👛 Inflation nation

Thursday, November 11, 2021 by Robinhood Snacks | Disclosures
Checking bacon prices like [fotostorm/E+ via Getty Images]

Checking bacon prices like [fotostorm/E+ via Getty Images]

Yesterday’s Market Moves
Dow Jones
36,080 (-0.66%)
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4,647 (-0.82%)
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15,623 (-1.66%)
Bitcoin
$65,160 (-3.08%)

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.

Flated

1. Inflation nation: US consumer prices hit a 30-year high, and they could be self-flating

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:

  • #PumpAnxiety is real: Gas prices were up 50%, but your wallet already knew that. Meanwhile, used cars and trucks were up 26%.
  • Breakfast is swerved: Bacon was up 20%, eggs 12%, and peanut butter 6%. Lunch isn't much better, with salad dressing up 8%.
  • Home is pricey: Laundry equipment is up 15%, furniture and bedding is up 12%, TVs are up 10%, and smart home assistants 8.4%.
  • So is away from home: Hotel prices were up 26%, and transportation services (cough, Uber) were up 5%.

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.

THE TAKEAWAY

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.

Hungry

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.

  • Euro-presence: When the deal closes, in 2022, Dash says it will add Wolt’s 2.5M customers in 23 European countries. Dash currently delivers in the US, Canada, Japan, and Australia.
  • Piping hot growth: Last quarter, Wolt’s sales grew 3X as fast as Dash’s. But while the deal could boost Dash’s sales growth, it won’t increase Dash’s US market share or diversify its revenue streams.

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.

THE TAKEAWAY

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.

What else we’re Snackin’

  • EPO: Shares of EV startup Rivian surged on their first trading day in the biggest IPO since 2014. The e-truck maker notched an $86B valuation (larger than Ford).
  • Fuel: A group of countries, Ford, GM, and Volvo committed to phasing out fossil-fueled vehicles by 2040 — but the US, China, and Germany skipped the pledge.
  • Served: The Justice Department sued Uber over allegations it charged people with disabilities too much, taking aim at Uber’s “wait time”-fee policy.
  • Minnie: Disney+ gained 2.1M subscribers last quarter, the smallest rise since the streamer launched two years ago. Disney’s theme-park profits also missed expectations.
  • Fine: Google failed to overturn a $2.8B EU antitrust fine that dinged the search giant for unfairly directing users to its own ads.
  • Swiped: Bumble reported slowing user growth for a second straight quarter, as fresh Covid outbreaks in some markets curbed swiping.

Snacks Daily Podcast

Not your typical collab: Chain-necklace icon Tiffany is partnering with streetwear legend Supreme.

Tune in to hear why Tiffany wants to put a ring on Gen Zillennial customers.

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Snack Fact of the Day

The computer, internet, and duct tape were all invented by or for the US military

Thursday

  • Earnings expected from: Wix, Utz Brands, and Revlon
  • Veterans Day

Authors of this Snacks own shares of: Google, CVS, Disney, Apple, Ford, GM, Uber, Netflix

ID: 1917506