#16 - Streaming Zynsanity

This week we cover the consumption growth of podcasts, music, and Zyns. And why there is always opportunity to be found in setbacks.

Big 3 Market Items

• Spotify ($SPOT) Reports Growing Revenue & Profit

  • Monthly active users grew 14% YOY to €626 million, subscriptions increased 12% YOY to €246 million.

  • Total Revenue was up 20% YOY to €3.8 billion and with gross margin at 29.2%.

  • The record profits came after big layoffs at Spotify. At the end of Q2 $SPOT workforce stood at 7,372 employees, down from 9,123 at the end of 2023.

• Philip Morris ($PM) has Zynsanity

  • $PM reported second quarter EPS of $1.59 and revenue for the quarter came in at $9.47B versus the estimate of $9.18B.

  • Their smoke-free business accounted for 38.1% of total revenues, with 36.5 million estimated adult users of our smoke-free products.

  • Zynsanity is happening as shipments are up over 50% vs Q2 2023. Last week $PM announced plans to to build a $600M Colorado plant to meet Zyn demand.

• Yahoo Finance Chartbook for 2024 Markets

  • The chartbook is composed of 32 data/economic charts compiled by economists and strategists on Wall Street.

  • There's a strong sense of optimism in the markets, with confidence that the US economy can achieve a "soft landing" despite the Fed's aggressive rate hikes.

  • AI stocks are crushing it this year, and those in semiconductor and cloud sectors have outperformed the S&P 500 by nearly 30 percentage points.

  • The labor market is stabilizing from the "Great Resignation" to now "The Big Stay." People are staying in their jobs longer that could lead to better productivity and lower wage-driven inflation.

Freedom Fund Portfolio

• 7/26/24 - Friday Freedom Fund Purchase:

  • 23 shares of $EVLV - Evolve Technologies

    • Racine Unified School District to add 9 scanners for next school year.

      • Evolv offers its product as part of a service package that costs around $2,500 a month per scanner and is generally offered under a four-year contract. That's another $1.08M in revenue over four years to cover just one door.

    • New York Times - Gun Detecting System Will Appear in Subway System

  • 2 shares of $SCHB - Schwab US Broad Market ETF

• Other Portfolio News:

  • $GOOGL - Alphabet

    • Q2 2024 - Earnings Recap

      • Reported revenues of $84.7 billion, a 14% YOY

      • Operating income for Q2 2024 was $27.4 billion, with an operating margin of 32%.

      • Net income for the quarter was $23.6 billion, resulting in a diluted EPS of $1.89.

      • Google Cloud contributed $10.3 billion in revenue and $1.2 billion in operating profit, its first billion-dollar operating profit quarter.

    • Cybersecurity firm Wiz calls off $23 billion deal with Google

    • Google no longer plans to phase out third-party tracking cookies from its Chrome browser.

  • $WM - Waste Management - Q2 Earnings

    • Revenue - $5.04B, +5.5% YOY

    • Adjusted Operating EBITDA - $1.62B, 10.3% YOY

    • Adjusted Operating EBITDA Margin - 30.0%

    • Adjusted EPS - $1.82, +20.5% YOY

Freedom Fund Background: I created the Freedom Fund as a public brokerage account back in October of 2022 to share that anyone with a social security # and a bank account can begin their investing journey by investing a couple hundred dollars a week. Every week and month I post on X (@GrahamInvesting) public updates about the purchases, exits, dividends, and growth of the fund if you want to follow in real time. The biggest obstacle people have to investing is just getting started so I decided to start a new account at $0 to start from nothing with you.

Quote of The Week

This phrase explores the deeper wisdom behind setbacks and unfulfilled desires. The Dalai Lama’s words remind us that not achieving our immediate goals can often pave the way for unforeseen opportunities and personal growth. In today’s competitive economy, this mindset offers perspective that that I think many of our younger generations grappling with high costs and financial pressures could relate to. It encourages a mindset shift, helping individuals to understand that detours and disappointments can lead to more informed decisions and solutions for your life and path.

Focus on what you can control because so much is out of your hands. Surround yourself with positive people and remember gratitude and positive self talk. Set small goals that create a realistic path to your big goals, don’t try to cross a bridge with no planks. Be open to change and trying new things otherwise you will get stuck. Practice building a resilient mindset that remains positive and flexible every single day so that you can enable yourself to handle challenges and changes with greater ease.

The purpose of Graham’s Gazette is to help others get started and stay consistent on their own personal, professional, and financial journey. I appreciate the time you take in reading & interacting with me and look forward to growing together.

Thanks for investing your time reading this.

-Graham (@GrahamInvesting)

Disclaimer: Graham’s Gazette provides information and resources related to investing, financial topics, and personal growth for educational and entertainment purposes only. The content presented is not intended to be construed as financial advice. Readers are encouraged to conduct their own research and consult with qualified professionals before making any financial decisions. Graham’s Gazette and its creators do not assume any responsibility for the accuracy or completeness of the information provided nor do they guarantee any specific results from such use of information.