🚗 Tesla in legal trouble

and more earnings

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Morning Download
May 09, 2024

Good morning investors! A lot happened yesterday, including some surprise earning reports and announcements.

Today we cover:

  • Student loans to get more expensive.

  • More earnings.

  • Tesla in legal trouble.

📊 Economy and News 

Federal student loans to get costlier?

Federal student loan rates may rise by about 1% in the 2024-2025 academic year, according to an estimation by higher education expert Mark Kantrowitz.

Why? The percentage is based on the 10-year Treasury note, which has been on the rise while the Federal Reserve keeps interest rates high until inflation comes down.

New rates: Official rates will be announced in a few days; however, experts believe that the interest rate on new undergraduate loans will likely rise to 6.5% for the 2024-2025 academic year, up from 5.5% last year.

For graduate students, loans will probably come with a 8% interest rate, compared with 7% now

Plus loans for graduate students and parents may have a 9% interest rate, an increase from 8%.

Are you affected? You do not have to worry if you don’t plan on getting new loans.

All federal education loans issued on or after July 1, 2024, will be subject to the new rates. However, remember that it is not possible to evade the rate increase by borrowing ahead of that deadline. Loans for the 2024-25 academic year must be taken out after July 1.

Global hits:

Inventories: Wholesale inventories in the U.S. held steady in March, maintaining the initial projection of a 0.4% decrease, which mirrored the previous month's uptick of 0.4%.

Despite this stability in inventory, wholesale sales experienced a notable downturn of -1.3%, marking their lowest point since January. Comparatively, wholesale sales showed a year-over-year increase of 1.4%.

Surprising: China’s imports jump 8.4% in April, exceeding expectations as purchases from the U.S. grow.

Mortgage jumps: Mortgage applications in the U.S. bounced back, rising by 2.6% in the week concluding on May 3, 2024, following a prior decline of 2.3%.

This increase was driven by improvements in both the purchase index, which elevated from 141.7 to 144.2, and the refinance index, which surged from 456.9 to 477.5.

The resurgence aligned with a decline in the 30-year mortgage rate to 7.18% from 7.29%.

📈 Stocks

S&P 500 5,187.67 (-0.00058%)
DJIA 39,056.39 (+0.044%)
NASDAQ 18,085.01 (-0.036%)
BRENT CRUDE 83.97 (+0.54%)
* Prices as of May 9th, 12:20 AM UTC

Airbnb reports earnings

Airbnb reported first-quarter results on Wednesday that beat analysts’ estimates on the top and bottom lines.

Here are the numbers:

  • Earnings per share: 41 cents vs. 24 cents expected

  • Revenue: $2.14 billion vs. $2.06 billion expected

Revenue increased 18% to $2.14 billion from $1.82 billion a year earlier.

Airbnb said it is already experiencing “robust demand for travel” ahead of the peak summer season.

Special events like the solar eclipse in North America helped drive platform engagement during the first quarter, according to its shareholder letter.

They’re not shopping at Shopify

Shopify’s stock tumbled -19% after the company reported first-quarter results.

Here are the numbers:

  • Earnings per share: 20 cents adjusted vs. 17 cents expected

  • Revenue: $1.86 billion vs. $1.85 billion expected

The Canadian e-commerce company beat on the top and bottom line, but it gave downbeat guidance for the second quarter.

Shopify said it sees second-quarter revenue growth slowing to a “high-teens percentage rate” year over year.

Chipmaker Arm slides

Arm reported fourth-quarter revenue of $928 million Wednesday, marking a 47% year-over-year rise.

Performance was driven by Arm’s licensing business, which grew 60% to $414 million in the quarter.

But it was Arm’s guidance that left investors unimpressed. For the 2025 fiscal year, Arm said it expects revenue to come in between $3.8 billion and $4.1 billion. Analysts were expecting revenue of $3.99 billion for the full year.

For the 2025 fiscal first quarter — the current quarter — the company said it expects sales of $875 million to $925 million, compared with estimates of $857.5 million.

Also check: Disney, Warner Bros. Discovery to bundle streaming services.

Shocking: Officials are investigating allegations that Tesla may have deceived investors and consumers by exaggerating the autonomous capabilities of its electric vehicles. 🚘

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Microsoft-backed OpenAI’s valuation has skyrocketed past $80B as ChatGPT takes the world by storm. It shows people understand the transformative power of artificial intelligence, but there’s just one problem: ChatGPT can’t think. 

Bill Gates has even said inventing a breakthrough in artificial intelligence so machines can learn  would be “worth 10 Microsofts.”

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The best part: You have an opportunity to invest in New Sapience before anyone even knows what “SI” is.

💵 Personal Finance

Protect yourself with insurance – Part II

We talked about health insurance yesterday, today let’s look at life insurance, a type of insurance that ensures your loved ones are financially protected when you're not there for them. This type of insurance is not for you but for your family.

It’s mean to replace an income stream. For example, you would insure whoever is working in your household so the proceeds could replace the lost income.

In simple words, it’s defined as “a contract between an insurance policy holder and an insurance company, where the insurer promises to pay a sum of money in exchange for a premium, upon the death of an insured person or after a set period.”

We must, however, mention that not all life policies have a cash value component. This means that you may not receive any money if your policy expires before you die. (Another reason to stay current on your plan).

Life insurance costs anywhere from $10 to $15 a month based on your location and you can get anywhere from $250,000 to over a million depending on terms and conditions.

Also, in some cases, you might get it for free – such as with a bank account – so look at all your options and consider including it in your financial plan.

Check this cool video for more:

💰 Be a Better Investor

“If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring.”

George Soros

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👩🏽‍⚖️ Legal Stuff
Nothing in this newsletter is financial advice. Always do your own research and think for yourself.

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