👗 Shein’s labor stitch
Hey Snackers,
Apple is getting some free publicity from an unlikely source: the NYPD is urging people to help fight auto theft by sticking AirTags in their cars. More Apple in the Big Apple could beat bad apples?
Stocks fell yesterday as investors worried about the Fed’s rate-hike decision today coupled with weakening labor-market data. March job openings fell to their lowest level in nearly two years as layoffs jumped to 1.8M. And Treasury Secretary Yellen said the US government could default as soon as June 1 if Congress doesn’t raise the debt ceiling.
Shein's mega-IPO could come unstitched as US lawmakers flag forced-labor concerns
Initial public audit… Shein may be preparing to go public this year, but the $64B fast-fashion phenom could be in a stitch as regulators dig into its production practices. Shein is America’s largest fast-fashion brand and could become one of the biggest Chinese companies to ever list in the US. But recently a group of bipartisan lawmakers urged the SEC to pause Shein’s IPO until they can prove it doesn’t use forced labor in China to make its clothes.
Shein’s been accused of mistreating Uyghurs workers (a marginalized minority in China) and falsifying reports of forced or underpaid labor at its supplier factories.
Shein says it has a “zero tolerance for forced labor.” But lawmakers want the SEC to order an independent audit (read: without China’s influence) of Shein’s labor practices.
Not buying it… As Shein’s US popularity skyrockets, so has scrutiny over what it takes to churn out thousands of cheap new styles listed on its site each day. Last year a Bloomberg report said that some of Shein's clothing contained cotton from China’s Xinjiang region. Governments and human-rights groups have accused China of running detention camps and forcing people to work in Xinjiang. Beijing denies that.
Fast commerce can breed fast solutions… and fast consequences. In addition to concerns over rights abuses, ultrafast-fashion brands like Shein have raised sustainability red flags. Shein alone contributes millions of tons of carbon emissions every year. But as consumers seek cheap convenience, fast-commerce competition is only growing: Shein’s China-based rival, Temu (picture: Wish.com meets Amazon), became the most-downloaded app in the US after its Super Bowl ad dropped back in February.
Coinbase and Gemini expand offshore as crypto heads for the US exits and finds a crowd
Traveling overseas… but it’s not a summer vacay. Yesterday, Coinbase launched an international exchange in Bermuda while New York-based (and Winklevoss twin-founded) exchange Gemini announced a derivatives platform anchored in Singapore. The expanded footprints will give the two crypto companies access to more flexible regulatory environments and allow them to serve up new products to new customers:
Coin "big money" base: Coinbase International Exchange says it’ll offer perpetual futures (think: no expiration) to non-US institutional investors only.
Gemi-no Brits allowed: Gemini Foundation will sling crypto derivatives to both retail and institutional customers in 30 countries — excluding the EU and UK.
When things get awkward at home… Coinbase has implied and Gemini has said outright that what they view as messy legal guidance from US regulators played a role in the decision to pack their business bags. Last week Coinbase sued the SEC to try to force the regulator to respond to its 2022 petition seeking crypto-specific rules. Meanwhile, the commission is considering suing Coinbase. It also accused Gemini of selling unregistered securities through its (now shuttered) lending program, Gemini Earn. SEC Chairman Gensler said his agency is just enforcing the existing securities rules.
The grass looks greener even when it's overgrown… Coinbase and Gemini are just the latest crypto cos to go international as US regulators crack down. Last month Kraken, another US-based exchange, secured a license to operate in Ireland (and Bittrex, which was once the largest US exchange, ditched America altogether). But wherever expanding US crypto companies settle, they risk finding the green grass thoroughly trampled on by already dominant international players like Binance.
ESPN may have the final say on when cable TV dies, but Disney is having trouble cutting the cord
Not with a bang… but with a merger. Disney's iconic cable network ESPN will eventually go entirely online, merging with its streaming counterpart ESPN+, say network chair Jimmy Pitaro and Disney CEO Bob Iger. Live-sports broadcasting is seen as a lifeline for cable companies, which lost another 3.5M subscribers last year, and ESPN’s full-stream move would likely hasten cable’s demise.
Meeting in the middle: the ESPN network has 74M subscribers, a 25M drop from a decade ago. ESPN+ has 25M subscribers after launching five years ago, and viewership surged 53% last year.
On the horizon: ESPN+ began airing MLB games last year, and the network has already started contract-renewal talks with the NBA, looking to put games on ESPN+ by 2025. Last year the streamer aired 27K live events.
Eating cable’s lunch… and dinner too. Live-sports deals are the hottest ticket in streaming, with Apple nabbing MLB games and YouTube winning the bidding war for NFL Sunday Ticket, in the industry’s effort to scoop up linear TV’s most successful content. Even channel surfing isn’t unique to cable anymore: in March, combined US viewership of Pluto TV and Tubi (which stream live channels) matched that of Disney+.
Profit can take precedence over preference… Only half of US households pay for TV packages, down from 85% a decade ago. But despite the trend, Disney is having a hard time letting go, since linear TV generates more $$ than streaming (its streaming biz actually loses money). Discounted bundles mean Disney earns less on streaming subscribers.
What else we’re Snackin’
Surge: Uber stock shot up 12% after it delivered stronger-than-expected revenue growth as its loss shrank. Bookings rose 40% as riders accepted 4X surges to brunch, while Eats growth slowed from pandemic highs.
Cut: The Writers Guild of America went on strike yesterday for the first time since 2007. With 11K+ movie and TV writers putting down their pens, shows like “Jimmy Kimmel Live” are expected to go dark.
Automate: IBM says it plans to pause hiring for 7.8K roles that could be replaced by artificial intelligence. CEO Arvind Krishna predicts AI could scrap 30% of non-customer-facing jobs in five years (like: HR).
Gonezo: Vice Media, once a $5.7B company, could soon file for bankruptcy — piling on to this year’s shutdowns of BuzzFeed News and Gawker, plus industry-wide layoffs. Rough economy + ad pullback = profit strugs.
Flunk: Chegg stock plunged nearly 50% yesterday after the education-tech provider said ChatGPT is hurting its growth. Chegg thrived mid-pandemic as students flocked to the company. Now it’s scrambling to roll out an AI bot.
Wednesday
- Earnings expected from CVS, Wingstop, Kraft, Estée Lauder, Yum Brands, and Barrick Gold
Authors of this Snacks own shares of: Apple, Amazon, Barrick Gold, CVS, Disney, Google, Kraft, Uber, and Yum Brands