| Hello Insiders!! Thursday’s business newsletter covers more on: - Meta stock soars on revenue growth
- TikTok entering a new business
- Verizon beats profit expectations
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Shriram
p/Shriram | |
| 1 | | Meta exceeded expectations in Q2, as revenue increased by 11% to $32B, and profits rose by 16% to $7.79B. The positive findings emerge as investor interest in AI strengthens the tech sector and demand for digital advertisements increases. More: - Facebook now has 2.06 billion daily active users, up 5% YoY, and 33% more monthly active users.
- After-hours trading on Meta shares increased by nearly 4% in response to the earnings report.
- Mark Zuckerberg, the CEO of Meta, declared a "year of efficiency" in February following a challenging 2022 marked by revenue decreases, cost-cutting measures, and layoffs.
- Within a week of launching Threads, its rival to Twitter, the firm had signed up 100 million users.
- Before monetizing Threads, Zuckerberg emphasized the value of providing stability for staff, eliminating obstacles, offering new AI-powered capabilities, and focusing on retention.
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What the numbers say: As of June 2023, TikTok has 1.173 billion active users worldwide, while Shein has 156 million and Temu has 79 million growing active users. TikTok aims to quadruple the gross merchandise value (GMV) to $20B globally this year from less than $5B last year. TikTok will provide a full-service model for Chinese manufacturers, handling storage, shipping, marketing, transactions, and after-sale services, with plans to expand to international manufacturers. Relevance: Beginning in early August, TikTok will introduce its e-commerce platform, TikTok Shop, to the U.S., joining Shein and Temu. TikTok Shop will provide customers with made-in-China products to support small local businesses. The action is a part of TikTok's aim to broaden its seller ecosystem and diversify revenue sources in light of the political unpredictability surrounding its initial intentions for a platform for third-party vendors. More info: TikTok is growing its business by investing in areas like storage and supply-chain management and hiring expert buyers. Amid mounting pressure from regulators and rivals, the corporation is also trying to draw manufacturers by experimenting with entry restrictions and incentives. | | | |
| 3 | | As a result of decreased costs and an unanticipated rise in wireless users, Verizon's quarterly earnings surpassed forecasts. In addition to testing abandoned lead cables mentioned in a recent Wall Street Journal article, the company's effort to grow its 5G network and attract enterprise customers has been successful. More: - After a tough 2022 hit by cheaper services from competitors like T-Mobile, the second quarter earnings showed indications of recovery.
- Although Verizon's stock increased 0.9%, it has lost roughly 5% since the Wall Street Journal's lead cable report on July 9.
- Contrary to estimates, Verizon attracted 8,000 new net monthly bill-paying wireless phone subscribers, posting a gain of 11,000 subscribers.
- The quarter's free cash flow was $5.6B, exceeding projections of $5.05B.
- Despite a 3.5% decrease in total revenue to $32.6B, missing analysts' estimates, adjusted profit exceeded expectations at $1.21 per share, driven by a 3.3% reduction in operating expenses.
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| 4 | | Coca-Cola exceeded analysts' expectations in Q2, with net sales reaching $11.97B, a 6% increase. The company also raised its full-year outlook, projecting a 5%-6% growth in adjusted earnings per share and an 8%-9% increase in organic revenue for 2023. More: - In Q2, net income attributable to shareholders rose to $2.55B, or $0.59 per share, compared to $1.91B, or $0.44 per share, in the previous year.
- The corporation raised the prices of its products as part of its pricing strategy in reaction to rising input costs.
- For the quarter, Coke's unit case volume globally remained unchanged while declining 1% in the U.S.
- Highlights included a 5% volume increase for Coke Zero Sugar, significant U.S. growth for the Fairlife milk brand, and a 5% volume increase for the coffee segment driven by Costa Coffee's success in the U.K. and China.
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| 5 | | Volkswagen and Xpeng, a Chinese producer of electric vehicles (EVs), are collaborating to jointly create two new electric cars intended solely for the Chinese market. Volkswagen will invest around $700M in Xpeng, acquiring a 4.99% stake, and the vehicles are expected to be launched in China by 2026 under the Volkswagen brand. More: - Following the partnership's announcement, Xpeng's U.S.-listed shares increased by almost 26%.
- The agreement includes integrating the new EVs with Xpeng's cutting-edge driving assistance software.
- The partnership intends to maximize development and acquisition costs while using strengths and forging synergies to launch new goods more quickly.
- In a separate agreement, Volkswagen's Audi subsidiary and its Chinese joint venture partner SAIC Motor agreed to create new Audi-branded EVs for the Chinese market in markets where Audi does not already compete.
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| 6 | | Just Eat Takeaway.com is encountering obstacles in finalizing the sale of its U.S. business, Grubhub Holdings Inc, due to demanding price requests from activist investors and an unfavorable market for transactions. Certain activist investors privately seek a sale price of approximately $4.4B. More: - Due to the industry's slowing growth during the COVID-19 lockdowns, Just Eat had to write down the value of the U.S. business by $3.29B after acquiring Grubhub in 2021 in an all-stock deal valued at over $7B.
- Since the merger, Grubhub has been losing market share to rivals like DoorDash and Uber Technologies.
- Grubhub stated in June that it would be laying off 15% of its workers for cost-cutting purposes.
- CEO Jitse Groen stated, "The U.S. industry is now unprofitable, partly because New York City has fee limitations that restrict the amounts that food delivery services can charge restaurants and stores."
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- Mattel plans a Barbie-focused Christmas after the blockbuster success of the "Barbie" movie, which earned $337M globally.
- Boeing has added another $1.5B in excess costs to its Starliner spacecraft project, which has faced delays and financial setbacks since receiving a $5B contract from NASA in 2014.
- Mattel executive Richard Dickson will become Gap's new CEO, credited with reviving Barbie, starting Aug. 22 with a $1.4M base salary.
- Anheuser-Busch is set to lay off a small percentage of its U.S. corporate staff in a restructuring aimed at simplifying and reducing layers within the organization, while frontline positions will not be affected.
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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 Vibha Chapparike | |
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