__Percey or Watts frame?__ __[Warby Parker](https://robinhood.com/stocks/WRBY)__ shares jumped 35% yesterday after [directly listing](https://www.wsj.com/articles/warby-parker-to-start-trading-on-nyse-11632913202) on public markets, giving the direct-to-consumer glasses giant a $6B valuation. Warby’s direct listing means it didn’t pay i-banks’ big fees to IPO, but released existing shares straight to investors. Last year, Warby’s sales grew faster than Ray Ban maker __Luxottica’s__, but the 11-year-old biz still isn’t profitable. It saw $394M in sales last year, but lost $56M.

__Shifting focus…__ Warby started out 100% online, cutting out price-inflating middlemen to lower the combined cost of frames and prescription lenses to just $95. In 2013, Warby expanded into physical retail with stylish stores for a hybrid D2C experience with soul:

1. __At-home perks:__ Warby offers free home try-on of five pairs, virtual AR try-ons, 30-day returns, and online visits with specialists to extend prescriptions.
2. __Experiential retail:__ Warby’s 145 stores feature friendly barista-like employees, dedicated optometrists, and the aesthetic of a Wes Anderson movie.  
3. __Values-based branding:__ Warby lasered in on social responsibility through its “Buy A Pair, Give a Pair” glasses-donation effort. 

Percey looks great on you [Maskot via Getty Images]

20/20

__Customer love doesn’t always = profit…__ But it’s the first step. Warby pioneered a D2C growth formula built around online sales, engaging stores, and brand values — and other companies quickly copied it. D2C dynamos like __Allbirds__, __[Casper](https://robinhood.com/stocks/CSPR)__, __[Blue Apron](https://robinhood.com/stocks/APRN)__, and __[Honest Company](https://robinhood.com/stocks/HNST)__ all followed Warby’s formula to hit unicorn valuations. But like Warby, they’re also still unprofitable. And investors don’t seem convinced: Casper’s stock is down 60% since its IPO, Honest’s is down 45%, and Blue Apron’s is down 95%.

D2C glasses pioneer Warby Parker just went public — but it’s struggling to turn a profit

__The roof is on fire...__ Or is it the ceiling? There’s a battle between congressional Democrats and Republicans over raising the US Treasury's debt ceiling. A refresher: The Treasury is like Uncle Sam's money manager. It's responsible for handling all federal finances, including managing bills, borrowing, and taxes.

- __The US gov't spends more than it collects__ in taxes, so it needs to constantly borrow to meet its financial obligations. Enter Treasury bonds.
- __The Treasury borrows by issuing bonds__ and bills. Many countries, institutions, and individuals invest in these government IOUs.
- __The debt ceiling is the max amount__ of $$$ that the Treasury can borrow. The US gov't has always paid back its debt to bondholders.
- __The Treasury uses money raised from bonds__ to cover financial obligations. Think Social Security, Medicare, tax refunds, and military salaries.
- __The US needs a higher ceiling__ to cover those expenses, plus trillions worth of Covid spending. The ceiling has been raised or suspended 78 times, but Congress can’t agree to move it.

__The stakes...__ Dems want to suspend or raise the debt limit through legislation. Republicans say Democrats should raise the ceiling without GOP support, in a separate package. While lifting the ceiling doesn't authorize fresh spending, the GOP doesn't want to facilitate the Dems' $3.5T spending plan. 

- __If Congress doesn't act__ by October 18 the Treasury could run out of cash, the US could default on its debts, and operations that rely on gov't funding could slow or stop. 
- __Treasury Sec. Janet Yellen__ believes the issue will be addressed, but said failing to would result in “a historic financial crisis” and "millions of jobs lost.” 

Roof

__“Full faith and credit” has a rep to protect...__ T-bonds are backed by the “full faith and credit” of the US gov't. If the Treasury can’t repay bondholders, investors might lose faith. The US can borrow trillions at very low interest rates, since T-bonds are seen as low-risk. If the US defaults for the first time, investors could become skeptical about lending it money. Higher risk would drive up interest rates on the debt. Higher interest = less money to spend on social programs or higher taxes, which could slow economic growth and increase the $29T national debt.

The fight over the debt ceiling could tank the US economy — and its reputation

Dow Jones

S&P 500

Nasdaq

Bitcoin

👓 Warby's direct-to-consumer IPO

__Say "seamless" again....__ Yesterday, __TikTok__ [hosted](https://www.nytimes.com/2021/09/28/business/media/tiktok-advertising.html) its first-ever "TikTok World" event to inspire brands and "TikTok For Business" clients to spend more ad bucks. TikTok is still the least trusted major social platform, and draws less than $1.3B in estimated annual US ad sales, versus $48B for __[Facebook](https://robinhood.com/stocks/FB)__ and Insta. That’s why it introduced [#seamless](https://www.google.com/url?q=https://newsroom.tiktok.com/en-us/you-are-invited-to-tiktok-world&sa=D&source=editors&ust=1632880275174000&usg=AOvVaw0vKNAZNEVbs_eE_xzs2rEX) new marketing tools, including an automated system that matches advertisers with creators, better ad-targeting tools, and deeper insights on content reach. The Tok also intro'd new shopping features with partners like __[Shopify](https://robinhood.com/stocks/SHOP)__ and __[Square](https://robinhood.com/stocks/SQ)__.

- __TikTok is becoming increasingly important to marketers.__ [71%](https://newsroom.tiktok.com/en-us/new-studies-quantify-tiktoks-growing-impact-on-culture-and-music) of users believe the biggest trends start on TikTok. Think Aerie's viral [leggings](https://www.vogue.com/article/tiktok-made-me-buy-it-aerie-leggings) and KFC's [Hot Chicken](https://www.businessinsider.com/kfc-nashville-hot-chicken-sudden-tiktok-popularity-leads-to-shortages-2021-5).
- __It has hundreds of thousands of advertisers,__ up from just dozens in 2019. This year the share of users who saw ads on TikTok nearly doubled from last year, to 37%. Last year Chinese parent __ByteDance__ saw its sales more than double from 2019.

__Music with a great (algo)rhythm...__ TikTok had 55M users in January 2018. By December 2018, it had 270M+ users post-Musical.ly merger; a year later, it had 500M. This week TikTok [announced](https://www.reuters.com/technology/tiktok-hits-1-billion-monthly-active-users-globally-company-2021-09-27/) it hit 1B+ monthly users, joining FB, Instagram, and YouTube in the elite Billion Social Club. Insta reached the 1B mark in 2018, eight years after launching; it took TikTok less than three. Meanwhile, __[Twitter](https://robinhood.com/stocks/TWTR)__ and __[Snap](https://robinhood.com/stocks/SNAP)__ still have fewer than 300M.


_Ordering 246th pair of viral TikTok leggings [Kelvin Murray/Stone via Getty Images]_

Ad-icted

__Cloned, *but not owned*....__ Social giants are trying to replicate TikTok's success with copycats, from Instagram “Reels” to Snap “Spotlight” and YouTube “Shorts.” Despite that, TikTok has continued strong growth and engagement. US users spend 24.5 hours on TikTok each month, and TikTok overtook YouTube this month for average watch time in the US and UK. But it's not all smooth-Toking: US regulatory scrutiny continues, and ByteDance reportedly postponed its IPO plans indefinitely amid China's tech crackdown.

Cloned, not owned: TikTok hosts its first big ad event and hits 1B users

__When all the pieces fit...__ __Lego__, the world’s largest toy biz by revenue, [revealed](https://www.ft.com/content/d2e845f1-1484-4745-8e3e-4995ee85f772) it hit record sales and profits in the first half of this year. The family-owned Danish toy giant nearly went bankrupt in 2003 after lots of kids abandoned IRL toys for video games. But the pandemic boosted sales across the toy biz.

- __Lego raked in a whopping $990M profit__ for the first half of 2021 — 1,000% more than __[Hasbro](https://robinhood.com/stocks/HAS)__, the world’s No. 2 toymaker. Part of the reason:
- __While Hasbro hiked prices__ because of the global supply crunch, Lego avoided Brickflation by building factories (#RealBricks) in its biggest markets. 

__Build a brick…__ Unlike Hasbro and __[Mattel](https://robinhood.com/stocks/MAT)__, which sell huge catalogs of toys ranging from Nerf Guns and Play-Doh to Barbie and Hot Wheels, Lego built its entire business around humble plastic bricks. And recently it’s found new ways to expand the Lego life:

- __Bricks for all:__ Lego adapted its bricks to audiences with nearly every interest imaginable, from Roman history to video games. It partnered with cultural giants like Marvel to boost popular appeal. Think Minecraft, Harry Potter, and Frozen Lego sets. 
- __The Lego-verse:__ By keeping its core brand simple, Lego laid the foundation for IRL extensions like Legoland theme park and Lego Stores staffed by “Brick Specialists.” It expects to open 174 new stores this year.


Play

__The fun is in the franchise…__ So is the money. Following in __[Disney](https://robinhood.com/stocks/DIS)__'s footsteps, Lego and other toy giants are focused on expanding toy lines into movies: Lego has released several successful Lego flicks, Mattel is developing 13 live-action movies based on popular toy brands like Barbie and Polly Pocket, and Hasbro has already built Transformers into a $5B movie mega-franchise.


Lego’s profits are built on top of its bricks — by making something for everyone

🕺  TikTok’s wild ad-venture 

__Almost autonomous…__ But already famous. __[Tesla](https://robinhood.com/stocks/TSLA)__ finally launched its “full self-driving” (FSD) update, allowing some owners to activate a beta version of its controversial autonomous tech. Tesla fans applauded the unfinished feature, and shares of the EV icon jumped nearly 3% yesterday. The deets:

- __Not-quite-self-driving:__ The update enables “autosteering” around urban obstacles like bikers or pedestrians. Teslas are “Level 2 autonomous,” like models from GM, Volvo, and Toyota, which means drivers must still constantly supervise. Honda sells the most autonomous car yet, a Level 3 that asks drivers to engage only if something goes wrong.
- __No hard braking:__ FSD Beta will be available to Tesla owners who request access and earn high “safety scores” after a week of car-veillance, which measures factors such as aggressive turning.
- __Partial functionality, full price tag:__ FSD costs $10K up front, or $199/month — and an estimated 360K people have already bought it.

__Pump the brakes…__ Yesterday, the head of the National Transportation Safety Board slammed the update, saying Tesla shouldn’t roll out features without addressing existing safety issues. Last month, regulators launched an investigation into Tesla’s self-driving tech, considering 11 separate accidents and one fatality. Tesla’s getting heat over accusations it’s misleading buyers about its self-driving abilities. 


__Tesla is used to moving fast...__ As an EV pioneer, Tesla has often built technology before regulators can even regulate it — think EV charging networks. Tesla claims to make the  “safest cars in the world,” and all its models have received perfect crash-test ratings. CEO Elon Musk has acknowledged that FSD is still dangerously far from full autonomy, but he seems to have no plans to slow the release to wait for regulators. 

As Tesla puts its self-driving tech in the fast lane, regulators push back on safety 

__Broke the #ForYouPage…__ Earlier this month, a real-estate agent [posted](https://www.bloomberg.com/news/articles/2021-09-24/why-is-zillow-buying-up-houses-viral-tiktok-criticizes-firm-for-price-jump?sref=q3KSFp38) a TikTok accusing an unnamed company of manipulating housing prices. Tokers thought he was shading __[Zillow](https://robinhood.com/stocks/Z)__, and the video went viral — nearly 3M views and 450K likes. His allegation: The company uses users’ search data to mass-buy 30 homes at one price, then purchases a 31st home at a higher price to drive up the value of the others.

- __Real estate experts say the Tok claims are unlikely,__ and Zillow denied them. A more probable explanation: Zillow sometimes overpays for homes in the hot market. 
- __Home prices are soaring__, while supply is extra-thin. It's getting harder for regular Americans to buy or rent, so the idea of being intentionally priced-out hit a viral nerve. 

__Late night Zillow scroll…__ A pandemic pastime. Like competitors __Redfin__ and __Opendoor__, Zillow isn't just a listing site  à la Airbnb: it's also a buyer — an *iBuyer*. While advertising *others'* listings is Zillow's main moneymaker, its iBuying segment is growing. It's on pace to buy 5K homes/month by 2024. 

- __iBuying:__ Zillow uses its huge trove of price data to make nearly instant cash offers on homes based on "Zestimates." That cuts out the agent middleman. 
-  __iEarning:__  Zillow charges sellers commission-like fees, and can profit on flipping homes it owns, though margins are generally thin. 


_The TikTok algo comes for real estate [JDC/ Stone via GettyImages]_

__The power of the Tok hits different...__  iBuyers accounted for just 0.2% of all US home purchases in the third quarter of last year. But thanks to one TikTok, iBuying is getting unprecedented attention, and Zillow woke up with a PR mess. TikTok's secret algorithm makes it easier for people without large followings to go viral overnight — harder to do on Insta, __[Snap](https://robinhood.com/stocks/SNAP)__, and __[Twitter](https://robinhood.com/stocks/TWTR)__. We could see more controversies like this, with companies being pushed to react in the speed of a Tok.

TikTok’s rising influence: A viral post targets the online real-estate market

🚗 Tesla goes FSD

__Rough week for PR...__ WSJ got its hands on some juicy __[Facebook](https://robinhood.com/stocks/FB)__-internal docs, and the bad headlines have been snowballing. Controversies include: a secret Facebook [moderation program](https://snacks.robinhood.com/newsletters/6273N36MQkF8DmmFKWXxCz/articles/2ovyNZgvE7UCLZgejwImpo/) that exempts celebs from usual posting restrictions, and a test initiative that pushed positive news stories about FB to users. The latest shocking revelation: FB has extensive [internal research](https://www.wsj.com/articles/facebook-knows-instagram-is-toxic-for-teen-girls-company-documents-show-11631620739) showing that Instagram is toxic for teens.

__Not a secret...__ Criticism of social media's impact on mental health has been building for years, amplified by documentaries like *The Social Dilemma* and vocal lawmakers. What's notable about FB is the scale of the problem. FB researchers consistently found that Insta is harmful for a significant percentage of users — especially young girls.

- __32% of teen girls__ said that when they felt bad about their bodies, Instagram made them feel worse.
- __6% of American users__ who reported suicidal thoughts traced those desires to Instagram. For British users, it was 13%.
- __+178%:__ Suicide deaths for children ages 10 to 14 nearly tripled from 2007 to 2017, when social media saw mass adoption.

__The paradox...__ The most problematic social app features also seem to drive the most engagement — along with profits and stock prices. Last quarter, FB's revenue soared, and profit nearly doubled to $9.5B. __[Snap](https://robinhood.com/stocks/SNAP)__ and __TikTok__ are also experiencing strong growth, largely thanks to young users who are growing up with these apps:

- __40%+ of Insta users are 22 and younger.__ Snap reaches 90% of US 13- to 24-year-olds. And 60% of TikTok users are between the ages of 16 and 24. 


Social

__We might be reaching a tipping point...__ Despite all the bad PR, social companies' revenue engines are thriving. Extensive regulations exist to protect our physical health (think: the FDA for food and drugs, and the NHTSA for driving). But we don't have many guardrails to protect *mental* health. If social giants start seeing regulatory and public criticism hit their balance sheets, an inflection point could force change. Already, lawmakers are pressing Facebook to abandon its plan to launch Instagram for kids.

Facebook’s Spiral: secret docs reveal the extent of Insta’s mental health toll on young users

__Surreal estate...__ Last week, markets wobbled as Chinese property giant __Evergrande__ missed an $83M payment — and it’s just the tip of a *$300B* debt iceberg. Investors [fear](https://snacks.robinhood.com/newsletters/3Bs2pOGJvHdNI3cCRY71xs/articles/1qtE8qfWuwZ3TCDJAbdXaw/) that Evergrande's collapse could cause a Lehman-esque global stock slump, and throw markets into turmoil. If Evergrande defaults, its financial partners, including __HSBC__, __BlackRock__, and __UBS__, could lose big money. Investors are watching to see if Evergrande will come up with the cash during its 30-day grace period — or miss more payments.

__You're gonna need a bigger boat...__ More like a higher ceiling.  Quick refresher: The US Treasury’s borrowing is limited by a “debt ceiling.” If it needs more cash, it asks Congress to raise the cap. Now, the US needs a higher ceiling to cover trillions worth of Covid expenses, but Congress can’t agree on a limit. If a deal doesn't happen, the US could default on its debts for the *first* time. Analysts say there’s a 20% chance of default, which could wipe out as many as 6M jobs and $15T in wealth. 


Zoom Out

Stories we're watching...

__Bed Bath & Beyond expectations...__ When you finally get the fitted sheet on the twin bed. Last quarter, __Bed Bath & Beyond__'s sales of bathroom and home organization products surpassed pre-pandemic levels, doubling from last year. Cue: BB&B raised its annual sales expectations,  and expanded its __DoorDash__ partnership to offer more delivery. We’ll see if the bedding icon saw a back-to-college boost when it reports quarterly earnings Thursday. 

__Fashion vs. #Flation...__ Consumer spending surged this spring when shoppers “revenge spent” on new outfits and plane tickets after a couch-bound year. While boosted unemployment benefits have ended, $300/month child tax credits ([#SecretStimulus](https://snacks.robinhood.com/newsletters/4UfptC7RMAEOo0YSfMmIZm/articles/9MKQo3q2RW7laXpPvRaf6/)) are now getting doled out. Experts expect spending to keep rising, but prices are also continuing to rise (#inflated). We’ll see if "revenge spending" has continued when inflation-adjusted consumer spending numbers drop on Friday.

Events

Coming up this week...

- __[Beat](https://snacks.robinhood.com/newsletters/5FNosAv8NvHNCzrNb49Ii6/articles/4O0eLLUfla8wJsZbvh3aNS/):__ __Universal Music__ shares soared 40% last Tuesday after going public, as the $53B music giant competes to make a soundtrack for the digital economy.
- __[Mine](https://snacks.robinhood.com/newsletters/Wse3pzG993ntz6I6lNfH0/articles/9jkoKs1Rhhifc8OVYQOlZ/):__ __Ford__ partnered with "urban mining" company __Redwood Materials__ to recycle its EV batteries from cars like the Mustang Mach-E.
- __[IRL](https://snacks.robinhood.com/newsletters/Wse3pzG993ntz6I6lNfH0/articles/1Zx3n1CYZfK7B547vqTIGO/):__ __Amazon__ reportedly plans to open physical department stores that feature QR codes, touch screens, and techy dressing rooms. The goal: end "retail ghosting."

ICYMI

Last week's highlights...

_Remembering where the Bed Bath & Beyond coupons are stashed [sturti/E+ via GettyImages]_

📱Insta’s mental health toll

__Disruption on Level 2 Women's...__ __[Amazon](https://robinhood.com/stocks/AMZN)__ upended department stores by becoming a click-to-buy shopping behemoth. Now, the Zon reportedly plans to disrupt physical department stores again — *by opening its own*. Amazon tried to keep it hush-hush, but WSJ's "people familiar with the matter" (#PFWTM) [revealed](https://www.wsj.com/articles/inside-amazons-department-store-plans-high-tech-dressing-rooms-its-own-apparel-brands-11632303002?mod=business_lead_pos2) some juicy deets about the rumored stores...

- __What:__  The Zon's own clothing brands would be featured front-and-center. Amazon launched private label apparel in 2016, and now has 100+ brands. This year, it surpassed __[Walmart](https://robinhood.com/stocks/WMT)__ as America's largest clothing seller (wild). 
- __Why:__ Amazon wants to see if stores can boost sales of private labels, while merging the digital and IRL experience. The first stores could open near San Francisco and Columbus, OH as early as next year.

__Do you have this in size Prime?...__ The most disruptive part of the Zon's rumored stores: techy dressing rooms. According to WSJ, customers could scan QR codes of items they want to try via phone app, while associates gather the fits and deliver them to rooms. But what happens *inside* the dressing room is even techier:

- __No awkward door-talking:__ Instead of calling for help through the door, you could request more items using a touch screen. 
- __No barefoot browsing:__ Instead of rushing out of the stall to dig for better items, the screen could recommend other clothes based on what you've scanned. 

_Alexa, show me this in blue [Kris Ubach and Quim Roser via GettyImages]_

Dressy

__It's harder to "retail ghost" in person...__ That's partly why Amazon has expanded into physical stores for groceries, books, and now potentially clothes. Dressing rooms are the digital shopping carts of physical stores. But it's easier to abandon items in your e-cart than to walk out of a dressing room empty-handed. Clothes typically have higher profit margins than other items. Amazon's hoping its techy rooms will reduce retail ghosting and returns, while boosting cushy apparel sales.   

Amazon reportedly plans to open department stores with techy dressing rooms at the core

__Where is my mined?…__ __[Ford](https://robinhood.com/stocks/F)__ partnered with battery recycler __Redwood Materials__ to recycle EV batteries from its e-cars, like the Mustang Mach-E. Redwood, started by an ex-__[Tesla](https://robinhood.com/stocks/TSLA)__ exec, is a Nevada-based “urban mining” startup. It extracts valuable metals like lithium, nickel, and cobalt from old cell-phones, appliances, and car batteries. One EV battery = 166 iPhones worth of cobalt. How it works:

1. __Trash:__ Ford sends its old EVs to Redwood’s US processing facility.
2. __Transform:__ Redwood recovers 95%+ of battery materials by “mining” metals, then sends them back to Ford. 
3. __Treasure:__ Ford and other car makers build new EV batteries from the reclaimed metals. 

__What’s yours is mine(d)…__ For a price. The metals in EV batteries and smartphones are already pricey because they’re globally sourced: Your iPhone could contain Congolese cobalt or Bolivian tin. But prices are spiking even higher. Lithium prices have *doubled* since November. Battery recycling is booming since it reduces production and transit costs: 

- __$25B:__ How much of its battery-recycling biz Redwood plans to shift from Asia to the US. 
- __$50B and $174B:__ Biden's commitments to the domestic chipmaking and EV industries, respectively. EV incentives could give the battery biz an energy boost.

Mine

__Supply circles are the new supply chains…__ Because one car’s trash is another car’s treasure. Other EV-makers are also trying to “close the loop” of their supply chains by recycling their own batteries: __Tesla__ recycles its e-batteries, and __[GM](https://robinhood.com/stocks/GM)__ partners with battery recycler __Li-Cycle__. It’s not just EVs, either: Next time you recycle your cell-phone or laptop at __[Best Buy](https://robinhood.com/stocks/BBY)__, it could end up with Redwood.

Ford’s new EV battery recycling deal could take “urban mining” mainstream – and ease the supply crunch 

👗 Amazon department store rumors

__Welcome to workationland...__ __[Airbnb](https://robinhood.com/stocks/ABNB)__ CEO Brian Chesky predicts a revolution: *a travel revolution*. At a conference this week, Chesky said he expects the industry to bounce back bigger than ever. Chesky believes a “travel revolution” will usher in a new golden age of travel, that’s more free-style than pre-pandemic travel. What he expects:

- __Long stays:__ 50% of Airbnb stays are a week or more, and 20% exceed a month.
- __Loose plans:__ 40% of travelers don’t initially have a destination or date in mind when they visit Airbnb’s site.
- __Rural > urban:__ Rental occupancy in large US cities fell 11% this year from pre-pandemic levels, but *increased* 27% in rural areas.

__You say you want a travel-ution…__ Airbnb is a comeback story of the corona-conomy. The rental icon lost 80% of its business when the pandemic hit. But it quickly embraced the work-from-home life and catered to changing travel trends. Since then, sales have rebounded to exceed pre-pandemic levels. How Airbnb’s ushering in the travel-ution:

- __“I’m Flexible” options__ let travelers go anywhere, anytime. Handy, since 70% of US companies will continue offering flexible and remote work.
- __Unique stays__ like boat houses, yurts, caves, and even shipping containers cater to adventure-hungry, couch-tired remote workers (#edgy).
- __Off-the-beaten-track options__ in rural allow travelers to stay socially distanced as part of Airbnb’s “Greatest Outdoors” campaign.
- __Online experiences__, like a Mezcal & Tequila Cocktail Masterclass, give travelers Covid-safe options. 


_Airbnb review: 5 stars for location, 1 star for no microwave [Marco Bottigelli/Moment via GettyImages]_

Bleisure

__Revolutionize to thrive...__ is better than “adapt to survive.” Airbnb thrived during the pandemic by recognizing the “old” travel biz was gone, and quickly building new experiences for remote, Covid-conscious customers. But it’s harder for some travel companies to adapt: Despite a rebound in leisure trips, the airline biz is struggling. Business travel, which brings in 75% of airlines' profits, still isn't budging back.  

Airbnb's CEO is planning for a travel-ution — and it’s all about flexibility (and yurts)

__Square-toe heels out in public...__ Princess Polly just hit the US public market. You've probably seen Gen Z “microinfluencers” doing hauls of its clothes (#PollyHaul). The trendy online fashion boutique, owned by __[A.K.A Brands](https://robinhood.com/stocks/AKA)__,  is one of the first fast-fashionistas to hit Wall Street since ASOS. Like ultra-fast fashion giant Shein, A.K.A churns out 500 to 800 styles per week across its brands, which include Princess Polly, Petal & Pup, and Rebdolls. But A.K.A. shares fell 9% after their NYSE debut. 

- __Used > new...__ Fast-fashion isn't so fashionable anymore. Recommerce and thrifting have been #thriving recently thanks to enviro-focused Zillennials.
-  __Wild stat:__ The fashion industry is responsible for 10% of global carbon emissions — and fast-fashion is one of the worst offenders.

__Recycled t-shirt bidding war...__ The ~$30B fast-fashion market is projected to grow 22% this year from 2020 – but younger consumers don't love the environmental price tag, and are willing to pay extra for more sustainable fashion. Now, fast-fashion brands are trying to hop on the green wave. Polly launched an "Earth Club" and started using "low-impact" clothing material, H&M plans to use 30% recycled materials by 2025, and UK-based BooHoo pledged to halve emissions by 2030.


Wedge

__Fashion isn't sustainable, but sustainability is fashionable..__ On one end, we've got recommerce brands like __ThredUp__ and __Poshmark__ that have leaned in to green. On the other, brands like Shein and __Forever21__ are focused on constantly-changing trends — which requires churning out thousands of new items each day. Gen Z controls $140B+ in spending power,  and 25% of GenZ'ers say their purchasing decisions are influenced by environmental impact. Fast-fashion may have to change to stay on trend. 

Princess Polly parent A.K.A Brands goes public as fast-fashion butts heads with sustainable trends 

🚐 Airbnb's travel-ution 

__Sound on…__ __Universal Music Group’s__ stock soared ~40% yesterday after dropping on an Amsterdam stock exchange, giving the world’s largest record label a $53B market cap. UMG represents stars like Taylor Swift, Justin Bieber, Billie Eilish and The Beatles. Now, it’s benefiting from the streaming revival of the music industry. 

__YouTube to MP3 download…__ The rise of streamers like __[Spotify](https://robinhood.com/stocks/SPOT)__ and __[Apple](https://robinhood.com/stocks/AAPL)__ reversed the music industry’s 15-year, LimeWire-powered decline. Since 2016, record labels’ sales have increased every year. Last year, streaming accounted for 83% of $12B total US music sales. But the “Big 3” record labels — __Universal__, __Sony__, and __[Warner](https://robinhood.com/stocks/WMG)__ — were privately owned until recently. 

- __Hot single:__ Warner Music [went public](https://snacks.robinhood.com/newsletters/1WiwiJZ2IRsY4gKeFWU4um/articles/4sBaguWCpI98yjIJ31UiSz/) last summer on the Nasdaq, but only listed 14% of its shares. Since then, its market cap has nearly doubled to $23B. 
- __Whole album:__ Universal Music listed 60% of its shares. Gaming giant __[Tencent](https://robinhood.com/stocks/TCEHY)__ — which licenses tunes for games —already owned a 20% stake. 
- __Still in the studio:__ Sony Music, valued at an estimated $62B, is still only accessible to investors as part of wider conglomerate __[Sony Group](https://robinhood.com/stocks/SONY)__.

_Getting that musical cheese [Catherine Falls Commercial/Moment via GettyImages]_

Biebs

__The digital economy needs a soundtrack…__ and __TikTok__, __[Peloton](https://robinhood.com/stocks/PTON)__, and Fortnite-maker __Epic Games__ are paying big bucks for the best beats. The opportunity to supply in-app songs is so huge: already, 10% of the total $22B in global streaming sales last year came from partnerships with popular apps. UMG already partners with __[Spotify](https://robinhood.com/stocks/SPOT)__, __[Apple](https://robinhood.com/stocks/AAPL)__, __[Facebook](https://robinhood.com/stocks/FB)__, __[Snap](https://robinhood.com/stocks/SNAP)__, TikTok, and video-sharing app __Triller__. Looking ahead, its CEO expects billions in future deals with makers of smart speakers, connected cars, and social apps. 


Universal Music soars after going public — and TikTok tunes could be its new growth engine

__The Netflix of cars...__ What __[Volkswagen](https://robinhood.com/stocks/VWAGY)__'s going for. This month, the car giant [launched](https://www.volkswagen-newsroom.com/en/press-releases/volkswagen-is-picking-up-the-pace-of-its-business-model-20-and-offering-car-subscriptions-from-today-7442) an electric car subscription service in Germany to accelerate its creatively-named “Business Model 2.0.” Volkswagen's goal: transform from a car manufacturer to a "mobility services provider."

- __For ~$600/month,__ the "AutoAbo" subscription offers access to 2K+ of VW's all-electric ID models.
- __"Everything but the electricity...”__ Sounds like a TJ's seasoning. The subscription includes  insurance, registration, maintenance, and 500 free miles/month. 
- __DTR:__ VW describes the commitment factor as mid-way between leasing and car sharing.

__Flexible like pandemic leggings...__ A typical car lease locks you in for two years. VW's subscription is flexible, with a three month minimum. This week, VW also showed its commitment to *low*-commitment mobility by filing an offer to buy European rental car giant __Europcar__. Europcar's 350K vehicles at airports and train stations could support the expansion of VW's subscription footprint. 

- __By 2030,__ VW says that 20% of its sales could come from newer offerings like subscriptions and car sharing. But it has an [iffy track record](https://fortune.com/2021/07/29/volkswagen-car-rental-company-europcar-uber-competitor-software/) with past attempts. 
- __Flexibility is (car) key:__ “A growing number of people don’t want to own a vehicle permanently," according to VW. 
- That's why car-sharing companies like __Zipcar__ have seen success in NYC and other hubs — and why __Uber__ and __Lyft__ launched car rental services to complement ride-hailing. 


Subscribe

__The new generation is "low commitment"...__ That requires high-flexibility biz models. Even pre-pandemic, Millennials were moving [more often](http://zillow.mediaroom.com/2019-10-03-Millennials-Are-Moving-More-Frequently-Than-Previous-Generations#:~:text=3%2C%202019%20%2FPRNewswire%2F%20%2D%2D,a%20new%20Zillow%C2%AE%20analysis.) than previous generations. During the pandemic, people moved from cities to suburbs and Airbnbs, and from offices to "work-from-anywhere" locales. [70%](https://www.marshalltribune.com/premium/brandpoint/new-survey-how-companies-are-responding-to-the-delta-variant,22645) of US companies will continue offering remote or flexible work options. And over [a third](https://www.salamancapress.com/news/state/report-over-a-third-of-gen-z-and-millennial-workers-are-looking-for-a-new/article_bb774d1c-37e0-5ed8-9f81-e42835d4b505.html) of Gen Z and Millennial workers are looking for new jobs. When you don't know where you’ll be in two weeks, long-term commitments are daunting. Now, more car manufacturers might adopt flexible subscription models. 

Volkswagen launches electric car subscriptions for the commitment-phobic generation

🎶 The J Bieber IPO

__Not the boat that blocked the Suez…__ But this company’s causing big issues, too. Real estate giant Evergrande’s shares sank 10% yesterday, contributing to a global stock plunge. Evergrande is the 2nd largest property developer in China, with a $30B market cap — but it owes $300B to partners. With $83M in payments due on Thursday, analysts worry Evergrande could default and affect the global economy. 

- __1.4M__ = Buyers waiting for their pre-purchased apartments to be built.
- __85%__ = Drop in Evergrande’s stock value in the last six months.
- __$8B__ = How much Evergrande raised this year — just $292B short of its debt obligations.  

__Charge it to the card…__ Evergrande entered the real estate biz right after China embraced private home ownership in 1998, when homes became a symbol of China’s booming middle class. But Evergrande borrowed heavily to grow, which led to a cash crunch when regulators started cracking down on debt last year. Evergrande has asked employees for loans and tried to pay bills with half-built houses. Now, all eyes are on regulators:

- __It wouldn’t be China’s first bailout…__ Regulators took over the once-thriving Anbang Insurance Group three years ago due to massive IOUs.
- __Too big to (fully) fail...__ Regulators let Evergrande renegotiate payment deadlines earlier this month, signaling their willingness to keep the company alive.

Bills

__It’s not the whale, it’s the splash…__ If a big fish like Evergrande goes belly up, its lenders and investors — including HSBC, BlackRock, and UBS — could lose big money. Businesses that work with it could also suffer (think: paint suppliers). But the ripple effects could be worse: Since three-quarters of China’s wealth is in real estate, Evergrande’s collapse could cause stock sell-offs across China’s real estate sector — or potentially a global sell-off, like Lehman Brothers’ collapse did in 2008. But, some analysts don’t expect Evergrande’s financial struggles to trickle into other parts of the world.

Chinese real estate giant Evergrande could cause global turmoil if it can’t pay its bills

__A Royal Flush…__ Netflix has taken its obsession with royal titles into the real world, bringing home the most gold at Sunday’s Emmy awards. For the first time,  streaming services won the most coveted categories, like Best Drama and Best Limited Series. 

- __Netflix__ won a whopping 44 Emmys for its original shows including “The Crown" and “Queen’s Gambit,” tying a record last set by CBS more than 40 years ago. 
- __AppleTV+__ became the first streamer to win Best Comedy for “Ted Lasso.” It was only the Fruit’s second-ever Emmy appearance.  
- __Disney+__ received 71 nods but only got the primetime gold for “Hamilton.”
- __HBO & HBO Max__ snagged 19 wins, including four for crime series “Mare of Easttown,” starring Kate Winslet.  

__Virtual rewind…__ Netflix first made its mark in 2007 when it ditched DVDs for digital play buttons. In 2013, its show "House of Cards" became the first online-only TV series to nab a primetime Emmy, setting the stage for other streamers. Fast-forward:

- __In 2019,__ Disney+ and AppleTV+ made their streaming debuts with originals like “The Mandalorian" and “The Morning Show.” Last year, HBO Max debuted with 10K hours of shows.
- __This year,__ director Steven Spielberg, who once tried to boot Netflix from the Oscars, inked a multi-year production deal with the Flix this summer.


_Netflix takes home the crown [roman makhmutov/Moment via GettyImages]_

Flixy

__(Original) Content is King…__ and streamers are serving it like royal scones. Streamers have prioritized original content as a way to dominate a field once ruled by Hollywood OGs. This year, the Flix will spend $17B on original content, up from $11.8B last year. Meanwhile, Amazon’s total content spend hit $11B last year. Netflix also plans to make 90 original films per year –3X more than Lionsgate’s most productive year. Beyond scale, Netflix has data on your viewing habits, plus a smart recommendation engine to keep you clicking “next."

Netflix reigns supreme at the Emmys as streamers double down on content at scale

⭐️ The streaming Emmys

__Self-absorbed shopping spree...__ Last week, __[Microsoft](https://robinhood.com/stocks/MSFT)__'s board [approved](https://www.wsj.com/articles/microsoft-plans-60-billion-share-buyback-program-raises-dividend-11631720770) a plan to buy back as much as $60B of the company's own stock — the software giant's largest share repurchase program *ever*. Stock buybacks are (kind of) like gifts to shareholders: by reabsorbing their own shares, companies can potentially improve their stock prices by reducing the number of available shares. 

- __When shares outstanding decrease,__ investors' ownership in the company pie can increase. Think: owning 1 share out of 10 total, vs. owning 1 out of 5. 
- __Slightly awk:__ Microsoft shares are already sitting near records, and have soared 38% this year. But it's *also* sitting on a $130B cash pile, so it has money to spend. 

__Takeout or delivery?...__ Corporations have different options when it comes to spending extra $$$. They can invest it back into the business (think: hiring, R&D, building factories) — *or*, they can return value to shareholders through dividends and stock buybacks. Microsoft has used its ginormous cash pile to fund acquisitions, boost dividends, *and* do buybacks. Many companies flush with excess cash are doubling down on buybacks, too. 

- __Spending on buybacks increased much faster__ than capital expenditures (think: buildings, equipment) in the first half of 2021.
- __S&P 500 companies spent *more* on buybacks__ than on capital expenditures in the first half 2021. Share repurchases hit $370B, up ~30% from the first half of 2020. 
- __For example:__ __[Lowe's](https://robinhood.com/stocks/LOW)__, which thrived on the DIY [House Hype](https://snacks.robinhood.com/newsletters/7Fl0kcKPHzNEVEVwnee0Zp/articles/3djXYQJYytx1qKMDTR9yG1/), spent $6B on share repurchases — compared with barely $850M on capital expenditures. __[Target](https://robinhood.com/stocks/TGT)__, another corona-conomy thriver, recently [announced](https://www.marketwatch.com/story/target-earnings-and-revenue-beat-expectations-11629283071#:~:text=Target's%20board%20has%20authorized%20a,end%20of%20the%20second%20quarter.) *$15B* in buybacks.


Back

__The Big Buyback relates to the Big Shortage...__ Many US businesses are cash-rich, thanks to low interest rates on debt and strong earnings fueled by economic recovery. The problem: supply and labor shortages are limiting *how much* companies can invest back into their businesses. But the Big Buyback, which could be contributing to soaring stock prices, could hit speed bumps ahead: Democratic senators just [proposed](https://www.forbes.com/sites/jonathanponciano/2021/09/10/a-2-tax-on-stock-buybacks-is-being-proposed-by-democratic-senators-to-offset-their-35-trillion-budget-plan/?sh=7424ec77270c) a 2% tax on corporate buybacks to help fund the $3.5T US budget bill.


The Big Buyback: Microsoft is splurging $60B on its own shares, and it’s not the only one

__To boost or not to boost...__ With 65% of US adults fully vaxxed and Delta cases surging, President Biden hoped to start distributing __[Pfizer](https://robinhood.com/stocks/PFE)__ booster shots *this week*. But on Friday, scientists overwhelmingly [advised](https://www.nytimes.com/live/2021/09/17/world/covid-delta-variant-vaccine) the FDA *not* to recommend boosters for the general public — only for people 65 and older, and those at high risk. Third shots are already controversial since many countries still don’t have *first* shots. The FDA’s final decision on boosters is expected this week, and it usually follows scientists’ counsel. 

__Nemo’s loving the WiFi...__ __[Google](https://robinhood.com/stocks/GOOGL)__ just [completed](https://www.cnet.com/tech/google-finishes-3900-mile-subsea-cable-connecting-us-to-uk-and-spain/) a 3.9K mile-long undersea internet cable between the US and Europe. Since [98%](https://cloud.google.com/blog/products/infrastructure/announcing-googles-grace-hopper-subsea-cable-system) of global web traffic flows through undersea cables, e-giants like __[Facebook](https://robinhood.com/stocks/FB)__, __[Amazon](https://robinhood.com/stocks/AMZN)__, __[Microsoft](https://robinhood.com/stocks/MSFT)__, and __Huawei__ pay big bucks for bandwidth on shared cables. But Google’s cable is Google-exclusive, and can handle more traffic than all existing cables *combined*. As the cloud computing boom continues, internet giants will either compete to buy more bandwidth — or to build it.



__The Chipotle of homebuilding__... Instead of BYOB, __[Lennar](https://robinhood.com/stocks/LEN)__ and __[KB Home](https://robinhood.com/stocks/KBH)__  help you build-your-own-home. The housing market has been [#thriving](https://snacks.robinhood.com/newsletters/3W8LX1jIAswA4HFNTbvVHO/articles/4Fw8bHVeO2Nn0unnSjroHO/) since millions of Americans ditched city-living for pandemic-friendly suburbia. Demand is still sky high, with housing inventory sitting at 40-year lows. But last month, home sales dropped for the first time in over a year. We’ll see if homes are still booming when Lennar and KB Home, two of America’s largest homebuilders, drop earnings this week.

__Limited breadsticks…__ As eager foodies return to indoor dining, restaurants are having a hard time keeping up with demand. Supply chain and labor shortages have forced some eateries to trim menu items and shorten hours. And many small restaurant owners have [seen](https://www.cnbc.com/2021/09/17/inflation-labor-and-delta-variant-hit-restaurant-owners-goldman-sachs-data-finds.html) a surge in operating costs due to rising prices (#din-flation). Last quarter, __[Cracker Barrel](https://robinhood.com/stocks/CBRL)__ and Olive Garden-owner __[Darden Restaurants](https://robinhood.com/stocks/DRI)__ said sales were almost back to pre-pandemic levels. We’ll see if the rebound continued when they serve up quarterly earnings. 


- __[Flyer](https://snacks.robinhood.com/newsletters/3aWztqHlVK88aCAOHKHyt5/articles/615L4UeXRNrBv69BPlY4ep/):__ Design startup __Canva__ notched a $40B valuation, making it the world’s most valuable female-founded and female-led startup.
- __[Hike](https://snacks.robinhood.com/newsletters/6273N36MQkF8DmmFKWXxCz/articles/2ocN7ACZMnCJkI07wU92mq/):__ House Dems proposed a $2.9T tax hike for high earners and big businesses to pay for President Biden’s $3.5T social agenda.
- __[Juicy](https://snacks.robinhood.com/newsletters/3aWztqHlVK88aCAOHKHyt5/articles/4UO2q0R1L2P5z8jG1RFv1f/):__  __Rivian__ became the first to bring a fully electric pickup truck to the consumer market, beating __[Tesla](https://robinhood.com/stocks/TSLA)__, __[Ford](https://robinhood.com/stocks/F)__, and __[GM](https://robinhood.com/stocks/GM)__ — who merely unveiled prototypes.


_Corporate card: would you like $60B buy back? [YuriArcurs/E+ via GettyImages]_

💰 Microsoft's big buyback

__Just got served…__ And not in a yummy way. __DoorDash__ sued NYC over a law that requires food-delivery apps to give restaurants more data about customers ordering dumplings at 10pm. That would potentially enable your go-to pizza spot to deliver to you directly (hold the Dash). It’s the latest in a food feud simmering between delivery giants and NYC. Quick recap:

- __At the start of the pandemic__, NYC capped the fees that __DoorDash__, __Uber Eats__, and __Grubhub__ can charge restaurants at 15% — they were up to 30% — to keep your local spots  alive.
- __This summer__, the City Council made those caps permanent.
- __Early this week__: DoorDash, Uber Eats, and Grubhub sued NYC over the fee limits.
- __Now__: DoorDash sued NYC *again* over a law that requires delivery platforms share customers’ contact info with restaurants. 

__The profits are getting cold…__ Food delivery companies struggled to deliver profits even *before* the pandemic. Now, their fee-skimming biz model is under fire nationwide. DoorDash and Grubhub were sued by Chicago last month for using deceptive fees, and 70 of the 100+ pandemic-era fee caps across the country are *still* in place.

_New lawsuit delivery to: City Hall [Ivan Pantic via GettyImages]_

Served

__Cost effective =/= politically effective…__ In many cities, business isn’t just financial — it’s *political*. NYC loves restaurants because they employ thousands of full-time workers,  promote consumer spending, and generate tax revenue. NYC *doesn’t love* delivery platforms’ treatment of gig workers or its funneling of profits to distant corporate HQs. Since DoorDash and Uber are failing politically in NY, they need help from the courts to keep their businesses cooking. 

DoorDash files a 2nd lawsuit against NYC as the city prioritizes restaurants over delivery apps

__Sustainability is in session…__ Harvard announced it’s officially ending investment ties to fossil fuels after years of pressure from students, staff, and climate activists. Harvard’s $42B endowment fund is the largest of any school in the US — and is bigger than roughly *half* of the world’s economies. 

- __179 to 20__: # of Harvard faculty who voted for and against fossil fuel divestment. 
- __<2%__: Harvard had already ended direct investment in companies that extract fossil fuels, but a tiny percentage was still indirectly invested — now, Harvard’s letting those “[runoff](https://www.thecrimson.com/article/2021/9/10/divest-declares-victory/).” 

__ESG Domino Effect…__ While the sustainability movement appeals to a wide range of people, younger generations have been among the most *vocal* supporters. During a Harvard vs. Yale football game, 200+ students stormed the field to protest the school’s fossil fuel investments. This year, a student activist group filed an official complaint with the state’s Attorney General. Dominos are falling:

- __2020__: The University of California became the largest college to go fossil fuel free.
- __-90%__: How much Stanford has reduced its fossil fuel investments since 2011.


GreenU

__Institutions may have to go green to get peace...__ Harvard’s landmark decision is yet another example of ESG investing's momentum (Environmental, Social, and Governance). As Millennials and Gen Z are expected to inherit $61T over the next 20 years, companies will need to attract their investment bucks. For higher education, ESG may be one way of satisfying climate conscious students while setting the stage for a new wave of endowments. 