← The Rundown
The Rundown
Starbucks' Turn-Around Plan Shows No Signs of Improvement, Palo Alto Networks Makes $25B Acquisition
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Public.com presents the rundown, your daily market update in under 10 minutes. My name is Zaydad Mani, and Today is Wednesday, July 30th. In today's episode, we'll get you ready for a big Fed meeting and tell you when investors are expecting a rate cut. We'll also recap earnings from Starbucks and tell you why investors are excited about their future. Then stick around to the end of the show to find out where Elon's boring company is going to next. We got a great show for you today. Let's go. Well, after six straight days of gains, the market finally hit a speed bump yesterday with the S and P and Nasdaq Both dropping about 0.3% now. Looking forward to today, we have a lot of stuff going on. First up is the Fed meeting. The Fed meeting wraps up this afternoon, and just like all the Fed meetings this year, no rate cuts are expected. Despite the constant pressures from President Trump, investors will still be paying attention to Jerome Powell's press conference for any hints, winks, or clues of a rate cut at the next meeting. Right now, the markets are only pricing in a 60% chance of a rate cut at the September Fed meeting, and I'm sure those odds will shift depending on what Jerome Powell says in the press conference. One reason the Fed has been waiting to cut rates is because of tariffs. They're worried that tariffs could reignite inflation and they don't want to cut rates to make the situation worse. But according to all the recent data, tariffs haven't had a meaningful impact on inflation just yet. And with all these trade deals being announced in the trade picture coming into clarity, it's, it could set the table for a September rate cut. So we'll see what Jerome Powell says and what his tone is this afternoon in this press conference. That'll tell us a lot. The Fed will announce their decision on interest rates at 2pm Eastern, and Jerome Powell's press conference will start around 2:30. So I'll definitely be tuning into that. But that's not the only thing we're paying attention to today because after the market close, we're getting earnings from Microsoft and Meta. So tomorrow's episode is going to be stacked. You definitely don't want to miss that one. Maybe even consider hitting the notification bell on Spotify if you, if you want to be notified as soon as the episode goes up. And if you guys want bonus content and an instant reaction to the Fed meeting today, follow our Instagram account. We'll put a link in the description. Let's Run through some headlines, starting with Starbucks. Starbucks just reported earnings and things are still kind of lukewarm over there. The company's sales and profits both came in below expectations in Q2 with comparable sales dropping 2% and and profits coming in at 50 cents a share, which was much worse than the 65 cents a share that Wall street was expecting. Starbucks has now reported a drop in same store sales for six quarters in a row. Not a good streak. Now the company has been in full turnaround mode since bringing on new CEO Brian Nickel, who by the way was previously running Chipotle and helped turn that company around. And he's trying to do the same at Starbucks. Starbucks has been revamping their stores to cut wait times and in his words, bring back the warmth and human connection that defined Starbucks back in the day. I know it might be hard to believe for some of the younger people out there, but Starbucks used to be a spot that I used to go hang out with my friends after school. That's definitely not the case anymore and Brian Niccol is trying to bring that back. So Brian Niccol is closing down those mobile only stores and said the new Starbucks stores will be an actual place to sit and drink your overpriced milkshake, I mean latte. Starbucks is also Planning to spend $500 million to increase staffing at US operated stores, hoping that more baristas and better service will bring customers through the door. I think it's a good start, but none of those changes have impacted the numbers yet. Now, Brian Nicholl did promise to unleash a wave of innovation in 2026, whatever that means. But investors were eating that up because Starbucks stock is up more than 5% this morning. @ the time of this recording this, the company also had some positive news coming out of China, which is Starbucks second biggest market. They saw sales jump 2%, which is the first time they've seen positive growth since Q1 of 2024. The company attributes that turnaround to cutting prices and offering more sugar free options. So Starbucks turnaround plan is still brewing. The numbers haven't fully bounced back yet, but investors are giving Brian Nickel time to cook. Let's take a quick break from earnings and talk about a big acquisition in the cybersecurity space. Palo Alto Networks is acquiring the Israeli identity security firm Cyberark in a $25 billion deal. CyberArk is one of the leading companies in what's called privileged access management. They help secure sensitive information and serve as a gatekeeper for who can access certain data inside a company. They're basically like a digital bouncer for the enterprise. And this deal will give CyberArk shareholders $45 a share, which is a 26% premium from Friday's close. This is the second major M and A deal in the cybersecurity space. Google made headlines back in March with a $32 billion purchase of Wiz, and now you have Palo Alto making this move. I think these companies are betting that cybersecurity is going to become even more crucial as cyber attacks increase in the age of AI. In fact, Palo Alto CEO Nikesh Arora called this a strategic play to solve the upcoming problem with agentic AI. And he said that cyber ARCS tools are critical for the next wave of cyber defense. Now, what's funny is that Wall street isn't quite loving this deal for Palo Alto. Their shares are down around 8% this morning at the time of this recording. But some analysts on Wall street, like Dan Ives, are calling this a home run deal. He says that this could spark a fresh wave of consolidation across the cybersecurity space. He calls out names like Zscaler, Crowdstrike, and Check Point, potentially next on the M and a dance card. So, yeah, cybersecurity seems to be hot right now, and it's definitely a sector to keep an eye on over the next few months. It also probably means we're going to have to do like six factor authentication just to access our work emails at some point. Let's talk about some stocks making moves today. Harley Davidson shares are revving higher this morning after reports that the motorcycle manufacturer is looking to offload their financing business in a deal worth $5 billion. According to Bloomberg, Harley is in talks with private equity giant KKR and Pacific Investment Management to sell off its loan portfolio and motorcycle financing arm. The financing unit makes up 20% of Harley's total revenue and provides loans to Harley dealers to help buy inventory and to customers for motorcycle purchases. This is coming at a time when Harley's core business is struggling. The company just dropped Q2 earnings this morning and they missed on profits and they declined to provide annual guidance. On top of that, the revenue was down a whopping 19% as demand for motorcycles continued to slide and tariffs add even more pressure. So. So yeah, Harley is struggling to sell motorcycles, but they're still able to make a solid exit on their financing side, which is investors excited and shares are up more than 20% this morning. Now, on the flip side, Mondelez, the company behind Oreos and Chips Ahoy, is seeing their stock drop more than 5% this morning after the company reported a 3% drop in North American sales. Mondelez is blaming the pullback on consumer anxiety over the economy and and higher prices. Mondelez had to hike prices earlier this year in response to cocoa hitting all time highs thanks to weather and supply chain issues in West Africa. The supply of cocoa has since improved, but those higher cocoa costs are starting to hit Mondelez's bottom line. The company reiterated that it expects a 10% drop in earnings this year because of cocoa supply disruption. Now, before you start blaming GLP1 drugs like ozempic for the drop in sales, Mondelez actually made this clear on their earnings call that that's not the issue here. It just seems like people are cutting back on buying Oreos of the economy, but they are hoping that a new collab with Hershey's can sweeten things up this fall. The company is launching Reese's flavored Oreos soon and there's also going to be Oreo flavored Reese's Cups as well. You know, I'm not a big Oreos or Reese's guy, so I'm not sure if a wild collab like that's going to fix their issues. But hey, at least they're trying, you know. Let's wrap the show with a fun fact. Elon Musk is Boring company is set to build tunnels under Nashville. The company is looking to build a 10 mile tunnel loop to connect the city's downtown to the local airport. Now, the project still needs approval, but Tennessee's governor said the tunnel could be ready as soon as fall of 2026, which is a pretty quick turnaround. You know, I gotta say, the Boring Company is probably the least talked about of Elon's companies. And it's probably because the company hasn't had much success since they launched back in 2017. Back when they first launched, Elon was hyping up innovation and tunneling and hyperloop technology that would travel super fast and reduce street traffic. But none of that has really come true. In fact, the only project the Boring Company has completed has been the Las Vegas one where they dug a tunnel around the Las Vegas Convention Center. And what's funny is in order to take that tunnel, you have to ride in a Tesla which are driven by humans. They're not even self driving yet. So I don't know why they couldn't have just gone with a conventional metro system or monorail. You know, I'm not sure if that's going to be the same way for this Nashville project. Hopefully it's more autonomous but if this project is completed quickly and is a success maybe the boring company will start getting more projects around the country. Well all right guys that's the rundown for today. Hope you guys enjoyed today's episode. We have an action packed episode coming tomorrow and the rest of the week so make sure you guys are subscribed to the podcast to stay in the loop. By the way if you guys have been enjoying our show so far and have like 8 extra seconds, consider giving us a 5 star rating on Apple, Spotify or 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 so much for listening and watching. Shout out to Mike and Connor for all the help behind the scenes. I will see you guys back here tomorrow.