✈️ Delta’s profit problem
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Hey Snackers,
If you think you’re a procrastinator, this should make you feel better: “Kien,” a game made for Game Boy Advance, was finally released after 22 years. Better late than never?
A sell-off in tech stocks yesterday dragged the Nasdaq down 2%. A cooler-than-expected June inflation report showed that US consumer prices fell on a monthly basis for the first time in four years. Nice.
🌹 Quiz from a rose: Our Snacks Seven quiz is back in bloom to test how well you remember this week’s biggest biz stories. Try the first q:
Which non-alcoholic-beverage company reportedly doubled its valuation to $800M? (Check your answer.)
Delta’s quarterly profit nosedives as higher costs burn airlines
Brace for landing… Delta Air Lines shares descended yesterday after the carrier kicked off airline earnings with disappointing quarterly #s. The good news: Delta’s revenue jumped to a Q2 record of $15.4B as more fliers splurged on premium seats. The bad: profit plunged 29% as Delta dealt with higher costs and a glut of extra seats on US flights. Delta’s expenses climbed 10% as fuel prices spiked and labor costs jumped after employee raises.
Budget brawl: Airfare prices are down 5% from a year ago, and Delta CEO Ed Bastian urged low-cost carriers to stop oversupplying seats on domestic routes. Delta’s “load factor,” aka the percentage of seats filled, slipped last quarter.
Business class: Delta’s lucrative corporate travel biz saw double-digit growth for the sixth straight month. International passenger revenue grew 4% as more Americans took off on “White Lotus”-style euro trips.
Emily not in Paris: Delta expects to take a $100M sales hit as Olympics-wary fliers avoid Paris, its biggest destination partner.
Hot sales, chilly profits… Delta’s results come as travel demand stays elevated: 3M fliers passed through TSA checkpoints on a single day this month — a record. This summer’s expected to be historic for air travel, with over half of Americans planning to fly at least once. But US airline profits have stumbled on higher labor costs and staffing issues. Officials say the industry is still short 3K air-traffic controllers, which has contributed to delays and cancellations.
Carriers are in a catch-22... The International Air Transport Association predicts the airline industry will earn a record $996B in sales this year. But total expenses are also expected to hit a record $936B. Because airlines already have thin margins, rising costs can have an outsize effect. The transport association’s director said airlines earn only about $6/per passenger — “barely enough for a coffee.”
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The Lithium Boom
Did you know it takes 10,000 iPhone batteries worth of Lithium to make 1 EV?
With over 350 million EVs projected to be sold globally by 2030, demand for Li is projected to soar and current extraction methods won’t be able to meet the demand.
So when EnergyX revealed that their technology could extract 300% more lithium than traditional methods, investors everywhere took note.
They’ve inked deals with top lithium producers including POSCO who is building a 100k ton/year plant, secured a $50M strategic investment from GM, and won a $5M DOE grant. Most recently, they acquired a 90,000-acre mining asset with ~5.5M tons of lithium.
Now, EnergyX is accepting shareholders for a limited time. This is a unique opportunity to invest on the ground floor as the company is set to unlock a massive lithium supply.
Romantasy books are flying off shelves and spicing up publishing sales
A court of hype and revenue… “Romantasy,” the book genre blending romance and fantasy (think: “50 Shades of Grey” but dragons exist), is continuing its hot streak. Adult-fantasy book sales have surged 85% in the first half of this year, after hitting $450M+ last year. The spike is largely credited with driving growth in overall unit sales of print books, which rose 1% in Q2. Led by authors including Sarah J. Maas and Rebecca Yarros, romantasy is writing a new chapter in the publishing industry.
Large print: Of the 10 best-selling books this year, half were from Maas and Yarros. Yarros’ two major titles, “Iron Flame” and “Fourth Wing,” have sold 1M+ copies this year. Maas’ seven current bestsellers (including “A Court of Thorns and Roses”) have sold 3M+ copies.
On writing: Romantasy authors Maas, Yarros, and Rebecca Ross moved ~20M books last year. For context, prolific authors James Patterson, Stephen King, and John Grisham sold a combined 6M print copies.
Publishing’s latest chosen one… An estimated 767M print books were sold in the US last year, down about 3% from the year before and 7% from 2021’s pandemic peak of 827M. With 80% of the market controlled by five publishers (HarperCollins, Penguin Random House, Hachette, Macmillan, and Simon & Schuster), the flattening of book sales led some publishers to cut staff and freeze hiring. Romantasy’s spike has played a part in offsetting further declines this year.
The book market needed a little spice… Shares of Bloomsbury, which publishes Maas’ 16 titles, are up 45% so far this year as investors can’t get enough of “enemies to lovers” and “one bed at the inn” tropes. Romantasy demand has also led bookstores to devote more shelf space to the titles, driving up sales. Some indie stores say the genre accounts for as much as 70% of sales.
The Crypto Catch-Up…
📜 Policy… The Republican National Committee released a new party platform Monday that promised to “defend the right to mine bitcoin.” Meantime, GOP Sen. Marsha Blackburn said her campaign (like former President Trump’s) will accept crypto donations.
🤔 Sus… Residents of a Texas town say the noise from a nearby Marathon Digital bitcoin mine is making them sick. There are at least 137 commercial bitcoin-mining operations across the US (FYI: the US became the world’s top mining spot in 2021).
⚖️ Judgy… Nishad Singh and Gary Wang, both former execs at the failed FTX crypto exchange, are set to be sentenced this fall. The two pleaded guilty, and both testified at FTX founder Sam Bankman-Fried’s trial (SBF is serving a 25-year sentence).
What else we’re Snackin’
Flat: Pepsi’s sales disappointed as Americans cut back on its price-hiked drinks and snacks (like: Lay’s, Cheetos, Doritos). Pepsi’s North American sales volume fell last quarter after it hiked prices by 5%.
Costup: Access to $1.50 hot-dog combos and Kirkland bulk buys will cost you extra. Costco is hiking its membership fees for the first time since 2017. Walmart-owned rival Sam’s Club recently did the same.
OneRing: Samsung’s leaning into health-tracking wearables to rival Apple. It launched its first smart ring, the $400 Galaxy Ring, and the Galaxy Watch Ultra. Wearables could fuel growth as phone upgrades slow.
Teslow: For the first time, Tesla controls less than half of the US electric-car market. While overall EV sales grew 11% in Q2, Tesla’s deliveries shrank as rivals gained more space on the road.
PBM: The FTC is said to be gearing up to sue UnitedHealth, CVS, and Cigna over their pharmacy-benefit managers. The FTC said these price-negotiating intermediaries may be inflating drug costs.
Snack Fact of the Day
13% of US workers earn less than $15/hour, down from 32% two years ago
Friday
US producer-price index for June
University of Michigan preliminary consumer-sentiment survey for July
Earnings expected from JPMorgan Chase, Wells Fargo, Citigroup, BNY Mellon, Fastenal, and Ericsson
Authors of this Snacks own bitcoin and shares of: Apple, CVS, Delta, Tesla, and Walmart
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