Tesla Posts Record Q2 Revenue, Goldman Sachs Struggles & Wesleyan Ends Legacy Admissions

0:01Stop waiting for customers to fall into your funnel. It's 2025, and the same old strategies are, well, just kind of old. That's where Amazon ads can make a difference. Brands using four Amazon ad solutions saw dramatically higher growth compared to limited approaches. Our latest Marketing Brew article breaks down how they can help you reach customers everywhere they are, from prime video to Alexa to shopping with consistent messaging. Read the whole thing at marketingbrew.com slash amazon dash ads. Good morning, Brew Daily Show. I am Neil Freiman. And I'm Toby Howell. On today's pod, Netflix shares its first update since it kicked you off your parents' account, and we will reveal the world's most powerful passport.

0:44Then we'll talk about the Women's World Cup kicking off today and how it's expected to break all sorts of records before finishing up with one of the weirder stories we've ever covered on the pod, the rise of NPC live streamers. It's Thursday, July 20th. Let's ride.

1:04All right, Neil, there's not a ton of perks of waking up at 4 a.m. every day, but this week makes it all worth it because the amount of sports that are going on in the wee hours of the morning. I'm declaring this week the golden age of early sports watching because not only is the Women's World Cup kicking off in Australia and New Zealand, where some of the games are starting at 3 a.m. Eastern, but we also have the British Open going on right now. So if we wanted to, we could watch a full slate of sports before even stepping foot in the studio, which is wild. It's pretty great. You know, I'm actually no one sees this right now, but I'm actually have all the games on going on right now.

1:38So I may be a bit distracted, but it's pretty cool. Yeah. And then also just a quick programming note at the top of the show. I will be out tomorrow for a wedding in McCall, Idaho, of all places. I'm actually hopping on a Spirit Air flight right after this with a layover in Las Vegas. So just prayers for me. Are you skip lagging? No, I'm not skip lagging, although I did Google if there was, but there's not a ton of layovers in Boise, Idaho. So it's not the skip lagging place. Yeah, absolutely not. So but yeah, Kelsey is filling in. She works for Marketing Brew and it's the premiere of Arben Highburn tomorrow.

2:13So you guys will go deep on. I'm really excited about that marketing. Yeah. So I'll be tuning in for sure. And you'll be off the grid, hopefully. We got a bunch of big earnings reports yesterday from Netflix, Tesla and Goldman Sachs. So let's run through what you need to know about how these three corporate giants are doing, starting with Netflix. which is really beginning to distance itself from the rest of the streaming pack. The company added 5.9 million new subscribers in the last quarter, largely thanks to two big projects, the password sharing crackdown and the launch of a cheaper tier with ads.

2:47That boost in subscribers didn't translate to a huge bump in revenue, which is why you saw Netflix's stock price sag after this report. But still, my takeaway here is there was this big streaming wars in which every media company launched its own service to compete with Netflix. Now that the dust has kind of settled here, it's pretty clear that all of these pluses, Disney Plus, Paramount Plus, Max, Peacock, haven't come close to dethroning Netflix. And we can pretty confidently declare that Netflix has won the streaming wars. Yeah. I think that's what this shows. I think so for sure too. I also think that it shows that there's a lot of room to run still for Netflix because they kind of mentioned that this is not an overnight thing.

3:29the password sharing crackdown, like it's still rolling out. And some people might take weeks or months or even like half a year to eventually convert because they might see a piece of content that comes out and goes like, all right, fine. I'll finally like sign up for my own Netflix account. So I do think we're in the early innings too of seeing the effects of the password sharing crackdown. And then another interesting nugget in this earnings call for me were the effects of the strike that's going on right now in Hollywood. And so it actually ended up freeing up cash flow for Netflix because they're not spending as much on content this year.

4:03So again, they have some scripts stockpiled. And so for the foreseeable future, they'll do all right. So it is a little weird and it doesn't make you feel great to know that this strike is actually increasing profitability for Netflix. They didn't frame it as a good thing because they're not investing in the future. But it does seem that as far as all of the streamers go, Netflix will be affected the least of any of them because they have the most overseas projects going. They have the most backlog of content. So just, you know, another win for Netflix in these streaming wars where all of these other companies are cutting spending to become profitable because investors are like, look, you guys have been at this for three to four years.

4:42You've had Peacock for a while. You've had Disney plus for a while. You still can't make money off of it. So what's going on? And they're all cutting, you know, their investments in these streaming services and Disney trying to sell off all of its traditional TV properties. So this is like a really bad time for a lot of media companies. Their push into streaming has gone a lot bumpier than expected. Meanwhile, Netflix, which pioneered this whole thing 20 years ago, is sitting pretty. They are sitting pretty. And I have, I got a show downloaded for the, or no, a movie. Oh, it's fine. I downloaded Extraction 2, which is from Chris Hemsworth.

5:18It's like the most gratuitous, over-the-top action movie. So I'll be watching that on the Spirit Air Flight. Okay, Neil, our next big earnings report yesterday came from Elon's small electric vehicle side project, Tesla. And this was the tale of a few numbers. On the surface, Tesla had a heck of a quarter. It reported record high revenue of$24.9 billion. Revenue from its core auto business rose 46 % year over year. And it delivered more cars than analysts expected. So then why did the stock slowly fall 5 % after hours while the earnings call wore on? Well, first and foremost, remember how we hyped up the fact that Tesla had finally produced a Cybertruck?

5:58Well, it turns out it isn't fully ready yet, and the stock started to slip when Elon revealed that there wasn't a precise start date for deliveries. Then the other reason for the slip is that its operating margin, which is basically how much they make on each car they sell, dropped again to 9.6%. And remember, Tesla has always lapped the field when it comes to operating margin. Its competitors genuinely sit around the 6 % to 7 % range, while Tesla has at times flirted with 20%. But that number has slowly been declining this year, given all the price slashing Tesla has done. So all in all, a great top-line quarter for Tesla, with some mildly concerning trends to keep an eye on.

6:38Yeah, this is all investors are really focused on profitability here with Elon Musk chopping prices a bunch in the first quarter. and he said we could continue chopping prices because we can't control the macro environment and people have less money to spend and automakers everywhere are slashing prices. The Ford F-150 Lightning just got a$10 ,000 price cut. Buyers paid an average of$45 ,000 on average for Tesla vehicles in the past quarter. And a year earlier, it was$56 ,000. So these are pretty drastic. Yeah, for sure. The other thing I want to mention is that on the call, Tesla actually mentioned AI.

7:15and they said, Elon Musk said that Tesla will spend more than$1 billion on developing Dojo, which is their AI. I read that. I was like, what? I know. A billion dollars. And basically, it makes a lot of sense though, because Dojo is the supercomputer that Tesla is developing that will help with computer vision and just like the camera process of a self-driving car. So even though it sounds like maybe they're jumping on the AI bandwagon, like Tesla does have a use case for AI if they want to get to that full autonomous vehicle. He wants to sell the tech. But here, real talk, how much time is Elon Musk actually spending on Tesla?

7:51When I was reading these articles and he was talking about, you know, these kind of nitty gritty things with Tesla, I'm like, dude, how do you even, how do you even focus on Tesla? Like, are you, is it like one hour a day? Yeah. I truly would love to see what his calendar looks like because It's a disaster. I am so confused how he's talking about Tesla. All right. Our final earnings report to go over, which is at Goldman Sachs. The clock is ticking for CEO David Solomon to fix his own mistakes. The bank's profit plunged 58 % in the second quarter to its lowest level in three years. And its position looks worse compared to all the other big banks that just reported their earnings.

8:31How did we get here? Well, Goldman wanted to extend its reach from Wall Street to Main Street with a big push to court consumers, not just companies and the wealthy. The idea behind the consumer bet was to generate more consistent and stable profits rather than riding the boom and bust cycles of investment banking and trading. But that has turned out to be a super costly mistake. And Solomon is still cleaning up from the damage that's caused both financially and to his reputation. There does seem to be some signs of a rebound, but he has to put up results in the next year or he'll probably have to face the music, the EDM music because he is a DJ.

9:07I get that reference. Yeah, I think one of the big stories here, too, was the commercial real estate portfolio. They wrote down their commercial real estate portfolio and it ended up hitting their profit for$1.2 billion. and it's just like this is the macro environment right now of offices are just languishing they're not at full occupancy hybrid work appears uh to be here for for the long run so it's just an ugly quarter and you know what's even crazier is the fact that uh golden stacks uh stock price actually jumped one percent when yeah again in the in this context because people are analysts just expected just a disgusting quarter out of Goldman.

9:50And so it's never good when you report a 56 % drawdown in profits and then your stock goes up 1%. It just shows where the level of expectations are at. This is still them cleaning up a lot of stuff and putting themselves in a better position going forward. But I don't know. This guy's had a really bad run at CEO. This is his worst quarter as CEO. I think he replaced Lloyd Blankfein, who was this legendary character in 2018. and he's just done nothing but kind of make mistakes. The Apple Card Partnership, they're trying to back out because they've lost almost$3 billion on it in the past few years.

10:25So that's just another thing that he's done that has just not really worked out at all. He's cleaning up his own mess, yeah. It's all his own fault, but let's see if he can get out of it. Okay, Neil, this next story actually snuck up on me a bit, but the Women's World Cup starts today. It's hosted by Australia and New Zealand, who actually won their first game of the tournament, won nothing against Norway. So shout out the Kiwis. This World Cup promises to be the biggest one ever for the women's game. The Guardian pegs total ticket sales at 1.4 million, which is bigger than the 1.1 million sold at the previous World Cup in France.

11:01And then early data shows that this year's edition could reach 2 billion viewers, which is nearly double 2019's numbers. And the best part is the players are finally gonna start benefiting a little bit from those eyeballs. FIFA is finally guaranteeing direct payments for the players for the first time with everyone set to earn a minimum of$30 ,000 out of a$110 million prize pool. That pool is 300 % higher than the French World Cup in 2019, but still sort of the men's World Cup pool of$440 million. But Neil, there's so much to talk about when it comes to this tournament from the sponsors to the injuries, to the fact the U.S.

11:39is going back to back to back. Oh, yeah. What are you keeping an eye on? Well, let's first talk about the U.S. team. Okay. So they have won two straight World Cups in 2019 and 2015. No other team has won three straight men's or women's has done the three-peat. So this would be awesome. This is history. That's the craziest thing about the World Cup is it requires 12 years of dominance to do something like that. So this is a team in flux. Like you have some people from the old guard, Alex Morgan, Megan Rapinoe, and then you have some people from the new guard, Sophia Smith, Trini Rodman. So it's definitely like this team is very exciting to me, and I'm nervous.

12:19I'm nervous for them, but I think it's going to be okay. Yeah, and then I guess the other thing I want to talk about first is just that it feels like we're at an inflection point with women's sports with so many sponsors and corporations coming on board to help plug the game and viewership has risen across many different women's sports. I mean, WNBA playoffs was up 22 % over 2021 last year. And then the NCAA Women's Final Four semis with Caitlin Clark and Angel Reese going at it was just like amazing television. That viewership was up 32 % over the previous year. Meanwhile, there's a lot of money coming into the National Women's Soccer League, which is the top tier soccer league in the United States.

13:01There's this new expansion team in San Francisco. ago, there was a private equity firm that paid$50 million for the rights to expand, to add to this team. Meanwhile, a few years ago, that expansion fee was just$2 million for a new team in Los Angeles. So you're seeing exponential growth in the amount of money that's being fueled into the sport. Yeah. I read a piece that was titled Women's Sports are the New Growth Stocks, because if you look at men's sports, where the valuations are in the billions of dollars, like$5 billion, six billion dollars it's hard for them to 10x whereas women's sports if you're paying two million dollars for a franchise fee and then a couple years later it's 53 million dollars you can see where the growth trajectory is heading so yeah definitely women's sports are the new growth stocks i also do want to talk a little bit about one of the downers of the tournament so far and that's been all the injuries you could feel the team that could arguably win the entire tournament with the amount of people out with specifically acl injuries and acl injuries are kind of like the boogeyman of women's soccer.

14:03At one point last year, ACL injuries had sidelined a quarter of the nominees for the Ballon d 'Or, which is the award for the best player in the world. And the problem is there's not a ton of research kind of dedicated to monitoring ACL injuries. UEFA, which is the governing body of European soccer, has been running an injury surveillance program on men's soccer for over like 20 years. And on the women's side, it's only been going on for less than five. So you're just not seeing as intensive of focus. And there's things like shoes are designed for men, not for women. Women play more games on turf field than men do.

14:39So ACL injuries are like the other weird. Yeah. I mean, and women are at a higher likelihood to have an ACL injury. But again, not a ton has been fully dedicated to research, figuring out why are so many people tearing their ACLs. And it's just a bummer. Yeah. And then the final note is that this is going to be played in New Zealand and Australia, where it's in the southern hemisphere. So it's going to be winter there. And I saw, you know, if you want, if you're feeling really hot and want to get a little chill, if you watch these games, they're probably going to have coats on the sidelines. You know, the breath might be coming out of their mouse and looking a little chillier.

15:18So if you're sweltering under these times right now, it might be fun to look at what's going on in the southern hemisphere. And the, yes, the times are going to be odd, but I want to point out that Washington, D.C. is allowing bars to serve alcohol 24-7. So you can go watch the U.S. women play really early in the morning at D.C. bars. And then Hoboken, New Jersey, is also opening its bars at 5 a.m. so people can watch soccer games. Let's roll through, Neil. Right after the show, straight to Hoboken. All right, before we jump into the next story, we're going to take a quick break. This episode is brought to you by State Farm.

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16:34I got them delivered free from 1-800-CONTACTS. Oh my gosh, they're so fast. And breathe. Oh, sorry. I almost couldn't breathe when I saw the discount they gave me on my first order. Oh, sorry. Namaste. Visit 1-800-CONTACTS.com today to save on your first order. 1-800-CONTACTS Alright, Neil, we're back and we're talking college admissions. Wesleyan, a small liberal arts college in Connecticut, announced yesterday it was ending any consideration of legacy status in the admissions process. Legacy admissions basically factor in whether you've had a relative attend that school and the practice is sometimes seen as sort of an affirmative action for the rich, as AOC once put it.

17:17Neil, this is happening right on the heels of the Supreme Court ending affirmative action, which Wesleyan mentioned as a driver of the decision. But the decision is not a very controversial one when you take into account a Pew Research study that found that 75 % of adults don't think you should consider whether someone's relative attended the school in admissions decisions. Right on the heels of the Supreme Court decision, Neil, it feels like we might hear a lot more of these announcements going forward. There are a few small elite colleges that don't do this. I think MIT, Johns Hopkins have kind of sworn it off and now Wesleyan.

17:55But there's still kind of an absurd amount of colleges that still do. And when you think about it, it does seem a little toxic and unpopular, even more so to do it after the Supreme Court decision that said you can't, you know, kind of boost people who have been marginalized. then then you're going to sort of raise the admissions prospects of mostly white kids whose parents went to elite colleges. I think there's a study that showed that 70 percent of legacy admissions at these colleges are white. So if I were a college looking at what is going on in the landscape, I would probably make a similar decision and say, like, all right, we're going to if we can't do, you know, raise the prospects of marginalized people, then we're not going to do it for.

18:39Right. I mean, it's again, 75 % of people say absolutely not. Like it affects people very deeply that it feels very unfair that a legacy admitted has a better chance. But it's very hard for universities to actually quit legacy admissions because according to one 16 year study at an unnamed private Northeastern university, legacy admittances do two things really well. One, they decide to attend the school, which we call matriculating, and two, they donate. So 74 % of legacies accepted in this study ended up going to the school that they were accepted to versus 47 % of non-legacies admitted. So again, schools like legacies because they can plan their admission cycles a little better because you can probably guess with a high degree of certainty that if admitted, they will attend.

19:28And then also they are way more likely to be big donors. From that same study, 42 % of legacy graduates were flagged as potential top donors versus only 6 % of non-legacies. So again, colleges spin this to say, if we get more legacy admissions, then we get a bigger, you know, more donations to use on financial aid for less fortunate students. And that's how they say it works out. It's like a drug for them. It's hard to like wean off the legacy admissions donation cycle. Because it's also, yeah, it's like reliable subscription revenue that things like, you know, we just talked about with Goldman Sachs.

20:07It's like we know these people are going to come. They're going to pay a lot. And then they'll probably keep paying into the future. So when we plan out our financial reports going decades, we know that there will be, you know, this amount of money on the books. And for Wesleyan, it's a lot of money because first year students pay an average of$85 ,000 to attend. I know. Like Lin-Manuel Miranda. I don't know. I have friends who went to Wesleyan. Yeah. But I think the point is for Wesleyan, this was not really a huge part of their admissions process to begin with. Right, right. So they were just, you know, they're like, all right, let's survey the landscape and we'll probably end this practice right now.

20:44All right. It's Thursday, which means another round of Neil's Numbers, the segment where I bring you three stats from the week's news that will make you go, huh, that's pretty interesting. First up, Threads. Meta's attempt to kill Twitter once and for all had a pretty incredible launch, became the fastest growing app in history, notching 150 million downloads, and it surprised pretty much everyone. But as expected, the honeymoon phase is over. An analysis from SimilarWeb showed that daily average users on threads had almost halved in the last 10 days, and people were spending much less time on the app, six minutes per day, down from an average of 21 minutes.

21:21and I feel like this jives with my personal experience of not really going on the app anymore. The only thing I'll say is that my personal experience of being on the app and like running the Morning Brew account is that engagement still feels like it's there and it still feels real. Again, we are a much larger account. Like we have 150 ,000 followers on it, but I haven't - Are you saying my account's small? Yes, I'm saying your account is small because I think you have less than that. But yeah, again, this is a personal anecdote, but I see these numbers and I hear that these daily active user numbers are falling.

21:52But again, when you're on it and you're running a big account, it feels still a little livelier. And again, 22 million daily active users is not nothing, but yeah, it's a concerning trend for sure. We're still in the early innings. I'm pretty bullish in the long term. Moving on, there is something very powerful about holding a passport in your hand, but there's only one country that can hold the title of world's most powerful passport, and that is Singapore. in annual rankings from the Henley Passport Index, Singapore dethroned Japan as the most powerful passport on earth after Japan held the title for five years.

22:27You're probably wondering what the most powerful passport actually means. And the ranking is based on how many countries you can use it to enter without a visa. People with a Singapore passport can enter 192 global destinations visa-free, while Japan slid to 189. A bunch of European countries, Germany, Italy, East, Spain, Austria, Finland rounded out the top spots. And the U.S., which was number one a decade ago, dropped to eighth. Yeah. And I read it's because we just haven't been expanding. Like, we've just kind of kept the number right where it's at. So we have fallen by not growing. So it's interesting to see.

23:04Yeah, I would not have guessed Singapore. That's a good trivia to have. It is a good trivia. And overall, people, you know, these experts who are conducting the rankings say, Overall, there's been a growing trend of loosening border restrictions and allowing people to enter. And that's just good for investment and trade and business overall. All right. The final number this week, the Cincinnati Reds called up Christian Encarnacion Strand, a corner infielder who's been crushing it in the minors. And the reason I'm mentioning this is because with 27 characters, Christian Encarnacion Strand now has the longest name in MLB history.

23:42That's counting the hyphen between Encarnacion and Strand, which is controversial. But either way, he crushes the player with the second longest name in history, Simeon Woods Richardson, who has a 22-character name. Toby, where would you rank this among the all-time achievements in sports? I mean, it's tough. I don't think it's going to be broken for a while because a lot of factors have to come together to make this possible. But I love awesome names in sport. Yeah, all right. Give me some of your names that you like. Okay, for soccer, Bastian Schweinsteiger is one of my favorites. Again, a lot of characters.

24:15In baseball, Nomar Garciaparra. Unbelievable. The only reason I know that is because it's Mia Hamm's husband. Horse racing, Seabiscuit. Can't beat Seabiscuit. And then also in basketball, Drew Holiday, but it's spelled J-R-U-E, which I think is just an awesome, awesome name. I'm all in on hockey names. And if you don't know these hockey names, go and Google them because they're just poetry. They flow off the tongue. It gives you goosebumps. It's some combination of the French-Canadian flair with the Scandinavian flair. Got like Yarmir Yager, Tevo Teravainen, Vincent Le Cavalier. I mean, these people could be, they could be characters in novels.

24:54It's so beautiful. They sound like the Three Musketeers a little bit. All right, Neil, let's move on to our final story, which feels kind of like a Toby trend because of how overall weird and online it is. So stick with me a little bit. But there's this new trend going on where creators are going live on TikTok and acting like NPCs. NPC stands for non-playable characters in video games. And they're usually characterized by their mechanical movements and repetitive motions and dialogue. They're kind of that person that you walk up to and press X to get directions or like buy a potion from. So these TikTokers are going live and reacting to gifts sent their way in this very distinct style.