Friday Oct.22, 2021

📣 Trump’s stock surge

A Musk-ular quarter [skynesher/E+ via Getty Images]
A Musk-ular quarter [skynesher/E+ via Getty Images]

Hey Snackers,

The downside of living in an exclusive gated community: It’s harder to escape when rodents the size of St. Bernards invade. The world’s largest rodent is loving the manicured lawns.

The market-tracking S&P 500 index closed at a fresh record yesterday, as investors digested another round of earnings. Snap stock plunged 22% after quarterly sales missed expectations, while WeWork shares jumped on their first day of trading — two years after its botched IPO.

DWAC

“The Trump SPAC” quadruples as his company vows to take on Big Tech

Trump’s back... with a SPAC? Former President Trump wants to take on Big Tech and “create a rival to the liberal media” with his own biz: Trump Media & Technology Group. ICYMI: Trump’s still barred from Twitter, Facebook, and YouTube. Yesterday, Trump’s company said it was going public by merging with Digital World Acquisition Corp. (aka DWAC), a special purpose acquisition company (aka SPAC — or blank check company).

  • DWAC shares more than 4X’d in value yesterday. It became the most traded stock on the Nasdaq and NYSE, changing hands 470M+ times.
  • Trump’s company plans to launch a social network called Truth Social next year (it looks a lot like Facebook).
  • Also in the works: a self-described “non-woke” Netflix rival called TMTG+, a CNN competitor called TMTG News, and an Amazon cloud rival.
  • Few deets: The only other TMTG employee announced was Scott St. John, former producer of “Deal or No Deal.”

The Trump hype machine… Trump has used his name to promote other businesses, like his casinos, hotels, and Trump University. But his biz record is financially and legally questionable. His only previous public company, Trump Hotels & Casino Resorts, lost money every year until it went bankrupt (one of his six bankruptcies). And the Trump Org and its CFO were recently charged with 15 felony counts, including tax evasion.

SPACs attract big names… Companies that go public via a SPAC sometimes face less oversight than those that IPO, which can help raise cash more quickly — especially when there’s a big name behind them. Other celebs like Shaq, Serena Williams, and Jay-Z have launched their own SPACs. Meanwhile, the SEC warned this year that it’s “never a good idea to invest in a SPAC just because someone famous sponsors or invests in it.”

Muskular

Tesla drops record profits thanks to big deliveries and supply-chain shortcuts

Elon(g) profit streak… nine quarters long, to be exact. Tesla notched another sales and delivery record last quarter. Despite supply-chain crunches and a global chip shortage, Tesla has been resilient compared to other carmakers, and still plans to boost deliveries by 50% each year.

  • 241K: The number of Teslas delivered last quarter. The lower-priced Model 3 and Model Ys made up a whopping 96% of the haul (sorry, S and X).
  • $1.6B: Tesla’s profit more than 4X’d from the same quarter last year, despite rising material and labor costs (#flation).

A Muskular effort... Tesla wasn’t immune to supply struggles: Its gig factories still aren’t operating at full capacity, which means longer delivery times and slower product rollouts (new Cybertruck ETA: 2023). Still, Tesla owns multiple stages of its own supply chain (it’s “vertically integrated”). Think: Tesla makes the machine that makes the Tesla. That's made it more resilient during the pandemic than many other carmakers.

  • GM’s US car deliveries dropped to 446K last quarter, down one-third from a year ago, because of supply disruptions.
  • Ford slashed production of its best-selling F-150 pickup truck and other profitable cars — again.
  • Chip shortages could cost automakers $210B this year. Tesla avoided some of the drama by manufacturing some of its own chips for its latest models.

Sometimes fewer products can mean more profits… especially during a global supply shortage. Legacy car manufacturers like GM and Ford produce numerous models on a larger scale. Meanwhile, Tesla and Chinese EV rival Nio offer just a handful, relying on a leaner supply chain to meet demand. Like Tesla, Nio also posted record deliveries last quarter, partly thanks to China’s investment in domestic production.

What else we’re Snackin’

  • Ghosted: Snap stock plunged 22% after Apple’s new iPhone privacy settings hurt the selfie giant’s ad sales more than expected.
  • Vax: Pfizer found its vaccine to be 95.6% effective as a booster shot, which could push the FDA to expand its booster guidelines.
  • Coinmart: Walmart announced plans to allow customers to buy Bitcoin from Coinstar kiosks in some of its US stores.
  • Halt: The Fed placed new personal-investing restrictions on its own officials after two Fed presidents resigned over conflicts of interest last month.
  • Reveal: Facebook's oversight board asked the social giant to fork over more info about how it deals with high-profile accounts, saying the social network hasn’t been “fully forthcoming.”
  • Beefy: Chipotle’s sales jumped 22% last quarter, as higher menu prices offset rising beef and shipping costs.

Friday

  • Earnings expected from: Whirlpool, Honeywell, and American Express

Authors of this Snacks own: Bitcoin, and shares of Walmart, Snap, GM, Amazon, and Tesla

ID: 1888498

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Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

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What is that training data? There the company is less loquacious.

Meta said the 15 trillion tokens on which its trained came from “publicly available sources.” Which sources? Meta told The Verge’s Alex Heath that it didn’t include Meta user data, but didn’t give much more in the way of specifics.

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AI companies are turning to such data because there’s not enough good, public data on the entire internet to train their increasingly greedy AI models. (Meta had reportedly floated buying a publisher like Simon & Schuster to satisfy its insatiable data needs.)

Meta, of course, isn’t the only company that’s tight-lipped about where its AI data is coming from. In a now infamous interview with WSJ’s Johanna Stern, OpenAI’s chief technology officer Mira Murati was unable to answer questions about what Sora, OpenAI’s video generating app, was trained on. YouTube? Facebook? Instagram — she said she wasn’t sure.

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Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

Perhaps most strange of all, the company created a fake Japanese streetwear brand called “Not So Ape” (clearly a play on A Bathing Ape) and continues to sell products from the brand on a Shopify store, presumably as an attempt to learn the inner workings of the shopping platform. Of course, copying is old hat for Amazon.

In meetings where they’d use this clandestine information to inform Amazon’s own business practices, the group resorted to literal paper. “[T]he team avoided distributing presentations electronically to Amazon executives. Instead, they printed the presentations and numbered the documents. Executives could look at the reports and take notes, but at the end of the meeting, team members collected the papers to ensure that they had all copies."

Exclusive | Inside Amazon’s Secret Operation to Gather Intel on Rivals

Exclusive | Inside Amazon’s Secret Operation to Gather Intel on Rivals

Working as a seller called Big River, a secret group of Amazon employees gained access to rival platforms, including Walmart, FedEx, and Alibaba. They used Big River email addresses and went to seller conferences as Big River employees. They even stayed hidden within Amazon itself. These employees would take screenshots of competitors’ systems that they would then show others at Amazon in person to avoid an email paper trail.

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Worldcoin has made waves for its iris-scanning metallic orb that promises a future where people can mathematically prove they’re real humans and not AI bots.

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees. 

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.

Worldcoin, Sam Altman's Crypto Project, Is Building a Layer-2 Chain

Worldcoin, Sam Altman's Crypto Project, Is Building a Layer-2 Chain

But it’s run into trouble: the orbs have been banned across Europe and Africa, and the associated WLD crypto token has plunged 50% over the past month.

For project insiders, who reportedly received a token allocation of 25% of supply, that could equal significant losses. 

Which is what may make World Chain attractive. Crypto exchange Coinbase launched its own L2, Base, last year. Base has since seen rapid user growth — activity that’s generated the exchange millions of dollars in weekly fees. 

Worldcoin could benefit from similar revenue if its L2 is adopted around the world.