Black Swan Street Weekly Stock Market Summary (May. 27-May. 31 2024)

Welcome to Black Swan Street!

Welcome back to another edition of the best financial newsletter: Black Swan Street!

It was a short but jam-packed week, so let’s jump straight in:

• Salesforce Suffers Worst Trading Day Since 2004📉

• The Swan’s Selections🦢

• In Other News🗞️

• Next Week In The Stock Market🔮

• The Swan’s Story Of The Week🦢

Read time: 6 minutes

Salesforce Suffers Worst Trading Day Since 2004📉

Beating earnings doesn’t have the same weight that it used to.

Increasing company earnings over time was often seen as a great sign for future company growth. Beating analyst forecasts meant that the company was doing better than expected. 

This is still the case, of course, but in the current market dynamic, analysts are looking at more metrics than just earnings.

Take Salesforce, which topped first-quarter earnings expectations. A 44% increase in EPS of $2.44 from the year prior should be an amazing sign of growth; however, the rest of the reported metrics tell us a different story. 

Even with such a strong increase in earnings, Salesforce tanked this week and suffered its worst trading day since 2004.

Salesforce (CRM) finished the week declining -13.94% 

They had a revenue miss that was well below expectations. Sales growth has also slowed despite an acquisition spree that included the likes of Slack Technologies and Mulesoft. 

Salesforce’s Earnings Snapshot:

• Revenue of $9.13B, up 11% YoY, missing expectations of $9.15B

• EPS of $2.44, beating expectations of $2.37

• Sees Q2 revenue $9.2B-$9.25B, below expectations of $9.35B

• Sees Q2 EPS of $2.34-$2.36, below expectations of $2.40B

Read the full story (here)

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The Swan’s Selections🦢

💸The $84 Trillion Wealth Transfer: Over $84 trillion dollars is set to be transferred to young adult hands from wealthy boomers. Most of these funds, around $72.6 trillion, are set to be gifted to heirs. 42% of the wealth transfer, or $35.8 trillion, is projected to come from ultra-wealthy families that make up just 1.5% of households.

⚔️Are We Heading For Civil War: Billionaire investor Ray Dalio, former manager of Bridgewater Associates, believes we could be heading for a civil war. He believes this year's current election could serve as a checkpoint to see if the United States economy spins out of control.

🛒Google Talks HubSpot: Google-parent Alphabet is considering an all-stock bid for $32.5B marketing software firm HubSpot. HubSpot shares rallied 8% on Tuesday after the news broke. Reports originally surfaced in early April and continued earlier this month, indicating that talks were still progressing.

🛍️Costco Beats Earnings: Costco beat third-quarter revenue expectations on Thursday, reporting net sales of $58.52 billion compared to estimates of $57.98 billion. They also reported adjusted earnings of $3.78 against the estimate of $3.70. Consumers can’t get enough of the wholesaler.

In Other News🗞

• Janet Yellen expressed concerns over rising living costs - FT

• Equity funds see massive weekly inflows on rate cut hopes - RT

• Citigroup asked 600 staffers to RTO full-time - RT

• Boeing sees six-fold rise in employee concerns on safety and quality - RT

• KKR is set to receive EU approval for its $23.9B deal to acquire Telecom Italia's fixed-line network - RT

• Carlyle is planning a sale of Italian aerospace-focused manufacturer Forgital at a $2.7B EV - RT

• GameStop raised $933M from an at-the-market equity offering - RT

• China set up its third state-backed fund with $47.5B to back its semiconductor industry - RT

• IMF upgraded China's 2024/25 GDP forecasts after 'strong' Q1 - RT

• Activist Elliott disclosed a $2.5B stake in Texas Instruments - RT

• Robinhood launched a maiden $1B stock buyback - RT

• T-Mobile agreed to acquire almost all of US Cellular's wireless operations in a $4.4B deal - RT

• Hess shareholders approved Chevron's $53B takeover despite a dispute with ExxonMobil over a key asset - BBG

• Johnson & Johnson agreed to acquire rights to a drug from privately held Numab Therapeutics for ~$1.3B - RT

• Former Goldman executive appointed next Cleveland Federal Reserve president - FT

• Activist Peltz sold entire Disney stake after losing proxy battle - CNBC

• US oil giant ConocoPhillips agreed to buy Marathon Oil in a $22.5B all-stock deal - RT

• Zero-down mortgages are making a comeback- CNN

• US GDP data was revised downwards on soft consumer spending - BBG

• Amazon will increase its 4% stake in food delivery app GrubHub to ~18% and allow US users to order directly on Amazon’s website/app - BBG

Next Week in the Stock Market🔮

Earnings Calendar Next Week:

Economic Calendar Next Week:

The Swan’s Story Of The Week🦢

Is College Still Worth It?

The decision to attend college or university can be a daunting one, especially considering the years of unaffordable debt aspiring students can potentially face. Without financial help from parents or guardians, college can be out of reach for many students.

Even still, the common consensus is this: get the degree, and the money will come after graduation. Yes, debt exists, but you can pay it all off once you start working and then some.

Well, this thought process may not be completely accurate anymore as new analysis suggests that about 30% of students will never earn enough money to offset the price of their education. In other words, depending on the type of degree you get, you may be strapped with college debt forever if you aren’t careful.

Read the full story (here)

The Wrap-Up🔄

🎊🎉 That’s it for this week 🎉🎊

Let us know what you thought⬇️

Black Swan Street Review of the Week🖤