Day: September 25, 2024

Donald Trump’s political fortunes are beginning to diverge from his financial ones.

Shares in the former president’s social media group plumbed fresh all-time lows on Monday, even as the latest polls suggest he’s gaining ground in a few key battleground states in the nation’s sunbelt.

Until recently, the price of his Truth Social parent company was widely viewed as a barometer of his chances in November.

On Monday, a poll published by The New York Times and Siena College showed him holding onto his lead in Georgia while pulling ahead of Harris in Arizona and North Carolina following their contentious debate this month that saw Trump go viral for claiming immigrants are eating pets.

It also marked the sixth straight day of heavy selling in Trump Media and Technology Group (TMTG), the parent of Twitter clone Truth Social, after a very brief respite when Trump told reporters he had no intention of selling his nearly 115 million shares of stock.

It closed down 10% on the session to finish at $12.15, its lowest level since it first announced three years ago plans to go public via a reverse merger with a blank check investment vehicle known as a SPAC.

That means the value of Trump’s 59% stake in the company, which was until this week subject to a six-month lockup period following the SPAC merger, has dwindled to just $1.4 billion from its peak in March of more than $9 billion.

Assuming Trump doesn’t sell his stake as he claims, the selling pressure will not necessarily let up, either.

Billion-dollar valuation, million-dollar sales

With its meme stock image and refusal to reveal anything about the underlying metrics driving its business, the stock is shunned by financial analysts.

There’s not one estimate on Yahoo Finance for this year’s revenue, let alone earnings or, in TMTG’s case, losses.

Applying the same 7.5x price-to-sales multiple for next year’s revenue that Reddit currently trades to TMTG stock would give it a market cap of around $25 million.

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That’s a fraction of the $2.4 billion that TMTG, on track for annual sales well below $4 million (with an ‘m’), is currently worth.

Excluding the $344 million raised from the SPAC deal—cash for which investors typically do not assign a multiple beyond their stated value—the amount of total assets on its books that can potentially generate profits for shareholders amounted to just $12.5 million at the end of June.

Fortune could not reach TMTG officials for comment. When contacted via TMTG’s Truth Social, Trump did not respond to a request for a statement.

‘Directional bet on the value of his brand’

Given Trump’s need to drum up cash to meet legal fines in the hundreds of millions of dollars and the lack of unencumbered assets he can easily liquidate, investors seem unwilling to take the former White House resident’s words at face value.

Last week, he announced his latest merchandising plan: selling one-ounce silver coins embossed with his face for $100 each—more than three times their current intrinsic value.

Chamath Palihapitiya, an early Facebook investor best known for promoting SPACs during their pandemic-era boom, ironically predicted TMTG was “a directional bet on the value of his brand” and something akin to the Official Trump Coin just unveiled.

Speaking on the All-In podcast shortly after TMTG began trading in March, he said the stock is “effectively a trading coin, a baseball card if you will—a trading card via a stock” that banks on the former president’s name recognition and likeness.

Trump may have inadvertently hurt his own investment story by declaring on Sunday he wouldn’t run again for the presidency should he lose in November. By taking him out of any future races, he stands to lose his influence on shaping the Republican party.

This story was originally featured on Fortune.com

Apple (NASDAQ: AAPL) is the most valuable company in the world right now with a market cap of $3.4 trillion. But a closer look at the company’s recent financial performance indicates that it is finding it difficult to put its growth into a higher gear.

For instance, in the third quarter of fiscal 2024 (which ended on June 29), Apple’s revenue increased just 5% year over year to $85.8 billion. Analysts are expecting this “Magnificent Seven” stock to finish the year with a 9% increase in revenue to $390 billion. Additionally, its revenue is expected to increase by just 8% in the next fiscal year.

This lukewarm growth at Apple can be attributed to the company’s already massive revenue base. Moreover, Apple’s bread-and-butter end market of smartphones is already quite huge, and its growth has stagnated. Market research firm IDC estimates that the global smartphone market could reach an annual growth rate of just 2.3% through 2028.

Considering that Apple is reliant on the iPhone for 52% of its revenue, it is not surprising to see that it’s not expected to grow at a blistering pace anymore. This is precisely the reason Apple could lose its crown as the world’s most valuable company to Nvidia (NASDAQ: NVDA), a company that is sitting on lucrative and fast-growing end markets that could help it deliver impressive growth over the next decade.

Let’s look at the reasons why Nvidia could be worth more than Apple after a decade.

Nvidia is set to benefit from massive growth opportunities in multiple end markets

Nvidia is currently the third-most valuable company in the world with a market cap of $2.85 trillion, which means that it is not very far from catching Apple. The terrific pace at which Nvidia has been growing tells us that it can indeed catch the iPhone maker over the next decade.

The company, which is known for its graphics processing units (GPUs), reported phenomenal revenue growth of 122% in the second quarter of fiscal 2025 to $30 billion. Nvidia has been riding the artificial intelligence (AI) wave, with its chips being deployed for training popular AI models such as ChatGPT. And now, Nvidia is diversifying into areas beyond AI training so that it can sustain its handsome growth for a long time to come.

For instance, on its August earnings conference call, Nvidia management pointed out that AI inference applications have accounted for more than 40% of its data center revenue. This is an important trend to note as inference is the process of using a trained AI model to generate results from a fresh set of data. So, Nvidia has moved beyond AI training and is now getting a nice chunk of revenue from the AI inferencing space as well.

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That’s good news for the company’s long-term prospects as its presence in both these markets should allow it to remain a dominant force in AI chips. Investors should note that the market for AI chips is expected to generate $300 billion in revenue in 2034, growing at an annual rate of 22% over the next decade.

Nvidia reportedly controls 70% to 95% of the AI chip market, according various estimates, leaving very little for rivals such as Advanced Micro Devices and Intel. It won’t be surprising to see that trend continue over the next decade as well, as a result of which Nvidia could sustain its elevated levels of growth for a long time to come.

Additionally, Nvidia is diversifying into lucrative markets such as AI enterprise software, where it has started witnessing impressive growth. This could unlock another lucrative growth opportunity for the company as the AI software market is expected to generate a whopping $1 trillion in revenue by 2032, according to Precedence Research.

Then again, Nvidia has other solid growth drivers in the form of the nascent but potentially massive cloud gaming space where it has already established a solid position for itself. All this explains why the company is forecast to grow at a much faster pace than Apple.

Faster growth could help the chipmaker overtake Apple’s market cap

Analysts are expecting Apple’s earnings to increase at a compound annual growth rate (CAGR) of 11% over the next five years. There is a chance that the iPhone maker’s earnings growth could accelerate in the long run thanks to the growing contribution of the company’s high-margin services business, but it is likely to be hamstrung by the slow pace of growth in smartphone sales over the next decade.

Precedence Research estimates that the global smartphone market could see 7% annual growth through 2034. While that’s rosier than IDC’s forecast, Precedence believes that the adoption of technologies such as augmented reality and virtual reality are likely to help the smartphone market achieve faster growth. But it is worth noting that these technologies have been around for some time and they haven’t been enough to inject life into the smartphone market.

On the other hand, the advent of AI turned out to be a massive catalyst for Nvidia. Analysts are forecasting the company’s earnings to increase at a CAGR of 52% over the next five years, a much faster pace than what Apple is expected to report. Moreover, Nvidia’s end markets are set to grow at a much faster pace than Apple’s, and the good part is that the company is the dominant player in most of those markets.

So, there is a good chance that Nvidia could outperform Apple’s growth by a big margin over the next decade, and the market could reward the former with more upside as a result and help it become a more valuable company.

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Prediction: 1 Stock That Will Be Worth More Than Apple 10 Years From Now was originally published by The Motley Fool

Donald Trump has promised a $1.5 trillion tax cut to eliminate income taxes on Social Security benefits. While popular among voters, the proposal raised concerns about its impact on the already strained Social Security system and the broader federal budget.

The former President’s plan taps into a long-simmering frustration among retirees who are often surprised to find their Social Security benefits subject to taxation. According to Social Security Administration data cited by the Wall Street Journal, half of all recipients paid taxes on their benefits in 2023, an increase from just 10% when the tax was introduced in 1983.

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Trump’s proposal appeal was evident in a WSJ poll which found that 83% of respondents favored eliminating taxes on Social Security benefits. Even when informed that the change could increase the national debt, a majority still supported the idea.

The proposal comes at an important time for Social Security. The program is projected to face a shortfall within the next decade, potentially triggering automatic benefit cuts if Congress fails to act.

See Also: How do billionaires pay less in income tax than you? Tax deferring is their number one strategy.

The WSJ said the income tax on benefits currently accounts for about 4% of Social Security’s revenue and its repeal would accelerate the program’s fiscal challenges.

Democrats have countered with their proposal spearheaded by Connecticut Rep. John Larson. Their bill would reduce, but not eliminate, the tax on benefits while expanding the program. To offset the costs, it proposes new taxes on high earners, applying Social Security taxes to wages and investment income above $400,000.

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“We do something [Trump] doesn’t,” Rep. Larson told the WSJ. “We pay for it.”

Nancy Altman, who worked on the 1983 reform and now leads the advocacy group Social Security Works, noted the tax’s enduring unpopularity. “From the beginning, it’s not been well understood and been very unpopular,” Altman said.

The current system creates a compounded tax situation for many retirees. Benefits become taxable when a recipient’s total income, including half of their Social Security benefits, exceeds certain thresholds. The structure can result in surprisingly high marginal tax rates for working retirees, potentially discouraging them from seeking employment.

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Some economists suggest that eliminating the tax could have mixed effects on the labor market. While it might encourage some seniors to work longer or return to the workforce, it could also lead others to retire earlier, knowing they’ll keep more of their benefits.

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Policy experts have proposed different approaches that could achieve similar goals without the price tag of Trump’s plan. Kyle Pomerleau of the American Enterprise Institute suggested including benefits in income from the first dollar while raising the standard deduction. This could prevent high marginal tax rates without “hemorrhaging $1.5 trillion,” Pomerleau argued.

Eric Beckman, a voter and 71-year-old retiree in Pennsylvania, sees potential benefits for middle-income retirees like himself, though he shared concerns about the impact on government finances.

The Tax Policy Center estimates that the tax cut would benefit 16% of all households, giving an average increase of $3,400.

With Social Security’s financial health already in question, any major changes to its revenue structure will likely face scrutiny in the months ahead.

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This article Trump’s Plan To Cut Social Security Taxes Is A Hit With Voters – But What’s The Catch? originally appeared on Benzinga.com

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• The job market is flashing signs the US is still headed for a hard-landing, Danielle DiMartino Booth says.

• The forecaster pointed to workers rolling off unemployment benefits, while part-time jobs have soared.

• Consumers could eventually pull back on spending, causing the US to tip into a downturn, she said.

Developments in the labor market show that the US economy isn’t on solid footing, according to Danielle DiMartino Booth.

The veteran forecaster and QI Research founder pointed to continued signs of weakness in the US job market, zooming in on a few key areas that are flashing signs of trouble.

Booth said that more workers who once qualified for unemployment insurance are now rolling off of their benefits. Workers in most states have 26 weeks of paid unemployment benefits, but according to the Bureau of Labor Statistics, 21% of workers are now taking more than 27 weeks to find a new job, up 3% from last year.

The average unemployment duration in the US climbed to 21 weeks in September, government data shows.

The second factor is the number of part-time workers in the US, which has climbed to an all-time high and suggests that the hiring picture isn’t as strong as may appear. The number of employees that usually work part-time climbed to 28.2 million in August, the highest number since the government began recording the data in the 1960s, BLS data shows.

“We’re not seeing these people pour into the unemployment claims pool,” Booth said in a recent interview with CNBC, attributing many of the part-time jobs to the gig economy, as out-of-work Americans may turn to platforms like Uber or other services in order to keep money coming in.

“Much different economy than we saw in 2007, 2008, because the gig economy has exploded in that period,” she added.

Weakness in the job market could later translate into consumer weakness, one of the economy’s chief concerns, Booth predicted. Fed economists already have their eye on weaker consumer spending, with consumption falling or remaining flat in most Fed Districts, according to the central bank’s latest Beige Book.

Lower consumption already appears to be having an effect on key industries. The manufacturing sector contracted for 21 out of the last 22 months, according to the Institute of Supply Management, while inventory grew. The housing market, where activity has been suppressed over the last two years, also saw existing home sales drop another 2.5% in August, per the National Association of Realtors.

Investors could see more signs of economic weakening with next quarter’s GDP figures, Booth said, which are set to roll out at the end of the week.

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The economy is expected to have grown nearly 3% last quarter, matching the pace in the second quarter of 2024, according to the latest Atlanta Fed GDPNow reading. But GDP figures could be later revised down, Booth noted, pointing to a recent revision that showed the economy added nearly a million fewer jobs than expected in the year leading up to March 2024.

Booth has been warning of a recession for months despite most of Wall Street warming up to the prospect of a soft landing. Previously, she made the case that the US economy was already in a recession despite continuing to grow in 2023 and 2024, pointing to continued weakness in the job market.

Read the original article on Business Insider

Costco offers two kinds of personal memberships: Gold Star and Executive. The cost difference between them is $65 ($65 for Gold Star and $130 for Executive). But an Executive membership lets you earn 2% back on all qualifying Costco purchases up to a maximum of $1,250 per year. Members who choose the Executive membership are usually those who can spend enough in a 12-month period ($6,500) to cover the cost of their entire membership fee.

If that information has you yawning, then you’re probably (a) already an Executive member or (b) aren’t one but have done a little research. Regardless of which category you fall into, there are certainly some little-known Executive perks that deserve some more attention — like these three.

1. Extra perks on insurance

Members can already save big on insurance through Costco’s partnership with CONNECT, an arm of American Family Insurance. According to Costco, members save roughly $600 on auto insurance in the first year they switch to CONNECT.

Executive members, however, get extra perks. Executive members who buy car insurance will also get roadside assistance, which covers up to $75 for minor problems like flat tires and dead batteries.

They also get lifetime renewability. This means CONNECT won’t drop you after you get into an accident or file a claim. There are some exclusions to this policy (for example, CONNECT could drop you if you don’t pay your premiums), so check the benefits page for more information.

CONNECT home insurance also offers extra benefits to Executive members. Home glass repair reimbursement, for instance, will cover up to $1,000 per occurrence with a maximum of two occurrences per year. Meanwhile, home lockout assistance will cover up to $100 per occurrence with a maximum of two occurrences per year.

2. Cash back on travel plans

As mentioned above, Executive members can earn 2% back on qualifying Costco purchases. And, yes, that includes Costco Travel bookings.

This 2% back on travel can make an Executive membership worth buying for a single trip alone. Say, for instance, that you book a five-day trip to Mexico for you and your partner for $5,000. If you can then spend $1,500 at Costco on your regular shopping, you would have earned enough cash back to cover your membership dues.

Better yet, you can double-dip rewards. That is, you can earn 2% back on your Costco membership and rewards on a travel credit card. This could mean getting a fair chunk of change returned to you in the form of cash back, reward points, or miles.

3. Costco Connection magazine

Okay, this one is definitely not as cool as the former two. But if you’re a magazine kind of person, an Executive membership will entitle you to a monthly copy of Costco Connection. Each edition includes health tips, business advice, recipes, member stories, and some book reviews.

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Even if you’re not an Executive member, you can view the magazine for free online. But only Executive members can have a paper copy of it delivered to their door.

An Executive membership entitles you to the perks mentioned above. Of course, for many people, its main draw is the 2% back on qualifying Costco purchases. Combine this with a good credit card to use at Costco and you could reduce your out-of-pocket spending at your favorite wholesale club.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

3 Little Known Perks of a Costco Executive Membership was originally published by The Motley Fool