đź‘“ Warby's direct-to-consumer IPO
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Hey Snackers,
You can finally order a whiskey without the (climate-related) headache: Booze-making giant Diageo just launched the first carbon-neutral distillery in the US.
Stocks ended the day slightly higher yesterday despite Fed Chair Powell’s warning that inflation could drag into 2022. The tech-heavy Nasdaq fell for the fourth day in a row as looming interest-rate hikes weighed on the tech biz.
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D2C glasses pioneer Warby Parker just went public — but it’s struggling to turn a profit
Percey or Watts frame? Warby Parker shares jumped 35% yesterday after directly listing on public markets, giving the direct-to-consumer glasses giant a $6B valuation. Warby’s direct listing means it didn’t pay i-banks’ big fees to IPO, but released existing shares straight to investors. Last year, Warby’s sales grew faster than Ray Ban maker Luxottica’s, but the 11-year-old biz still isn’t profitable. It saw $394M in sales last year, but lost $56M.
Shifting focus… Warby started out 100% online, cutting out price-inflating middlemen to lower the combined cost of frames and prescription lenses to just $95. In 2013, Warby expanded into physical retail with stylish stores for a hybrid D2C experience with soul:
- At-home perks: Warby offers free home try-on of five pairs, virtual AR try-ons, 30-day returns, and online visits with specialists to extend prescriptions.
- Experiential retail: Warby’s 145 stores feature friendly barista-like employees, dedicated optometrists, and the aesthetic of a Wes Anderson movie.
- Values-based branding: Warby lasered in on social responsibility through its “Buy A Pair, Give a Pair” glasses-donation effort.
Customer love doesn’t always = profit… But it’s the first step. Warby pioneered a D2C growth formula built around online sales, engaging stores, and brand values — and other companies quickly copied it. D2C dynamos like Allbirds, Casper, Blue Apron, and Honest Company all followed Warby’s formula to hit unicorn valuations. But like Warby, they’re also still unprofitable. And investors don’t seem convinced: Casper’s stock is down 60% since its IPO, Honest’s is down 45%, and Blue Apron’s is down 95%.
The fight over the debt ceiling could tank the US economy — and its reputation
The roof is on fire... Or is it the ceiling? There’s a battle between congressional Democrats and Republicans over raising the US Treasury's debt ceiling. A refresher: The Treasury is like Uncle Sam's money manager. It's responsible for handling all federal finances, including managing bills, borrowing, and taxes.
- The US gov't spends more than it collects in taxes, so it needs to constantly borrow to meet its financial obligations. Enter Treasury bonds.
- The Treasury borrows by issuing bonds and bills. Many countries, institutions, and individuals invest in these government IOUs.
- The debt ceiling is the max amount of $$$ that the Treasury can borrow. The US gov't has always paid back its debt to bondholders.
- The Treasury uses money raised from bonds to cover financial obligations. Think Social Security, Medicare, tax refunds, and military salaries.
- The US needs a higher ceiling to cover those expenses, plus trillions worth of Covid spending. The ceiling has been raised or suspended 78 times, but Congress can’t agree to move it.
The stakes... Dems want to suspend or raise the debt limit through legislation. Republicans say Democrats should raise the ceiling without GOP support, in a separate package. While lifting the ceiling doesn't authorize fresh spending, the GOP doesn't want to facilitate the Dems' $3.5T spending plan.
- If Congress doesn't act by October 18 the Treasury could run out of cash, the US could default on its debts, and operations that rely on gov't funding could slow or stop.
- Treasury Sec. Janet Yellen believes the issue will be addressed, but said failing to would result in “a historic financial crisis” and "millions of jobs lost.”
“Full faith and credit” has a rep to protect... T-bonds are backed by the “full faith and credit” of the US gov't. If the Treasury can’t repay bondholders, investors might lose faith. The US can borrow trillions at very low interest rates, since T-bonds are seen as low-risk. If the US defaults for the first time, investors could become skeptical about lending it money. Higher risk would drive up interest rates on the debt. Higher interest = less money to spend on social programs or higher taxes, which could slow economic growth and increase the $29T national debt.
What else we’re Snackin’
- Unstream: YouTube said it would remove content featuring Covid vaccine misinfo, and has already removed 130K+ videos for violating its vax policies since last year.
- Fired: United Airlines said that nearly 600 US-based employees faced termination after failing to comply with its vax policy.
- Washingtons: Dollar Tree said it would sell more items above $1 to offset costs as prices keep rising across the US — call it Dollar and a Half tree.
- Santa: Walmart said it’s rushing to hire 150K long-term employees ahead of the busy holiday season, but the labor market is still tight.
- Launch: The FAA cleared Virgin Galactic to resume spaceflight, closing out an investigation into a mishap that happened on Richard Branson's latest voyage.
- Collect: Fanatics' new trading-card business reportedly raised $350M in funding, which values it at a game-ready $10.4B.
Thursday
- Weekly jobless claims
- Earnings expected from Paychex, McCormick, CarMax, and Bed Bath & Beyond
Authors of this Snacks own shares of: Google and Snap
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