💸 Flip’s social-shopping growth

Wednesday, November 15, 2023 by Snacks
When that Flip text comes in and you wonder if it’s real (Mike Kemp/Getty Images)

When that Flip text comes in and you wonder if it’s real (Mike Kemp/Getty Images)

When that Flip text comes in and you wonder if it’s real (Mike Kemp/Getty Images)

When that Flip text comes in and you wonder if it’s real (Mike Kemp/Getty Images)

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Yesterday’s Market Moves
Dow Jones
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Hey Snackers,

No more trying to decipher your dog’s head tilts: pet psychics are gaining popularity as people splurge more on their fur babies. One “animal communicator” in Philly charges $550 for 90 minutes and has a waitlist of 7.6K pet parents. Our guess? They want a treat.

Stocks rallied after October’s US consumer-inflation report showed the smallest annual increase in core prices since September ’21, boosting investors’ hopes that the Fed will stop hiking rates. The S&P 500 is up 7% this month.


1. Shopping app Flip tries to popularize social commerce with referral giveaways

“Use my referral”… your friend sending you a $75 Flip gift card. A fast-growing app has climbed the App Store charts recently, becoming a top 10 shopping app. If Amazon and TikTok had a baby, it might look like Flip. The social-shopping platform features a TikTok-like feed dedicated to product reviews by regular users, plus a shopping tab.

  • Brands that sell on Flip include Milk Cosmetics, Pat McGrath, Goop, and E.l.f. While it skews toward beauty, Flip also offers clothing, household goods, and gadgets.

  • Network effect: Flip launched in 2019, but its recent growth has been fueled by generous referral credits. The more contacts you have on Flip, the more $$ you can get when someone refers you. Sometimes it’s as much as $130 in discounts.

  • Engagement can pay: Users can get paid for posting product reviews and earn rewards for engaging with or viewing content. Flip takes a cut of all sales, and says it doesn’t charge brands to join its app.

Tried and still not true… Social commerce is huge in Asia thanks to superapps like Tencent’s WeChat and Pinduoduo. But it hasn’t taken off in the US, despite several tries. Meta scaled back its social-commerce push, including removing Instagram’s Shop tab. In September, ByteDance launched TikTok Shop in the US, but results have been meh. The solution might lie in social and ecomm giants teaming up instead of trying to compete:

  • Amazon + Meta: Last week Amazon announced it was partnering with Meta to let customers shop from Instagram and FB ads using their Amazon checkout info, without leaving their social feeds. Amazon agreed to a similar deal with Snap.


Traction doesn’t always = retention… Flip’s growing fast thanks to hefty discounts, but those are pricey, especially for a company that’s raised just $95M. Splurging on growth only pays off when you can eventually gain enough momentum to turn a profit. Flip said it’s preparing to raise a larger round, which would give it more runway. But the true test’ll be if it can keep users when the giveaways dry up — or risk going the way of MoviePass.

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2. Home Depot nails an earnings beat, but slower sales could signal a home-decoration bust

DIY meets DIL… do-it-later. Home Depot shares had their best day in a year yesterday after the home-improvement staple dropped better-than-expected earnings. Still, there were some cracks: its sales fell 3% last quarter as shoppers cut back on upgrades like new cabinets and marble countertops. And the # of $1K+ purchases dropped 5% on the year, despite record sales for Halloween items (see: that viral 12-foot skeleton). Home Depot narrowed its annual sales guidance, saying it’s in “a period of moderation” after a pandemic DIY boom.

Home-reno reversal... Home-improvement businesses are caught between two competing trends: a housing shortage, which would typically fuel more projects (think: four-seasons porch), and bloated prices that’ve pinched wallets. Smaller home renos and repair work initially helped offset a drop in larger projects, but those have also started dwindling.

  • Nailed down: Nearly a quarter of “pro customers” like contractors saw project sizes fall from July to August, and a third of homeowners have said they’re shifting to cheaper materials.


Every house party has to end… Companies like Home Depot benefited early in the pandemic as homeowners invested in repairs and upgrades. But the vibe’s shifted. Folks may feel stuck in their homes as 20-year-high interest rates make new mortgages unappealing. Owners may not want to invest in their houses if they don’t plan to sell soon — and with prices this high, many won’t likely be buying soon anyway. Home-renovation spend is expected to fall to $457B next year, from $486B.


3. Snacks Unwrapped: New book spills the tea on Ray Dalio’s hedge fund, Bridgewater

Burnin’ a bridge(water)... A new book called “The Fund” is hot business goss. In it, author Rob Copeland digs into Ray Dalio’s hedge fund, Bridgewater Associates, aka: the world’s largest hedge fund, more than twice the size of its closest rival. He suggests that Bridgewater is a cult of personality built to prop up its founder’s ego by favoring employees who agree with him. Copeland also details seedier tales about the company (like: an alleged policy for hiring adult entertainers). Dalio dismissed “The Fund” on LinkedIn, calling it a “sensational and inaccurate tabloid.”

  • Abridged history: If you haven’t studied your hedge-fund grid in a while, Bridgewater became a biz legend post-2008. Its portfolio gained 9% during the financial crisis while the market dipped 37%.

“Radical transparency”… is a Dalio catchphrase, which he popularized in his best-selling book “Principles.” Yet his fund’s inner workings are (in)famously mysterious. Bridgewater says it uses hundreds of “signals” to make its investments, but doesn’t share what they are. It’s led some journalists to speculate: Bloomberg’s Matt Levine guessed that a computer runs the whole fund, and that its main problem is keeping the employees busy. Copeland, meanwhile, wonders whether the fund does much investing at all, arguing that its market impact is that of a “minnow” when it should be a “whale.”

What else we’re Snackin’

  • Venti: Starbucks Workers United said thousands of employees would strike tomorrow on Red Cup Day (aka: when it gives out reusable holiday cups — a difficult shift for workers). The union says Starbs hasn’t negotiated with its 360+ union stores.

  • Botty: YouTube said it’ll crack down on AI music that mimics artists as it builds an AI tool that lets users (legally) mimic artists. Its parent, Google, has poured billions into genAI as copyright challenges grow.

  • Severance: Jeep maker Stellantis is expected to offer buyouts to about half its US corporate employees. It’s searching for savings as it eats higher labor costs and a $3.2B hit from the six-week UAW strike.

  • TaskUber: Uber said it plans to test a service that’ll let users hire people for small tasks like laundry and lawn mowing. It’s the latest move beyond ride hailing for Uber, which recently rolled out package returns.

  • Query: During Google’s DOJ antitrust trial, an expert said Apple gets a 36% cut of Google’s revenue from search ads on Apple’s Safari browser (where Google’s the default search).

Snack Fact of the Day

Earnings-call compliments (like “congrats,” “good quarter”) are down 29% this quarter


  • Earnings expected from Target, TJ Maxx, and Cisco

Authors of this Snacks own shares of: Alphabet, Amazon, Apple, Snap, Starbucks, and Uber

*Advertiser’s disclosure: There are important risks associated with transacting in any of the Cboe Company products discussed here. Before engaging in any transactions in those products, it is important for market participants to carefully review the disclosures and disclaimers contained at https://www.cboe.com/us_disclaimers.

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