🍎 Goldman’s Apple Card problem

Tuesday, September 13, 2022 by Robinhood Snacks |
The IOUs are racking up (Michael Short/Getty Images)

The IOUs are racking up (Michael Short/Getty Images)

The IOUs are racking up (Michael Short/Getty Images)

The IOUs are racking up (Michael Short/Getty Images)

Yesterday’s Market Moves
Dow Jones
32,381 (+0.71%)
S&P 500
4,110 (+1.06%)
12,266 (+1.27%)
$22,338 (+2.54%)

Hey Snackers,

Elon Musk’s college sweetheart is auctioning off Musk mementos. A card reading "Happy Birthday, Jennifer (aka, Boo-Boo)" is expected to sell for over $10K. Moral: keep letters from your ex… if your ex is Elon Musk.

Stocks popped yesterday for the fourth straight trading day as investors grew more optimistic that inflation has peaked. (FYI: August inflation #s come out today.) Energy stocks led the rally as oil rebounded.


Charging the iPhone to my Apple Card... seamless. Paying it off on time: not so much. Goldman Sachs’ Apple Card biz has a bad-credit problem, according to competitor JPMorgan. In 2019 the investment-banking giant triumphed over established card companies to become Apple's card issuer. The sleek no-fee card generated hype, with early users posting pics of their names etched in Apple titanium. Some expressed shock they'd been approved. Now we know why:

  • Credit karma: Over a quarter of Goldman’s card loans have gone to customers with credit scores under 660 (aka: fair to poor).
  • The WOAT: Goldman’s loss rate on credit-card loans is the worst among major US card issuers and “well above subprime lenders," JPM said.
  • The GOAT: Thanks to pandemic stimulus and rising wages, rivals like Bank of America have seen repayments rise near record levels.

DJ D-Sol in the hot seat... Goldman CEO David Solomon, who moonlights as an EDM DJ, is under pressure to produce profits at Goldman's consumer-facing biz (which makes up 18% of its total revenue). The Wall Street-centric bank expanded to consumers in 2016 with its high-yield Marcus savings account. Then Apple Card supercharged its retail reach. Now:

  • Growing revenue: Goldman's consumer-banking biz grew revenue 25% last quarter, with 14M customers and $16B in loan balances.
  • Growing losses: The consumer division is on track to lose $1.2B this year, and Goldman has been forced to set aside more reserves in case of future loan losses.

Cracks emerge in a downturn… and they could cause a quake. With inflation at a 40-year high and unemployment ticking up, the weakest American borrowers are starting to miss loan payments. Goldman execs have acknowledged that its consumer biz could lose even more than $1.2B if a deep recession forces them to set aside more $$ for defaulted loans. Banks with more subprime exposure will feel the hit first.


Enter the Mocha-verse… Cold brew’s coming to the blockchain. Yesterday Starbucks introduced a loyalty program powered by non-fungible tokens called “Starbucks Odyssey.” Odyssey will be powered by Polygon, a proof-of-stake "sidechain" that aims to make ethereum transactions cheaper and faster. Polygon’s native token, matic, jumped 5% on the Starbs news.

  • A journey: Odyssey will extend Starbs’ popular rewards program, enabling latte lovers to earn NFTs (called “stamps”) by completing “journeys.” Think: java-inspired games.
  • Peppier perks: Users can redeem stamps for exclusive experiences like virtual espresso-martini-making classes and trips to Costa Rican coffee farms.
  • Brewing up community: Odyssey users can also buy and sell limited-edition stamps.

Spill the NFTea… Last year NFT sales boomed with high crypto prices. But since then the NFT industry has struggled:

  • Trading volume on top NFT marketplace OpenSea has plunged 99% from its May peak. An NFT of Twitter founder Jack Dorsey’s first-ever tweet recently got a top bid of $280 (not a typo) — after selling for $2.9M last year.
  • Getting practical: As sales have slumped, some companies have rolled out “practical” NFT applications: Ticketmaster uses them to verify tickets and prevent resale scams, and eBay’s embraced them to authenticate its goods.

Loyal customers make it easier to innovate… After Starbucks combined its existing payment system with new mobile-ordering tech in 2015, loyal latte-sippers happily adopted the tech to earn rewards — and made Starbucks the top mobile payment platform (it’s now second to Apple Pay, with 31M users). Starbs could become a top player in web3's tokenized future, if customers embrace its new NFT features.

What else we’re Snackin’

  • Track: Two of the US’s largest railroad unions are threatening to strike if workers aren’t given better working conditions. Because trains carry nearly 40% of long-distance trade, a strike could wreak supply havoc.
  • Wi-Fi: Google’s spinning out its satellite-internet startup (dubbed: Aalyria) but is keeping a minority stake. The search giant joins other tech biggies looking beyond ad sales for revenue growth.
  • Fight: Twitter pushed back against Elon Musk's (third) attempt to back out of his $44B takeover offer. Twitter shareholders will vote today on whether to approve a Musk-quisition.
  • Chic: Hilton's new boutique-hotel brand made its Time Square debut as Broadway visitors near prepandemic levels. It’s part of Hilton's $2.5B plan to revamp the theater district's entertainment options.
  • Slash: Universal Studios Beijing is cutting staff (again) as China’s zero-Covid policy continues to shrink visitor #s. It’s not just theme parks: China’s tourism revenue fell 28% in the first half of the year from last.

Snack Fact of the Day

The Strategic Petroleum Reserve is at its lowest level since 1984 after President Biden tapped it to boost gas supplies


  • August inflation numbers released
  • Earnings expected from Core & Main

Authors of this Snacks own: ethereum and matic and shares of Apple, Google, Starbucks, and Twitter

ID: 2421584