☕️ Starbucks Falls 12%

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Some key data bites you should know: 

• McDonald’s $MCD saw global comparable sales increase 2% in Q1.

• U.S. oil and gas deals hit a record $51B in Q1.

• Roughly a third of all S&P 500 stock trades are now executed in the last 10 minutes of the session.

• Robinhood $HOOD saw $81B in equity trading volume in February, it’s largest since November 2021.

• Hertz $HZ is trying to sell all of its 30,000 Tesla EVs by the end of the year.

• Domino’s $DPZ global retail sales grew 7.3% in Q1.

• Amazon’s $AMZN Q1 net income tripled from a year ago.

• Apollo $APO is accused of setting up a $20B human life wagering scheme.

• Snapchat $SNAP Daily Active Users hits 422M in Q1 2024.

• SoFi’s $SOFI total net revenue increased 37% to $645M in Q1.

In today’s newsletter:

• ☕️ Starbucks Sales Drop

• 💾 AMD Expects $4B in AI Chip Sales

• 👜 Hermès Leads In The Luxury Race

Let’s dive right in!

More people are making their coffee at home.

Starbucks stock plummeted 12% after hours last night following the release of its Q2 FY24 earnings results.

Here are some key numbers:

• 🔴 Earnings: $0.68 vs. $0.79 Est.

• 🔴 Revenue: $8.56B vs. $9.13B Est.

• 🔴 Global Same Store Sales: -4% vs. +1% Est.

The numbers speak for themselves. This was a quarter to forget for Starbucks.

Year over year, net revenue dipped by 2%, earnings dropped by 7%, and operating margin shrank by 140 basis points to 12.8%.

The most telling sign was the fall in comparable store sales across the board—a crucial metric that tracks consistent revenue across established locations.

Looking ahead, the outlook isn’t much brighter.

Starbucks anticipates low single-digit declines to flat comparable store growth for the full year 2024.

This forecast, combined with expected low single-digit revenue growth and stagnant operating margin and EPS, had investors running to the woods.

With the stock now hovering below $80 and trading at roughly 20x earnings, it’s not exactly “cheap,” especially given the flat earnings projection for this year.

However, it is trading at a discount compared to its historical 10-year median PE ratio of 31x, per YCharts.

The strength of Starbucks' brand and global presence will likely always bolster the stock price, adding a premium to the valuation.

So the question to ask now is can Starbucks reverse course and re-accelerate growth in the short term?

What happens when a stock that has surged over 75% in the last year meets or slightly beats expectations?

It often drops—and that's precisely what happened to AMD.

Shares fell about 7% following the release of their Q1 FY24 earnings, even though the numbers were good:

• 🟢 Earnings: $0.62 vs. $0.61 Est.

• 🟢 Revenue: $5.47B vs. $5.46B Est.

• ⚪️ Q2 Revenue Outlook: $5.7B vs. $5.7B Est.

Revenue grew 2% YoY, driven by strong performances in AMD’s data center and client segments, which offset slower growth in gaming and embedded segments.

CEO Lisa Su announced that AMD is on track to generate $4B from AI chip sales in 2024, an uptick from the $3.5B forecasted in January.

The company’s MI300 chip has already achieved over $1B in cumulative sales since its launch in Q4 2023.

Despite these positive indicators and a slight beat this quarter, along with a bullish outlook for AI chip sales, investors were expecting more, leading to the stock's decline in after hours trading.

The demand for those rare Birkin bags isn’t slowing down.

Hermès recently reported a robust 17% increase in first-quarter sales, reaching €3.8B.

Even more impressive — every geographical area Hermès operates in recorded double-digit growth.

Asia (excluding Japan) rose by 14%, Japan itself surged an exceptional 25%, the Americas increased by 12%, and Europe (excluding France) grew by 15%.

Driving this impressive revenue spike were primarily two segments: Leather Goods and Saddlery and Ready-to-Wear and Accessories.

These segments expanded by 20% and 16% YoY, respectively, and together they make up nearly 71% of Hermès’ total TTM revenue.

With these numbers, Hermès is winning in the luxury race.

In comparison, LVMH recently reported a modest first-quarter sales growth of 3%, and Kering, the parent company of Gucci, saw Q1 revenue decline 11%.

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Notable Companies Reporting Earnings This Week:

• Monday (4/29):

  • NXP Semiconductors $NXPI, Welltower $WELL, ON Semi $ON, MicroStrategy $MSTR, Domino’s Pizza $DPZ, SoFi $SOFI

• Tuesday (4/30):

  • Amazon $AMZN, Eli Lilly $LLY, Coca-Cola $KO, AMD $AMD, McDonald’s $MCD, Stryker $SYK, Starbucks $SBUX, PayPal $PYPL, 3M $MMM, Super Micro $SMCI, Pinterest $PINS

• Wednesday (5/1):

  • Mastercard $MA, Qualcomm $QCOM, Pfizer $PFE, ADP $ADP, CVS Health $CVS, DoorDash $DASH, Kraft Heinz $KHC

• Thursday (5/2):

  • Apple $AAPL, Novo Nordisk $NVO, Linde $LIN, Coinbase $COIN, Block $SQ, DraftKings $DKNG

• Friday (5/3):

  • Hershey $HSY, XPO $XPO

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

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  • Insider: Henry Fernandez (Chairman & CEO)

    • # of Shares Purchased: 13,000

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    • SEC Forms: [1]

  • Insider: Baer Pettit (President & COO)

    • # of Shares Purchased: 7,500

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    • SEC Forms: [1]

• Loar Holdings ($LOAR)

  • Insider: Taiwo Danmola (Director)

    • # of Shares Purchased: 71,429

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    • SEC Forms: [1]

  • Insider: Margaret McGetrick (Director)

    • # of Shares Purchased: 71,429

    • $ Amount: $2,000,012

    • SEC Forms: [1]

• Heartland Express ($HTLD)

  • Insider: Michael Gerdin (CEO)

    • # of Shares Purchased: 190,696

    • $ Amount: $1,928,489

    • SEC Forms: [1]

Sells

• Vertiv Holdings ($VRT)

  • Insider: Philip O’Doherty (Managing Director)

    • # of Shares Sold: 3,000,000

    • $ Amount: $280,929,588

    • SEC Forms: [1]

• Jefferies Financial Group ($JEF)

  • Insider: Richard Handler (CEO)

    • # of Shares Sold: 1,500,000

    • $ Amount: $65,250,900

    • SEC Forms: [1]

• Chipotle ($CMG)

  • Insider: Brian Niccol (Chairman & CEO)

    • # of Shares Sold: 6,406

    • $ Amount: $20,408,980

    • SEC Forms: [1]

🤝 Review of the Week