🍎 Buffet Dumps Billions of Apple

MARKET UPDATE

Good Morning Investor! On Friday, the market continued selling off after we got further damming evidence pointing towards a potential recession in the US. Additionally, the Japanese Nikkei 225 dropped almost 6%, triggering a circuit breaker twice in a single day, which concluded as the biggest single-day selloff in over 8 years.

The US economy only added 114,000 jobs in July, significantly below expectations of 176,000. Additionally, the unemployment rate rose to 4.3%, above the 4.1% expected, indicating that the labor market is beginning to crack, with Intel ($INTC) being the latest company to announce mass layoffs — roughly 15,000 employees.

TODAY’S BIG HEADLINES

Buffet Dumps Billions of Apple

The Shock Return of Carvana

Intel’s Worst Day in 50 Years

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SUPER INVESTORS

Buffet Dumps Billions of Apple 🍎

An Apple a Day…Keeps Buffett Away?: Despite Buffett's investment in tech giant Apple ($AAPL) proving to be juicier than a forbidden fruit over the past decade, it seems this love affair is souring faster than milk left out in the Omaha sun. Earlier this year, when Berkshire Hathaway - Buffett's corporate vessel - revealed it had sold off a portion of its stake in Apple, the internet went into panic mode.

• Buffett later revealed he had sold a slice of his Apple pie due to tax implications. He believes Uncle Sam is likely to get greedier in the future, so cashing in now is as prudent as wearing a raincoat in a monsoon.

The Great Apple Dump: Buffett's explanation seemed to calm investors' nerves... for about as long as it takes to update an iPhone. This zen-like state shattered when Berkshire released its Q2 holdings, revealing it had sold off half of its entire Apple position - roughly $51.2 billion worth of stock. Berkshire’s Apple position currently sits at $84.2 billion, down from $135.4 billion at the end of the first quarter.

• Ironically, Q2 has been a spectacular quarter for Apple, with its stock surging 22%. It seems Buffett may have jumped ship just a tad bit early.

• Berkshire has now sold off 55.8% of its stake in the iPhone maker this year alone. That's more dumping than a teenager's first relationship.

Is the Worm in the Apple?: The reason for this mass exodus? Despite Buffett's previous tax-dodge explanation, many argue it's most likely down to Apple's growth being as tepid as week-old tea, combined with a valuation more inflated than a bouncy castle at a kid's birthday party. It's a recipe for disaster should Apple Intelligence fail to be the game-changer everyone's betting on, and Apple’s prophesied upgrade cycle fails to materialize.

AUTOMOBILES & RETAIL

The Shock Return of Carvana🚘

Carvana's Comeback Tour: Believe it or not, over the past 20 months, Carvana ($CVNA) has been hotter than a car engine left running in Death Valley, returning over 3,000% since January 2023. But how has this debt-ridden used car retailer, once as close to bankruptcy as a college student to their last ramen packet, risen from the financial graveyard in such spectacular fashion?

From Junker to Joyride: During Carvana's legal troubles, its share price dropped faster than a lead balloon, plummeting 99% at one point. This comeback was driven primarily by significant improvements in its financial health. Last Thursday, the used car retailer reported quarterly earnings that were sexier than a Ferrari in a bikini wash, with revenue surging 11.4% to $3.41 billion, while retail vehicle sales jumped 32.5% - talk about putting the pedal to the metal!

• Given this turnaround smoother than a freshly waxed Corvette, Wells Fargo ($WFC) has upgraded its price target for the stock from $77 to $175, expressing optimism about Carvana's future prospects.

A Rollercoaster Ride Without Seatbelts: During the pandemic, Carvana thrived like toilet paper manufacturers, as lockdowns pushed buyers to online car buying. However, the company made some questionable decisions and “moved in the wrong direction”, followed by a drop in used vehicle prices in 2022 that hit harder than a fender bender with a semi-truck. This drove a 3% decline in vehicles sold, versus a 75% increase in the prior year, resulting in the company’s $1.6 billion net loss.

• Things began to turn around last year after Carvana restructured its debts and laid off employees, leading to its first operating profit in nearly two years. Given the prospect of declining interest rates, Carvana’s future might be brighter than almost anyone expected, after successfully navigating the volatile auto market over the past two years.

SEMICONDUCTORS

Intel’s Worst Day in 50 Years❌

Intel's Belly Flop into the Pool of Despair: Friday marked the worst single day of trading for American semiconductor manufacturing firm Intel ($INTC) in 50 years. Its share price plunged 26% faster than a skydiver without a parachute after reporting earnings results so bad, they could make even a seasoned Wall Street trader cry into their morning martini.

Intel's Symphony of Sorrow: Not only did the chip maker report a miss on both the top and bottom line, but they also provided guidance softer than a wet noodle, combined with the announcement of mass layoffs. But the real nail in the coffin was the firm's decision to suspend its dividend entirely - stripping "dividend investors" of their income faster than a Vegas casino strip... Here's the rundown of the report, which reads like a horror novel for shareholders:

• The company reported earnings per share (EPS) of $0.02, drastically below the expected $0.10 amongst analysts. This is a significant drop from last year’s $0.13 per share.

• Intel’s revenue stumbled in at $12.8 billion, a slight miss on the $12.9 expected, and down from the prior year’s $12.9 billion.

• Additionally, the firm’s Data Center and AI segment brought in $3.05 billion in the quarter, below expectations of $3.07 billion. The company is struggling to compete in this space with Nvidia ($NVDA), largely due to their inferior products, proof that in the AI race, Intel is still stuck in the "Artificial" phase, struggling to reach the "Intelligence" part.

• Client revenue — Intel’s largest revenue segment, generated $7.4 billion in sales, also below the $7.5 billion expected, but fortunately still up from the prior year’s $6.7 billion. It's like being the tallest dwarf in the room.

A Chip off the Old Block: Why is Intel in such dire straits? Well, grab your popcorn, folks, because this drama has more plot twists than a soap opera. Firstly, the company is undergoing a massive restructuring, attempting to regain market share from arch-rival Advanced Micro Devices ($AMD). Secondly, Intel's capital expenditures are through the roof as they spend billions on factories and facilities worldwide.

• To add insult to injury, Qualcomm ($QCOM) has now entered the PC space with its new Snapdragon X Elite chip as part of Microsoft’s new Surface Laptop and Surface Pro in May. It's like Intel showed up to a knife fight, only to realize everyone else brought bazookas.

MORE NEWS

Additional market-moving events🌎

AI Friend Launches: A rogue 21-year-old just raised $2.5 million, then blew most of it on a URL. The founder of Friend, an AI wearable device, confessed to splashing $1.8 million on friend.com. The company’s $99 pendant aims to combat loneliness. (Independent)

Buffett Sheds Bank Shares: Warren Buffett's Berkshire Hathaway ($BRK.A) has sold 90.4 million shares, totaling over $3.8 billion, of Bank of America ($BAC) since mid-July. Berkshire remains the largest shareholder with a 12.1% stake. (Reuters)

Carvana Makes Surprise Return: Shares of Carvana ($CVNA) popped last week after reporting a surprise profit beat. The stock is now up a mind blowing 3,000% since the start of 2023. (YF)

Most Expensive Bundle: Venu, a sports streaming bundle is going to be the next streamer to drain your wallet, launching pricing at an aggressive $43/month. (BusinessInsider)

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