CONSUMER DISCRETIONARY

Grilling Giants Like Traeger, Solo, and Weber Are In A Post-Pandemic Sales Glut

There’s nothing more American than grilling, but despite 80% of US homeowners owning a grill or smoker, the barbecue business isn’t as hot as it used to be. The once-booming pandemic BBQ craze is cooling down as homeowners lose their appetite for the latest grill gear.

BBQ-bye: As Americans embraced home cooking, high-end grill manufacturers Traeger ($COOK), Solo Brands ($DTC), and Weber went public in 2021, riding a wave of sales and investor interest. But three years later, growth has simmered, and losses have mounted, casting a shadow over their futures.

• Sales of Traeger and Solo Stove grills have plummeted 51% from their 2021 highs, tanking their stocks by over 90%. Weber was taken private last year after losing half its share value.

• One hardware store owner told CNN that sales have simply fallen “back to normal” but that he’s seeing a wider variety of customers purchasing propane tanks.

Fourth Fever

Americans might be dodging grill upgrades as they tighten spending on non-essentials — a trend worsened by rising barbecue costs. According to Rabobank’s BBQ Index, July Fourth barbecue costs have jumped 32% since 2019, with the cost of hosting a 10-person BBQ hitting a record $99. As a result, brands are responding with deals.

• Home Depot ($HD) has introduced promotions to entice homeowners with intro-level grills like the $99 Weber kettle, along with free assembly and delivery.

• Retailers like Walmart ($WMT) and Kroger ($KR) are bundling popular BBQ products to attract cost-conscious Americans.

Grill on: Grill manufacturers might struggle to replicate their abnormal 2020 successes, but that won’t stop Americans from firing up the grill. And it won’t stop them from upgrading in the future. With the average grill lasting about five years, Home Depot’s Joe Downey believes, “The bottom has been reached and we are on the upswing.”

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LARGECAP RECAP

🚘 Tesla’s Delivery Report Offers Some Optimism For Investors Ahead of Earnings, Robotaxi Event

Analysts weren’t expecting Tesla ($TSLA) to deliver (literally), but the EV maker disappointed a little less than usual in the second quarter. Tesla delivered ~444K vehicles, a 14.8% increase from the previous quarter — sending its stock up 10% yesterday. Still, this marks the second consecutive quarter of lower deliveries, despite significant price cuts and attractive leasing deals.

• Q2 deliveries dropped by 4.8% compared to the same quarter last year, partly due to slower sales and shipping delays.

• Wells Fargo analyst Colin Langan maintained his sell rating, citing “declining delivery growth” and lower profits from price cuts.

The road ahead: Tesla’s stock is still down 7% year-to-date — and the coming weeks could provide even bigger moves. The company will report earnings on Jul. 23 and will meet again on Aug. 8 to detail its robotaxi and self-driving vehicle plans. But the bigger news could come from Tesla’s cheaper model, which Musk said would arrive in 2025.

Read: Wells Fargo Describes Tesla as a “Growth Stock With No Growth”

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Markets & Economy

France’s far-right surge stuns Europe: Marine Le Pen’s National Rally won the first-round legislative elections, signaling a shift in French politics. They’re trailed by the left-leaning New Popular Front, with Macron polling third. [Read]

CDK Global endures major cyberattack: Two weeks after a cyberattack, CDK’s car dealer software remains partially offline. The disruption impacts 15K dealerships during peak season, costing dealers an estimated $944M in losses. [Read]

Record-breaking Hurricane Beryl raises US concerns: Beryl, now a Category 5, is the earliest and most intense hurricane in the Western Hemisphere since Columbus’ 1490 expedition. Forecasters warn of an extreme Atlantic hurricane season. [Read]

Business & Wealth

Senators demand action on frozen fintech deposits: US Senators urged Synapse’s owners and partners to restore customer access to funds following bankruptcy, citing concerns over a potential $65M to $96M shortfall. [Read]

Citadel CEO doubtful of AI replacing jobs soon: Ken Griffin is skeptical that AI will make human jobs obsolete soon, referencing its limited adaptability to changing environments. However, he’s optimistic about long-term problem-solving abilities, especially in cancer research. [Read]

State Farm seeks 30% California home insurance hike: The insurer requested another premium increase for 1.2M California homeowners, citing wildfire losses. They already received approval to raise premiums by 7% and 20% earlier this year. [Read]

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DIGIT OF THE DAY

The Great Reset Approaches for 102K Homeowners With Adjustable Rate Mortgages

What happens when your mortgage adjusts to reality? Many homeowners are about to find out as their adjustable-rate mortgages (ARMs) approach the end of their initial low-rate periods, potentially facing higher interest rates once these rates expire. Given that mortgage rates are still quite high, these homeowners could see substantial increases in their monthly mortgage payments.

• 1.7M homeowners have chosen ARMs since 2019 to find temporary relief amid America’s housing unaffordability crisis.

• 328K homeowners have already experienced ARM rate resets, with another 102K ARM loans expected to reset in the next 12 months.

Housing blues: On the other hand, 30-year fixed-rate mortgage rates recently dropped to their lowest level since early April but are still high compared to pre-2022 levels. For the first time since the pandemic began, the typical US home sold for 0.3% less than its list price in the four weeks leading up to June 23. High mortgage rates and home prices are deterring buyers, but relief could be on the horizon. As more homes sell below their asking prices and sellers cut prices, buyers might soon find more affordable options — or throw in the towel and rent instead.