The Never-Ending Trade War

Catch up with this week’s Five on Friday!

#TradeWar

US markets experienced massive volatility throughout the week driven by uncertainty surrounding the trade talks between American and Chinese representatives.

What does this mean?

On Sunday, US President Donald Trump tweeted that he would raise tariffs on $200 billion worth of Chinese goods from 10% to 25% by the end of the week and would “shortly” target the remaining Chinese imports with tariffs. Following the tweet, US markets tumbled over concerns that a deal remained further away than previously thought. However, they quickly recovered their losses on the belief — some might say the hope — that Trump was simply playing hardball in the closing stages of negotiations. The President’s rhetoric has not cooled down since. Speaking at a rally on Wednesday, Trump said that the US “won’t back down until China stops cheating our workers and stealing our jobs.” This morning, then, Trump finally pulled the trigger, confirming via Twitter that the US had begun implementing the higher tariffs. In response, the Chinese commerce ministry says it will take “necessary countermeasures.” It looks like this dispute won’t be resolved for a while yet.

#Uber

In 2019’s most highly-anticipated IPO, Uber has been valued at $82 billion ahead of its listing on the NYSE today.

What does this mean?

The valuation puts the price of Uber’s shares at $45 a piece, coming in at the lower end of the range previously given by the company. According to a filing issued last month, Uber could have been floating at as much as $50 a share, which would have given the company an eye-watering $120 billion valuation. After a tumultuous week for the market, due in no small part to worries over fallout from the aforementioned trade war, it’s not altogether surprising that Uber is taking a more conservative approach to its listing. More pertinent to the company, however, is the recent experience of industry-rival Lyft on the public market, with shares currently down some 30% since floating just over a month ago. Still, with plans to raise as much as $8 billion, Uber’s floatation will certainly go down as one of the largest in history. Not bad for a company that lost $1.8 billion last year.

#Berkshire

More than 40,000 investors flocked to Omaha, Nebraska last weekend to attend the annual Berkshire Hathaway shareholder meeting, where legendary CEO Warren Buffett offered his wisdom on a variety of topics.

What does this mean?

Highlights of the event — sometimes dubbed “Woodstock for Capitalists” — included Buffett’s remarks on Apple, his decision to finally invest in Amazon, and his six-decade partnership with Berkshire’s Vice Chairman Charlie Munger. During the conference, Buffett reaffirmed his admiration for Apple and said he wished he’d bought shares of the tech giant earlier. “In my family, the people who have Apple phones, it’s the last thing they’ll give up,” he added. The Munger-Buffett partnership is one of the most storied in the history of investing. Reflecting on sixty years with his “sidekick”, Buffett said, “We make the big decisions jointly. It’s just that we haven’t had any big decisions.” If there was an elephant in the room at this year’s Berkshire meeting, it was the question of how much longer Buffett, who will turn 89 in August, has left at the company, and who might replace him. As with previous years, the investing legend did not reveal who he expects to take the helm after he’s gone.

#EarningsOverview

Earnings season is winding down by now, but we still had another slew of market-shaking reports to dig into. To help you get up to speed, here’s ‘The Earnings Overview’:

The Good 😁

Evolent Health — A jump in registered users contributed to a narrower-than-expected first-quarter loss as well as estimate-beating revenue for the digital healthcare platform.

GoPro — Strong sales, a smaller-than-expected loss, and an improved revenue forecast spelt a good quarter for the camera manufacturer.

Hain Celestial — The health foods company topped expectations across the board and announced it would sell its poultry business as it focuses on core products.

The Match Group — Shareholders felt the love after the online dating company beat Wall Street on the top and bottom lines, mostly thanks to the continued success of Tinder.

The Walt Disney Company — The unveiling of a new streaming service was the clear highlight in a very solid quarter for the entertainment giant, which saw its beat Wall Street on earnings and revenue.

The (Not So) Bad 😐

Chuy’s Holdings — The quirky restaurant chain reported better-than-expected earnings but disappointing revenue for the quarter.

TrueCar — The automotive pricing store just about broke even during the quarter, though revenue still surpasses Wall Street expectations.
 
The Trade Desk — The online advertising marketplace beat estimates on its top and bottom lines and revealed a highly impressive customer retention rate of 95%, yet shares tanked on the release of the report.

The Ugly 🙃

2U — Shares of the online education company fell heavily after it reported wider losses and lower-than-expected sales in the current quarter.
 
Booking Holdings — Heavy marketing expenses contributed to a poor quarter for the travel fare aggregator site, which fell short of analyst estimates across the board.
 
Nautilus — Weak direct-to-consumer sales led to a poor quarter for the fitness equipment maker, which posted an adjusted loss of $8.1 million.
 
TripAdvisor — The online travel company reported worse-than-expected revenue as well as a 5% year-on-year drop in average monthly users. 
 
TrueCar — Shares in the automotive pricing and information website crashed more than 15% this morning after the company issued weaker-than-expected guidance and missed earnings for the last quarter.

ShotSpotter — The gunshot detection company missed on earnings and reduced its revenue forecast for the year.

#AndFinally

In a strange turn of events, a startup called Liquid Death raised $1.6 million this week to sell “extreme” canned water. The dream-child of Mike Cessario, a former creative director at Netflix, Liquid Death has been enjoying a great deal of publicity thanks to its unique branding. The product itself, whose label features a flamboyantly melting skull under the ridiculous slogan ‘Murder Your Thirst’, is supposedly aimed at punks, Satanists, heavy metal fans, and other typical water-drinkers. If all that sounds more like what you’d expect to find on a craft beer can, then that’s sort of the point. “We started Liquid Death with the diabolical plan to completely obliterate bottled water marketing clichés by taking the world’s healthiest beverage and making it just as funny and stupid and entertaining as the unhealthy brands across energy drinks, soda, and beer,” reads the company’s mission statement. Predictably, the Internet loves this over-the-top style. One playful Amazon review caught the silliness perfectly: “As soon as I drank from the can, I could feel the rage of Liquid Death as it mercilessly and violently slaughtered my thirst.‘

What does this mean?

Apparently, it’s not the product that counts, but how bizarrely you can market it.

The Week In Numbers

2024

is when space venture Blue Origin will send astronauts to the moon, according to founder Jeff Bezos.

$300 million

is how much Boston Beer paid today to join forces Dogfish Head brewery.

$2.3 billion

is roughly how much Starbucks gained in free advertising after a takeout coffee cup bearing its likeness showed up accidentally in hit show ‘Game of Thrones’.

MyWallSt operates a full disclosure policy. MyWallSt staff currently hold long positions in some of the companies mentioned above.

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