5/1/25

Amazon slides on light Q2 guidance, despite earnings beat

Amazon beat earnings expectations for Q1, but the tech giant forecast operating profit for the current quarter that undershot Wall Street’s expectations.

Shares fell 3.9% after-hours, as the company forecast Q2 sales of $159 billion to $164 billion (a midpoint of $161.5 billion) and operating income of $13 billion to $17.5 billion. Analysts are calling for sales of $161.21 billion and operating income of $17.62 billion, according to FactSet.

For the first quarter, Amazon blew past analysts’ revenue expectations with $155.7 billion of sales, up 9% year on year. The FactSet analyst consensus was $155.1 billion. Earnings per share came in at $1.59, topping estimates of $1.37.

Net income was $17.1 billion, up 64% year on year. Estimates were $14.58 billion.

Capital expenditures were $25 billion, in line with analyst expectations.

Ad revenue jumped 18% year on year to $13.9 billion.

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Luke Kawa

53m

The K-shaped economy, in one chart

The idea of a “K-shaped recovery” — relatively affluent Americans doing well, while those lower on the income spectrum struggle mightily — was in vogue as the US economy emerged from its Covid-induced recession in 2020.

A few years of better wage growth for lower earners helped put a dent in this trend, but now, the “K-shaped economy” is back in a big way:

Liz Everett Krisberg, head of the Bank of America Institute, and senior economist David Michael Tinsley wrote in a new report (emphasis ours):

“The labor market slowdown appears to be impacting lower-income households, in particular. According to Bank of America deposit data, after-tax wage and salary growth slipped to just 0.9% year-over-year (YoY) for lower-income households in August — the smallest gain since the start of the series in 2016. Wage growth for higher-income households, on the other hand, rose to 3.6% YoY, the highest growth rate since November 2021. This growing divergence between income cohorts is also reflected in spending trends, with credit and debit card spending growth easing for lower-income households but accelerating for higher-income ones.”

Deteriorating labor market outcomes for lower-income and traditionally marginalized groups sucks. Full stop.

From a macroeconomic perspective, however, remember that the top 40% of earners drives over 60% of US consumer spending. That means any easing of nominal consumption growth at the lower end of the income scale can be more than offset by a similar-sized pickup in spending growth at the upper end.

Luke Kawa

15h

Opendoor soars as cofounders Keith Rabois and Eric Wu added to board of directors, Shopify COO Kaz Nejatian appointed as new CEO

Opendoor Technologies is soaring after announcing that two of the online real estate company’s cofounders, Keith Rabois and Eric Wu, have been added to its board of directors. Rabois will serve as chairman.

The company said Wu and Rabois’ venture capital firm is buying $40 million in Opendoor stock via a private investment in public equity (PIPE) financing.

In addition, Opendoor has poached Shopify COO Kaz Nejatian to serve as its new CEO after Carrie Wheeler resigned in mid-August.

“Literally there was only one choice for the job: Kaz. I am thrilled that he will be serving as CEO of Opendoor,” Rabois said.

The company touted in its press release that it’s “going into founder mode” with these additions, with lead independent director Eric Feder championing this injection of “founder DNA.”

That exact phrase, “founder DNA,” was used by Eric Jackson, architect of the initial rally and social interest in Opendoor, as he openly campaigned for these very two individuals to be added to the board.

This underscores how far the company is willing to go in embracing a new strategy of listening to its investors (particularly the most prominent one, it seems!) as management aims to engineer a fundamental turnaround in its business to match the optimism embedded in its stock price.

Nia Warfield, Luke Kawa

15h

Three stocks power S&P 500 to fresh record closing high

Eighty-three basis points of today’s return in the SPDR S&P 500 ETF, more than 2x its daily gain, were attributable to Oracle and the two leading US chip designers, Nvidia and Broadcom.

Oracle’s RPO Remaining Performance Obligations

What is an RPO, the number that drove Oracle’s giant share move?

Matt Phillips, Max Knoblauch18h

Luke Kawa

19h

“Pokemon” trading cards skyrocketing in value and GameStop’s collectibles business taking off are two sides of the same coin

The Wall Street Journal’s fantastic piece “The Hot Investment With a 3,000% Return? Pokémon Cards” includes this vignette:

“...the cards caught fire among amateur investors during the pandemic. As some investors banded together to spark the GameStop meme stock mania, a more fringe group of traders, also stuck at home and armed with cash from government stimulus, began scooping up Pokémon cards.”

And the connection between “Pokemon” cards and the video game retailer is in fact even closer than that:

GameStop’s collectibles business played a big role in why it smashed Q2 revenue expectations! Sales in this segment exceeded $227 million, while the two analysts that provided forecasts had an average estimate of $170.4 million. Fiscal year to date, sales of collectibles make up 25.8% of its revenues, up from 16.4% at this time last year.

The company significantly expanded its footprint in the “Pokemon” trading card world in 2024 by launching in-store buying and selling of individual cards, and introduced “Power Packs,” which include one card graded at 8 or above by the Professional Sports Authenticator, in its most recent quarter.

As a 35-year-old man who still plays “Pokemon” (Nuzlockes are peak math + strategy entertainment!), thinks the release of “Pokemon Go” marked the peak for Western civilization, and considers Christmas 1998 to be the second-best day of his life because it’s when he got “Pokemon Red,” I personally view the outperformance of “Pokemon” cards as being indicative of the power of nostalgia coupled with a drop-off in child rearing by millennials, leaving more room for discretionary purchases and investments.

And the nostalgia business seems like a great place to be.

The Hot Investment With a 3,000% Return? Pokémon Cards

“...the cards caught fire among amateur investors during the pandemic. As some investors banded together to spark the GameStop meme stock mania, a more fringe group of traders, also stuck at home and armed with cash from government stimulus, began scooping up Pokémon cards.”

And the connection between “Pokemon” cards and the video game retailer is in fact even closer than that:

And the nostalgia business seems like a great place to be.

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