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| Here's your daily business briefing. - 📊 Q4 2023: PepsiCo posts mixed earnings results
- 🏈 Deep Dive: Super Bowl ads reach $7M
- 💼 Permian firms close to $50B merger
Thanks for reading! Shriram
p/Shriram | |
| 1 | | PepsiCo ($PEP) released mixed quarterly results: revenue of $27.85B fell short of expectations of $28.4B, but adjusted profits per share of $1.78 exceeded expectations of $1.72. The 4.5% increase in organic revenue was driven by higher prices, although the impact of these raised prices adversely affected demand. More: - For the first time since 2020, PepsiCo's net sales dropped by less than 1% to $27.85B.
- Volume fell in a number of categories, including North American Quaker Foods by 8%, Frito-Lay North America by 2%, and North American beverage unit by 6%.
- Executives cited a number of issues for the sales drop, including high interest rates, dwindling personal savings, and consumer desire for smaller pack sizes.
- Pepsi expects a 4% minimum organic revenue growth and at least 8% core constant currency earnings per share growth in 2024, with a slower first half due to product recalls and international conflicts affecting sales.
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What the numbers say: The cost of a 30-second Super Bowl ad slot has surged to approximately $7M, underscoring the significant investment made by advertisers. Nielsen data indicates that the NFL's championship typically attracts over 100 million viewers, with last year's event reaching more than 115 million, and women comprise nearly half of the Super Bowl audience. Relevance: Super Bowl ads maintain the use of celebrities for attention, emphasizing risk-free humor and broad appeal. Brands are directing efforts toward the female audience, tailoring ads to connect with women, a substantial portion of Super Bowl viewership. More data: Super Bowl ads incorporate tech-related themes like artificial intelligence, aligning with current industry trends. Brands are introducing creative concepts, like DoorDash's commitment to delivering products showcased in all the commercials during the game, while marketers aim to steer clear of controversies to avoid negative consumer sentiment, learning from past incidents like Bud Light's. | | | |
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| 3 | | According to the WSJ, Diamondback Energy ($FANG) and Endeavor Energy Resources are set to merge, forming a more than $50B oil-and-gas giant. This move comes in the wake of major deals by Exxon Mobil and Chevron in late 2023, triggering a wave of consolidation within the energy sector. More: - The stock and cash purchase would give Diamondback stockholders a controlling stake in the combined company, valuing Endeavour at almost $25B.
- The combined Diamondback-Endeavor entity is set to be a major player in Texas' Permian Basin, with significant acreage and expected crude production surpassing 400,000 barrels per day.
- Elevated debt costs, stricter regulations, and confidence in the resilience of the U.S. economy fuel the ongoing trend of mergers and acquisitions in the energy sector.
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| 4 | | Uber Technologies ($UBER) recorded its first full-year profit as a public company in 2023, signaling a shift from growth-focused strategies. The company reported a profit of $1.43B in the final quarter of 2023, supported by $1B in equity investments, and $1.89B for the year. More: - Uber, which went public in 2019, turned a profit in 2018, but that was due to a good year for its investments rather than operational earnings.
- Its app had a 22% increase in overall transaction value to $37.58B in the fourth quarter of 2023, while revenue grew by 15% to $9.93B.
- In keeping with analyst predictions, Uber projects that the overall transaction value on its app in the first quarter of 2024 would fall between $37B and $38.5B.
- The company's revenue from deliveries increased by 6% and mobility by 34% in the final three months of 2023, while its revenue from goods fell by 17%.
- Uber's cost-cutting measures and focus on core businesses, particularly food delivery, have contributed to its profitability, though regulatory challenges for its food-delivery unit loom.
- In January, Uber announced it would shut down Drizly, an alcohol-delivery business it acquired for $1.1B in 2021.
NOTE: Inside.com founder and CEO Jason Calacanis is an investor in Uber. | | | |
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| 5 | | Nvidia ($NVDA) is creating a business unit to develop custom chips for cloud computing companies and other applications, aiming to tap into the growing market for specialized AI chips. With a focus on the $30B custom chip market, Nvidia seeks to defend its position amid rising competition. It currently holds an 80% share of the high-end AI chip market with clients like OpenAI, Microsoft, Alphabet, and Meta Platforms. More: - The company offers all-purpose AI processors in the form of its H100 and A100 chips, but clients are increasingly creating unique internal circuits for particular applications.
- Meta plans to purchase 350,000 of Nvidia's H100 chips, with prices ranging from $16,000 to $100,000 based on volume and other factors.
- To compete with rivals like Marvell Technology and Broadcom, Nvidia is now offering to assist these businesses in creating custom AI processors.
- Nvidia executives are talking with major tech firms, including Amazon, Meta, Microsoft, Google, and OpenAI, about producing custom chips for them.
- Nvidia intends to offer specialized chips for the telecom, automotive, and video game industries in addition to the data center market.
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| 6 | | Claire's launched The Collab, an influencer platform targeting Gen Z and Gen Alpha to establish connections with young consumers and shape creative strategies. The program, featuring diverse brand ambassadors, will continue throughout 2024, with periodic additions for an ongoing social dialogue. More: - The first members range in age from 7 to 17 and include cooks, athletes, musicians, fashion designers, and filmmakers.
- The ambassadors will use their skills to support Claire's marketing initiatives by helping make creative decisions and participating in in-store events.
- Claire's wants to enable the next generation to acknowledge their abilities and goals and express themselves authentically.
- The retailer's shift mirrors the broader trend in influencer marketing targeting Gen Z and Gen Alpha, aligning with digital marketing strategies and metaverse involvement.
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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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