The latest earnings from Joby Aviation and Match Group; Consumer spending has shifted from goods to services
1) On Tuesday, I shared that Joby Aviation (JOBY) hit another all-time high on some positive acquisition news.
After the close yesterday, the air-taxi company reported second-quarter earnings. (You can read the press release here and the shareholder letter here.)
Whenever I analyze Joby's results, I have to set aside my usual framework. The company lacks true earnings and, essentially, revenues!
That's because its electric aircraft is still in development. But it's making excellent progress toward receiving certification from the Federal Aviation Administration ("FAA").
You can see its current status in this table from the shareholder letter:
It recently completed 21 test flights in Dubai. It plans to launch commercial service in the United Arab Emirates next year, likely before it receives approval to fly in the U.S.
(I think this could be a big catalyst for the stock... I might even fly to Dubai to be one of the first paying customers!)
Joby is also making progress through partnerships. By teaming up with Toyota Motor (TM), it's expanding manufacturing capabilities in California and Ohio. And with L3Harris Technologies (LHX), it's developing a gas-engine version of its aircraft for military purposes.
Most importantly, its financial position is strong. It has $991 million of cash and no debt. That's enough to fund nearly two years of operations at its current annual rate of spending.
In conclusion, nothing in the latest earnings report changes my view that the stock is a promising speculation.
As I've noted before, it's unclear how large the market will be for Joby's aircraft. The business model of providing an air-taxi service is also unproven.
Despite the wide range of potential outcomes, I still like the company. I'll continue to follow it closely.
2) After the close on Tuesday, Match Group (MTCH) also reported second-quarter earnings...
The numbers exceeded low expectations, and the stock jumped 10.5% yesterday. It closed at $37.27, near its 52-week high.
Longtime readers may recall I pitched the dating-app company at the Stansberry Research Conference & Alliance Meeting on October 23. That was when the stock was at $30.56.
I was a little early, as it dipped into the mid-$20s shortly after:
I didn't throw in the towel on my thesis. On May 12, I said, "If Match can start to show year-over-year growth... I suspect the stock could quickly double."
Well, it isn't growing yet. But there are signs that a turnaround is underway...
Revenue exceeded expectations of $854 million, despite coming in flat year over year at $864 million.
Similarly, adjusted operating income was down 5% to $290 million. But that blew through expectations of $199 million.
And Match continues to be a free-cash-flow machine. It generated $409 million, which it returned to shareholders through share repurchases and dividends.
Its share count is down a remarkable 9% in the past year. This has given a 10% boost to its earnings per share.
Lastly, the company gave strong guidance for the third quarter. Revenue is expected to be between $910 million and $920 million. And adjusted operating income is expected to be $330 million to $335 million.
My team and I at Stansberry's Investment Advisory will keep an eye on Match Group, as I continue to like the stock.
If we ever decide it's compelling enough to add to the model portfolio, subscribers will be the first to know. (If you aren't an Investment Advisory subscriber, you can find out how to become one right here.)
3) Consumer spending accounts for roughly 70% of U.S. GDP. So I think every investor should have a basic understanding of its components and trends.
Over the past 66 years, consumer spending has shifted dramatically from goods to services. You can see the trend in this chart posted on social platform X, courtesy of Charlie Bilello:
And this chart from Visual Capitalist shows the components of these two categories:
As you can see, housing and utilities and health care have the most consumer spending by far. That's interesting, since both sectors are struggling right now.
I'll have to take a closer look to see if there are any promising investment opportunities here. So stay tuned...
4) I love this story: A Broadway Singer Was Interrupted Onstage By Her Toddler. What Happened Next Made Her Performance Go Viral.
The singer, Jennie Harney-Fleming, is the wife of a friend of mine. And their daughter, Olivia, created the ruckus. You can watch the video on Jennie's Instagram:
Best regards,
Whitney
P.S. I welcome your feedback – send me an e-mail by clicking here.