Hey Snackers,
Spies are worried about AI, while also wanting it to do their work (they’re just like us). Microsoft developed a genAI model for the US intelligence community that’s separate from the internet. Doesn’t mean the CIA won’t have to deal with hallucinations.Â
Stocks were mixed yesterday, with investors taking a step back after a four-day hot streak. Meantime, data showed that the rate at which consumers are falling into delinquency because of credit cards and auto loans is cooling.
Hey Dude scuffs up Crocs’ shiny earnings as the ugly-shoe industry marches on
Sport mode engaged… Crocs comfortably beat quarterly growth expectations this week, announcing it had sold 32M pairs of its holey kicks. The brand’s having a banner year: Crocs’ stock is up about 40%, and its recent Pringles collab sold out almost instantly. But something is cramping its style: Hey Dude, the lightweight slip-on loafer brand that Crocs bought for $2.5B in 2022, is underperforming. Hey Dude sales fell 17% last quarter, and Crocs slashed the brand’s annual forecast, expecting revenue to decline up to 10%.
Hey Dude, don’t make Crocs bad… Hey Dudes, lacking the irony capital of Crocs, have been called tissue boxes, too large, bread-loaf-like, and even “relationship-threatening.” And they cost $40 to $75 a pair.
Take a sad clog and make it better… Aware of its slip-on snafu, Crocs last month rehired former chief marketing officer Terence Reilly (who’d left to help turn Stanley cups into a wrestling-in-Target-worthy sensation) to lead Hey Dude.
Camp style… Aside from Hey Dude, Crocs earnings reflected strong loyalty among the Jibbitz-lovin’ public. Crocs-specific sales rose 15%, with international demand leading growth. Its success has spread across the industry as footwear companies capitalize on the ugly-fashion trend. Birkenstock’s revenue jumped 22% in its holiday quarter on strong US demand. Mschf’s $350 Big Red Boots sold out in seconds last year (and a Crocs collab version retailed for $450). And New Balance is releasing an already viral “snoafer” frankenshoe this summer.
“Functional footwear” walks a fine line… between appealingly “dad shoe” and unironically uncool. The pandemic trend of comfy-is-cool has persisted, but like Hey Dude, not all comfort-first shoes see success. Allbirds sales have sagged for several quarters and its market cap has plunged from $4B+ at its 2021 IPO to about $100M.
Reddit sets the tone for benchwarmers waiting to go public, in its first post-IPO earnings
Good karma… Reddit shares jumped after the social co reported surging user #s and revenue, the first time Reddit’s reported quarterly results since going public in March. Daily users grew 37% annually to a record 83M, as Redditors browsed pages like r/birdswitharms. In between yoked bird pics, users saw ads: revenue grew 48% to $243M, with ad $$ accounting for the bulk of it.
You r/unprofitable: Reddit’s never turned a profit, and its quarterly loss widened to $575M from $61M last year (it cited IPO-related costs).
High-intent users… Reddit’s pitch deck to advertisers is a bit different than that of its social-media peers (BTW: Meta and Snap also enjoyed growing ad sales last quarter). Instead of chatting with friends and browsing selfies, Reddit users visit hyper-specific pages like r/Mattress — which could be an appealing ad buy for a home-goods store. Reddit visits are so intentional that it’s become a quasi search platform as users add “Reddit” to the end of their Google queries (picture: “best mattress reddit,” “weird bump on finger reddit”). Reddit doubled down on that symbiosis by cutting an AI-licensing deal with Google that could be worth $60M/year.
One downside: More than half of Reddit users aren’t logged in (they’re “lurkers”), meaning Reddit and its advertisers could lose out on some engagement and data.
Success is contagious… There’s a lot of pressure on little Snoo, Reddit’s alien mascot. Reddit was the first social platform to IPO since Pinterest in 2019, and the 19-year-old company went public during a debut drought. Its share price has yet to dip below its $34 IPO price, and that success could inspire private companies on the bench to hit the public field. Dealmaking may already be picking up: 20 US companies went public in April, up from 12 in March.
The roles most likely to add AI to their résumé to stay relevant
It seems like the people in the jobs most threatened by generative AI are also the most likely to add AI to their résumés. In the past six months, non-technical professionals have boosted their use of AI-focused LinkedIn Learning courses by 160%, a Microsoft report said.
What else we’re Snackin’
Pancaked: Applebee’s and IHOP parent Dine Brands said its profits petered out last quarter, with resto sales declining. The fast-casual slump isn’t unique to Dine as people with lower incomes cut back.
WTFTX: FTX said many customers will be fully reimbursed (thanks: recent market gains). The catch: they’ll receive the dollar amount that their crypto was worth at the time of the bankruptcy. FYI: bitcoin has 3x’d since then.Â
Surprise: Uber swung to a Q1 loss, despite growing ride and Eats demand (partly to blame: settlements and investments). Rival Lyft’s bookings and riders accelerated, sending shares up nearly 5%.Â
ElectAI: OpenAI joined a nonprofit setting standards for identifying digitally manipulated content like deepfakes. The issue could get thorny for genAI giants ahead of the US presidential election.
Slipify: Shopify shares slid 19% — its worst one-day drop — after the ecomm colossus said it expects growth to cool as it competes with shopping stars Temu and Shein. Still, it had a strong Q1.
Snack Fact of the Day
Just 8% of large US companies with hybrid-work policies require employees to go to the office on Fridays
Thursday
Unemployment data
Peabody Awards winners announced
Blues Music Awards
Earnings expected from Warner Bros. Discovery, Six Flags, Warner Music Group, Dropbox, H&R Block, Roblox, US Foods, Hyatt, and Groupon
Authors of this Snacks own bitcoin and shares of: Alphabet, Microsoft, Reddit, Shopify, Snap, and Uber