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šļø Burrito Season
[5 minutes to read] Plus: What's with the tech layoffs?
By Matthew Gutierrez and Shawn OāMalley
šÆĀ Guac, rice, lettuce, chicken, salsa, cheese. By now, virtually everyone has memorized their ideal Chipotle order.
The $74 billion chain reported a 14% jump in annual sales yesterday (more below), bucking the trend seen at Starbucks and McDonaldās.
The countryās appetite for fast Mexican food has remained strong, and Chipotle plans to open another 285+ stores this year ā including one a block from my apartment, just in time for āburrito seasonā from March through May.
ā Matthew
Hereās todayās rundown:
Today, we'll discuss the three biggest stories in markets:
A rundown of Chipotleās, Uberās, and Robloxās earnings
Why are tech companies laying off so many workers?
ESPN, Fox, and Warner team up on sports
All this, and more, in just 5 minutes to read.
POP QUIZ
In The News
āļø Earnings Rundown
Created by DALL-E, via ChatGPT
Itās never been easier to have Uber deliver your Chipotle order, and coincidentally, both companies reported earnings this week.
Also reporting earnings was Roblox, which, to parentsā chagrin, raked in cash by selling its virtual currency ā Robux ā to (mostly) kids.
Chipotle:
Despite seemingly perpetual fears that the economy is nearing a recession, Chipotle delivered solid fourth-quarter earnings.
Burrito bowl eaters happily said yes to extra Guac to the tune of $2.52 billion in sales, with revenue at stores open for a year or longer rising 8.4%.
Its stock moved over 7% higher after slowdowns in fast-food spending at McDonaldās and Starbucks failed to manifest.
If youāre keeping track at home, that marks a 55% rally in Chipotleās stock over the past 12 months (more than twice the S&P 500ās returns.)
Uber:
$1.4 billion. Thatās Uberās profits from last quarter, up from $595 million for the same quarter in 2022 ā not too shabby. Part of that, though, is āunrealized gainsā thanks to revaluations of its investments in other companies.
Still, revenue came in $180 million higher than analysts expected, a 15% rise from year-over-year.
Said its CEO, 2023 was a year of āsustainable, profitable growth for Uber.ā Investors agree ā the stock is up almost 104% over the past year.
Adding, āPeople are going out to dinner, theyāre going out to concerts, sports events, etc. And when people go out and they spend money, or when they want anything delivered to their home, Uber benefits.ā
Roblox:
Roblox stock popped 12% in Wednesday morning trading, bringing in more revenue than expected and not losing as much per share in earnings as feared.
As mentioned, Roblox players (60% are under the age of 16) spend real dollars on virtual currency used to dress up their avatars and purchase other in-game features.
For the quarter, 71.5 million people played on average daily, up 22% from a year prior. The company's long-term goal is to attract over ā1 billion daily active users,ā according to its CEO.
Beyond just player growth, players were also spending more. Average revenue per daily user rose 3% to $15.75.
Read more (more earnings coverage)
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š¼ Why Tech Companies Are Laying Off So Many Workers
Gif by Freedomists on Giphy
As if 2023 werenāt brutal enough for tech workers, the industry kicked off 2024 with a bang: another wave of job cuts.Ā
Thousands of workers have been laid off through the first few weeks of the year, even for some āsafeā jobs in cloud and software. Big tech companies believe they can accomplish more with less, thanks to AI.Ā
Over-hiring: Snap has reduced its workforce by 10%, or 540 employees. Okta cut 7% of staff, or 400 employees. DocuSign is cutting 6%, or 400 jobs. Google and UPS each cut 12,000 jobs recently. Even Amazon, Salesforce, and Meta are cutting costs by eliminating positions, reducing headcount, and doubling down on the positions they deem more necessary.
One analyst notes that ātech companies are still trying to correct for their over-hiring during the pandemic surge, given that the high interest-rate environment and tech downturn have both lasted longer than initially expected.ā
Big picture: There was the āearly Covidā spike in layoffs, in early 2020, then the āinterest rate hikeā layoff period, which has been going on for nearly two years, more evidence for why some economists believe weāve lived through a rolling recession over a lengthy period.Ā
Some companies cite artificial intelligence as a lead reason for the layoffs: Theyāre shifting resources to focus on AI.
Job postings in āartificial intelligence or requiring AI skill increased by about 2,000 from December to January,ā up to around 18,000 total postings.
Why it matters:
So, yes, tech layoffs are very much a thing. But tech hirings are also in full force. Both can be true.Ā
āI do feel like most of the layoffs have happened, and companies are going to start rebounding, " one hiring firm executive commented. āBut itās still very uncertain.ā He expects things to stay that way āuntil the Fed really comes out and starts to cut interest rates.ā
Or, as one professor put it, after tons of hiring and wage increases during the pandemic, āworkers are getting whipsawed.ā
More Headlines
š° Disney takes $1.5 billion stake in Fortnite-maker Epic Games
š New York Community Bank shares continue to fall after being downgraded to ājunkā by Moodyās
š Ā Snap shares crater 30% after revenue miss and weak guidance
š„¤ Cokeās first new permanent flavor in years adds a spicy twist
š Nvidia is nearing Amazon and Apple in market capitalization
š¬ Tesla is the worst-performing S&P 500 stock this year
š Uncertainty creeps into the Treasury market after Fed comments and strong economic data
š ESPN, Fox, and Warner Team Up for Sports Streaming
Walt Disneyās ESPN, Fox, and Warner Bros. Discovery are teaming up to (try to) revolutionize how we watch sports.Ā
Theyāre launching a joint streaming service this fall, just in time for football season. The new platform will be run by a new company with its leadership team, which will likely reshape our sports-viewing experience.
Bundle up: Consumers can subscribe directly via an app, with the option to bundle the service with Disney+, Hulu, and Max. It will include channels like ESPN, ESPN, Fox Sports, TNT, and TBS, all of which broadcast events like the NFL, MLB, and the NCAA Tournament.Ā
The expected monthly fee will be around $50, much lower than cable packages that usually run north of $100.
The goal: We all know cable TV hasnāt had a very good run in the past decade. But sports viewership is still big business, and the companies hope to make the platform a home base for sports programming.Ā
Disney, Warner Bros. Discovery, and Fox will each own one-third of the new company. Per CNBC, the rights to fee revenue sharing will be proportional to what the cable networks charge pay TV providers.
Citi analysts say the new service could encompass about 55% of U.S. sports rights.
Any sports fan will tell you itās been tough to watch all the games you want. Thereās this service, that service, this app, and all sorts of confusing packages. But as pay TV declines because of cord-cutting, ESPN, Warner, and Fox see the writing on the wall. Theyāre making a big bet on streaming, even if itās a crowded market.
Why it matters:
Look, you probably wonāt see us invest in anything media-related, but thereās a short list of things people worldwide can connect with ā good food, music, family, and sports. Thatās unlikely to change.
The big question: Could the new service make sports viewership seamless again, all in one place? Thatās the hope as consumers abandon pay-TV at a fast clip ā an annual drop of 7%.Ā
Still, about 55 million U.S. households pay for traditional TV, down from a peak of about 100 million a decade ago.
Most of the decline is due to rising alternatives like YouTube TV, FuboTV, and others, which are growing rapidly, with about 18 million subscribers combined.Ā
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