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- #723 - 💸 Fly like Mike, not Nike
#723 - 💸 Fly like Mike, not Nike
Good morning. NEETs, short for Not in Employment, Education, or Training, are becoming more prevalent among young people worldwide. According to the International Labour Organization, 23.5% of individuals aged 15-24 were not actively engaged in education, job-seeking, or vocational training in 2022, up from 21.8% in 2012. The era of hustle culture has officially met its match, so take it easy today — there’s always tomorrow.
SPACS
SPACs Were Retail Investors’ Favorite Way To Invest In New Companies. Then, They Vanished.
Special purpose acquisition companies (SPACs) were once hailed for their opportunity to level the playing field, but the only thing they’ve leveled is the financials of retail investors. Their fervor was a blip in Wall Street history, but their losses are historic — and ongoing.
No Buffett: From 2020 to 2022, SPACs made up half of new Wall Street entrants. However, the trend has fizzled today, and its kingmakers are no more. Notably, Chamath Palihapitiya, known for kickstarting SPAC mania by taking Virgin Galactic ($SPCE) public in 2019, and other celebrity endorsements have faded. Last year, 40% of new SPACs failed to find a target, while at least 21 former SPAC targets went bankrupt, erasing over $46B in shareholder value.
Where are the SPAC Success Stories?
While many SPACs have struggled to stay public, with companies like Virgin Galactic conducting a reverse split last month to remain compliant, some SPACs have outperformed the market. Among the few are companies like construction leader Primoris ($PRIM), data center firm Vertiv ($VRT), and gambling giant DraftKings ($DKNG). And interestingly, a SPAC has emerged as one of the most active stocks this year:
Donald Trump’s Trump Media ($DJT), which merged with a SPAC in January, has seen its shares more than double this year since completing its merger.
However, the Truth Social owner is down 45% from its all-time high — with its trading and valuation described by LinkedIn’s Reid Hoffman as “wildly high” and “absurdly out of the realm of normal.”
The comeback no one asked for: With the resurgence in memecoin trading and the popularity of $DJT, analysts are speculating about a potential comeback for SPACs on Wall Street. Bloomberg reports that SPACs have raised $888M in the last three months — and even seasoned SPAC investor Michael Klein has reentered the arena, alongside OpenAI’s Sam Altman toying with their potential. But buyers, beware, SPAC sponsors get paid regardless of whether you make money or not.
PARTNERED WITH ROOTLESS
Time’s Running Out to Tap into This $600 Billion Market
After working in climate change for 10+ years, Sachi Singh knew how sustainable seaweed is. But she discovered it had an even greater power: It could transform women’s health.
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But the opportunity ahead is even bigger, making Rootless one of the most exciting investment opportunities this year:
Women spend up to $20K on menopause solutions.
Over 1B women will experience menopause by 2025.
Solving for the root cause of menopause is an untapped $600B market.
Don’t miss your chance to share in Rootless’s growth potential. Become a Rootless shareholder before this deal ends on 6/28.
LARGECAP RECAP
🏢 Meet the Company Behind Your Aggressive Rent Hikes
For the 52% of Americans who rent, there’s nothing worse than receiving your renewal notice with a rent increase — especially when those hikes exceed inflation rates, a trend that has become more common since the pandemic. The culprit? Allegedly, it’s a piece of software advising your landlord to do so. RealPage, utilized by many of America’s largest landlords to help recommend rent prices, is implicated in driving up rents across the nation.
RealPage’s algorithm influences over 16M rental units, reportedly advising landlords to raise rents and accept higher vacancy rates for increased profits.
According to The American Prospect, this has led to apartment rents rising “between 50-80% over the past seven years in markets where the software is employed.”
Where the buck stops: RealPage insists landlords accept less than half of its rent recommendations. However, this hasn’t stopped investigations by attorney generals in 10 states and at least one class action lawsuit alleging the software price-fixes rents. And making matters more colorful, the FBI recently raided one of RealPage’s largest clients, seeking information on the software’s use. We’ll have to see if RealPage lives to hike rents another day.
👟 Nike Is Tired of Being Posterized So It’s Turning To Jordan For an Assist
Michael Jordan famously said, “The key to success is failure.” By that quote, Nike should be well set up for success. Nike ($NKE), whose stock is down nearly 50% from its 2021 peak, has struggled in China, one of its largest markets, after consumers boycotted the brand for stopping cotton purchases from Xinjiang over forced labor abuse accusations. China’s share of Nike’s total revenue has dropped from nearly one-fifth of its total sales in 2021 to 15%. To reignite growth, Nike is turning to its Jordan brand, targeting older consumers with disposable income who grew up watching Michael Jordan.
In March, Nike opened its fourth World of Flight store in Beijing’s high-end Taikoo Li shopping complex, home to luxury brands like Louis Vuitton and Hermès.
From 2019-2023, Jordan sales soared by 198% — outpacing Nike’s 43% but lagging behind Fila’s 516% growth.
Fly like Mike, not Nike: With earnings set to be reported tomorrow, the company has no shortage of doubters. Williams Trading’s Sam Poser recently set a price target of $75 for Nike (~21% downside) — citing an overreliance on discounts and a less experienced management team compared to the past.
JOE’S MARKET PULSE
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Markets & Economy
Paramount ($PARA) to raise streaming cost: After rejecting a merger deal with David Ellison’s Skydance, the streaming giant announced a price increase for Paramount+ by $1 to $2 per month. The company’s stock is down 29% YTD. [Read]
How interest rates affect time in the market: Millions of Americans are keeping their cash in cash for longer, taking advantage of generational record interest rates — but they risk missing the opportunity to buy other assets before the market declines. [Read]
Consumer dashboard shows mixed data: Goldman Sachs ($GS) released the latest version of its US consumer dashboard, revealing mixed data on debt, consumer spending, and economic growth. [Read]
Business & Wealth
Apple ($AAPL) shelved Meta ($META) AI partnership: The WSJ reported that Apple and Meta had entered talks to integrate Meta’s AI software on Apple devices, but a new report by TechCrunch alleges that privacy concerns led Apple to reject the deal. [Read]
Lufthansa ($DLAKY) adds environmental surcharge: To comply with Europe’s aggressive ecological regulations, the German airline will add an “environmental cost surcharge” of $1 to $72 on some fares. [Read]
Judges block parts of Biden student loan plan: Two federal judges blocked changes to the Department of Education’s income-driven repayment plan, SAVE, which would have cut participants’ payments in half starting Jul. 1. [Read]
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CHART
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DIGIT OF THE DAY
Fertility Rates Have Fallen By Nearly Half Over The Past 60 Years
Parenthood is the scariest hood you’ll go through, so some are avoiding the neighborhood altogether. According to a new report from the Organisation for Economic Co-operation and Development (OECD), fertility rates have dropped from 3.3 children per woman in 1960 to 1.5 in 2022. This is far below the replacement rate of 2.1, needed to maintain the population without migration. Except for Denmark, fertility rates have fallen across all OECD countries since 1980. And women are having children later — and in many cases, not at all.
Between 1980-2022, the average age at childbirth rose from 27 to 30.9.
The percentage of women remaining childless “increased markedly,” with Italy, Spain, and Japan seeing their rates double between the 1955 and 1975 cohorts.
Choice or circumstance? The decline in fertility rates has coincided with a dramatic rise in the cost of raising children in recent years, from when they enter the nest to when they leave. Daycare costs have jumped nearly 36% over the last ten years, outpacing inflation. According to the Federal Reserve Bank of St. Louis, education costs have also risen faster than the Consumer Price Index for decades. And even when they leave the nest, if ever, 59% of young adults are receiving financial help from their parents, according to Pew Research — while the share of young adults aged 20-29 living with their parents has also increased from 45% to 50%.
EXTRA JOE
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