Thursday May.06, 2021

🗳 Facebook's Trump dilemma

_A look inside the new Cadillac Escalade [E+ via GettyImages]_

Hey Snackers,

Skittles-owner Mars is launching a trademark infringement lawsuit over a THC-laced copycat whose name is “confusingly similar” to Skittles. The name: "Zkittlez."

The industrials-heavy Dow index rose to a record yesterday, while Big Tech continued to fall.

Banned

Facebook's Oversight Board delivers a Trump ban decision (plus, one non-decision)

When FB "Memories" resurfaces a terrible pic... Flashback to January: Big Tech excommunicated Donald Trump, after he was criticized for stoking the storming of the US Capitol. Twitter permanently banned Trump and removed all of his tweets. Facebook suspended his accounts temporarily — and potentially indefinitely. About that...

FB punted the decision to its "Oversight Board," a 20-person independent body that makes binding decisions on content moderation. It includes law school professors, a Nobel Peace Prize Laureate, and... the former Prime Minister of Denmark.
The Board decided that FB was justified in suspending Trump, but didn’t explain if/why the ex-POTUS should be permanently banned. Also: that it was inappropriate for FB to impose the "standardless penalty" of indefinite suspension.

Call it "scapeboard"... FB punted the weighty decision to the board. The Board punted it right back, giving FB six months to determine whether Trump should be permanently banned and why. But even without a final decision...

The Board's support of the restriction sets a precedent for how FB (and even other social apps) may be expected to react to world leaders going forward.
Facebook has been scrutinized for not taking action when leaders incite violence, including allowing Indian politicians' posts saying Rohingya Muslim immigrants should be shot.
Twitter has been criticized for not labeling or removing tweets from Iran's Supreme Leader calling for the annihilation of Israel, and violent posts from other world leaders.

A few (tech-annointed) people have immense power... to define online speech policy for billions. But at least FB's Oversight Board is independent — more than can be said for other social giants. Nearly half of Earth’s population uses FB, but 20 people are making binding decisions on its most important moderation policies. The alternative: an unknown group of FB execs deciding. Twitter, with its ~5K employees, makes decisions internally for its ~200M users. But it recently launched a community-run moderation program. Going forward, we might see more efforts to establish independent moderation groups.

SUV

GM leans into the "business class on wheels" life as profit soars

It goes down in the GM... and up in the earnings. GM drove home $3B in profit for the January to March quarter, up from ~$300M in the same quarter last year. It was nearly a record for the OG carmaker, despite a global chip shortage that's been shutting down car factories.

Chip shortage = fewer cars = higher prices. The inventory crunch has led to record car prices. And don't expect a generous promo from dealership Bob.
$37K: The average price paid for a new vehicle last quarter. Meanwhile, the average discount fell 20%. That seriously padded GM's profit.

Law & Order: SUV... GM's monster profit was also fueled by redesigned SUVs, including the Chevy Suburban and the Cadillac Escalade. GM took a few pages from Delta — it's going full "Business Class on Wheels" with these models.

Think: Premium second-row legroom and HD touch-screens for the seven kids in the back. New Escalade displays have "twice the pixel density of a 4K TV." Throw in hot towels, and go LA-London nonstop.
These big babies have routinely sold for $100K since they arrived last year, though some start at around only ~$52K. For GM, the add-on perks justify the extra greens ($$$).
Now GM is doubling down on e-SUVS, too: It just unveiled a second (decked-out) version of the Hummer EV SUV.

GM smells "price insensitivity" signals... Price sensitivity = the degree to which a product's price affects purchasing decisions. Price insensitivity = the opposite. GM knows that when you roll into the dealership asking for a $70K Escalade, you could probably pay $90K to upgrade. Extra money for dealers means GM can mark up prices – and boost its profit. Price sensitivity is why GM has only three sedans left on the US market (that Chevy Malibu isn't a profit puppy).

What else we’re Snackin’

Vax: The Biden admin is supporting a proposal to waive companies' intellectual property protections for Covid vaccines (think: vax patents).
Recall: In a major reversal, Peloton recalled its treadmills after dozens of injuries and one death — and apologized for its initial response.
Tacos: Uber's gross bookings grew 24% last quarter thanks to Uber Eats, which now makes up nearly two-thirds of its total biz.
Diaper: Shares of Jessica Alba's Honest Co. soared 44% on their first trading day. Now the company (and its diaper cakes) are worth ~$2.7B.
YarnIt: Etsy said sales more than doubled last quarter from 2020, but the stock plunged 9% because it expects slowing growth (#DPF).

Thursday

Weekly jobless claims
Earnings expected from Moderna, Peloton, Beyond Meat, Expedia, Volkswagen, Live Nation, and AMC

Authors of this Snacks own shares of: GM and Uber

ID: 1636658

Latest Stories

Rani Molla

No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?

Apple reportedly cuts Vision Pro production due to low demand

Seriously, relax

Economy keeps on humming along

Meta exhaustingly tries to merge the metaverse and AI

Gonna have to rename the company... again

Rani Molla4h

Chris Black

Black’s Gold

Can you justify a $335 trashcan? Yes.

Here’s how.

Biden signs a bill that could ban TikTok — but the #ForYou fight is far from over

Jamie Wilde

Read

Gucci’s parent braces for sliding sales, as luxury demand unravels over high prices

Nia Warfield

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Matt Phillips

20h

Chipotle continues to go on a tear, hitting a sales record

Hey it might not be the kind of AI stock investors are all hot and bothered over, but don’t sleep on the burrito business.

Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

Rani Molla

21h

Facebook had great earnings, the market hates it

Facebook reported impressive earnings. Record first-quarter revenue thanks to AI! Profit up 117% compared to a year earlier! But at the same time, its capital expenditures are going up and it’s expecting second quarter revenue potentially lower than analyst estimates. So in other words, the future doesn’t look as bright as the present.

All in all the stock is down more than 10%. (Basically the opposite of what happened with Tesla yesterday).

Net net

23h

Earnings can’t stop, won’t stop

Rani Molla

4/24/24

Why Tesla investors are holding on to hope for a cheap car

Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.

Spotify’s finally turning its user growth into serious cash flow

Tom Jones, David Crowther4/24/24

The FTC is banning non-compete clauses

Why that might make job switching even more lucrative

Millie Giles, David Crowther4/24/24

Matt Phillips

4/24/24

Hasbro pretty much entirely depends on Magic: The Gathering to make a profit

William Coulman, David Crowther

4/24/24

Thousands of bank branches have closed across America

America has lost thousands of bank branches. The latest closure? JPMorgan’s iconic 45 Wall St. address.

4/24/24

TikTok versus the United States

Casey Newton

Senate Takes Up Foreign Aid Package Passed By House

William Coulman & David Crowther

4/24/24

Not so Gucci

French luxury fashion conglomerate Kering has seen its shares fall ~10% in the last 24 hours after reporting that sales at its flagship brand Gucci had dropped 21% in its latest quarter.

Kering’s other brands, which include Yves Saint Laurent, Bottega Veneta, and Balenciaga, fared slightly better — but the only real bright spot was the company’s eyewear division, where sales rose 24% (9% on a comparable basis).

With Gucci responsible for roughly two-thirds of the company’s profit, the ongoing struggles of the brand are weighing heavily on the bottom line: the company expects recurring operating profit to drop 40-45% in the first six months of the year.

Gucci execs will be hoping that new designer Sabato de Sarno can turn the iconic brand’s fortunes around, particularly in China where demand has dropped precipitously. His designs only started hitting stores in February.