Hey Snackers,
Consumers are buying now and returning later: product returns cost the retail industry an estimated $890 billion last year, as return rates have more than doubled since 2019 and the associated costs have risen even more. As for the demographics primarily responsible, higher-income shoppers are returning items at nearly twice the rate of lower-income households, but one generation has the lowest return rate â unless itâs for electronics.
After stocks ended last week with their best day in months, they took a breather Monday, ending near session lows. The S&P 500 fell 0.4%, the Nasdaq 100 gave back 0.3%, and the Russell 2000 was at the bottom of the pack with a decline of about 1%.
Within the S&P 500, there were 299 more losers than gainers, the most broadly negative day in over a month.
Dr Pepper needs a coffee break
Seven years ago, a deal was made, and Dr Pepper Snapple Group merged with Keurig Green Mountain to become the diversified beverage giant Keurig Dr Pepper.Â
Sure, the city fathers clucked their tongues and stroked their beards and wondered, âAre you really sure that it makes sense to be both a coffee company and a soft drink company,â or perhaps, âThose really donât seem like similar products is all Iâm saying,â and naturally, âI donât see a lot of supply chain efficiencies across those two product lines,â but the companies defied the haters and merged.
Well, you really do have to hand it to the haters â they nailed it. They were totally right on this one.Â
Keurig Dr Pepper has announced a plan to buy Dutch-based JDE Peetâs NV for 15.7 billion euros (or roughly $18.4 billion) in an all-stock deal.
It will then cleave itself in two, separating the newly combined companyâs coffee and other refreshment drinks into stand-alone entities. One company will sell coffee; another will sell soft drinks. You know, just like seven years ago.Â
âUpon separation, Global Coffee Co., with approximately $16 billion in combined annual net sales, will be the worldâs largest pure-play coffee company,â Keurig said in a press release.
Investors appear to dislike this development, with the stock at the bottom of the S&P 500 and finishing the day down 11.5%.
The Takeaway
If thereâs one persistent trend of the past few decades, itâs that markets abhor a conglomerate. Companies that try to have a diversified portfolio are often judged not by the strongest business in that portfolio but rather the weakest card in their hand. Keurig Dr Pepper is a strong fizzy beverage company with a struggling coffee business, and by splitting apart, presumably it hopes that investors will more appropriately value its cold bev biz.Â
Osteoarthritis + Cancer: One Drug May Treat Two Diseases, You Can Invest
While Wall Street reacts to market dips and Big Tech earnings, Cytonics is focused on a steady step forward in biotech.
Cytonicsâ breakthrough drug for osteoarthritis, CYT-108, may be able to halt and repair joint damage at the molecular level. Currently in FDA human clinical trials, CYT-108 could soon become one of the first disease-modifying drugs to hit the $393 billion global osteoarthritis market.1
But CYT-108âs potential applications donât stop there. Recent research has indicated that it may also block the enzymes that drive tumor growth and metastasis in patients with melanoma. Just last week, Cytonics filed a U.S. provisional patent to expand the drug into melanoma â giving the drug dual-indication potential.
Everyday investors can still get in on Cytonicsâ offering at $3/share2â but only until tomorrow when the round closes.
The minimum investment is $501.
Temu crushed on profits right before it runs into the tariff buzzsaw
PDD Holdings â the parent company of Temu, best known for offering low-cost consumer goods through the mail â reported earnings, with revenues of nearly 104 billion yuan ($14.5 billion) modestly exceeding expectations and adjusted diluted earnings per share of 22.07 yuan ($3.08) crushing estimates for 15.50 yuan. Â
Unfortunately for them, âlow-cost consumer goodsâ is more of a pre-tariff phenomenon, and even the âthrough the mailâ bit is getting dicey.
During the conference call, co-CEO Jiazhen Zhao cautioned that this was more of a bumper quarter for the bottom line.
âWe do not believe this quarterâs profit levels are sustainable,â he warned, with other executives citing positive e-commerce seasonality as a factor juicing these results.
Over the course of the quarter, PDD Holdings had to grapple with the end of the âde minimisâ exemption that allowed inexpensive shipments to come into the US duty-free. Moving forward, packages of any value are going to get hit with tariffs, which is a problem when your American business was built on cheap packages avoiding that.Â
The Takeaway
So, how bad is the death of de minimis going to be?
âWhile margins are unlikely to return to prior highs, early signs suggest profitability may prove more resilient even as the company sustains investment and prioritizes long-term growth over short-term gains,â Bloomberg Intelligence senior industry analyst Catherine Lim wrote.
Are cannabis reform hopes finally more than a pipe dream?
Rumors regarding changes to marijuana regulation have been some of the largest catalysts for price movement in cannabis companiesâ stocks. Recently, a report that President Trump was âconsideringâ reclassifying marijuana as a less dangerous drug boosted shares of Tilray, Canopy, and SNDL. Now even analysts are growing bullish on the future, upgrading price targets for two of those companies.
Yesterday's Big Daily Movers
Nvidia rallied after releasing Jetson Thor, a platform it calls a ârobot brainâ
Home goods retailers Wayfair, RH, and Williams-Sonoma fell following Trumpâs threat to impose tariffs on US furniture imports
Roblox jumped after setting a record of more than 45 million concurrent players over the weekend
Semiconductor testing equipment maker Aehr Test Systems skyrocketed after a âworld-leading hyperscalerâ boosted its order
Warren Buffett says heâs not looking to buy a second railroad, sending CSX down
Jumpstart your options journey
The most powerful tool in any traderâs toolbox is education. For the options-curious, weâve created a beginner-friendly guide that helps dispel common options myths, explains options basics, and helps you understand how to turn your market opinions into options trades.
What Else We're Snackin'
Teslaâs robots get the same treatment as its cars: cameras and video, forgoing expensive sensors like lidar and radar
American Eagleâs Sydney Sweeney boost isnât enough to offset tariffs
Skinny, curved: the iPhone is finally getting a glow-up
Elon Musk is suing Apple and OpenAI, accusing the iPhone maker of unfairly favoring ChatGPT in its App Store
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Snack Fact Of The Day
Bitcoin treasury company Strategy now holds 3% of the total bitcoin supply.
Today's Events
July durable goods
August consumer confidenceÂ
Earnings expected from MongoDB and Box
1 The estimated global osteoarthritis (OA) market = TNF-alpha global sales x [ratio of OA prevalence to rheumatoid arthritis (RA) prevalence]. OA is 9x more common than RA. OA estimated market = $43B x 9 = $393B.
2 The minimum investment is $501 (167 units). This is a paid advertisement for Cytonics Regulation A+ Offering. Please read the offering circular and related risks on the Cytonics StartEngine page.
Investing in private company securities is not suitable for all investors because it is highly speculative and involves a high degree of risk. It should only be considered a long-term investment. You must be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid, and there is no guarantee that a market will develop for such securities.