| Here's your daily business briefing. - 🚗 Carvana profit tops estimates, stock soars
- 🔍 Deep Dive: Expedia boosts Vrbo to challenge Airbnb
- 💼 KKR nears $4B Broadcom deal
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Carvana ($CVNA) surpassed Q4 2023 profit expectations, reporting adjusted EBITDA of $60M, while fourth-quarter revenue slightly fell short of analyst predictions at $2.42B. Carvana's gross profit per unit increased to over $5,500 from $3,022 in 2022. More: - The company's shares saw their most significant intraday rise since July, shooting up 37% after the New York market opened on Friday.
- With interest payments rising to $632M, Carvana's net debt has decreased to $5B, down more than $1B.
- Including the $878M gain from debt extinguishment, Carvana recorded a net loss of $728M.
- Despite obstacles, Carvana anticipates first-quarter adjusted EBITDA to be "significantly above" $100M.
- Though Q4 2023 retail unit sales of 76,090 fell short of analysts' projections, the business expects Q1 2024 sales to be somewhat higher than last year's sales.
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| 2 | | 
What the numbers say: Expedia Group Inc. ($EXPE) aims to set a new record in marketing expenditure this year, surpassing the $6.1B spent in 2022. Analysts project that Expedia's marketing expenses will rise to $7B in 2024 and $8B in 2025. Vrbo, its vacation-rental unit, currently boasts around 2 million listings, compared to Airbnb's ($ABNB) seven million. Relevance: Expedia is ramping up its U.S. marketing efforts to compete with Airbnb in the vacation rental market, explicitly highlighting Vrbo's scenic whole-home listings to differentiate it from Airbnb's diverse offerings. Despite a modest rebound in Vrbo's traffic in the last quarter, analysts are watching closely for increased competition from Booking Holdings Inc. in the alternative accommodation sector. More data: Expedia's Q4 earnings report on Feb. 8 showed that the company saw a 10% rise in revenue to $2.89B, exceeding estimates. | | | |
| 3 | | KKR & Co. ($KKR) is set to acquire Broadcom Inc.'s ($AVGO) end-user computer (EUC) unit for around $4B. This business, initially obtained by Broadcom through its $61B acquisition of VMware Inc. in 2023, specializes in software enabling remote access to desktops and applications. More: - KKR plans to pursue new alliances and increase the EUC Division's research and development activities.
- Workers in the EUC Division will get shares as part of KKR's employee-ownership program.
- The Broadcom business piqued the interest of private equity investors EQT AB and Thoma Bravo.
- Broadcom received advice on the transaction from Citigroup Inc., while KKR received advice from Evercore Inc., Deutsche Bank AG, and Jefferies Financial Group Inc.
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| 4 | | J.B. Hunt ($JBHT) Transport Services plans to buy Walmart's intermodal container and chassis fleets as part of a new shipping arrangement. The goal of the agreement is to deepen the relationship between Walmart ($WMT) and J.B. Hunt by committing to more volume and capacity in intermodal shipping. More: - The largest business component of J.B. Hunt is its intermodal operation, which brought in $6.2B in sales last year — nearly half of its entire revenue.
- However, due to a decline in volume and freight prices, intermodal segment revenue fell last year, with a 7% decline in the fourth quarter.
- After counting 118,171 containers in Q4 2023, J.B. Hunt intends to increase the number of containers in its intermodal fleet, with a goal of 150,000 within three years.
- The American transportation and logistics company has a lasting deal with BNSF Railway for West Coast intermodal transport and is expanding the business with initiatives like the premium service Quantum.
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| 5 | | Airlines like United ($UAL), American ($AAL), and JetBlue ($JBLU) have raised baggage fees, with American Airlines now charging $35 when booked online and $40 at the airport for domestic flights. Exceptions apply for certain travelers, such as those with specific credit cards or elite frequent flyer status, intending to streamline check-in processes and reduce airport congestion. More: - Tier pricing for baggage fees is a long-standing strategy used by ultra-low-cost airlines to encourage upfront payments from consumers.
- With prepaid prices of $35 and airport rates of $40, United started charging more for luggage checked at the airport in 2020 and announced an additional $5 hike.
- Airlines rely heavily on baggage fees for their revenue; in the first nine months of 2023, U.S. carriers generated over $5.4B from these fees, an increase of more than 25% from 2019.
- Southwest Airlines stands out by offering customers the benefit of checking two bags for free, aligning with its customer-centric approach and operational efficiency goals.
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| 6 | | Etsy ($ETSY) reported Q4 revenue of $842.3M, up 4.3%, despite a 0.7% dip in gross merchandise sales. The platform closed the year with a record 92 million active buyers and achieved a full-year revenue of $2.7B, with a net income of $307.6M, a notable improvement from the previous year's $694M net loss. More: - Etsy's CEO, Josh Silverman, highlighted the platform's unique market position compared to competitors like Amazon, Walmart, Shein, and Temu, known for heavy discounting and mass-produced items.
- Etsy saw 8 million new customers in Q4 despite pressure from competitors, and users spent $3.6B on the site.
- The company highlighted ongoing enhancements to its search algorithm, upcoming loyalty program developments, and the recent introduction of Gift Mode, an AI-driven gift recommendation service.
- Bank of America analysts express caution about Etsy's short-term revenue growth amid economic uncertainty but acknowledge the potential impact of the platform's strategic initiatives on sales and market share.
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| 7 | | Quick Hits: - Discover the trends shaping 2024 and learn how trust will be the key to business success. Shape your strategy and get ahead with this latest report.*
- The FTC is blocking the $25B Kroger-Albertsons merger, challenging the supermarkets' store-selling plan, with Kroger and Albertsons arguing the merger's potential to enhance competitiveness against Walmart and Amazon.
- Shein will unveil its spring-summer collection in a shoppable livestream event, accessible on platforms like YouTube, X, Instagram, and Facebook, following a successful similar event held last fall.
- Nvidia has recognized Huawei as a major competitor in various business categories, including the production of processors for artificial intelligence systems, according to the company's annual report.
- Australia's CSR Ltd. has accepted a $3B takeover bid from France's Cie. de Saint-Gobain, as outlined in a definitive agreement where Saint-Gobain proposes to acquire all CSR shares at A$9 each.
- Visa and Mastercard have come to a historic $5B settlement, marking a pivotal moment for small business owners. If your business accepts Visa/MC, claim your share today*
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 | 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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