From Wall Street to Silicon Valley, these are the top stories that moved markets and had investors, business leaders, and entrepreneurs talking this week on Cheddar.
MARKET SHRUGS OFF INFLATION
Stocks rebounded from an early slump to close out the week, boosted by reopening optimism following the CDC’s sharp reversal on mask wearing for vaccinated Americans. Tech shares led the rebound, though the Nasdaq still closed the week lower by 1.04 percent. The Dow and S&P also ended with modest losses. The big economic data of the week was April's CPI, which came in much hotter than expected, leading to renewed concerns that the economic recovery is in danger of overheating. The consumer price index — a measure of a basket of goods, housing, and energy costs — jumped 4.2 percent year-over-year, a much higher than expected reading that comes during a time of shortages and price hikes on everything from grocery staples to computer chips. Inflation is accelerating at its fastest pace in 12 years as the American economic engine grinds into gear, though the data is a bit distorted because of how abnormally low it was this time last year at the height of the pandemic. The Fed has said it expects the rise in inflation to be temporary.
MUSK REVERSES COURSE
Fresh off his hosting stint on SNL, Elon Musk did an about-face on Bitcoin, tweeting that Tesla would stop accepting the cryptocurrency for purchases due to its environmental impact. The decision came just three months after he announced the digital coin as a new way to pay. Bitcoin had its worst week since February on that tweet, dropping as much as 15 percent before paring some of those losses. Other coins like Ether and Doge also slid, though Doge’s price went as high as 56 cents after Coinbase said it would initiate support for the token in the coming weeks. Tesla had a miserable week of its own, dinged by the impact of inflation on high-multiple stocks, Musk’s Bitcoin reversal, and surprisingly bad sales data out of China. While Tesla doesn’t break out monthly or regional sales, the China Passenger Car Association estimated that the company sold 27 percent fewer domestically-made vehicles in April than March, while Warren Buffett-backed BYD has been gaining steam.
AIRBNB HITS THE SKIDS
Airbnb reported its second earnings since going public, showing revenue grew 5 percent in Q1 to $887 million. The home-rental platform’s net loss widened to $1.2 billion. For comparison, competitors like Expedia and Booking Holdings reported double-digit revenue declines given the uneven state of global travel. Shares of Airbnb are down 40 percent from their highs in February, hurt by increased competition not just from more traditional booking platforms but also the likes of VRBO, which is particularly well positioned to take share from Airbnb when it comes to rural vacation rentals and has a more attractive fee structure for consumers.
NEW ERA FOR VICTORIA’S SECRET
L Brands has decided to spin off Victoria’s Secret and Bath & Body Works into two separate public companies after spending the last year deciding what to do with its two flagship properties, particularly its struggling lingerie chain. Victoria’s Secret was in the process of being acquired by Sycamore Partners in early 2020 before the pandemic sank the deal. Since then, the company got a new CEO and embarked on a turnaround that involved closing underperforming stores and deemphasizing its famously sexualized image for a more inclusive brand. So far, it seems to be working. VS sales reached $1.6 billion in Q1, compared to $894 million a year prior at the nadir of its troubles. Victoria’s Secret is expected to be valued between $5 billion and $7 billion after the spinoff to L Brands shareholders, according to the New York Times. As for Bath & Body Works, the chain famous for its home fragrance selection, saw net sales rise to $1.5 billion in Q1, up 60 percent in two years.
DISNEY MOMENTUM SLOWS
Disney shares took a drubbing after reporting an all-around disappointing quarter, ending the week down 6.49 percent. Disney+, the pandemic bright spot for the Mouse House, saw subscriber growth slow to 8.7 million for the quarter. That still brings Disney+ subs to 104 million in the year-and-a-half since it launched, not too shabby considering the company’s own original forecast was for 60 to 90 million subs by 2024. Still, for the Street, it’s all about momentum and it may be that Disney’s streaming growth just couldn’t sustain that pace forever.The theme park division reported its fourth straight loss — no surprise there, given many of those parks are just now opening back up.
Next-gen social sports platform Break the Love recently raised $2.5 million in seed funding. Break the Love's platform and iOS app allows users to discover and book group-based tennis activities, to either learn, train, or compete. The new company has already gotten support from a few big names in the world of tennis, including the coach of Naomi Osaka, as well as the United States Tennis Association and the brand Wilson. Break the Love founder and CEO Trisha Goyal joins Cheddar News' Closing Bell to discuss.
The world of NFTs and cannabis are colliding as luxury cannabis company Peakz gears up to launch a digital dispensary in the metaverse. CEO Jessie Grundy and Tiffany McBride, managing director of social equity ventures at The Parent Company, an investor in Peakz, joined Cheddar to break down exactly how a digital dispensary would work. Grundy also talked about offering low-cost NFT courses in an effort to help Oakland, California, residents not miss out on new investing opportunities, and McBride discussed why the tech-forward vision of Grundy was worth investing in for The Parent Company. "He comes with really fresh ideas that he's vetted, that he's experienced in, and I really believe the thinking along Jessie's lines is the future of cannabis," she said. "He's more than just flower and a story. He comes with concepts that are new that are innovative, and that is easy for us to get behind."
Daniel O'Brien, president and global head of enterprise at HTC America, joined Cheddar's "Closing Bell" to discuss new products and services the virtual reality brand showed off at CES 2022, including a wrist tracker — in lieu of controllers — for more accurate interactions connected to its all-in-one headset, the VIVE Focus 3. O'Brien also described a cloud-based, 5G content delivery system. "We partnered up with Lumen Technologies and from six miles away we delivered high bandwidth VR to a headset directly in the Wynn Hotel during CES," he said. "And people were able to walk around in their virtual experience through a wireless signal."
Samsung unveiled a slew of new electronics and upgraded designs at CES 2022. With a heavy focus on gaming and the future of work, the company showed off its all new Odyssey Ark, which boasts a massive 55 in. curved display designed to give users a more immersive and captivating experience. Sang Kim, SVP, Samsung Electronics joined Cheddar's Michelle Castillo to discuss the company's biggest launches as well as major trends to watch in 2022.
Tesla's Austin, Texas-based gigafactory could be days away from opening its doors and beginning production. Dan Ives, managing director of equity research at WedBush Securities, joined Cheddar to talk about his estimate that the EV company will be running its factory within a week and noted that Tesla has been in a good position despite ongoing semiconductor shortages. "They're really almost Teflon-like relative to other automakers," he said, calling its production delays "containable." Amid another shortage — labor —, he said he thinks Tesla positioned itself well for access to talent months ago with expanded hiring amid the move to Texas from California.
The UK's Information Commissioner's office is scrutinizing Facebook's parent company Meta over child safety practices linked to the Oculus headset, according to a report. The agency is looking to question the tech giant about how it's protecting children from harmful experiences in virtual reality.
Hall of Fame quarterback Troy Aikman joined Cheddar's "Between Bells" to talk about his own brand of organic light beer called Eight (his jersey number with the Dallas Cowboys) and explained that he's had an interest in the industry since his days working for a distributor during college. "These brands that are on the market have been there for a long time and [I] felt that it was time for something fresh, something new, and I thought that we could do it in a way that was a better-for-you beer' and that's what we've done," he said. Aikman also provided some insight into the upcoming NFL playoffs and noted that he doesn't see a clear frontrunner for this year's Vince Lombardi trophy.
Disney has secured a patent for a digital world simulator for headset-free augmented reality expected to be accessible in parks by tracking smartphones and projecting personalized 3D displays, an indication that the entertainment giant is gearing up for its entry into the metaverse.
It has been a record year for luxury automaker Rolls-Royce despite the industry struggling to meet demand overall due to the ongoing semiconductor chip shortage. CEO Torsten Müller-Ötvös joined Cheddar to discuss the driving factors behind the company's 2021 success. He said after the pandemic forced the closure of factories in 2020 and people stopped making large purchases, they were open to spending more in 2021. "The entire luxury sector was fueled by there's money available, and people are prepared to spend money," he said.
