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Hey Snackers,
Happy Friday. A Syrian immigrant who came to the US with $14K and opened a gas station became a millionaire after selling the winning $2B Powerball ticket.
Stocks soared yesterday on news that inflation cooled more than expected last month, lifting investors’ hopes that the Fed will slow its roll on rate hikes. The Nasdaq spiked 7.3% and the three major US indexes had their best day in two years.
Thank you for your service: a big Veterans Day shoutout to everyone who’s served and defended the United States.
Alexcut
Amazon reportedly considers downsizing Alexa as tech giants scramble to cut costs
“Alexa, stop losing money”... There’s trouble in the house Bezos built: Amazon is looking to cut costs, notably in its Alexa division, a WSJ report says. In the past three years Amazon spent lavishly as ecomm demand surged: it hired 800K+ workers and splurged $10B on acquisitions, including Roomba maker iRobot and health clinic One Medical. But now that rising prices are denting profits, the Prime padre is looking to cut costs:
- Try harder, Alexa: Amazon’s Alexa team has 10K+ employees (about as many as Snap and Airbnb combined) and has lost up to $5B annually in recent years. Now Amazon is said to be encouraging Alexa workers to find jobs in other divisions.
- Company-wide: Amazon has lost $3B this year — after making $33B in profits last year. Cue: Amazon just announced a hiring freeze.
Alexa has company… Numerous tech giants have resorted to radical cost cutting as the Fed’s hikes have hit rate-sensitive tech businesses hard. This week Meta laid off 11K employees (13% of its workforce), and 330+ other techies have laid off workers this year. Others, including Apple, have frozen most corporate hiring and reeled in spending (think: less $$ for R&D and moonshots).
Not all cost cuts are created equal… Some are easier to reverse than others, and poorly executed cost cutting can be expensive: just look at Twitter, which is already trying to rehire some of the workers Elon fired just days ago. On the other hand, strategic cuts can pay off in the long run: by downsizing growth plans instead of laying off workers, companies like Amazon and Google hope to position themselves for an easier scale-up in the next boom.
Infla-date
Bumble’s dating boom slows as zillennial users cut swipey spend (and choose cheaper dates)
Cuffing szn is here… but investors have mixed feelings about Bumble. It grew sales 16% last quarter, but the pace of its swipe-driven growth is slowing. Bumble’s female-focused dating app also added a record 164K paying users last quarter, but experienced lower renewal rates on key paid subscriptions (especially with younger users). The company issued a weak forecast for this quarter as the strong US dollar hurts sales for its international dating apps like Euro-focused Badoo and Fruitz, which it picked up this year.
Post-work drinks… over Two-Buck Chuck. Since 2017 Bumble has nearly doubled its market share, but the brand is starting to see weaker spend from younger users on perks like unlimited swipes and extended matches. It’s a theme: this year nearly a quarter of millennials and nearly as many Gen Zers say they’ve gone into debt from splurging on dates, a recent survey found. Still:
- Tinder owner Match Group beat expectations last week thanks to its diverse portfolio of 20+ e-romance businesses, including Hinge, which last month saw record downloads.
- But Match also warned that the gloomy economy was weighing on discretionary app spend and hurting Match brands that serve swipers with lower incomes.
Finding a date is only half the equation… Inflation is forcing people to be thriftier — both with how they find dates and what they spend on dates. Nearly half of Gen Zers and millennials are having more budget-friendly meetups (think: walks, coffee dates), another survey found. As more singles prioritize IRL experiences over swipe sessions, $3 lattes could win over $3 extra swipes.
REKTX
The Crypto Catch-Up…
- 🤔 Sus… After FTX imploded, a WSJ source said the crypto exchange secretly lent over half its customers' funds to its sister trading firm, Alameda Research, forcing FTX to suspend withdrawals as customers rushed to get their money back. And…
- 🔎 Sleuthy… While Bahamas-based FTX crumbles, the SEC is investigating FTX’s separate US subsidiary. The commission is said to be looking into whether FTX.us sold unregistered securities — in addition to FTX's handling of Americans' money.
- 📜 Policy… Before the FTX fiasco, lawmakers had been working with CEO Sam Bankman-Fried to shape industry-friendly crypto regulation like the Digital Commodities Consumer Protection Act. Any collab may now be toast as elected officials eye the fallout.
What else we’re Snackin’
- Reverse: EV makers Nio and Rivian reported substantial third-quarter losses this week, with inflation pushing up Rivian's material costs. Production problems have plagued the broader industry.
- Storm: 300K+ Florida homes and businesses lost power yesterday after Hurricane Nicole hit the Sunshine State on Wednesday. Nicole has since weakened into a tropical storm.
- WeClose: WeWork plans to close 40 US locations as a cost-cutting measure. The coworking biz lowered its forecast for the year, blaming slower-than-expected growth as remote work continues.
- Dried: Drought is shrinking the Mississippi River and US exporters are feeling the squeeze. Record low water levels create barge traffic jams, and the financial toll could reach $20B as exporters use costlier alts.
- Carved: Carvana shares popped 32% yesterday after plunging nearly the same amount a day earlier, when the online used-car seller disappointed on earnings (still no profit). This year the stock’s down 97%.
Friday
- Veterans Day
- Earnings expected from Innovid
Authors of this Snacks own: shares of Amazon, Apple, Google, Match, Snap, and Twitter
ID: 2588573
