Tesla’s Terrible Earnings, the FTC’s Noncompete Ban, and 24/7 Trading at the NYSE | Prof G Markets

Summary

This week's episode of Propy Markets dives into a myriad of financial topics, starting with the revelation that Americans discard $68 million in coins annually. The discussion then shifts to Tesla's Q1 earnings, which were below expectations, yet the stock price rose, possibly due to an oversold market and Musk's emphasis on AI and robotics. The analysts also delve into Spotify's revenue increase, Netflix's membership growth, and Meta's revenue surge despite a share price drop after announcing increased AI investment. The show touches on the potential billion-dollar agreement for a new FIFA tournament and the implications of the Biden administration giving TikTok a year to sell to an American company. The conversation also addresses the FTC's ban on non-compete agreements, which is expected to boost wages and create new business opportunities. Finally, they ponder the cultural and financial implications of the potential shift to 24-hour trading at the New York Stock Exchange.

Takeaways

• 💰 Americans discard approximately $68 million worth of coins annually.
• 📈 Spotify reported a 20% year-over-year increase in first-quarter revenue and a record high profit of $180 million, following a challenging year with layoffs and price hikes.
• 📊 Netflix membership rose by 16% in the first quarter from the previous year, but the company plans to stop reporting quarterly subscriber numbers and revenue per user starting next year.
• 📈 Meta's revenue increased by more than 27% from the previous year, surpassing analyst expectations, yet shares fell by more than 15% due to lighter than expected revenue guidance and increased spending on AI.
• 🏆 FIFA and Apple are close to a deal regarding TV rights for a new World Cup-style tournament for club teams, potentially valued at around $1 billion, set to take place in the US in 2025.
• 🛑 President Biden signed a bill giving TikTok until 2025 to arrange a sale to an American company or face a ban in the US, with TikTok's CEO vowing to challenge the law on First Amendment grounds.
• 🚗 Tesla reported a decline in revenue and profits, its first drop since 2020, with the company burning through $2.5 billion in cash. Despite this, Elon Musk committed to launching more affordable vehicles by 2025, leading to a 14% stock rise.
• 🛇 The FTC has banned non-compete agreements, which could increase average annual earnings by over $500, benefiting around 30 million workers.
• 🌐 The New York Stock Exchange is considering a shift to 24-hour trading, seven days a week, potentially increasing trading volume and attracting more global investors.
• 🤔 The discussion suggests that the rise in efficiency and profitability in companies like Spotify and Meta may be due to better economic conditions and consumer spending, despite increased prices.
• 📉 Concerns are raised about the potential negative impacts of 24/7 trading on mental health and work-life balance for financial services employees, as well as the possible increase in market volatility.

Q & A

Why do Americans throw out approximately $68 million worth of coins every year?

The habit of throwing out coins is likely due to a combination of factors, including the inconvenience of carrying change, the low value of individual coins, and a lack of awareness about the cumulative worth of discarded coins.

What is the significance of the ban on non-compete agreements by the FTC?

The ban aims to increase workforce mobility, boost competition, and potentially raise wages by allowing around 30 million workers previously bound by non-compete agreements to change jobs more freely.

How did Spotify's first quarter revenue increase impact the company?

Spotify reported a first quarter revenue increase of 20% from the previous year and a record high profit of $180 million. This came after a challenging year that included layoffs and the first price increase in a decade.

Why did Netflix's stock price fall by 9% after their announcement?

Netflix's stock price fell due to their decision to stop reporting quarterly subscriber numbers and revenue per user, starting next year, which raised concerns about the transparency and future growth of the company.

What is the potential value of the agreement between FIFA and Apple for a new tournament?

The agreement could be valued at about $1 billion, with the month-long tournament set to be hosted in the US in 2025, potentially creating a new and lucrative market for football club competitions.

What was the reason behind President Biden signing a bill that gives TikTok up to 12 months to arrange a sale to an American company?

The bill was signed due to national security concerns over the Chinese-owned social media platform's data collection practices and its potential to be used for foreign influence operations.

Why did Tesla's stock rise by 14% despite reporting worse than expected earnings?

The stock rise could be attributed to the market's reaction to Elon Musk's emphasis on Tesla's AI initiatives and the announcement of a more affordable vehicle lineup by 2025, which may have overshadowed the company's current financial struggles.

What are the potential implications of the New York Stock Exchange considering 24-hour trading?

24-hour trading could lead to increased liquidity and attract more global investors, particularly from Asia. However, it may also increase volatility, affect the mental health and work-life balance of traders, and necessitate more reliance on AI for monitoring the market.

What is the potential impact of the ban on non-compete agreements on innovation and the protection of intellectual property?

While the ban may lead to increased competition and higher wages for workers, there are concerns that it could compromise companies' ability to protect their intellectual property, potentially leading to a decrease in innovation.

Why is the discussion around Meta's increased spending on AI investment causing concern for investors?

Investors are concerned that Meta's increased spending on AI signals a shift from a focus on profitability to a costly investment phase, similar to the company's previous investment in the metaverse, which did not yield expected returns.

What is the potential cultural impact of 24-hour trading on Wall Street and financial services workers?

The shift to 24-hour trading could erode the traditional workweek and weekend structure for financial services workers, potentially leading to increased stress and a blurring of work and personal life boundaries.