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| Hey Insiders, Thursday's edition of Inside Business takes a look at: - FedNow: Fed's instant payment system
- Analysis of Netflix Q2 earnings report
- United's Q2 earnings surge predicts lucrative summer
Also: we want to hear from you! Tell us why customer feedback is important for product development and how to use it effectively. Please say it here! If you find this newsletter helpful, please share it with your friends and colleagues. Shriram
p/Shriram | |
| 1 | | The Federal Reserve has launched FedNow, a new instant payment system that allows consumers and businesses to send and receive money in seconds, 24/7. Unlike other payment systems like Venmo and ACH, FedNow settles payments immediately, which can help businesses manage cash flow more effectively. The service is currently available to 35 banks, but the Fed plans to expand its availability in the coming years. More: - The FedNow service has a transaction limit of $100,000 but will eventually allow up to $500,000.
- FedNow will charge banks and credit unions $0.045 per credit transfer and $25 per month, but the final cost to consumers will be determined by the banks and other financial service providers.
- JPMorgan, Wells Fargo, and a few credit unions are already participants in the program.
- FedNow could enable the widespread adoption of "pay-by-bank" solutions in the U.S., which could appeal to merchants looking to circumvent interchange fees.
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What the numbers say: With earnings per share of $3.29 in the second quarter, Netflix outperformed predictions of $2.86 per share. The streaming behemoth attracted 5.9 million members and recorded a net income of $1.49B, up from $1.44B in the same quarter last year, but slightly missed sales projections at $8.19B compared to an estimated $8.30B. Relevance: In the second quarter, Netflix's income and subscribers increased thanks to initiatives to stop password sharing in the U.S. Following the earnings report and announcement that it would introduce its new guidelines to the rest of its customer base, the company's stock dropped as much as 8% in after-hours trading. More data: The impact of paid sharing and steady growth in its ad-supported plan are expected to propel Netflix's third quarter revenue increase of 7% year over year, reaching $8.5B. The business anticipates high subscriber retention rates after seeing an increase in users due to the sharing policy's deployment. | | | |
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| 3 | | As foreign travel picks up, United Airlines recorded its biggest quarterly profit ever and anticipated a solid third quarter. Despite aircraft delays at its Newark hub, the airline outperformed experts' predictions and achieved excellent revenue growth in overseas flights, which made up 40% of overall sales. More: - In the second quarter, earnings per share exceeded expectations at $5.03, while total revenue was higher than expected at $14.18B.
- Compared to the same period last year, net income for the second quarter was $1.08B, or $3.24 per share, as opposed to $329M.
- With a 17% increase in overall revenue YoY, United's capacity increased by 17.5% from the second quarter of 2022.
- United Airlines plans to increase capacity by approximately 16% in Q3 and anticipates up to 13% revenue growth in the same period next year while projecting adjusted earnings per share of $3.85 to $4.35 for Q3.
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| 4 | | A $424M upsized IPO for the beauty and wellness company Oddity Tech Ltd. was a success. The company sold over 12.1 million shares at an IPO price of $35 per share, representing a market value of almost $2B. More: - After considering employee stock options, the company's valuation is more closely related to $2.4B.
- IL Makiage and the wellness-focused online-only company SpoiledChild are among Oddity's companies.
- With net revenues of nearly $324M and a net income of $21.7M in 2022, Oddity significantly outperformed the previous year.
- The shares will start trading on the Nasdaq Global Market under the ODD ticker, and the IPO is being led by Goldman Sachs Group Inc., Morgan Stanley, and Allen & Co.
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| 5 | | Despite the Fed's efforts to slow demand, the labor market in the U.S. remains strong. The number of people filing for unemployment benefits fell unexpectedly last week to the lowest level in two months. This suggests that the economy is not in a recession, but the housing market is slumping, and manufacturing activity is subdued. More: - The labor market remained tight as companies hired more workers, adding 209,000 jobs in June.
- Initial claims for state unemployment benefits dropped 9,000 to a seasonally adjusted 228,000 for the week ended July 15, the lowest level since mid-May.
- Factory activity in the mid-Atlantic region was still subdued in July, but manufacturers were more upbeat about business conditions over the next six months.
- The Fed is considering raising rates next Wednesday after skipping an increase in June.
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| 6 | | The rising cost of buying a home is making it more difficult for people to afford one. Surging home prices and mortgage rates are pushing monthly payments to an all-time high. Inflation, increasing demand, and a limited supply of homes are driving these costs up. More: - Home prices rose by 2.1% in the four weeks ending July 19, the largest increase since December.
- Sales prices in Milwaukee rose 12.2% from a year ago, the most of any metro tracked by Redfin.
- Existing home sales declined 3.3% from May to a seasonally adjusted annual rate of 4.16 million.
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- Kenvue, the recently spun-off consumer health company from J&J, exceeded expectations in its first quarterly report, driven by high demand for its popular brands, and issued a positive sales outlook for 2023.
- Leading contract chip manufacturer TSMC projects a 10% drop in sales for this year and postpones the planned Arizona factory's anticipated start of major production until next year.
- Apparel company Skims, co-founded by Kim Kardashian, has raised $270M in funding, bringing its valuation to $4B, making it a four-time unicorn.
- The president and CEO of Gucci is set to resign in a leadership restructuring at parent company Kering, with the goal of capitalizing on the growing luxury goods market worldwide.
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Term of the Day Lean startup: A lean startup occurs when founders and teams understand customer needs and refine their products accordingly to reduce wasted efforts and costs. Question of the Week Do you think it's ever acceptable to bring politics into the workplace? Join the conversation |
INSIDE BUSINESS LEADERBOARD (7 DAYS) |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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