Within the space of just a few days, the stock market has nearly unraveled all of 2024's gains, driven by the fear that Trump's fresh tariff plan will set the U.S. on a faster collision course to a recession. Amid this backdrop, however, investors who haveWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has b ...

Core Viewpoint - Verizon Communications is viewed as a reliable defensive stock but has struggled to outperform the market, particularly during bull markets [1][2][12] Group 1: Performance and Market Comparison - Since the current bull market began on October 12, 2022, the S&P 500 has risen by 51%, while Verizon's stock has only increased by 28% [2] - In 2023, Verizon's stock rallied by 14% as the S&P 500 declined by 8%, indicating its defensive nature during economic uncertainty [2] - Over the past 20 years, Verizon's stock has only risen by 34%, with a $10,000 investment growing to $13,400, compared to an S&P 500 index fund that would have grown to approximately $43,140 [3][4] Group 2: Financial Metrics and Debt - Verizon's adjusted earnings per share (EPS) has had a compound annual growth rate (CAGR) of only 3% from 2004 to 2024 [4] - The company's year-end debt increased from $39.3 billion to $168.4 billion, primarily due to a $130 billion acquisition of Vodafone's stake in Verizon Wireless in 2014 [5] - Verizon expects its wireless revenue to grow by 2% to 2.8% in 2025, with adjusted EBITDA projected to grow by 1% to 3% [8] Group 3: Subscriber Growth and Market Strategy - In 2023, Verizon struggled to gain new wireless subscribers, attributing the slowdown to competition from AT&T, T-Mobile, and other smaller players [6] - In 2024, Verizon doubled its postpaid phone net additions, thanks to localized incentives, marketing campaigns, and a partnership with Walmart [7] - The wireless retail churn rate improved from 1.67% in 2023 to 1.62% in 2024, indicating better customer retention [7] Group 4: Future Outlook - Verizon's enterprise value is $329 billion, trading at 7 times this year's adjusted EBITDA, with a forward dividend yield of 6.1% [9] - If Verizon maintains a CAGR of 3% for adjusted EPS and EBITDA over the next 20 years, its stock could potentially rise by more than 90% to around $88 per share by 2045 [11] - Despite potential gains, Verizon is expected to underperform compared to the S&P 500, which has delivered an average annual return of over 10% since 1957 [11][12]

Core Points - U.S. Treasury yields have significantly decreased, with the 10-year Treasury yield falling below 4% due to fears of a global recession triggered by China's retaliatory tariffs against U.S. goods [1][3] - The 10-year Treasury yield dropped over 16 basis points to 3.89%, marking the lowest level since October, while the 2-year Treasury yield fell over 22 basis points to 3.50% [2] - China announced a 34% tariff on all U.S. goods starting April 10, following President Trump's implementation of a 10% baseline tariff affecting over 180 countries, which has led to a surge in Treasury purchases for safety [3][4] - JPMorgan has increased the probability of a recession this year to 60% from 40%, citing that sustained tariff policies could push the U.S. and potentially the global economy into recession [4] - Investors are anticipating the nonfarm payrolls report, with expectations of a 140,000 job increase and an unemployment rate steady at 4.1%, which will provide insights into the U.S. economic health amid growth concerns [5] - A weaker-than-expected nonfarm payrolls report could exacerbate recession fears, while a stronger report may be viewed as outdated due to the looming impact of tariffs on the job market [6]

Group 1: Market Overview - The current stock market sell-off is disproportionately impacting artificial intelligence (AI) stocks, which have been dominant in recent years, leading to some stocks reaching bargain-bin status [1] - Alphabet's stock has reached valuation levels rarely seen in the past few years, signaling potential investment opportunities [2][4] Group 2: Alphabet's Financial Performance - Approximately 75% of Alphabet's revenue is derived from advertising, making it vulnerable to cuts in advertising budgets during economic downturns [3] - Alphabet's stock has not been this cheap since early 2023, despite a significant growth of nearly 60% throughout the year [4] Group 3: Historical Context and Recovery - Alphabet's stock has historically recovered from significant sell-offs, including during the COVID-related sell-off, the Great Recession, and in 2012, providing strong returns to shareholders [5] - Concerns about a potential recession and government actions against Alphabet for alleged monopoly practices are present, but the company has a history of bouncing back [5][6] Group 4: Government Regulations and Future Outlook - The U.S. government is pursuing actions to break up Alphabet's dominance in search and advertising technology, with ongoing cases that could impact its business structure [5] - Despite regulatory concerns, the company believes that spin-offs could create value, and the focus remains on purchasing Alphabet stock at its current valuation [6][7]

Core Points - U.S. futures indexes experienced a significant decline, primarily driven by a sharp drop in major tech stocks, amid fears of a global trade war and recession following President Trump's new tariffs [1][2] Market Reactions - The S&P Futures fell approximately 3.1% to 5,534.25 points, while the Dow Jones Industrial Average contracts decreased by 2.51% to 41,424 points [2] - The Nasdaq 100 index saw the largest decline, dropping 3.45% to 19,079.75, heavily influenced by the downturn in major tech companies [2] Company-Specific Impacts - Apple shares fell over 7.3% to $207.50, affected by tariffs on manufacturing in countries like China, Vietnam, and India [3] - Amazon's stock decreased by more than 5.5% to $185.01 in premarket trading [3] - Despite being exempt from tariffs, Nvidia's shares dropped 4.26% to $105.72 [3] - Other tech giants such as Google, Meta, and Microsoft also experienced declines of 2.43%, 3.5%, and 2% respectively [4] Global Market Impact - Foreign markets reacted negatively, with Japan's Nikkei 225 index down 2.77% to 34,735.93 points and the TOPIX dropping nearly 3.1% to 2,568.61 points [5] - South Korea's KOSPI index fell by 0.76%, while Australia's ASX 200 decreased by 0.94% [5] - Major Asian indices, including India's Sensex, China's Shanghai Composite, and Hong Kong's Hang Seng, also reported declines [5] - European markets opened lower, with the FTSE 100 down 1.34% and the EURO STOXX 50 falling 2.27% [5]

Group 1 - Long-term investors have an opportunity to acquire shares of high-growth stocks as their prices are currently misaligned with fundamentals due to market volatility [1] - The overall recession is believed to have further room to develop, indicating potential challenges ahead for the market [1] - Gary Alexander has extensive experience in technology companies and has been a contributor to Seeking Alpha since 2017, providing insights into industry trends [1] Group 2 - The article does not provide specific investment recommendations or advice, emphasizing that past performance does not guarantee future results [2][3]

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Core Viewpoint - Lululemon is experiencing significant stock market losses due to macroeconomic challenges, including tariffs imposed by President Trump and declining consumer confidence [1][3]. Stock Performance - Lululemon's stock fell 15% to approximately $290, marking its lowest intraday price since October and the worst percentage loss since last March [2]. - If the losses persist, this would represent Lululemon's second-largest drop in the last five years and the ninth-steepest decline since its IPO in 2007 [2]. Financial Guidance and Market Reaction - Despite exceeding Wall Street earnings forecasts for the last quarter, Lululemon's guidance of about 3% bottom line growth for 2025 raised concerns among investors, as it would be the worst growth since 2020 [3]. - The company's CEO noted a cautious consumer environment and slower traffic in U.S. retail stores [4]. Tariff Impact - The financial guidance from Lululemon only accounts for a minor slowdown of 0.2 percentage points due to tariffs, while Wall Street anticipates a more significant impact [5]. - Bank of America analysts reduced their 2025 profit forecast for Lululemon by 2% due to margin pressures from tariffs [5]. Consumer Sentiment and Economic Outlook - Analysts predict that continued tariffs and rising inflation could lead to Lululemon's first annual sales decline since at least 2006 [6]. - The macroeconomic environment is contributing to a more cautious consumer sentiment, with indicators showing a significant drop in consumer confidence [10]. Supply Chain Concerns - Lululemon sources about 40% of its products from Vietnam, making it vulnerable to potential tariffs on Vietnamese goods, which could exacerbate the company's challenges [8]. Industry Context - Other major retailers, including Walmart and Ford, have also expressed concerns about the negative impacts of tariffs on their businesses, indicating a broader industry challenge [11].

Economic Overview - The U.S. economy is facing potential recession risks due to President Trump's tariffs and trade wars, leading to reduced consumer discretionary spending as affordability issues rise [1] - Historical context shows that during the Great Recession (December 2007 - June 2009), the S&P 500 fell by 36%, while certain stocks thrived [2] Netflix - Netflix experienced a significant growth of 77% during the Great Recession, driven by its early-stage streaming service and strong business potential [3] - In the event of a recession in 2025, Netflix's streaming service remains an attractive option for consumers, with pricing tiers at $7.99 with ads and $17.99 without [4] - Despite a high price-to-earnings ratio of 48, Netflix could still be considered a safer stock during economic downturns [5] Ross Stores - Ross Stores saw a 51% increase in stock value during the Great Recession, benefiting from its off-price retail strategy that attracts cost-conscious consumers [6] - The company projects conservative same-store sales growth for fiscal 2025, estimating a range of down 1% to up 2% due to macroeconomic pressures [7] - With a valuation of less than 20 times trailing earnings, Ross Stores is positioned favorably compared to the average S&P 500 stock, which trades at 23 times earnings [8] Vertex Pharmaceuticals - Vertex Pharmaceuticals achieved an 18% growth during the Great Recession, transitioning from a less profitable company to generating over $11 billion in sales in 2024 [9] - The company reported an operating profit of $4.4 billion last year, with a margin of 40%, indicating strong profitability [10] - Vertex is trading at nearly 30 times next year's estimated earnings, with a promising R&D pipeline that includes treatments for various diseases, making it a strong long-term investment [11]

Core Viewpoint - PayPal's stock has faced significant declines due to increased competition in the fintech sector and a challenging macroeconomic environment, but its strong portfolio and expanding partner base present long-term investment opportunities [1][20]. Financial Performance - PayPal shares have dropped 17% year to date and 24.3% since reaching a 52-week high of $93.66 on December 9, 2024 [1][2]. - The stock is currently trading at a forward 12-month P/E of 13.7X, which is a significant discount compared to the industry average of 23.56X [2]. - Over the trailing 12 months, PayPal shares appreciated 6.5%, underperforming the industry’s 17.7% growth [5]. Operational Highlights - Total active accounts increased by 2% year over year to 434 million in 2024, with payment transactions rising 5% to 26.33 million [11]. - Total payment volume (TPV) grew 10% year over year to $1.68 trillion, with transaction margin in dollar terms increasing by 7% [12]. - The Buy-Now-Pay-Later TPV surged 21% year over year to $33 billion [12]. Strategic Initiatives - PayPal's Fastlane feature enhances the checkout experience, attracting new users, with 75% of Fastlane consumers being new or dormant users [13]. - The launch of FX-as-a-service and network tokens for automated billing is expected to drive transaction margins [14]. - PayPal Everywhere initiative led to a nearly 100% increase in debit card TPV, with over 1.5 million first-time debit card users added in Q4 2024 [15]. Partnerships and Collaborations - PayPal's partnerships with companies like Fiserv, Adyen, Amazon, and Shopify are enhancing its market prospects [16][17]. - Integration with Shopify Payments and collaborations with Apple and Google for Venmo debit card integration are noteworthy developments [17]. Earnings Guidance - PayPal expects non-GAAP earnings per share growth of 6-10% for 2025, with higher growth anticipated for 2027 [19]. - The Zacks Consensus Estimate for 2025 earnings is $5.02 per share, indicating a 7.96% growth over 2024 [19]. Conclusion - PayPal's robust portfolio, expanding partner base, and attractive valuation make it appealing for long-term investors, despite facing short-term competitive pressures [20].