Amazon’s Market Cap, Walgreens Earnings, and More!
Editor’s Note: Happy Friday, dear reader! I hope you have a great weekend!
Now let’s get to it!
Amazon’s Market Cap Crosses $2T Line
There’s been much ballyhoo over Nvidia (NSDQ: NVDA) briefly becoming the world’s most valuable publicly traded company — and remaining with Microsoft (NSDQ: MSFT) one of the only two companies with market caps north of $3 trillion.
I remember when a billion seemed like a lot of dough…
Anyway, Apple (NSDQ: AAPL) became the first company in the U.S. to be valued at more than $1 trillion back in August 2018.
Since then, the market caps of the biggest tech giants have snowballed out of control. There are currently six U.S. companies trading for more than $1 trillion.
And Amazon (NSDQ: AMZN) is quietly rising in the ranks.
On Wednesday, investors pushed the valuation of the e-commerce behemoth past the $2 trillion line for the first time. It joins Nvidia, Microsoft, Apple, and Google parent Alphabet (NSDQ: GOGL) in this club.
Amazon’s stock has soared by more than 50% in the last 12 months thanks largely to — you guessed it — investor buzz about artificial intelligence (AI).
Back in April, CEO Andy Jassy predicted that Amazon’s investments in AI had put the company’s cloud-computing business, Amazon Web Services (AWS) on a path to revenue of $100 billion this year. The company recently added its own AI assistant, Amazon Q, to its AWS offerings.
The company also designs its own AI chips and offers other AI-related services across its many units.
Of course, there were other factors that contributed to the company’s push past $2 trillion.
For one thing, Bank of America (NYSE: BAC) analysts reported that Amazon is still their No. 1 pick of all FAANG stocks.
If you’ll recall, the FAANG group was the hottest group of stocks before the pandemic, including Apple, Google, Netflix (NSDQ: NFLX), and Meta Platforms (NSDQ: META) — then known as Facebook — as well as the e-commerce juggernaut.
The BAC analysts also upped their price target for AMZN from $210 to $220.
The other big factor behind Amazon’s rise this week is today’s next story…
Keep in mind that Amazon owns more than a 16% stake in this electric vehicle (EV) maker.
Rivian Receives VW Lifeline
Shares of Rivian Automotive (NSDQ: RIVN) skyrocketed this week on the news that it would receive a new investment from Volkswagen (OTCMKTS: VWAPY).
The German auto company has announced that it will invest up to $5 billion in the American electric vehicle (EV) maker over the next two years.
That’s certainly welcome news for Rivian and its shareholders. Before the announcement — which sent Rivian shares soaring by more than 30% this week — the EV company’s stock had plummeted by roughly 50% since the start of 2024.
Rivian has suffered such a poor share-price performance due to some intense cash burn. The company has burned through more than $4 billion of its cash in the last 12 months.
According to Rivian, it will receive up to $1 billion up front from Volkswagen in the form of a convertible bond. Then it will receive $2 billion in common stock, followed by a $2 billion investment in a new joint venture (JV) between the automakers.
A joint statement said that the JV will “create next-generation electrical architecture and best-in-class software technology.” The venture will be equally controlled and owned.
Aside from giving Rivian a much-needed boost to its balance sheet, Volkswagen’s investment signals that VW is optimistic about Rivian’s future. The deal could also help Rivian receive contracts and investments from other automotive players, too.
“The transaction as a whole provides a powerful platform for future growth for Rivian,” the EV maker’s chief financial officer, Claire McDonough, said. “And it’s not just the $2 billion of JV-related capital. It’s the full $5 billion of capital and the opportunity we have to accelerate our mission.”
According to Rivian, it will use VW’s investments to ramp up production at its current Illinois facility, as well as to build a new plant in Georgia. The EV maker noted that both facilities are crucial to putting Rivian on “a path to positive free cash flow and meaningful scale.”
“Through our cooperation, we will bring the best solutions to our vehicles faster and at lower cost,” VW CEO Oliver Blume said. “We are strengthening our technology profile and our competitiveness.”
Why WBA Plummeted This Week
Shares of pharmacy chain Walgreens (NSDQ: WBA) cratered yesterday after the company reported lower-than-expected fiscal third-quarter earnings and dramatically cut its full-year profit outlook.
According to Walgreens, this year’s “challenging” environment of cash-strapped consumers has led it to lower its adjusted earnings outlook from between $3.20 and $3.35 per share to between $2.80 and $2.95 per share.
According to Walgreens CEO Tim Wentworth, “The consumer is absolutely stunned by the absolute price of things, and the fact that some of them may not be inflating doesn’t actually change their resistance to the current pricing. So we’ve had to get really keen, particularly in discretionary things.”
The company reported adjusted quarterly earnings per share (EPS) of 63 cents. Wall Street had expected an adjusted EPS of 68 cents.
However, Walgreens reported higher revenue than expected — $36.4 billion versus $35.94 billion. This also reflected a 2.6% year-over-year increase.
The chain’s net income totalled $344 million, or 40 cents per share. That compared favorably with the year-ago quarter’s $118 million, or 14 cents per share.
Walgreen’s U.S. healthcare business division fared particularly well, enjoying a 7.6% year-over-year increase in sales. This unit’s revenue totaled $2.13 billion — above Wall Street’s expectation of $2.08 billion.
At the same time, the pharmacy segment hauled in $28.5 billion in sales during the quarter — again, better than the $28.34 billion reported for the year-ago quarter.
However, Walgreens’ retail sales dropped by 4% on a year-over-year basis. Comparable sales ticked 2.3% lower.
“We continue to face difficult operating environments, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins. Our results and outlook reflect these headwinds, despite solid performance in both our international and U.S. healthcare segments,” Wentworth said in a statement.
He went on to say, “I am confident that we have the right team and the right strategy to lead a business turnaround for the Walgreens that our customers and patients need.”
The earnings report sent Walgreens stock plunging by more than 17% in pre-market trading yesterday.
Stock Splits Are Back in Style
Stock splits are back with a vengeance.
This week, both Nvidia and Chipotle Mexican Grill (NYSE: CMG) initiated splits of 10-for-1 and 50-for-1, respectively.
And back in February, retail giant Walmart (NYSE: WMT) executed its first stock split in more than 20 years. It was a 3-for-1 split.
Why are stock splits all the rage?
Well, aside from making shares more attractive to retail investors, stock splits have a habit of pushing share prices higher.
According to data from Bank of America’s Research Investment Committee, stocks that had split beat the S&P 500 on average in each of the past four decades.
In fact, companies whose stocks split enjoyed an average total return of 25.4% in the 12 months following the split announcement.
That’s more than double the average return of the S&P during the 12-month periods.
Take a look:
You will find more infographics at Statista
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