🚘 Tesla and Google earnings

and home sales fall

Good morning investors! Big names are dropping earnings now.

Today we cover:

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  • Home sales fall.

  • Google and Tesla report earnings.

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📊 Economy and News 

The housing market is getting better for buyers

Sales of previously owned homes fell by 5.4% in June compared to May, reaching 3.89 million units on a seasonally adjusted, annualized basis, according to the National Association of Realtors. This figure also represents a 5.4% decline from June of the previous year, marking the slowest sales pace since December.

These figures represent closed sales, based on contracts primarily signed in April and May, when the average rate on a 30-year fixed mortgage exceeded 7%. Since then, rates have slightly decreased to the high 6% range.

Inventory increased by 23.4% from a year ago, reaching 1.32 million units at the end of June. Despite coming off record lows, this still represents just a 4.1-month supply. A six-month supply is typically considered balanced between buyers and sellers.

These inventory levels are the highest since May 2020, driven by homes staying on the market longer. The average time a home remained on the market was 22 days, up from 18 days a year ago.

However, the increase in supply has not eased prices. The median price of an existing home sold in June was $426,900, a 4.1% increase year-over-year and an all-time high for the second consecutive month. This is partly because the higher end of the market remains much stronger.

Homes priced over $1 million were the only category showing sales gains over the past year, while the largest drop in sales occurred in the $250,000 and lower range.

Higher-end buyers are more likely to use cash, with 28% of sales being all-cash transactions, up from 26% a year ago. Meanwhile, investor purchases decreased slightly, comprising 16% of sales, down from 18% a year earlier.

Global hits:

Good to know: A new report found that more than 39 million workers in the US are making less than $17 per hour. They make up about 23% of U.S. workers altogether. On the plus side, there has been a decrease in workers making a low wage in the last few years.

Remember that the federal minimum is currently $7.25 per hour and the federal tipped minimum for workers who earn part of their wages through tips is $2.13 per hour.

This comes at a time when nearly four in ten (39%) of US adults say they worry most or all of the time that their family’s income won’t be enough to meet expenses.

To cope, significant shares of Americans said they are adding side jobs, cutting down on driving and putting more expenses on credit cards.

Despite inflation coming down, prices are still higher than they were last year – they’re just rising at a slower pace. And consumers are still trying to catch up to the price spikes of 2022 and 2023.

📈 Stocks

S&P 500 5,555.74 (-0.16%)
DJIA 40,358.09 (-0.14%)
NASDAQ 17,997.35 (-0.057%)
BRENT CRUDE 81.59 (+0.72%)
* Prices as of Jul 24th, 12:20 AM UTC

Google and Tesla announce earnings

Google parent company Alphabet reported earnings after the bell Tuesday. Here are the results:

Earnings: $1.89 a share vs. $1.84 per share expected

Revenue: $84.74 billion vs. $84.19 billion expected

Wall Street is also watching several other numbers in the report:

  • YouTube advertising revenue: $8.66 billion vs. $8.93 billion, according to StreetAccount

  • Google Cloud revenue: $10.35 billion vs. $10.20 billion, according to StreetAccount

  • Traffic acquisition costs (TAC): $13.39 billion vs. $13.54 billion, according to StreetAccount

The company reported ad revenue of $64.62 billion — up from $58.14 billion last year, showing that Google’s advertising business continues to grow, though at a slower pace than in the first quarter. Alphabet shares fell just 1% on the report after rising inflation and interest rates tightened marketing budgets in 2022 and 2023.

Tesla reported weaker-than-expected earnings for the second quarter as automotive sales dropped for a second straight period.

  • Earnings per share: 52 cents vs 62 cents expected, per LSEG consensus estimates.

  • Revenue: $25.50 billion vs. $24.77 billion expected by LSEG

Revenue increased 2% from $24.93 billion a year earlier, Tesla said in an investor deck on Tuesday. But automotive sales dropped 7% to $19.9 billion from $21.27 billion in the same quarter a year ago. Auto sales included regulatory credits of $890 million, more than triple the figure from last year.

The bad report sent the stock down -8% after the bell.

Also check: Meta debuts newest Llama AI model with help from Nvidia and cloud partners.

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💵 Personal Finance

Introduction to private equity

Different from private debt, private equity is for people with a lot of money as you typically need millions to invest in private equity but returns can be exponential. However, the risk factor is also there.

It refers to capital investment made into private companies with the hope that they’ll one day get big. You’re technically betting on the genius of another person.

The infographic below explains everything about private equity, including its subsets:

💰 Be a Better Investor

“We ignore outlooks and forecasts… we’re lousy at it and we admit it … everyone else is lousy too, but most people won’t admit it.”

Martin Whitman

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