👓 Apple’s mixed vision

Tuesday, January 10, 2023 by Robinhood Snacks |
Apple vision (Christoph Dernbach/Getty Images)

Apple vision (Christoph Dernbach/Getty Images)

Apple vision (Christoph Dernbach/Getty Images)

Apple vision (Christoph Dernbach/Getty Images)

Yesterday’s Market Moves
Dow Jones
33,518 (-0.34%)
S&P 500
3,892 (-0.077%)
Nasdaq
10,636 (+0.63%)
Bitcoin
$17,205 (+0.80%)

Hey Snackers,

When love goes down the toilet, don’t give up hope. A diamond engagement ring that was flushed down the porcelain throne was recovered 21 years later.

Stocks were mixed to start the week as investors awaited Thursday's December inflation data for hints about Fed moves. Meanwhile, China’s reopening helped boost oil.

Hooky

Ripe for launch… After seven years of development, Apple could release its mixed-reality headset this year, Bloomberg reported. The device, apparently dubbed “RealityPro,” aims to augment a user’s environment (think: graphic overlays), not completely immerse you in a virtual world, like Meta’s headsets. While the official use cases are still TBD, it could eventually be used for everything from playing games to hosting virtual work events.

  • How it started: Apple unveiled its AR ambitions in 2017, with plans to hit the market as early as 2019, but development snags have kept launches on the back burner.
  • How it’s going: Apple’s built a new operating system for the tech and has recently sent headset prototypes to software developers. While the headset could be ready for consumers by fall, kinks may muddy the timeline.

Big Tech reality check… Headsets would be Apple’s first new major product category since the Apple Watch — and could position it against rivals like Meta’s Oculus and Sony’s PlayStation VR. But so far it seems as if consumers aren’t going gaga for expensive gadgets to sport on your face. Last year global shipments of VR and AR devices dropped over 12%.

  • Headsets are tech's holy grail, but every effort’s flopped so far: Google Glass was an epic fail, and Snap lost $40M on 300K unsold AR Spectacles.
THE TAKEAWAY

Apple might be bucking a trend… of people trying to be more connected to real-world experiences. Read: less glued to tech. We’re seeing this play out, from the underwhelming adoption of Meta’s Horizon Worlds to Gen Z ditching iPhone lenses for point-and-shoot cameras and even Polaroids. After pandemic years of being cooped up with gadgets, spending on IRL experiences like travel and dining is soaring. But if anyone can make headsets succeed, it could be the company that got the world hooked on its ecosystem of hardware and apps.

Stretched

Downward dog days… Athleisure icon Lululemon was a pandemic winner as people donned its comfy sets for home workouts and couch chillouts. Lulu’s flexible fortunes continued well after Covid restrictions ended, but its luck might be stretching thin. While Lulu raised its sales expectations, investors had a problem with its profit forecasts:

  • Lulu shares sank 9% yesterday after it said that profit margins would shrink for its holiday quarter (ending January 29). It also issued disappointing earnings targets.
  • Piles of styles: While Lulu said visits to stores and sites continued to grow, high inventory levels and markdowns could weigh on its bottom line.
  • $130 leggings now $70: Last quarter, Lulu had 85% more inventory than it did a year earlier. Also: over 40% of items were on sale in November, up 10%.

The mirror cracks… Discounted leggings aren’t Lulu’s only profit-draining problem. In July 2020, when stocks were soaring and athleisure sales were booming, Lulu bought home-fitness startup Mirror for a cool $500M (its first acquisition). Think: a monthly workout subscription where trainers pump you up from a reflective screen (hence: mirror). Lulu’s CEO said that Mirror continues to be a drag on profits and is likely experiencing less adoption than anticipated.

THE TAKEAWAY

Boom spending is a bust bug… What a company splurges on during healthy boom times can come back to bite it in a downturn (think: buying a BMW when your portfolio’s soaring, then losing your job and still having to make payments). Lulu was far from the only one to make an optimistic splurge in 2020. One example: Salesforce bought Slack for $28B when the good times were rolling. Last week it said it was cutting 10% of its workforce.

DEFI(NE)

☎️ Like calling all your new babysitter's references…

Crypto loves anonymity. Bitcoin's creator, Satoshi Nakamoto, used a pseudonym, and many advocates champion the asset class for financial privacy. That core principle runs headfirst into US-based exchanges' "know your customer" (aka KYC) obligations. Think: regulatory requirements to run customer-identity checks. Now, that tension's come to a head as exchanges are hit with fines and crypto companies spend more on compliance.

What else we’re Snackin’

  • Vaxxing: Moderna is considering pricing its Covid vaccine between $110 to $130 per dose when it shifts to commercial distribution in the US (right now, it’s still contracting with Uncle Sam).

  • Squash: Ant Group founder Jack Ma is ceding control of the fintech titan, whose Alipay app has 1B+ users. Ma criticized Chinese regulators in 2020, and China has cracked down on Ant since (including: canceled mega-IPO).

  • DCGone: Crypto conglomerate DCG closed its wealth-management division after a bad case of FTX contagion. Its Genesis lending biz is in a spat with crypto exchange Gemini over $900M in frozen customer funds.

  • McFine: The SEC fined former McDonald's CEO Stephen Easterbrook $400K on charges he misled investors about his 2019 firing. Think: failing to disclose relationships with several employees.

  • Sacks: Goldman Sachs reportedly plans to shed 3.3K employees this week in its biggest round of cuts ever as layoffs spread beyond tech.

Snack Fact of the Day

Rolls-Royce sold a record number of cars last year at an average price of $534K

Tuesday

  • Fed Chair Jerome Powell to speak in Stockholm
  • Earnings expected from Albertsons

Authors of this Snacks own bitcoin and shares of: Apple, Google and Moderna

ID: 2670958