Assessing volatility, Lyft CEO, Disney: Market Domination

The stock market (^DJI, ^IXIC, ^GSPC) is losing steam in its attempt to recover from this week's sell-off losses. Julie Hyman and Josh Lipton monitor the movements in the market indexes and talk to top Wall Street experts and CEOs in Wednesday's final trading hour.

Lyft (LYFT) CEO David Risher discusses the ride-share platform's first quarterly profit and its strategy to build long-term investor trust.

BlackRock Global co-head of bond ETFs Steve Laipply also joins the program to talk about the advantages that fixed income and bond market investing provides during periods of market violatility.

Top trending tickers on the Yahoo Finance platform include Trex (TREX), Ralph Lauren (RL), and Warner Bros. Discovery (WBD) ahead of its latest earnings release

This post was written by Luke Carberry Mogan.

Video transcript

Hello and welcome to market domination.

I'm Julie Him and that is Josh left in live from our New York City headquarters.

We're giving you the ultimate investing playbook to help tune out the noise and make the right for your money.

And he is head line with getting up to speed one hour before the closing.

Bell rings on Wall Street.

We, we think the market overreacted a little bit to the jobs data on Friday.

So I think the market is kind of digesting that fact that, you know, the data was weak but it wasn't horrible.

Uh We got a bit of a pull back on Monday.

Um I, I would kind of put those in separate categories.

Yeah, the market responded to the data and then you have something that was a little more yen carry slash positioning driven.

The portfolio for Disney is working really, really well.

Uh Obviously, the numbers were great, you know, 4% revenue, 35% eps growth, 30% guide.

Uh but the entertainment business profitability tripled and we've been talking a lot about, you know, the creative engine really getting back on track and that's what we've also seen over the course of the last three months performance of the company really strong.

And yes, then the market took our shares down linked to even higher expectations for the go in the quarter.

And the reason why I called the blip is that, that the underlying trends are really strong and with the raise of full year outlook, then investors should be very comfortable in the performance of the company.

We got one hour to go until the market close.

So let's take a look at the major averages here and we had the rally intact, the rebound intact now about an hour ago.

So the dow turning lower about 215 points.

You off uh 6, 10 of 1%.

The Dow was the first to go and then it was followed by the S and P which is now down a half a percent and the NASA which is down three quarters 1%.

I was just looking at the sector action here to see what's behind the decline in consumer discretionary, health care, materials tech, you got energy utilities and financial still in the green but pretty broad based selling.

We did have that weak us bond sale.

Uh We should point out, I mean, there has been that big rally there.

So I don't know if that indication that maybe folks think it's time for a bit of a, a breather.

Um Other, you know, it's interesting Julie because we had a bit of relative com, right?

Uh But still you just got so many interesting cross currents going on investors trying to get kind of that are more technical in nature yen funded carry trade we've been talking about.

But also still questions about the economy, geopolitical risk.

I also thought by the way, small caps were interesting too down again today and by quietly small caps already this month down nearly about 10% here.

Um It has not been good.

Uh So obviously, there was a lot of talk about the great rotation.

Folks are, folks were so excited about the fed cutting rates, but if you're cutting rates because you're getting really more nervous about our.

Right.

Yeah.

Yeah, you also are looking at volatility today that is ticking up a little bit again.

This is the past 10 days for volatility here, but it was the sort of uh short volatility trades also getting wiped out that also played a role in, in all of the market volatility as of late, getting back to the 10 year here for just a second, another big move uh back upward today.

So, you know, even with the forecast for the Fed to interesting to see that kind of move over the past couple of sessions, we us bond sale.

You know, I got just the guy to tell you about that good.

I do, I really do for more on the latest moves.

Let's welcome in Steve lately.

Blackrock's Global Co head of Bond ETF.

Steve.

It is good to see you.

It has been, uh, a wild week, Steve and it's only Wednesday, which is, which is impressive.

Uh, let's start a big picture, Steve.

I'm just curious.

You know, what are you telling clients?

I'm sure you've been getting a lot of calls this week, Steve.

What, what has been your guidance?

Yeah, I think, I think we're, um, advising in a very similar way.

What, what um you know, others are, which is remain calm.

Um The volatility is going to happen in these markets.

We were in a period of trending markets for a while.

Um We were very sort of sideways and rates as an example for the longest time started drifting down and then uh the jobs report kicked us lower by a fair amount.

Now we're having some uh somewhat of a correction to that.

Um You know, the uh weaker 10 year auction got us uh pushing back up towards 4%.

Um I don't think fundamentally anything has really changed with the view on the fed.

Um starting to cut rates in September, we can debate about 25 or 50.

Is it two or three, et cetera, et cetera?

But I think that the consensus is still pretty much pricing that in.

So, you know, again, we're advising investors just to remain calm and just sort of manage through this volatility and we've got some more data coming.

So that will give us a little bit more of a clear picture in the next couple of months.

Yeah, we have to wait a little bit for it.

At least not, not this week.

In terms of the biggest data.

Can you talk to me a little bit more about this bond sale that we saw today did draw a weaker demand that had been expected.

And I wonder was it, didn't, we didn't see a meaningful change in that 10 year chart, by the way, when we got that, but we did start to see stocks come down around the same time.

Was there was that sort of a catalyst for what's going on today?

Well, as, as you mentioned, at the beginning of the broadcast, there's a lot of things that are driving uh this volatility right now, you mentioned the yen carry trade, um this, you know, a little bit of an overshoot perhaps in yields moving lower and then uh potentially just repricing.

Um It's hard to say exactly, you know, what the linkage is with, with equities.

I mean, the correlations did come back the way they were supposed to when you did get that week's week job uh report.

So I wouldn't read too much into this.

Um, but we expect yields to, um, you know, continue to be more or less, um, in this range, maybe moving lower as the fed starts to cut.

But I think, you know, we, we've been um advising people all year to take a hard look at the bond market with a view that it could potentially re price lower.

And, you know, we did see that from mid fours down to where we are now.

So, um, we'll see where we go once the, the fed does, um, kick off um, their, their cycle, uh perhaps as early as September and it will be very important to see what their communication is around that, that will be key.

You know, Steve, you, you mentioned the fed, I just want to on that for a second because this week and certainly on Monday there all of a sudden is more calls, Steve, more chatter.

Well, maybe there has to be an emergency inter meeting, uh, cut.

Um, I will say that we spoke to Mohammed Al Arian on the show this week.

He was very skeptical of such such an emergency action there.

He just thought if, if the fed did that, it would just, he thinks signal panic to investors, but I would love to get your take as well on that.

Yeah, I think their bar is probably fairly high for that.

Um, you would have to have more disruption and, and more, um, you know, extreme levels of volatility to, um, you know, to really start that conversation, um, in a serious way and, and it would have to be accompanied by, um, some, you know, data that would show that things are turning very, uh, significantly.

Um, so, yeah, I would agree.

The bar is probably fairly high for that and our flows haven't really shown, um, that much of, you know, of a view that things are, are deteriorating that rapidly.

Yes.

You know, you've had a sell off in equities, obviously.

Um, you have had outflows and you have had even some profit taking in bonds, but we don't really see anything pronounced yet.

And so Steve, is it your view that there will be a recession?

Oh, I don't think, you know, base case.

I think we probably, I mean, obviously the um with policy being as restrictive as, as it is, there's always a risk of that, but I don't know that we tilted into a, you know, likelihood of that.

Um Certainly, you know, people could argue that the probability of that may have increased um with some of this weakening data.

But again, you have folks on the other side who will point to various aspects of the data.

Uh My read some a report that was talking about how the hurricane and you know, whether in Texas may have influenced the jobs report, et cetera, et cetera.

So I do think we need some more corroborating data points to really to get a beat on whether we're tipping into higher recession odds going forward.

And so bottom line, Steve you fixed income investors who are listening right now.

What is your advice?

Where is the value so I can tell you where we've been seeing our flows and it's, it's something that we've been consistent about all year, which is high quality fixed income.

Um You know, we've been um telling investors it's time and again, this isn't an either or it's not a binary thing, but it's time to take a hard look at the cash you're sitting on.

Um, if you're underweight fixed income and our data has shown consistently that people are that it was time to move back.

And one way to do that was the high quality fixed income, you know, and uh I share we've taken in around 56 billion in the USA full 50 of that is in treasury, high quality investment grade, multi sector, investment grade credit, et cetera, et cetera.

And so investors have responded that way.

They have also been more or less allocating somewhere in between short duration and long duration.

Yes, you've seen flows into TLT but most of the flows have been in the belly of the curve.

So investors have been doing that.

Um We think there's still an opportunity to lock in these yields, especially ahead of a of an easing cycle if that is to kick off in, in September.

So stick with high quality.

Um You know, depending on what you're comfortable with.

Stay in the belly of the curve.

All right, thanks.

And also I would add on the active side.

Oh, sorry Julie.

Um Just one thing we've also seen, I'd be remiss in not mentioning we continue to see um strong interest in active ETF S. We've talked on the show about bin continuing to see flows into that or clo a product et cetera.

So that's also a dimension of, of the flow picture we've seen this year Belly the curve and active ETF.

Thanks a lot, Steve.

Appreciate it.

Let's take a look now at one of the days top trending tickers, it is Super Micro computer shares of Super Micro computer are sinking after the company missed earnings estimates for the fourth quarter.

The tech company also reporting a drop in gross margin.

Now, here's what's super interesting about Super Micro.

We reported those numbers when they broke late yesterday after the close and at first, the stock went up.

That's because the sales forecast is above estimates, but we even noted at the time they missed on earnings per share by two bucks per share.

And indeed that gross margin number came in light.

Well, it took a little while but then the market was like, wow, these numbers were not so good and you see this decline especially standing out to me.

And this was something that was highlighted in a note from Bank of America that the company has warned C I says that they don't expect Blackwell GP us to ship in this calendar year apart from engineering samples, Blackwell, of course, being made by NVIDIA and then Super micro is a vendor that provides the cooling system uh for those chips.

So just an interesting note there that I think the market's also seizing on.

Yeah, there was also an interesting note from uh evercore looking at some of the possible read throughs Julie um in their coverage universe.

And what they said was, um they told their clients listen the upside to the company's 2025 guide bodes well, for Dell's A I server shipments to a lesser extent of H PE.

But then they said we think margin headwinds remains a greater focal point versus revenues.

And listen, they acknowledge there are nuances, you know, comparing and contrasting these three companies.

But bottom line, they did say Super Micro's margin under performance does raise concerns heading into Dell and HPS July quarter plan.

Yeah, there are some questions about Super Micro may be offering price discounts in order to compete against those bigger guys.

Hence the margin pressure on that Bank of America note, by the way that I mentioned was also a downgrade of the stock to neutral from buy the new price target there $700 a share.

So look at that.

Yeah, it's already, it's already well below there, we are just getting started here on market domination and we've got a lineup loaded with executives set for you today coming up at 330 gonna speak with Lyft Ceo David Rer about his company's second quarter shares of the ride sharing giant are sinking today.

Plus later in the hour dime brand, Ceo John Payton joins the show live from New York Stock Exchange on a mixed bag in their most recent earnings and in the four pm hour, Brian.

So heading to the Ralph Lauren headquarters in New York to discuss that iconic brands latest quarter with CEO Patrice State T for all those conversations as well as much more market coverage leading up to.

And after the closing bell, we will be right back despite beating on the top and bottom lines.

Disney third quarter, earnings results were overshadowed by continued weakness in its parks division.

As a result shares moving lower here still there were positives.

The entertainment giant reports, total streaming division turned a profit for the first time, a quarter ahead of its own estimates.

Here's what Disney CFO Hugh Johnson told Yahoo Finance about the company's streaming business.

We said we were going to do it in Q four.

We've achieved it in Q three.

I would expect to see us continue to do that.

We were losing not too long ago, a billion dollars a quarter.

Now, now we made 47 million and I expect we're going to continue to go up and join us.

Now with more is Yahoo finances, Alexandra Canal.

A hi Josh.

Yeah, you just heard it.

I mean, streaming is clearly a priority for this company and something that they've been working towards, but you can't really ignore that miss at the parks business.

I mean, the parks has been really the shining light for this company.

It's what got them through the pandemic.

And now we're starting to see this squeeze.

We did receive a warning ahead of this report that we should be expecting some softness.

But the fact that Disney is now warning of continue to softness due to quote moderation in demand, that's not very encouraging.

We did see domestic operating income for the segment dropped 6% from the prior year on the earnings call.

You Johnston said the company expects to see quote the latish revenue from parks for the current quarter.

Now, along with parks, we also saw linear networks continue to struggle domestic line, your revenue falling 7%.

This was dragged lower by a decline in advertising revenue and lower affiliate fees as more consumers cut the.

So really not a big surprise there as we've been reporting on this phenomenon.

But what was a surprise was that streaming profit that we were just discussing one quarter ahead of schedule, full combined profitability for all of the DTC platform.

So that includes Disney Plus, Hulu and ESPN Plus and, and looking ahead, Disney does say that it remains on track to be profitable in the current quarter and to see that continued profitability.

So that's something for investors to look forward to.

Another thing to look forward to as well is what ultimately happens with Hulu.

We do know that Disney purchased a Comcast NBC Universal share in Hulu for the floor price, which was $8.6 billion.

However, now we're seeing a little bit of debate on what the fair market value is for Hulu.

So it's a bit complicated.

But basically Disney says that they overpaid, NBC Universal says that they underpaid, they now have a third party appraiser in here that's going to analyze this.

And Disney coming out with an sec filing earlier this morning and basically worst case scenario, they might have to pay NBC Universal 5 billion more.

So that's another under the radar development that's pressuring shares today.

Um Let us also talk about the other media news is happening today.

Warner Brothers Discovery is reporting after the bell.

So what should we be on the lookout for?

And it's all I feel like the NBA is going to be top of mind.

That's going to be the first question that is asked.

We do know that unfortunately Warner Brothers Discovery they were not able to renew their media rights.

The NBA going with some newcomers with NBC Universal and Amazon also, Disney was able to renew its current package, but you know, this is something that I think David that is going to try and skirt around.

We do know that WBD has sued the NBA over the fact that the NBA did not accept Warner Brothers matching, right?

So that's something I look forward to and then beyond the NBA, this is a company that's struggling with a lot of the same things that all of these media companies are struggling with.

When you think about advertising, when you think about a lot of those cord cutting was streaming has been positive that they have been positive in streaming.

And I think with House of The Dragon, we're going to see some more subscriber editions as well.

But this is a company, I mean, it's struggling stock is down 30% since the start of the year.

You've been hearing a lot of rumors about what to do moving forward.

There's been layoffs, there's been restructuring.

Should you spin off certain assets?

Should you combined certain units?

And that's something that I think is going to be a topic of conversation, especially when it relates to M and A.

But WBD one of those media giants that just can't seem to catch a break or, or get it right.

Maybe after the bell, maybe after the bell, we'll, we'll see what happens.

Thanks, Sally, appreciate it.

Well, joining us now with more on Disney earnings and the streaming landscape is Jessica Reef Elich B of a securities Senior media entertainment analyst, Jessica.

It's always great to see you and get your perspective.

So let's start with Disney here.

The Parks disappointment, the streaming progress here.

I know that you like the stock.

So I, I guess tell us about the, the good parts of the quarter what stood out to you.

Yeah, I mean, today was a mixed bag for sure.

Um On the really positive side, where is the uh film division?

The inside out to did extremely well.

Deadpool versus Wolverine is doing extremely well.

And what's important about, well, for one, it's a turn around just, just on the film unit theatrical alone.

But what's important about all of Disney's content is that it does drive streaming.

So it, you know, the company talked this today on their call and, and in their press release about how the original movies, the original inside out or the the prior Deadpool movies and Wolverine movies, how consumers have come back to the streaming service to re-watch them or sign up just to see them.

So that's one thing that was very positive.

The other thing that was actually a pretty big surprise was how well they did in advertising.

So advertising was up over 8% across the company even with the linear decline.

So it just goes to show you how strong the other parts of the business were.

So they had very solid double digit growth in advertising and streaming and also in sports.

So those are two big drivers in the quarter they just announced, but also going forward that that's where the growth is and they're very well positioned for that.

But as you said, there were some disappointments as well.

So it's very much a mixed bag.

Yeah, on the on the disappointments, Jessica.

So us theme parks and miss on the bottom and it looks like the top as well.

What, what is going on there exactly, Jessica, what are the puts and takes and, and what do you see ahead?

Well, we, we had a heads up when, when Comcast reported, um, and had a terrible quarter at Universal theme parks.

So there's look, the consumer demand is getting weaker.

We, we, we see that across multiple industries, whether it's restaurants or air travel.

So we're, we're seeing that the, the consumer is starting to really feel pressure um from the economy.

So that's one thing.

Um And then, you know, they've had this incredible demand for the last several years because, you know, it's that post COVID.

Um you know, just everybody wanted to get out and have an experience having said all of that and they raised prices of course, as well.

But it looks like at this point, the um the indication from management was that the next several quarters could be difficult.

They didn't say how many quarters, but we know that this is a cyclical business.

I followed Disney for many decades and it's, uh you know, there's no way around it, there's exposure to the economy.

Um And so the next year, I think the numbers will have to come down across the street for theme parks and, and Jessica, you know, you cover other media businesses, as you said, you've, you've covered um Disney for a long time.

Does it feel like, as you say, we don't know how long it's gonna last?

But it feels, does it feel like we're sort of at the leading edge of this, that it's only the beginning of what could be this consumer downturn?

Well, I, I'd say there are a couple of things, I mean, it's possible domestically, there's a lot of pressure, unfortunately, there's some pressure from China as well.

So Chinese consumers um are starting to feel a pullback.

So Disney has Global Parks.

It, it feels like they'll have one quarter of um maybe a challenging quarter from Paris because the Olympics since nobody else wanted to, you know, the hotels were booked, but Paris bookings sound like they're very strong.

Japan's been really amazing.

And then the other thing is that they have three cruise ships, they're basically doubling their cruise ship line over the next 18 months and the cruises have been on fire, they're high end is very expensive and um and pretty much booked, you know, and, and the biggest ship ever is coming in, the will open in the coming year in Asia and Singapore.

It'll be Singapore based and it's a gigantic ship.

So there are offsets to the weakness.

Um And it is more of a global company that now than it was in the last cycle.

And Jessica just back to streaming quickly, you know, they obviously want to keep profits moving in the right direction and they are raising prices.

I I'm just curious, you know, in, in the kind of macro backdrop we find ourselves in, you know, what do you think the impact is gonna be there, Jessica, how do you think consumers react?

So there again, another division with a lot of puts and takes.

So on the positive side, advertising is really strong for them.

They have great content, uh very brand friendly and safe for consumers.

So, you know, an Uncluttered environment so that bodes well and they're scaling up in advertising, they've announced a gigantic price increase and they expect minimal term and they are starting to crack down this month, August on password sharing.

So those are three very positive drivers.

On the other hand, they did talk about investing in technology and um having more um it, it sounds like they're changing the recommendation and they're investing in technology.

So there will be a higher level of investment, at least in the coming year.

They didn't say how long and that even though they will have a nice swing in direct to consumer and streaming profitability, it could have been even higher or it would have been even higher if not for this investment.

And and Jessica finally to sort of tie those the streaming and the consumer stuff together.

Um because as we see these prices go up, not just for Disney, but some of the other streaming services as well is there a concern that consumers will reach a limit and we will start to see more cancellations as they start to choose which ones they think are worth keeping.

Absolutely.

And the price, you know, it's the prices for all streamers have been going up.

I get on one hand, there's a very low price offer for advertising.

So if consumers can handle or willing to, to take a ads, even, you know, a smaller amount than with linear television.

So let's say it's four or five minutes an hour versus 15 minutes plus on linear.

Um If that's palatable, it, it's not that it's not that expensive, but the prices for subscription only without advertising are starting to go through the roof.

And as a result, our view is that consumers will, will drop several streamers and maybe rotate a little bit more depending on the content cycle.

Jessica, great to have you on the show today.

Thanks for making time for us.

Thank you and coming up shares of Lyft going downhill today following weak third quarter guidance, we're gonna speak to the Ceo David Riser on the other side about the latest earnings report, stick around more market domination.

Right.

On the other side, the shares of Lyft are sliding today after the company reported second quarter earnings this morning, the ride share company missing on Q two booking and third quarter guidance.

We have Lyft Ceo David Risher joining us now to talk about the latest print.

David.

Always great to see you.

It's great to be here.

Thank you, Josh.

So let's dive right into this.

So, so first quarterly profit in the company's history, big milestone.

It does sound like they have the bookings guidance, the outlook, maybe missing the street's expectations.

Let's just start there, walk us through the report.

What, what are you seeing in the business?

Yeah.

So what we're seeing is it's our best quarter ever.

I mean, and it's not just the first profitable quarter though, that's obviously a big milestone um for any company, but we've had more uh riders than we've had ever.

We have more drivers and more driver hours than we've ever had on the platform.

Our ETA S pick up times are as fast as they've ever been.

Uh Our pricing is great.

So it's so from a marketplace perspective, it sort of inter it feels super, super strong.

Um And then we, what we did today was we reiterated our full year guidance and our three year plan.

I think it sounds like uh you know, investors were looking for something a little bit different.

But I have to say, and you know, I guess maybe a lot of CEO S say this, my big focus is on the long term and I feel like there are 100 and 60 billion rides in the US and we're doing a tiny fraction of those.

So I see a huge amount of growth ahead of us, do you think, I mean, part of your job as well?

And I know you, like you said, everybody says you focus on the long term, but part of your job also managing those expectations on the part of investors.

So how do you sort of close that gap if you will?

Yeah.

So we are really focused on doing what we say we're gonna do.

We really are.

And it's one of those things where, and it's so hard, right?

You, you're so tempted always to sort of get out a little bit ahead and make a forecast that, you know, you're sort of 90% sure.

We really say, you know, what our deal is, when we say we're gonna do something, we're gonna do it and that's the way we're going to manage.

And I think investors long term that's trust building, but in the short term, sometimes it's frustrating because you're not saying what they want you to say.

I, I'm curious if you don't expect to be profitable um on an annual basis for, for some time, what are the levers though you're gonna pull to get there?

Is it just, is it about just the ride volumes?

Is it about the new products like advertising?

You know, all the above?

Yeah.

Well, so will be profitable on an annual basis.

You know, certainly in our next an investor day, we at over 2025 to 2027 and we said in the earlier part of that.

So that is, is absolutely on the horizon.

Um You know, it's a little all the above.

We're a scale business.

We do about 2 million rides a day.

It's a great experience for 2 million people.

And that's what we want it to be.

Customer obsession drives profitable growth.

So as we grow without growing our cost, our cost base that obviously starts to turn off money.

And that's why this is our third uh cash flow positive quarter, $250 million of cash, actually just this quarter alone.

So that's a great sign.

Then on top of that, you start to work with mix and it's not just mix within ride share.

It's adding things like media where every one of those rides is 2 million rides a day.

You're going to the grocery store, you're going to the supermarket, you're going to any number of places and those are media opportunities for people to come and, and talk to you and that tends to be a higher margin product, right?

And your advertising revenue did go up uh quite a bit.

I I wanna ask a little bit more about the consumer because you know, we're sort of halfway a little bit more into earning season and definitely have heard a little bit of caution on the part of some companies about what's going on with the consumer.

You guys, you mentioned you saw active riders at a record um 16% jump in rides to and from restaurants, bars and entertainment venues, anything that indicates to you that the consumer is weakening, more price sensitive, any kind of hit to demand anywhere.

It's so interesting.

I mean, we look at our data, you know, and just stare at it so quickly and try to find, you know, read those same tea, tea leaves.

Honestly, we don't see a lot to talk about there.

It's frustrating because everyone wants to say like, what does this really mean?

Well, is the price sensitivity because I know you, you have talked about that a little bit.

Is that a reflection has that has the price sensitivity increased in your view?

Yeah, not in a significant way.

And I'll tell you that because we have a product called Wait and Save, uh which is a great product.

If you want to wait a little bit, you save some money and we don't see a lot of people trading into that.

That's been pretty as well.

It's more from our perspective, looking forward, hearing some of the same chatter around price Intivia and so forth and looking and saying, well, what can we do there almost proactively to try to get ahead of that?

And that's what this new price lock product is all about trying to give people complete certainty and how much they're gonna pay on a daily commute.

So that's why we lean in there.

But honestly, when we look at the current data.

We're not actually seeing a lot of, a lot to be worried about.

Interesting, you know, another mega trend we talk a lot about on the show, Dave is A I and I'm just curious how is live leveraging benefiting from that technology?

Yeah, a ton, a ton.

And I mean, of course, a lot of it is behind the scenes stuff you don't see around pricing and you know, how do you get the right car at the right place?

Um The place where you're most likely to see it soonest is if you have a problem in customer service and a lot of companies are doing this.

We're super excited about the response that we've gotten from our driver community in particular, um who get their problem solved much faster and get back on the road much more quickly as a result of some of the A I chatbot stuff, we're already kind of rolling out, I think then and again, where I get very excited is can we create products and services for, you know, again, for drivers to help them earn even more on the platform?

I think there's a lot of stuff you can do there um with A I and then of course, as autonomous vehicles come, that's all about artificial intelligence.

That's a, a physical car driving it around, which is, which is A I power and you talked about autonomous vehicles on as well.

A little bit and that you guys are already seeing autonomous vehicles through your platform um particularly in the Southwest.

Are you doing thing?

You know, you don't own the cars obviously.

So it's just a matter of partnering with those who do are, are you actively working on those kinds of partnerships?

And how do you foster that more A vs on the platform?

Yeah.

So first thing I'll say is I think A VS are gonna be a huge tail wind for R because it's gonna add more supply, right?

Conceivably.

Well, hopefully, certainly a safer supply, you know, over time and hopefully also a less expensive supply.

But what else is gonna happen is there's gonna be a whole business model thing that has to go on where the manufacturers say, how can we put these to, to good use, right?

If you spent a lot of money on, on a B development, you want them out and about, you want them utilized 24 hours a day, seven days a week.

And that again where we come in, we're a platform that, that provides demand, we can on board individual cars and so on and so forth.

So a lot of conversations are going on between us and, and various different partners, all the people that you would expect.

Um It's still very early days, of course, as we all know, we're talking about very, very small number of actual vehicles, but everyone we talked to is super excited about a hybrid model between some cars driving themselves and frankly, a lot of cars being driven by drivers for a long time to come.

Ralph Lauren shares are in the red today despite topping earnings expectations for the first quarter, our Brian saw standing by at the lecture retailers, New York City headquarters and showroom.

He's got more on the latest report.

Hey, Julie, what's going on?

Yeah, tough assignment, but I'm glad I signed up for it.

Hanging out here uh in that headquarters and showroom uh for Ralph Lauren, really in the, in the mood, I think from being in here in a half an hour for a Great Martini gonna have to grab one after the segment.

But really uh like you mentioned shares of uh RL on the finance platform under a little bit of pressure here despite a lot of wins in the company's most recent quarter, here are a couple uh three top takeaways.

Uh At least that I saw from the company's Ernie's call and earnings release, Europe and Asia right out of the gate.

Those were results very, very strong in both of those countries.

Much stronger, relatively speaking compared to many other players that have reported uh from the retail space so far.

So that was the first takeaway number two gross margins and operating profit margins up year over year.

Uh Another big win for Ralph Lauren, I think it speaks to a, I think it's a really interesting sign, Julie when a power retailer in a very promotional environment can grow its profit margins.

And then you look at perhaps one reason why inventory level down 13% over a year immediately signals to me companies not dealing with any inventory challenges.

Its channels are probably stuffed with a lot of full price merchandise.

Always good to see.

And last but not least if you were going to ding the company on anything, it was mixed results out of the North America business, uh same store sales and the physical stores up 3% e commerce down 4%.

But that wholesale business, those sales down 30% as Ralph Lauren pulls out of a lot of, I would say department store doors that don't make a out of sense don't really fit uh with the company's vision for the future.

And look, let's just face the facts.

Department stores continue to bleed traffic.

Uh, as people go online, a lot of department stores out there just don't do a good job presenting merchandise.

So Ralph Lauren continues to clean up a lot of doors that no longer make a lot of sense.

But Julie, I, I have to say, you know, sitting in this headquarters, you were reminded of, uh this is just a different company.

What you don't see off camera.

I'm looking at a photo of, of Ralph Lauren who is the executive chairman of uh of the company maybe from the seventies.

I'm sitting next to a book titled next to me, Ralph Lauren, uh a way of living.

This is a company uh still in many respects.

Founder led, he is in the trenches, he's still designing.

Of course, the co is Patrice Louve, who I'm going to talk to very shortly.

But there's just something special about this company Julie and that's why historically Ralph Lauren shares have traded at a premium relative to many other apparel companies out there.

Well, but I think the big question saz is, are they going to be immune to the consumer headwinds that are so clearly emerging here.

We're hearing from it uh about it from a lot of companies we've yet to get into really in earnest the retail earnings season as you know, but I expect we're gonna be hearing a lot about, I mean, you know, Disney is not in retail, well, they're sort of in retail, they sell a lot of merchandise, but, you know, when you hear that the parks are, are taking a little bit of a hit and people are worried about prices.

You have to think that that's some of that is going to make its way to retail.

You're right.

Uh Julie, of course, Disney, a big seller of all merchandise who doesn't want a new stuffed Mickey doll to put in their house, sign me up for one of those.

Julie, I'm down for one of those.

But look to your point my day started talking to Disney CFO Hugh Johnston and he told me, Brian consumers are watching every penny.

That's my story.

Go to Yahoo finance.com.

I encourage everyone, the millions of people that watch Yahoo Finance to read that story because I think that really explain some of the weakness we're seeing uh out of a Disney.

But I just heard your conversation with live CEO.

He didn't want to come out and say that consumers are pulling back or resisting against prices.

But look, Julie, I heard a little bit of caution in his voice and I think the reality if there's anything we're getting out of this earnings season over the past few weeks, the consumer has started to pull back.

Are they falling off a cliff?

No, but they're not spending to the extent they were 3 to 6 months ago, Brian Sazi.

Thank you, buddy.

Appreciate it.

All right.

Thanks Josh.

Meanwhile, shares of tracks, let's look at that ticker.

They are sinking down over 20% right now.

It's after the deck maker trimmed its sales outlook as it anticipates a reduction in proan inventories and accelerating weakness in entry level product sales.

So, uh stock is just nose diving here, Julie, uh decking company lowers its revenue outlook now looking for revenue for the year between 1.13 and 1.15 billion.

Um That is down from 1.22 to 1.24 billion just playing right off.

What SI said, by the way, I thought some of the commentary from executives that highlights this theme, right?

Um They say premium product sales continue to out perform, but they say sales of lower price product lines were below expectations consistent with the recent data.

They say indicating lower than anticipated purchasing by consumers in this segment.

We expect additional softness in this market in the second half of the year.

Well, what's interesting is Brian Fairbanks on the call, the CEO talked about that they have sort of three tiers of their products and he's come out and talked with us before about treks composite decking and that they do have these three sort of tiers.

So he said basically what happened is that you had the weakness on the lower end.

He said the middle range and the higher end up until June had been holding up.

And then as they got into June and July, he said, we started to see those mid level customers um starting to struggle and starting to pull back as well.

So moving up the value chain, the income chain that weakening starting to creep in there.

So again, I think it's, it's gonna be a, we don't, we start to get more um earnings reports from retailers next week, we'll get Home Depot next week.

Then it accelerates into the end of the month and we're gonna have to watch them really closely to get more on these themes.

Yeah.

And also reacting by the way, team at Stevens downgrades this name talking about the sudden steep and potentially prolonged, slow down.

It looks like at least some investors are great today for sure.

Well, stocks are sinking ahead of the closing bell.

Let's stay t for more market domination on the other side, di brands delivering an earnings beat for the second core despite declines in comparable same restaurant sales, but a lower 2024 sales outlook dampening the better than expected profit.

Got Yahoo finances, Brooke Dipalma down at the New York Stock Exchange with Dyn brand, Ceo John Payton for more on the quarter.

Brooke.

So I repeat you out here.

Ok.

It sounds like we have lost our communications with Brooke.

So we're gonna check back in with her in just a little bit in the meantime, let us get back to the state of the consumer that is in focus on Wall Street and its Tale of two stories based on the results from Shopify and Air B and B.

Uh We now have less than 50 minutes left to the closing Bell on Wall Street.

We're looking at how to navigate the big picture with the Yahoo Finance playbook.

And joining us now is Scott Devitt Wedbush Equity research analyst.

You know, Scott, we've been sifting through a lot of the results, not just these to, to try and figure out what is the health of the US consumer, but these are two good examples that tell very different stories, Shopify seemingly going like Gangbusters.

Now it's most of its customers are not directly consumers, but it's retailers that service consumers and then you have Air BNB on the other side showing some cracks in terms of consumer demand.

So what do we take away from this mixed messages?

I think um is what we're taking away, you know, the travel companies broadly.

So the online travel companies inclusive of tripadvisor um are speaking about um shortened booking windows, meaning that consumers, you typically book out like 45 days in advance and they're tightening up, they're still traveling, but they're, but they're making their decisions later in the process, which is an indication of, you know, economic weakness.

And then you mentioned Shopify, you know, being strong, which counters that Uber's results were strong.

Um parts of Google's business were strong, meta was strong across the board.

So um it's unclear what is going on other than that, there are these emerging kind of indications of weakness that weren't there three months ago.

And so it may be isolated to travel in a few other pockets or it could be, you know, the beginning of something broader.

And I think that's why you're seeing these reverberations in the market aside from the macro, you know, dynamics.

But from a fundamental standpoint, some reverberations around that uncertainty, Scott, let's get into some specific names.

I know you cover Shopify is one of them they reported sales and profit beat, uh, consensus stock is surging here.

Uh, Scott, you're though, you're neutral on the name.

So you're on the sidelines.

How come Scott?

Well, we downgraded it, um, a handful of months ago on evaluation and, um, it's, it's a, it's a very well positioned company.

It's just, um, very expensive because of the way that investors look at it.

Um, they look at it like a software company but it doesn't have software company margins.

So, um you know, it tends to trade at a very high multiple relative to other companies that are in similar businesses across the consumer internet.

And so for that reason, we're pretty valuation sensitive and, you know, where the stock trades now it's about 42 times EBITA.

So that, that's a, it's a high multiple even for a business that's growing 20 plus percent with expanding margins.

So that's, that's the main issue.

Nothing really fundamental.

I think it's a very strong company and, and in fact, with these results, they're pretty well positioned to show healthy top line and expanding margins now for at least a few quarters.

So I guess that what would change your mind is only either if the shares came down or if you know, the numbers accelerated to such an extent that the valuation looked more attractive.

That's right.

I, I think there's better opportunities elsewhere but not, it's not really a knock.

The rating is not, um, you know, negative in any way.

It just, it's really valuation oriented because the, it's not you, it's, it's a couple of standard deviations away from the norm in the sector.

And um you know, I think that that presents more risk than opportunity for investors even despite days like today, because if you go back to last quarter, stock was sitting at 77 they actually guided down and the stock went from 77 to 54 in a quarter.

So we're about halfway back.

Got another name, you cover Lyft uh reporter today, we had Ceo David Riser on the program.

Um You know, investors disappointed here in, in, in that print.

I'm curious what you made of it.

Well, I think, you know, one of the challenges the company had an analyst day and put out, you know, expectations and then, you know, shortly thereafter miss them.

And so that creates a little bit of a credibility issue that it creates an exaggerated response in the stock.

Um You know, Uber dominates that industry um in the US where Lyft participates.

But um but boy, what a dramatic move if you look at the stock chart and Lyft and I don't know that the results, you know, justified the moves that, that have happened in the stock, um like leading into results and on the back of it.

So, um it's probably interesting, you know, sub tan our price targets $12 a share and then let's circle back to Air B NBA little bit more specifically, as well as you said, both they and Tripadvisor talked about that narrow wing booking window here.

Um But otherwise, you know, it seemed as though the results were decent at the very least.

So, so what do you make of that one?

Is that one you would scoop up on the weakness today?

Well, I think um airbnb is, is um in a bit of AAA transition period because, you know, they've relied on the core business for so long.

It's begun to slow.

Booking is actually taking market share of alternative rooms based on, you know, booking's definition of alternative rooms.

And um and booking has a sizable business, they're over 80% of the size of Air BNB and growing faster, you know, so airbnb is in this kind of digestion period where they need to get to the next thing, whether the next thing is the core re accelerating um through, you know, investment or growth in newer international markets or expansion through experiences relaunching in 2025 or better take rates because of um the implementation of the cross, you know, border fees that they, they've just instituted one of those things that needs to take over so that the business can sustainably grow in the double digits.

Whereas right now it's there and investors, you know, without that visibility, think this business could be a single digit grower, which would be problematic even though it's not super expensive at 23 times earnings with a 7% free cash flow yield.

So we like it, um, you know, on the pullback, but I was there yesterday, you know, so I, I don't think with the stock down 20% there was enough there to downgrade it after the fact.

Um, you know, but it's, it's, uh, it's gonna be a tough one for a bit, Scott.

We're always lucky to have you on the show.

Thanks for joining us.

Thanks so much.

D brand delivering earnings beat for the second quarter despite declines in comparable same restaurant sales.

We got Yahoo Finance's Brooke Dipalma down at the New York Stock Exchange with Dyin brand, Ceo John Payton for more on the quarter.

Brooke.

Good afternoon, Josh.

That's right.

I'm here with John right here, John.

I'd love to kick things off with what we're hearing about the state of the US consumer.

We've been hearing from so many executives that they really are counting their dimes that they're really watching their wallets.

How does that translate to your customer?

Uh It's tough out there, you know.

So when we see our customers behavior right now, we're seeing a couple of things, Brooke, remember that our core customer earns about $75,000 household income.

And you know, the first thing we're seeing is that in the last quarter or two, they're eating out less number one when they do eat out um with us, for example, they're finding our value portion of our menu to a, to a higher degree.

So for example, if you look at Applebee's, the LT Os are limited time offers plus our value portion of our menu with about 33% of tickets last quarter were those two categories for Applebee's.

And that's up from 22 to 25% a year ago.

I, I can tell you more.

Yeah.

Yeah.

No, Josh, I I really would love to understand too.

In the past, you've said that you guys compete with fast food.

We've heard from so many fast food giants introduce value meals.

Do you think that's still your main competitor here?

Well, what's happened in the last quarter or two is that there's been a little of a conflation between fast food uh select service, full service like our own because of the, you know, the consolidation of price points around $10.

You know what I would say is that anybody can call it a value meal and put it up on their their menu board, right?

And, and serve that burger out of a bag.

You know what we do is abundant food, great tasting and most importantly the experience of the fun you have at our restaurant, interacting with our team members and all of that at an accessible price.

That's the definition of, you know, full service value John, I have to say I love a good local Applebee's with the walls and the local community feel 1099 seemed to be that price point that you guys were hit.

Do you think you have the ability to take that even lower to truly ramp up the competition here?

Um It's possible I'm not gonna sort of reveal what we're heading in the next couple of quarters.

But what I can tell you is that the, the guest today is very value driven, right?

And you're seeing that across, across the restaurant segments today.

And what's important to keep in mind, Brooke, is that our promotions at Applebee's Ihop and fuzzy are always um profitable.

We construct them in partnership with our franchisee.

Each brand has an ad committee and together, we put those, those promotions together and they're designed to drive traffic, profitable traffic as well as additional items for whatever that promotional item is.

Would you call what we're seeing right now?

A price war, a value war.

What would you call it?

It's a value war and it's really, it's a fight for share of wallet, right?

So at a time when our target guest is dining out less, we have to make sure that when they do used to dine out that Ihop or Applebee's or fuzzies are their first choice.

And right now really delivering great value and a great experience is what does that?

I'll give you an example, you know, we're being much more flexible now, you know, we, we typically would plan our marketing calendars on an 18 month time frame and lock them in.

You can't do that.

What we've learned in the last couple of quarters is you've got to be able to potentially make changes with four or five weeks notice.

So the two by two by two promotion that Ihop did last quarter, 22 eggs, two pancakes and two proteins for $6.

We, we put that in place in four weeks, not having it on the schedule because we saw what our guests are looking for.

You know, right now, Applebee's has all.

You can eat appetizers and endless fries and Ihop's got all you can eat pancakes.

We've never had both brands doing all you can eat at the same time.

And it's because we saw that this was what's needed right now because we want to meet our guests where they are and give them what they need.

We're hearing from other restaurants like a mcdonald's or Chipotle major expansion plans that they've been working on, rolled out the end of last year.

Continue to roll out this year.

It's a bit of a different story for you guys.

Walk us through how you think about expansion.

It seems like Wall Street really is looking for that.

Adding more restaurants is certainly a key to our future and our growth.

It is a tough time to do that right now for various reasons in this economy, as well as the cost of building out a full service restaurant is more expensive than it once was.

So, we've got a couple of key plans in place.

Now, the one of the most important is Applebee's is redesigning its entire restaurant.

We're almost finished with that work with a big focus on redesigning the kitchen, the back of the house to take out, make it much more efficient and take out significant cost.

We'll be able to start testing that prototype and building it next year.

We think that's going to unlock Applebee's growth.

The other thing I'll tell you is we're having great success with what we're calling dual brands.

So we've opened 10 dual brands outside the US.

That's an Applebee's and an Ihop in the same size restaurant as one or the other.

They're doing twice the revenue and sharing the cost of one kitchen and a cross trained staff.

We're now bringing it to the US.

We've got 15 restaurants in the pipeline.

The first one will open in Q one of next year and we're excited for the American consumer to see that and for us to test out the economics and that with our franchisees.

All right, we'll have to keep a look out for that collaboration, John Payne and I'm brand CEO.

Thank you so much for joining us.

Always a pleasure back to you guys in the studio, Brooke.

Thank you, appreciate it.

And while we're wrapping up today's market domination, do not go anywhere.

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