Weekly News Recap 5 – 9 August 2024

News for 5 August 2024

Trend of Gold Prices (XAU/USD)

At the end of last week, gold prices remained high, closing at $2,443/oz. This stability was due to lower-than-expected U.S. labor market figures. Non-farm payrolls came in at 114k, below expectations, and the U.S. unemployment rate was 4.3%, the highest in nearly 3 years. This led to increased volatility in gold prices towards the end of the market.

On August 5, at 20:45, the U.S. Services Purchasing Managers’ Index (PMI) will be announced, with a forecast of 56.0. Later, at 21:00, the U.S. ISM Services PMI will be released, with a forecast of 51.4.

Review Micron Stock Strong Core Revenue Growth But %GP Just Recovered

Micron Technology Inc. was founded in 1978 and has developed into a global leader in semiconductor manufacturing. The company specializes in producing memory and storage solutions to support a variety of industries including computer storage, networking, and mobile devices. Its products include DRAM and NAND, as well as other semiconductor solutions.

Products

• DRAM (Dynamic Random Access Memory) helps your computer perform efficiently by providing fast access to the data your processor needs to perform at peak performance. It is commonly used on PCs, laptops, smartphones, and tablets.
• NAND is a non-volatile storage technology that requires no power to store data.

Latest Q3/24 results (as of 30/6/24) with revenue increasing to $6.81 billion +82%YoY, +17%QoQ, and EPS of $0.62 (reversing loss in 3Q23), +48%QoQ due to the main revenue from DRAM and NAND growing +13%QoQ and +32%QoQ respectively, with Compute and Networking (CNBU) revenue of $2.57 billion +85%YoY, +18%QoQ but Mobile (MBU) revenue contracting slightly in QoQ to $1.59 billion -1%QoQ but increasing +94%YoY. EBITDA margin continues to grow from 8.29% in 3Q23 to 38.85%.

Guidance 4Q24

Management estimates that revenue in 4Q24 (as of 30/9/24) increased to $7.60 billion, in line with a gross profit margin (%GP) increase to 34.5% (3Q24 %GP was 28%), which could push EPS up to $1.08.

Valuation

Although management gave a positive 4Q24 guidance, the company still has volatility in revenue. The growth prospects for DRAM may decrease, and the DRAM market share is lower than Samsung and SK Hynix.

News for 6 August 2024

Gold Prices Rebound Above $2,400/oz After Recent Decline

On August 5, global assets, including gold, experienced a significant decline, with gold closing at $2,410/oz. This drop was driven by concerns over a potential severe economic downturn in the U.S.

Additionally, keep an eye on potential retaliatory actions from Iran following the assassination of a Hamas leader in Tehran.

Changes in Fundamentals of the 7 Magnificent Seven

1. Tesla (TSLA): In the second quarter of 2023 (2Q23), Tesla’s electric vehicle sales accounted for 97% of its total revenue, while revenue from Energy Generation and Storage made up 3% of the total. By the second quarter of 2024 (2Q24), electric vehicle sales had decreased to 88% of total revenue, with Energy Generation and Storage increasing to 12% of the total. Revenue from Energy Generation and Storage reached $3.014 billion, up 100% year-over-year (YoY) and 84% quarter-over-quarter (QoQ). This shift has led to a reduction in the net profit margin from 11% in 2Q23 to just 6% in 2Q24.
2. Apple (AAPL): Recently, Warren Buffett has reduced his stake in Apple (AAPL) by nearly 50%. This decision comes as the proportion of iPhone sales has decreased from 51% to 46%. At the same time, the proportions of sales from iPads and MacBooks have been rising, with iPad sales reaching $7.16 billion (+24% YoY) and MacBook sales at $7.01 billion (+3% YoY). This shift in sales dynamics has led Warren Buffett to gradually decrease his holdings in AAPL.

News for 7 August 2024

Gold Falls Below $2,400/oz

On August 6, gold prices dropped to $2,390/oz, influenced by a slight rebound in the U.S. Dollar Index, which rose to 102.93. This dollar strength put pressure on gold prices.

Currently, gold appears to be losing some stability. Prices are expected to remain under pressure in the short term. However, with the anticipation of potential interest rate cuts in September, gold may see a rebound and upward momentum soon.

Uber Shares Surge +10% – After User Growth +14%YoY and Positive Investment Income

On August 6, Uber announced its 2Q24 results, showing a strong performance with shares jumping +10%. The company reported a revenue increase to $10.7 billion, up 16% YoY and 6% QoQ. Net profit rose significantly to $1.015 billion, up 158% YoY, reversing the losses from 1Q24. This growth was driven by a 14% YoY increase in Monthly Active Platform Consumers (MAPCs), reaching 156 million accounts, and a 21% YoY rise in trips to 2.765 billion.

Revenue from Mobility, Uber’s core business, grew to $6.134 billion, up 25% YoY, making up 57% of total revenue. Operating income increased to approximately $796 million, up 144% YoY. Notably, investment income before taxes shifted from a loss of around $630 million in 1Q24 to a profit of $1.077 billion, boosting EPS from -$0.32 to $0.47.

Additionally, Uber’s management is promoting the use of electric vehicles (EVs) among drivers, especially from the BYD brand, which is expected to result in a five-fold cost saving.

News for 8 August 2024

Gold Alert: Watch for Support Break

On August 7, gold prices fell to close at $2,383/oz. This decline was attributed to a rebound in the US 10-year Treasury yield, which increased from 3.89% to 3.94%, strengthening the dollar and putting pressure on gold prices.

Important news to watch for includes the weekly jobless claims report, scheduled for 19:30, with a forecast of 241,000 claims. Additionally, if there is no retaliatory response from Iran, gold prices may continue to trend sideways or decline further.

Disney Reports Revenue and Profit Growth Fueled by Streaming Business

On August 7, Disney reported its 3Q24 earnings (ending June 30, 2024). The company achieved revenue of $23.16 billion, surpassing analysts’ expectations of $23.07 billion, and reported earnings of $1.39 per share, exceeding the forecast of $1.19 per share. This performance was driven by the strong performance of its streaming business.

The number of domestic subscribers in the U.S. increased to 54.8 million, up 9% year-over-year (YoY) and 1% quarter-over-quarter (QoQ). International subscribers also rose to 63.5 million, up 4% YoY but down 1% QoQ. The average monthly revenue per international subscriber increased to $6.78, up 1% YoY and QoQ.

Looking ahead to 4Q23 (ending September 30, 2024), executives estimate a slight increase in subscribers, with revenue likely comparable to 3Q24. However, Disneyland Paris is expected to see a decline in visitors due to the upcoming Olympic Games in France, which may also impact trends in China where economic conditions remain subdued.

News for 9 August 2024

Gold Rebounds as 200-Day Moving Average Holds Strong

On August 8, gold prices climbed to close at $2,427/oz. This rebound was driven by investor expectations that the Federal Reserve may lower interest rates in September, leading to a more relaxed market environment and supporting higher gold prices.

Looking ahead to August 9, economic data will be released at 08:30, with the Chinese inflation index forecasted to be 0.3%.

Eli Lilly Reports Strong Earnings, Stock Rises Over 9%

On August 8, Eli Lilly (LLY) reported its 2Q24 results, exceeding expectations and driving a 9% increase in its stock price. The company posted revenue of $11.303 billion, up 36% YoY, surpassing analyst forecasts of $10 billion. Net income reached $2.967 billion, up 68% YoY. This strong performance was driven by increased sales of JARDIANCE and MOUNJARO, which rose by 24% YoY and 33% YoY, respectively.

Sales in the U.S. accounted for 69% of total revenue, growing robustly to $7.835 billion, up 42% YoY, with sales prices and volumes increasing by 15% and 27%, respectively. The gross profit margin improved to 81% from 79% in 2Q23, supported by the strong sales of new diabetes and obesity drugs, including MOUNJARO and ZEPBOUND.

Eli Lilly has raised its full-year 2024 revenue guidance to $45.4 billion – $46.6 billion, up from the previous range of $42.4 billion – $43.6 billion, due to increased production capacity and higher demand. The gross profit margin forecast has also been revised up to 36% – 38%, from 32% – 34%, reflecting the growth in sales of new products.