Wednesday Nov.06, 2019

Match Group goes international (respectfully)

_The Profit Police just took down Peloton_

Hey Snackers,

What to do if you're an NFL player and a cat takes over your Monday Night Football game (literally).

Stocks dipped from record highs Tuesday, but we'll be looking for today's Consumer Credit Report to see how we're all spending.

Unsatisfied

Peloton's 8% drop highlights a classic Growth vs. Profits tradeoff

This is my first time, so cut me some slack... Fresh off its September IPO, Peloton announced its first quarterly earnings report as a publicly traded company Tuesday. The results and calorie count all beat analysts' expectations:

Revenue more than doubled to $228M.
The number of Peloton monthly subscribers (you buy the $2K bike, then you drop $39/month to be yelled at via streaming spin classes) more than doubled to 563K.
Peloton projected it'll add 100K Pelotonistas this holiday season.
Plus: The average number of workouts per month on Pelotons rose from 8.7 to 11.7 (more fun stats in this pretty presentation).

So it's a shocker that the stock dropped 8%... Peloton felt like a middle schooler who brought home A's when their parents expected B's — and then got grounded. Its CEO struggled to rationalize Wall Street's punishment for its rippling results: "The stock going backward is a bit of a head-scratcher, I’ve got to be totally honest with you." Well put.

This is a claaaassic "Profits vs. Growth" tradeoff... Peloton loses money each quarter, spending more than it brings in. Its $50M loss invited investor disgust, but the CEO pointed out the loss was necessary in order to grow quickly. You're either focused on profits or growth — in the saddle or out of it:

Peloton could cancel its expensive TV ads, stop adding stores at fancy malls, and layoff salespeople to become profitable.
But is that the right move at this crucial moment when Mirror and SoulCycle are chasing its head start?

LTR

Match plummets 15% even though Tinder is thriving

1st date humble brag... Match owns the trademark on "Swipe" and "Swipe Right" — a huge advantage for the owner of Tinder and 44 other dating apps. Match shares dropped 15% Tuesday though on word that its projections for the upcoming quarter aren't worth bringing home to Mom and Dad. But its Tinder numbers are.

Tinder is a stage 5 clinger... Actually, its Tinderella users are. The app enjoyed (another) surge in downloads by 437K last quarter to hit 5.6M total users. The new "Swipe Night" interactive in-app choose-your-adventure show that debuted last month was a hit (especially among Gen Z and women). But 2 specific numbers in the charming earnings stood out to your Snacks team:

5 days: On average, users check out Tinder 5 days a week.
30%: That's the increase in users who now open the app 7 days a week compared to last year.

International is Match's opportunity — but it requires “product localization”... Uber barged into new countries and didn’t adapt to local culture. Match uses the opposite strategy as it heads abroad — it's all about being culturally sensitive. Take Match's OKCupid app tactics in India:

Situation: Online dating isn't the go-to option and arranged marriage is still common.
Response: Match made Indian OKCupid dating profiles include more user info than in other countries so that more conservative daters could get comfortable.
Result: A surge in app downloads to 1.4M over the last year.

What else we’re Snackin’

Spacial: Adidas partners with the international space station because it wants to test out its gear in, you know, space
De-paid: Boeing's CEO gives up his 2019 bonus in light of the 737 Max crisis
Twins: Xiaomi (aka the "Apple of China") just released its new smartwatch — looks a lot like Apple Watch
Fucci: TheRealReal shares dropped 11% after a CNBC investigation showed that the consignment company isn't perfectly sorting out fake products from the real stuff
Anti-Public: Walgreens reached out to private equity firms to take the company private — the 9,300-store chain wants to get out of the spotlight of public markets

Wednesday

Earnings from Expedia, Wendy's, Roku, and Qualcomm

ID: 1004317

Latest Stories

We get results!

30m

This earnings season is fully operational

Balancing Act

Acrobatic Accounting

So, you want to join the circus?

Megan DeMatteo

Rani Molla

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?

Apple reportedly cuts Vision Pro production due to low demand

Seriously, relax

Economy keeps on humming along

Meta exhaustingly tries to merge the metaverse and AI

Gonna have to rename the company... again

Rani Molla5h

Biden signs a bill that could ban TikTok — but the #ForYou fight is far from over

Jamie Wilde

Read

10h

Gucci’s parent braces for sliding sales, as luxury demand unravels over high prices

Nia Warfield

Read

Matt Phillips

21h

Chipotle continues to go on a tear, hitting a sales record

Hey it might not be the kind of AI stock investors are all hot and bothered over, but don’t sleep on the burrito business.

Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

Rani Molla

22h

Facebook had great earnings, the market hates it

Facebook reported impressive earnings. Record first-quarter revenue thanks to AI! Profit up 117% compared to a year earlier! But at the same time, its capital expenditures are going up and it’s expecting second quarter revenue potentially lower than analyst estimates. So in other words, the future doesn’t look as bright as the present.

All in all the stock is down more than 10%. (Basically the opposite of what happened with Tesla yesterday).

Net net

4/24/24

Earnings can’t stop, won’t stop

Rani Molla

4/24/24

Why Tesla investors are holding on to hope for a cheap car

Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.

Spotify’s finally turning its user growth into serious cash flow

Tom Jones, David Crowther4/24/24

The FTC is banning non-compete clauses

Why that might make job switching even more lucrative

Millie Giles, David Crowther4/24/24

Matt Phillips

4/24/24

Hasbro pretty much entirely depends on Magic: The Gathering to make a profit

William Coulman, David Crowther

4/24/24

Thousands of bank branches have closed across America

America has lost thousands of bank branches. The latest closure? JPMorgan’s iconic 45 Wall St. address.

4/24/24

TikTok versus the United States

Casey Newton

Senate Takes Up Foreign Aid Package Passed By House

William Coulman & David Crowther

4/24/24

Not so Gucci

French luxury fashion conglomerate Kering has seen its shares fall ~10% in the last 24 hours after reporting that sales at its flagship brand Gucci had dropped 21% in its latest quarter.

Kering’s other brands, which include Yves Saint Laurent, Bottega Veneta, and Balenciaga, fared slightly better — but the only real bright spot was the company’s eyewear division, where sales rose 24% (9% on a comparable basis).

With Gucci responsible for roughly two-thirds of the company’s profit, the ongoing struggles of the brand are weighing heavily on the bottom line: the company expects recurring operating profit to drop 40-45% in the first six months of the year.

Gucci execs will be hoping that new designer Sabato de Sarno can turn the iconic brand’s fortunes around, particularly in China where demand has dropped precipitously. His designs only started hitting stores in February.