Insurance company Progressive stock slumps after reporting a second-quarter earnings miss, revenue beat. Amazon announces this year's Prime Day was its biggest sales event on record. Pharmaceutical manufacturer Perrigo has received FDA approval on its over-the-counter birth control pill, Opill.
Video Transcript
- All right, let's take a look at some of the individual movers of the day. Let's start with Progressive. That stock sliding into the red after earnings lagged the Street's estimates. We're looking at a drop of just about 13%, and that is the biggest drop that we have seen since 2008. It's one of the worst performers in the S&P.
So obviously, these results, Ali, disappointing the Street. Wells Fargo out with a note saying that it shows that the auto insurers are continuing to be impacted by quote elevated severity, and we're seeing that caution reflected in some of the competitors as well.
- Yeah. And insurance has gotten more and more expensive, but also fixing cars has gotten more expensive. So that obviously pressures margins. I'm very happy I don't have a car, so I don't have to worry about car insurance right now. But it is interesting, though, because there was a research report from JP Morgan earlier this month saying that Progressive is a leader in this space but that the stock is fully valued at this point, but clearly a lot of challenges in the insurance space as well.
- No, definitely. I mean, look, you know, I have a family member who's there who gave me kind of a heads up that this was-- things were a little rough there. So I'm not as surprised to see these actual numbers play out today. I said maybe you should start looking for somewhere else. I'm sorry. That's a little bit of a sidebar.
But we also know that we've talked about this before, cars becoming more expensive or maintenance because people are keeping their cars for longer. The length of time the duration people are keeping their cars around 12 years again, that putting pressure on the margins in terms of just the cost to insure the vehicle. I want to switch gears to another stock that we are watching. Shares of Amazon popping today up a little more than 2.5% on the back of its annual Prime Day event.
Adobe Analytics estimating online spending shot up 6% to $6.4 billion on the first day alone. The projection for both days is top $12 billion. I know going into this, they were expecting to see above $13 billion, and we'll see when it all shakes out. Now Amazon, of course, we know doesn't reveal its total sales for those two days, but consumers bought more than 375 million items during the event. That's what Amazon says. Did you guys buy anything?
- I bought some things, yeah. I can never really stay away from Amazon Prime. They get me with all of their deals. They're too good to pass up. But a couple of things did jump out to me in these results and really what we heard from the report from Adobe, and that's the fact that average order size was up 3% on a year-over-year basis. Obviously, not a huge surprise given inflation, given the fact that these goods do cost more. But more shoppers were using buy now, pay later, and that certainly is just a sign of the times that we are in right now. Consumers more strapped for cash, and they're using that option so they don't have to pay the full amount, at least up front.
- And it's hard to draw concrete conclusions about what this means on the state of consumer. You don't know if people are buying things down the line for the holidays, for Christmas, for birthdays, what have you. But $2.5 billion saved via some of these deals, and now I'm regretting not getting in on these Amazon--
- Oh, I did.
- --Prime Sales. I didn't--
- You always have to have a list ready for a day like this.
- I know.
- You don't-- I mean, obviously, I am not advocating the buy now pay later kind of program, but I have my list for days like that, and I say, you know, like I have a few appliances, and I'm like what is-- so I got a blender. I'm finally there you go, proud owner of a Vitamix.
- Oh, there we go.
- That was a good investment.
- That was a good buy.
- That's worth it.
- And especially because I price compared it to last year's Prime Day was the same price even though the normal price is higher this year with inflation. So even with where inflation is, they didn't cut the discount. I appreciate that.
- No, but clearly, this is such a huge day days for Amazon, and they pour a lot of money marketing into this, whether it's online, TV, what have you. So good for Amazon. One stock I'm watching is Perrigo. Their Opill oral contraceptive has become the first over-the-counter birth control approved by the US Food and Drug Administration. Shares closing roughly flat, but they were up more than 4% earlier today on that news.
And guys, this is a big deal, especially in the United States. The company said it will likely be available in the US in early 2024. But what's interesting is that this pill was available with the prescription since 1973. So it took 50 years to get this to be over-the-counter. It is available without a prescription in over 100 countries outside of the US. So the US lagging there, but a big, big win for reproductive rights for sure.
- It is, I mean, this is a huge milestone in general for women and just where we've come and the issues we've had to deal with recently. But one of the things that could be affecting the stock price is. We don't know the price of this. So how will that play into what it does revenue-wise for Perrigo and in terms of its bottom line in general. But it's a big win for women.
- It certainly is a huge win. And going off of what you were saying just in terms of we don't know what the price is yet. We also don't know what insurance coverage is going to look like because insurers are not mandated to cover a pill that is over-the-counter. It does not hold up to the same standards as what is need a prescription for, so there are so many questions just in terms of what people are going to have to pay on a monthly basis if they do want to buy the pill. So it does remove the barrier given the fact that it is over the counter, but that cost is certainly a massive variable here just in terms of wider adoption.
- And the company did say they want it to be affordable, but that's relative, right? Like what exactly does that mean we mean?
- We'll see what that will be. But a huge day for women in terms of just the availability of it. All right, Ali, we appreciate you helping us with all of this.
- Of course.
