Thursday Jul.11, 2019

Nintendo's smaller, cheaper, handheld Switch

_Pikachu slimming down to game on the go_

Hey Snackers,

Round numbers with multiple zeroes are the cat videos of Wall Street — most people love them, no one really knows why.

The S&P 500 just crossed 3,000 points for the 1st time ever. Investors are celebrating the Fed Chairman's testimony to Congress, which hinted that the central bank could cut interest rates this summer as the trade war continues.

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Play

Nintendo unveils "Switch Lite" — a portable-only version of the legendary gaming device

Your 2-year-old iPhone is ancient... Nintendo measures time differently — the 120-year-old Japanese electronics icon (founded in 1899, originally making playing cards in Kyoto) is convincing customers it's still fresh with the Switch Lite. The stock rose 3% on word of the next version of its best-selling gaming device.

Smaller, cheaper, no TV... Although it sounds like a downgraded hotel room, we're talking about the new Switch. The revolutionary design of the original Switch let you play on a handheld screen or on TV. This one's purely for the go (convenient, but limiting) — and $200, instead of $300. The yellow, gray, and turquoise options that this Game Boy descendant comes in are delightfully Pikachu-ish.

Nintendo thrives on blockbuster consoles... Super Nintendo, Game Boy, N64, and Wii are different chapters of Nintendo's dynasty. But the Switch has sold a shocking 34.7M units in the two years since its launch, generating 85% of Nintendo's revenue over that time. And the stock's up 48% in those two years as it plays along with it.

Error

Zoom made a big mistake. And took 4 months to fess up about it.

Enter your passcode on the touchtone keypad... to listen to Zoom's brutal security flaw. What's given Zoom a cult corporate following is its easy-use video conference calling. On Monday, we learned about the bug: If an attacker sends you a malicious Zoom link, it opens your Mac webcam automatically — exposing your life. The flaw is bad. Zoom's response was worse.

Enter Jonathan Leitschuh... The software engineer side-hustles as a security flaw hunter. Here are highlights of the awkward series of events he detailed on his blog post that exposed the Zoom issue.

March 8: Jon tweets at Zoom he found a problem (gets no response).
March 26: He emails Zoom, warning he’ll disclose the flaw in 90 days (he even offers a quick fix).
March 27: Jon is offered a "bug bounty" by Zoom (payment from Zoom for finding the problem), which he refuses to accept.
June 21: Zoom says the flaw is fixed!
July 7: The fix stops working!
July 8: So Jon tells the world.

Investors vote in real-time via Wall Street... Despite the security flaw, the flubbed fix, and a beloved CEO's belated apology, shares didn't drop (they've actually risen since Monday). The bug's most likely impact on Zoom would've been customers leaving or lawsuits arriving. The stock's reaction signals Wall Street may not be worried about either.

Clink

Private prisons lose another bank: SunTrust

Your parole has been denied... SunTrust bank just announced it will no longer do business with private prisons or migrant detention centers. It's following JPMorgan, Wells Fargo, and Bank of America, which have all boycotted the industry this year as well. The trigger? Reports of inhumane conditions in border prisons that are sheltering unaccompanied children.

PS: Georgia-based SunTrust is mid-merger with North Carolina-based BB&T. Afterward it will awkwardly be called "Truist."

Let's look at the prisons affected... GEO Group and CoreCivic are the two biggest publicly-traded and for-profit prison companies. They get paid by the federal and state governments to incarcerate prisoners for them (about $24K per year, per prisoner). GEO Group and CoreCivic both think the banks are caving to political pressure.

Reputation and profits — it's a tradeoff... The banks are turning down potential profits to protect their reputation among the community and with their employees. Sometimes, it's the other way around, like HSBC, which became the top bank of Saudi Arabia despite the nation's human rights abuses and recent murder of journalist Jamal Khashoggi.

What else we’re Snackin’

Hired: Caliva, the California cannabis company Joe Montana invested in, signs Jay-Z as Chief Brand Strategist
Chirping: McDonald's franchise owners ask the chain to create a southern-style chicken sandwich to compete with Chick-fil-A
Revealed: Microsoft just opened its 1st retail store in London — it's down the block from Apple and features an entire "enterprise" floor
Taxed: France is adding an "eco-tax" to flights out of its airports starting in 2020
Star: Amazon teamed up with Lady Gaga for its 1st exclusive cosmetics line: Haus Laboratories

Thursday

Earnings from Delta
Fed Chairman Jerry Powell testifies (day 2) to the Senate on the central bank's interest rate plans

Disclosure: An author of this Snacks owns shares of Amazon

Latest Stories

Rebecca Moretti

Department of Justice investigating Live Nation and Ticketmaster

Taylor Swift fans have beef with Ticketmaster-owner Live Nation, and now the US government does, too: The Justice Department is reportedly getting ready to slap America's largest concert promoter with an antitrust suit.

Lawmakers and regulators have accused Live Nation of outrageously high ticket prices, iffy customer service, and anticompetitive practices.

The DOJ's investigation into the concert colossus heated up in November 2022, when Ticketmaster crashed after T. Swift fans tried to snap up "Eras" tour tickets.

Exclusive | Justice Department to File Antitrust Suit Against Live Nation

The DOJ's investigation into the concert colossus heated up in November 2022, when Ticketmaster crashed after T. Swift fans tried to snap up "Eras" tour tickets.

Jack Morse

Adidas inexplicably decides 2024 is the right time to jump back on NFTs

Adidas is reportedly teaming up with Stepn, a web3 company that promised to reward users who engaged in physical activity like walking and running. The collab, announced this morning by Stepn, kicks off with the release of 1K Adidas-styled NFT sneakers. Current price: roughly $2,500 a pop.

Stepn made waves back in 2022 as a pioneer of “move-to-earn” games.

The solana-based app rewarded active users with tokens — though they’d have to have purchased a pair of NFT sneakers first. Some early adopters bragged about making hundreds of dollars a day by walking, but critics said the game relied on Ponzi-scheme like economics.

The Stepn-Adidas “phygital” sneakers release hits as the NFT market suffers a 30-day period that’s seen trading volumes fall nearly 40%.

Adidas partners with crypto fitness app Stepn, both NFTs and merch coming

The Stepn-Adidas “phygital” sneakers release hits as the NFT market suffers a 30-day period that’s seen trading volumes fall nearly 40%.

Matt Phillips

11h

Iran, oil, high rates are a bummer

At the risk of stating the obvious, the market has really started struggling. Last week’s hot inflation report, and the spike in interest rates it generated, seemed to get the sell-off rolling. Military strikes between Israel and Iran haven’t helped matters, as they’ve kept oil prices elevated. The market hates it, given the role oil plays keeping inflation high — and the Fed potentially on hold. The S&P’s 1.2% decline Monday pushed the index below its 50-day moving average, confirming the loss of momentum.

We’ve tried nothing and we’re all out of ideas

Forget driving away advertisers and charging for blue checks only to give them out for free, Elon Musk has other ideas to not make money on Twitter, aka X. Today he floated charging new users a “small fee” to deal with the platform’s seemingly intractable bot problem.

Unfortunately, a small fee for new user write access is the only way to curb the relentless onslaught of bots.

Current AI (and troll farms) can pass “are you a bot” with ease.
— Elon Musk (@elonmusk) April 15, 2024

Old heads might remember that way back in 2022, ahead of buying Twitter, the billionaire had pledged to “defeat the spam bots or die trying.” Guess we’re in the “die trying” era.

Allegra Rosenberg

12h

Page Turner

Fan
fic
book
boom

“There is just a really bright voice that comes from fan fiction.”

Jack Raines

Beta boom

12h

Banks thrived with rising rates, but can't win with stable ones

Net interest income in focus for earnings season

U.S.-WASHINGTON, D.C.-SENATE-HEARING-BANK-CEO

Millie Giles & David Crowther

16h

Which states have the highest tax rates?

Millions of people will be spending today frantically preparing to meet tonight’s 11:59 pm deadline. Indeed, those in the throes of filing can delight in the IRS’s promotion of “improved customer service”, as the ~100m who’ve already sent returns can enjoy less procedural promos from the likes of Krispy Kreme.

But if lower taxes are a priority for you: where should you move?

Today is Tax Day. The IRS expects ‘tens of millions’ of returns to be filed at the last minute | CNN Business

Jack Raines

16h

The biggest fund in the world is going absolutely nowhere near private equity

The Norwegian government announced on Friday that Norges Bank Investment Management (NBIM), the nation's $1.6T sovereign wealth fund, should not add private equity investments to its portfolio, rejecting the fund management's recommendation to add private equity allocation in November 2023.

The last few years have seen an uptick of institutional investors, such as pensions and endowments, increasing their exposure to PE. However, high fees and difficulty tracking investment performance have made the Norwegian government wary of investing in the field.

With private equity funds already struggling to return capital to their investors during a period of record-high inflows, restraint by the Norwegian government may prove to be a shrewd decision.

Norway wealth fund will not invest in private equity, government says

With private equity funds already struggling to return capital to their investors during a period of record-high inflows, restraint by the Norwegian government may prove to be a shrewd decision.

Matt Phillips

16h

Goldman Sachs shatters expectations as the bank roars back from the brink

Tom Jones, David Crowther

16h

The Coachella hype is starting to fade

Ticket sales have underwhelmed for the California music festival

Samsung has dethroned Apple as the top smartphone seller... again

William Coulman, David Crowther16h

Max Knoblauch

17h

Adobe is paying $3 a minute for AI-training video of people touching things

Adobe is pushing its way into the growing business of generative AI video, joining OpenAI’s Sora and Google’s Imagen 2.

The new tools will roll out this year, according to Adobe.

In contrast to its web-scraping rivals, Bloomberg reported that Adobe is paying videographers up to $120 for stock footage used to train the model.

High-priority subjects include: footage of people showing emotions, clips of people touching things, and anatomy shots of eyes, hands, and feet.

AI companies are growing increasingly wary of copyright lawsuits, as giants like YouTube threaten possible litigation if AI is trained on their videos. Plus: AI is learning so fast that the data used to train it could be completely tapped by 2026.

Adobe's working on generative video, too | TechCrunch

High-priority subjects include: footage of people showing emotions, clips of people touching things, and anatomy shots of eyes, hands, and feet.

Pivoting to AI is going to take longer than company leaders think

Rani Molla17h

10%

Tesla is laying off more than 10% of its roughly 140,000 person global workforce, according to a company email viewed by Electrek and Business Insider. The news comes after disappointing first quarter delivery numbers and a report by Reuters that the company is canning its long-awaited mass-market car.

David Crowther

21h

Netflix is still trying to nail movies

Netflix’s new movie chief is already shaking things up. Just two weeks into his tenure, Dan Lin has laid off 15 employees in the film department (~10% of its staff) and reorganized the division by genre instead of budget level, as the streaming giant looks to produce a wider spectrum of films.

Lin’s new vision for one of Netflix’s highest profile departments comes amidst a wider strategic reshuffle at the company. Gone are the days of limitless budgets, blank checks and endless A-list packed action flicks. A new era — complete with a password sharing crackdown, multiple price hikes, a foray into advertising, and much tighter departmental purse strings — has been ushered in by the world’s largest streamer.

The leaner, new Netflix shows up most clearly in the company’s cash spending on content: last year Netflix spent $13.1 billion on content, some 21% less than the $16.7 billion spent in 2022.