Business news update for Tuesday, August 5th
capitalcurrentsdaily.substack.com
---
In today's episode, I’ll tell you about Elon Musk's new pay package from Tesla, then let's go over Berkshire Hathaway's earnings results.
The markets are coming off their worst week of the summer with the S&P 500 and Nasdaq both dropping more than 2% last week. The main driver? The disappointing jobs report. Not only did that report show July’s jobs numbers were weak, but it also revised May and June’s numbers down, meaning the economy added just 35,000 jobs on average over the last three months—a sign the labor market is losing steam.
Now, looking ahead to this week, we’ve got a ton of big earnings on deck: Palantir, AMD, Uber, Airbnb, Disney, and more. It’s another packed week, and we might even see a couple of trade deals, with new tariff rates going into effect August 7th. We’ll stay on top of all that, so make sure you’re subscribed to the podcast!
Let’s run through some headlines, starting with Elon Musk. The Tesla board just approved a massive $29 billion pay package for Elon, aiming to keep him locked in and motivated. This deal includes 96 million shares that will only vest if Musk remains a key executive through 2027. It’s essentially a two-year, $29 billion deal, and a way for Tesla to make good on the $50 billion package from 2018 that was struck down by a Delaware court earlier this year. In a shareholder letter, Tesla’s board said this is the first step toward a long-term comp plan, which will go to vote at the November 6th annual meeting. This package could also gradually increase Elon’s voting power, which is currently around 13%. The board wants him focused on Tesla, not distracted by SpaceX or xAI, especially since Tesla’s core business is struggling—vehicle sales dropped 14% last quarter and revenue growth has flatlined. There have been rumors of a possible CEO switch, but for now, the board and investors still believe Musk is the guy to lead Tesla into its next chapter: full self-driving, robo-taxis, and humanoid robots.
Switching gears to Berkshire Hathaway: The Warren Buffett-led giant reported disappointing earnings with operating profits dropping 4% in Q2, dragged down by insurance underwriting losses. Other segments like railroads and energy were flat or only slightly up, but the biggest hit was a $3.8 billion write-down on their Kraft Heinz stake—a rare L for Buffett. Berkshire now values its 27% Kraft Heinz stake at just $8.4 billion, less than half of what it was worth in 2017.
Buffett also took a jab at Trump’s trade policy, warning that escalating tariffs could hurt most of Berkshire’s businesses and investments. The company was a net seller of stocks for the 11th straight quarter, unloading $3 billion worth of equities in Q2 and $4.5 billion in the first half of the year. And with Buffett set to step down as CEO at the end of 2025, the vibes are a bit shaky. The stock is down more than 3%.
That’s all the business headlines for now. Let’s look at some stocks:
Wayfair shares are popping after the company posted its strongest quarter since the pandemic—revenues grew 5% year over year in Q2. While that may sound low, it’s a big comeback for Wayfair. Last quarter, revenue growth was flat, and for 2024, sales dropped 1%. The company hasn’t posted a profit in years, but this Q2 they reported a surprise profit and the stock is up over 5% this morning.
On the flip side, Boeing’s stock is down after more than 3,000 workers in their defense unit went on strike in Missouri and Illinois, following the union’s rejection of a four-year labor contract. Boeing’s defense unit is about 30% of total revenue and produces key military products like the Apache helicopter, so this is another headache as they try to turn things around. This comes less than a year after thousands of Boeing employees went on strike in September 2024, a strike that didn’t end until November. Boeing stock is down around 2% this morning in response.