Hey Snackers,
A bear wandered onto a Utah middle-school campus the other day and was safely relocated — we’re guessing to Wall Street.
Investors were back to feeling bearish, sending the S&P 500 down a whopping 4% in its worst day since June 2020 — and the Nasdaq’s plunge was even worse. Driving the market blues: a major retail selloff, from Costco to Dollar Tree, started by Target...
Clear aisles, full carts... can lose. Target stock plunged 27% yesterday in its worst day since Black Monday in 1987. Tarjay missed the profit bull’s-eye, taking home just $1.3B last quarter compared to $2.4B a year earlier. Despite high inflation, Target’s trying not to raise customer prices this year. Instead of charging you more for made-in-China floral dresses, it’s eating the extra costs.
#Flation starts hitting… the bottom line. Shrinking earnings have emerged as a theme for the US’s largest retailers. On Tuesday, Walmart reported that its quarterly profit shrank 25% from last year.
The bottom line matters more… For investors, profit is often more important than sales for established corporations (with young startups, growth is often the focus). While sales rose at Target, Walmart, and Amazon, the major profit hits they took overshadowed that growth — cue: the stocks got pummeled. Meanwhile, TJ Maxx missed sales expectations but surged on its profit win. We’ll see whether Ross and Kohl’s also put the bottom line first when they report today.
The Block Head has spoken… and he says crypto concert tix are the future. Jack Dorsey, “Block Head” at Block (translation: CEO at the biz formerly known as Square) just outlined plans for the company’s future. Block’s changed a lot since its last investor day five years ago: it bought Jay-Z’s music streamer Tidal for $300M last year and fintech Afterpay for $29B this year. Here’s what’s next:
There are plenty of ways to pay… but Block’s superapp strategy could distinguish it from a crowded payments field. The company started in 2009 as a point-of-sale disruptor, selling those swipe-y consoles used by your local coffee shop. But since then, Toast, Clover, and others have launched competitors, and now Apple’s reportedly testing a tap-to-pay iPhone feature that could blow up the industry.
It’s a tough time to be a tech biz… even a profitable one. Tech stocks have plunged in recent months as investors ditch “disruptive” but unprofitable tech giants (think: Uber, Peloton, and Airbnb) to invest in slow-and-steady companies with consistent cash flow (think: energy, utilities). Even though Block has been profitable for the past three years, its blockchain-powered ecosystem could scare off tech-phobic investors looking for stability.
Authors of this Snacks own: bitcoin and shares of Walmart, Amazon, Block, Tesla, Apple, and Uber
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