🛢️Big oil’s profit peak?

Pump it up… Energy powerhouses pulled in ginormous profits last year, continuing a multiyear streak of blockbuster earnings. Last week, Exxon reported a historic $56B profit for 2022, the biggest for any Western oil biz ever. Shell also rang in a slick annual profit, which was $10B higher than its last record, in 2008. Meanwhile, Chevron pulled in a record $35B, but fell short of expectations. Up next: BP, TotalEnergies, and Valvoline report this week.

• Full tank: Rather than ramping up production, oil giants are investing in themselves — and their shareholders. Last week Chevron agreed to buy back a whopping $75B of its shares, and last year Exxon tripled buybacks to $30B.
• Big crank: Western oil biggies are expected to have earned a combined $200B in profit last year, reigniting talks among US lawmakers about imposing a windfall tax on their excess earnings.

Drilling down… For much of last year, oil giants benefited from rising prices as Russia’s war on Ukraine strained supply and demand rebounded while production stayed tight. But in the last quarter of the year, gassy growth slowed as prices fell. This year, big oil’s profit boom is expected to cool. Pump prices have dropped 30% from last year’s highs, as the global economy slows and recession jitters curb demand. Still, with China’s reopening, analysts predict oil could climb as high as $120/barrel (China’s the world's second-largest oil consumer behind the US).

Closing the gap… As America’s fastest-growing group of entrepreneurs, Black women are increasingly leaving corporate roles to launch their own companies — starting businesses at 4.5X the rate of the overall population. But while the rate of Black entrepreneurship is high, bias and funding gaps pose roadblocks to growth. As of January 2022, just 4% of Black businesses were still open after 3.5 years, compared to the national average of 55%. A key issue: Black startups, especially those run by women, tend to have less access to funding.

Spot the bots… Last week OpenAI announced a $20/month premium subscription for ChatGPT. More quietly, it released a tool that detects AI-generated text. It could be especially useful for teachers and employers looking to spot bot submissions — but OpenAI said it fails 75% of the time (womp). Meanwhile, an app called GPTZero uses ChatGPT against itself to detect AI. There’s growing concern over the use of genAI tools for cheating, plagiarism, and spamming. AI detection tools could be key to addressing these issues — but first they’ll have to get reliable.

Rolling in Corollas… Toyota reports earnings this week along with Nissan and Honda. Toyota has been the world’s top-selling carmaker for three years straight, but auto sales in general have been losing traction. Last year was the worst for new-car sales in 10+ years as production issues hit supply (picture: record-low inventories). Meanwhile, higher interest rates are making car payments pricier, which could ding demand. But while Ford reported weak #s last week, Chevy maker GM infused hope with expectation-smashing earnings and gave strong guidance for the year.

KenTacoHut earnings… Yum Brands, the owner of fast-food faves like KFC, Pizza Hut, and Taco Bell, is expected to deliver earnings this week — along with fast-casual icon Chipotle. Last week, McDonald's dropped tasty sales growth as its inflation-friendly prices and cult fave menu items kept McCustomers coming. But while McD’s prices dropped last year, Chipotle and Yum kept hiking. Analysts expect same-store sales growth, but price hikes might be dimming appetites. Meanwhile, rising avo prices are threatening Chipotle’s “burrito season” profits.

• Zuck: Meta shares popped 26% after better-than-feared quarterly revenue, despite ad-pocalypse. Zuck said 2023 is Meta’s “year of efficiency” (sorry, metaverse). It expects to spend less after slashing 11K+ employees.
• UnPod: Spotify popped after reporting record user growth, driven by podcasts. But its quarterly loss widened to $250M and the “growth at all costs” pod-palooza could be over as the streamer chases profitability.
• Cody: Peloton shares surged 28% after its pivot from hardware to subscriptions helped spin down quarterly losses. While equipment sales fell, revenue from its on-demand fitness classes grew 22%.

• RTO: WFH opportunities are shrinking as employers seek RTO-ready candidates. Remote jobs made up 13% of LinkedIn postings last month, down from 21% in March — but 53% of all applications were for remote jobs (awk).
• Out: As stimulus money dries up and inflation stays high, more Americans are tapping into their retirement savings for emergencies. A record 2.8% of Vanguard’s 401(k) participants pulled money out of their plans last year.
• Zuck: Meta’s TikTok copycat Reels fueled engagement last year as ad revenue sagged. The problem: Reels take users away from Insta and FB’s ad-filled main feeds. Now monetizing the swipey videos is a priority.

• Monday: Loews, Activision Blizzard, Spirit Airlines, Pinterest, and Tyson Foods
• Tuesday: BP, Valvoline, Royal Caribbean Group, H&R Block, Nintendo, Chipotle, Hertz Global, SoftBank, and Western Union
• Wednesday: Uber, CVS, Coty, CME, Yum! Brands, Under Armour, Dominion Energy, U-Haul, Teva Pharmaceuticals, Robinhood, Disney, Sonoco, and MGM Resorts
• Thursday: Pepsi, AbbVie, Hilton, Canopy Growth, Toyota, Phillip Morris, AstraZeneca, Ralph Lauren, Duke Energy, Kellogg, and Warner Music Group
• Friday: Enbridge, Spectrum Brands, and Honda

Authors of this Snacks own shares: of CVS, GM, Disney, Exxon, Yum! Brands, Robinhood, Warner Music Group, and Uber

ID: 2721593