Friday May.21, 2021

💳 Give the people credit

_Give the people credit cards...and Oatly? [pixelfit/E+ via GettyImages]_

Hey Snackers,

The best part of returning to a pet-friendly office: hanging with all the pandemic pups that your coworkers adopted during lockdown. Just don't pet them.

Crypto prices rebounded yesterday after Wednesday's big selloff. Bitcoin, Ethereum, and Dogecoin all jumped. What fell: jobless claims, which hit a new pandemic low last week.

Swipe

Chase and other major banks will reportedly give credit cards to people with no credit scores

No more FICO scores on Hinge... even 800s. JPM Chase, Wells Fargo, and other banks are taking the “history” out of credit history. When reviewing credit card applications, banks will consider deposit account info for people with no credit, according to WSJ's #PFWTM — and share that info with each other. Think: $$$ in checking and savings accounts, and overdraft history. It's part of a gov-backed initiative to extend credit to underserved people. The pilot, aimed at financially responsible people without credit scores, could launch this year.

To build credit, you need to borrow. Think: credit card spending, car or student loans, or a mortgage. To build good credit and avoid interest, you need to pay IOUs on time.
The "chicken or the egg" of the banking world: When you've never had a credit card, and need a credit score to get a credit card with your bank (womp).

Give the people credit... 53M adults in the US don’t have credit scores — many only pay with cash/debit, or are new to the US. If this program launches, Chase could check your Wells Fargo checkings when reviewing your Chase card app. That means millions more Americans could get access to credit — and it could be a boon for banks and credit card companies.

Banks make $$$ from merchants each time you swipe. That "Swipe Tax" is why purchase minimums exist (the bodega doesn't want plastic for a $2 muffin).
Banks also earn interest on overdue balances. But thanks to stimulus checks and #lockdownlife, Americans have reduced their credit card debt (big time): balances are now $157B lower than pre-pandemic.

Credit = opportunity... Good credit can help people take out cheaper loans like mortgages. Homeownership has been one of the greatest contributors to wealth creation for families. But mortgages are hard to get without a credit score. In 2015, Black and Hispanic adults in the US were more likely than white or Asian adults to lack credit scores — and they're still more likely to be denied mortgages. Increasing credit access to historically disadvantaged communities is key to narrowing the racial wealth gap.

IPO

Oatly, the spunky company that invented oat milk, raises $1.4B in its IPO

Starbucks is out of oat milk... What else is new? Oat milk icon Oatly raised $1.4B in its IPO on Wednesday, snagging a frothy $10B valuation — more than Beyond Meat's market cap. Yesterday, Oatly shares soared 19% during their first day on the Nasdaq. The IPOat eased investors' concerns about IPOs, which have been underwhelming recently. A few things investors were sweet on...

Sales: Sales of Oatly's sustainable milk ~2X'd in 2020 from 2019 .
Starbs: In March, Oatly won the milk lottery: a nationwide rollout at Starbucks.
Stars: The Swedish company is backed by celebs like Oprah, Natalie Portman, and Jay-Z.

My oat milk brings all the boys... to the Starbs. Oat milk is a barista staple today, but for decades after Oatly was born in 1994, it was pretty obscure. Wild stat: the founder of Oatly literally invented oat milk. In 2017, Oatly expanded to the US and launched a major rebrand. That hip, spunky branding has been key to its growth. Oatly's marketing strategy = anti-marketing (see: these murals, these cartons, and this Super Bowl ad). And it's provocative...

Provocative marketing comes with risks... Oatly highlighted its "provocative and unconventional marketing" as a business risk, which could expose it to more scrutiny from food regulators and lawsuits from dairy lobbyists. Oatly's slogan: "It's like milk, but made for humans." But for Oatly, the branding strategy has also come with big rewards. Oat milk is oat milk, but people seek out Oatly specifically, thanks to its "cool brand" factor. That's likely why Starbs chose to feature Oatly, too.

What else we’re Snackin’

Crypto: The US Treasury wants every crypto transfer larger than $10K to be reported to the IRS — we smell "tax purposes."
Peace: The CEO of TikTok-owner ByteDance is stepping down. He'll have more time for "reading, listening to music, and daydreaming."
Woof: Petco swung to a profit last quarter and boosted its forecast, expecting the puppy-palooza to continue.
IFLIP: IHOP is offering $150K to the first franchisees who open a Flip'd, its fast-casual spinoff which launches in July (expect "pancake bowls").

Friday

Earnings expected from John Deere, Foot Locker, and Supreme-owner VF Corp
Apple CEO Tim Cook testifies at the Epic trial

Authors of this Snacks own shares of: JPM Chase

ID: 658097

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Tangential remarks

Nicolai Tangen, the CEO who holds the purse strings of Norway’s $1.6 trillion sovereign wealth fund, thinks that his fellow Europeans don’t quite stack up to US employees when it comes to pure hustle, telling the Financial Times in a recent interview that there is a difference in “the general level of ambition” and that “the Americans just work harder”.

Tangen has clearly been putting his money — or more specifically Norway’s — where his mouth is: the sprawling Norwegian oil fund, now one of the largest investors on the planet, has been pumping more capital into its US holdings in the past decade, while decreasing its investment into European entities.

The troublesome news for our European readers? Tangen might be onto something. According to data from the OECD, American workers are putting in almost 60 hours a year more than the weighted average for OECD nations… a benchmark that workers from countries in the European Union are already ~180 hours shy of.

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Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

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No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?