Monday Jul.22, 2019

Boeing-gate cost $8.4B. We compare that to other "gates."

_Boeing trying to keep everyone happy_
_Boeing trying to keep everyone happy_

Hey Snackers,

Say yes to that extra $2 protein shot for whatever you're breakfasting with.

Investors are carbo-loading up for the biggest week of earnings yet — Facebook, Tesla, Amazon, and Alphabet are all on deck.

Highs

Who's up...

Tinder is making the first move... It's finding a way around the app store “tax” that Google charges. To get premium features like "Tinder Gold" (Super Likes, read receipts, and other aggressive dating tools), you pay with your credit card on file through the Google Play store — and Google takes a 30% cut (it's similar with Apple apps). That's a hefty toll. So Tinder will encourage users to go around the app store and pay it directly. Shares of Tinder-owner Match jumped 5% on the plan that sneakily avoids Google's 30% fee.

Hakuna matata... Disney entertained itself with two fresh records over the weekend: The Lion King's $185M haul in North America was the best opening weekend for a Disney remake — and then Avengers: Endgame finally passed Avatar as top grossing hit ever — $2.789B worth of movie tickets sold. With another Star Wars coming (shocker), Disney's on pace to earn $9B at the box office this year (which would also be a record).

Big banks are the window to your wallet's soul... Spending on Citi credit cards jumped 8% last quarter while splurging on JP Morgan cards popped 11%. Goldman Sachs wants in on that consumer spending so badly that it has invested $1.3B on its retail banking project "Marcus" (and a new credit card partnership with Apple hits this summer). In a world of volatile markets, interest rate uncertainty, and a trade war, your savings, checking, and credit accounts are banks' warm and fuzzy blanket.

Lows

...and who's down

Narcos Season 3 was bad... This was even more painful. Netflix suffered its worst earnings miss ever after US Netflix subscribers actually decreased by 126K in the past year. Netflix simply didn't pump out enough headline original content over the last three months to entice new sign-ups. Plus, the monthly price rose by 2 bucks over the quarter. And now it's about to lose Friends and The Office, its 2 most popular shows.

Can't blame gluten... Blame delivery. Domino's plummeted 9% on word that sales only rose 3% last quarter. The CEO blamed the slowdown on competition from "3rd party delivery aggregators," aka DoorDash, Uber Eats, Postmates, and Grubhub. He mentioned them 19 times in the earnings call as the apps open up your delivery palette to non-pizza options.

To quote LL Cool J... Don't call it a comeback. iHeartMedia had $20B of debt and its last playlist ended in bankruptcy. Now it's been given a 2nd chance by a judge, and its shares just started trading again on the Nasdaq exchange. Its new mission is obsessed with "companionship," aka the daily devotion listeners have to talk radio and podcasts. In addition to concert hosting and sticking ads into the audio you hear, iHeartMedia wants to dethrone NPR as America's top podcast publisher (it's currently #2).

Pricetag

Boeing's 737 Max crisis has cost it $8.4B. Here's how that compares.

Not a fun number to tally... In addition to scrutiny and lost trust, the safety issues that contributed to two downed planes full of passengers have cost Boeing a lot of money already:

  • For customer reimbursements: The airlines that bought 737 Max planes were planning to fly them. Since they haven't since March, Boeing said last week it put aside $5.6B to reimburse them.
  • For lost sales: Since March 13th, not a single 737 Max has been delivered. Instead of turning into $2.7B of revenue for Boeing, the planes are filling up company parking lots (literally).
  • For the victims: The Ethiopian Airlines crash killed 157 people. The Lion Air crash killed 189 more. Boeing is paying their families through a $100M fund.
  • Grand total: $8.4B

How does that giant number compare?... We took a stroll down the hall of corporate shame to find out.

  • Volkswagen paid $30B for cheating regulators and customers about "clean" diesel cars.
  • Facebook was just fined $5B for letting Cambridge Analytica manipulate 87M users' votes in the 2016 election.
  • Wells Fargo was punished $575M for opening fake accounts for millions of unknowing customers.
  • Bank of America, JP Morgan, and Citi (among other huge banks) paid $16.5B, $13B, and $7B for setting up the perfect kindling — subprime mortgage loans — for a 2008 financial system fiasco.

Boeing's future looks fine... Stock prices reflect future profits, and Wall Street clearly thinks Boeing can dust this one off. The reason is competition (the lack of it) — Comparing Boeing's stock drop to Volkswagen's makes it clear.

  • 🚗 Volkswagen's shares fell 60% in the months after Diesel-gate. That's because there are dozens of car companies that customers could switch to.
  • ✈️ Boeing's stock is down only 11% since the 2nd plane crash in March. That's because there's only 1 planemaker customers could switch to – Airbus — and its orders are booked out for almost 8 years.

What else we’re Snackin’

  • Work: 13 tips to up your small talk game (we tried the "teach" one over the weekend)
  • Life: Why mosquitos single you out and what to do about it
  • Money: Where "bull" and "bear" come from in the financial world
  • Venture: A helpful graphic on everything that's getting bigger in venture capital
  • Crypto: The differences between Bitcoin and Facebook's Libra
  • Do: The 2-minute breathing exercise that leads to better decision making

This Week

Disclosure: Authors of this Snacks own shares of Beyond Meat, Tesla, Amazon, and Volkswagen

20190722-905818-2726996

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