__Never disappoints on the quirky decks...__ Japanese investment giant __[Softbank](https://robinhood.com/stocks/SFTBY/)__ is famous for its simple but poetic earnings decks, which include pictures of unicorns falling into the "Valley of Coronavirus" ([slide 50](https://group.softbank/system/files/pdf/ir/presentations/2019/earnings-presentation_q4fy2019_01_en.pdf)) and a powerful slide that just says "Many Regrets" (11). To understand the mood of Softbank's latest earnings, check out this frown on [slide 4](https://group.softbank/system/files/pdf/ir/presentations/2022/earnings-presentation_q1fy2022_01_en.pdf).

- __Softbank reported its largest quarterly loss ever.__ The mind-numbing figure: $23.4B. Softbank's tech-centric Vision Fund alone [lost](https://www.cnbc.com/2022/08/08/softbank-vision-fund-posts-a-21point6-billion-quarterly-loss-.html) nearly $22B.
- __Blame plunging tech stocks —__ from __[DoorDash](https://robinhood.com/stocks/DASH/)__ to __[WeWork](https://robinhood.com/stocks/WE/)__ to __[Uber](https://robinhood.com/stocks/UBER/)__ — which Softbank was heavily invested in. The Vision Fund has lost [$50B](https://www.wsj.com/articles/softbank-reports-23-billion-quarterly-loss-as-tech-downturn-hits-11659940047) in gains from its peak (#WeCrashed).
- __Losses were spread__ across Softbank’s portfolio of 300+ companies, including __Klarna__, __[DiDi](https://robinhood.com/stocks/DIDIY/)__ (the Uber of China), and Singapore’s [superapp](https://snacks.robinhood.com/newsletters/73PYCZgEW1bG9MUNOaqJQc/articles/3mJwpmK77yoS0MetcedE4n/), __[Grab](https://robinhood.com/stocks/GRAB/)__.

__The decks are still iconic...__ but Softbank’s investments have soured. Rising interest rates have crushed high-flying valuations, while China’s regulatory crackdown on tech pummeled Softbank’s investments in Asia. Now Softbank is selling to raise cash and soothe losses:

- __Softbank has sold its entire stake in__ Uber, __[Slack](https://robinhood.com/stocks/WORK/)__, __[Opendoor](https://robinhood.com/stocks/OPEN/)__, Nvidia, and others. It says it made a $1.5B profit by selling its long-held Uber stake. 
- __Cutting back:__ The Vision Fund approved just $600M in investments from April to June, down from a record $20.6B a year earlier, and job cuts could be coming.

A frown quarter (STR/JIJI PRESS/AFP via Getty Images)

Frown

__It can be hard to see the downside…__ when the upside is so in your face. Softbank was riding high when tech was booming. For 2020, it [posted](https://snacks.robinhood.com/newsletters/2rQFq8IqPXoQvwG9uxlD8l/articles/7qLRWjMIgX25AvlI8nuSLv/) a record *$46B* profit — the highest for a Japanese company, and $5B more than __[Google](https://robinhood.com/stocks/GOOGL/)__ earned that year. CEO Masayoshi Son [said](https://www.wsj.com/articles/softbank-reports-23-billion-quarterly-loss-as-tech-downturn-hits-11659940047) he’d become "somewhat delirious" when prices soared, and regrets all the $$ he funneled into startups. Now Softbank is imposing discipline to weather the markets’ ups and downs.

Softbank lost a record $23B last quarter as its formerly booming tech investments turned sour

__Forget the aux cord…__ Soon you’ll be able to control music in __[Lyft](https://robinhood.com/stocks/LYFT/)__ rides without nervously asking your driver — but you’ll have to watch ads. Yesterday, Lyft [announced](https://www.wsj.com/articles/lyft-creates-media-division-to-expand-its-advertising-services-11659956407?mod=business_featst_pos3) Lyft Media, a new unit focused on advertising. Ride-hailing demand has roared back to life, and Lyft wants to monetize users’ eyeballs: 

- __Brands riding shotgun:__ Lyft is adding tablets to its drivers’ cars so that brands can serve ads on the go. Think: a __[Vita Coco](https://robinhood.com/stocks/COCO/)__ ad in the app when you book, and another in the car to the supermarket. 
- __New features:__ Riders will be able to choose music and tip drivers through the tablets. Lyft said drivers will make extra $$ from in-car ads.

__Wienermobile ETA…__ Two years ago, Lyft bought Halo Cars, a startup that makes car-top screens. Since then, Lyft has grown its marketing biz by putting ads on car roofs, bike-sharing docks, and in its app. Think: Oscar Mayer Wienermobiles moving on the Lyft map instead of a car. It’s good timing to appeal to advertisers:

- __More rides = more eyes:__ Lyft’s stock [soared](https://www.cnbc.com/2022/08/05/uber-and-lyft-stocks-had-their-best-week-ever.html) 46% last week after it reported its biggest bump in active riders since the pandemic began. But the stock’s still down 55% this year.

#ads

__The route less traveled by may make the difference…__ While Lyft has stayed narrowly focused on rides, Uber has grown its Eats biz into one of the largest food deliverers (and has expanded to everything-delivery). But now Lyft could capitalize on its strength: riders’ eyeballs. While Uber also sells ads, it hasn’t built an ecosystem like Lyft’s. But this month Uber said it planned to expand its ad biz — and that it could hit $1B in revenue by 2024.

As ride-hailing rebounds, Lyft’s launching an ad biz (feat. in-car tablets) to gain an edge over Uber

Softbank lost a record $23B last quarter as its tech investments soured

Dow Jones

S&P 500

Nasdaq

Bitcoin

Consumer confidence in the housing market has hit its lowest level since 2011

🦄 Softbank’s frowning unicorns

__Swipe left…__ Your local grocery and __[Disney](https://robinhood.com/stocks/DIS/)__ have a common enemy: card fees. This spring, __[Visa](https://robinhood.com/stocks/V/)__ and __[Mastercard](https://robinhood.com/stocks/MA/)__ [hiked](https://www.cnn.com/2022/05/18/economy/credit-card-swipe-fees-inflation/index.html) the “swipe fees” they charge merchants for card purchases. FYI: merchants can pass swipe costs on to shoppers. Visa and Mastercard process 83% of US credit cards and earned $55B+ from swipe fees last year. But the duopoly is under scrutiny:

- __New rules:__ The Senate’s [finalizing](https://www.bloomberg.com/opinion/articles/2022-08-03/credit-card-rewards-aren-t-free-shoppers-don-t-care) a bill that would boost payment competition by forcing banks to use several partners, versus exclusively using Visa or Mastercard. More competition’s expected to reduce fees by $11B+ annually.
- __New suits:__ This month Disney [sued](https://www.nytimes.com/2022/08/01/business/dealbook/pornhub-visa-mastercard-disney.html) Visa and Mastercard, alleging they were essentially fixing fees — they settled privately. __[Walmart](https://robinhood.com/stocks/WMT/)__, __[Kroger](https://robinhood.com/stocks/KR/)__, __[Amazon](https://robinhood.com/stocks/AMZN/)__, and others have won billions doing the same.
- __Scandals:__ Last week a judge [greenlighted](https://www.nytimes.com/2022/08/01/business/dealbook/pornhub-visa-mastercard-disney.html) a suit against Visa for processing payments for Pornhub parent __MindGeek__ (which is accused of enabling child sex abuse). The case could make payment juggernauts responsible for all transactions they process.

__Land of the fee…__ home of the paid. US retailers pay 7X more in swipe fees than European retailers, which cap card fees. Most of that fee $$ goes to the bank that actually issued your card, because the bank is the one paying the merchant. But networks like Visa and Mastercard, which move your $5 latte payment from your bank to your coffee shop, are cashing in too: 

- __Booming profits:__ Visa’s and Mastercard’s profits surged last quarter, and Visa’s 66% profit margin is the S&P 500’s highest.
- __Soaring IOUs:__ Credit-card balances spiked 13% last quarter, the biggest jump in 20+ years, as savings dwindled and inflation sizzled. 

Is it, though? (Justin Sullivan/Getty Images)

Swiped

__The swipe economy is changing…__ Swipe fees increase costs for US families by $700 annually, on average, and hit low-income shoppers hardest. Now lawsuits and legislation could rewrite payment rules and curb the swipe-opoly. Meanwhile, Visa and Mastercard are building in-house buy now, pay later systems and crypto products to unlock revenue beyond swipes. But they’ll face scrutiny: last year the DOJ blocked Visa’s $5.3B acquisition of pay-tech giant __Plaid__.

Visa and Mastercard are profiting from higher swipe fees and growing debt, but their swipe-opoly is under fire

__Ready, player none…__ The pandemic gaming boom is over. Global video-game sales are [expected](https://fortune.com/2022/07/05/global-video-games-market-decline/) to fall this year for the first time in seven years. Last week, gaming titan __[Activision](https://robinhood.com/stocks/ATVI/)__ Blizzard (“Call of Duty,” “Overwatch”) said its quarterly revenue was $600M lower than a year ago. __[Nintendo’s](https://robinhood.com/stocks/NTDOY/)__ Switch sales plunged 60%, __[Microsoft](https://robinhood.com/stocks/MSFT/)__ reported lower gaming revenue as Xbox sales slipped, and FIFA legend EA lowered its sales forecast. Up next to report: __[Roblox](https://robinhood.com/stocks/RBLX/)__. Supply woes, recession jitters, and IRL fun are expected to [shrink](https://www.reuters.com/technology/electronic-arts-sales-forecast-disappoints-gaming-craze-cools-2022-08-02/) gaming sales by 9% this year. 

__BTS is back...__ we're not talking K-pop. This year’s back-to-school season will be pricey: families with kids in elementary through high school plan to spend, on average, $864 on supplies, up $168 from 2019. Retailers including Walmart and __[Target](https://robinhood.com/stocks/TGT/)__ have cut their sales outlooks as households prioritize essentials like groceries and __Ticonderoga__ pencils over new laptops. Still, overall BTS spend is on pace to match last year's $37B record. Some parents are dipping into savings to afford supplies. Now, some states are [offering](https://fox59.com/news/sales-tax-holiday-where-you-can-get-a-great-deal-on-back-to-school-shopping/) sales-tax holidays for BTS shopping.

Zoom Out

Stories we’re watching...

__Love at first swipe…__ for __[Bumble](https://robinhood.com/stocks/BMBL/)__ investors. The dating (and networking) biz, where women make the first move, saw a 24% revenue bump last quarter as its 3M+ paying users spent more $$ on app perks. Now Bumble’s targeting Gen Z with cheaper subscriptions and more digi-gift offerings (think: $5 virtual bouquet). Still, global dating-app downloads have [dipped](https://snacks.robinhood.com/newsletters/6jwczdGxGtc3of4SVziNSV/articles/1ZoI3jEE9V3rGTpGmc8Tp5/) as people pick IRL meetups over speed-swiping. Tinder owner __[Match](https://robinhood.com/stocks/MTCH/)__ saw its shares plunge last week after reporting slowing growth. We’ll see whether Bumble felt the same heat when it reports Wednesday.

__Taking home the mini shampoo…__ Don’t forget free cotton swabs. Hotel staple __[Hyatt](https://robinhood.com/stocks/H/)__ reports tomorrow amid the travel rebound. The leisure + hospitality sector led July job gains as restaurants and hotels scrambled to hire (they’re still 1.2M positions short of prepandemic levels). Hospitality stocks have gained over the past month after strong earnings from Hilton and __[Marriott](https://robinhood.com/stocks/MAR/)__, whose revenue per available room surged 70% year over year. __[Airbnb](https://robinhood.com/stocks/ABNB/)__ had its best quarter ever with record bookings. We’ll see if Hyatt swung back to a profit.

Events

Coming up this week...

- __[Batted](https://snacks.robinhood.com/newsletters/f8suYXqPD4YTOYUaoKShp/articles/7aMmFkMt3wJvNpCPjvMHFj/):__ After spending $90M on “Batgirl,” __[Warner Discovery](https://robinhood.com/stocks/WBD/)__ is scrapping the DC flick (which it had planned to release directly to HBO Max). Warner’s new execs are shifting focus back to box-office hits as losses mount. 
- __[Taipei](https://snacks.robinhood.com/newsletters/21a7001xbV9iPZ0fMfzUHV/articles/2XOGD88p5uBRL9HBfqymyP/):__ House Speaker Nancy Pelosi became the highest-ranking US official to visit Taiwan in 25 years. Last week’s historic visit drew China’s wrath and rattled global markets. 
- __[Bubbly](https://snacks.robinhood.com/newsletters/29d17uJyHleH663tK5KuJ1/articles/3r4WhA5Mb6b60gYyQWPyhC/):__ __[Pepsi](https://robinhood.com/stocks/PEP/)__ invested $550M in “healthy” energy-drink maker __[Celsius](https://robinhood.com/stocks/CELH/)__. As soda declines, big bev companies have shifted to functional beverages (think: vitamin-packed energy drinks and enhanced waters).

ICYMI

Last week's highlights...

Visa and Mastercard are profiting from higher swipe fees, but their swipe-opoly is under fire

As of June, 61% of American adults lived paycheck to paycheck — up from 55% a year earlier

💳 Visa + Mastercard’s swipe-opoly

__Bye, bye, Batgirl...__ __[Warner Bros](https://robinhood.com/stocks/WBD/)__ splurged [$90M](https://variety.com/2022/film/news/batgirl-not-released-warner-bros-hbo-max-1235331897/) to produce "Batgirl," a movie based on the DC Comics character. Warner was planning to release it directly to its HBO Max streamer. Five years after the project kicked off, “Batgirl” was basically ready to go — but the public won’t see it.

- __Warner Bros. Discovery is axing “Batgirl,”__ which won’t be released on HBO Max or in theaters. FYI: studios rarely scrap finished productions.
- __Losing stream:__ The movie, starring Leslie Grace as Batgirl and Michael Keaton as Batman, was greenlighted last year as part of a push to create buzz-worthy features for HBO Max.
- __Gaining screen:__ Under new execs, Warner Bros. Discovery has pivoted its focus back to theatrical blockbusters as moviegoing recovers. It’s also scrapping its made-for-streaming “Scooby-Doo” movie, which reportedly cost $40M.

__Why not let “Batgirl” fly?…__ Insiders [say](https://variety.com/2022/film/news/batgirl-not-released-warner-bros-hbo-max-1235331897/) the decision had nothing to do with the film’s quality, but was a result of shifting priorities. Remember when Warner’s then-CEO Jason Kilar [decided](https://snacks.robinhood.com/newsletters/5uT3B80poAFNjJebT4r6t/articles/3QEoAxpDIuCNZQVpsMlAV/) to release all of Warner’s 2021 films on HBO Max *at the same time* as theaters? That’s not happening this year. Current CEO David Zaslav seems committed to box-office hits.

- __Marketing $$:__ Studios need to market movies, and it would’ve [cost](https://variety.com/2022/film/news/batgirl-movie-why-not-releasing-warner-bros-1235332062/) between $30M and $50M to advertise “Batgirl” in the US alone — never mind globally. 
- __Awkward:__ While “Batgirl” may not be big enough for a global theatrical release, it’s likely too expensive to make sense for streaming alone. 
- __Write it off:__ Sources say Warner Bros [plans](https://variety.com/2022/film/news/batgirl-movie-why-not-releasing-warner-bros-1235332062/?sub_action=logged_in) to recoup some of its losses by taking a tax write-down on the film. But that would mean it *can’t* monetize it. 

Leslie Grace, the star of “Batgirl” (Sean Zanni/Patrick McMullan via Getty Images)

Batted

__The “sunk-cost fallacy” doesn’t always apply…__ Sure, Warner threw $90M into this movie. But studios need eyes on their productions, and Warner likely thought the marketing costs for “Batgirl” weren’t worth it. Now it’s cutting its losses, and not without reason: Yesterday, Warner revealed that it swung to a $3.4B loss, in its first earnings since merging with Discovery. Shares tanked 12%.

After spending $90M on “Batgirl,” Warner is scrapping the flick as priorities shift from streaming to screening

__Cross-chain bridges…__ pave the way for highway robbery. __Nomad__, a crypto protocol that helps people bridge coins and tokens between different blockchains (think: moving __[USDC](https://robinhood.com/crypto/USDC/)__ from __[ethereum](https://robinhood.com/crypto/ETH/)__ to __moonbeam__), lost $190M to a freewheeling hack on Monday. After someone spotted a security vulnerability in Nomad’s smart contract, potentially hundreds of people got in on the theft, striking a reputational blow to key crypto infrastructure. But the problem’s bigger than just Nomad. 

__Crypto bridge…__ is falling down. Nomad is only the most recent example of cracking crypto bridges. __Wormhole__ was hit with a $325M hack in February, $625M was boosted from __Ronin__ in March, and $100M was lifted from __Harmony__ in June. In other words, cross-chain bridges are increasingly taking a beating. Just this year:

- __69%__ of all stolen crypto has been looted from bridges (as opposed to exchanges or individuals).
- __$2B__ has been stolen from crypto bridges in at least 13 cross-chain bridge hacks.

Raided

__Cross-chain bridges are critical for crypto…__ but their shaky foundations put the #FutureOfFinance at risk. Different blockchains (think: __[bitcoin](https://robinhood.com/crypto/BTC/)__, ethereum, __[solana](https://robinhood.com/crypto/SOL/)__) are kind of like walled-off crypto kingdoms, with cross-chain bridges as the toll roads letting traders move coins (and Ape NFTs) between them. No bridges = no trade, making cross-chain bridges crucial to decentralized finance (DeFi). But like on the roads of old, robbers are hiding in the digital bushes — and they're getting bolder. Bridge security will have to get its act together if blockchain kingdoms are to potentially flourish.

Thieves stole $190M from a crypto cross-chain bridge, but the risk to decentralized finance is about more than $$

After spending $90M on “Batgirl,” Warner is axing the flick as priorities shift

Every US state but Delaware had wildfires last year

🦇 Warner scraps “Batgirl”

__Girls’ night out > *another* coffee date…__ __[Match Group](https://robinhood.com/stocks/MTCH/)__ wasn’t feeling the love from investors after earnings yesterday. Shares of the dating icon plunged 18% after it reported that swipe-fueled growth was cooling. Refresher: Match owns Tinder, Hinge, OkCupid, and 20+ other e-romance businesses. 

- __Burned out:__ Match’s revenue growth slowed significantly last quarter to 12%, and it’s lowered its forecast for the current quarter too.
- __Left-swiped:__ Tinder’s CEO stepped down this week after less than a year on the job. America’s #1 dating app also ditched its romantic metaverse plans (including a Tinder digi-coin).

__From FaceTime to face-to-face…__ Match benefited during the pandemic as stuck-at-home singles shelled out more $$ for extra swipes to connect. But now users are more interested in BFF vacay retreats than at-home swipe sprees. Last quarter, Match's revenue per user grew just 3% — down from 15% last year. Global dating-app revenue has grown every year since 2015, but downloads have dipped from prepandemic highs.

- __Beesting:__ Rival __[Bumble](https://robinhood.com/stocks/BMBL/)__ has nearly doubled its market share since 2017 and its stock is [down](https://robinhood.com/stocks/BMBL/) less than 0.5% this year — whereas Match is down *over 50%*. Bumble (which reports next week) has said it has “substantial” growth opportunity in the US.

Tinder’s trampled spark (Peerapon Boonyakiat/Getty Images)

Ghosted

__There are plenty of fish left in the sea…__ The key is fishing in the *right* spot. As Match’s saturated North American market hits a wall, it’s looking overseas to expand. Last year, Match spent $1.7B to buy Korean social company Hyperconnect (its biggest acquisition) and launched Hinge in Germany. This year Hinge is expected to bring in $300M in revenue as it launches in other European countries and India, where dating apps are less popular.

Unmatched: Tinder's parent company lost a fifth of its value as its pandemic swiping boom fizzles

__A modern Midas…__ In Greek mythology, everything King Midas touched turned to gold. Activist hedge fund __Elliott Management__ seems to think it has the Midas touch too. Shares of __[PayPal](https://robinhood.com/stocks/PYPL/)__ and __[Pinterest](https://robinhood.com/stocks/PINS/)__ have spiked 14%+ this week after Elliott [disclosed](https://www.reuters.com/technology/paypal-reveals-2-billion-stake-held-by-elliott-announces-new-cfo-2022-08-02/) big stakes in each company (it’s now their top shareholder). 

- __Staying active:__ Elliott is one of the world’s oldest hedge funds, founded in 1977 by Paul Singer. Since then, it’s bought 40 companies (like: __[Barnes & Noble](https://robinhood.com/stocks/BNED/)__, __LogMeIn__), built stakes in __[Twitter](https://robinhood.com/stocks/TWTR/)__, __[AT&T](https://robinhood.com/stocks/T/)__, and __Samsung__, and is managing $56B in assets. 
- __High stakes:__ Elliott uses its stake in companies to force them to change (think: cost cutting, replacing execs). Right now it’s also invested in __[Marathon Petroleum](https://robinhood.com/stocks/MPC/)__, __[Tesla](https://robinhood.com/stocks/TSLA/)__, __[Wayfair](https://robinhood.com/stocks/W/)__, and __[Suncor Energy](https://robinhood.com/stocks/SU/)__.

__Activism’s so hot right now…__ Shareholder activism boomed last year, thanks partly to growing awareness of environmental, social, and governance issues. Investment companies like __Engine No. 1__ and __[Icahn Enterprises](https://robinhood.com/stocks/IEP/)__ have lobbied (successfully) to [install](https://snacks.robinhood.com/newsletters/GthYqJXfXa1UXvTAPKzZr/articles/1zYvayrbd8lJxnS8ecuB30/) climate-focused board members at __[Exxon](https://robinhood.com/stocks/XOM/)__ and (unsuccessfully) to [force](https://www.nytimes.com/2022/05/26/business/carl-icahn-mcdonalds-pigs.html) __[McDonald’s](https://robinhood.com/stocks/MCD/)__ to change how it treats its pigs. 

- __But at the end of the trading day__, a primary goal of shareholder activists is plain ol’ profits. Example: Elliott bought Athenahealth for $5.7B in 2018 and sold it for $17B earlier this year, pocketing $5B+.

Staked

__Activists love bargains…__ and in today’s market many companies are priced lower. The S&P 500 is down 13% this year, but some shares are down way more: before the Elliott news, Pinterest and PayPal had lost about 40% and 50% this year. For activists like Elliott, slumped shares are an opportunity to launch turnaround efforts at a lower price. Shareholder activism is expected to rise this year as investors keep bargain hunting.

PayPal and Pinterest shares soar after activist investor Elliott snaps up their slumping stocks

Tinder owner Match Group sees shares sink as its pandemic swiping boom fizzles

Airbnb made more money on July 4 than it has on any other day in its history, helping it notch a record quarter

💔 Match’s dating doldrums

__The plot thickens...__ House Speaker Nancy Pelosi landed in Taiwan yesterday, [becoming](https://www.wsj.com/articles/nancy-pelosi-heads-to-taipei-as-china-warns-of-disastrous-consequences-11659442605) the highest-ranking US official to visit the self-ruling island in 25 years. The visit, part of a broader Asia tour, is causing global drama. China has long claimed Taiwan and its population of 23M to be part of its territory, [saying](https://www.reuters.com/world/china/chinas-xi-says-reunification-with-taiwan-must-will-be-realised-2021-10-09/) that reunification is its "historical task." Chinese President Xi Jinping has vowed to eventually take Taiwan back by any means. Pelosi wants to show support for the small democracy, and is set to meet with the Taiwanese president today.

- __China's response:__ Beijing staunchly opposed the trip, threatening consequences for the US. American officials [said](https://www.wsj.com/articles/nancy-pelosi-heads-to-taipei-as-china-warns-of-disastrous-consequences-11659442605) that China has been staging military drills, sending missiles near Taiwan, and boosting its military presence closer to the island.
- __America's response:__ President Biden can't really dictate where a member of Congress can travel (#SeparationOfPowers). But he did [say](https://www.nytimes.com/2022/07/29/world/asia/china-taiwan-pelosi-explained.html): "I think that the military thinks it’s not a good idea right now.”

__*Interesting* timing…__ US-China relations are at a precarious low, exacerbated by economic and military competition. Meanwhile, Russia’s invasion of Ukraine is far from over. China hasn’t overtly intervened on Russia’s behalf, but the two superpowers have their interests allied against the US. At the same time, China is a key trade partner: the US imports [more](https://www.cfr.org/backgrounder/contentious-us-china-trade-relationship) from China than from any other country, and China is critical for US exports. Taiwan’s __[TSMC](https://robinhood.com/stocks/TSM/)__ makes [half](https://www.cnbc.com/2022/08/02/apple-chipmaker-tsmc-warns-taiwan-china-war-would-make-everybody-losers.html) of the world’s computer chips (including __[Apple’s](https://robinhood.com/stocks/AAPL/)__).

USA in Taipei (Taiwanese Foreign Ministry/Anadolu Agency/Getty Images)

Visit

__Geopolitical tension is market kryptonite…__ Investors hate uncertainty, and the world is rife with it. China’s economy is tied to the world by a thread right now, and some fear Pelosi’s visit could be a pair of scissors. Escalating tensions with both Russia and China have investors on edge: global markets [tumbled](https://www.cnn.com/2022/08/01/investing/global-markets-pelosi-taiwan-intl-hnk/index.html) yesterday, from Hong Kong to New York.

Nancy Pelosi’s historic visit to Taiwan draws China’s wrath, sending shivers across global markets

__Rise of WFU…__ work from __[Uber](https://robinhood.com/stocks/UBER/)__. Summer getaways and high gas prices have gifted Uber a five-star quarter. Uber shares surged 19% yesterday after the ride-hailer more than doubled its revenue to a record $8B last quarter, [crushing](https://www.nytimes.com/2022/08/02/business/uber-quarterly-earnings.html) expectations. 

- __Backseat bliss:__ A record 122M riders and drivers used the app each month, fueling Uber’s first cash-flow-positive quarter.
- __Cold cuts:__ Uber’s delivery biz (mainly UberEats) grew 12%, but growth slowed from the year before as people ditched doorstep deliveries for boozy brunches.
- __Billion-dollar binge:__ Uber lost $2.6B on startup investments like __Zomato__ and __[Grab](https://robinhood.com/stocks/GRAB/)__, but execs say the overall biz is in its strongest position in years.

__Looking for your UberX…__ in a sea of Camrys. From festival szn to IRL work happy hours, more consumers are turning to ride-hailing as outings return. Uber introduced a fuel surcharge in March to combat high pump prices, but it didn’t stop riders from splurging on private drivers. In May, Uber made an average of $87/per customer *each month*, a 60% jump from 2020.

Surge

__Don't lose sight of your core biz…__ even when it falls through. While Eats was Uber’s MVP during the pandemic, its hailing biz has finally caught up. Uber’s ride segment finally surpassed Eats revenue in the first quarter and continued the trend in Q2. Now Uber’s recruiting new drivers ahead of a busy fall season by adding highly requested driver features like the ability to see fares up front. We’ll see whether the ride rebound is as strong for __[Lyft](https://robinhood.com/stocks/LYFT/)__ when it reports Thursday.

Uber posts record revenue as the summer travel surge and gas avoidance rev up ride-hailing demand

Pelosi’s historic Taiwan visit draws China’s wrath, sending shivers across global markets

Tiger Woods reportedly turned down a $700M+ offer to play in the Saudi-funded LIV Golf series

✈️ Pelosi-China shivers

__Looks like a seltzer...__ hits like a double espresso. __[Pepsi](https://robinhood.com/stocks/PEP/)__ [announced](https://www.cnbc.com/2022/08/01/pepsico-takes-550-million-stake-in-energy-drink-maker-celsius-.html) a $550M stake in trendy energy-drink maker __[Celsius Holdings](https://robinhood.com/stocks/CELH/)__ as part of a distribution deal. Celsius stock popped 11% after the Pepsi-vestment. Its stake equals about 7% of Celsius, which is now worth over $7B. The soda giant will help Celsius expand in retailers like gas stations and convenience stores, where the [bulk](https://www.investors.com/news/celsius-stock-jumps-after-pepsico-announces-550-million-stake-distribution-deal/) of energy drinks are sold.

- __Functionally fit:__ Celsius markets its sugar-free energy drinks as "healthy." Think: supplemental ingredients like ginger and green tea with no artificial preservatives. It [says](https://www.celsius.com/?utm_source=google&utm_medium=cpc&utm_id=go_cmp-2036233644_adg-71976425036_ad-423732639773_kwd-3369406223_dev-c_ext-_prd-_mca-_sig-Cj0KCQjw852XBhC6ARIsAJsFPN167-gK3WeAKDgbZCdZBE8EEcD9i_4PWKWI7xmsqS3EOGfGKDc1DFIaAg3rEALw_wcB&maas=maas_adg_api_5554740490501_macro_1_1&ref_=aa_maas&aa_campaignid=2036233644&aa_adgroupid=71976425036&aa_creativeid=ad-423732639773_kwd-3369406223_dev-c_ext-&gclid=Cj0KCQjw852XBhC6ARIsAJsFPN167-gK3WeAKDgbZCdZBE8EEcD9i_4PWKWI7xmsqS3EOGfGKDc1DFIaAg3rEALw_wcB) its drinks are "clinically proven to accelerate your metabolism."
- __Gen Z-pleasing:__ Celsius has targeted young, on-the-go consumers with its sleek cans and flavors like "Sparkling Arctic Vibe" and "Peach Mango Green Tea."

__Pre-Zoom energy…__ Though founded in 2005, Celsius has seen explosive growth this year as young Americans seek energy boosts for __[Zoom](https://robinhood.com/stocks/ZM)__ marathons, gym sessions, classes, and returning social events. In the first quarter, Celsius' US sales more than tripled to $123M. It’s not just Celsius: energy drinks have become one of the fastest-growing non-boozy bev categories. Blame long and irregular hybrid work hours, labor shortages, and (increasingly frequent) social obligations.

Functional bevs come for soda’s shelves (Jeffrey Greenberg/Getty Images)

Bubbly

__“Functional bevs” are the new sugar…__ As sodas continue declining, big bev companies have shifted investment to functional beverages — think: vitamin-packed energy drinks and enhanced waters with a “purpose” (besides just hydration or intoxication). Last year, __[Coke](https://robinhood.com/stocks/KO)__ [splurged](https://snacks.robinhood.com/newsletters/4xyYi2ejMbHgg4fwSZetyJ/articles/6hIGigM2hwMH2qNzt0yTve/) $5.6B for health-focused Gatorade rival BodyArmor. In 2020, Pepsi bought Rockstar Energy for nearly $4B and [launched](https://snacks.robinhood.com/newsletters/46KUPDxFhDhy8dxhA7DfbJ/articles/3XzeV4IkPMBxSbNmfG7y8n/) sleep-enhancement drink Driftwell. The global functional-bev market is [expected](https://foodinstitute.com/focus/functional-beverage-market-percolating/#:~:text=The%20global%20functional%20beverage%20market,reaching%20%24198.1%20billion%20by%202026.) to be worth nearly $200B by 2026.

Pepsi invests $550M in “healthy” energy-drink maker Celsius as functional beverages replace sugary sodas

__Oh Romeo, Romeo…__ where art thy batteries, Romeo? Yesterday, e-truck maker __[Nikola](https://robinhood.com/stocks/NKLA)__ [agreed](https://www.cnbc.com/2022/08/01/nikola-nkla-to-acquire-romeo-power-rmo-.html) to buy battery biz __[Romeo Power](https://robinhood.com/stocks/RMO)__ for $144M. Romeo was worth $1.3B when it went public via a SPAC in 2020. But then it ran up $250M+ in losses, and recently warned investors it might soon run out of cash. 

- __Extra juice:__ Nikola, Romeo’s biggest customer, has agreed to give Romeo $35M in “interim funding” to keep making batteries as the deal closes. 
- __Bringing home the batts:__ Since Nikola needs so many batteries, it expects to save $350M over four years through its purchase. 
- __Not just Nikola:__ Other EV makers like __[GM](https://robinhood.com/stocks/GM/)__, __[Ford](https://robinhood.com/stocks/F/)__, __[Tesla](https://robinhood.com/stocks/TSLA/)__, and __[Toyota](https://robinhood.com/stocks/TM/)__ are spending billions on battery factories with partners like __LG__ and __Panasonic__.

__A remarkable recharge…__ Not long ago, Nikola nearly ran out of juice itself. In 2020, Nikola’s ex-CEO resigned over fraud allegations (remember the infamous [truck rolling down a hill](https://arstechnica.com/cars/2020/09/nikola-admits-prototype-was-rolling-downhill-in-promotional-video/) commercial?). In the aftermath, Nikola’s billion-dollar GM partnership crumbled, and its shares have collapsed 90% from their 2020 peak. But last quarter Nikola shocked Wall Street by delivering its first trucks — and its first revenue. Now:

- __Nikola expects to ship at least 300 trucks__ by year’s end. Batteries are among the priciest and hardest-to-find EV components, so consistent access is key to scaling.

Sparks

__Batteries are the future of the electric economy…__ Take it from Elon: EV batteries [are](https://www.barrons.com/articles/tesla-elon-musk-energy-batteries-51657745667) the “new oil.” But like oil, they’re expensive — and scarce. That’s why Nikola splurged on its own battery biz, despite having only about $400M in cash on hand in March. It’s also why auto giants and EV suppliers have invested $30B in the US battery biz over the past two years, and why President Biden this year unveiled a $3B plan to boost battery-making. 

Electric-truck maker Nikola plans to buy battery biz Romeo to secure its supply chain on the cheap

Pepsi invests $550M in “healthy” energy-drink maker Celsius as functional bevs replace soda

Metaverse-related job openings plunged 81% from April to June as Meta, Google, and Apple rolled back meta-hiring

🥤 Pepsi chugs Celsius

__Choose your fighter…__ OG Word Doc on your hard drive vs. __[Google](https://robinhood.com/stocks/GOOGL/)__ Doc in the cloud. Amazon, __[Microsoft](https://robinhood.com/stocks/MSFT/)__, and Google control nearly two-thirds of all cloud spending (think: companies storing their data on other companies' servers vs. on-premises). They reported mixed results last week and have seen their stocks plunge this year as higher interest rates and slower ad spend hurt growth prospects. But cloud has been a silver lining. Last quarter:

- __Amazon’s__ AWS (the #1 cloud service) grew revenue by 33% to $19.7B, and accounted for *all* of the ‘Zon’s profits as its core shopping biz continued slowing. 
- __Microsoft’s__ Intelligent cloud revenue (which make up more than a third of its sales) grew 26% thanks to corporate customers like __[GM](https://robinhood.com/stocks/GM/)__ and __[Kraft-Heinz](https://robinhood.com/stocks/KHC/)__.
- __Google’s__ cloud revenue climbed 35%, but the pace of growth slowed and the cloud division lost $858M. 

__Crank up the AWS storage…__ The pandemic drove massive corporate cloud spending as millions of Americans worked from home. Big companies leveraged their cash-flush coffers to quickly expand their cloud infrastructure to meet demand. The hot streak continued this year, with global enterprise cloud revenue up [34%](https://www.srgresearch.com/articles/huge-cloud-market-is-still-growing-at-34-per-year-amazon-microsoft-and-google-now-account-for-65-of-all-cloud-revenues#:~:text=New%20data%20from%20Synergy%20Research,the%2034%2D40%25%20range.) in the first quarter. But the boom might be slowing.

Big Tech has the cloud market on lock (Jeffrey Coolidge / Getty Images)

Cloudy

__Storm clouds may be brewing…__ Investors have looked to the cloud as a profit cushion for tech companies when ad sales and consumer demand slow. But recession fears, rising costs, and slowing growth could push companies to cut and reevaluate cloud spend to boost their own profit margins. Analysts expect cloud growth to slow by [half](https://www.marketwatch.com/story/people-will-freak-out-the-cloud-boom-is-coming-back-to-earth-and-that-could-be-scary-for-tech-stocks-11658423842) in the coming years. Still, cloud giants’ pricing power could allow them to raise costs to keep revenues afloat. In March, Google [hiked](https://techcrunch.com/2022/03/14/inflation-is-real-google-cloud-raises-its-storage-prices/) its cloud storage prices by as much as 50%.

Cloud helped super-charge tech profits during the pandemic — but recession belt- tightening could bring demand down to earth

__The latest national debate…__ “Recession or nah?” Last week, we learned that the US economy shrank for a second-straight quarter (aka: the common definition of a recession). But recessions are difficult to call, and are labeled retrospectively. The National Bureau of Economic Research (NBER), which officially determines recessions, is taking a more nuanced approach. While consumer sentiment is at a record low, the cooling job market is still fairly strong —  and most earnings so far have beat expectations. Still, [most](https://www.newsweek.com/us-recession-american-poll-economy-1724222) Americans think the US is already in a recession. 

__America’s hungry for chips…__ And it’s splurging to satisfy its craving. Last week, Congress [passed](https://www.cnbc.com/2022/07/28/china-competitiveness-and-chip-bill-passes-house-goes-to-biden.html) CHIPS-Plus, a bill to boost US chip production. The US has lost global chip-making market share in recent years: Taiwan’s __[TSMC](https://robinhood.com/stocks/TSM)__ makes 90% of the world’s advanced chips. Meanwhile, China plans to build 31 more chip factories by 2024. Foreign reliance worsened US supply shortages, since chips are key to everything from __[Ford](https://robinhood.com/stocks/F)__ cars to iPhones. CHIPS includes $52B in subsidies for US chip giants like __[Lattice](https://robinhood.com/stocks/LSCC)__, __[AMD](https://robinhood.com/stocks/AMD)__, and __[ON](https://robinhood.com/stocks/ON)__ (which report this week). President Biden is expected to approve the bill within weeks.

__Andy Grammer, live from the Greek…__ Earnings, live from the boardroom. Concert giant __[Live Nation](https://robinhood.com/stocks/LYV)__ reports Thursday. The Ticketmaster-owner had its best first quarter ever this year, as artists returned to fan-packed venues. Through April, Live Nation’s bookings were up 44% from *pre*-pandemic levels. In May, Live Nation anticipated a record year based on concert and festival ticket demand (think: Lollapalooza). But the average resale ticket price has soared [45%](https://www.cnbc.com/2022/01/30/inflation-at-its-worst-some-ticket-prices-are-up-as-much-as-100percent.html) since the start of the pandemic, when Live Nation’s biz was decimated. We’ll see if concert-flation hit – or helped – earnings. 

__Bye bye YOLO economy…__ People are feeling less lucky this year, and casino resort companies may take a hit. US casinos had their best year *ever* in 2021 as cooped-up consumers returned to spend their lockdown stimmy savings. Since then, inflation has soared and savings have dried up. Casino stocks have [lagged](https://www.cnbc.com/2022/06/17/casino-stocks-take-a-hit-as-inflation-rocks-economy.html) behind the S&P 500 this year. People are still visiting, but they’re not spending as much (less Blackjack, more all-you-can-eat buffet). We’ll see how the odds look when __[Caesar’s](https://robinhood.com/stocks/CZR)__ and __[MGM Resorts](https://robinhood.com/stocks/MGM)__ report this week.

- __[Green](https://snacks.robinhood.com/newsletters/7o6MiXoh575GLldhSJSmef/articles/4ZzLcQM4Z4lRI2FDkbcd1l/):__ Dems struck a surprise deal with Senator Manchin on a major climate and tax bill. The slimmed-down Build Back Better-esque proposal includes $60B for clean energy infrastructure and new tax credits for EV buyers. 
- __[Short](https://snacks.robinhood.com/newsletters/5ckCeypI4HdqrSwbe8z6cV/articles/61coI1d0brQ4jbe8EgvCzZ/):__ __[Reckitt](https://robinhood.com/stocks/RBGLY)__ is cashing in on the national baby formula shortage. The Lysol-makers’ share of the US formula market has surged from 40% to 55%. Now, regulators may loosen rules to boost competition and production. 
- __[Glossy](https://snacks.robinhood.com/newsletters/2x4Y5iRWMumGD6ZA5ykik1/articles/1SWYiRpeeZAUl7RWl2MBh2/):__ Gen Z-fave cosmetics brand __Glossier__ will sell its products in Sephora’s stores and sites starting next year. A broader physical presence could be key to success as digi-storefronts get overcrowded.

Cloud helped super-charge Big Tech profits, but recession fears could bring demand down to earth

The Mega Millions jackpot was won in Illinois at $1.3B and is the second-largest jackpot in the game’s 20-year history

☁️ Tech’s cloudy future

__Build Back Better is back…__ Well, almost. Yesterday Democratic Senator Joe Manchin [struck](https://www.nytimes.com/2022/07/28/climate/climate-change-deal-manchin.html) a surprise deal with Dems to support a climate and tax bill, reopening the door for some — but not all — of Biden’s agenda. Manchin initially opposed Biden’s “Build Back Better” plan on fears it would spike #flation, but says the new bill will do the opposite: 

- __The Inflation Reduction Act__ is tinier than Biden’s $2T+ proposal, which also covered education and health. But it aims to spend a record $369B on climate programs *and* reduce the deficit by $300B. How? By raising $739B in taxes, largely through a 15% minimum tax on mega-corporations. 
- __What’s included:__ $60B for clean energy infrastructure (think: wind turbines and EV factories), $60B for climate adaptation in hard-hit communities, and more. 
- __For consumers:__ The bill would extend the $7.5K tax credit for new EVs, and add new tax credits for home solar panels and used EVs.

__Renewed hope for renewables…__ In recent months, renewable companies’ earnings have been clouded by rising prices: the cost of key solar materials has nearly [tripled](https://fortune.com/2022/07/14/solar-projects-could-stop-polysilicon-prices/) from last January. But solar demand’s still strong, and this bill could boost green investment:

- __Sunny:__ Shares of solar companies like __[Enphase Energy](https://robinhood.com/stocks/ENPH)__, __[First Solar](https://robinhood.com/stocks/FSLR)__, __[Maxeon Solar](https://robinhood.com/stocks/MAXN)__, __[Sunrun](https://robinhood.com/stocks/RUN)__, __[Sunnova](https://robinhood.com/stocks/NOVA)__, __[SunPower](https://robinhood.com/stocks/SPWR)__, and __[SolarEdge](https://robinhood.com/stocks/SEDG)__ all surged yesterday.

Solar’s power hour (Paul Hennessy / Getty Images)

Green

__It’s a historic step for climate investment…__ But still just the beginning. Experts say the new climate bill could pass as early as next week, if it gets the support from all 50 Democratic Senators (wild-cards like Kyrsten Sinema could kill the deal). It’ll still take years for America to overhaul its old energy infrastructure, but certain companies and consumers may benefit right away.

A slimmer version of Biden’s Build Back Better bill is back on the table, lighting a path for solar companies

__Shoot your (multi-billion dollar) shot...__ __[Pfizer's](https://robinhood.com/stocks/PFE)__ sales hit a [record](https://www.cnbc.com/2022/07/28/pfizer-pfe-earnings-q2-2022.html) high last quarter, surging 27% from last year to nearly $28B. *More than half* of that revenue came from Covid shots or Covid treatments. Meanwhile, total profit ballooned 78% to nearly $10B.

- __Pfizer's Covid vax__ (still the most popular in the US [by far](https://covid.cdc.gov/covid-data-tracker/#vaccinations_vacc-people-additional-dose-totalpop)) brought in $8.8B in revenue. Compare that to __[J&J](https://robinhood.com/stocks/JNJ)__, which made just $544M from Covid vax sales last quarter.
- __Pfizer's antiviral pill__ Paxlovid, used to prevent severe sickness in high-risk Covid patients, brought in $8.1B. __[Merck](https://robinhood.com/stocks/MRK)__ also reported strong growth yesterday, partly thanks to [$1.2B](https://www.investors.com/news/technology/merck-stock-merck-earnings-q2-2022/) in revenue from its Covid pill Lagevrio. Merck's total profit 3X'd from last year.
- __Still:__ Pharma stocks tumbled yesterday after Senate Dems reached a deal they say will lower prescription drug costs.

__Halloween and vaccines...__ If it seems like everyone’s getting Covid, that’s because the dominant BA.5 Omicron subvariant is more transmissible than past ones. As Covid resurges, the FDA has asked vaccine-makers to target dominant subvariants for a wave of fall boosters. Last month, Pfizer and its vax partner __[BioNTech](https://robinhood.com/stocks/BNTX)__ struck a $3.2B deal with the US gov't to deliver 105M doses ahead of an increasingly-likely fall vaccination campaign.

Vaxxing

__Out of mind ≠ out of sight…__ The pandemic used to dominate every headline and conversation. It isn’t monopolizing our daily lives like it was two years ago — from loosening restrictions to lessening news coverage. Still, the US is dealing with [130K](https://www.marketwatch.com/story/coronavirus-tally-us-cases-still-close-to-130000-a-day-as-death-toll-ticks-up-10-from-two-weeks-ago-2022-07-27) new daily Covid cases and a rising death toll. For reference: daily cases are at the [same](https://www.reuters.com/article/us-health-coronavirus-usa-records/u-s-reports-130000-new-coronavirus-cases-fourth-straight-daily-record-idUSKBN27O03I) high level that they were in November 2020. Now, health officials worry that the US will face an even bigger wave when summer ends —  and vax-makers will be key to tackling it. 

Pfizer’s sales soar to a record, driven by vaccines and Covid pills as cases resurge

A slimmer version of Build Back Better is back, lighting a path for green energy companies

Nearly 90% of humans live in the Northern Hemisphere

☀️ Build back greener

__A dystopian formula for success…__ As US parents scramble to feed their kids amid an ongoing baby formula shortage, British health giant __[Reckitt](https://robinhood.com/stocks/RBGLY)__ is [raking](https://www.wsj.com/articles/enfamil-maker-reckitt-boosted-by-u-s-demand-for-infant-formula-11658918202?mod=business_lead_pos6) in cash. Lysol-maker Reckitt and three other companies — __[Abbott](https://robinhood.com/stocks/ABT)__, __[Nestlé](https://robinhood.com/stocks/NSRGY)__, and __[Perrigo](https://robinhood.com/stocks/PRGO)__ — produce 90% of US baby formula. Similac-maker Abbott (which also makes Covid tests) halted some formula production in February due to contamination, exacerbating supply shortages. 

- __Airlifted:__ To boost supplies last quarter, Reckitt increased US production and got temporary FDA approval to airlift formula from abroad. Cue: a boom in sales and profits. Yesterday Reckitt lifted its annual forecast, sending shares up 5%.
- __Less formula…__ more market control. Reckitt’s formula market share surged to 55% from 40% during the shortage, while Abbott’s plunged to 20% from 40%. 

__Food for thought…__ To ensure all US babies get enough nutrition, the formula biz is heavily regulated. But the federal program that subsidizes baby food — called Women, Infants, and Children (WIC) —  limits competition in the industry. That may have worsened the shortage.

- __WIC buys more than half__ of all US formula and then distributes it to low-income families. 
- __But WIC requires each state__ to choose just one supplier, giving formula giants big market share. Reckitt has WIC contracts in 10 states.

Empty formula shelves (Samuel Corum/Getty Images)

Shortage

__Emergency responses could create permanent changes…__ Biden *temporarily* invoked the Defense Production Act (DPA) to boost domestic formula production. The FDA also lifted limits on formula imports, temporarily allowing more foreign-made formula into the US. But some analysts expect the shortage to lead to reform of restrictive WIC rules, which could create more US formula competition — and shrink the big formula four's market share.

Reckitt’s sales are booming on the baby formula shortage, but more competition could be coming

__Eleven trading card…__ superpowers not included. Sports merch staple __Fanatics__ nabbed a deal with __[Netflix](https://robinhood.com/stocks/NFLX)__ to expand beyond athletics into pop culture. Now, Fanatics can sell everything from “Stranger Things” Hellfire t-shirts to demodog trading cards. Beyond Hawkins, Fanatics inked a merch deal with Legendary Entertainment for its “Dune” movie franchise. It’s a shift for the sports-centric brand:

- __The roster:__ Fanatics [pays](https://snacks.robinhood.com/newsletters/7nJDYIh8RKeeUP9ZdU0AKT/articles/6IzOCzAlPLe9NQrfQqbzxX/) 300+ sports teams and brands for the right to sell their merch as an official partner. In January, the merch master [bought](https://snacks.robinhood.com/newsletters/7nJDYIh8RKeeUP9ZdU0AKT/articles/6IzOCzAlPLe9NQrfQqbzxX/) trading card icon __Topps__ for a reported $500M to sell MLB, NBA, and NFL player cards. 
- __The $$:__ Fanatics' collectibles biz alone (think: signed Brady jerseys) is expected to top $1B in revenue this year, while its e-comm biz is projected to hit $4.5B in sales. 

__From trading cards to NFTs…__ Fanatics’ fanbase is expanding. In March, Fanatics launched zerocool, a premium trading card company that collabs with media and pop culture brands. Now, it’s using Netflix's 221M-strong subscriber base to diversify its portfolio. Netflix has its own low-key [merch](https://www.netflix.shop/collections/stranger-things) store, but now it’ll get exposure to Fanatic’s 80M customers. Demand is hot: __[Ebay](https://robinhood.com/stocks/EBAY/)__ sold 142% more trading cards in 2020 than in 2019.

Merch

__Fanatics is going wide to get far...__ It wants to be everyone's favorite merch company — and not just for sports lovers. That’s why Fanatics is planning more licensing deals with production studios, musicians, and even fashion brands. It’s not the only company going wide: yesterday, luxury reseller __[The RealReal](https://robinhood.com/stocks/REAL)__ expanded its fashion marketplace to include collectibles like trading cards and action figures. Going wide could be key to Fanatics' goal of becoming a $100B company over the next decade.

Sports merch giant Fanatics inks a “Stranger Things” deal with Netflix as it looks to Hollywood for growth

Reckitt’s sales are booming on the baby formula shortage, but competition could increase

The space economy grew to $469B last year, expanding at its fastest rate in nearly a decade

🍼 Reckitt’s formula boom

__Ignoring the leggings at the front...__ and beelining to the grocery aisles. __[Walmart](https://robinhood.com/stocks/WMT/)__ said that high fuel and food prices are causing Americans to cut back on discretionary spending (think: floral dresses, instant pots, decorative pillows). The consumer bellwether has been marking down the price of clothing and big-ticket items to help unload unsold inventory. Cue:

- __America’s largest retailer__ [slashed](https://www.wsj.com/articles/walmart-cuts-profit-outlook-as-it-lowers-prices-to-move-goods-11658781617) its annual profit forecast. While Walmart expects quarterly store sales will grow, the growth is coming from less profitable items like groceries.
- __Walmart stock dropped__ 8% yesterday. __[Amazon](https://robinhood.com/stocks/AMZN/)__, which reports tomorrow, dropped 5% as investors feared it may be experiencing a similar fate.

__Nuggets > new kicks...__ Big-ticket items like apparel and electronics typically have higher profit margins, but consumers are cutting spending in those categories to afford necessities like food and gas. Americans are also [trading down](https://www.wsj.com/articles/cheaper-beer-cigarettes-gain-favor-as-inflation-pinches-shoppers-11658655001?mod=article_inline) to cheaper beer brands (like: Busch Light vs. Corona) and discount cigarettes (like: Edgefield vs. Marlboro). But not every consumer staple is suffering:

- __[McDonald's](https://robinhood.com/stocks/MCD/)__ [reported](https://www.cnbc.com/2022/07/26/mcdonalds-mcd-q2-2022-earnings-.html) expectation-beating profits yesterday as price hikes and value deals fueled same-store sales growth. The $2 breakfast's still going strong. 
- __[Coke](https://robinhood.com/stocks/KO/)__ beat earnings expectations and [boosted](https://www.barrons.com/articles/coca-cola-earnings-stock-price-51658770567) its annual sales forecast thanks to price hikes and rebounding “away-from-home” soda sales (movie theaters, restaurants).

 It’s giving anti-inflation signals (Joe Raedle/Getty Images)

Pillows

__The “discretionary drop” is the 1st wave...__ of a recession, and a 2nd wave could follow. In a downturn, people usually forgo discretionary items like clothes before cutting back on necessities like groceries. Consumer sentiment hit a record low in June — problematic, since consumer spending makes up 70% of America’s economic output. Tomorrow’s second quarter GDP report will give us clearer insight into the “are we in a recession” question.

Walmart slashes prices and profit forecasts as Americans cut back on discretionary goodies like clothes

__Scooping up ultra lip balm…__ __Glossier’s__ taking its Zillennial-fave beauty products to Sephora in a major retail partnership starting next year. Glossier launched as a delivery-only beauty brand in 2014, and was last [valued](https://snacks.robinhood.com/newsletters/4XhXFxZ9Jc6bcL9aMggLSr/articles/5jj0lR6LlNJitAc0Eqk9WF/) at $1.8B thanks to its Insta-friendly pink packaging and cult classics like “Boy Brow.”

- __Gloss on the go:__ Glossier products will be available at Sephora’s stores (and website) in the US and Canada, but it's TBD how many and where. (Fun fact: Glossier says it's one of the most searched for as-of-yet unavailable brands on Sephora’s site.)
- __Physical pivot:__ Glossier founder Emily Weiss [stepped](https://www.forbes.com/sites/madelinehalpert/2022/05/24/emily-weiss-steps-down-as-glossier-ceo-months-after-company-layoffs/?sh=6998e5702d80) down as CEO in May as the brand embarked on a "new chapter" to drive growth. Glossier [already](https://www.glossier.com/picks/retail-locations) has stores in London, Miami, LA, and Seattle, and plans to open more big city locations this year.

__Beauty counter binge…__ Glossier’s retail partnership comes as the return of IRL events ignites makeup demand. Last quarter, high-end cosmetics [topped](https://wwd.com/beauty-industry-news/beauty-features/beauty-sales-skyrocket-npd-high-income-spending-1235259818/) $2B in sales, with unit sales surpassing pre-pandemic levels. __[Estée Lauder](https://robinhood.com/stocks/EL)__ delivered double-digit sales growth last quarter, and the trend could continue: during economic downturns, shoppers are more likely to splurge on tiny pleasures like a $20 jelly-cream blush than a new Macbook (see: [the Lipstick index](https://www.businessoffashion.com/articles/beauty/beauty-brands-prepare-recession/)).

Glossy

__The digi-storefront is packed…__ especially in the beauty space. That’s why digital-first beauty brands have increasingly been going physical. See: Kylie Cosmetics’ 2018 partnership with __[Ulta](https://robinhood.com/stocks/ULTA/)__ and Rihanna’s __Fenty__ presence at Sephora. By having a physical presence at beauty go-to Sephora, Glossier can attract new customers and become more accessible to loyal fans.

Cosmetics unicorn Glossier nabs a major retail deal with Sephora as digi-storefronts get crowded

Walmart slashes prices and profit forecasts as Americans cut back on discretionary spending

After 20 years of cooperation with the US, Russia is pulling out of the International Space Station and will build its own