S&P 500, NASDAQ 100, and DJIA MAKE HISTORY

1. Genevieve’s Corner

WHAT AN INCREDIBLE WEEK!

S&P 500, NASDAQ 100, and DJIA MAKE HISTORY WITH NEW ALL-TIME HIGHS! 🚨

Let’s recap!👇

• NVIDIA crushes earnings: EPS $5.16 vs $4.64 expected and Revenue $22.1B vs. $20.62B expected

• NVIDIA now earns more quarterly than it did annually.

• NVIDIA's market cap increased by +$277 billion to $2 trillion after blowout earnings, the largest single-day gain for any company in history

• NVIDIA's market cap has surpassed the size of Canada's economy

• NVIDIA is now the world’s 4th largest public company, trailing only behind Saudi Aramco, Microsoft, and Apple

• After yesterday's rally, NVIDIA co-founder Jensen Huang's fortune increased by +$9 billion. 🤑

• Goldman Sachs calls NVIDIA the "most important stock on Earth”

• Jim Cramer says NVIDIA is not near its peak

• NVDIA short sellers have $3 billion in losses. Semiconductor short-sellers have +$7.2 billion in losses.

• Jamie Dimon and his family sell +$150MM in $JPM stock for the first time since becoming CEO 18 years ago. This follows Jeff Bezos selling +$8.5 billion of $AMZN and Zuckerberg selling $428MM in $META.

• Jeff Bezos, Microsoft, and NVIDIA are investing in $2 Billion AI-robot startup Figure AI

• Elon Musk has said that the first human implanted with Neuralink’s brain chip has made a full recovery

• The number of S&P 500 companies discussing AI has hit a new high in Q4 conference calls

• Reddit files for IPO on NYSE (ticker RDDT)

• Donald Trump says "many people are embracing" Bitcoin, and he's seeing more and more people wanting to pay in BTC

• European Central Bank says Bitcoin's fair value is still zero and is unsuitable for payment or investment.

• Market cap concentration of the top 10% of stocks hits the highest since 1929, surpassing 2000

• Google apologizes after new Gemini AI refuses to show pictures and achievements of White people. Google also paused Gemini image generation, per FOX

• AT&T said the network disruption that caused tens of thousands of customers to lose cellular service Thursday was not a cyberattack

• Bad commercial real estate loans have overtaken loss reserves at the biggest US banks, per FDIC.

• Japan's stock market hits a record high, surpassing a level last seen in 1989

• Rivian lays off 10% of the workforce as EV pricing pressure mounts

• FED Minutes: FED officials believe rates are "likely at their peak"; most officials note risks of cutting rates too quickly, and more progress toward 2% inflation is needed before rate cuts.

• Goldman Sachs now expects the FED to start cutting rates in June. Expect 4 rate cuts in 2024 compared to its previous forecast of 5 rate cuts.

• Warren Buffett and Berkshire Hathaway are reporting earnings tomorrow morning! 

My portfolio is having a hell of a start to 2024!

If you want to see the full holdings, upgrade to GRIT VIP HERE!

Have a fantastic weekend, everyone; you deserve it! 🍾

Genevieve Roch-Decter

2. Matt Allen’s Corner

7 REASONS WHY STOCK PRICES FALL AFTER EARNINGS

Hi Everyone! Today, I’m highlighting one of our sections in GRIT VIP! Below, I share part of my article, 7 Reasons Why A Stock Falls After Earnings.

Earnings reports are required so investors can examine a company's health over a specific time period and analyze whether it is meeting its annual projections.

Before these earnings are available to the public, "Wall Street analysts" estimate how companies expect to perform. If a company beats these analysts' expectations ("earnings beat"), this usually sends the stock up. 📈

On the other hand, if a company fails to meet analyst estimates, a drop in the stock price usually follows.

More often than not, the days surrounding a company's earnings report release will naturally be more volatile.

So, you should keep track of when your company's earnings reports are released to avoid making poor investment decisions, such as investing all your money the day before earnings are released.

To understand how an earnings report affects a company's stock price, we must look at four crucial performance metrics (among others) that consist of an earnings report. These metrics define how a company performed since its last quarter.

Remember that these are the four we look at, which doesn't mean I am right or wrong.

Metric #1: Revenue

The first metric you should look at is revenue (sales). Revenue is the total amount of money a company generated over the past quarter from selling its products and services, not accounting for any costs associated with making this money.

Put simply, revenue is pure money before any other number—for example, the costs of producing a product/service. You should invest in companies that regularly beat these revenue analyst estimates. However, a company with high sales could make no profit, so it is important to dig deeper into the financials if you have time.

Metric #2: Earnings per Share (EPS)

Earnings per share (EPS) translates to the company's actual profits. A higher EPS number means a company is more profitable, has the potential to grow faster, and can pay out more to its shareholders through earnings increases and/or dividends.

Metric #3: Unit Sales

The third metric is unit sales, simply the number of units a company sold compared to its previous quarter.

Typically, a stock's price movement will move due to a sales increase/decrease of one of its more popular products, not one that has never dominated the industry market share.

One example is Apple (AAPL), a multinational technology company, and its popular iPhone smartphone product. This product line alone accounts for around 50% of the company's annual revenue.

So, even if Apple crushed earnings and EPS estimates for one quarter, a significant decrease in the number of iPhones sold since the previous quarter could lead to Apple's stock price falling after the market opens. However, if investors had realized that Apple's average iPhone selling price had increased since the previous quarter, then the stock price would likely have increased on the market opening instead.

Metric #4: Free Cash Flow

The fourth metric is free cash flow, the amount of money the company can give back to its shareholders.

For example, let's say a stock does $1,000,000 in revenue. However, the company generates negative cash flow. This situation means that after operating costs, expenses, and taxes, the company is not profitable and cannot "distribute" any money back to its investors.

On Shark Tank, Mr. Wonderful always asks about the free cash flow. Let's say Mr. Wonderful owns 10% of a business with $100,000 in free cash flow. If the company has free cash flow, it can distribute $10,000 to him as owner distributions at the end of the year.

There is no difference between Mr. Wonderful's example and a stock you own on the market. A company with tons of free cash flow can reward investors through dividends, share buybacks, M&A, or growth, which can increase the stock price.

Free cash flow is my favorite metric to study.

To read the full resource, upgrade to VIP here. 📚

Cheers,

Matt Allen

3. Comin’ Up

EARNINGS AND ECONOMIC DATA

💰 Earnings:

Monday: Workday, Fidelity

Tuesday: Lowes, Bank of Nova Scotia

Wednesday: Salesforce, Snowflake, Monster Beverage

Thursday: Anheuser-Busch, NetEase, Dell

Friday: Pearson, Plug Power

📈 Major Economic Events:

Monday: New Home Sales

Tuesday: Durable-goods orders

Wednesday: GDP

Thursday: Initial Jobless Claims, PCE, Personal income

Friday: Multiple Fed Presidents speak

The author of this newsletter owns ETF’s (exchange traded funds) that may hold ownership interests in the companies discussed in this newsletter as of the published date of this newsletter.