SoundHound earnings, softening travel demand: Asking for a Trend
On today’s episode of Asking for a Trend, Host Josh Lipton[1] breaks down some of the biggest themes and stories that dominated the trading day.
Expedia Group (EXPE[2]) CEO Ariane Gorin warned of softening travel demands in the travel booking site’s latest earnings. Furthermore, Disney (DIS[3]) CFO Hugh Johnston told Yahoo Finance on Wednesday that consumers are beginning to “watch their pennies”[4] after the multinational entertainment company indicated consumer headwinds in its theme park division. Bloomberg Intelligence senior credit analyst Jody Lurie[5] says, “We were surprised when we ran our survey of travel that the consumer was actually very much planning on spending on travel.” She continues, “Even if they were pulling back on goods, they were still spending on travel, they were still spending on leisure. They wanted to go and do, but they were showing signs of selectivity.”
Yahoo Finance markets reporter Josh Schafer[6] breaks down his key takeaways from the trading day[7] as US equities (^GSPC[8], ^DJI[9], ^IXIC[10]) bounced back in Thursday’s session and the S&P 500 jumped 2.3%, its biggest increase since November 2022.
SoundHound AI (SOUN[11]) posted second quarter earnings after the market close on Thursday, topping revenue expectations with $13.5 million versus the expected $13.1 million, an increase of 54% year-over-year. SoundHound AI Co-Founder & CEO Keyvan Mohajer discusses the recent purchase of another AI-based company[12]: “We bought an amazing company. We announced it this morning. It’s called Amelia, they specialize in conversational AI for customer service…And they are in different verticals that we wanted to go after. That’s a big part of our business, it’s a big part of our growth”. He adds, “We are now able to go into verticals that we wanted to go to, and that path is now accelerated. Now we were in restaurants, we were supporting smaller businesses, but now we are in healthcare. We are in financial services, insurance, hospitality and retail.”
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Wall Street is getting mixed signals from the labor market as the unemployment rate signals a recession while initial jobless claims suggest the contrary[13]. Market Domination co-host Julie Hyman[14] breaks down the historical comparisons between recessions and these data points[15], and what it could signal about the future of the US economy.
Finally, Asking for a Trend host Josh Lipton[16] breaks down some of the names moving the most in after-hours trading[17], from Sweetgreen (SG) to Paramount (PARA[18], PARAA[19]).
This post was written by Melanie Riehl
Video transcript
Hello and welcome to asking for a trend.
I’m Josh Lipton and for the next half hour, we’re going to be breaking down the trends of today that will move stocks tomorrow.
There is a lot to keep track of.
So we’re focusing on what you need to know to get ahead of the curve.
Here’s some of the trends.
We’re gonna be diving into the markets have moved on from Monday’s panic with another day of green across the board, the NASDAQ Composite having its best since February and the S and P 500 see its largest daily gain since November 2022 that an expected jobless claims helping allay concerns about the labor market.
Plus once upon a time revenge travel was a boon for hotel and resort names but names across the sector including Disney Expedia warning the weary consumer is pulling back.
We’ll take a closer look at what softer demand means for the industry.
And after Monday’s sell off and a Capex heavy earnings season, some say the A I trade is losing its luster but not for all voice A I company sound have reporting record revenue second quarter with a top and bottom line beat.
We’re going to speak with the CEO within the hour.
Consumer weakness is showing up as travel related companies report earnings Expedia warning of a softening in recent travel demand and its latest results and Disney flagging a moderation in theme park demand that it expects could weigh on income for the next few quarters.
Joining me now is Jody Lurie Bloomberg Intelligence, Senior credit analyst, Jody.
It is good to see you and I’m interested, Jody just kind of start at a higher level and get your take on the Eric consumer.
And I think as we make our way through this earnings season, Jody, you know, we’re all trying to look for clues about that.
It can be kind of confusing even in today’s trade, Jody.
I mean, I’m looking here under armor, armor ripped higher.
On the other hand, I got monster beverage in the red top golf.
Calloway is in the red.
Um And as you look through these earnings reports, you listen to the conference calls, what what is your your takeaway, Jody?
How does the consumer look to you?
So, Josh, I think we’re starting to finally see the shift in the consumer.
And by that, I mean, is that when we started off this year, we anticipated that there would be moderation in the consumer.
That was actually the title of our outlook.
And we were surprised when we ran our survey of travel that the consumer was actually very much planning on spending on travel.
Even if they were pulling back on goods, they were still spending on travel, they were still spending on leisure.
They wanted to go and do.
But they were showing signs of selectivity by this.
We mean that they did respond that they would pull back on restaurant spending if by chance they exceeded their budget.
So I think that really at the end of the day, we’re now starting to see that slowly take shape and we’re seeing it mostly at the lower end consumer and we’re also seeing it out of China.
It’s interesting because we’ve heard a lot about the loan consumer.
Are you seeing any signs that that’s kind of, and you know, you can look through some earnings report and see signs that, that it’s kind of creeping up the income ladder a bit though as well, Jody, it is creeping up to some extent.
But if you look at, you know, for instance, Hyatt, right?
So we cover the hotels, we cover the restaurants, we cover the gaming companies, we cover the cruise lines, the theme parks and the rental car companies.
And so it’s a really broad mix across the consumer spectrum.
We really get the low end consumer, the high end consumer and the business traveler.
And for someone like Hyatt, you are seeing some softness but maybe not as much their softness is coming out of China.
But for someone like Hilton that has much more of the middle market.
You are seeing signs that they’re not as optimistic, at least heading into the end of this year when it comes to what they call transient leisure travel, they are still optimistic when it comes to business and conferences.
And I think that’s going to be the tail when that kind of pushes a lot of these companies through.
But when it comes to the traditional leisure travel consumer, we might not necessarily see as much robustness as we saw in 2023 or 2022.
The exception is in cruise lines where the bookings are done way in advance where consumers are booking for a cruise next year and booking rates are at record levels are there because I know I know you know that sector so well, Jody are there certain, are there certain cruise lines that you think are are better positioned than others right now to in terms of just the the the backdrop the macro?
Sure Josh.
So you know, I think that there’s a couple of components there.
So we’ve been very adamantly pounding on the table that the cruise line story is one of credit quality.
It’s not one for the equity markets.
It is a bond story, right?
And we’re finally starting to see that the equity markets are quote unquote benefiting because Royal Caribbean just reintroduced their dividend.
Now, we’ve been saying for quite some time that Royal Caribbean is a few quarters ahead of carnival when it comes to repaying their debt load, bringing back the balance sheet towards quote unquote normal and getting the company back on track.
They were first to start cruising again and they’ve slowly kind of been repaying their debt at a much quicker rate than some of their peers.
Now, someone like Norwegian has been taking the attitude of growing IDA to improve leverage as opposed to repaying debt.
And that could be something that could be problematic.
Should the consumer pull back and should that start trickling into cruise lines where new region does benefit is they market more heavily to the high end consumer.
So maybe they feel like they’re more recession proof or they, they won’t necessarily feel this as much.
Plus most of their consumers come from the US, which is concentration, but they don’t get the Europe effect.
They don’t get the China effect the same way that you might see at a carnival.
They tell me I have to go Jordy, but I sneak one last one in.
You think there’s too many cruise lines at this point, too many cruise lines.
Uh It depends who you ask, Josh, if you are talking to Venice Italy, they might say yes, they’ve definitely stopped that certain European cities are talking about pulling back on cruise lines allowing to dock that’s still developing.
Um You know, I mean, the water is a very large place.
It’s really a question of supply and demand at this point.
I I can’t say whether or not there’s too many cruise lines.
Are there too many cruise ships?
Who knows?
I guess time will tell Jody.
Great to have you on the show today.
Thanks for joining us.
Sure thing.
Have a good one.
US stocks jumping after initial jobless claims data eases concerns over the US economy.
Our finances, Josh Schafer joins us now with more on the trading day takeaways, Josh.
Hey Josh.
Yeah, I want to start with that economic story because remember recession, fears have been creeping into the market over the last couple of days and that was part of what brought stocks lower after that July Jobs report.
Well, today we had our first look at the labor market since that jobs for and we had weekly initial jobless claims.
This is the amount of people filing for unemployment on a weekly basis moving markets.
This comes out every Thursday and most Thursdays it comes out and no one talks about it.
But today at 830 it was a big deal when this number came down from its nine month high.
Uh 233,000 claims were filed below the 240 that was expected.
But to your point, Josh, I mean, the biggest takeaway here that was just kind of shocking you, NASDAQ futures, NASDAQ 100 futures basically flat at 830 right up to 1% on the day.
And we never really looked back so clearly, this was in focus.
Investors just wanted to feel a little bit more comfortable.
I think with the economic narrative now, I think zooming out and sort of what do economists say about this number and the data we’re gonna need to see more.
One week.
It’s a very volatile data set, it’s often revised.
So maybe it didn’t flash concern.
I think it actually might have been a bigger saying, why are we any tragedy you’re reading kind of voicing.
I don’t surprise that we would move that hard on the claim.
You’re feeding me to take away too, which is more signs of an uneasy market.
Neil Dutta over at Renaissance Macro who’s been calling for the fed to smart guy, he’s been calling for the fed to cut and he sort of said NASDAQ up 1.2% at 935 off claims.
Really?
That shows me that maybe the market is reading a little bit too much in the data right now.
And I mean, when we just look at the action over the last couple of days, it’s not hard to see.
Right.
So we got a 10 day up here at the S and P. Look at what we’ve been doing this week.
Up, down, up down today.
You had the biggest jump in the S and P 500 up 2.3 percent.
That’s the biggest jump going back to November 2022.
So think about all the gains that we’ve seen over the last two years now, that’s a big gain 28%.
But this was the best single day move.
So that just gives you a feel for how much back and forth jump we’ve been having.
And Neil Dule pointed out with that.
Think about what we have come up next week, next week you have a big CP I release.
You have retail sales, sort of saying that the big up and downs we’ve been seeing in the market, maybe that’s not over and that’s gonna be a theme that we’re watching kind of through the rest of August at this point.
Yeah, sounds good.
All right, Schafer pull point number three, we do not have bullets.
That’s all I got.
That’s all I got for you.
I should get greedy.
I should get greedy.
That’s it.
Thank you, Joshua.
Coming up, shares of Sound Town are rising f as Las earnings report.
I’m speaking with the company’s CEO on the other side.
Stay tuned.
We’re asking for a trend still to come.
Sound hound A I posting a revenue beat for the second quarter reporting an increase of 54% year over year.
So it’s coming on the back of the company’s Amelia acquisition announcement.
Sound how looking to capture A I opportunities as enterprise spending on generative A I gathers momentum and join us now to talk about all this is sound how A I co founder, Ceo Kvo Mohajer, KVO.
It is good to see you.
So you just reported uh revenue for the second quarter, Kvo.
That’s a beat.
Uh Jumping more than 50%.
13.5 million.
The street was close to 13.1 million.
The stock is, is popping here in the after hours.
Walk us through the quarter.
Kon, what drove the business?
Well, thank you for having me back.
It’s great to be here.
Uh We had a record Q two.
our revenue grew 54%.
Uh We had guided 50.
So we’re very proud of that.
Uh We signed up new customers.
We expanded with existing ones.
Uh We signed up two new quick service restaurants.
We are now working with five of the top 15.
Uh, we signed up, uh one of the largest pizza chains, um, and in automotive.
Uh, we were the first to go live, uh, in production with native A I and that has worked well.
We’ve expanded that.
Uh, we are now in, uh, over 20 markets, support dozens of languages, uh, increasing our royalties.
Uh, and we have improved our financial strength.
Uh We paid up our debts last quarter and we finished the quarter with over $200 million of cash.
Let me ask you also, KVO.
Um, the acquisition you announced here of Emilia, talk to me about that acquisition, how that deal came about KVO and what’s going to mean for your business?
Uh Yeah, we bought an amazing company.
V and as this morning, it’s called Amelia.
Uh They specialize in conversational A I for customer service.
Uh So do we, um And uh they are in different verticals that we wanted to go after.
Um That’s a big part of our uh business.
Uh It’s a big part of our growth.
Um uh There was a mckenzie research that uh showed uh enterprise spending on Jared A I is going to reach $250 billion within three years.
And, uh A I customer service is a big part of it.
Um And uh with uh Amelia, um we are now able to go into verticals that we wanted to go to and that path is now accelerated.
Now, we, we, we were in restaurants, uh we were in smaller, we were supporting smaller businesses.
Uh But now we are in health care.
We are in financial services, insurance, hospitality and retail.
So those are, you know, healthcare, financial services KV are obviously, um, you know, more, more regulated industries, more regulated verticals was, was part of the thinking there.
It was just gonna be easier for you all to, to move in with an acquisition.
Um We always, you know, Amelia already had a footprint rather than and then trying to do it.
Um stand alone.
Yeah, so we have the amazing technology to power those experiences.
Uh but uh um getting into those customers understanding their needs, understanding those industries and integrating with their infrastructure that takes time.
And Emilia has 26 years of uh they’ve accumulated 26 years of those customers and integrations.
So it was mostly about acceleration and there’s a lot of complementary products.
I want to get your take on about another theme.
We’ve talked a lot about on the show, which is that as we move through this earnings season, about A I, I mean, certainly if you were to talk about one of the prime drivers of the, the broader market rally we saw in the first half this year.
KVO.
I mean, yes, it was the bet on the soft landing.
It was also just the A I craze this earnings season.
It feels like something did shift and investors suddenly just had more questions for more companies where if you were spending a lot on A I, that was OK. You know, suddenly investors wanna know, ok, you’re spending and there’s testing and there’s experimenting but, you know, show me the usage, show me the monetization, show me the return.
Um I’m just curious, Kevin, how you’ve been in this business for a long time?
How do you sort of think about that dynamic?
We were you surprised by it.
Uh So first, as someone who’s been in this field for over 20 years, I can tell you that um uh the technology of J A is real is magical and it’s gonna change a lot of things.
Um uh Now there was a lot of focus on investment in the infrastructure of A I and foundation companies building foundation models.
Um And some people, there’s some chatter that maybe there’s some over investments in those um uh which I don’t necessarily agree to disagree with it.
Uh But uh what we think is going to happen next is uh companies, building businesses and user experiences on top of this technology.
Uh So the analogy is we had IOS and Android in the mobile era and that, you know, that was the high for one or two years and then for more than a decade, it was apps and apps and apps and companies building these amazing apps, great businesses value creation.
Um on top of that infrastructure and we predict that same is going to happen with A I.
So there was infrastructure of A I now it’s going to be companies that are building experiences on top of it.
And Soundhound is a company that is building business at scale on top of these models and this amazing technology.
So we are in cars, we’ve improved, we have reinvented existing experiences in cars and in customer service and we’re building new ones.
I’m about, you know, people think they do think, you know, obviously voice assistant for cars, drive through and that drive through a quick service restaurants.
I’ve spoken to analysts before KVO.
They, they cover the company.
Um Some of them that that’s where they see a lot of runway for you all.
I’m curious about the trends and themes you’re seeing there.
Yeah.
So there, there are things that we know will happen for sure.
So, in, in, in the near future, not far future, uh when you go to a driver of a service restaurant, uh you will be dealing with an A I uh not, not the employee of the restaurant.
The employees right now are doing multitasking.
They’re building, they’re creative food and they packaging it and they’re also taking the order and it’s not good for them.
It’s not good for the user experience.
And if you can automate that and we can do that really well with A I and we are in multiple brands and the feedback is amazingly positive.
Uh that’s going to happen.
And uh that’s a huge time.
Um And what’s even more special about sound hand is that once we power the drivers with our A I because we also power cars, we can actually take your order before you get to the driver because you can talk to, when you talk to your car, you’re talking to our A I.
And if you discover those brands that the power, you can just talk to your car and order your food before you even get to the drive through KVO.
Just stocked up about 5% a year in the after hours.
So you reported that at least initially your investors like what they see.
Thank you as always Kvo for, for taking the time to come on the show and chat.
Thank you for having me.
The unemployment rate might be signaling a recession but jobless claims are not finances.
Julie Hyman joins me now with a closer look.
Well, at least that’s according to one strategist.
So as we talked about earlier, Josh, this week, we don’t have a lot of economic data.
So this morning, the jobless claims took on some new importance as investors are trying to figure out what’s going to happen next in the stock market and other risk markets and what’s going to happen with us.
Economy.
Well, Kevin Gordon senior strategist over at Charles Schwab tweeted this chart earlier today.
Now, first of all, what we’re looking at here is the unemployment rate minus the three year moving average.
And as you see, it actually is creeping up to an area that is consistent with past recessions, the 2020 recession, the financial crisis, and then you go back further.
But he points out if you look at jobless claims and look at the four week average of initial jobless claims the year over year percentage change, which is this axis here, you see that we’re not seeing a spike there that would be consistent with past recessions.
It’s more sort of in line with norms here.
We haven’t yet seen that pick up.
And of course, as we discussed also the jobs figure this morning was somewhat reassuring to markets as it happens.
Kevin was on the morning show today and he talked a little bit about why he is not convinced that a recession is coming.
Um You know, a lot of these trends have been in place for a while, whether it’s a slowdown in wage growth or whether it’s this drift higher in the unemployment rate or even just the monthly change in payrolls, which has been decelerating.
Um I think probably the miss in expectations for payroll is coupled with, you know, that, that two, that 20 basis point jump in the unemployment rate was probably where a lot of the fear started to kick in.
But even if you look at some of the inners, the unemployment rate itself triggering the so rule, yes, a bad thing.
But if you start to look at things like the employment to population ratio, even for the prime age group, it’s still rising, there’s still a lot of inflows into the labor force and it’s expanding.
So those things are not yet consistent with what you would typically see at the beginning of a recession or the economy already being in a recession.
So another view here, Josh, looking specifically through the prism of the labor numbers at what’s kind of seems to be coalescing into consensus here among the people we’ve talked to that there is an economic slowdown, but it doesn’t yet look like a recession, at least that seems to be the majority view.
All right, thank you, Julie.
Coming up, we’re gonna check in on a few trending tickers that are moving after hours.
Stay tuned.
More, more.
Asking for a trend on the other side.
Rivian second generation of its flagship lineup is ready for review.
Y Finances Pros, Marin and Rick Newman among the elite group.
Wow, elite group.
Look at that intro to test drive.
One of the refreshed vehicles.
They’ll join us now to tell us more.
Tell me more.
I’m not elite pro just showed up with the car.
He’s like, get in.
I’m like, where did this come from?
Tell me the review is it, is it, I mean, did it match an elite status?
Do you feel elite?
Uh You know?
Yes.
Yes, you did.
OK. No.
Yes and no.
So uh briefly got the R one S the SUV version of the R one trucks that are selling quite well.
Caribbean compared to the, the truck is, was a world beater when it came out.
The R one T was a great truck.
I reviewed it.
It drove phenomenally.
Uh but it’s pickup, right?
Most Americans want SUV.
So here we go.
Here, we have it here and this is uh near Rick’s place.
I won’t say where it is but, but Rick, I wanna talk to you about, you know, uh design wise, it’s good, right?
I think it’s very cool.
And you, and you do see Rivian is on the road now and they have that dis those distinctive, I mean, you, you’ve got the automotive language.
What, how do you describe those?
Yeah, they, well, they, it, it’s, I call it the anthropomorphized, um, grill because it has, it has a lot of love that, you know, so you can see the eyes, right?
Like the ovals, right?
Um, and, uh, I mean, you see them coming in, in the dark, they look very cool.
So they’ve done a good job making this distinctive feature on the road.
And remember when they started, they got this originally, they got this deal with Amazon for the technology to go into um delivery vans.
So that was a huge um uh bet uh in the technology by a huge player in the field, right?
Um So then we drive the SU the SUV and now, now pros is the one who’s there.
We are action shop, look at all the, look at everybody trying to get up and be in our cameras and stuff.
I mean, the women just drive up next to us and they harass us.
We have to, we have to swat them away.
You’re at work.
You’ve got a review to do.
I’m sorry, doesn’t love the ride.
And um what did you love the ride?
What do you think?
Uh I so very comfortable.
I have to, I hate that, that class of, I hate Big SUV because to me they’re always willowy.
They, they, they sort of just jumble down the road and, you know, I, I’m just, I’m just a guy who likes smaller cars and even if it’s not a sports car, just a smaller car, my personal car is a Subaru crossover.
Um, so to me, all these big cars prez has a better basis for comparison because he did a detailed test of the truck.
And this is, no, you like the truck?
Yeah.
Yeah, I do so real quick.
I think there’s issues with the fact that the way the cars tuned the truck was longer has a better, uh the way to spread out better and into the car.
That truck hail just like a, like a dream.
This car is like a dream.
This car is a bit bouncy.
I found porpoises, porpoises front and rear.
Do you guys, do you guys know what porpoising is?
Tell the world about it kind of goes up and down like this and it’s not great.
We, we, we were able to dial it out a little bit.
It’s, it got better but it’s not, it’s tough to, for a $90,000 car.
I just wanna really, really add that.
This is a very important vehicle for Remi because Ruby, because we only have two vehicles on sale.
The R one T and the R one s before the R twos come out.
So these cars, this one isn’t there, this one isn’t, it’s not there yet.
But, but, but they do have software that they can be updated over time.
This can be addressed, but right now it’s just not perfect, an elite team that was porpoising.
That’s what, that’s what was happening.
I’m porpoise with us.
I would love to uh Rick Prize.
Thank you both.
Let’s take a look at what’s trending after hours now.
Shares of Sweet Green on a tear, the salad chain raising its full year outlook for same store sales after a solid second core companies 184.6 million in revenue beating estimates though it posted a wider than expected loss for the period.
Take two, take a look at that one.
Take it off after hours.
The video game publisher beating the streets first quarter estimates.
CEO saying he expects the acquisition of Borderlands developer Gearbox to be lucrative.
The company provided no updates on its much anticipated Grand Theft Auto Six release by Elf Beauty delivering a beat on the top and bottom line for the first quarter.
Company also boosting its adjusted earnings per share guidance for the full year.
However, the forecast a Miss Wall Street’s expectations and then take another look here.
Shares of Paramount Global which reports second quarter results on the earnings call.
The company did announce it is laying off 15% of its US.
Workforce.
Paramount reported its first ever profit for its dream business in the second quarter but overall revenue did miss expectations that is a wrap on today’s asking for a trend.
Be sure to come back tomorrow at 4:30 p.m. Eastern for all the latest market moving stories affecting your wallet.
Have a great night.
References
- ^ Josh Lipton (www.yahoo.com)
- ^ EXPE (finance.yahoo.com)
- ^ DIS (finance.yahoo.com)
- ^ consumers are beginning to “watch their pennies” (finance.yahoo.com)
- ^ Jody Lurie (finance.yahoo.com)
- ^ Josh Schafer (www.yahoo.com)
- ^ key takeaways from the trading day (finance.yahoo.com)
- ^ ^GSPC (finance.yahoo.com)
- ^ ^DJI (finance.yahoo.com)
- ^ ^IXIC (finance.yahoo.com)
- ^ SOUN (finance.yahoo.com)
- ^ ecent purchase of another AI-based company (finance.yahoo.com)
- ^ initial jobless claims suggest the contrary (finance.yahoo.com)
- ^ Julie Hyman (www.yahoo.com)
- ^ breaks down the historical comparisons between recessions and these data points (finance.yahoo.com)
- ^ Josh Lipton (www.yahoo.com)
- ^ names moving the most in after-hours trading (finance.yahoo.com)
- ^ PARA (finance.yahoo.com)
- ^ PARAA (finance.yahoo.com)