Friday May.29, 2020

😴 Twitter's unfazed investors

_Live sports 2020_
_Live sports 2020_

Hey Snackers,

For those who think shipping delays have been bad recently: a Canadian man just received a package of hair gel he ordered 8 years ago. Happy Friday.

Stocks inched down as US-China trade tensions are escalating again — so is Twitter drama.

Order

Twitter barely budges after Trump targets social media giants with Executive Order

It started with a tweet... But the battle with social media giants has been #trending in DC for a while. On Tuesday, Twitter (for the first time) flagged two of Trump's tweets with links for additional information, as Twitter deemed the words from the President about mail-in voting "potentially misleading." Then yesterday, Trump signed an executive order targeting social giants — TLDR: he's not a fan of Section 230:

  • Section 230: Beautiful name — it's part of Congress' Communications Decency Act — it gives social media companies two key (and somewhat contradictory) things...
  • Immunity: Social media companies have broad immunity from liability for their users’ posts/actions.
  • Moderation: Social media companies also have broad powers to moderate/remove content on their sites (this is the more contentious one #spicy).

If Trump's order succeeds... Without immunity powers, Twitter and Facebook would have never grown into the giants they are today. If Facebook got sued every time someone posted something offensive or false, the 'Book would never have made it past Mark Zuckerberg's dorm room. Losing broad immunity would be disastrous for social media companies.

Investors didn't break a sweat... Despite being (pretty much) directly targeted with an Executive Order by the President of the United States, Twitter's stock moved only slightly downward (4% Thursday). Facebook, which is equally affected by the move, barely budged (it's near an all-time high). Why?

  • Threats to regulate Big Tech have been hollow for years — despite all the fanfare since 2016, nothing much has changed.
  • The order is likely going to be challenged in court and may get blocked for overstepping the executive power. Section 230 was passed by Congress, and likely requires congressional action to repeal.
Bet

DraftKings surges after announcing live sports streaming (despite current lack of live sports)

Tuning into Russian ping-pong... DraftKings took its fantasy sports app public juuust over a month ago. The sports betting company's stock has soared 85% since, even though live sports aren't happening right now (though ESPN did stream a spelling bee). Yesterday, DraftKings announced it'll start live-streaming sports events through its app. Despite the current state of live sports (almost none), investors are optimistic:

  • Unity is key: Live streaming in-app could significantly increase DraftKings' user engagement, in terms of both time and money spent in-app.
  • Live sports are (kinda) returning: The MLB is on pace to restart sooner than planned, and the NHL and NBA are looking to resume playoffs sometimes this summer. But...

Live sports might be very different... DraftKings' push into streaming was pretty timely. We could be remote-watching big games played in empty stadiums for a while. Sports teams and stadiums will lose out big on missed ticket revenues, but sports betting probably won't change too much.

DraftKings might be getting help from the corona-restless... Sports fans may be looking for ways to feel more engaged in games, now that the electric excitment and sound of a packed stadium is gone. Couple that with non-existent public social events, and it's not hard to see how couch-bound boredom could give DraftKings a boost. FYI, gaming peer Penn National is up 76% for the month.

What else we’re Snackin’

  • Dance: TikTok-owner ByteDance reportedly made $3B in profit and raked in $17B in sales for 2019.
  • Grub: Papa John’s sales jumped 33% in May, while Popeyes soared over 40% (drive-thru game strong. So is the chicken).
  • Tourism: Cyprus said it'll pay for the vacations of any tourists who catch COVID-19 while in the country.
  • Chill: Meditation apps are surging — Calm had 31% more downloads in April compared to January.

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Friday

Disclosure: Authors of this Snacks own shares of Twitter and Chipotle

ID: 1200522

Get Your News

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest Stories

Business
Jack Raines
56m

The FTC vs. Big Handbag

The Federal Trade Commission has sued to block big tech, big grocery, big vacuum, and now, big… “affordable luxury handbag.”

Yesterday, the FTC sued to block Tapestry Inc’s $8.5B acquisition of Capri holdings. The agency is worried that a merger between Tapestry, which owns the Coach and Kate Spade brands, and Capri, which owns Michael Kors, would eliminate competition in the market.

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

FTC Moves to Block Tapestry’s Acquisition of Capri

FTC Moves to Block Tapestry’s Acquisition of Capri

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

Matt Phillips
3h

Tesla had a good ride, but the stock’s price destruction is historic

Few people have created as much value as Elon Musk. The iconoclastic entrepreneur took Tesla from a market capitalization of roughly $2 billion at the time of its IPO in 2010 to $1.2 trillion in early 2023. That’s a return of about 55,000%. Musk made a lot of people a lot of money.

On the other hand, Tesla shares are down nearly 60% since their all-time peak. The company has ceded ground in EVs, prompting a series of profit crushing price cuts to preserve market share. The cumulative loss in market value over that period is pushing $800 billion. Few corporate executives have presided over such a degree of value destruction.

And it could get worse, as people are bracing for an ugly update when Tesla reports after the close Tuesday.

Jack Raines
Opinion
5h
Starbucks could use a CIO

Customers give Starbucks billions of dollars in prepaid credits each year. Should the coffee chain be investing it?

Starbucks American Coffee Chain Cafe In Amsterdam
Sponsored by
Go Deeper with Market Depth

Nasdaq TotalView powers the need-to-know data serious investors rely on.

Read more
Scuba Diving in the Wild Blue Yonder in French Polynesia
Tech
Rani Molla
5h

Smaller AI models are in

Tech companies that have long touted the enormity of their AI models are now saying size doesn’t always matter.

Microsoft is the latest tech company to introduce smaller AI models, as part of its Phi-3 tech family. Last week Meta released two smaller models of its AI Llama 3 and earlier this year Alphabet did the same. All are open sourcing these models to encourage wider adoption.

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Business
wake up!
6h
Morning earnings report
$127

The average bitcoin-transaction fee hit an all-time high of $127 on Friday.

The temporary spike came as the halving cut miner rewards and traders forked over huge sums of BTC (skewing the average) to be included in the first post-halving block.

Adding fuel to the fee fire was the launch of Runes, a new protocol that lets developers create memecoins on top of the bitcoin blockchain. The debut was so popular that fees popped as traders fought for limited block space.

11h

Amazon adds shoppable live TV to Prime Video, as more Americans buy while they binge

Nia Warfield
Read
11h

Warehouse whale Prologis cuts its outlook as retailers embrace “just in time” storage

Max Knoblauch
Read
Business
Reporting soon
23h
Ahead of tech earnings

Your inbox is ready

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Sic transit gloria mundi
4/22/24

Chants & chill

Sophia Smith Galer
One Nun Praying Near Group of Nuns
Jack Raines
4/22/24
Nvidia had the 2nd-largest stock decline, ever

Where does Nvidia's recent plunge rank in the steepest stock crashes?

US-TECHNOLOGY-AI-HUANG
2024-04-22-1-america-importing-less-from-china

The US now buys more goods from Mexico than from China

Chinese imports are down as companies begin to "nearshore" in Mexico

Tom Jones, David Crowther4/22/24
2024-04-22-paramount-global-site

Multiple bidders want to buy Paramount Global’s sprawling media assets

William Coulman, David Crowther4/22/24
Junk

How much of the world’s plastic is recycled? Only a fraction

Landfills still account for the majority of plastic disposal

Millie Giles, David Crowther4/22/24
Markets
Matt Phillips
4/22/24

Stock market gains for 2024 cut by more than half

All of the sudden, the stock market seems to be running out of steam.

There’s no big mystery here. War in the Mideast has pushed up oil prices, which will help keep inflation elevated. And annoyingly high price increases in March have already pushed the June Fed rate cuts the market was banking on farther into the uncertain future.

All that’s added up to higher interest rates and lower stock prices.

Tech
Rani Molla
4/22/24

AI needs so much electricity that tech companies are getting into the energy business

To accommodate tech companies’ pivots to artificial intelligence, tech companies are increasingly investing in ways to power AI’s immense electricity needs.

Most recently, OpenAI CEO Sam Altman invested in Exowatt, a company using solar power to feed data centers, according to the Wall Street Journal.

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

This can all feel like a bit of spin, as these tech companies move the narrative toward their use of green energy rather than questioning whether they truly need to be consuming so much energy in the first place.

Exclusive | Sam Altman Invests in Energy Startup Focused on AI Data Centers

Exclusive | Sam Altman Invests in Energy Startup Focused on AI Data Centers

That’s on the heals of OpenAI partner, Microsoft, working on getting approval for nuclear energy to help power its AI operations. Last year Amazon, which is a major investor in AI company Anthropic, said it invested in more than 100 renewable energy projects, making it the “world’s largest corporate purchaser of renewable energy for the fourth year in a row.”

This can all feel like a bit of spin, as these tech companies move the narrative toward their use of green energy rather than questioning whether they truly need to be consuming so much energy in the first place.

Super Bowl Winning Team Head Coach and MVP Press Conference

Private equity is eating sports

Private equity firms may soon own your favorite football franchise.

Jack Raines4/22/24
Karma

The front page evolves

ByRyanBroderick

MonApr 222024

Business
David Crowther
4/22/24

What’s on your mind?

Meta is rolling out a new chatbot, Meta AI, to its 3 largest social media properties: Facebook, Instagram and WhatsApp.

On Facebook the usual search bar for some users has been replaced with “Ask Meta AI anything” — a prompt that could give millions of people their first ever interaction with an AI chatbot.

Meta has been increasingly focused on AI ever since ChatGPT exploded into the mainstream in late 2022. In earnings calls, the focus has never been clearer: Facebook execs made ~10x more references to artificial intelligence than the Metaverse, the company’s previous primary focus which prompted its rebrand in October 2021.

Metaverse mentions

How to use Meta’s new AI chatbot that you can’t avoid

How to use Meta’s new AI chatbot that you can’t avoid

Meta has been increasingly focused on AI ever since ChatGPT exploded into the mainstream in late 2022. In earnings calls, the focus has never been clearer: Facebook execs made ~10x more references to artificial intelligence than the Metaverse, the company’s previous primary focus which prompted its rebrand in October 2021.

Metaverse mentions
4/22/24

GTA publisher Take-Two joins the flood of gaming layoffs — which could be felt for years

Max Knoblauch
Read