🍋 RIP Streaming Wars
The so-called streaming wars are over, plus venture capital returns are plummeting but consumers are spending more than ever.
“I buy expensive suits. They just look cheap on me.” — Warren Buffett
Good Morning! Venture capital returns are plunging as startups slash their valuations. And the investment world is as pessimistic as ever, 65% of fund managers are bracing for a recession this year.
But on the bright side, retail sales rose in April for the first time in three months. Disney wants to grow its empire and is eyeing full ownership of Hulu. The biggest mattress maker (Tempur Sealy) is acquiring the biggest mattress seller (Mattress Firm). And the return-to-office is stalling, just in time for the summer.
As the summer goes into full gear, want to explore the great outdoors on your very own electric bike? Check out today’s sponsor, Upway’s curated selection of e-bikes.
1. Story of the Day: RIP Streaming Wars
The Streaming Wars have been a battle of epic proportions, but now it seems we are witnessing the climactic end of this fierce competition. Over the past four years, industry giants have been locked in a relentless struggle to capture the hearts and wallets of streaming subscribers. However, a startling revelation has shaken these corporate behemoths to their core: the explosive growth of streaming subscribers has come to a halt.
Consider the recent setback faced by Disney Plus, one of the biggest players in the game. Last week, the company announced a staggering loss of 4 million subscribers in just three months. In stark contrast, Netflix, with its colossal 232.5 million subscriber base, could only muster a sluggish addition of 1.75 million subscribers during the same period.
The writing is on the wall: streaming companies can no longer rely on the pandemic-fueled surge and the early years of mass streaming to sustain their rapid growth. Simply raising prices and cutting costs won't suffice to solve the profitability problem they face.
Streaming companies are now setting their sights beyond the realm of traditional streaming. Some companies are venturing into the gaming industry, and others are all-in on the metaverse.
Takeaway: There are always growing pains when companies readjust from a growth strategy, and now streamers are shifting from playing offense to defense. Looks like we’ve come full circle and streamers are starting to look pretty similar to the cable companies they set out to disrupt.
2. Markets Rundown
Stocks closed lower over debt ceiling worries.
Movers & Shakers
(+) Capital One ($COF) +2% after Warren Buffett bought a stake in the company.
(–) Home Depot ($HD) -2% after the company had the biggest revenue miss in 20 years.
(–) Horizon Therapeutics ($HZNP) -14% after the FTC sued to block Amgen’s takeover of the company.
Castlelake bought $4 billion of consumer loans from Upstart
Edenred bought Reward Gateway, an employee engagement software platform, for $1.25 billion
Apax Partners will invest $450 million for a stake in IBS Software, a travel SaaS
Amwins and Flexpoint Ford led a $250 million recapitalization of SageSure, an insurance underwriter
Ray Therapeutics, an optogenetics company, raised $100 million
Petal, a consumer credit card startup, raised $35 million
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Ready to take your summer adventures to the next level? Discover Upway’s curated selection of e-bikes and take advantage of their spring sale offering up to an extra $600 off a selection of e-bikes.
3. Top Reads
The return to the office won’t save the office (Vox)
Jamie Dimon says it’s unlikely JPMorgan Chase will acquire another struggling bank (CNBC)
The Fed breaks out its old toolbox (Axios)
Top 5 big cities for jobs, pay, and high tech (Fox)
Google to delete accounts that have been inactive for at least two years (TC)
Home Depot’s lackluster Q1 shows remodeling boom is over (YF)
FTC sues to block Amgen’s $28B Horizon takeover (CNBC)
Why Warren Buffett likes Japanese stocks (WSJ)
Will chatbots replace money managers? (BB)
The restaurant service charge isn’t going anywhere (NYT)
4. Book of the Day: What I Learned About Investing From Darwin
The investment profession is in a state of crisis. The vast majority of equity fund managers are unable to beat the market over the long term, which has led to massive outflows from active funds to passive funds. Where should investors turn in search of a new approach?
Pulak Prasad offers a philosophy of patient long-term investing based on an unexpected source: evolutionary biology. He draws key lessons from core Darwinian concepts, mixing vivid examples from the natural world with compelling stories of good and bad investing decisions―including his own.
How can bumblebees’ survival strategies help us accept that we might miss out on Tesla? What does an experiment in breeding tame foxes reveal about the traits of successful businesses? Why might a small frog’s mimicry of the croak of a larger rival shed light on the signs of corporate dishonesty?
Informed by successful evolutionary strategies, Prasad outlines his counterintuitive principles for long-term gain.
“Avoid big risks; buy high quality at a fair price; and don’t be lazy―be very lazy.”
5. Short Squeez Picks
The unexpected key to boosting your productivity
6 secrets for overcoming burnout
2 common but terrible job tips
Why resisting the need to fly solo could be the key to leadership
What happens when you give 50k for ChatGPT to invest
What Else to Read
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6. Daily Visual: Americans Believe it's the Worst Time Ever to Buy a House
Share of US adults who say they think its a bad time to buy a house
7. Daily Acumen
Prospect Theory sheds light on how our perception of risk is influenced by subjective factors.
Beyond objective probabilities, our decision-making is shaped by biases such as loss aversion and framing effects.
Loss aversion leads us to prioritize avoiding losses rather than pursuing equivalent gains, often hindering our willingness to take calculated risks.
The framing of information is another crucial aspect, as how choices and outcomes are presented can significantly impact our preferences and risk assessment.
By understanding these principles, we can challenge our biases, consciously embrace calculated risks, and make choices aligned with our long-term objectives.
Take a moment to reflect on instances where loss aversion or framing effects have influenced your decisions, and consider how embracing calculated risks could lead to greater growth and fulfillment.
By applying the insights of Prospect Theory, you can develop a more nuanced understanding of risk perception and make choices that propel you towards success and personal satisfaction.
8. Memes of the Day
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