The Exchange: Consumers have the retail whip hand 15 Feb 2022 From Saks Fifth Avenue to Target, U.S. retailers are under intense pressure to change their businesses to meet consumers’ needs. Alix Partners’ Joel Bines tells Jennifer Saba it’s about more than just a shift in shopping habits. He argues that consumers now hold all the power.
Capital Calls: Crypto hangs up Super Bowl placard 11 Feb 2022 Concise views on global finance: Cryptocurrency firms have lined up for ads on the U.S. football championship, much like dotcoms did in 2000. They are paying up to $7 mln per spot, or twice as much, adjusted for inflation.
Viewsroom: Spotify, Peloton and failed chip deals 10 Feb 2022 Neil Young’s podcast protests have shone a light on a potential flaw in Spotify’s business model, says Liam Proud. Peloton highlights the danger of giving company founders too much voting power, Rob Cyran argues. And semiconductor M&A gives global antitrust regulators agita.
Capital Calls: ABB’s car chargers, Airport M&A 10 Feb 2022 Concise views on global finance: The Swiss engineering group’s listing plans come at an unfortunate moment; Britain’s John Menzies takes a risk with rejection of “opportunistic” approach from Kuwaiti air services group NAS.
Unilever’s Plan B invites unflattering comparisons 10 Feb 2022 After a failed 50 bln pound bid for GSK’s consumer arm, CEO Alan Jope intends to focus on more promising brands in personal care and beauty. That unit’s revenue grew 4% last year, lagging glossier rivals like L’Oréal. Higher sales will also come at the expense of lower margins.
Yum China’s strategic recipe adds too much spice 10 Feb 2022 The KFC and Pizza Hut owner plans to open as many as 1,200 new stores across the country despite a 93% fall in quarterly profit. Starbucks is similarly confident. Both may be underestimating the extent of consumer weakness. Hotpot chain Haidilao provides a cautionary tale.
Disney closes gap with Netflix in value, not risk 9 Feb 2022 The Magic Kingdom’s streaming service Disney+ now has 130 mln subscribers, narrowing the gulf with its bigger rival. Investors value the two firms’ earnings on a similar multiple. Yet even though Netflix is now a smaller company by market value, it’s Disney that’s the greater gamble.
Toyota’s armour plating takes some ill-timed dents 9 Feb 2022 Supply-chain crises have caught up with the Japanese marque. Now it’s cutting production as quarterly earnings fall 21%. It’s the most profitable of peers, but Honda, Ford and GM are slated to grow faster and Toyota lags on electric cars. Boss Akio Toyoda needs to drive hard.
Peloton gear-change starts with stock, not CEO 8 Feb 2022 Drafting in ex-Spotify executive Barry McCarthy may help the fitness company tone up. But founder John Foley’s voting power limits Peloton’s options. Other firms fared better after ditching supervoting stock. Foley could revive Peloton and his fortune by doing likewise.
Amazon could get Peloton at garage-sale price 7 Feb 2022 The workout firm’s shares surged after suggestions the $1.6 trln e-commerce giant may buy it. Peloton isn’t an obvious fit, but the ability to sell subscriptions to even a sliver of Amazon’s user base is valuable. With the right regime, Peloton’s value could conceivably double.
Facebook $250 bln slump punctures antitrust case 7 Feb 2022 That’s how much Mark Zuckerberg’s firm Meta Platforms lost in value after growth stalled. Competition from TikTok specifically is getting tough, but U.S. antitrust regulators who are fighting Facebook have said the Chinese-owned app isn’t a rival. The market begs to differ.
Clorox shrinks in violent profit spin-cycle 4 Feb 2022 The bleach-maker is now worth less than it was before the pandemic. A boost to sales of wipes and bleach is being negated by rising costs, and overzealous production puts Clorox in a worse place than where it started. It won’t be the only one left hanging on the clothesline.
Snap investors have too many stars in their eyes 4 Feb 2022 The messaging app’s shares soared 50% even though it warned ad privacy changes could hit revenue – something that clobbered Meta Platforms. They share risks, including an ascendant TikTok. Snap looks extra pricey given it lacks peers’ ability to hurl money at new problems.
Amazon has a unique inflation problem 3 Feb 2022 Like peers, the $1.4 trillion giant dominates markets and has businesses that are growing rapidly. Yet Amazon has about 10 times as many workers, and a vast network of infrastructure vulnerable to rising prices. Yet it’s valued as if it does not.
Facebook’s grip on online ads may be slipping 2 Feb 2022 Parent Meta Platforms lost some $200 bln of market cap after an earnings report that suggested weaker-than-expected advertising growth to come. Headwinds ranging from Apple to TikTok are part of the problem; Mark Zuckerberg’s expensive pivot to the metaverse doesn’t help.
PayPal tries to suck more juice from fewer lemons 2 Feb 2022 The $160 bln payment firm has admitted that piling on 50 mln new customers a year isn’t the path to profit it previously thought. From now on it will seek to get more out of the customers it has. As other financial firms have a similar epiphany, a land grab may become a turf war.
Mark Zuckerberg’s startup project bets the company 2 Feb 2022 Meta Platforms has signaled a $10 bln hit to 2021 operating profit from investments in nascent virtual- and augmented-reality worlds. The founder has lots of advertising cash from his social networks to deploy. But reinventing an 18-year-old firm is a real-world uphill challenge.
Shine keeps coming off AT&T-Discovery deal 1 Feb 2022 The U.S. telecom giant is cutting its dividend as it puts finishing touches on its deal with Discovery. The $43 bln of cash AT&T will get for its streaming assets is helpful. But as the deal nears, shareholders’ muted reaction raises the question of whether it’s worth the effort.
Capital Calls: Antitrust game of chicken 31 Jan 2022 Concise views on global finance: President Joe Biden’s administration is hypersensitive to mergers that reduce competition. Sectors that have also experienced inflation may be top of the hit list – like poultry production.
Breakdown: Real profit and loss in the metaverse 28 Jan 2022 Mark Zuckerberg is on the case, and nascent virtual spaces like Decentraland could be the next social-networking hit. Breakingviews unpacks the metaverse, what it offers users and investors, and the risks.