Reddit Is Raising $150 Million At A $1.7 Billion Valuation, Plus Walmart Can’t Catch a Break

By 06.19.17

morning brew

Here’s your hand-crafted Brew for June 19th

QUOTE OF THE DAY

“Colonizing Mars. Major changes to the plan coming soon.” –– Elon Musk on lowering the cost of colonizing mars to $100,000 per person. Nbd…just wave “bye” to that college degree from the window of your spaceship.

Market Snapshot

  • The Dow and S&P finished up, while a bad week for tech left the Nasdaq in the red.
  • Grocery stocks tanked after Amazon announced it would acquire Whole Foods for $13.7 billion.
  • The dollar index fell after weak housing and consumer sentiment reports.
  • Oil prices ended the week higher, but posted a fourth straight week of losses.

Amazon’s World, We’re Just Living In It

In its largest acquisition (by far), the $466 billion e-commerce giant just picked off Whole Foods for a clean $13.7 billion.

Whole Foods has taken a beating this year from cutthroat competition and price gouging, both of which have eaten away at earnings.

And with its stock down 50% since 2015, Whole Foods just might have needed Bezos and Co. to step in and save the day.

Either way, shareholders aren’t complaining—the stock ballooned 29% on the news.

Why build it when you can buy it

Amazon has been relentlessly competing with the Wal-Marts and Krogers of the world for a slice of the $674 billion grocery industry.

Its $14.99 subscription service, AmazonFresh, brings bagged groceries right to your doorstep, while its futuristic grocery store concept, Amazon Go, hopes to make lines a thing of the past (it’s still working out the kinks).

But building out a brick-and-mortar empire doesn’t happen overnight…well, unless you…(cue Bezos brain blast).

Like a thief in the night, Bezos crept into John Mackey’s home and swiped himself a 460-store grocery network.

And with it, he adds another lofty goal to Amazon’s grocery list: become a top 5 grocer.

Everybody knows it, but nobody says it

“Amazon is taking over the world.”

40% of the cloud runs on Amazon Web Services. Amazon Prime Video boasts 76 million users and counting. AND Alexa has become a permanent guest in millions of homes across the country.

Now, we’re almost afraid to see what Bezos has up his sleeve next.

Is the Brew even safe these days?…Don’t worry, it is.

Wal-Mart Can’t Catch a Break

But at least it’ll still look good. Wal-Mart’s (-4.65%) $310 million acquisition of men’s fashion brand Bonobos was quickly upstaged by Amazon’s $13.7 billion main act.

It’s Wal-Mart’s latest shopping spree since splurging a combined $166 million on fashion startups ModCloth and ShoeBuy.com as Marc Lore (founder of Jet.com—Wal-Mart also bought that) steers the low price giant towards e-commerce stardom.

The pivot has been a saving grace for the legacy brick-and-mortar retailer, which now offers free two-day shipping and has seen online sales grow 63% over the last year.

One question remains—will Wal-Mart’s low cost mantra hurt its new, high-end brands?

I’m the One Who Knocks

Apple (-1.40%) handpicked two Hollywood hotshots from under Sony’s (-0.27%) nose.

The creative minds that brought you Breaking Bad and Netflix-original (+0.41%)The Crown are bringing original content to the palm of your hand.

But this biz isn’t for the faint of heart.

Competition has peaked as scripted shows have doubled since 2011 (up to 500). Not to mention, providers spend years offering recycled content just to build up viewership (Sound familiar? Here’s a hint: AMC and Netflix).

Still, Tim Cook sees Apple’s $24 billion streaming business growing into a $50 billion cash cow by 2020.

Stay hungry, Tim.

r/Fundraising

Reddit, the self-proclaimed “front page of the internet,” is reportedly raising $150 million at a $1.7 billion valuation.

This would be a hefty up round to the social news community’s last raise at a $500 million valuation from Y Combinator’s Sam Altman and other high-profile investors and celebrities.

But despite Reddit being the 4th most visited site in the U.S. and having 240 million MAU, one big (and green) concern still remains: money. Sound familiar?

Co-founders Steve Huffman and Alexis Ohanian say profitability will come, and when it does, the numbers won’t lie…

What Else Is Happening…

  • After 41 years, McDonald’s (+0.54%) is ending its sponsorship with the Olympics (three years early).
  • ESPN is shuffling around its top executives.
  • The EU is preparing to hit Google (-0.16%) with a massive fine for manipulating search results.
  • Egypt is paying GE (+0.21%) $575 million for 100 locomotives and 15 years of technical support.

Economic Calendar

  • Friday (June 16th): Michigan Consumer Sentiment Index (-)
  • Monday: No events today
  • Tuesday: Adobe Systems, FedEx, La-Z-Boy Earnings
  • Wednesday: Crude Inventories, Existing Home Sales
  • Thursday: Accenture, Barnes & Noble, Bed Bath & Beyond, Carnival, Sonic Earnings; Housing Price Index
  • Friday: BlackBerry, Finish Line Earnings; New Home Sales

Water Cooler

From the Crew

Welcome back to From the Crew. This is your chance to connect with our team, while loading up some of the very best digital diamonds in the rough.

And don’t forget: whether you love it, you hate it or are downright confused by it, click on the Crewmember’s name of your choosing and get the convo going!

From Michael: Jack Attack

Monday’s aren’t easy, but here’s a little something to get you through the day. This Jack Russell terrier gives a heart-warming performance at the Crufts 2017 as the announcers so eloquently put this furry little guy’s life into perspective: “he loves life and exercise.”

Ollie’s one good boy

From Austin: Homecoming King

Hasan Minhaj absolutely kills it in this 70-minute stand-up routine. The Senior Correspondent on The Daily Show, followed up his 2017 White House Correspondents’ Dinner performance by launching his first stand-up special available on Netflix—Homecoming King.

Time to laugh

From Alex: Spin City

Austin calls me a kindergartener. Michael peers over and shakes his head in slow motion. I don’t care…I love my fidget spinner.

Regardless, it appears as though the fidget spinning frenzy may be entering fad purgatory. FiveThirtyEight says that since May 18th, search for spinners has been on the downtrend.

It’s a sad day 😦

From Will: Guilty, or not guilty?

It’s official: I discovered my favorite crime-thriller movie: Primal Fear. Starring two Golden Globe recipients, Edward Norton and Richard Gere, the film portrays a hotshot defense attorney, who represents an altar boy accused of murder in a seemingly unwinnable case. Brilliant and riveting.

Check out the trailer


The Breakroom

Interview Question of the Day

You’ve got someone working for you for seven days and a gold bar to pay him. The gold bar is segmented into seven connected pieces.

You must give them a piece of gold at the end of every day.

What and where are the fewest number of cuts to the bar of gold that will allow you to pay him 1/7th each day?

(Scroll on page to see responses)

Who Am I?

  1. I have 161 unique patents to my name.
  2. I built my first steam engine by the age of 15.
  3. I was inspired by Thomas Edison to build cars.
  4. I established the first moving assembly line in 1913.

(Who am I?)

Stat of the Day

$153 million

That’s about how much one startup raised in less than three hours through its initial coin offering. Yea, that’s a thing—check it out.


TAGSBusinessFinanceMorning Brew

Join The Discussion