Lululemon Crashes After Earnings, Strong Jobs Report Put Fed Hike in Play

0:00public.com presents the rundown your daily market update in 10 minutes. My name is Zadeh Dhanmani and today is Friday, September 4. In today's episode we'll break down the surprisingly strong August jobs report and what it means for the Fed's interest rate decision later this month. We'll also tell you about Tesla CyberCab event yesterday and while Lulu Lemonstock is getting absolutely hammered after their earnings. And stick around to the end of the show to find out why the richest owner in sports just got hit with the biggest punishment in NBA history. We got a great show for you today. Let's go. Well guys, we finally got a nice rally in the stock market on Thursday. The S&P 500 jumped 1.1% and the NASDAQ was up 1.4%. After Fed Governor Christopher Waller suggested that he could support keeping interest rate steady at the Fed meeting later this month. Well his decision might have just gotten a bit harder because we just got the August

1:02jobs report this morning. I've been talking about it all week and the numbers could impact what the Fed does with interest rates. According to the report, the US economy added 162,000 jobs in the month of August, absolutely crushing expectations of 53,000 jobs. On top of that, July's jobs numbers were revised from losing 23,000 jobs to actually adding 21,000 jobs. And the unemployment rate held steady at 4.1%. So after a pretty shaky summer of weak jobs reports, the labor market is suddenly looking a lot healthier, which is good news, but it is bad news for the stock market because it raises the chances that the Fed could hike interest rates. Remember, the Federal Reserve's job is to keep inflation low and employment high. That is their dual mandate. And they do that by changing interest rates. If the labor market is looking healthy again, that could give the Fed cover to move forward with rate hikes later this month to get inflation under control. Traders are now pricing in a 60% chance of a September rate hike and Treasury yields are

2:03jumping as well after the jobs report this morning. Personally, I don't think today's jobs report guarantees a rate hike later this month. I think what it does do though is remove the labor market as the Fed executes not to hike interest rates. I think it'll all come down to inflation. I mean, we are getting a CPI report next week and if that comes in hot, a rate hike could be in play in a couple of weeks. The market is definitely pricing it in. So yeah, the next couple of weeks are going to be big. We have a CPI report. There's an Apple event next week. We have a Fed meeting coming up and who knows what else? We're going to be staying on top of all of it for you guys and recapping it on the show. So definitely get subscribed to the podcast if you haven't already. Also, just a heads up. Monday is Labor Day. The stock market will be closed. So no show from us that day. Also, no deep dive this weekend as well. But we are posting an awesome interview over the weekend. So keep an eye on your podcast feed for that. Let's run through some headlines. Starting with Tesla and the CyberCab. Tesla had a very low key event in Austin, Texas last night where they announced that the CyberCab is finally rolling out to the public as part of Tesla's Robotaxi service.

3:06Now Tesla first showed off the CyberCab back in October of 2024. So almost two years ago, it's a very unique looking car. It's gold. It's too cedar-only. It has no steering wheels, no pedals and no side mirrors. The idea is that the passenger gets in, sits down, the car drives itself to destination. And it seems like Tesla finally has the tech good enough to finally roll it out to the public, but it is a very limited rollout. According to state records, Tesla has just 45 CyberCab registered for autonomous operations in Texas and rides to the public are rolling out this weekend in limited parts of Austin. So it's still not a full-scale rollout. I think that's why the event last night was so low key. There usually are Tesla events or hyped up where a lot of people are invited. The whole thing is live streamed, but that wasn't the case for the event last night. There was no live stream. There was no journalist. In fact, the event was mostly covered by Tesla influencers. I mean, even Elon Musk didn't take the time to show up for the event. So I think it's a sign that the CyberCab still isn't ready for prime time.

4:07And when you look at Tesla overall on the Robotaxi service, it's still way behind Waymo. In Texas alone, Waymo has nearly a thousand driverless cars registered. Tesla has just 420 cars and most of them are the model. The difference though is that Waymo cars are very expensive to make because they are covered in LiDAR, radar and other sensors. The CyberCab on the other hand is much cheaper to make because it only uses cameras and neural networks for self-driving. And Tesla is betting that in the long term, the difference in costs for the vehicles will allow them to scale much faster. So we'll see. I'm a little skeptical that Tesla will catch up to Waymo anytime soon. I'm still not really sure why Tesla needs to make a dedicated CyberCab instead of just using their model wise. I think the market seems to be pretty disappointed with the CyberCab event as well. Tesla's stock was up more than 5% yesterday leading up to the event, but the stock is down around 4% today following the event. Let's shift gears and talk about Lulu Lemon. Lulu Lemon reported earnings last night and the stock is getting smoked.

5:10The numbers from the earnings were just brutal. The sales fell 4% in Q2 from a year ago to $2.4 billion and same-store sales dropped by 9%, which was nearly twice as bad as Wall Street expected. The biggest problem for Lulu Lemon continues to be North America. Revenues in North America fell 8%, and sales of leggings, which is the company's signature product, dropped around 20%. Lulu Lemon continues to lose market share to competitors like Alow and Viori and management basically admitted that some of their new products aren't hitting consumers. And they're not totally speaking. They're all rocking Alow these days. So yeah, Lulu Lemon isn't a tough spot here and they don't expect things to get better anytime soon. In fact, they're expecting full year revenues to decline between 5% and 7%. So you can see why investors didn't love the report. Lulu's stock is down around 20% this morning at the time this recording. The stock is now trading below $100 for the first time since 2018. Now Lulu is bringing in a new CEO, Heidi O'Neill.

6:11She's a former Nike executive and she starts next week. And I gotta say man, she is inheriting a total mess here. By the way, this made me crack up when I read it. Apparently Michael Burry, the dude from the big short, he's been buying up Lulu Lemon stock recently. According to his sub-stack post, Lulu is now his largest position, but Michael Burry did admit that the stock is down 20% from the last time that he bought it. But he's not selling it though. He plans to buy more of the stock. I don't know about you guys, but I feel like Michael Burry just might be a one hit wonder. I mean, at this point, I'm thinking about using the AI agent feature on public that takes the opposite side of whatever trade that Michael Burry makes. Shameless plug, the AI agent feature on public is really cool. I highly recommend checking it out if you haven't already. Also, if you haven't signed up for a public account yet, this is a great time to do so. Public is running a promo where if you open up an account and deposit $1,000, you'll get $100 in free stock. That is five times more than what they usually offer. So again, great time to open up a public account. We'll put a link in the description if you want to check it out. And it also supports the show as well.

7:12Let's talk about some stocks making moves today. Shares of Planet Labs are surging this morning after the Space Company reported better than expected earnings. Planet Labs is a company that operates hundreds of satellites in orbit that are constantly taking pictures of Earth. Government and companies pay Planet Labs for those images, and they also have an AI platform that helps analyze all those images. You know, their platform is used from everything from monitoring military activity, that tracking agriculture, infrastructure, and natural disasters. If you want to learn more about this company, we actually interviewed the CEO of Planet Labs on this podcast a few months ago. We'll put a link in the description if you want to go check that out. Going back to the earnings, business is booming right now. Revenue has grew 58% last quarter to $116 million. And profitability was even stronger. The big growth engine right now for the company is defense, military and intelligence customers accounted for 70% of Planet Labs' revenue, which is up 57% from a year ago.

8:17Now there was one week's spot on the report. Planet's guidance for the current quarter was actually below Wall Street expectations. But I guess investors are looking past that, give it how strong last quarter was. Planet Labs stock is up around 10% this morning in pre-market trading. And if you zoom out, the stock has nearly tripled over the past 12 months. Now on the flip side, shares of UI Path are dropping this morning despite the company beating on earnings. UI Path is a company that makes automation software for businesses. Basically, they have software that helps companies automate repetitive office work, like moving data between programs or processing invoices or filling out forms. You know, the numbers from last quarter were pretty solid. The news came in at $410 million in earnings per share. It came in at $0.15 a share. Both those metrics beat Wall Street estimates. And the company also raised their full year revenue outlook. But despite the beat and raise, stock is down around 8% in pre-market trading. I think for UI Path, the big concern that investors are having is the impact that AI will have on the business down the line. I feel like a company that makes automation software would be the most at risk of AI

9:21agents replacing them. But you know, if you zoom out though, UI Path stock has gone up more than 60% in the last 12 months. I was kind of surprised to see that I'm not going to lie. Let's wrap the show with a fun fact. The NBA just handed the LA Clippers and their owner Steve Balmer one of the harshest punishments in league history. Long time listeners know, I'm a big sports fan, especially the NBA. So I've been following this story closely. But even if you don't follow basketball or sports, this is actually a really interesting story. So here's a quick version of what happened for my non NBA fans out there. In the NBA, all 30 teams have a salary cap, which means that each team has the same budget to pay players. The salary cap system is designed to stop the richest owners from basically signing all the best players on one team. Well the NBA found out that the LA Clippers were going around those salary cap rules to help pay one of their top players, Kawaii Leonard, more money. Now Kawaii is one of the top players in the NBA when he plays. He is injured all the time, but he's a two time NBA finals MVP and he signed with the

10:24Clippers back in 2019. Well, according to the investigation, the Clippers helped connect Kawaii with companies that were already doing business with the Clippers. These companies then gave Kawaii endorsement deals worth millions of dollars where Kawaii didn't really have to do anything. Now we don't have time on this show to go into all the details of what happened. Big shout out to Pablo Torre, who was an awesome journalist and podcaster. He was the first to uncover all of this a year ago and that actually forced the NBA to investigate this situation even further. So if you want to learn more about this case, go check out Pablo's podcast and all the videos that he's done about it. Anyways, the Clippers were found guilty by the NBA and the league brought down the hammer. The league is finding Steve Balmer a record 30 million dollars and he's also been suspended for a year. And more importantly, the Clippers have to give up five first round draft picks. Now the money in this situation is nothing for Steve Balmer. He's one of the richest people in the world worth like $150 billion. But losing five first round picks is brutal because that's usually how a team gets better.

11:25So the Clippers are now cooked for like the next five plus years. Kawaii by the way, he walks away probably the biggest winner here. He only got $7,000 despite making tens of millions of dollars from these endorsement deals. I feel like Kawaii probably should have gotten a harsher punishment. Anyways, the Clippers have actually traded Kawaii to the Toronto Raptor so he's ready to move on. And you think about it, the reason the NBA came down so hard on the Clippers and Steve Balmer is because the salary cap is basically the economic foundation of the league. If you have one super rich owner using their business relationships to secretly pay players more money, the entire system can fall apart. So I think the punishment against the Clippers is probably justified. Well alright guys, that's the rundown for today. I hope you guys enjoyed today's episode. Thank you guys so much for listening, watching and commenting. Shout out to Mike and V for all the work behind the scenes. And we'll see you guys this weekend for the interview.