Hey Snackers,
Apparently shaking hands is equal to 3 hours of face-to-face interaction. But how many Zoom calls equal one hug?
Stocks had their worst day since March: the Nasdaq and the S&P 500 lost over 5%, and the Dow plunged almost 7%. Investors were worried about a spike in coronavirus cases in reopened states. More on that below.
Zoom shuts down a human rights account to comply with Chinese law
Applied the wrong filter... Zoom. An American human rights org hosted a Zoom conference to commemorate the lives lost in Tiananmen Square 31 years ago. Then Zoom shut the account down. Zooming out...
- Tiananmen Square Massacre: In 1989, a million pro-democracy protesters hit the streets of Beijing against repressive Communist leaders/policies. The Chinese government cracked down hard, killing hundreds, thousands, or "at least 10K" people (exact number is unknown).
- Censored: In China, it's illegal to discuss what happened in Tiananmen Square. So since Chinese citizens joined the conference, Zoom decided to shut down the US-based account "to comply with local law."
- Zoom's response: "It is not in Zoom’s power to change the laws of governments opposed to free speech.” So what is in companies' power?
What this company did... Pocket Casts, a popular podcast app, just said it won't censor content based on China's requests: “We believe podcasting is and should remain free of government censorship.” That principled move resulted in Pocket Casts getting removed from the App Store in China yesterday.
- "All-or-nothing" approach: Tech companies aren't thrilled to get blocked off from billions of potential users in China. But Pocket Casts went "all-or-nothing."
- "Censored" approach: What Zoom just chose. Also, what LinkedIn does by offering a censored version of itself in China. In 2018, Google worked on a censored search engine for Chinese users, but backed down after US public outcry.
The world has two internets... What else is blocked in China? Facebook, Google, Twitter, Wikipedia, Reddit, Slack, and pretty much every other platform that freely spews people's every thought. Tech companies have to decide if they'll go "all-or-nothing" or "censored" with China. Either way, China has had no problem creating its own gov-censored social copycats (like WeChat for WhatsApp and Weibo for Twitter).
Chewy thrives on puppy-palooza (but investors expected a bigger treat)
Fur ballin' out... The cutest trend to accelerate in the corona-conomy: puppy love. Pet adoption soared 60% in March and April as homebound Americans took in pandemic pups and kittens to keep them company (and spice up their social lives). Online pet supply deliverer Chewy thrived on the furry frenzy:
- +46%: How much Chewy's sales soared last quarter. Pet parents stocked up on chewy bones, peanut butter treats, and adorable toys to pamper WFH companions.
- $3.4M: Chewy's profit, unlike the previous quarter (where it actually lost money). Chewy wasn't expected to dig up a quarterly profit until 2021.
- 2.5M: The number of new customers who made Chewy pet profiles last quarter — 25% of those profiles were for new pets.
Chewed too hard... Chewy stock, which is up 66% for the year, actually dipped on the earnings. Investors were expecting even more pawesome results, given the whole pet adoption hype. But Chewy believes it has something more lasting and more valuable than a pandemic surge....
Customer service is Chewy's real profit puppy... Chewy retains customers long-term thanks to its focus on customer service. That came in clutch when the demand surge caused shipping delays in March/April. Chewy promises a human will pick up its 24/7 customer hotline within 6 seconds (we tried it — it's legit). It's even sent customers oil paintings of their pets. Who can stay mad with a Picasso-style bulldog?
Stocks have their worst day since March on investors' worst fear: A 2nd outbreak
Clear the confetti from the NYSE floor... After an impressive three-month rally when the S&P 500 gained 45%, stocks just plunged. Investors bit their nails over health stats flowing out of newly reopened states:
- Texas reported its 3rd straight day of record COVID-19 hospitalizations (2,153 on Wednesday) — it was one of the first states to reopen.
- Florida had the biggest jump in cases since March, and South Carolina hit a record high. California said nine counties saw a spike in new cases and hospitalizations.
No parties at the Fed, either... On Wednesday, the Fed projected that it would keep interest rates close to zero through at least 2022. The Fed wants us to spend our $$$ on stocks/stuff and take out low-interest loans (instead of hoarding it in a savings account).
- Problem? That 2-year economic stimulation effort suggests the Fed's outlook is grim. The near-zero rates are aggressive, but the Fed thinks they're necessary to stay afloat.
- Even though unemployment filings last week were the lowest in 11 weeks, 21M Americans are still collecting unemployment benefits.
- Treasury Secretary Steven Mnuchin said that shutting down the economy again to slow the spread isn’t a viable option. Investors think it's possible (and panic-inducing).
Investors were ignoring the inevitable... Public health experts have said that when states re-open, infections will likely spike. Economists have said it'll take years, not months, to recover from the financial damage coronavirus wreaked. Buuut: falling cases, a wave of reopenings, and a surprisingly positive May job report kept investors optimistic. Markets were down just 5% from their record highs — until yesterday.
What else we’re Snackin’
- Venture: Facebook is launching a venture capital arm to invest in startups before they get big (#pre-Zucking).
- Zen: Meditation app Headspace raises $48M in funding for extra peace of mind.
- Pinned: Pinterest begins testing vanishing stories, called "Story Pins," with US creators.
- Gig: California regulators say Uber and Lyft drivers will be considered employees under CA's gig worker law.
- Zonpay: Amazon unveils a credit line for US-based small businesses, in partnership with Goldman Sachs.
- E-Bags: Online grocery leader Instacart raises $225M in fresh funding and snags a $13.7B valuation.
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Friday
- The consumer sentiment index reveals how we feel about the economy today.
Disclosure: Authors of this Snacks own shares of Amazon
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