Hey Snackers,
Good pre-weekend heads-up: Robocalls just got one step closer to being crushed upon by DC.
Markets wrap up an aggressive week of corporate earnings today with McDonald's and Twitter.
Fact... Internet growth is slowing. That freaked out Google's parent, Alphabet, when revenues inched up just 13% last quarter. It was depression-worthy for Google investors, who were used to 25% revenue growth. So the bar was low this time, but Google cleared it (and then some) with a 19% surge in revenues.
Webster's should strike the word "search" from the internet... Google's dominance in online search is astounding (93% of worldwide searches) — and so are the ad dollars it harvests year after year. Now it's dishing out some of the $63B in profits it's made the past 3 years by buying-back shares of itself — That can make each remaining share worth more in the near term.
This 21-year-old has 2 problems... Investors look at Alphabet's ~$800B market value and think: should this be worth more or less? Google faces 2 major obstacles to up its growth game:
Warning... Hershey's latest earnings report revealed that it's raising candy prices, which will probably hit your office choco-bowl budget soon. It also enjoyed $1.8B in quarterly revenues, which beat expectations. But one detail stood out to us at Snacks: “Growth was led by our powerful Reese’s franchise.” Please continue, Hershey.
An 87-calorie triple threat... Reese's are 90 years old, but Hershey's has given them a facelift by introducing new versions. They call it "innovation." We call it "repackaging and reshaping." But it's working. Here's what they came up with this year:
Hershey has an acquisition craving... There's only so much repackaging of nut butter and cocoa a century-old company can pull off. So it's looking to buy new brands. Last fall, the chocolate legend acquired Pirate's Booty to get into non-sugar-laden snacks. And Hershey's president thinks acquisitions of newer, innovativ-er brands now play a "major role" in its future.
Between NorCal and SoCal... lies the Governor of California. Four car companies secretly met up with him to negotiate a compromise on minimum MPG fuel efficiency. You borderline needed to whip out a pocket Constitution to understand this one.
Cars cause pollution... Econ 101 says that governments tax pollution or put limits on it. President Obama ordered that car companies increase their minimum average fuel economy to 54.5 mpg by 2025. President Trump doesn't believe that's necessary and prefers 37 mpg. That's why California planned to exercise its waiver from federal fuel economy laws to keep stricter standards, and 13 states want to follow its lead.
This is why car companies want trade deals... Drastically different fuel standards between "teams" of states would've given carmakers tons to comply with — sometimes 2 assembly lines are needed instead of 1. Trade deals can fix that. Take the proposed Trans-Pacific Partnership (a US/Asia trade deal that fell apart). It would've unified standards between the US and Japan, but politics killed it. Car companies are intervening to unify the US.
Disclosure: An author of this Snacks own shares of Amazon.
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