| |  | TOGETHER WITH |  | | | Good morning — and what a week!
On Wednesday, a euphoric market rallied after Federal Reserve Chairman Jerome Powell shot down the idea of a future 0.75% interest rate hike. The Dow rose over 900 points, the most in two years.
Yesterday, the optimism completely evaporated and the Nasdaq fell 5.0%, the S&P 500 3.6%, and the Dow 3.1%. Today, May 6, is the 85th anniversary of the Hindenburg disaster, which, let us hope, is not a metaphor for anything, and just a historical — and notable — fact. | | | • | | Shopify fires another shot in the e-commerce wars. | | • | | Formula One racing comes to Miami this weekend, jockeying for a $400 million breakthrough. | | • | | Facebook played more than hardball to lobby against Australian law, whistleblower claims. | | | | |  | e-commerce | Shopify Buys a $2.1 Billion Piece of the Supply Chain as E-commerce Stalls | | E-commerce standout and aspiring Amazon competitor Shopify announced Thursday a deal to buy Deliverr, an order-fulfillment specialist, for $2.1 billion.
Unfortunately, that hefty investment comes just as Shopify, and the e-commerce sector as a whole, weathers one of its worst runs in recent memory. | One Macroeconomic Sign You Have a Spending Problem | | Last week it was Amazon. This week it was Etsy, Wayfair, eBay, and, yes, Shopify. The most high-profile players in e-commerce took turns stepping up to the plate for earnings week, with everybody whiffing. Some companies missed earnings estimates, others offered weak guidance. Of particular note is the 3% decrease in Amazon's Q1 online retail sales to $51 billion, strongly indicating that, in an increasingly uncertain economy, consumers are buying less.
Despite the slowdown, Shopify is charging ahead with its ambition to provide smaller, online retailers with an alternative fulfillment network to Amazon. In 2020, the company announced a $1 billion allocation for building a network of warehouses capable of delivering to 90% of the US population, a big step. And buying Deliverr, a developer of a proprietary order-management software that helps vendors get products to consumers in two days or less, is another.
But these moves also represent large cash outlays, exacerbating the pressures of the current squeeze on e-commerce: | • | | Before the Deliverr acquisition, spending was already a drag on Shopify’s financials: the company’s latest quarterly results, also announced Thursday, showed adjusted operating income fell 85% year-over-year to $32 million. Shopify reported a net loss of $1.5 billion in the first quarter, compared to a $1.3 billion profit last year. | | • | | Shopify’s revenue growth slowed to 22% year-over-year in the first quarter, the worst in the company’s history and 3% below Wall Street’s expectations. Growth of gross merchandise volume — a metric that counts the dollar value of orders made on Shopify — was also a record low 16% year-over-year. | | | | You Are Not Alone: Shopify’s share price fell nearly 15% Thursday, adding insult to injury: it was already down 65% this year. At the same time, Etsy fell over 16%, Wayfair roughly 25%, eBay about 12%, and the mighty Amazon was down over 7%. Shopify may have picked a rough time to invest in growth, but given the e-commerce selloff, it’s not the only firm feeling current pain attached to future gain. | | | | | | Sports | Heading Into Miami Grand Prix Weekend, Formula One Looks like a Full-Fledged American Phenomenon |  | | For much of its history, Formula One was seen as a posh foreign spectacle best left to Monaco and Milan — a bitter, upscale negroni to NASCAR’s light, hoppy lager.
This weekend, the open-wheel, single-seater racing series will take over Miami. Economic data suggests Formula One is on the cusp of becoming an American entertainment and economic juggernaut not far behind the Super Bowl. | At Least Someone’s Making Money From Netflix | | Formula One, or F1, racing has undergone a radical reassessment in America for two reasons. First, in 2017, Colorado-based Liberty Media acquired a controlling stake in F1 for $4.4 billion. As owners of the Atlanta Braves, Liberty is firmly entrenched in the most American of pastimes. In F1, it could create another one and the new owners added more stateside races, called Grand Prix, to draw fans closer to home.
Then there’s the second reason F1 has blown up: Netflix. The streaming service may have a sputtering engine these days, but it can’t blame that on Formula 1: Drive to Survive. The latest season of the F1 documentary series drew 4 million viewers in its first weekend alone, making it one of the most popular streaming shows in existence. According to a Morning Consult survey, 74% of US F1 fans under 45 said Drive to Survive is what got them into the sport. Now, Miami is in for a boost: | • | | Organizers said some 300,000 people are expected to come to the city for the Miami Grand Prix, and the 85,000 capacity event is sold out (tickets have fetched as much as $32,000 on the secondary market). F1’s US Grand Prix drew 400,000 people to Austin last year, 70% of them first-timers. | | • | | Super Bowl LIV had $572 million in estimated economic impact on Miami-Dade County, Broward County, and Palm Beach County, according to Miami Grand Prix organizers. This weekend’s F1 race is expected to generate about $400 million — not bad for a recent import from Europe. You can bet your Continental breakfast that local restaurateurs and hoteliers will be all too happy to hear those 140-decibel engines roar. | | | | “The sport in North America is under-viewed, under-monetized, under-everything,” Greg Maffei, Liberty Media’s CEO told Bloomberg. Of F1’s $2.1 billion in revenue across 22 races last year, 40% came from promotions and sponsorships, which could become even more lucrative as the sport’s audience grows.
Stays in Vegas: In 2023, the US will host more F1 Grand Prix — three — than any other country. Joining Austin and Miami will be Las Vegas, where officials expect 170,000 visitors on race weekend, leading to 400,000 nights of hotel stays and a $500 million boost to the local economy. | | | | | | SPONSORED BY Acretrader | Build Your Portfolio, Support Farmers | It’s not often you see those two sentiments side-by-side, but hey, that’s what happens when you’re as innovative as AcreTrader. How do they do it? Investing in farmland, that’s how. On the financial side, farmland is a very appealing investment: It’s a hard asset with an attractive yield, low volatility, and an average annual return of 11.0% over the last 30 years. But here’s the catch… the benefits don’t stop there. Thanks to AcreTrader’s additional role as a capital partner, local farmers can use the platform to purchase, lease, and even develop new properties. That makes it a rare win-win (you don’t see those often). Okay, let’s recap: Diversify your portfolio, support farmers, hedge against inflation, and have an incredibly easy time doing it. Yeah, AcreTrader sounds pretty good to us. Get started investing in farmland right here. | | | | | | Social Media | Whistleblower Sheds Light on Facebook’s Mischievous Attempts to Soften Australian Law | | In October, The Wall Street Journal published a blockbuster investigation of Facebook’s troubling internal practices, based in large part on documents and files surfaced by employee-turned-whistleblower Frances Haugen.
On Thursday, another whistleblower bombshell surfaced in the WSJ. According to the report, Facebook took ruthless efforts to gut proposed tech regulations, including allowing hospital and emergency services to get taken off its platform. Facebook publicly claimed it was an unintentional technical issue, whistleblowers said it was designed to sew chaos and force legislators to soften their approach. | What the Zuck | | In February 2021, as the Australian Parliament prepared to vote on a law requiring tech giants to negotiate paid contracts with news outlets for their content, Facebook unsurprisingly sought to sway the process for a more favorable outcome. But the tech giant didn’t just rely on tried-and-true lobbying tactics. Instead, Facebook blacked out all news content Down Under. You want us to pay for news? How about no news at all?
Caught up in the aggressive posturing, however, was more than just The Sydney Morning Herald or Melbourne's The Age. Fire and rescue links posted by emergency services (in the middle of a destructive fire season) went down on Facebook. So did Covid vaccine information from public health departments. Facebook blamed the takedowns on an algorithm snafu. Yet, whistleblowers who spoke to the WSJ said leadership knew full well the extent of its ban, and slow-walked the remedy process. Internally, the hardball negotiation tactic was celebrated as a “masterstroke,” as it apparently helped Facebook win concessions from lawmakers: | • | | Eleventh-hour changes to the legislation freed Facebook from being forced to negotiate fair payment deals with all news publishers. Instead, Facebook would remain free from the government code so long as it made enough deals with news publishers to satisfy Australia's Treasurer. Facebook quickly entered advanced negotiations with several publishers after earning the concession. | | • | | "We took down pages that were clearly not owned by news publications,” an alarmed Facebook employee wrote on the company's internal logs, acquired by the WSJ. "Such pages include those operated by official government sources, fire and emergency services, universities, official health pages, and charities for causes such as homelessness and domestic violence." | | | | Round Two: In early April, Canada introduced a similar piece of legislation — including an arbitration process that would likely give publishers a negotiating edge. Meanwhile, comparably-designed draft legislation began circulating through both chambers of the US Congress in April, WSJ reports. If the latest whistleblower report is any indication, Meta won’t let either bill pass so easily. | | | | | | Extra Upside | • | | Think inflation at home is bad? In Turkey, it was 70% for the last month alone. | | • | | A Ford commercial that pokes fun at Elon Musk will air during the Kentucky Derby this weekend. | | • | | How can you land an exciting role at the next tech unicorn? Using Skillful— an online school and community built to help you break into tech. Skillful provides a unique project-based & mentor-led model which helps 80% of active job seekers land exciting and life-changing roles. Their cohorts are highly curated and taught by mentors from TikTok, DoorDash, Spotify, Twitch and more. Get priority access here.* *Partner | | | | | | |  | Just For Fun | | | | | Written by Sean Craig and Brian Boyle. | | No longer want to receive these emails? Unsubscribe here. Copyright © 2022 The Daily Upside, LLC., All rights reserved. 1230 York Avenue, Box 154, New York, NY 10065 | | | | |
