Sweetgreen Falls, Amazon Downgraded, Capital One Nears Discover Deal
Apr 21, 2025
Sweetgreen's stock is under pressure as its COO departs and Bank of America lowers its price target. Amazon faces a downgrade due to soaring costs and tariffs, marking a 30% drop since February. Meanwhile, Capital One's green light for acquiring Discover Financial brings a surge in their stocks, despite ongoing market volatility. The podcast dives deep into how these dynamics are shaping the financial landscape and impacting investor sentiment.
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Sweetgreen's Demand Challenges
Sweetgreen faces demand pressure due to multiple factors including tariffs, immigration policy, and weather impacts like wildfires.
These challenges could affect costs and labor, forcing adjustments in their business model.
insights INSIGHT
Immigration Impact on Labor Market
Stricter immigration policies tighten the labor market even for companies not hiring undocumented workers.
This results in competition for employees and overall workforce scarcity.
insights INSIGHT
Amazon's Earnings Headwinds
Amazon earnings could face pressure due to heavy investments and tariffs increasing import costs from China.
AI infrastructure spending and a potential pause in AWS deals are additional growth headwinds.
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- Sweetgreen (SG) shares fell on news the salad restaurant chain's COO would leave the company. Bank of America also cut its price target from $36 to $31.
- Amazon (AMZN) was downgraded by Raymond James on anticipation that earnings will come under pressure from its increasing investments and the steep US tariff increases on imports from China. Amazon shares are down more than 30% off a February peak, participating in the broad-based market slump that has largely come on tariff uncertainty. The stock fell 3.4% on Monday, on track for both its fifth straight negative session and its lowest close since August. While Raymond James still has the equivalent of a buy rating, downgrades of Amazon are rare, and 95% of the analysts tracked by Bloomberg recommend buying the stock.
- Shares in Discover Financial (DFS) and shares in Capital One (COF) both rose following word that Capital One received approval from US regulators to buy Discover. The Federal Reserve and the Office of the Comptroller of the Currency, regulators responsible for approving the deal, announced their decisions in separate statements Friday. In giving its nod, the Fed said it evaluated “the financial and managerial resources of the companies, the convenience and needs of the communities to be served by the combined organization, and the competitive and financial stability impacts of the proposal.” The transaction — valued at $35 billion when it was announced — was awaiting a last remaining hurdle: The question of whether the US Department of Justice would sue to block the acquisition. Staff had been divided about whether the DOJ should challenge the tie-up, with some concerned the deal could harm competition, Bloomberg reported earlier this year. But antitrust division chief Gail Slater determined there wasn’t enough evidence to challenge the deal.
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