📊 Nike Is Running Into Trouble

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Happy Sunday!

Before we jump in, a quick announcement that there will be no issue next Sunday, 7/7, due to the Independence Day Weekend! The newsletter will resume on 7/14!

This week was packed with news, with the highlight being the Trump-Biden debate.

According to a recent Economist and YouGov poll, nearly 60% of Americans view both candidates unfavorably.

Additionally, 44% of the 1,600 U.S. adults surveyed aren't enthusiastic about voting in November, reflecting widespread election apprehension.

Both candidates have agreed to one more debate in September, following their respective party nominations.

Some key data bites from this week that you should know: 

• Under Armour $UAA has agreed to a $434M settlement over misleading financial claims.

• Apple $AAPL has been working to reduce 50% of its assembly line workers.

• Trump Media $DJT announced it would receive more than $69.4M from the cash exercise of warrants.

• American Express $AXP purchased reservation company Tock for $400M.

• Microsoft $MSFT could face a fine equal to 10% of its annual global revenue for bundling Teams with its Office software.

• Amazon $AMZN surpassed a $2T valuation for the first time ever.

• FedEx $FDX raised guidance and announced a $2.5B stock buyback.

• The average credit card interest rate now sits at 27.70%.

• Walgreens $WBA is set to close roughly 8,600 locations across the U.S.

In today’s newsletter:

• 🇪🇺 Most Valuable European Companies

• ⛑️ Rivian Receives A Lifeline

• 🚀 SpaceX’s Valuation Hits $210B

• ✔️ Nike Is Running Into Trouble

• 🇺🇸 S&P 500 Returns By President

The weight loss drug boom has helped propel the Danish company Novo Nordisk all the way to the top.

Novo’s shares climbed this week following news of Wegovy’s approval for sale in China.

The company now sits comfortably in first place as the most valuable company in Europe, ahead of ASML by roughly $230B.

ASML, specializing in chip production machinery, recently climbed to second place, overtaking luxury giant Louis Vuitton, now third.

Rounding out the top ranks are diverse names like SAP, which develops enterprise software, Accenture, known for their IT consulting, and Inditex, renowned for Zara.

Speaking of European companies, German automobile manufacturer Volkswagen is easily one of the most well known.

The company made headlines this week following news of their investment of up to $5B in American EV company Rivian.

Initially, Volkswagen will invest $1B, with plans to potentially increase this to $5B over time.

This influx of cash is a crucial lifeline for Rivian, whose stock has plummeted nearly 90% since its late 2021 IPO.

Volkswagen aims to develop a next-generation software-defined vehicle platform using Rivian’s technology, which both companies will integrate into their future EVs.

Since they went public, Rivian has lost $17.9B.

Even more surprising, Rivian lost an average of $39,000 for each vehicle sold in the first quarter of the year.

Nonetheless, investors were bullish on the news, sending shares of Rivian up 30% this week.

SpaceX isn’t just sending rockets up; their valuation is soaring too.

The company’s valuation has now hit a new all-time high at $210B.

This spike follows a recent insider share sale at $112 per share in a tender offer, marking a 17% increase from its $180B valuation in December.

SpaceX now approaches the valuation of TikTok’s owner, Bytedance, at $268B.

So, just how big is SpaceX now? It has surpassed the entire mass media giant Disney in value.

In fact, it’s also now worth more than PayPal, Palantir, Supermicro, and Lululemon combined.

While these companies are not direct competitors to SpaceX, it’s always interesting to look at valuations in the context of other companies.

This surge in valuation is set to considerably boost Elon Musk’s net worth, given his 42% stake in the privately held company.

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While SpaceX seems to be doing well, let’s talk about a company that isn’t doing too hot: Nike.

Shares of the athletic footwear giant plummeted nearly 20% following its Q4 Fiscal 2024 earnings report, marking its worst trading day since its 1980 IPO.

Despite exceeding earnings expectations for the quarter, Nike fell short on revenue.

Furthermore, sales growth for fiscal 2024 was the slowest since 2010, excluding the Covid pandemic.

The primary driver for Nike’s stock plunge though was the company’s forecast of a 10% sales decline in the current quarter, significantly below analysts' expectations of a 3.2% drop.

The grim outlook reflects weak sales in China, leading Nike to anticipate mid-single-digit declines for fiscal 2025, a sharp contrast to previous growth projections.

Does the stock market really care whose in office?

Based on historical data, the answer is not really.

Over the long term, the stock market has done well under both Democratic and Republican administrations, per data from The Motley Fool.

From a mean perspective, the S&P 500 has grown annually at 9.8% under Democratic presidents, outpacing the 6% under Republicans since 1957.

However, looking at median growth rates, the market has seen 10.2% growth under Republicans and 8.9% under Democrats.

While either party could make the case that the stock market performs better during their party, the direct impact of policy remains hard to quantify.

Furthermore, presidential terms are susceptible to unforeseen events like the dot-com bubble, the 2008 financial crisis, and Covid-19, to name a few.

As always, the name of the game is time in the market, not the president’s political party.

The S&P 500’s compounded annual growth rate of 10.26% is a clear testament to that.

Notable Companies Reporting Earnings Next Week:

• Wednesday (7/3):

  • Constellation Brands $STZ

All of the companies that are reporting earnings next week can be viewed here.

📚 Recommended Reading

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Buys

• Michael McCaul (R)

  • Company: Apple ($AAPL)

    • Amount Purchased: $530K - $1.3M

  • Company: Intel ($INTC)

    • Amount Purchased: $265K - $550K

  • Company: Kraft Heinz ($KHC)

    • Amount Purchased: $200K - $500K

Sells

• Michael McCaul (R)

  • Company: Wells Fargo ($WFC)

    • Amount Sold: $200K - $500K

  • Company: Philip Morris International ($PM)

    • Amount Sold: $200K - $500K

• Debbie Dingell (D)

  • Company: Apple ($AAPL)

    • Amount Sold: $31K - $115K

Buys

• RH ($RH)

  • Insider: Gary Friedman (Chairman & CEO)

    • # of Shares Purchased: 46,274

    • $ Amount: $9,999,978

    • SEC Forms: [1]

Sells

• Aribnb ($ABNB)

  • Insider: Joseph Gebbia (Director)

    • # of Shares Sold: 692,463

    • $ Amount: $104,194,254

    • SEC Forms: [1], [2]

  • Insider: Brian Chesky (CEO & Chairman)

    • # of Shares Sold: 115,385

    • $ Amount: $17,155,152

    • SEC Forms: [1]

• Snowflake ($SNOW)

  • Insider: Grzegorz Czajkowski (EVP, Engineering and Support)

    • # of Shares Sold: 469,120

    • $ Amount: $57,742,876

    • SEC Forms: [1]

• DraftKings ($DKNG)

  • Insider: Paul Liberman (Director)

    • # of Shares Sold: 668,890

    • $ Amount: $25,972,124

    • SEC Forms: [1]

• Nvidia ($NVDA)

  • Insider: Colette Kress (EVP & Chief Financial Officer)

    • # of Shares Sold: 200,000

    • $ Amount: $24,430,514

    • SEC Forms: [1]

🤝 Review of the Week