Oct 24, 2022

Cold Snap Incoming For Online Ad Spending | The Daily Peel | 10/24/22

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Oct 24, 2022 | Peel #322

 

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Market Snapshot

If you bought $SNAP right after its hotly-anticipated IPO, you’d have lost about 3/4 of your money as of today. Its DAUs are still growing, but its ad partners are tightening their belts. More eyeballs doesn’t mean much if you can’t monetize them.

The rest of the market fared much better Friday, with major indices closing the week in the green after a slew of positive earnings reports.

market summary

Banana Bits
  • Twitter employees might want to dust off their resumes after Elon pledged to cut 75% of its workforce
  • Joey B’s gift to student borrowers held up to a challenge in the Supreme Court
  • The federal government’s budget deficit was cut in half in 2022, totaling a measly $1.4 trillion
  • The mighty Mississippi River is drying up at an alarming pace, threatening cargo supply lines

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Macro Monkey Says

The Dreaded Yield Curve Inversion

Other than crypto millionaires selling Ferraris, an inverted yield curve is about the best recession signal there is.

It’s not foolproof, but once short-term bonds are paying more than the long-term variety, slower growth is almost guaranteed.

  • The yield curve inverted last week, with the 2-year now paying more than the 10-year
  • Yields and stocks have oddly been moving in tandem recently after having very different years—the 10-year yield has gained over 250 bps since January, while stocks have cratered
  • The inversion is slight, igniting a debate around whether a deeper inversion is necessary for it to really represent a recession alarm
  • Stocks look to have some sort of recession already priced in, so a 2023 recession may not necessarily tank the market

Meme of the day
meme

 

Source

What's Ripe

The Boston Beer Company ($SAM) ↑ 19.67% ↑

  • $SAM proved the haters wrong after beating top and bottom line estimates in Q3, driven by higher prices and tighter operating expenses
  • Twisted Tea and Hard Mountain Dew are performing well, offsetting lagging performance in its Truly and Angry Orchard brands

AMC Entertainment Preferred Equity ($APE) ↑ 9.88% ↑

  • $APE stans are down almost 60% since shares were issued in late August but were given a shot in the arm Friday
  • The beleaguered theater chain still has $1 billion in the bank, and investors like the stock ahead of its upcoming Q3 earnings release

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What's Rotten

Snap ($SNAP) ↓ 28.08% ↓

  • Snap is one of several ad-based companies buckling under Apple’s iOS privacy update, which limits its ability to track your every move and sell ads accordingly
  • It’s not giving guidance for Q4 other than saying revenue growth will probably continue to crater

Nat Gas Futures (NG00)

  • It’s been a helluva ride in the nat gas market this year. In mid-September, prices were up 3x from the start of the year.
  • Since that point, they’ve been cut in half. A combination of warmer-than-expected weather and higher storage levels triggered the collapse.

Data Peel
chart

 

Source

Thought Banana

Higher Education Is A-Changin’

The promise of spending four years getting plastered, learning a few things, and coming out the other side with an earnings-boosting degree is eroding.

Younger generations are looking at absurd Millennial student debt burdens and the meager earning power those degrees have granted them, and they are passing on the traditional higher education route.

Schools are scrambling to respond.

  • “About 1.5 million fewer students are enrolled in college than before the pandemic”
  • Online schools and HBCUs have been the winners of the shift
  • Until the ROI of college starts to make more sense, high schoolers will probably continue to opt for coding boot camps and online certification programs to access higher earnings without the ball-and-chain of 6-figure debt

The big question: Will legacy universities adapt to the shifting landscape, or will private companies make inroads into the higher education sector with cheaper training programs that basically guarantee higher wages?

Banana Brain Teaser

Friday — He has married many women but has never been married. Who am I?

A preacher.

Today — It’s 100 bananas off the M&A Modeling Course. LFG!

He has one and a person has two, a citizen has three and a human being has four, a personality has five and an inhabitant of earth has six. What am I?

Shoot us your guesses at [email protected] with the subject line “Banana Brain Teaser” or simply click here to reply!
Happy Investing, Patrick & The Daily Peel Team Was this email forwarded to you? Sign up for the WSO Daily Peel here.   ADVERTISE // WSO ALPHA // COURSES // LEGAL

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