Life

Who Had A Worse Day Yesterday: Apple Or Chipotle? Plus Twitter’s Stock Plummeted After Hours

#Morning Brew
by Last Updated

“Verizon’s about to take over as dumber from AT&T.” — T-Mobile CEO John Legere, who has long described Verizon and AT&T as “dumb and dumber,” commenting on Verizon’s recent acquisition strategy that has included the purchase of AOL and a strong interest in Yahoo. Clearly John isn’t a fan.

MARKET SNAPSHOT
Big Picture

  • No surprises here: U.S. stocks meandered around without doing much; all eyes are on the Federal Reserve, which unveils its interest rate decision today (spoiler alert: don’t expect rates to go up)

Alternatives to Watch

  • Oil-producing nations and companies can break out the champagne: oil hit its 2016 high yesterday after U.S. crude stockpiles unexpectedly declined—perhaps oil in the $30s is a thing of the past
  • The dollar weakened again yesterday, continuing its decline after reaching a peak in November as investors fully expect U.S. interest rates to remain low (low interest rates = a weaker dollar)

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CORPORATE PRIMER
Auto Industry Invades Washington

Self-driving cars have been the source of endless hype in the auto industry for quite some time, but sluggish lawmaking has held autonomous vehicles back from the market…until now. Yesterday, Google, Uber, Ford, Lyft and Volvo announced a coalition that intends to accelerate federal policy surrounding self-driving cars by pushing for a common set of regulations nationwide. With a powerhouse company combo like this, we can’t imagine it’ll be too long before autonomous vehicles hit the road.

A Bad Apple

The Brew never thought the day would come, but there’s (nearly) a first for everything: Apple posted its first quarterly sales decline in 13 years….yes, 13 years. Both profit and revenue results missed analyst expectations as sales of the iPhone, and iPad decline and product newbie Apple Watch barely made a bent. Simply put, fewer iPhone users upgraded to the generally unpopular iPhone 6 and global sales in markets like China have stagnated due to adverse economic conditions. So, is this the end of Apple’s long-lasting reign? The tech giant is now looking into electric vehicles and augmented reality in hopes of boosting future growth—we’ll see if Tim Cook and Co can get Apple back on the map.

Twitter Beats Most Expectations, But Still Can’t Satisfy

Twitter: even when you win, you still don’t really win. The perpetually-struggling social media company released its first quarter earnings report, and overall the numbers were actually quite strong. The third-largest social network (behind Facebook and Instagram) beat earnings expectations and reported revenue of $594.5 million, 36% higher than last year. Twitter even posted a 3% increase in average monthly active users (MAUs), which now stand at 310 million. But here’s where it went wrong: the company drastically lowered its second-quarter revenue expectations. Investors took note, with shares dropping 12% after hours.

Chipotle Earnings

Okay, so it gave E. coli to a few people in 14 states. Big deal? Yes, absolutely. Sure, a free burrito and Guac Hunter was enough to get back in the Brew’s good graces, but it wasn’t nearly enough for investors. Serious health concerns over a locally-sourced business model took another huge bite out of sale, and those all freebies sure didn’t help costs. With all the dust cleared, Chipotle is now staring at back-to-back quarters of negative earnings, same store sales down a whopping 30% and a stock price that dipped (not in guac) over 4% after hours yesterday. No amount of guac can save that (although Chipotle is welcome to try).

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OTHER STORIES

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ECONOMIC CALENDAR

A ROYAL WIN

We’ve all seen the photo: President Obama crouching down last Friday to shake the hand of nearly 3-year-old Prince George (who had to stay up past his bedtime to greet the President). Fans certainly took notice of the adorable little robe that Prince George donned. The robe was made by My 1st Years, a British personalized baby-clothing brand that has seen its sales skyrocket since the photo went viral. Here are the numbers behind the delightfully plush bedtime article:

  • The $39 dollar robe sold out in just seven minutes, and is now forcing customers to wait two to three weeks to get their hands on one. Oh bugger!
  • Visits to My 1st Years’ website surged by 1,000% last weekend, compared to usual traffic.
  • Before the viral photo went…well, viral, only 3% of My 1st Years’ sales were from America. Now, that number has jumped to 50%. Americans love the Royal Family too, and Obama’s smiling face doesn’t hurt either.
  • Since 2010, My 1st Years’ annual sales growth rate has been 150%. It has already seen a 60% growth rate in the first four months of 2016. Brilliant!

INTERVIEW QUESTION OF THE DAY

Why do private equity firms use leverage when buying a company? (Answer)

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BUSINESS TERM OF THE DAY

DuPont Analysis — The DuPont analysis is a method of performance measurement that was started by the DuPont Corporation in the 1920s. With this method, assets are measured at their gross book value rather than at net book value in order to produce a higher return on equity.

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FOOD FOR THOUGHT

Want to grab lunch with Tim Cook? It’ll cost you a cool $110,000, the current bid on Cook’s annual lunch auction. Don’t feel too bad: the proceeds go to the Robert F. Kennedy Human Rights group, where Cook serves as a board member.

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In case you missed yesterday’s announcement: iPhone users, rejoice—we’ve heard your cries that the Brew is pretty much impossible to read on mobile (we’re looking at you, Gmail for iPhone). But that should now be a thing of the past. If you’ve stopped reading the Brew on your iPhone due to the small text size, give it a try again—and if anything still seems off, reply to this email and we’ll do our best to sort it out.
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