🚨 Google Loses Landmark Antitrust Case

MARKET UPDATE

Good Morning Investor! On Tuesday, shares of manufacturing behemoth SunPower ($SPWR) took a nosedive, plunging 30% after the company filed for Chapter 11 bankruptcy. In an unexpected twist, the stock price mounted a steamy comeback, surging a tantalizing 110% during the day and closing with just a 6% dip.

Meanwhile, shares of logistics powerhouse Expeditors International ($EXPD) lost some steam, dropping over 4% despite outperforming sales expectations and hitting earnings forecasts right on the nose.

TODAY’S BIG HEADLINES

Google Loses Landmark Antitrust Case

Uber Delivers Excellence Despite Consumer Spending Slowdown

Celsius is Stealing Market Share from Monster & Red Bull

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MEGA CAPS & ANTITRUST

Google Loses Landmark Antitrust Case 🚨

Two Tech Giants, One Stone: Monday not only brought us a market selloff more severe than a toddler's tantrum, but also what might be the final episode in the long-running tech bromance between Apple ($AAPL) and Google ($GOOG). A federal judge, playing the role of disapproving parent, ruled that Google's been running an illegal monopoly in its search business.

Google's Monopoly Game Gets Flipped: A US judge, channeling his inner Sherlock Holmes, deduced that Google has been violating antitrust law. Apparently, spending billions to become the world's default search engine is frowned upon in legal circles. Who knew? This ruling sets the stage for a sequel, potentially including a breakup of Google parent Alphabet.

• Given that Google maintains a 90% market share of online search and 95% on smartphones, this ruling is about as surprising as finding out water is wet. We are, however, anticipating Google to appeal this judgment, potentially dragging things out longer than a Peter Jackson movie trilogy.

Apple's Golden Goose Gets Cooked: While Google's been caught with its hand in the cookie jar, it's Apple that might end up with crumbs. The iGiant currently enjoys a sweet deal with Google, which plants the search engine on every iPhone. In exchange for this prime real estate, Google shells out $20 billion. For context, that's pure profit for Apple, making up more than a fifth of the tech giant's profits for 2023.

SOFTWARE & FAST FOOD

Uber Delivers Excellence Despite Consumer Spending Slowdown🛵

Defying the Odds: Much like its food delivery sibling DoorDash ($DASH), Uber ($UBER) managed to crush earnings estimates for the second quarter harder than a monster truck at a demolition derby. The stock shot up over 8% in pre-market trading. This comes despite the massive slowdown in consumer spending that's left luxury brands crying into their champagne and fast-food joints wondering if the dollar menu is too pricey.

Delivering Excellence: Uber beat on both the top and bottom lines, while growing its adjusted EBITDA margin faster than a New York cabbie weaving through traffic. Buckle up, buttercup, because this earnings report is about to take you for a ride:

• Uber’s revenue came revving in at $10.70 billion, beating analyst estimates of $10.57 billion like a Formula 1 car lapping a golf cart, and growing 16% year-over-year.

• Profitability hit the gas pedal hard, with GAAP EPS of $0.47 beating the analyst consensus estimate of $0.31.

• As for Uber’s margins, the Adjusted EBITDA margin as a percentage of Gross Bookings was 3.9%, up from 2.7% in the prior year.

• Gross Bookings grew 19% year-over-year to $39.95 billion versus the analyst consensus of $39.7 billion.

• Lastly, Uber reported a record level of free cash flow ($1.7 billion), while its high-margin advertising business officially exceeded a $1 billion revenue run-rate.

Slices of the Pie: As for Uber's three revenue segments, Mobility grew to $6.13 billion, up 25% year over year. Delivery rose like a soufflé (albeit a slow one), generating $3.29 billion, up 8%, and Freight was $1.27 billion, remaining as flat as a Kansas highway.

The Numbers Don't Lie (But They Might Take You For a Ride): The two metrics we find particularly titillating also showed superb growth. Monthly Active Platform Consumers reached 156 million, growing 14% year-over-year. Meanwhile, trips grew 21% year-over-year to 2.8 billion, or 30 million per day - that's more trips than a clumsy waiter during the dinner rush! And let's not forget the 7.4 million drivers, putting in more hours than a workaholic with a caffeine addiction.

BEVERAGES & CONSUMER DISCRETIONARIES

Celsius is Stealing Market Share from Monster & Red Bull🦸‍♂️

A Titanic Turn of Events: Healthy energy beverage maker Celsius ($CELH) managed to steer clear of disaster in the second quarter, sending its shares up over 3.5% in pre-market trading. The stock had been on a slippery slope for some time, plummeting 56% since its peak in May. The reason for this selloff? Leaked sales data indicated a sudden but dramatic slowdown in the company's sales, leaving investors with a bitter taste in their mouths.

Bubbly Financial Symphony: Despite the leaked sales data threatening to burst their bubble, Celsius managed to report a beat on both the top and bottom line. Management even went as far as to claim they're now actively stealing market share from arch-rivals Monster ($MNST) and Red Bull – talk about a caffeine-fueled heist! Let's pop the top on this earnings report and gulp down the frothy details:

• Celsius reported record second quarter revenue of $402.0 million, up 23% year over year. Celsius even managed to single-handedly contribute 47 percent of all second-quarter growth for the energy drink category.

• This was followed by record second quarter net income of $79.8 million, up 55% year over year, resulting in a diluted EPS of $0.28, up a thirst-quenching 65% year over year. The business now operates with a 52% gross profit margin, up 320 basis points from the prior year’s 48.80%, as a result of freight optimization and lower materials costs.

• Celsius gained approximately 35% more retail shelf space, increasing the average SKUs selling per store to 20 from 15. Additionally, Celsius sales to Amazon increased 41% year over year to approximately $39.9 million.

Going Global, One Sip at a Time: Celsius provides us with a breakdown of its revenue-generating regions, with North America generating $382.4 million in sales, an increase of 23%, while international sales came in at $19.6 million, an increase of 30% year-over-year, now making up 5% of total sales. They're spreading faster than gossip at a high school reunion!

World Domination: Celsius' management updated us on their international expansion, with sales beginning in the UK and Ireland in the second quarter through the fitness channel and in select gyms. Sales in Canada continued to exceed the company's initial expectations – apparently, they're hotter than a hockey player in a sauna up there. Lastly, sales in Australia, France, and New Zealand are expected to begin in the second half of this year. Watch out, world.

The Devil's in the Details (and the Caffeine): Celsius’ management also revealed some interesting sales data. Revenue in the quarter was offset in part by reduction in inventory days on hand by a large distributor. Retail sales of Celsius in total US MULOC grew by 36.5% year over year in the second quarter of 2024, as reported by Circana for the last-thirteen-week period.

A Love Affair with Fizz: We believe that Celsius is a fantastic business, and given the price action in recent months, we believe the stock is now trading at an attractive valuation given its current growth trajectory. We’ve begun adding Celsius to the Tickergeek portfolio at $40.38 per share. We're ready to ride this carbonated rocket to the moon – just don't shake us too hard on the way up!

MORE NEWS

Additional market-moving events🌎

Anthropic Defection: OpenAI co-founder John Schulman announced he will leave the company to join AI startup Anthropic. (CNBC)

Chipmaker Funding: The Commerce Department will award SK Hynix, an Nvidia ($NVDA) supplier, up to $450M in grants for a $3.87B advanced chip packaging plant and R&D facility in Indiana. (Reuters)

X's SF Office: Elon Musk's X will close its San Francisco office in the coming weeks, moving employees to San Jose and opening an engineering office in Palo Alto. (NYTimes)

Loan Demand Strengthens: US banks reported unchanged demand for commercial and industrial loans in the second quarter, the first time in two years that demand did not weaken. (Reuters)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “superperformers” stock pick which we believe will provide significant outperformance compared to the S&P 500. Then on the 14th of June we released our next stock selection. Lastly, on August 6th, we initiated a position in Celsius holdings.

Here’s how the stocks have performed since:

• Hims & Hers Health: $16.88 (📈+16.66%)

• PayPal: $62.75 (📈+3.45%)

• Celsius: $40.38 (📈+0.00%)

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