| Here’s your daily business briefing. - 🚀 Reddit shares soar with OpenAI deal
- 🔍 Deep Dive: Walmart hits $500B on strong results
- 💼 UPS picks Goldman Sachs for $43.4B pension management
Thanks for reading! Shriram
p/Shriram | |
| 1 | | OpenAI's partnership with Reddit, utilizing its content for AI chatbots, led to a 15% surge in Reddit's shares ($RDDT) during after-hours trading, aiming to supply dependable data for advanced AI models. Amid the AI boom, social media platforms are increasingly exploring strategies to monetize their data resources. More: - Reddit seeks to monetize its data by selling it to third parties for AI training alongside its existing advertising-driven revenue model.
- OpenAI has previously entered into agreements with publishers such as the Financial Times, Associated Press, Axel Springer, Le Monde, and Prisa Media.
- The New York Times and other publishers have filed copyright infringement lawsuits against OpenAI and Microsoft, while some have chosen to collaborate with them.
- OpenAI's CEO, Sam Altman, who owns nearly 10% of Reddit's stock, is poised to gain from the agreement.
|     | |
| 2 | | 
What the numbers say: Walmart's market value surpassed $500B for the first time after a 7% share ($WMT) surge, closing at a record high of $64. The stock has risen by 22% in 2024, outperforming the S&P 500 Consumer Staples Index's 9.7% gain. Relevance: Walmart's market value rise highlights its growing retail dominance, driven by online expansion and higher-income customer retention. Its increased annual sales and profit forecasts signal confidence in sustained growth amid easing inflation and industry challenges. More data: Walmart is the largest company by market value in the S&P 500 Consumer Staples Index and 14th overall in the S&P 500, surpassing competitors like Procter & Gamble ($396B), Costco ($352B), and Target ($74B). Analysts, including those from Evercore ISI, highlight Walmart's market share gains and strategic initiatives, leveraging its scale and strong balance sheet for a competitive edge. | | | |
| 3 | | UPS ($UPS) has selected Goldman Sachs ($GS) Asset Management to manage its $43.4B pension fund assets across the U.S. and Canada, showcasing Goldman's strategy to diversify away from trading and investment banking through the expansion of its asset management arm. This decision underscores Goldman's focus on growing its asset management business as part of its broader strategic goals. More: - UPS's choice reflects a broader trend among major employers to outsource pension fund management to specialized firms adept at navigating financial markets.
- Goldman Sachs manages over $2.8T in assets, significantly less than Morgan Stanley's $7T under management.
- Outsourcing pension fund management enables UPS to concentrate on its primary focus of parcel delivery operations.
- UPS's internal investment management team is projected to relocate to Goldman Sachs' Atlanta office in the third quarter.
| | | |
| 4 | | According to the Federal Reserve Bank of New York, around 15.3% of Gen Z credit card users have maxed out their cards, significantly higher than the 4.8% of Baby Boomers and 9.6% of Gen Xers, indicating severe financial strain among younger borrowers. Additionally, credit card delinquencies over 90 days have hit 10.7%, the highest rate since 2012, reflecting growing financial distress in America. More: - Post-pandemic, rising delinquency rates show over a third of maxed-out cardholders falling behind on payments.
- Gen Z faces financial strain with a median credit limit of $4,500, much lower than Millennials' $16,300 and Gen X's $21,800.
- In low-income areas, 12% of borrowers max out their credit cards, compared to 5.5% in high-income neighborhoods.
- With an average interest rate of 20.66%, near a record high, managing credit card debt is particularly challenging.
| | | |
| 5 | | Swiss footwear brand On achieves record Q1 sales, marking a 20.9% year-over-year increase to $559M, with direct-to-consumer (DTC) sales contributing significantly, rising from 32.6% to 37.5% of total net sales since Q1 '23. Additionally, the brand's net income surges by 106% to $100M, setting a new quarterly record. More: - Ahead of the summer Olympics, On intends to open a second store in Paris, which will act as a hub for the running community during the event.
- The brand plans to increase its global retail footprint by adding 100 more stores in the coming years, doubling its current count of 50 stores worldwide.
- The direct-to-consumer sales drive the gross profit margin close to 60%, with DTC net sales rising by 39% to $210M.
- Footwear continues to lead in net sales, increasing by 21% to $533M, with notable growth in apparel and accessories categories.
- On anticipates a minimum of 30% growth in full-year 2024 net sales, aiming for at least $2.52B on a constant currency basis.
| | | |
| 6 | | Johnson & Johnson ($JNJ) reveals its purchase of Proteologix for $850M in cash to gain access to the company's experimental treatments targeting atopic dermatitis. Atopic dermatitis, a chronic inflammatory skin condition characterized by dry, itchy, and infection-prone skin, is the focus of Proteologix's research. More: - J&J's in-house atopic dermatitis drug is in mid-stage development, and the deal outlines potential additional milestone payments.
- PX128 antibody from Proteologix is designated for early-stage development for moderate-to-severe asthma and atopic dermatitis.
- PX130, an additional antibody, is undergoing preclinical research to treat moderate-to-severe atopic dermatitis.
- The transaction is anticipated to be completed in the coming months, contingent upon obtaining antitrust clearance and meeting standard closing conditions.
| | | |
| |
| Upcoming Events | * This is a sponsored event | | | |
 | 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 Shriram Jeevakumar | |
| |
| |
