U.S. Economy Loses Jobs in July, Airbnb Posts Best Quarter In Years

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Friday, August 7th. In today's episode, we'll break down a surprisingly weak jobs report and what it means for the Fed. We'll also recap Airbnb's earnings and tell you why the company says that AI is the best thing to ever happen to its business. We'll also take a look at the major AI shakeups happening inside Google and what it means for the company. Then stick around to the end of the show to find out how big Elon Musk's new Texas chip factory is expected to be. We got a great show for you today.
Let's go.
Thursday was kind of a boring one for the markets. The S&P 500 fell 0.2% and the NASDAQ was basically flat down less than 0.1%. The main thing weighing on the markets yesterday was oil. Oil prices jumped roughly 3% as investors started to question whether the Strait of Hormuz is actually going to reopen anytime soon. I mean, you guys know the drill at this point. The oil markets flip-flopped back and forth in a high stakes game of deal or no deal with Iran. But you know, all of that is a footnote today because this morning we got the July jobs report and it was a shocker. The US economy lost 23,000 jobs for the month of July. Economists were expecting the economy to add 83,000 jobs. And the news gets worse. May and June were revised down by a combined 103,000 jobs as well. And then not to mention wage growth was at the slowest it's been in more than five years. Now the unemployment rate did fall from 4.2% to 4.1%, but that wasn't because more people found jobs. It was because more Americans stopped looking for work altogether. The labor force participation rate fell to 61.4%, which Bloomberg says is the lowest level since the 1970s, excluding the pandemic, of course. So yeah, this is a pretty dramatic miss and it kind of changes the conversation on what the Fed could do with interest rates moving forward. A weak labor market means that the Fed has less room to hike rates because hiking rates could make the job market even worse. You know, Fed Chair Kevin Warsh has been talking tough on inflation since he took over the role earlier this year. That's why the markets were pricing at a potential rate hike this year, but it's much harder to justify raising rates when the economy is actively losing jobs. So this is gonna put the Fed in a difficult spot here, but the stock market is rallying this morning despite the poor jobs report. I'm recording this right at the open and I'm seeing green across the board. So this is a case of bad news being good news for the stock market. Now, I don't want to overreact to just one jobs report, but when you combine this report with the huge downward revisions for May and June, the labor market might not be as strong as we thought. So we'll see what the Fed decides to do moving forward. This just got a lot more interesting. We're gonna be staying on top of everything, including all the macro developments, all the earnings, everything else happening in the market. So definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.
Let's run through some headlines, starting with Airbnb. Airbnb reported earnings last night and it was one of their strongest quarters in years. Revenues jumped 17% to $3.6 billion that beat expectations and profits climbed to $816 million. That was up from the $642 million last year. On top of that gross bookings, which is the total dollar value of every trip booked on the platform increased by 16% to $27.2 billion. That also came in higher than expectations. And the big takeaway here is that people are still traveling. Knights In Experience booked increased by 10% to $148 million. And Airbnb said that growth actually accelerated in major markets, including the US, France, the UK and Australia. In fact, North America had its fastest booking growth in almost three years. So despite all the concerns around consumers pulling back on spending, travel demand continues to look pretty resilient. We also saw this with Disney's earnings when we talked about them yesterday. Looking ahead, Airbnb raised their full year revenue outlook for the second time this year. They now expect growth of at least in the mid-teens. So the market like what they heard from Airbnb and the stock is up around 8% this morning at the time of this recording. You know, digging into Airbnb's earnings, there's a couple of things that stood out to me. One is that they're slowly becoming less dependent on people just renting out their homes and condos. The company continues to add boutique hotels and tours and local experiences and services. Now, hotels are still a small part of the business, but hotel bookings are growing roughly three times faster than Airbnb's core home rental business. And I think this is a smart move because long time listeners know I'm an Airbnb hater. Okay, I prefer staying at hotels. So I think this is smart for Airbnb to start putting hotels on their platform. I think long term Airbnb strategy is to be more like booking.com or Expedia. Fun fact, booking.com is actually worth more than Airbnb. Booking has a market cap of $150 billion, while Airbnb is worth around $90 billion. So Airbnb is slowly pivoting their business. Now the other part of this report that stood out to me was what the company said about AI. CEO Brian Chesky said that Airbnb has basically rebuilt the company to become AI native, and he straight up said that AI is the best thing to ever happen to Airbnb. Airbnb said they're using AI behind the scenes to ship products faster and personalize search results and improve listings and also automate customer service. That last part I don't like so much. But yeah, in the near future, it looks like Airbnb is setting themselves up to be a full blown travel super app and it might have some cool features like a built-in AI agent or something. Personally, I still prefer booking hotels directly from the hotel's website, but I do like the fact that Airbnb is pivoting a bit. Let me know in the comments on what you guys think. Do you like the fact that Airbnb is adding hotels to their platform or do you prefer they just keep it old school and just stick with homes and condos? I gotta say, Airbnb stock has been a sneaky good performer over the last year. It's up more than 30% in the last 12 months.