, too. Monthly active users jumped 17% to 189 million. Mobility bookings were up 20% and their delivery bookings, which includes UberEats, was up 25%. So by all accounts, Uber's business is doing great. But investors tend to focus more on company guidance, which in this case came in below expectations. And as a result, Uber stock is down more than 5% this morning. In reaction to the earnings, let's wrap the show with a fun fact. Nintendo has already sold over 10 million units of their Switch to gaming console since its launch back in June. In fact, the sales have been so great the company is now raising their sales forecast from 15 million units to 19 million units for the fiscal year. I mean, look, I'm not going to lie, I'm kind of surprised the Switch 2 has been such a huge hit because the initial reviews were somewhat mediocre. On top of that, the games were super expensive. But I guess that hasn't hurt sales at all. So yeah, the success of the Switch 2 has been a big boost for Nintendo stock. It's up more than 40% this year. Longtime listeners know that I'm more of an Xbox guy. I don't really have time to game anymore, but I kind of want to play Mario Kart with my six year old daughter. But I also don't want to drop like $80 per game. So I don't know, should I get the Switch 2 or not? If you own a Switch to let me know in the comments on what you think about it and if you think it's worth picking up. I just, I kind of want to get one just to play Mario Kart again because the last time I played I at a friend's house, I was terrible. Can't have my kid knowing that I'm bad at Mario Kart, you know. 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 podcasts. 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. 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.