HAPPY WEDNESDAY TO THE STREET
Good news, doomscrollers: Meta’s (META) trial is over, and it will not have to sunset its trademark infinite scroll feature.
The tech giant will, however, have to pay a whopping $17B to 47 states, and institute hard caps on teens' daily screen time, to settle claims that it deliberately got kids hooked on Instagram and Facebook. The deal ends a landmark trial just one week in, and spares Mark Zuckerberg a turn on the witness stand.
Good news for investors, bad news for my social media presence. Nothing generates new memes faster than Zuck taking to the stage to do his best impression of a human.
🟨 | US stocks finished near flat today ahead of Nvidia’s (NVDA) earnings due after the bell.
📈 | One Notable Gainer: Abercrombie & Fitch (ANF) soared more than 30% after trouncing fiscal Q2 estimates and raising its full-year outlook.
📉 | One Notable Decliner: Zoom (ZM) fell after issuing a lighter-than-expected Q3 forecast.
— Brooks & The Street Sheet Team
MARKET SNAPSHOT
S&P 500 Heatmap. Credit: Unusual Whales
Market Movers
INTUIT, JM SMUCKER, KOHL'S
📈 | JM Smucker (SJM) topped fiscal Q1 revenue estimates.
📉 | Intuit (INTU) issued disappointing fiscal 2027 revenue guidance.
📈 | Kohl's (KSS) raised its full-year outlook and restarted share buybacks.
📉 | Boston Scientific (BSX) disclosed a cybersecurity incident expected to disrupt product access.
📈 | Semtech (SMTC) beat Q2 estimates and guided above expectations.
Tomorrow's Trade Idea, Today
LIGHTS OUT AND AWAY WE GO
Stock Spotlight
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Pole Position
Wall Street's fastest trade might not be tech.
Morgan Stanley analyst Sean Diffley reiterated Formula One as his top pick across media and entertainment, calling the sports car racing stock surprisingly underowned.
With investors hunting for winners in sports and live events, the analyst sees the racing giant as a prime fund flow beneficiary.
American Muscle
The engine is a particularly high-octane one: America.
Americans are tuning into Formula One at a record rate. ESPN viewership hit an all-time high of 1.3M for the 2025 season. Apple (AAPL) says streaming numbers are sharply higher since taking over the broadcast. And roughly 70M global viewers tune in each race weekend.
Diffley points to highly visible, contracted revenue from media rights and race fees, with sponsorships and licensing as the upside drivers. MotoGP, he adds, is in the early innings of the same playbook.
Sticker Shock
The bulls are leading the pack. All but two of 17 analysts covering the stock rate it a Buy or equivalent, and consensus sees EPS climbing nearly 22% to $2.25 in 2027.
At 46x next year's earnings, the shares aren’t exactly cheap. But Janus Henderson (JHG) notes sports franchises routinely change hands at 7x to 10x revenue.
Shares have trailed the broader market lately. If Diffley is right, they are just waiting for the lights to go out.
Do you own any shares of Liberty Formula One (FWONK)?
OVERHEARD ON THE STREET
📊 | July PCE ran hot at 3.7% annually, but the Federal Reserve’s preferred metric, Core PCE, remained in-line at 3.3%.
🕵️ | Court documents revealed Chinese state-sponsored hackers breached the Fed, NASA, DOJ, and other US agencies.
🤖 | Bill Gates warned there is no plan for the social and economic upheaval AI will cause.
💊 | The FDA approved Revolution Medicines' (RVMD) pancreatic cancer drug after it nearly doubled patient survival in trials.
TUESDAY’S POLL RESULTS
Do you own any shares of Dynatrace (DT)?
▇▇▇▇▇▇ 🐂 Yup, I’m holding
▇▇▇▇▇▇ 🐻 Nope, not interested
▇▇▇▇▇▇ 👀 No, but I’m interested
And, in response, you said:
🐻 Nope, not interested — “Frankly, I would sell anything associated with the AI ‘boom’. By the time the 2-year buildout and stocking is realized, it will be like 2008 again — except for technology. Tons of warehouses full of specialized useless computer scrap.”
