"I can fix her." - Jerome Powell, looking at Lennar's earnings…  

Lennar just served up a reality check sandwich with a side of copium, missing revenue estimates while their CEO basically said “but them rate cuts tho…” Translation: The homebuilding giant that's been handing out buyer incentives like they're a sack of coupons posted Q3 earnings that had Wall Street… not mad, but definitely disappointed. 

(Source: Giphy) 

In short, the damage was this: Revenue dropped 6.1% year-over-year to $8.81 billion, which missed forecasts bigly bad. Meanwhile, earnings per share hit $2 and actually beat expectations, proving that even in a dumpster fire quarter, bean counters can still work magic with the numbers. And yet, despite the mixed bag, CEO Stuart Miller ran straight towards his saving grace “J-Powws gift that will keep on giving in 2025” (read: rate cuts). As Miller noted, falling interest rates and the Fed's recent cut "gives us optimism as we head into the fourth quarter."

(Source: Investopedia) 

However, while new orders actually jumped 12% to 23,004 homes, Lennar quite literally had to basically pay people to want houses. As for the math, well, here’s how it checks out: Average sales price fell from $422,000 to $383,000 (ouch), while gross margin on home sales cratered from 22.5% to 17.5% (double ouch). Additionally, Q4 delivery guidance of 22,000-23,000 homes came in softer than your homeboy during a cold shower. 

So, the question has been answered: Was Lennar, who was running a Black Friday sale on houses while mortgage rates are still sitting at levels that make potential buyers want to live in their parents' basement forever, a good strategy? Nada. This is exactly why the company's betting that Jerome Powell's rate cut magic will eventually trickle down to mortgage rates and suddenly everyone will remember they want to buy overpriced suburban McMansions again.

(Source: Giphy) 

Meaning, Lennar is officially sitting here with a big ole “trust the process” stamped on their foreheads while the stock gets hammered (down -3.66% on the day). And yet, I’m rooting for Lennar here… because if they win, I might be able to finally refinance my ungodly mortgage payment without selling both my kidneys. Of course, only time will tell… but for now, keep your eyes on Lennar and place your bets accordingly. Until next time, friends… 

At the time of publishing, Stocks.News does not hold positions in companies mentioned in the article.