- __[WeCrash](https://snacks.robinhood.com/newsletters/JCFHKjEAYPfwYYjKzoi0t/articles/DgOZJmncilojeNgA5W7Le/):__ Investment giant __[SoftBank](https://robinhood.com/stocks/SFTBY/)__ lost a record $23B last quarter as its tech investments — from __[Uber](https://robinhood.com/stocks/UBER/)__ to __[WeWork](https://robinhood.com/stocks/WE/)__ to __Didi__ — plunged. Now it’s selling big tech stakes to curb losses. 
- __[#Ad](https://snacks.robinhood.com/newsletters/JCFHKjEAYPfwYYjKzoi0t/articles/4to0gNRSJSd0mBaH2DRfvD/):__ __[Lyft](https://robinhood.com/stocks/LYFT/)__ is launching an ad biz (feat. in-car tablets and in-app Oscar Mayer Wienermobiles) to monetize users’ eyeballs as ride-hailing rebounds. Ads could help it gain an edge on larger rival Uber.
- __[Streamy](https://snacks.robinhood.com/newsletters/3qF3Shfyn2JxNdyUWAF3Uo/articles/7K0IcNGbKsOqy5uKEYtCPG/):__ __[Disney+](https://robinhood.com/stocks/DIS/)__ added an expectation-crushing 14.4M subs last quarter, while Mickey’s parks and resorts posted record profits. But Disney’s streamers (Disney+, Hulu, ESPN+) are still losing billions.

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__Earnings in Aisle 5...__ America's favorite retailers are expected to report this week, and it’s looking like a rough quarter for __[Walmart](https://robinhood.com/stocks/WMT/)__ and __[Target](https://robinhood.com/stocks/TGT/)__. High food and gas prices are causing Americans to cut back on discretionary splurges (think: TVs, bikes, air fryers). Now retailers have billions’ worth of unsold inventory (picture: a mountain of hoodies).

- __Walmart cut its annual profit__ forecast in July and [laid off](https://www.wsj.com/articles/walmart-lays-off-hundreds-of-corporate-workers-11659558590) hundreds of corporate workers this month. America's largest retailer missed profit expectations in Q1 as inventory surged 33% from last year. This latest quarter could be worse.
- __Target issued a profit warning__ in June, saying earnings would take a short-term hit as it cancels orders and slashes prices to get rid of inventory. In Q1, Target shocked investors with a big profit miss as consumers scaled back on pricier items.

__Ignoring the decorative pillows...__ and turning your back on the pajama rack. Like Target, Walmart’s been on a discounting binge to unload stuff like sweatsuits, patio furniture, and blenders. Those were hot commodities mid-pandemic, but consumers are shunning them now:

- __Clothes down, food up:__ The pace of inflation slowed last month, but grocery prices continued rising from June, and consumer confidence hit another low in July.
- __*Not* saved by the bell pepper:__ Groceries account for over half of Walmart’s sales (and a good chunk of Target’s) but they’re less profitable than apparel and electronics.

How low can they go? (Bob Riha Jr./Getty Images)

Piles

__Being behind the curve is costly…__ It’s not just inflation hitting earnings: retailers have too much of the wrong stuff and not enough of the *right* stuff. __[Gap](https://robinhood.com/stocks/GPS/)__ has piles of unsold hoodies and leggings, while customers want cocktail dresses and office blazers. By acting fast to shed undesirables, retailers can make room for products customers actually want (like: groceries, school supplies). But being “guest-relevant” (as Target’s CEO put it) could take a few quarters — and that’s hurting profits now.

Walmart and Target could take a big profit hit as they aggressively discount to become “guest-relevant”

__Dark clouds…__ US trade officials have [halted](https://www.wsj.com/articles/u-s-solar-shipments-are-hit-by-import-ban-on-chinas-xinjiang-region-11660037401) imports from the Xinjiang province as part of a crackdown on China’s human-rights abuses of Uyghur Muslims and other ethnic minorities. Xinjiang produces over 40% of the world’s polysilicon, a key component of solar panels. Now panels from companies like __[Jinko Solar](https://robinhood.com/stocks/JKS/)__ and __Trina Solar__ can’t enter the US, and delays are expected to last at least six months. Trade troubles might spread beyond solar, since a quarter of the world’s tomato paste and 13% of its wind turbines also come from Xinjiang.

__A-list after-party…__ in the *metaverse*. Crypto winter hasn’t stopped celebs from bringing the virtual heat. Last week, mega-fluencer and entrepreneur Paris Hilton [debuted](https://snacks.robinhood.com/newsletters/3qF3Shfyn2JxNdyUWAF3Uo/articles/4b4mPHyiIFQEezvvxZDsxf/) her virtual Malibu mansion on meta-gaming site __Sandbox__ (think: digi-martinis by the meta-pool). The Sandbox has 2M users and 300 partnerships with big names like Snoop Dogg, Tony Hawk, Gucci, and __[Adidas](https://robinhood.com/stocks/ADDYY/)__. These “phygital” deals could help celebs and brands profit from fresh forms of entertainment (picture: a Snoop meta-concert). Still, this year virtual-land prices are down 85%.

Zoom Out

Stories we’re watching...

__Weekend treasure hunt…__ down the $7 jeans aisle. As inflation squeezes wallets, bargain-seekers are boosting sales at discount legends __[Ross](https://robinhood.com/stocks/ROST/)__ and __[TJX](https://robinhood.com/stocks/TJX/)__ (which owns TJ Maxx and Marshalls). Last quarter treasure-hunters helped fuel TJX's 13% sales growth. Off-price chains have also [benefited](https://www.wsj.com/articles/glut-of-goods-at-target-walmart-is-a-boon-for-liquidators-11656927184) by selling backlogged merch from larger, oversupplied retailers. Still, apparel prices are up 5% from last year and consumer spending is slowing. We’ll see whether the bargain boost is intact when Ross and TJX report this week. 

__Mixed signals…__ Economists expected unemployment to jump as interest rates rose, but the US economy added *twice* as many jobs as expected last month, finally recovering all jobs lost in the pandemic. But jobless claims also rose to their highest level since November last week, and mass layoffs are getting more common — a sign job growth may wane. The Fed wants the labor market to cool to curb #flation (just not too much). Economists are anxiously waiting to see if Thursday’s jobless claims rise again.

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Walmart and Target could take a big profit hit as they price-slash to become "guest-relevant"

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🛍️ Walmart and Target’s pile problem

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