Google harvests 90% of the internet
Hey Snackers,
Good pre-weekend heads-up: Robocalls just got one step closer to being crushed upon by DC.
Markets wrap up an aggressive week of corporate earnings today with McDonald's and Twitter.
Google jumps 8% — despite Earth's internet growth slowdown
Fact... Internet growth is slowing. That freaked out Google's parent, Alphabet, when revenues inched up just 13% last quarter. It was depression-worthy for Google investors, who were used to 25% revenue growth. So the bar was low this time, but Google cleared it (and then some) with a 19% surge in revenues.
- Fun Fact: Google's budget-friendly $400 Pixel 3A helped double sales of its smartphones.
Webster's should strike the word "search" from the internet... Google's dominance in online search is astounding (93% of worldwide searches) — and so are the ad dollars it harvests year after year. Now it's dishing out some of the $63B in profits it's made the past 3 years by buying-back shares of itself — That can make each remaining share worth more in the near term.
This 21-year-old has 2 problems... Investors look at Alphabet's ~$800B market value and think: should this be worth more or less? Google faces 2 major obstacles to up its growth game:
- Shockingly slowing internet growth: Mary Meeker's famous Internet Trends Report showed that internet users around the globe are growing at just 6% annually. That's the slowest growth ever, so Google's making up for it by sticking more ads in Google Maps and YouTube.
- Major antitrust vibes: The federal government started an investigation this week into Google and its gigantic internet friends for allegedly just being way too dominant for society.
Creative Reese's just powered Hershey up 2%
Warning... Hershey's latest earnings report revealed that it's raising candy prices, which will probably hit your office choco-bowl budget soon. It also enjoyed $1.8B in quarterly revenues, which beat expectations. But one detail stood out to us at Snacks: “Growth was led by our powerful Reese’s franchise.” Please continue, Hershey.
An 87-calorie triple threat... Reese's are 90 years old, but Hershey's has given them a facelift by introducing new versions. They call it "innovation." We call it "repackaging and reshaping." But it's working. Here's what they came up with this year:
- Reese's Thins: Pretty straightforward — the peanut butter cups are 40% narrower.
- Reese's Lovers: Instead of a 50/50 chocolate/PB split, there's more chocolate in some, more peanut butter in others.
- Variety Pack: This one's a straight-up packaging trick — 5 bars of 6 types (and one is just a regular Reese's cup...filled with Reese's Pieces).
Hershey has an acquisition craving... There's only so much repackaging of nut butter and cocoa a century-old company can pull off. So it's looking to buy new brands. Last fall, the chocolate legend acquired Pirate's Booty to get into non-sugar-laden snacks. And Hershey's president thinks acquisitions of newer, innovativ-er brands now play a "major role" in its future.
4 car companies secretly met with California for an environmental deal
Between NorCal and SoCal... lies the Governor of California. Four car companies secretly met up with him to negotiate a compromise on minimum MPG fuel efficiency. You borderline needed to whip out a pocket Constitution to understand this one.
Cars cause pollution... Econ 101 says that governments tax pollution or put limits on it. President Obama ordered that car companies increase their minimum average fuel economy to 54.5 mpg by 2025. President Trump doesn't believe that's necessary and prefers 37 mpg. That's why California planned to exercise its waiver from federal fuel economy laws to keep stricter standards, and 13 states want to follow its lead.
- The nightmare scenario: Car companies might have had to create two lineups of cars — one for the 36 states following Trump's rules, one for the 14 more dedicated to fighting climate change.
- Instead they compromised: Ford, Honda, VW, and BMW made a pact with California to follow a (very efficient) 51 mpg nationwide by 2026. More automakers are expected to follow.
This is why car companies want trade deals... Drastically different fuel standards between "teams" of states would've given carmakers tons to comply with — sometimes 2 assembly lines are needed instead of 1. Trade deals can fix that. Take the proposed Trans-Pacific Partnership (a US/Asia trade deal that fell apart). It would've unified standards between the US and Japan, but politics killed it. Car companies are intervening to unify the US.
What else we’re Snackin’
- Caffeinated: Starbucks pops 6% after earnings revealed its US sales surged 7% from last year
- Living: Baskin-Robbins will launch plant-based ice cream on August 1st (FYI, it's owned by Dunkin')
- Liked: Instagram is considering dropping "likes" to improve everyone's mental health
- Grounded: Southwest says that grounding all those 737 Max flights dropped its profits by $175M — and it has to abandon Newark airport
- Comeback: Snap just closed above its IPO price (it went public in 2017) for the first time since last March
Friday
- 2nd Quarter GDP report
- Earnings from McDonald's and Twitter
Disclosure: An author of this Snacks own shares of Amazon.
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