Hey Snackers,
19M: the number of US veterans alive today. Sharing a big Veterans Day shoutout to every person who’s served and defended the United States. Thank you for your service.
The techy Nasdaq index rebounded today from yesterday's inflation-driven sell-off. Meanwhile, the Dow dipped after Disney stock took its worst plunge in more than a year. In other news: Elon sold $5B worth of his Tesla shares.
Cry me a pork chop... Pork-chop prices are up 16% from last year, and they're not the only ones. The Labor Department just dropped October’s Consumer Price Index, which measures prices of 80K common items. Overall, consumer prices jumped 6.2% from October last year — the fastest yearly increase in 30 years. The pace of inflation accelerated sharply from September, and it was the fifth straight month above 5%. Price increases were broad, but we’ve pulled some gems:
The price is not right... While the Fed still expects inflation to be temporary, prices have been surging longer (and higher) than expected. This #flated sitch is a result of multiple factors, including pandemic-related supply shortages, labor shortages, supply-chain backlogs, and booming consumer demand. Americans' wallets have been padded by trillions in stimulus cash, which has triggered faster-than-expected rebound in demand. But supply bottlenecks are making it hard to meet that demand and are driving up prices.
Inflation can be a self-fulfilling prophecy... aka self-flating. Expectations of inflation can make inflation worse, or even cause prices to rise unnaturally. If people expect higher prices, they're more likely to demand higher wages and accept inflated costs. And expectations are high: Americans' three-year inflation expectations have hit 4.2%, the highest level on record. If it continues, inflation could stay elevated even after supply bottlenecks ease.
Forgot the extra ranch… DoorDash’s sales growth continued slowing last quarter after the pandemic dine-in boom, and net losses doubled from last year. Cue: a global feast. DoorDash announced plans to buy Finland-based Wolt for $8.1B. Dash shares jumped nearly 20% yesterday on the news.
May the best promo code win… Delivery customers have little loyalty, which is why companies like Dash, Grubhub, and Uber Eats are constantly throwing out profit-sucking promo codes. Competition is fierce, so food-delivery giants have gobbled up rivals to accelerate growth and expand market share. Last year, Uber acquired Postmates for $2.7B, and Euro delivery heavyweight Just Eat Takeaway bought Grubhub for $7.3B. DoorDash is still the biggest US food deliverer, but it’s losing its lead: Next quarter, Uber’s delivery sales are expected to grow twice as fast as Dash’s.
It’s hard to consistently deliver accelerating growth... by delivering the same thing. DoorDash's acquisition may boost growth for a few quarters, but that may still slow once European markets are saturated. Uber’s ride-hailing biz bought international rivals to expand, but it still had to invest in new revenue streams — like food delivery — to attempt to turn a profit. If food-delivery growth cools, Dash may seek new revenue streams: It’s already investing in ghost kitchens and non-food deliveries, like its CVS partnership to shuttle staples like Advil and toothpaste.
Authors of this Snacks own shares of: Google, CVS, Disney, Apple, Ford, GM, Uber, Netflix
ID: 1917506