1-day Prime shipping is crazy expensive
Hey Snackers,
FYI, the 5-hour workday experiment is happening. Wednesday's the new Friday.
Stocks barely budged before Amazon dropped its earnings on us — now Budweiser serves itself up before the weekend.
Amazon's profits fall (and will likely keep falling) from that 1-day Prime shipping switch
"I know what you're thinking, but this is actually fantastic news!"... That's the vibe we're getting from Amazon's 3rd quarter earnings report. The stock dropped 9% despite the reassuring pillow talk from CEO Jeff Bezos:
- “Customers love the transition of Prime from two days to one day — they’ve already ordered billions of items with free one-day delivery this year."
True, people love not waiting for packages... so what's the cost? Amazon's revenues rose 24% to $70B, but shipping costs surged much faster: Up 46%. That ate away at profits, which shrank by 26% to just $2.1B. And heads-up — Amazon also expects to make half as much profit this holiday quarter as the last one. Other highlights:
- The profit puppy: Sales at Amazon Web Services, the cloud-beast that runs most of the internet (pretty much), rose by 35% and brought home the majority of the profits.
- New-ish physical stores: Sales dropped. Dropped. We don't usually see that from Amazon (except Fire phone. RIP.). Those book stores and cashier-less Amazon Go are still finding their way.
- The fine arts: Marvelous Mrs. Maisel now has 8 Emmy's and a new season in December.
Don't go back to your old habits, Amazon... That's the message from shareholders. They patiently waited through 20 years of Amazon unprofitably as it reinvesting every buck it made in growth — then suddenly in 2017 Amazon turned on the profit switch, making over $8B annually the past 2 years. Now with Walmart and Target challenging its shipping supremacy with their own 1-day options, Amazon's wildly spending again.
Twitter stock plummets 21% because of a midlife ad crisis
Get CEO Jack Dorsey on a Julia Roberts-style Eat Pray Love vacay... His social network's working through a midlife crisis that dropped shares 21% Thursday. Twitter's 9% rise in revenues and 145M daily active users in the 3rd quarter were trolled by investors. Twitter's somewhat small compared to its social peers:
- Snapchat = 210M daily active users
- Instagram = 500M humans simply use Stories every day
- Facebook = 1.6B daily active users (and it owns Insta)
Noticing more rando tweet ads mid-scroll?... You should. Twitter is pumping out more ads lately. Plus, because of a software bug, you're seeing more of the wrong ads too: Burger lovers might be getting ads about a juice cleanse because of product "bugs." The result? A drop in advertisers buying ad space for next quarter.
Don’t forget the "media" in social media... Even though Twitter sends out cutting-edge tech vibes, its business model is just like your old school local weekly gazette newspaper: Ads. 85% of Twitter's revenues come from ads (the other 15% is mostly data licensing). And if Twitter's ad software isn't working, more ads won't solve it.
Barclays Bank reverses its post office ATM decision because Brits revolted
Brits drive on the left. Spell it "colour"... And use post offices as ATMs. UK-based Barclays simply wants to cancel that last one. Earlier this month, the bank tried to save itself 10M pounds a year by announcing the end to its "free ATM" policy at all of the UK's 11.5K post offices. Then this happened:
- Outrage: Politicians, footballers, and loyal subjects felt betrayed by Barclays quitting the "Post Office Banking Framework" — a UK bank pact allowing fee-free cash withdrawals at post offices.
- Flip-flop: Barclays announced Thursday that it misestimated the decision's impact. So it caved, promising to stay in the POs for at least 3 more years.
- FYI: Turns out Barclays would've only saved 0.3% of its £3.5B annual profit anyway.
Upstate, the countryside, the shire... Low population density areas sometimes get neglected by businesses. Grocery stores, internet service, and even hospitals quit on rural regions because there simply aren't enough customers to make money. Even Barclays has closed 481 locations since 2015.
If you're going to announce something controversial, make sure you're committed... Barclays isn't following through on the post office retreat — so it won't save the money it was hoping to. But the damage to its rep is already done. It loses on both sides. It should've anticipated the outrage and then decided to do it (or not). Doing both, means you lose both ways.
What else we’re Snackin’
- Operator: Nokia's stock suffers its worst day since 1991 (you can't blame iPhones anymore)
- Ticker: Square's Cash App jumps into the brokerage battles with free stock trading
- eVroom: Ford's new Mustang-inspired electric SUV rolls in on 11/17
- Revived: Popeyes' sold-out chicken sandwich is making a comeback next month — everyone can relax now
- Brakes: Fair, the Softbank-backed car-subscription service, just fired 40% of its staff and the CFO
Friday
- Facebook (reportedly) launches a new News tab
- Earnings from Bud-owner AB-Inbev, Verizon, and Barclays
Disclosure: Authors of this Snacks own shares of Amazon