Axios Closer

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February 22, 2024

Thursday βœ….

Today's newsletter is 688 words, a 2Β½-minute read.

πŸ”” The dashboard: The S&P 500 closed up 2.1%.

  • Biggest gainer? Nvidia (+16.4%), the chipmaker, rode last night's fourth-quarter earnings. (See below.)
  • Biggest decliner? Etsy (-8.4%), the online marketplace, disappointed investors with quarterly results.

1 big thing: Nvidia's growth trumps risk

an illustration of an upward climbing arrow created out of glowing binary code

Illustration: Tiffany Herring/Axios

Nvidia's meteoric rise is yielding speculation over whether the run-up is just the beginning or whether the stock is overhyped, Nathan writes.

Why it matters: The company's shares surged another 16% today after its blowout earnings report, but the 275% gain over the past year has some questioning whether the AI darling has entered dot-com-like euphoria.

Between the lines: There's a difference between now and then, however, when investors piled into dot-com stocks around the turn of the century: Unlike many of those dot-com-bubble companies, Nvidia is selling actual stuff.

  • So much, in fact, that it says it doesn't expect to be able to keep up with demand.
  • And while its stock price has exploded, many point out that its earnings have been growing even faster, keeping its trading multiple in check.

Reality check: The biggest threat to Nvidia, however, is if those same customers who are driving demand are over-investing in chips to power unrealistic or far-too-soon AI ambitions.

  • One customer alone represents 13% of Nvidia's revenue, according to a new SEC filing.

Morgan Stanley analyst Joe Moore acknowledged that the company may be benefiting from "an overordering cycle," but he still raised his price target from $750 to $795.

  • Bank of America analyst Vivek Arya acknowledged the risk of competition, but he still raised his price target from $800 to $925.

This says a lot: Few investors have the conviction to bet against Nvidia's stock, at least for now.

  • Shorts represented only 1.12% of the company's outstanding shares as of Feb. 8, according to S&P Capital IQ.

2. Charted: Rivian shares run off the road

Data: Yahoo Finance; Chart: Axios Visuals
Data: Yahoo Finance; Chart: Axios Visuals

Rivian's stock plunged to an all-time low today after the automaker slashed its outlook.

Why it matters: Rivian's fate is intertwined with EV demand, which is falling behind expectations.

State of play: Last night, the company said it expects to produce only 57,000 vehicles this year β€” about the same as 2023.

  • Flat is not good for a company that's supposed to be growing.

The impact: The company is cutting 10% of its salaried workforce.

  • "Unfortunately, there's little RIVN can do to improve its near-term financial performance absent stronger demand," CFRA Research analyst Garrett Nelson wrote today in a research note.

The bottom line: Rivian shares closed down more than 25% to $11.45 β€” a far cry from its all-time closing high of $172.01 in November 2021.

3. What's happening

πŸ€– Google is suspending the capability of its AI tool Gemini to generate images of people after "inaccuracies" in historical depictions. (AP)

🏠 Mortgage rates rose for the third straight week, nearing an average of 7% again for 30-year fixed-rate borrowers. (CNN)

🀳 An AT&T outage left thousands without cell service across the U.S. (Axios)

4. Reddit, set, go!

A person holding a smartphone with a Reddit logo on it.

Photo Illustration: Rafael Henrique/SOPA Images/LightRocket via Getty Images

Reddit has finally publicly filed to go public on the New York Stock Exchange under the ticker "RDDT," Axios' Kia Kokalitcheva writes.

Why it matters: It's a move the company wanted to make for a while, but the market downturn forced it to pump the breaks.

By the numbers: The online forum website brought in $804 million in revenue in 2023, with a net loss of just under $91 million.

  • In 2022, it had $667 million in revenue and a net loss of almost $159 million.

What we're watching: Yesterday we noted that Reddit is reportedly eying an unusual move to reward its most loyal users through the IPO.

5. Tooth deflation

Average Tooth Fairy payout per lost tooth πŸͺ„
Data:Β Delta Dental 2024 Original Tooth Fairy Poll; Chart: Danielle Alberti/Axios

Here's some welcome relief for parents but bad news for the kids. For the first time since 2019, the tooth fairy is paying less for lost teeth than the year before, Axios' Kelly Tyko writes.

Why it matters: It's a sign that the tooth fairy's helpers β€” aka parents β€” are worn down from two years of high inflation.

The big picture: The tooth fairy's national average gift value for a single lost tooth dropped 6% last year, according to a Delta Dental survey of 1,000 parents with children ages 6–12.

  • Context: It's still a 349% increase from 1998.

Go deeper

6. What they're saying

"We just are worried about capital availability, and that's limiting our ability to invest in growth."
β€” Will Coleman, CEO of ride-hailing firm Alto, to Axios on the Uber-Lyft competitor's decision to suspend operations in two key markets.

Today's newsletter was edited by Pete Gannon and copy edited by Sheryl Miller.

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