Facebook Messenger Is Losing Heat, Plus Spotify Hits 50 Million Subscribers

morning brew

Enjoy your March 3rd hand-crafted Brew!


“Right now we’re just celebrating” — Drew Vollero, Snap’s CFO, reacting to the company’s IPO yesterday. And celebrating for good reason. To say the IPO was a success is a vast understatement. SNAP closed up 44% (at $24.48) and now boasts a market cap of $28 billion. All smiles from Spiegel and Co.

Market Snapshot

  • Major U.S. indexes closed in the red yesterday (yes, really), dragged down by the financial and industrial sectors. The markets had a tough day, but economic optimism remains strong as weekly jobless claims fell to a new post-recession low
  • The U.S. is stockpiling a historically high level of oil these days, and all that excess supply has helped drive the price of oil to a three-week low. That’s surely frustrating to mega oil cartel OPEC, which actually appears to be following through with its recently agreed-to production cuts that were meant to lift oil prices higher

A High For Spotify

…50 million subscribers, to be exact. This is Spotify’s first user number announcement since it hit 40 million subscribers a mere five and a half months ago. Spotify appears to be taking full advantage of the growth of the music streaming market, but it’s up to plenty more. The company recently announced an upgraded subscription to a hi-res audio tier for an additional few dollars a month. Rumors have been flying about this potential premium option, but the company has yet to comment. For now, the 50 million of us will have to wait.

Facebook Messenger Is Losing Heat

…And businesses are taking note. Since Facebook’s (-0.48%) Messenger app broke off from the social network itself, the company has introduced artificial intelligence chatbots to help businesses engage with customers via Messenger. And how’s that going? Not great. Yesterday, online retailer Everlane (one of Messenger’s original launch partners) decided that it’s been fun, but it hasn’t been real fun, and ditched Messenger to return to good ol’ email for customer notifications. The good news? Facebook just rolled out an update to help streamline the app’s bot services, which aim to breathe new life into the platform.

Brazil, Buy More Beer!

…Sincerely, AB Executives. That’s right, the recession in Brazil is creating real problems for the world’s biggest brewer, Anheuser-Busch InBev (-3.75). The megabrewer reported its first drop in core earnings since InBev was founded in 2004. Because of the underwhelming performance in 2016, most of the members of the exec board won’t be getting bonuses this year—oops.

Google Lends a Hand

…To assist your Android. For those Android users who haven’t been formally introduced, meet Google Assistant, Google’s (-0.81%) A.I. helper. In the U.S. this week, Google Assistant was rolled out on many Android devices, but it still may take time to get to foreign users. As an alternative to Apple’s Siri, Google execs hope to impress users with more back-and-forth conversation capability. Google still hasn’t announced which Android devices will receive the update—let’s hope it’s you.

A Bug’s Life

…U.S. federal law enforcement raided three of Caterpillar’s facilities yesterday. The U.S. hasn’t said why, but Caterpillar thinks that the raids were part of a larger IRS investigation it’s currently embroiled in. Caterpillar (-4.28%), known for its heavy machinery manufacturing, has been accused of shifting billions in profits to its Swiss subsidiary to avoid paying higher U.S. taxes. CAT says it’s not true, but Uncle Sam is relentless.

Boeing, The Friendly Giant

…The jet maker has accepted nearly 1,900 voluntary layoffs from union employees. Yes, you heard right—1,900 people voluntarily quit their jobs in exchange for a buyout from Boeing (-0.50%). This is all part of Boeing’s multi-year plan to cut costs through job reductions, and the company has said to expect the same in 2017.

Other Stories

  • Nintendo debuts “Switch”, a hybrid home and mobile videogame console
  • Costco raises membership fees after disappointing earnings report
  • Twitter inks live streaming deal for 1,500 hours of e-sports competitions
  • Angel investor Chris Sacca reflects on past communication with Snapchat

Economic Calendar

Water Cooler

Dolphins Dive Into the Business World

Spotted at a construction site in midtown Manhattan: a third of the Miami Dolphins football team, clad in hard hats and business attire. Owner Stephen Ross was leading 16 players on a tour of a $25 billion property he’s developing. The tour was just one part of the loaded itinerary for a “business combine,” organized by Ross this past week.

  • Real estate development was one of many industries explored by the players, including tech, hospitality and retail. Participants had to pay thousands of dollars to attend—just a small price to pay to open some doors for life after football.
  • According to the NFL, the average professional football career lasts only six years. Aside from the flashy contracts and bonuses, the bankruptcy rate among NFL players after retiring is pretty high: between 15% and 40%.
  • The NFL’s player engagement department hosts a similar business boot camp with various universities, like Penn State, Harvard, Stanford and Northwestern. But the Dolphins’ business combine is the first of its kind in the league, and it’s no surprise that a Florida franchise knows how to prepare for retirement.

The Breakroom

Interview Question of the Day

Six drinking glasses stand in a row, with the first three full of juice and the next three empty. By moving only one glass, can you arrange them so empty and full glasses alternate? (Answer)

Business Term of the Day

Interest coverage ratio – A debt ratio and profitability ratio used to determine how easily a company can pay interest on outstanding debt. The interest coverage ratio may be calculated by dividing a company’s earnings before interest and taxes (EBIT) during a given period by the amount a company must pay in interest on its debts during the same period.

Food for Thought

Ready for your obscure yet exorbitantly expensive item of the day? On March 1, a piece of mold (yes, you heard that right) sold for $14,500 at an auction in London. Now, this wasn’t just any piece of mold! This specimen was grown by Alexander Fleming and led to the biologist’s discovery of penicillin.

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