Breakfast News: MELI Falls on Margin Miss

Breakfast News: MELI Falls on Margin Miss

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1. Mixed Results for Rule Breakers Pair

MercadoLibre (MELI -0.08%) and Axon Enterprise (AXON 0.76%), both introduced to the Fooliverse as Rule Breakers recommendations, posted second-quarter results after yesterday's closing bell. Axon stock gained over 6% pre-market, with MercadoLibre down more than 5%.

• Biggest in Latin America by market cap: MercadoLibre missed analyst expectations for net income, down 1.5% year over year to $523 million, as more generous free shipping led to a lower EBIT margin of 12.2%, from 14.3% a year prior.
• FY revenue guidance lifted to $2.65 billion to $2.73 billion: Axon, meanwhile, posted a 33% year-over-year rise in Q2 revenue to $669 million, thanks to growing demand for software services, TASER, and body camera technology.

2. Wall Street Warning

Concern is growing among market commentators we could be in for a correction, as stocks have soared in 2025 despite souring economic indicators – the latest inflation and job growth prints both disappointed amid trade war concerns.

• S&P 500 14-day relative strength index touches 76: On that metric, stocks are more expensive than they've been since just before last summer's peak. Over 70 is often seen as overheated.
• "We're buyers of dips": Mike Wilson, strategist at Morgan Stanley (MS 0.86%), said he expects a "modest pullback in the third quarter" of up to 10%, but is still upbeat on long-term earnings strength. Evercore's (EVR 1.97%) Julian Emanuel fears a dip of up to 15%.

3. VRTX, KD, HIMS in Big Swings After Earnings

Vertex Pharmaceuticals (VRTX -0.45%) posted adjusted Q2 earnings of $4.52 per share yesterday, ahead of estimates. But the stock fell 14% overnight as the biotech company reported disappointing Phase 2 results for pain drug VX-993 and will not move it further.

• Down 12% after hours: Hidden Gems rec Kyndryl Holdings (KD 0.64%) posted $3.74 billion Q2 revenue after market close, short of analysts' estimated $3.80 billion with sales for the IT services company flat year over year.
• Superscore of 76 in Moneyball database: Hims & Hers (HIMS 5.85%) missed on revenue, even with a 73% year-over-year rise to $544.8 million. EBITDA of $82.2 million soared above $39.3 million this time last year, but the stock fell 15% after hours.

4. Q2 Updates From AMD, ANET, AMGN After Close

Advanced Micro Devices (AMD 2.03%) stock is up 46% year to date following Q1 revenue and earnings beats. Watch for news on the latest Instinct MI350 series of AI chips, designed to compete with Nvidia (NVDA 1.10%).

• Optimized for hyperscale cloud networks: Arista Networks (ANET 0.95%) is a preferred network switch supplier for AI giants like Microsoft (MSFT -0.44%) and Meta Platforms (META 0.11%). The company expects a 24% revenue rise year over year in the quarter.
• Beaten earnings estimates in the past four quarters: Chronic disease management specialist Amgen (AMGN 0.40%) saw a performance upturn in Q1 on the back of strong global demand, with Wall Street expecting $5.28 per share from $8.91 billion revenue this time.

5. Your Take

Which of the following Foolish stocks, all down over 30% since being recommended in Stock Advisor over the past 2 years, has the best chance of recovering and beating the market over the next 5 years: Lululemon (LULU 0.07%), Novo Nordisk (NVO -1.90%), Atlassian (TEAM -2.54%), or e.l.f. Beauty (ELF 1.11%)? Debate with friends and family, or become a member to hear what your fellow Fools are saying.