Hey Snackers,
Some Flat-Earthers in Italy were forced to quarantine after sailing out to find "the end of the world" during lockdown. Guess 2020 wasn't enough for them.
On Friday, we learned that the US economy added ~1.4M jobs in August. The unemployment rate dropped for the 4th month straight, falling to 8.4% from 10.2% in July. Stocks still fell for the week.
On the pod: Peloton is reportedly unveiling a cheaper treadmill. Tune into our 15-minute pod to hear why it's way easier to sprint downmarket than up.
BRB, deleting Venmo... The US is kind of like that person who racked up more in Venmo requests than they can pay. US debt has been growing for decades, but it skyrocketed in the corona-conomy. From April-June, America's debt became larger than the size of its economy on a quarterly basis. Last week...
One shrinks, one explodes... The US GDP shrank at a record rate last quarter as consumer spending and manufacturing declined. Instead of that $5 Starbucks latte, you made WFH iced coffee. Meanwhile, debt ballooned:
Tomorrow's generations will have to repay today's debts... The bigger the debt, the more the US has to pay back â with interest. Right now, the US (counterintuitively) enjoys record low interest on government debt despite the massive IOU. But in the long term, higher interest rates on debt could force the US government to cut spending on services like healthcare, education, and defense â and/or raise taxes. Big spending is necessary right now to prop up the economy, but it's trouble for future generations.
Abnormally Happy Hour... Zoom's profit soared 3,300% last quarter compared to the same time last year. In 3 months, the video conferencing icon made double the money that it made last year. Zoom's sales more than quadrupled to $663M and it significantly raised its full-year forecast, so investors sent the stock zooming up 40%. Zoom is growing abnormally fast for a public, relatively mature company (even compared to other corona-conomy winners).
Trying to sneak the Red Vines in... AMC shares soared 15% on Friday after America's largest movie theater chain said 70% of its US theaters would be open on Labor Day weekend. Chris Nolan's much-hyped thriller "Tenet" also dropped on Friday, kicking off US theaters' 1st big weekend since March and bringing in $20M. In June, AMC said it was "generating effectively no revenue" (niiice) and doubted it could remain in business much longer. Since then, AMC stock has soared 70% on the reopening hype.
Elon gets rejected from the club... Tesla stock plunged 7% Friday on news that the S&P 500 added Etsy to the famous index, but not the e-car maker. Tesla became eligible for an S&P 500 Club invite in July after posting 4 straight profitable quarters. If Tesla did get in, funds that track the S&P would need to buy over 120M Tesla shares, likely driving up the stock price. Turns out Elon hasn't made it past the S&P bouncer yet.
Throwing profit puppies out the emergency exit... Desperate move. United said it's permanently dropping its $200 change fee for domestic flights. Delta and American predictably followed suit. Profitable add-ons like change fees have 5X'd over the past decade and made up 15% of US airlines' sales last year. Buuuut: travel is still down ~60% from 2019 and airline bailout money runs out in October. Between pandemics, hurricanes, and fires, booking a flight with a $200 change fee is... risky. Airlines hope that killing those fees will boost sales.
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Disclosure: Authors of this Snacks own shares of Delta, Amazon, and Lululemon
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