Three Things (5/6)

Pandora’s lab-grown diamond growth

The Copenhagen, Denmark based jewelry brand, Pandora, has skyrocketed over the past 6 months and is up ~18% year-to-date. Last quarter, gross margins reached 79%, and the company raised forward year sales guidance to 8-10% growth. Pandora’s positive results are largely tied to the recent surge in popularity of lab-grown diamonds, as sales for these specific stones rose 87% last quarter.

While natural diamonds are formed over billions of years below the earth’s surface, lab-grown diamonds are formed over just six weeks in a controlled, pressurized environment. Customers are drawn to both the lower price tag and the fact that the synthetically-made diamonds are considered ethical and sustainable. The cost-friendly option has been a popular choice recently, but we expect the trend will continue. The lab-grown diamond industry is projected to grow to $15.9 billion by 2027 and could be a powerful tailwind for well-positioned jewelry companies. 

April jobs report

After a few months of unwanted growth in the employment market, the April 2024 jobs report indicated signs of cooling. The U.S. added 175,000 jobs, still more than the Fed would like, but fewer than was expected. Wage growth, which had previously increased, slowed to 2.4% and unemployment rose to 3.9%. 

Earlier this year, markets were pricing in rate cuts for June, but a few discouraging inflation prints quickly shifted expectations. The Federal Reserve has a dual mandate for monetary policy: achieve maximum employment and stable prices. They are keenly focused on the latter, which you could argue is functioning at the expense of the former. A hot jobs market can keep price gains high, and the central bank’s key focus is to stabilize prices. Higher unemployment is a positive sign, but the trend will need to continue with a lower inflation print on May 15th before rate cuts are part of the Fed’s conversation again. 

Apple’s iPhone sales

Apple released quarterly earnings results, and investors were pleasantly surprised that revenue had declined by less than they expected. iPhone sales, an important revenue source, have been sluggish in China because of the tough competitive landscape, as Huawei’s smartphone sales rose 70% and Apple’s iPhone sales fell 19% year-over-year. The iPhone’s overall revenue was about $46 billion, dropping ~10% from the previous quarter.

Apple depends on markets around the world to uphold profitability and revenue growth. The iPhone’s potential to compete in “Greater China” depends on several factors, like its ability to integrate AI, but some are difficult to control. For example, pandemic sanctions in China slowed growth in 2019 and more recent laws banned iPhones in Chinese government workplaces. In the face of sectoral challenges, Apple will need to heavily lean into its mission of innovation as it enhances the iPhone to organically win back market share.

Disclosures:

As of the date of publishing, AAPL is a holding in Titan's Flagship strategy.

Advisory services are offered by Titan Global Capital Management USA LLC (“Titan”), an SEC registered investment adviser. Titan’s affiliate, Titan Global Technologies LLC (“TGT”), is a registered broker-dealer and member of FINRA/SIPC. Newsletters provided by Titan reflect the opinions of only the authors who are associated persons of Titan and do not reflect the views of Titan, or any of its subsidiaries or affiliates. They are meant for educational and informational purposes only, are not intended to serve as a recommendation to buy or sell any security and are not an offer to buy or sell a security. They are also not research reports and are not intended to serve as the basis for any investment decision. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Any third-party information provided therein does not reflect the views of Titan or any of its subsidiaries or affiliates. All investments involve risk, and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not ensure a profit or protect against loss. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and clients may lose money, including their original investment and principal. Any rewards or free trials offered through Titan's client referral program are subject to full program terms & conditions.

Titan newsletters are curated digests of business news stories delivered daily. Titan newsletters’ goals are to make business and financial news accessible to all. The Titan newsletter team has editorial independence. Authority over all news decisions that appear in Titan newsletters, including what news we cover, our tone, and any accompanying media, lies with the Titan news team. Titan newsletter editors conduct daily research through a variety of primary (e.g., press releases, financial reports, public statements, economic data, social media accounts, interviews, etc.), and secondary sources (e.g., Fortune, The Wall Street Journal, The New York Times, Bloomberg, CNBC, TechCrunch, Jalopnik, Business Insider, Fox Business, etc.). The editors then determine the stories to be featured, covering a mix of headline news as well as less reported, yet relevant stories. Titan can’t cover everything, but the Titan newsletters aim to deliver a well-rounded serving of news. Titan newsletters make every attempt to report the facts fairly and accurately and provide “Takeaways” based on our understanding of the trends, our business experiences, and our personal opinions. We deliver the crucial information and our unique perspective so you can assess the news critically. Titan newsletters may contain forward-looking statements, which reflect the author’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Smart Cash is offered by Titan as one of its RIA product offerings. Titan's Smart Cash strives for tax optimization; after-tax yields are estimates, and actual outcomes may vary. Yields are subject to market conditions, will fluctuate, and are not a guarantee or forecast of future earnings. While Titan can provide general tax information and guidance, any information provided should not be taken as tax advice as Titan is not a tax professional. Consult a tax professional for personalized tax advice. View Smart Cash risks and disclosures at titan.com/smart-cash-disclosures.

Various Registered Investment Company products (or “Third Party Funds”) are offered by third-party fund families and investment companies on the platform as one of many potential investment options available to Titan’s clients, that may or may not be recommended based on an individual client’s investment objectives and risk tolerance. Certain Third Party Funds are offered through Titan Global Technologies LLC. Other Third Party Funds are offered to advisory clients by Titan. The Third Party Funds that are available on the platform are interval funds. Investments in interval funds are highly speculative and subject to a lack of liquidity that is generally available in other types of investments. Actual investment return and principal value is likely to fluctuate and may depreciate in value when redeemed. Liquidity and distributions are not guaranteed, and are subject to availability at the discretion of the Third Party Fund. Please review the Third Party Fund’s prospectus, available on www.titan.com, in its entirety for a full list of risks associated with investing in the interval fund before making any investment decision.

Investments with exposure to crypto assets are only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns, as they still carry inherent risk associated with cryptocurrencies. You are solely responsible for evaluating the merits and risks associated with the use of any information, materials, content, user content, or third party content provided before making any decisions based on such content.

If there are substantive errors when published, corrections will appear in the following day’s material or within a business day of discovery of the error. When Titan or the author of a newsletter owns stock in a company mentioned, we’ll disclose it at the bottom of our newsletter.