Udemy | July 24th, 2024

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GOOD MORNING

Here's everything you need to know today:

Alphabet dropped its most recent earnings on Tuesday afternoon, and surprise surprise, being one-half of a global advertising revenue duopoly is profitable! 

The monolith formerly known as Google hit a whopping $84.7 billion in revenue, a 14% jump from last year. The real flex? Google Cloud finally crossed the $10 billion mark, with $1 billion in operating profit. 

CEO Sundar Pichai (or an AI version of him used for earnings season), credited Search and Cloud momentum for the boost. And speaking of flexes, operating margins are at 32%, and net income soared to $23.6 billion, also Alphabet is now earning $1 billion in passive interest every quarter. All hail CFO Ruth Porat who, ever the financial ninja, kept costs in check while raking in the dough.

But Alphabet somehow missed estimates on YouTube ad revenue. Damn, the algo really is cold as ice.

Let’s dive into more detail below.

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BREAKING NEWS
Big Tech’s hottest new summer couple is already calling it quits.

Cloud cybersecurity startup Wiz has called off its $23 billion deal to be acquired by Google and will focus instead on going public. The merger was initially hailed as a strategic masterstroke to bolster Google's cloud security capabilities but seems to have fallen victim to the fallout of Friday’s CrowdStrike debacle and a resurgent IPO market.

Basically, like the protagonist of a Taylor Swift song, Wiz looked at its new relationship and decided to spend some time loving itself… before paying investment bankers huge fees to tell everyone else why they should love it.

WHAT HAPPENED
According to multiple, the megadeal fell apart due to "regulatory hurdles and valuation disagreements" which both sides would want us to translate as: “The government got nosy, and both sides couldn't agree on how much this whole thing was worth.”

Sure, Google is currently under at least two antitrust investigations (but who isn’t these days) and $23 billion might actually seem a little light considering that it’s like a 2x plus change of Wiz’s current $12 billion valuation in one of the hottest sectors in all of finance.

Plus, Wiz already has a pretty robust little business, boasting partners like Amazon and Oracle already in its growing portfolio, meaning that Google might have had more to gain from the acquisition. And we’d wager a few Alphabet shares that this is the narrative being whispered into Wiz’s ear by more than a few i-bankers who can almost taste the underwriting fees of a new cybersecurity player hitting the public markets.

“I can only imagine how many pitchbooks these guys have had thrown at them,” one banker at a bulge bracket bank told Moby. “But I can imagine how much pressure there is to get the underwriting fees on this one.”

What we’re saying is; Wiz’s decision to break up with the bros in Mountain View might have actually been a genuine “It’s not you, it’s me” situation.

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BREAKING NEWS
ETFs are essentially the Stanley Quenchers of modern finance: Trendy, ubiquitous, and always thirsty for a collab.

The total net assets of exchange-traded funds are more than $8 billion thanks to investor’s seemingly bottomless thirst for what are basically tax-friendly mutual funds with fun themes and lower fees. It’s a trend that everyone on Wall Street and Robinhood wants a piece of right now, even if some institutional providers have been slow to admit it.

We’re looking at you Goldman Sachs.

WHAT HAPPENED
Goldman Sachs, the Deathstar of global finance, hasn’t done much more than dip a fleece-vested toe in the ETF pool. The total assets under management of Goldman’s entire ETF portfolio look like a rounding error at BlackRock or Vanguard.

But that might be about to change.

A key hire indicates that Goldman is starting to play catch-up and will be turning on its ETF cash machine sooner rather than later.

Bryon Lake, JPMorgan’s former Global Head of ETF Solutions has come aboard at Goldman’s headquarters at 200 West Street in the role of Chief Transformation Officer in Goldman’s Asset Management business. Under Lake, JPMorgan had some rather impressive growth in the ETF department putting it in the top 10 of U.S ETF providers by assets.

That league table is still dominated by Vanguard and Goldman’s existential enemy BlackRock.  We don’t want to overstep here, but wethinks that Lake’s “transformation” will be telling Goldman’s sell-side guys “Can you make an ETF for that?”

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BREAKING NEWS
Oh, Gary…it's been a tough couple of years, hasn't it?

Once a shining star of Goldman Sachs, where he spent 18 years and became one of the youngest partners ever at age 30. He landed billion-dollar deals with the NFL (a $3.6 billion deal, to be exact), and during his time there as co-head of finance, he was responsible for controllers and treasury worldwide. Everything was good and going great, likely never heard or cared about blockchain technology, proof-of-stake, Bitcoin or Vitalik Buterin.

Then, President Bill Clinton came knocking, and his time in government began. Now, after a few tours through multiple regulatory agencies, Gensler is Wall Street’s top sheriff, and he knows all about the crypto universe. And lately, he’s had a lot on his plate regarding Ethereum.

WHAT HAPPENED
The SEC Chairman's relationship with Bitcoin, Ethereum, and crypto at large has been nothing short of toxic. Think Sid and Nancy, but reverse the roles and less drugs and violence. If you don't believe us, see how the Bitcoin and crypto crowd on X feel about Gary Gensler over the years…God save the Chairman.

But what a lot of people don't know is Gensler is no noob when it comes to the space. In 2018, while teaching at MIT, Gensler delivered many lectures on blockchain and cryptocurrencies, often speaking about Ethereum, noting its potential and the complexities of its regulatory status. This was also likely the time Gensler started building up a case against - consciously or not Ethereum's 2014 initial coin offering (ICO) and its securities status in the eyes of U.S. regulation.

Ethereum was initially described in a white paper by Vitalik Buterin in late 2013 and later announced at the North American Bitcoin Conference in Miami in January 2014 as an entirely legitimate project. It officially launched on July 30, 2015, under the codename "Frontier," raising over $18 million.

After Gensler was sworn in to run the SEC on April 17, 2021, he became a mixture of Mr. Burns and Captain America, emphasizing the need for intense regulatory oversight of the Bitcoin and crypto markets, broadening investor protections, all with the unsubtle air of wanting to accrue as much authority as possible.

"Right now, the exchanges trading in these crypto-assets do not have a regulatory framework, either at the SEC or our sister agency, the Commodity Futures Trading Commission. That could instill greater confidence," Gensler (who also once ran the CFTC) stated at the House Financial Services Committee on May 6, 2021.

Then, in early 2023, after deliberating back and forth whether Ethereum was a commodity, security, or magic internet money, Gary dropped the metaphorical hammer on Ethereum 2.0. The SEC initiated a formal investigation into Ethereum's potential classification as a security. The Division of Enforcement approved this investigation on March 28, with full commission authorization following April 13, empowering SEC staff to investigate and subpoena parties involved in Ethereum token transactions.

Unlike Gary's early years at Goldman, though, he dropped the ball when called to the House Financial Services Committee to chat about Ethereum's security status. He consistently declined to provide a definitive stance and maintained a strange ambiguity on the regulator's position, making many wonder why he suddenly had cold feet.

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1. Visa Misses Q3 Revenue Estimates in Mixed Earnings

Visa reported mixed third-quarter results, beating earnings per share expectations but missing on revenue estimates. The company’s stock reacted negatively to the revenue shortfall.

2. Boeing Dominates Farnborough Day 1 With Big Orders for Large Planes

Boeing secured a significant number of commercial jet orders on the first day of the Farnborough International Airshow, highlighting strong demand for its large planes. This positions Boeing favorably against competitors in the commercial aviation market.

3. AMC Entertainment Inks Key Refinancing Deal With Lenders

AMC Entertainment announced a successful refinancing deal with lenders, which is expected to relieve financial pressure on the company and provide stability for its operations and shareholders.

4. Porsche Shares Fall 5% After Automaker Cuts 2024 Outlook on Aluminum Alloy Shortage

Porsche’s shares dropped by 5% following the announcement of a revised 2024 outlook due to a shortage of aluminum alloys, impacting production and financial projections.

5. Spotify Stock Jumps on Strong Earnings Growth Amid Turnaround Plan

Spotify reported robust earnings growth, driven by an increase in paid subscribers and a successful turnaround plan, leading to a significant rise in its stock price.

6. General Motors Reports $4.4 Billion in Q2 Pretax Profits, Raises Expected Earnings for Full Year

General Motors reported a strong second-quarter performance with $4.4 billion in pretax profits, and increased its full-year earnings guidance due to robust vehicle sales.

7. UPS Shares Slide on Earnings Miss, Guidance Cut

UPS shares fell sharply after the company missed quarterly earnings expectations and lowered its 2024 guidance, citing high labor costs and weak package delivery demand.

8. Ethereum ETFs Hit $300 Million in Trading Volume in First Hour of Being Live on the Market

Ethereum ETFs saw significant trading activity, reaching $300 million in volume within the first hour of market debut, indicating strong investor interest in cryptocurrency-based financial products.

9. Alphabet’s Revenue Boosted by Cloud Computing, Search Ads

Alphabet reported higher-than-expected second-quarter revenue, driven by strong performance in its cloud computing services and search advertising business, boosting investor confidence.

10. Tesla’s Profit Fell 45% in the Second Quarter on Weak E.V. Sales

Tesla’s second-quarter profit declined by 45%, attributed to weaker sales of electric vehicles and substantial investments in AI and driverless technology, impacting its financial results.

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Today's insights are courtesy of Udemy, they are an online learning platform offering affordable courses across various fields.

Learn More Now ➔