🐙 Amazon’s octopus moment

Tuesday, January 17, 2023 by Robinhood Snacks |
Prime from all? (Dan Kitwood/Getty Images)

Prime from all? (Dan Kitwood/Getty Images)

Prime from all? (Dan Kitwood/Getty Images)

Prime from all? (Dan Kitwood/Getty Images)

Last Week’s Market Moves
Dow Jones
34,303 (+2.00%)
S&P 500
3,999 (+2.67%)
Nasdaq
11,079 (+4.83)
Bitcoin
$19,814 (+15.71%)

Hey Snackers,

Because our backs aren’t messed up enough from hunching over computers, Apple is reportedly working on adding touch screens to Macs. Steve Jobs once called the idea “ergonomically terrible.”

Stocks surged and the techy Nasdaq had its best week since November. Investors were heartened by news that inflation cooled for the sixth straight month in December, with prices notching their largest month-over-month decrease since April 2020.

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Pay

The dreaded checkout page… Say you find a new online shop for neon sneakers. You might abandon the cool kicks in your cart if you’re too lazy to fill in your credit-card info (or if you don’t trust the retailer with delivery). Enter Amazon: it’ll widely roll out its “Buy with Prime” feature to third-party merchants this month.

  • Merchants that don’t sell on Amazon (think: your fave swimsuit site) can leverage the ecomm giant’s payment, fulfillment, and delivery services.
  • Less #friction: Amazon said BWP increased shopper conversion rate by an average of 25%, meaning fewer people abandoned their carts when buying with Prime was an option.
  • Prime members get the benefits of Amazon’s speedy payment and free next-day delivery on non-Amazon sites. FYI: Last year, Prime went up from $119 to $139/year.
  • Amazon gets more $$ (it charges merchants to use BWP). It said payment processing, fulfillment, and storage fees can vary by inventory.

No longer in its prime… The new revenue from Buy with Prime is a welcome addition as Amazon deals with slowing sales growth in its core retail and cloud businesses. The pandemic boom has died down, and it recently made its largest round of layoffs. The company’s also faced growing regulatory backlash over how it uses customer data to compete with third-party sellers (think: making a cheaper Amazon Basics version of a popular product). Psst: Amazon will still collect data from those who use Buy with Prime.

THE TAKEAWAY

This could be Amazon’s octopus moment… BWP could make Amazon even more ubiquitous than it already is, allowing it to widely spread its retail tentacles beyond its platform. It’s also a major threat to ecomm payment titans like Shopify and PayPal. Shopify has reportedly told merchants that are trying to install the BWP button that it violates its terms of service. Amazon has the household edge: a recent survey found it to be the most trusted retailer in America.

Events

Like a coming-of-age flick... Netflix is going through changes. Last year, the streamer lost 1.2M subscribers over two quarters and saw its stock drop by half. Now it’s trying to drum up fresh revenue and subs with its cheaper ad-supported tier, which launched in November. Investors hope a turnaround is coming: the stock is up ~90% over the past six months as Netflix bolsters its ad biz and cracks down on password mooching. Efforts might be paying off: analysts expect the streamer to announce strong subscriber growth when it reports on Thursday.

Aisle all-stars… The company behind household staples like Tide, Charmin, Crest, and Head & Shoulders shampoo was in the money last year, with price hikes helping Procter & Gamble beat sales and profit expectations. But now higher transportation and materials costs may be taking their toll on P&G's bottom line. What's more, execs expect lofty costs will continue into this year. The Ohio-based company is expected to reveal declines in sales and profits this week.

Zoom Out

Non-compete clauses… could become non-existent. The Federal Trade Commission proposed a rule that would end legal agreements that keep workers from switching to rival companies after leaving their jobs. From C-suite execs to security guards, nearly 30M US workers are under non-compete agreements, and breaches can lead to pricey fines and lawsuits. Meanwhile, workers who do comply can miss out on higher pay and better working conditions. A ban could boost US wages by nearly $300B/year and help close the racial and gender pay gaps.

Adding insult to injury… there’s more trouble for crypto lenders. Last week the SEC charged Gemini and Genesis with selling unregistered securities through their lending program. The crypto cos had offered returns (aka yield) as high as 8% via Gemini Earn — then it went south. Before it went bankrupt, BlockFi paid $100M after the SEC said its interest-bearing accounts were unregistered securities. Going forward, crypto lenders may be forced to register their products as securities or face the costly consequences.

ICYMI
  • GPT: Microsoft’s reportedly in talks to invest $10B into OpenAI, the company behind viral genAI tools like ChatGPT and DALL-E. It could incorporate the AI tech into its search engine, Bing, or its Office software.

  • Augment: Apple could (finally) launch its mixed-reality headset this year, which would position it against rivals like Meta’s Quest VR. But the reality of success for pricey face gadgets looks iffy.

  • CEO: As the US’s fastest-growing group of entrepreneurs, Black women are increasingly leaving corporate roles to launch their own companies — but funding challenges are hampering growth.

What else we’re Snackin’

  • Bots: Chatbots got a GPT boost with a website called Character.AI offering up convos in the style of celebs like Elon Musk and dead authors. But its creators say the AI avatars can get things very wrong.
  • TikJob: TikTok is becoming a recruiting tool for companies trying to lure Gen Z candidates. Influencers (and social media in general) are playing a growing role in hiring efforts.
  • SBF’d: Before FTX imploded, Sam Bankman-Fried invested $1B in a bitcoin miner in Kazakhstan. Now it’s one of the largest assets in FTX's bankruptcy. Meanwhile, BTC-mining-biz valuations have tanked.

Snack Fact of the Day

Martin Luther King is the only American, other than George Washington, with a national holiday observed in his honor

This Week

  • Monday: US markets closed for MLK Day
  • Tuesday: Earnings expected from United Airlines, Goldman Sachs, Silvergate Capital, Citizens Bank, and Morgan Stanley
  • Wednesday: Earnings expected from Charles Schwab, Prologis, and JB Hunt
  • Thursday: Jobless claims. Earnings expected from Netflix and Procter & Gamble
  • Friday: Earnings expected from Ericsson, Ally Financial, and State Street

Authors of this Snacks own bitcoin and shares: of Apple, Amazon, Microsoft, and Shopify

ID: 2680611