đ Amazonâs spooky earnings
![Haunted by shortages, rising costs, and gift orders [inhauscreative/E+ via Getty Images]](https://cdn.robinhood.com/static_content/mwphzyq69oso/en-US/assets/files/7pAxNna0sg2PjUNuLBWRac_1_haunted_by_shortages.jpg)
Hey Snackers,
We knew Facebook was planning on changing its name to something metaverse-related. But we didnât know just how creative it would get. FBâs new name: Meta.
Stocks squeaked out record highs to finish Friday, even after heavyweights Apple and Amazon posted lower-than-expected earnings. All three major indices posted their fourth consecutive positive week.
Amazon drops bummer earnings, haunted by rising costs and holiday demand
Primed for disappointment... With the holidays approaching and shortages wreaking global havoc, all eyes were on Amazon earnings yesterday. Refresher: Amazonâs sales hit a record $125B for the quarter ending last December, but year-over-year growth has been slowing. The Zon's shares still haven't recovered from lackluster earnings in July. Its latest earnings were even worse than expected.
- Plunging profit: Profit plunged by nearly half, to $3.2B, down from $6.3B in the same quarter last year â way worse than expected.
- Slo-mo sales: Sales grew just 15% from last year, to $110B â slowing from 27% growth in the previous quarter, and 44% in the one before that.
- Forlorn forecast: Amazon expects sales to slow even more this quarter, as buyers return to IRL stores. Rival eBay also lowered forecasts for online holiday shopping.
Save the Ted Lasso âfit for next Halloween... That's when it's arriving. Holiday spending is expected to smash records this year, but retailers are sweating to meet demand. Nearly everything is in short supply, and materials and labor costs are surging. Amazon expects to face billions in extra costs this quarter to manage higher shipping prices and rising wages â "all while doing whatever it takes to minimize the impact on customers." It plans to hire 150K seasonal staff in the US, 50% more than last year â plus 160K workers overseas.
A capital advantage is a competitive advantage... And Amazon has plenty of capital. Think: $30B in cash and nearly 1M US employees. One of every 153 American workers is on Amazon's payroll. That's how it doubled the size of its fulfillment network during the pandemic, and went on a mass hiring spree to meet demand. Everyone is dealing with supply and labor headaches. But Amazon is one of the few that can afford to adapt at that scale to keep customers happy.
Food giants served up tasty earnings despite rising costs â because buyers wonât bail on Big Macs
Iâll take fries with that⊠Food giants McDonaldâs, Coca-Cola, Kraft Heinz â aka McCocaKraft â reported better-than-expected sales this week, despite raising prices of fan favorites like Big Macs, Heinz ketchup, and Coke Zero. The deets:
- Less happy meals: McDâs jacked up prices by 6%, but big appetite for the new Saweetie Meal helped push sales 10% higher than pre-pandemic levels.
- More cheese for mac: Heinz raised prices for two-thirds of its products, from Kraft mac and cheese to Heinz ketchup â but still boosted profits and its annual forecast.
- Costlier Coke: Coca-Cola lifted the price of its bevvies, yet still sold more drinks than it did pre-pandemic thanks to global thirst for fizzy drinks like Fanta.
McDouble or nothing⊠Global food prices hit a 10-year high this month, straining low-income families and causing buyers to shell out up to 40% more for staples like PB. Rising costs of ingredients like beef and sugar also led food giants such as McCocaKraft to raise prices. General Mills and Chock Full OâNuts tried to shrink or swap products to mask price hikes (#shrinkflation and #swapflation). But McCocaKraft chose the other option: good old-fashioned #flation.
The âstaple advantageâ is real⊠And Coke, McDonaldâs, and Kraft are staples of US snack culture. Together, the tasty trio has a nearly $500B market cap â but their well-known brand names also have huge value. With inflation up across the board, many customers are willing to accept slightly higher prices for some go-to goodies like McNuggets, Diet Coke, and Bagel Bites. For smaller companies that havenât reached âstapleâ status, it might prove harder to raise prices without hurting sales.
What else weâre Snackinâ
- Punted: President Biden pitched an updated $1.75T social spending plan, which includes renewable energy and child tax credits. But House Dems arenât biting.
- Shortage: Apple saw double-digit sales growth across nearly all product categories last quarter, but missed expectations on supply-chain snags.
- Cold: Starbucks missed expectations after Covid outbreaks in China skimmed latte sales in the key market, though US sales were up from pre-pandemic levels.
- Vexing: 72% of unvaccinated US workers said theyâd leave their jobs if their employers mandated Covid vaccines to comply with federal guidelines.
- Support: Customer-service platform Zendesk said it would buy SurveyMonkeyâs parent company, Momentive, in a $4.1B all-stock deal.
- Techsi: Pepsi is building digital hubs dedicated to solving supply-chain problems and creating new snack brands.
Friday
- Earnings expected from: Exxon, Chevron, and Colgate-Palmolive
Authors of this Snacks own shares of: Amazon, Netflix, Ford, Apple, and Starbucks
ID: 1898562