__Bingeing “Selling Sunset”...__ While scrolling __[Zillow](https://robinhood.com/stocks/Z)__ listings under $100K (spoiler: not many). The median price for a previously owned home sold in April hit a record [$391K](https://www.cnbc.com/2022/05/19/existing-home-sales-fell-in-april-to-lowest-level-since-start-of-pandemic.html), up 15% from a year ago. Despite soaring mortgage rates, low housing supply is keeping ownership out of reach for many Americans. Now some startups are offering a way to get in on the housing boom — minus the house.

- __You've heard of [fractional shares](https://robinhood.com/us/en/support/articles/fractional-shares/).__ New-ish thing: fractional *real estate*. You own a percentage of a property (think: a time-share where you never get to chill).
- __Split the bill(ding):__ Jeff Bezos-backed __Arrived__ just [raised](https://techcrunch.com/2022/05/17/backed-by-forerunner-and-bezos-back-arrived-a-startup-that-lets-you-buy-into-single-family-rentals-for-as-little-as-100/) $25M to let people buy shares in single-family rentals with “as little as $100.” Startups like __Fintor__, __Fractional__, and __Pacaso__ have also popped up to make real estate more accessible through co-ownership.

__Cry me a duplex...__ While still small, the rise of fractional home ownership underscores how many people are priced out. Over the past year, US home prices have risen 20%. But as the Fed raises rates, the situation may be shifting:

- __Interest up:__ The rate on a 30-year mortgage has jumped from 3.7% in February to nearly 5.5%, the [highest](https://edition.cnn.com/2022/05/05/homes/us-mortgage-rates-may-5/index.html#:~:text=The%2030%2Dyear%20fixed%2Drate,from%20this%20time%20last%20year.) level since ’09. Some homebuilders may be starting to [worry](https://www.axios.com/2022/05/18/homebuilders-higher-mortgage-rates) that would-be buyers are sitting out. 
- __Sales down:__ Existing-home sales fell for the third straight month in April, with more slowdowns expected. In their earnings forecasts this month, Zillow and __[Redfin](https://robinhood.com/stocks/RDFN)__ also [suggested](https://www.barrons.com/articles/housing-market-real-estate-earnings-51652827465) the market is cooling.  
- __Still:__ Pension funds are [increasingly](https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/pension-funds-boost-investments-in-multifamily-industrial-office-reits-70019051) investing in real estate investment trusts (REITs) — a vote of confidence in the sector.

A house divided… (Caspar Benson/Getty Images)

Wall

__Housing’s hitting a wall…__ There’s a reason higher borrowing costs aren’t sinking prices: brutally low inventory. There’re only 1M homes for sale in the US. Cue: the average home gets snatched up within 17 days. Some [fear](https://www.forbes.com/advisor/mortgages/will-housing-market-crash/) we may be heading into a housing bubble, though mortgage lenders now have [strict](https://fortune.com/2022/04/04/redfin-red-hot-housing-market-shows-first-signs-cooling-mortgage-rates/) debt-to-income ratios to protect against an ’08-style crash. As rates rise, fewer people will be eligible (or willing) to take out loans. Yet home prices [won’t](https://fortune.com/2022/04/04/redfin-red-hot-housing-market-shows-first-signs-cooling-mortgage-rates/) cool until supply improves, which could take a while.

The rise of “fractional real estate” spotlights the overpriced, under-supplied housing market — but will the boom bust?

__Better late than never…__ After decades of neutrality, Finland and Sweden last week [applied](https://www.vox.com/2022/5/13/23069341/finland-sweden-nato-membership-russia-ukraine-war) to join NATO (the transatlantic political and military alliance) to beef up security against Russia. Both countries were already tied to Europe’s economy via the EU. NATO’s [expected](https://www.aljazeera.com/news/2022/5/18/finland-and-swedens-fast-tracked-nato-membership) to welcome them with ([mostly](https://www.cnn.com/2022/05/18/europe/turkey-nato-finland-sweden-cmd-intl/index.html)) open arms within months, which will further [isolate](https://www.dw.com/en/nato-application-puts-finlands-russian-trade-on-thin-ice/a-61829860) Russia from Western markets willing to buy its gas. If trade relationships keep shifting, a “multipolar” world could emerge: one anchored by the US and the EU on the one side, and Russia and China on the other.

__Gelato-nomics…__ Last year a US dollar got you about 0.82 euro (not much gelato). Now the currencies are almost equal. The USD has [appreciated](https://snacks.robinhood.com/newsletters/1aPeIVnSAv0nbiyhbzDAM4/) this year as global investors parked more cash in USD than in other currencies, like the war-shaken euro. A strong dollar is good for American tourists, making summer trips to Rome less expensive. Bigger picture, it could cool soaring US inflation, since it makes imports (relatively) cheaper. On the flip side: a strong USD makes US exports pricier (think: fewer __[Ford](https://robinhood.com/stocks/F)__ EVs sold in Europe), which could check economic growth.

Zoom Out

Stories we’re watching...

__Inferiority complex...__ During a gold rush, sell shovels. During a downturn, sell McDoubles. In tough times, consumers trade down pricey products for budget alternatives (economists call these “[inferior goods](https://www.investopedia.com/terms/i/inferior-good.asp#:~:text=An%20inferior%20good%20is%20an,buying%20more%20costly%20substitutes%20instead.)”). Think: ditching Clif Bars from __Whole Foods__ for granola bars from __[Costco](https://robinhood.com/stocks/COST)__. Discount stores like __[Dollar Tree](https://robinhood.com/stocks/DLTR)__, __[Dollar General](https://robinhood.com/stocks/DG)__, and Costco, which all report this week, thrive when inflation spikes — *if* they can keep their own rising supply costs down. That’s easier said than done: last week other discounters, including Walmart and Target, dropped unexpectedly low quarterly profits.

__Mission possible?…__ “Top Gun: Maverick” opens Friday after *two years* of delays. The $170M sequel could answer Hollywood’s biggest question of the Covid era: will people go to theaters for something that *isn’t* a superhero flick? With “Top Gun,” __[Paramount](https://robinhood.com/stocks/PARA)__ is betting some films justify the big-screen experience. The summer will test that bet, with the major studios, from __Universal__ (“Jurassic World”) to __[Warner Bros.](https://robinhood.com/stocks/WBD)__ (“Elvis”), all releasing “event” movies. The pandemic-scarred industry needs some wins: total box office this year is still down 40% from 2019.

Events

Coming up this week...

- __[Down](https://snacks.robinhood.com/newsletters/3rDFQHAVhkLPecWpTqK1VB/articles/16p3aAY3ZteRSIiL83IOEd/):__ Swedish fintech __Klarna__ is reportedly raising new funding at a much lower valuation, a sign that the days of easy VC $$ for money-losing startups could be over. Even free-spending __[SoftBank](https://robinhood.com/stocks/SFTBY)__ is cutting back.
- __[Omen](https://snacks.robinhood.com/newsletters/6ATVRl9b59JpFcHxnHzgSf/articles/576CqDmQ7xmpN30fn19YAU/):__ It’s getting harder for retailers to pass on their rising costs to consumers. Case in point: Walmart’s and Target’s sour earnings last week, which showed inflation’s pinching profits.
- __[Oracle](https://snacks.robinhood.com/newsletters/1aPeIVnSAv0nbiyhbzDAM4/articles/5x4DI2GpIW4apUtIK4RtdC/):__ Warren Buffett’s on a stock-buying spree after pulling back last year. The investing guru is snagging stakes in companies like __[Chevron](https://robinhood.com/stocks/CVX)__ and __[Citi](https://robinhood.com/stocks/C)__, using his famous “value” playbook in the bear market.

ICYMI

Last week's highlights...

Dow Jones

S&P 500

Nasdaq

Bitcoin

An owl’s eyes can account for 3% of its entire body weight, compared to .0003% for humans

🏠 Unreal estate

__Down and to the right…__ Booming buy now, pay later (BNPL) startup __Klarna__ reportedly [wants](https://www.wsj.com/articles/softbank-backed-fintech-giant-klarna-looks-for-new-funds-at-lower-valuation-11652951574?mod=hp_lead_pos5) to raise money at a valuation a full third lower than its last raise. Klarna became Europe’s most valuable fintech startup in June after it raised a chunk of change from __[SoftBank](https://robinhood.com/stocks/SFTBY)__ at a $46B valuation. But since then markets have plunged, forcing cash-strapped Klarna to fundraise at a reduced valuation — aka a “down round.” 

- __Quick rise, quick fall:__ Klarna’s valuation ballooned 13X between 2019 and last year as BNPL took off. But its losses also grew as it burned through venture-capital cash to expand.
- __Bad news for backers:__ Earlier this month, SoftBank posted its worst-ever annual loss of $13B+ as the value of its tech investments tanked.

__What goes up…__ sometimes comes down. It wasn’t just Klarna: startups raised a record $600B from VCs last year, twice as much as the year before. But as tech stocks have fallen to Earth, so has investor confidence: startups raised 26% less $$ last quarter than at the same time last year. 

- __That’s where down rounds come in:__ startups that’ve burned through their cash have little choice but to raise more, even if it’s at a reduced valuation.

The lights are looking a little dimmer lately (Georg Wendt/Picture Alliance via Getty Images)

CASCADE

__Corrections aren’t choosy…__ They devalue public *and* private companies alike. Experts say private startups usually lag behind public companies in seeing the effects of market slumps. Shares of __[Affirm](https://robinhood.com/stocks/AFRM)__, a publicly listed Klarna rival, are down a staggering 75% this year— and now Klarna’s hurting too. It could spell trouble for private tech companies as public tech giants lost $1.3T in the early months of this year.

Klarna’s valuation could fall by a third as the downturn catches up to private markets

__Bipartisanship lives…__ Democrats and Republicans agree on something: a bipartisan group of senators have [introduced](https://www.wsj.com/articles/gop-led-legislation-would-force-breakup-of-googles-ad-business-11652969185) a bill that would force __[Google](https://robinhood.com/stocks/GOOGL)__ to break up its hugely lucrative ad biz. It’s one of the toothier antitrust bills winding its way through Congress.

- __The issue:__ Google (in)famously has a stake in all aspects of the online ad marketplace: it owns the tools that companies use to buy and sell ads, plus the biggest exchange where the buying and selling happens.
- __The criticism:__ Critics say the dominant position makes Google a monopoly, allowing it to set the terms of the market as buyer, seller, and broker.
- __The bill:__ The Competition and Transparency in Digital Advertising Act (mouthful) would bar public companies that have $20B in annual ad sales from operating on more than one side of the ad ecosystem.  

__Antitrust cheat sheet…__ The bill is aimed directly at Google, which brought in a whopping $55B from ads last quarter alone. But it’s not the only regulation targeting Big Tech’s market power that has found bipartisan momentum in DC. Also in play:

- __Cracking open the app stores:__ One piece of legislation would force __[Apple](https://robinhood.com/stocks/AAPL)__ and Google to open their app stores to third-party competitors.
- __No more playing favorites:__ A similar bill would prevent platforms like __[Amazon](https://robinhood.com/stocks/AMZN)__ from favoring their own products and services over others.

Tick

__The window for lawmakers to make these laws is closing…__ Congress goes on recess in August, and then it’s election season (read: nothing gets done). In the likely event that Republicans win control of either the House or the Senate in November, antitrust legislation is unlikely to be a priority — especially now that [polls](https://www.pewresearch.org/fact-tank/2022/05/13/support-for-more-regulation-of-tech-companies-has-declined-in-u-s-especially-among-republicans/) show a shrinking number of Americans see it as one. That leaves the next two months as potentially do or die for any of these bills.

A bipartisan bill targets Google’s ad biz, while Congress faces crunch time to regulate Big Tech

The average building wastes 30% of the energy it consumes

↘️ The “down round” returns

__Clear aisles, full carts...__ *can* lose. Target stock plunged 27% yesterday in its worst day since Black Monday in 1987. Tarjay [missed](https://www.wsj.com/articles/target-earnings-squeezed-by-inflation-and-fuel-costs-11652869800) the profit bull’s-eye, taking home just $1.3B last quarter compared to $2.4B a year earlier. Despite high inflation, Target’s trying *not* to raise customer prices this year. Instead of charging you more for made-in-China floral dresses, it’s eating the extra costs.

- __Strategy:__ Target wants to keep prices affordable in hopes of stealing market share from __[Walmart](https://robinhood.com/stocks/WMT)__, __[Amazon](https://robinhood.com/stocks/AMZN)__, and other retailers.
- __Problem:__ Transportation costs this year will be $1B higher than Target had forecast, which means it's spending more to get __[Keurig](https://robinhood.com/stocks/KDP)__ cups and shower caddies on shelves.
- __Problem (cont.):__ Consumers are buying fewer high-margin goodies like bikes, flat screens, and air fryers, and more lower-margin basics like food.

__#Flation starts hitting…__ the bottom line. Shrinking earnings have emerged as a theme for the US’s largest retailers. On Tuesday, Walmart reported that its quarterly profit [shrank](https://www.wsj.com/articles/walmart-sales-rise-but-higher-costs-dent-profit-11652787631) 25% from last year. 

- __Like Target,__ Walmart tries to undercut competitors on price to gain market share (especially with grocery staples). 
- __Unlike Target,__ Walmart execs suggested they’d have to raise prices after this “disappointment” of a quarter. Its stock is down 18% since earnings. 
- __Unlike *both*:__ Discount retailer __[TJ Maxx](https://robinhood.com/stocks/TJX)__ [notched](https://www.barrons.com/articles/tjx-stock-price-earnings-sales-margins-51652874529?tesla=y) higher profits and fatter margins after raising prices for off-the-rack clothes. Shares popped 11% yesterday (#outlier).

Retail earnings this week (Jeffrey Coolidge/Getty Images)

Carted

__The bottom line matters more…__ For investors, profit is often more important than sales for established corporations (with young startups, growth is often the focus). While sales rose at Target, Walmart, *and* Amazon, the major profit hits they took overshadowed that growth — cue: the stocks got pummeled. Meanwhile, TJ Maxx missed sales expectations but surged on its profit win. We’ll see whether __[Ross](https://robinhood.com/stocks/ROST)__ and __[Kohl’s](https://robinhood.com/stocks/KSS)__ also put the bottom line first when they report today.

From Target to Walmart, America’s largest retailers are eating inflation costs to stay ahead — and their bummer earnings reflect it

__The Block Head has spoken…__ and he says crypto concert tix are the future. Jack Dorsey, “Block Head” at __[Block](https://robinhood.com/stocks/SQ)__ (translation: CEO at the biz formerly known as Square) just [outlined](https://www.cnbc.com/2022/05/18/jack-dorsey-outlines-blocks-bitcoin-centric-future-no-longer-just-a-payments-company.html) plans for the company’s future. Block’s changed a lot since its last investor day five years ago: it bought Jay-Z’s music streamer __Tidal__ for $300M last year and fintech __Afterpay__ for [$29B](https://snacks.robinhood.com/newsletters/68Ji759EUo3BnTZxw9mAj1/articles/4ged1i28lf9nr12iGW3oBC/) this year. Here’s what’s next:

- __Not your grandma’s card-reader biz:__ Dorsey said Block’s not a payment company but an “ecosystem” spanning fintech, music, and crypto. 
- __Bullish on BTC:__ Block’s building __[bitcoin](https://robinhood.com/crypto/BTC/)__ wallets, mining systems, and developer tools because Dorsey believes bitcoin will become the internet’s native currency.
- __Banking on Gen Z:__ Block wants to be a payment superapp for younger users. Think: buying Kendrick Lamar [tickets](https://qz.com/2165570/jack-dorsey-and-kendrick-lamar-make-block-the-ultimate-gen-z-bank/) *and* crypto, all inside the Cash App (Block’s Venmo rival).

__There are plenty of ways to pay…__ but Block’s superapp strategy could distinguish it from a crowded payments field. The company started in 2009 as a point-of-sale disruptor, selling those swipe-y consoles used by your local coffee shop. But since then, __[Toast](https://robinhood.com/stocks/TOST)__, __Clover__, and others have launched competitors, and now __[Apple’s](https://robinhood.com/stocks/AAPL)__ [reportedly](https://www.macrumors.com/2022/05/16/apple-tests-iphone-tap-to-pay-apple-park/) testing a tap-to-pay iPhone feature that could blow up the industry.

Cube

__It’s a tough time to be a tech biz…__ even a profitable one. Tech stocks have plunged in recent months as investors ditch “disruptive” but unprofitable tech giants (think: __[Uber](https://robinhood.com/stocks/UBER)__, __[Peloton](https://robinhood.com/stocks/PTON)__, and __[Airbnb](https://robinhood.com/stocks/ABNB)__) to invest in slow-and-steady companies with consistent cash flow (think: energy, utilities). Even though Block has been profitable for the past three years, its blockchain-powered ecosystem could scare off tech-phobic investors looking for stability.

Block’s making a crypto-music-payment “ecosystem,” but it may be too visionary for today’s market

Target and Walmart are eating inflation costs — and their bummer earnings reflect it that

There are reportedly more Airbnb listings in NYC than there are apartments for rent

🎯 Target’s anti-bull’s-eye

__Exchanging USDs for gelato…__ A year ago, one US dollar would get you 0.82 euro. Today, you can exchange $1 for about 0.95 euro — the currencies are almost equal. That's because the USD has "[appreciated](https://learn.robinhood.com/articles/3rN6OSsz8d3VA4wo3m41Li/what-is-appreciation/)," or gained in value, compared to the euro. In fact, the greenback has [gained](https://www.wsj.com/articles/the-dollar-is-winning-in-a-messy-global-economyand-that-matters-in-the-fight-against-inflation-11652617801) against many currencies (like the Japanese yen, the Chinese yuan, and the British pound). That's good for:

- __US imports:__ A strong dollar makes imported goods cheaper, which should help tamp down inflation (yay). The US = the world’s [largest](https://ustr.gov/countries-regions#:~:text=Goods%20Imports,percent%20of%20total%20goods%20imports.) goods importer. Instead of spending $100 to buy 90 euros’ worth of Italian leather, an importer would now spend about $90. 
- __American tourists:__ A stronger dollar means you get more foreign currency with fewer dollars. Paris trip = instantly cheaper.
- __Uncle Sam:__ A strong dollar is seen as a stable investment. That makes people more likely to lend money to the US gov't (think: buying Treasury bonds). No one wants to be paid back in a wobbly currency.

__Moment of appreciation...__ for the golden currency of nations. The USD's stable rep has long made it the world's reserve currency for international purchases. Think: countries [buy](https://www.investopedia.com/articles/forex/092415/oil-currencies-understanding-their-correlation.asp) crude oil in USDs. But what's behind the recent appreciation streak? It all comes down to the “d” word: demand for dollars is higher.

Browsing the dollar menu (RubberBall Productions/Getty Images)

Buck

__Everything’s relative…__ That’s literally true in the foreign-exchange world. USD demand has risen because (1) US interest rates are significantly higher than in other countries, which gives investors more reason to park their money in America, and (2) compared with other big economies, the US is looking peachy. Europe’s trade situation has been wrecked by Russia’s war on Ukraine, and China’s Covid crackdown has decimated chunks of its economy. The flip side: a strong dollar makes US exports pricier, which could check economic growth.

Stocks have been on a losing streak, but the dollar’s been winning — and that could help fight inflation

__Some people love a bargain…__ Warren Buffett’s holding company, __[Berkshire Hathaway](https://robinhood.com/stocks/BRK.A)__, has [invested](https://www.wsj.com/articles/warren-buffett-spends-big-as-stock-market-sells-off-11652589031?mod=business_trending_now_article_pos1) billions in battered stocks over the past few months, a recent filing showed. The Oracle of Omaha sat tight last year while stock prices soared, selling more than he bought. But now that markets have cooled, he’s buying again. Big time:

- __Spending spree:__ Berkshire [added](https://www.kiplinger.com/investing/stocks/604684/stocks-warren-buffett-is-buying-and-selling-in-q1-2022) $42B of stocks to its portfolio last quarter, its biggest splurge since 2008. Among them: Buffett classics like __[Apple](https://robinhood.com/stocks/AAPL)__, plus relative rookies __[Citigroup](https://robinhood.com/stocks/C)__, __[HP](https://robinhood.com/stocks/HPQ)__, __[Paramount](https://robinhood.com/stocks/PARA)__, __[Activision Blizzard](https://robinhood.com/stocks/ATVI)__, and __[Ally Bank](https://robinhood.com/stocks/ALLY)__.
- __The “Buffett Bump” is real:__ Shares of Paramount [jumped](https://www.cnbc.com/2022/05/17/paramount-shares-jump-10percent-after-buffetts-berkshire-reveals-new-stake.html) 15%, Ally rose 6%, and Citi [popped](https://ca.finance.yahoo.com/news/citi-shares-jump-berkshire-adds-132243748.html) 7% yesterday after Berkshire’s stakes were reported. __[Verizon](https://robinhood.com/stocks/VZ)__ and __[Kroger](https://robinhood.com/stocks/KR)__ fell on news that Berkshire sold their shares. 

__When the going gets tough…__ Buffett gets buying. The 91-year-old guru famously seeks stocks that are low priced relative to their potential long-term value. But those “value stocks” were hard to find last year since (according to Buffett) *everything* was overvalued. So Berkshire ended the year with a near-record cash pile. Now it’s trading time:

- __In…__ oil. Berkshire doubled down on inflation-friendly stocks like __[Chevron](https://robinhood.com/stocks/CVX)__ and __[Occidental](https://robinhood.com/stocks/OXY)__ (energy is the best-performing category in the S&P 500 this year). 
- __Out…__ pharma. Berkshire ditched stocks __[Bristol Myers Squibb](https://robinhood.com/stocks/BMY)__ and __[AbbVie](https://robinhood.com/stocks/ABBV)__, which spiked earlier in the pandemic.

Sage

__This is Warren-nomics 101…__ Thanks to Fed’s rate hikes, booming “growth” stocks have fallen back to Earth (#corrected). That’s created ideal conditions for Berkshire to shop for bargain-priced “value” stocks. Meanwhile, growth stocks — whose value often rests on distant returns — may keep struggling as the Fed keeps raising rates. To weather a downturn, even growth-hungry investors might jump on the Buffett wagon and invest in slow-and-steady stocks.

Buffett’s back, and he’s on a buying spree — since steep sell-offs have created a new class of value stocks

Stocks have been on a losing streak, but the dollar’s been winning — and that could help with inflation

1 million seconds is about 12 days, and 1 billion seconds is about 31 years

💵 The dominant dollar

__Like "Succession" in the sky…__ Spoiler alert: the latest episode of the __[Spirit Airlines](https://robinhood.com/stocks/SAVE)__ merger drama just dropped, and things are getting hostile. Yesterday __[JetBlue](https://robinhood.com/stocks/JBLU)__ [said](https://www.wsj.com/articles/jetblue-to-launch-tender-offer-for-spirit-urge-shareholders-to-vote-against-frontier-deal-sources-say-11652688356) it would try a hostile takeover of Spirit after its previous offer was rejected. Refresher:

- __Earlier this season:__ Spirit [accepted](https://snacks.robinhood.com/newsletters/1I3jIJQkqK0ygv51yekmCQ/articles/V8eaYxPExXyVEX2Vdr6Jz/) a $2.9B buyout offer from __[Frontier](https://robinhood.com/stocks/ULCC)__ in February. Then JB [made](https://snacks.robinhood.com/newsletters/22c5VDDeeLOi4iyaybumsG/articles/6v13W7lFCwtbaBJ73GcFzB/) a $3.6B bid in April, but Spirit’s board didn’t budge.
- __Plot twist:__ Now JB’s appealing directly to shareholders, asking them to ditch Frontier for a $3.3B deal (that’s lower than its first offer, but more than Frontier’s — and almost twice Spirit’s Friday price). JB said it would pony up more if Spirit’s board negotiates. 

__Only the big survive…__ __[American](https://robinhood.com/stocks/AAL)__, __[Delta](https://robinhood.com/stocks/DAL)__, __[Southwest](https://robinhood.com/stocks/LUV)__, and __[United](https://robinhood.com/stocks/UAL)__ take up lots of airspace: together they control 80% of US domestic flights. Meanwhile, an ongoing pilot shortage and rising fuel costs are making it hard for smaller airlines to compete. But buying Spirit could give JetBlue (or Frontier) more leverage: 

- __The Big 5:__ If either airline succeeds in taking over Spirit, they’ll become the fifth-largest US carrier with about 10% market share.
- __More control:__ Spirit’s buyer won’t just get market share: they’ll get more pilots, more pricing power (which helps offset rising fuel costs), and more routes (which are often reserved at major hubs).

If at first you don’t succeed… (Joe Raedle/Getty Images)

Hostile

__Downturns create buying opportunities…__ Spirit’s stock is down 46% over the past year, and JetBlue believes its latest offer will still be attractive to shareholders. Historically, hostile takeovers increase during downturns, when market caps slide (reminder: Belgian __[InBev](https://robinhood.com/stocks/BUD)__ [gulped](https://www.industryweek.com/leadership/companies-executives/article/21948686/the-battle-is-over-inbev-buys-anheuserbusch) down Bud-brewer Anheuser-Busch for $52B during the 2008 crisis). JetBlue probably won’t be the last buyer to shop for a downturn discount either: Elon Musk [hinted](https://www.bloomberg.com/news/articles/2022-05-16/musk-says-twitter-bots-likely-account-for-at-least-20-of-users) yesterday he might try to renegotiate his __[Twitter](https://robinhood.com/stocks/TWTR)__ deal at a lower price.

The Spirit saga continues: JetBlue moves to buy the budget airline at a "downturn discount"

__Turning on the bathroom TV...__ to an ad for premium shampoo. As travel demand rebounded last quarter, __[Marriott’s](https://robinhood.com/stocks/MAR)__ hotel occupancy [surged](https://marriott.gcs-web.com/static-files/24293aca-75a0-497f-ad51-29a5892ef957) to nearly pre-pandemic levels. Now the chain’s getting creative with ways to monetize its returning guests (beyond $10 minibar waters): Marriott is [rolling out](https://www.wsj.com/articles/marriott-rolls-out-media-network-that-lets-brands-reach-travelers-on-its-apps-and-tv-screens-11652698800?mod=hp_lista_pos4) a media network with __[Yahoo](https://robinhood.com/stocks/YAHOY)__ to let brands advertise on its digital and physical real estate.

- __Targeted stays:__ Marriott will use anonymized guest data to help brands target ads. Think: theme-park commercials for families vs. __[BMW](https://robinhood.com/stocks/BMWYY)__-rental ads for deep-pocketed businesspeople.
- __Inescapable ways:__ The ads will appear on Marriott's hotel websites (think: WiFi portal) and on hotel screens (think: lobbies, gyms, bars, room TVs).

__Prada blazer...__ for the forgetful biz traveler. Privacy developments like __[Apple's](https://robinhood.com/stocks/AAPL)__ iOS change ("ask app not to track") and __[Google's](https://robinhood.com/stocks/GOOGL)__ plan to block third-party tracking cookies on Chrome have made ad targeting much harder. Now brands are increasingly looking to "first-party data" (aka: info they collect directly from consumers) rather than "third-party data" (think: targeting offered by Insta and YouTube).

- __Marriott__ says it will use info from searches and bookings on its platforms to deliver relevant ads. It has 164M loyalty members and knows when and how they'll be traveling.
- __[Walmart](https://robinhood.com/stocks/WMT), [DoorDash](https://robinhood.com/stocks/DASH), and [CVS](https://robinhood.com/stocks/CVS)__ have also been leveraging customer data to offer marketers new ways to reach consumers (your 3 a.m. taco orders speak volumes).

AdFi

__If you have eyeballs, you have ad-tention...__ Companies that haven't traditionally sold ads are realizing that they can, whether it’s __[Kroger](https://robinhood.com/stocks/KR)__ and __[Walgreens](https://robinhood.com/stocks/WBA)__ [replacing](https://retailwire.com/discussion/will-customers-grow-to-love-walgreens-digital-cooler-doors/) fridge doors with digital screens or Marriott selling you rental cars in your hotel room. And while the $500B+ digital ad market is dominated by __[Facebook](https://robinhood.com/stocks/FB)__, Google, and __[Amazon](https://robinhood.com/stocks/AMZN)__, even a small slice of the pie can mean fresh billions — and fresh consumer-privacy concerns.

Marriott launches targeted ads on its hotel screens and sites, as privacy changes reveal the value of "first party" data

After a failed first offer, JetBlue wants to take over Spirit at a "downturn discount"

Because of Covid lockdowns, not a single car was sold in Shanghai last month

🛫 JetBlue goes hostile

__The status…__ is *pricey*. In two-thirds of developed countries, college is [free](https://educationdata.org/average-cost-of-college-by-country) or less than $2K a year. In the US, private college [costs](https://www.usnews.com/education/best-colleges/paying-for-college/articles/paying-for-college-infographic) $38K a year, on average, and public schools cost $23K out of state and $10K in state. The cost of college has [tripled](https://www.cnbc.com/2021/11/02/the-gap-in-college-costs-and-earnings-for-young-workers-since-1980.html) since 1980, while average pay for young workers is up just 20% since then. Still, many undergrads go into debt for degrees, since grads earn $1M more over their careers than non-grads. But students are reconsidering college’s value: in the past two years, US enrollment dipped 7% as more [choose](https://www.washingtonpost.com/education/2022/01/13/fall-college-enrollment/) to “earn over learn.” 

__Snackers say:__

- “Spending more money doesn’t always mean getting more in return… Going to college taught me that spending ‘the big bucks’ on something people traditionally value won’t always pay off.” —*Isabelle, 27*
- “My university BA in psychology was rewarding… and was very overpriced. My community-college AS in nursing was exponentially more financially valuable, but less fun.” —*Brad, 32*

3,500 Snackers told us how they see the value of a college degree

__The outlook…__ is shifting. President Biden [campaigned](https://www.cnbc.com/2019/08/27/biden-hints-at-his-plan-to-address-student-debt-and-college-costs.html) to make public college free in the US. Now that his Build Back Better bill is stalled that’s… not likely. Meanwhile, schools are making class less costly to woo students: Columbia University recently nixed tuition for kids whose families make less than $150K/year, and Utica College is one of several schools exploring cheaper three-year degrees. College alternatives like coding bootcamp __General Assembly__ also offer new ways to pay, like income-share agreements (ISAs) that charge a % of earnings once grads land jobs (alums work at __[Google](https://robinhood.com/stocks/GOOGL)__ and __[JPMorgan](https://robinhood.com/stocks/JPM)__).

The cost of admission: up and to the right

__The status…__ is green. On paper, it couldn't be a better time to land your first job. The US is experiencing basically full employment. Last month the US [added](https://www.cnn.com/2022/05/06/economy/april-jobs-report/index.html) 428K jobs, leaving a [record](https://www.bls.gov/news.release/jolts.nr0.htm) 12M “help wanted” signs unfilled. That’s good news for college seniors, since employers plan to hire over a [quarter](https://www.nbcdfw.com/news/local/data-shows-promising-job-outlook-for-recent-upcoming-college-grads/2840935/#:~:text=The%20National%20Association%20of%20Colleges,the%20class%20of%20May%202021.) more graduates this May compared with last year. They’ll be making an average starting salary of $55K, but the return on (degree) investment tends to vary (comp-sci majors are starting at $72K, English majors at $49K). 

Nearly two-thirds of all public bachelor's degree programs leave graduates able to earn enough to cover the cost of college within a decade. But for recent grads, a [survey](https://www.intelligent.com/1-in-7-college-grads-earn-less-than-the-poverty-threshold/) found more than half don’t end up working in their field of study — and nearly half live paycheck to paycheck.

__SnackStat:__ *78% of Snackers said they felt “fairly confident” or “very confident” about their job prospects as college students or recent grads.* 

__Snackers say:__

- “There are a lot of jobs you can’t even interview for unless you have a degree. Having it helps get your foot in the door.” —*Jennifer, 33*
- “Growing up, degrees were the key to getting a ‘good job.’ While I do think it is valuable, it’s not at the rate of what I am paying.” —*Thomas, 42*

Hired

__The outlook…__ is unclear. Even though companies like __[Starbucks](https://robinhood.com/stocks/SBUX)__ pay extra so that you'll make rush-hour lattes, overall wages aren't keeping up with inflation. Many students feel [that](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) tacking on two years (or more) for grad school is the cost of doing biz to land a competitive role in certain fields. The value of that extra degree is mixed: while master’s degree holders can [make](https://www.indeed.com/career-advice/pay-salary/how-much-does-degree-increase-earnings) 20% more than those with a bachelor’s, employability (aka: the odds of getting hired) [increases](https://www.educationdata.org/education-attainment-statistics) only by 3%. Plus, more school means more tuition: nearly half of federal student-loan debt comes from postgrad for master’s and Ph.D. programs.

The labor market: opportunity knocking

__The status…__ is spiraling. Colleges raise prices, lenders dole out aid, and colleges raise prices (again). For decades, tuition increases have [outpaced](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) household incomes, forcing families to rely on loans. Today, two-thirds of college students graduate with debt, which typically takes [17 years](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) to pay off. The average loan balance at graduation has tripled since the ’90s to more than [$30K](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) — and nearly a tenth of borrowers owe more than *$100K*. To help relieve the burden, Biden pledged to make at least some college free, and promised at least $10K in loan forgiveness for each borrower. So far, his admin has forgiven $17B worth of federal student debt for 675K borrowers — a fraction of the [$1.7T](https://www.cnbc.com/2022/02/08/what-it-would-take-for-the-government-to-cancel-student-loans-.html) in student loans Americans owe.

__SnackStat:__ *65% of Snackers said their college degree was “fairly valuable” or “very valuable” relative to their tuition investment. A quarter said it wasn’t “particularly valuable,” and 9% said it was “worthless.”* 

__Snackers say…__ 
- “I made six figures straight out of college. If you are going to college to be a librarian, the 100K in student loans are probably not worth it.” —*Zack, 37*
- “If I could go back, I wouldn’t do it. I would tell my children not to go to college, and get a technical job.” —*Mikayla, 28*

Interest

__The outlook…__ is mixed. This month, the Education Department said it’s forgiving loans of more than 110K government workers (think: teachers, firefighters). But the rest of debt holders aren’t so lucky, since Biden’s blanket loan-forgiveness promise isn’t panning out. Still, the pause on student loans has now been extended six times since March 2020, saving borrowers $1.5B a month in interest payments alone. Payments are set to resume in September, and if nothing changes, student debt could top [$3T](https://www.cnbc.com/2022/05/06/this-is-how-student-loan-debt-became-a-1point7-trillion-crisis.html) by 2035.

Student debt: forgive and forget?

- __[Contagion](https://snacks.robinhood.com/newsletters/4pRYwQp39631d0x5mo8zbx/articles/DdT30qWIQKQ8lB83AgCes/):__ Nearly $500B was wiped off the crypto market last week as volatility has investors turning risk-averse. Not even some so-called stablecoins appear safe.
- __[Bottle](https://snacks.robinhood.com/newsletters/4pRYwQp39631d0x5mo8zbx/articles/77nr1oiiC86WivHiIpYgzR/):__ A baby-formula shortage is forcing worried parents to ration supplies or drive hours in search of the powdered gold. The root cause: US import limits.
- __[Med](https://snacks.robinhood.com/newsletters/5xjp3PmErVX6calMlzNVjK/articles/T0hqswG18kk95NL2Buyig/):__ The feds subpoenaed mental-health startup __Cerebral__ over its prescription practices for pills like Adderall and Xanax, a sign regulators may rein in telemedicine.

As the class of 2022 graduates, the college-value prop is blurrier than ever

It takes college grads an average of three to six months to find a job after school

🎓 The graduation edition

__It could be contagious…__ Crypto markets have caught a cold — or worse. The crypto industry has lost nearly $500B this week after two top stablecoins were “[unpegged](https://snacks.robinhood.com/newsletters/CZLtSSO02dkWUNfYSsz7D/articles/40vJyepmLGsyVSkxrAJx2M/)” — and caused investors to panic-sell other coins. Refresher: stablecoins are cryptos whose value is (theoretically) pegged to other assets, like the USD. A recap:

- __First,__ stablecoin __TerraUSD__ (UST) [fell](https://snacks.robinhood.com/newsletters/CZLtSSO02dkWUNfYSsz7D/articles/40vJyepmLGsyVSkxrAJx2M/) to a third of its “fixed” value after its algorithm failed to rebalance its price (it’s still [down](https://coinmarketcap.com/currencies/terrausd/)).
- __Then__ the largest stablecoin, __Tether__, [slipped](https://fortune.com/2022/05/12/terrausd-ust-luna-contagion-tether-bitcoin-solana-ether-price-crypto/) from its $1 peg, falling to $0.95 before recovering. (Tether is backed by cash, not just an algorithm.) Skittish investors have been selling off the bigger coins this week too: __[bitcoin’s](https://robinhood.com/crypto/BTC)__ down 22%, __[ether](https://robinhood.com/crypto/ETH)__ 31%, and __[solana](https://robinhood.com/crypto/SOL)__ 49%.

__This could be a (decentralized) bubble…__ When an entire asset class (think: real estate, stocks) is overvalued, it’s often called a “bubble” — and if prices later crash, the bubble bursts. Some experts say crypto’s sell-off is starting to [resemble](https://www.investopedia.com/articles/stocks/10/5-steps-of-a-bubble.asp) the dot-com bubble that led to the 2000 tech crash, or the housing bubble that led to the Great Recession (2007-09). In both cases, a sharp panic-fueled sell-off followed years of soaring speculative prices. (Worth noting: both those crashes wiped out trillions in wealth, much more than the crypto sell-off has.)

Chaos in cryptoland (Justin Tallis/AFP via Getty Images)

Untethered

__Bursting bubbles are destructive…__ but they can be beneficial. If a crypto bubble pops, coins could disappear, companies could go bankrupt, and investors could lose billions. Yet more consumer protections, stronger regulations, and leaner companies could also emerge (__[Google](https://robinhood.com/stocks/GOOGL)__ and __[Amazon](https://robinhood.com/stocks/AMZN)__ vaulted to global dominance after dot-com-era consolidation). That was what crypto-supporting Sen. Pat Toomey meant this week when he said that “failure should be an option” in the crypto space.

As crypto prices crash, the lawless market could be in for a regulatory reckoning

__Endless “sold out” shelves…__ not again. A baby-formula crisis is rippling through the US, forcing parents to [ration](https://www.nytimes.com/2022/05/10/us/baby-formula-shortage.html) supplies or drive hours in search of inventory. Over 40% of formula is out of stock nationwide, up 10% from a month ago. Now top formula supplier __[Abbott Labs](https://robinhood.com/stocks/ABT)__ says it could take until July to get the product back on shelves. How we got here:

- __In February:__ The FDA [recalled](https://www.nbcchicago.com/news/local/2nd-infant-dies-after-exposure-to-recalled-baby-formula-linked-to-bacterial-infections-fda-says/2771429/#:~:text=The%20child%20died%20after%20being,sakazakii%20infection%2C%20the%20FDA%20said.) formula brands made at Abbott's Michigan plant after reports that some babies had gotten sick — and even died — from bacterial illnesses traced to the facility. As a result the plant was shut down.
- __This week:__ Abbott got the OK to [resume](https://www.thedenverchannel.com/news/national/amid-shortages-fda-allows-abbott-to-release-baby-formula-from-facility-after-recall) production in that plant, but only on a case-by-case basis (think: specialty formulas for medical conditions).

__Pandemic stockpiles…__ The plant closure is just part of the story. Worried parents snatched up formula in droves in the early days of Covid. As they worked through their supplies, demand plummeted and formula makers slashed production. Inventory still hasn’t kept up with a resurgence in demand (#supplychain, #laborshortages). Now retailers [from](https://www.bloomberg.com/news/articles/2022-05-09/cvs-walgreens-target-ration-baby-formula-as-shortages-hit-50) __[Target](https://robinhood.com/stocks/TGT)__ to __[CVS](https://robinhood.com/stocks/CVS)__ are capping how much formula shoppers can buy. On top of that:

- __Regulators are *very* strict__ about what goes in formula, and often only US-based ingredients make the cut. Global suppliers that do qualify [face](https://www.theatlantic.com/ideas/archive/2022/05/baby-formula-shortage-abbott-recall/629828/) a nearly 20% tariff. 
- __The result__ is a tiny domestic industry of formula makers dominated by a handful of companies, like Abbott.

Bottle

__This isn’t just a production issue…__ it’s a policy issue. The pandemic caused both the Trump and the Biden administrations to emphasize domestic manufacturing (aka: on-shoring). But the worsening formula shortage illustrates the pitfalls of limiting imports of basic necessities. Washington appears to be listening: the White House [said](https://www.nbcnews.com/politics/white-house/biden-speak-retailers-manufacturers-baby-formula-shortage-rcna28538) yesterday it’s working to reduce red tape and make it easier to import formula.

America’s baby-formula shortage exposes the risks of US-first trade policies and strict regulation

The average American adult has a net worth of $79,952

🫧 Crypto, untethered

__April showers bring...__ May's expensive water bill. We're checking in on our old frenemy, inflation. Consumer prices were up 8.3% in April from a year earlier. The pace of inflation slipped a bit from March, falling for the first time in eight months — but is still close to a 40-year high. The biggest culprits were food, plane tickets, and housing. Zooming in:

- __That bites:__ Food prices were up over 9% from a year ago. Dairy products jumped 2.5% from March alone, the category's largest monthly price gain since 2007. Milk is up 15% from April 2021, and your omelet isn't faring much better: eggs are +10% month over month.
- __Not fly:__ Your summer getaway’s making you sweat before you hit the beach. Airline fares were up a whopping 33% from a year ago, and soared 19% from March alone. 
- __Lost steam:__ Not everything got more #flated. Energy and clothing prices fell from March to April, with gas dropping 6%. Don't get too pumped — that’s still up 44% year over year.

__JFK to LAX...__ You know it's bad when $600 looks like a sweet deal. With stimulus gone, consumers are dipping into savings to support [rising spending](https://snacks.robinhood.com/newsletters/7Eii6CUWY0BFV8UUv3TpJD/articles/6HBcxIs3mE0INLHalLT7zn/). The Fed’s hiked rates twice so far this year to tame prices, but April's data inspires little confidence that broad inflation is cooling. And despite the hot labor market, prices are rising faster than historically high wage gains.

The dreaded dairy aisle (Michael M. Santiago/Getty Images)

Flated

__Lower income = smaller runway…__ Americans with low incomes are the [most sensitive](https://www.npr.org/2022/05/11/1097966775/inflation-poor-income-inequality-biden-federal-reserve) to inflation because they have smaller cash reserves to meet elevated prices for necessities (think: $4.50 milk gallons and wild rent prices). While there are signs that inflation could be peaking, the real question is how long it’ll take to get back to “acceptable” levels. The longer it takes, the sooner savings will run dry.

From flights to cheese, prices are still rising — and while inflation could be peaking, real relief looks distant

__Sunbathing at a shepherd’s hut…__ welcome to the new age of great escapes. __[Airbnb](https://robinhood.com/stocks/ABNB)__ has launched its biggest makeover in more than a decade, hoping you’ll ditch your spa getaway for an off-the-grid excursion. The revamp includes the ability to search by category, from castles to tiny homes, no specific destination required. Plus:

- __AirCover:__ Free travel protection with a 24/hr safety line, and a “get what you booked” guarantee. AKA: travel insurance. 
- __Split stays:__ A frictionless way to split longer trips between two homes, intended to appeal to digital nomads.
- __“OMG” getaways:__ A new category highlighting IG-worthy stays, like an alien-themed [glamping](https://www.airbnb.com/rooms/33518282/photos?source_impression_id=p3_1652292763_%2B1kSo8fTVlR2YqQj) site in Joshua Tree (FYI: it’s booked solid till 2025).

__Team meetings in Tahoe...__ Airbnb almost collapsed when Covid hit, cutting a [quarter](https://www.npr.org/sections/coronavirus-live-updates/2020/05/05/850986054/airbnb-cuts-1-900-jobs-25-of-its-workforce-as-pandemic-freezes-travel#:~:text=Airbnb%20says%20it's%20cutting%201%2C900,email%20to%20employees%20on%20Tuesday.) of its workforce as bookings fell off a cliff. But the rental giant staged a quick pivot — not to mention an IPO — recognizing that "old" travel was gone while creating experiences for remote safety-conscious customers. Bookings [reached](https://www.cnbc.com/2022/05/03/airbnb-abnb-earnings-q1-2022.html) a record 102M last quarter, and nearly a quarter were long-term rentals. The company expects a strong summer travel season to keep fueling record sales.

- __Rental competition:__ Rival __VRBO__ (owned by __[Expedia](https://robinhood.com/stocks/EXPE)__) also [saw](https://skift.com/2022/05/02/expedia-says-half-of-recent-vrbo-customers-were-new/) record bookings in the first quarter, and said half its customers were brand new.
- __7 out of 10 Americans__ expect to travel this summer, though inflation could scramble some of those plans.

Treehouse

__Flexibility and discoverability are the future of travel…__ and Airbnb has always had a built-in advantage for that future. Its revamp is intended to merge the things that customers love about the service (think: the whimsy of finding and staying in a treehouse) with the comforts of the traditional hotel experience (think: getting exactly what you pay for, and a refund if you don’t).

Airbnb pulled off a pandemic turnaround for the ages — now it’s betting on a future with all-new travel habits

From flights to cheese, prices are still rising fast — and while inflation could be peaking, relief looks distant

There’s enough concrete in the Hoover Dam to pave a highway from San Francisco to NYC

⛰️ Inflation’s peak?

__Not so stable after all…__ Stablecoins are causing crypto chaos. Refresher: stablecoins are cryptocurrencies whose value is (theoretically) pegged to another asset, like the USD. But this week __TerraUSD__ (UST), the third-largest stablecoin, was unpegged from its $1 value and [fell](https://www.cnbc.com/2022/05/10/bitcoin-btc-investors-panic-as-terrausd-ust-sinks-below-1-peg.html) to $0.62. Investors then sold UST (think: crypto bank run), sending jolts through the market.

- __Broken algorithm:__ Most stablecoins are backed by cash reserves, but “algorithmic” coins like UST are backed by “sister” coins. When one sister dips below $1, it can be swapped for the other at a small profit, which (theoretically) keeps both stable. 
- __Bitcoin bailout:__ During this week’s bitcoin sell-off, UST *and* its sister coin slumped together, causing investors to ditch *both*. To prop ’em up, UST’s creator sold some bitcoin from a $3.5B emergency stash — but UST still isn’t back to $1.

__Crypto’s confidence crisis…__ goes beyond stablecoins. The crypto market has lost nearly $2T in capitalization from its November peak. Even __[bitcoin](https://robinhood.com/crypto/BTC)__ is down 50% since then, which has led analysts to question its status as “reserve currency” for other coins like UST. 

- __Companies__ including __[Tesla](https://robinhood.com/stocks/TSLA)__, __[Square](https://robinhood.com/stocks/SQ)__, __[Coinbase](https://robinhood.com/stocks/COIN)__, and __[MicroStrategy](https://robinhood.com/stocks/MSTR)__ have lost billions on crypto in recent months. 
- __El Salvador,__ which accepts bitcoin as legal tender, has lost $$ too (though it bought 500 bitcoin this week).

A stablecoin breaks the buck (dem10/Getty Images)

Unstable

__Most cryptos were minted in calm weather…__ Now they’re caught in the path of two storms: regulation and recession. UST’s “buck-breaking” moment showed that even so-called stable coins are risky, prompting Treasury Secretary Janet Yellen to call — again — for new crypto rules. Plus, economists predict a recession’s coming, which could cause un-tested coins like UST to lose *more* value. Investors may get caught in the rain: most short-term crypto investors are already underwater, and more than half of bitcoin holders are in the red.

A stablecoin just “unpegged” from the dollar, testing crypto’s ability to weather big downturns

__Loanly, I'm Mr. Loanly...__ "Buy now, pay later" doesn’t sound as good as it used to. The days of near-zero interest rates and stimmy checks are gone, and it's [hurting](https://techcrunch.com/2022/05/10/the-bnpl-boom-may-be-fading/) loan providers — from BNPL firms like __[Affirm](https://robinhood.com/stocks/AFRM)__ to accessible lending platforms like __[Upstart](https://robinhood.com/stocks/UPST)__.

- __Shares of Upstart tanked__ 56% yesterday, despite the company's better-than-expected [earnings](https://ir.upstart.com/news-releases/news-release-details/upstart-announces-first-quarter-2022-results) (revenue more than doubled and profit 3X'd).
- __The AI-driven platform__ connects people with less-than-stellar credit scores to lenders with favorable terms. Its mantra: "you are more than your credit score."
- __Problem:__ Upstart cut its revenue forecast for the year and predicts lower sales and zero profit for this quarter.

__Pay in installments?...__ Maybe *nah*. Lending [boomed](https://snacks.robinhood.com/newsletters/1TtUXZyHvZ2SETOZOaUYq7/articles/2wpby5ZPzAfks9OlK1Syl/) during the pandemic as extra-low interest rates made borrowing cheap — from home buying to online clothes shopping. BNPL firms like __Afterpay__, __Klarna__, and Affirm thrived by letting you buy those $700 Gucci loafers *now* and pay in installments *later*. Last year, Americans spent more than [$20B](https://www.sfgate.com/news/article/influencers-lead-Gen-Z-into-debt-17142294.php) through BNPL. Almost a year ago, Klarna hit a $46B valuation, becoming the second-most-valuable private fintech. Now:

- __Interest rates__ are expected to keep rising as the Fed tightens its monetary belt to fight inflation. Cue: Affirm stock, down 81% this year. 
- __Loan-default rates__ are rising after cruising at historic lows for the past year and a half. Lenders are demanding higher interest to make up for higher risk.

BNPN

__When rates rise, BNPN wins…__ That’s “buy now, pay now.” Rising rates make loans more expensive — from credit-card debt to car leases — so consumers might start taking out fewer loans (hence: why Upstart slashed its forecast). Now the BNPL sector is being repriced to reflect that, and debt-laden Gen Zers are starting to [turn against](https://www.sfgate.com/news/article/influencers-lead-Gen-Z-into-debt-17142294.php) the services whose growth they fueled.

Upstart and Affirm shares plunge as the “buy now, pay later” boom fades — now, rising rates could boost “BNPN”

A stablecoin “unpegged” from the USD, testing crypto’s ability to weather big downturns

The T. Rex was alive closer in time to humans than to the stegosaurus

🪙 Unstablecoins

__Over prescribed…__ and under investigation. This weekend, online mental-health startup __Cerebral__ [said](https://www.wsj.com/articles/cerebral-receives-subpoena-from-federal-prosecutors-11651950307?mod=business_lead_pos12) it’s been subpoenaed by the feds over its pill-prescription practices. Refresher: the FDA changed the rules to allow virtual prescriptions during the pandemic — even for ADHD meds like Adderall, which are easily abused. Last year, ADHD drug prescriptions jumped 10% from 2020, and critics [worry](https://www.wsj.com/articles/startups-make-it-easier-to-get-adhd-drugs-that-made-some-workers-anxious-11648267205) telehealth startups have become digital pill mills:

- __In March,__ Bloomberg and the WSJ [reported](https://www.bloomberg.com/news/features/2022-03-11/cerebral-app-over-prescribed-adhd-meds-ex-employees-say) that Cerebral and __Done__ pushed workers to prescribe ADHD meds after 30-minute video sessions. 
- __In response,__ __[Walmart](https://robinhood.com/stocks/WMT)__, __[CVS](https://robinhood.com/stocks/CVS)__, __[Walgreens](https://robinhood.com/stocks/WBA)__, and startup __Truepill__ reportedly stopped distributing ADHD meds for telehealth startups, with Cerebral also pausing new ADHD scripts.

__Robo-therapy roller coaster…__ It’s not just ADHD: rates of anxiety and depression [spiked](https://www.who.int/news/item/02-03-2022-covid-19-pandemic-triggers-25-increase-in-prevalence-of-anxiety-and-depression-worldwide#:~:text=Wake%2Dup%20call%20to%20all,mental%20health%20services%20and%20support&text=In%20the%20first%20year%20of,Health%20Organization%20(WHO)%20today) 25% during the pandemic, the WHO said. So did [investment](https://www.wsj.com/articles/as-demand-for-mental-health-care-booms-investors-see-opportunities-11652018401?mod=business_lead_pos7) in mental-health startups: nine of them (including Cerebral) hit unicorn valuations ($1B+). But many execs at these fledgling companies have no medical background, and some have been accused of using Silicon Valley strategies that prioritize growth over patient care:

- __Viral marketing:__ Cerebral reportedly spends millions on ads on __TikTok__, Insta, and __Google__ each month; some patients say TikTok ads convinced them they had ADHD. 
- __D2C pill subscriptions:__ Cerebral and Done charge patients a monthly fee, meaning they earn more from long-term prescriptions.

Telehealth under scrutiny (MirageC/Getty Images)

Pills

__Telemedicine is pharma’s Wild West…__ and the Cerebral case could mean regulators are ready to play sheriff. The telehealth model exploded during Covid, when VC-funded startups took a page out of tech’s "growth at all costs" playbook to scale fast. But a one-size-fits-all telehealth model may not work as well for complex diagnoses like ADHD as it does for common ailments like the flu — and this tele-Adderall crackdown could signal more regulation to come.

Regulators investigate mental-health startup Cerebral, signaling an end to telehealth’s Wild West

__Swapping face masks for lip kits…__ Saturday nights are back. As more of us get glammed up for social soirees, multistep skin-care routines are taking a back seat. Beauty giant __[Coty](https://robinhood.com/stocks/COTY)__ — home to names like CoverGirl and Kylie Cosmetics — [saw](https://investors.coty.com/news-events-and-presentations/news/news-details/2022/Coty-Reports-3Q22-Sales-Growth-Ahead-of-Expectations-and-Progress-Across-All-Metrics/default.aspx) sales jump 15% last quarter. It’s expecting an even bigger profit bump this year thanks to the [return of IRL events](https://snacks.robinhood.com/newsletters/7Eii6CUWY0BFV8UUv3TpJD/).

- __Like bees to honey:__ Coty's portfolio of luxe fragrance lines grew 20% as middle-seat-bound travelers splurged on name-brand sprays from __[Burberry](https://robinhood.com/stocks/BURBY)__ and __[Gucci](https://robinhood.com/stocks/REAL)__.
- __Clean face:__ Coty’s CEO said natural cosmetics (think: vegan, eco-friendly ingredients) were also a key growth [driver](https://www.fool.com/earnings/call-transcripts/2022/05/09/coty-class-a-coty-q3-2022-earnings-call-transcript/), a trend that took off during the pandemic.

__Welcome to the makeup renaissance…__ where cosmetic giants from __[Estée Lauder](https://robinhood.com/stocks/EL)__ to __L’Oréal__ post record sales as you ditch the couch for a night out. In the US, shoppers are using their extra $$ to [splurge](https://www.reuters.com/business/retail-consumer/loreal-first-quarter-sales-up-135-2022-04-19/) on TikTok-inspired beauty trends and eye-popping palettes. Last year, US “prestige beauty” sales (think: department-store brands like __Clinique__) [rose](https://www.gcimagazine.com/consumers-markets/news/22018003/the-npd-group-2021-us-prestige-beauty-growth-drivers-ranked) 30% from the year before, topping pre-pandemic levels. Now:

- __In stores:__ Beauty retailers like __Sephora__ and __[Ulta](https://robinhood.com/stocks/ULTA)__ have seen foot traffic [jump](https://www.premiumbeautynews.com/en/u-s-beauty-market-to-grow-as,20284) 25% compared to last year.
- __Online:__ Coty said its e-commerce sales [rose](https://investors.coty.com/news-events-and-presentations/news/news-details/2022/Coty-Reports-3Q22-Sales-Growth-Ahead-of-Expectations-and-Progress-Across-All-Metrics/default.aspx) double digits, even after hiking prices to keep up with higher packaging and ingredient costs.

Blush

__Don’t call it a cosmetics comeback…__ at least not yet. Coty’s still at the mercy of all the usual economic headwinds (supply backups and inflation). Plus, WFH and flexible work situations have sent [weekly](https://www.kantar.com/inspiration/fmcg/less-is-more-how-the-pandemic-shifted-the-beauty-market) makeup usage down 28% compared to 2019. Coty’s premiumization (think: fancy-fied products it can charge extra for) has kept sales strong. But the stock hasn’t caught up: Coty shares are [down](https://robinhood.com/stocks/COTY) 25% this year.

Coty sales are a vision as consumer demand for cosmetics defies rising inflation

An investigation of health startup Cerebral could end telehealth’s Wild West era

The Nasdaq — down 27% this year — has given up all its 2021 gains