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| Here’s your daily business briefing. - 🚗 Ford exceeds Q4 expectations, forecasts robust 2024
- 🔍 Deep Dive: Billion-dollar luxury secondhand market
- 📺 ESPN, Fox, Warner collaborate on sports streaming
Thanks for reading! Shriram
p/Shriram | |
| 1 | | Ford ($F) surpassed Q4 expectations with adjusted earnings of $0.29 per share (anticipated $0.14 per share) and automotive revenue of $43.2B (expected $40.12B). For the full year 2023, Ford achieved $10.42B in adjusted EBIT, $176.2B in revenue, and $6.8B in adjusted free cash flow, announcing a special dividend of $0.18 per share and a first-quarter regular dividend of $0.15 per share. More: - Ford Blue, the company's traditional business, reported a 48% decline in adjusted earnings during Q4 compared to the previous year, reaching $813M.
- Ford Pro's commercial business reported Q4 earnings of $1.81B, a 25% increase YoY.
- Model e, Ford's electric vehicle unit, incurred a fourth-quarter loss of $1.57B, doubling the $631M loss in the same period in 2022.
- Ford projects an adjusted EBIT of $10B-$12B, with adjusted free cash flow of $6B-$7B and capital spending of $8B-$9.5B in 2024.
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What the numbers say: Over the past four years, consumers spent $1.3T on new luxury items, contributing to the $49.3B resale market for luxury goods in 2023, which doubled in size over four years. Used Hermès handbags, Rolex, and Patek Philippe watches command premiums of 25%, 20%, and 39%, respectively, while most luxury brands experience depreciation, with Louis Vuitton handbags losing 40% of their value on average and Christian Dior's bags nearly halving in value. Relevance: The thriving luxury goods resale market has substantial consumer and investor implications. Luxury brands are growing more concerned about resale values, as they are indicative of brand perception and performance, influencing consumer behavior and investor sentiment. More data: Most luxury brands find it challenging to control resale values effectively, despite attempts like Rolex's certified preowned watch program. The resale market's widespread impact remains a persistent challenge for luxury companies, limiting their options to address the phenomenon and providing insights into brand performance through resale data. | | | |
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| 3 | | ESPN, Fox Corp. ($FOX), and Warner Bros. Discovery ($WBD) are teaming up to launch a sports-streaming service in the fall, directly providing content from significant leagues to consumers. The new service will have equal ownership from each company, with pricing details yet to be disclosed. More: - This move signifies a notable shift in the streaming landscape and may hasten the decline of cable TV.
- The "raptor" deal originated from discussions among ESPN's Jimmy Pitaro, Disney's Robert Iger, Fox's Lachlan Murdoch, and Warner Bros. Discovery's David Zaslav.
- Disney, the company that owns the bulk of ESPN, views the alliance as a means of giving sports fans more options and adjusting to shifting watching preferences.
- The new service will be available as part of a bundle to users of Disney's streaming services (Disney+, Hulu, and Max).
- The new service intends to provide customers with a wide selection of sporting events, even if some prominent sports content will continue to be exclusive to other platforms.
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| 4 | | Eli Lilly ($LLY) outperformed expectations in Q4, with robust revenue and adjusted earnings attributed to the successful introduction of Zepbound and increased prices for Mounjaro. The company reported adjusted earnings per share of $2.49, surpassing the expected $2.22, and generated revenue of $9.35B (up 28% YoY), exceeding the anticipated $8.93B. More: - FDA-approved in November, Zepbound achieved $175.8M in sales for the quarter.
- Incretin medications, such as Mounjaro, are anticipated to experience a shortage in 2024 despite continuous efforts to increase capacity.
- Sales of Mounjaro jumped to $2.21B in the fourth quarter due to higher realized prices and greater demand.
- Verzenio and Jardiance sales, which increased by 42% and 30%, respectively, also contributed to the revenue gain.
- Despite high costs, variable insurance coverage, side effects, and supply issues, the stock surged nearly 60% last year amid the surging popularity of weight loss drugs.
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| 5 | | In Q4 2023, Spotify ($SPOT) reduced its losses to $75M, compared to $290M the previous year, with revenue increasing by 16% to $3.95, driven by a price hike and expanding advertising business. Subscription revenue saw a 17% rise to $3.4B, and advertising revenue grew by 12% to $540M. More: - With notable growth in Latin America and other regions outside Europe and North America, paid subscribers climbed by 15% to 236 million.
- Monthly active users increased by 23% YoY to reach 602 million, with expectations to grow to 618 million in Q1.
- With hopes for future profitability, Spotify's podcast division broke even in the fourth quarter.
- Due to price hikes, the subscription business's average income per user climbed by 1% to $4.95 (€4.60).
Zoom Out: - Joe Rogan signs a new Spotify deal worth up to $250M, expanding the show's distribution to platforms like YouTube and moving away from exclusive audio streaming.
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| 6 | | TSMC ($TSM) is set to invest over $20B in Japan for its second chip factory, aiming to address concerns about geopolitical risks associated with its production concentration in Taiwan amid tensions with China. The construction of the new facility is scheduled to start this year, with completion expected by 2027, creating 3,400 high-tech professional jobs. More: - Toyota and Denso have invested in TSMC's chip manufacturing business in Japan; Denso will own a 5.5% stake, Toyota a 2% stake, and Sony a 6% stake.
- Japan intends to offer $1B in subsidies for flash-memory chip factories that Kioxia and Western Digital jointly own.
- The Kumamoto site will manufacture chips for automotive, industrial, and consumer applications, broadening the chip range in the second fab.
- Japan's semiconductor initiative, akin to the Biden administration's Chips and Science Act, targets semiconductor investments and addresses supply chain disruptions.
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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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