🍎🤑 Apple Wants You to Subscribe to Use... Your iPhone?
Happy Hump Day everyone,
It has been another big week not just in the world of finance, politics and crypto but for the YouTube channel as well! Last week, we put out our economic breakdown of Costco and how they intentionally lose $40M a year to get customers in the door. We’re proud of the video we put out and we have many more to come!
Now as for your regularly scheduled Hump Days content, Tesla is considering a stock split, Apple wants to make you subscribe to use your iPhone, California’s Gavin Newsom is giving rebates to car drivers and another Bored Ape worth $350,000 was stolen and sold for $115.
Look for this week’s feature article under the Featured Story section as you scroll the newsletter!
- Humphrey & Rickie
In the Markets
Featured Story
Instacart is taking a major haircut on their valuation and this is actually very significant not only from Instacart’s standpoint but for the entire gig-economy food delivery industry. By volunteering a 40% reduction towards their valuation (they asked for a revaluation), they ultimately are admitting that they got way ahead of themselves.
The company says that by slashing the valuation, it will help them attract better talent by selling prospective employees on the potential for significant gains down the line if they can regain favor in the markets. An interesting strategy by Instacart here, but something tells me they are not telling the full story 🤔.
If you recall back in November 2021, Peloton saw their stock drop 40% in a day after they cited that they were temporarily halting production due to quickly evaporating demand for their bikes and treadmills. They were once the pandemic darling on Wall St. but because of declining demand coming out of the pandemic, they too realized that they were in way over their heads with where they were as a company.
This could very well be the case for Instacart here, and while they are not publicly traded, one could infer that they experienced many of the same profitability issues that Peloton experienced coming out of the pandemic. Additionally, in such a low-margin business such as grocery-delivery (how much can you really charge for that?), Instacart relies heavily on the volume of shoppers using their service. With capacity restrictions lifted and people with more time to run errands as a result of fully-remote work, Instacart has a major uphill battle to conquer if they want to get anywhere near that $40B valuation.
One more thing that I thought was interesting. By volunteering a revaluation, it shows that employees at Instacart were okay with taking a pay-cut, which historically was a major company killer. Are wages still sticky downwards? Shout out to all my Keynesian’s out there. Let’s keep a close eye on other Silicon Valley startups with huge valuations and see what they do from here.
Weekly News Roundup
Instacart Slashes its Valuation by Almost 40% to $24 Billion (BBG)
Instacart, one of the pandemic darlings (re: Peloton 😬), slashed their valuation from $39B down to $24B in a move that the company is framing will help them attract talent and adapt to market conditions.
Uber Reaches Deal to List All New York City Taxis on Its App (WSJ)
Taxi drivers who had their livelihoods affected with the coming of ride-hailing app Uber are rejoicing after they were able to reach an agreement to list all NYC taxis on their app. The decision to go through with this deal aims to ease Uber’s driver shortage and temper high fares while also directing business towards cab drivers.
HY: Once they were enemies, now they are friends. Are they now frenemies?
RH: Will the cab drivers let me have the AUX?
Inside Biden’s $5.8 Trillion Budget Proposal (NYT)
President Joe Biden put forth a $5.8 trillion annual budget that reflects growing security and economic concerns at home and abroad. Key points include billions set aside to invest in police departments and the military which would come from the pockets of American corporations and the wealthy through higher taxes.
RH: The budget proposal is largely a symbolic document, a suggestion if you will. Congress responded accordingly along party lines.