🚗 Tesla’s ad U-turn

Thursday, May 18, 2023 by Snacks
Three years and counting… (Frederic J. Brown/AFP via Getty Images)

Three years and counting… (Frederic J. Brown/AFP via Getty Images)

Three years and counting… (Frederic J. Brown/AFP via Getty Images)

Three years and counting… (Frederic J. Brown/AFP via Getty Images)

Yesterday’s Market Moves
Dow Jones
33,421 (+1.24%)
S&P 500
4,159 (+1.19%)
12,501 (+1.28%)
$27,369 (+1.23%)

Hey Snackers,

The hottest party in town is… Ikea? The furniture icon is hosting warehouse raves in Milan, complete with DJs and light shows, in a bid to boost store traffic. We’d go for the Swedish House Meatballs.

Lots of PMA (Positive Mental Attitude) in markets yesterday. Stocks rebounded after President Biden, House Speaker McCarthy, and JPMorgan CEO Jamie Dimon all said they think the US can reach an agreement on the debt ceiling before June 1.


1. Tesla’s planning to advertise for the first time as EV competition revs into high gear

Coming to a billboard near you… Elon Musk dropped some electric updates at Tesla's annual shareholder meeting this week. Some highlights: the CEO said Tesla would finally deliver its first (long-delayed) Cybertrucks this year, and might eventually produce up to 500K/year. The EV icon teased two upcoming models with a (very dark) silhouette of a car. Elon also said Tesla “will try a little advertising” after years of relying on word-of-mouth fame.

  • Shifting gears: Elon tweeted in 2019 that Tesla “does not advertise or pay for endorsements,” but may have changed his mind after buying ad-reliant Twitter.

  • Speed bump: Despite record deliveries last quarter, Tesla’s profit dropped by more than $1B after multiple price cuts this year failed to fuel demand as much as hoped.

Elon has company(s)… For years, Tesla was in its own lane as the go-to EV maker. While it’s still the world’s top full-electric car seller, the competitive tide is turning. OG automakers like Ford, GM, and Volkswagen are spending billions to ramp up their own electric production, while Chinese EV makers are catching up with cheaper, high-tech whips. In January, BYD overtook Tesla as the world’s largest EV seller (if you count plug-in hybrids). In the first quarter, Tesla controlled just 60% of the full-electric market in California — down from 73% last year.


The first-mover advantage doesn’t last… Tesla has long enjoyed the advantages of being the buzzy EV pioneer. As its sleek cars turned heads on streets, it didn’t need to advertise to grow. But with a plethora of new (and cheaper) EVs flooding the market, Tesla can no longer lean on its first-mover status to compete. Now, it’s hoping ads will convince customers to look its way.


2. Dollar stores face wage and safety side-eye as inflation fosters a discount retail boom

A day late and a dollar short… Efforts to rein in safety violations and address wage concerns at Dollar General and Dollar Tree are ramping up. On Tuesday, two activist investment firms introduced a pair of resolutions that would audit the state of employee well-being and pay inequality at the two leading US dollar stores. FYI: together, the chains make up over 60% of the discount market (#DollarDuopoly). Dollar General and Dollar Tree have asked investors to vote down the proposals.

  • OSHoot: Dollar General was deemed a “severe violator” by the Labor Dept., racking up $15.5M in workplace safety violation fines since 2017 (picture: blocked fire exits). In the same period, Dollar Tree (and its subsidiary Family Dollar) were fined $19M for violations.

  • Pocket change: Those penalties pale in comparison to earnings. DG’s total fines since 2017 amount to just 0.04% of its sales last year.

  • Checked: Combined, the two chains employ 377K workers in the US, but lack minimum-wage commitments like the $15/hour guarantee at retail peers like Amazon and Target. As of last year, 92% of DG’s workforce made less than $15/hour.

Low prices are in high demand… Family Dollar was behind only Walmart in food and beverage sales growth as of February. As inflation-pummeled shoppers hunt for savings and #DollarTreeDinners, companies like Kraft and Hershey's are working with dollar stores to stock their products. Dollar General said it’s seeing more traffic from higher-income customers ($75K+/year), and has sought ways to encourage higher spending (think: broom pieces sold separately).


Rolling stones are hard to stop… Fines aren’t slowing the dollar duopoly: more than one-third of all US stores opened in 2021 and 2022 were dollar stores, and DG plans to open 1K+ more this year. But some areas have opted to banish the chains to protect mom-and-pop shops: at least 75 communities have voted down dollar store openings since 2019.

What else we’re Snackin’

  • TikOff: Starting January 2024, the state of Montana will make it illegal for app stores to offer TikTok within its borders. US lawmakers are considering a nationwide ban as concerns grow over the app’s China ties.

  • Tarjay: Target hit the bullseye on quarterly expectations, though sales rose only 1% and profit fell. Customers are cutting back on pricier discretionary items (think: jackets, TVs) and sticking to essentials.

  • Cropped: Ultra-fast-fashion titan Shein reportedly raised $2B at a $66B valuation — down from $100B a year ago. US lawmakers recently urged the SEC to pause the Chinese biz’s possible IPO over forced labor concerns.

  • AlexAI: Amazon introduced new Echo devices and said it’ll bring ChatGPT-esque conversational abilities to Alexa, which it says is “at the forefront of AI.” Amazon’s leg up in the race: 500M Alexa gadgets in homes.

  • Youber: Uber introduced personalization features, including a way for less tech-savvy people to book a ride without the app and teen-specific accounts. Revenue surged last quarter as the ride rebound rolled on.

Snack Fact of the Day

The new “Zelda” sold 10M copies in 3 days, becoming Nintendo’s fastest-selling game ever in the Americas


  • Weekly jobless claims

  • Earnings expected from Bath & Body Works, Walmart, Alibaba, and Dole

Authors of this Snacks own shares of: Amazon, GM, Uber, Kraft, Walmart, and Tesla

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