Hey Snackers,
This CES car is giving us mood-ring flashbacks: BMW showed off a color-changing concept vehicle that one day could match drivers’ emotions. We’re imagining a sea of red at rush hour.
In an economy where good news is bad news, stocks fell after surprisingly strong December jobs numbers. Investors feared the still-hot labor market could lead to more aggro rate hikes.
Bed Bath & Beyond could go bankrupt as the coupon king loses its category-killer crown
Throwing in the (bath) towel… Shares of Bed Bath & Beyond lost over a quarter of their value yesterday after the embattled retailer said it might file for bankruptcy. Refresher: BB&B has racked up big debts over the years and has struggled to attract new shoppers online and in stores. Now the home-goods legend says it may not have enough $$ to cover key expenses.
- Looking back: In September, BB&B announced lifeline plans to close 150 stores, slash 20% of its workforce, and raise $500M in financing. Update: it still needs help.
- Moving forward: BB&B expects its net loss will soar 40% to $386M for the third quarter (which includes Black Friday). Q3 sales are forecast to sink 33% from last year.
Private label, public problems… During the pandemic shopping boom, BB&B focused on creating private-label brands to compete with cheaper offerings from Amazon and Walmart. Yet the pivot resulted in shoppers struggling to find recognizable brands they actually wanted (think: Keurigs and KitchenAid mixers). Last year, BB&B said it had lost $175M in sales because of out-of-stock items. Now it’s still exploring non-bankruptcy options like restructuring and raising cash, but it could be too little too late.
Category-killers are getting killed… Old-school category-killers like Barnes & Noble, Blockbuster, and BB&B snatched sales from small businesses as they spread across America. BB&B used to be the go-to for dorm hauls and bathroom makeovers. Now shoppers have a wide variety of online retailers (cough, Amazon) to choose from, and OG category-killers are dying. Case in point: Toys R Us filed for bankruptcy in 2017 and JCPenney followed suit in 2020.
Crypto mega bank Silvergate sheds staff and bails on digital-currency plans as customers pull out billions
Mega bank run… The California bank that helped fuel the crypto boom is feeling crypto winter's wrath. Silvergate announced yesterday that it's cutting 40% of its staff following an $8.1B bank run — which the biz says forced it to sell assets at a $718M loss to cover. That's more than its total profit since 2013 (ouch). That news, plus word that Silvergate's halting its digital-currency plans (down the drain: $196M spent on Facebook's Diem tech) led to a nearly 50% decline in Silvergate stock. Now its execs say the biz could be a takeover target.
High roller… with a low-key profile. Silvergate greases the crypto industry's wheels by helping big businesses move big bucks in and out of crypto platforms. 90% of the bank's deposits are crypto-related. It’s provided banking services to Coinbase and Gemini and held deposits for both FTX and its sister hedge fund, Alameda Research. Once it got into crypto, it blew up fast: by 2019 it served 1.6K miners, exchanges, and crypto custodians. As of last year, it held $16B in deposits — up from $2B in 2020. Now it’s blowing up again, in a bad way:
- Crypt-no: Silvergate execs said yesterday that its customers were closing accounts and pulling out of crypto altogether.
- SBF’d: Last month lawmakers questioned the bank over any possible role in the loss of billions in FTX customer funds.
Big bets mean big risks… Silvergate put most of its eggs in the crypto basket, helping it grow from a relatively small SoCal bank to an industry player. But as crypto winter set in and investors ran for sunnier pastures, that basket has come back to bite it — and the wider industry could suffer from the fallout. Silvergate’s expected to report this month.
The Crypto Catch-Up…
🤹‍♀️ Quirky… NFTs are heading to a US court this month after luxury designer Hermès sued an artist over his digi assets depicting Birkin bags (meet: MetaBirkins). The trial could set the tone for how courts treat NFTs.
🪙 Coins… A judge ruled that bankrupt crypto lender Celsius owns the $4.2B that customers deposited into 600K interest-bearing accounts (putting them last in line for repayment). Also, the NY attorney general sued Celsius's founder, accusing him of fraud.
🌶️ Spicy… Sam Bankman-Fried pleaded not guilty to eight criminal charges related to FTX’s collapse. His trial is scheduled to start in October, but two former colleagues have already pleaded guilty.
What else we’re Snackin’
- Pill: Walgreens became the first major US pharmacy chain to say it’ll sell abortion pills in states where it’s legal, after an FDA rule change (CVS followed suit). The pill’s approved for use up to 10 weeks into pregnancy.
- Stitch: Online personal styling service Stitch Fix plans to cut 20% of its staff and announced its CEO will step down. The fashion box company is trying to return to profitability after hefty losses.
- Splurge: “Add to cart” was the jingle of this holiday season: Americans spent a hefty $212B shopping online, Adobe Analytics said, as steep discounts attracted inflation-weary consumers.
- Cut: Genesis laid off 30% of its staff and is eying bankruptcy. The crypto lender has struggled to recoup a $1B+ loan and is the subject of a public spat starring Cameron Winklevoss.
- Xtra: Elon’s space baby could get some major rocket fuel: SpaceX is said to be raising $750M in a funding round that values it at $137B (about a third of a Tesla). Last year it raised $2B.
Friday
- December jobs report released
- Earnings expected from Greenbrier
Authors of this Snacks own: shares of Amazon, CVS, Tesla, and Walmart
ID: 2666330