Morning Brew Daily - Twitter's New CEO, Peloton Recalls 2 Million Bikes & Workers Are Happier Than Ever

Episode Date: May 12, 2023

Episode 58: We kick off Friday with Kyle Hagge! Neal and Kyle discuss Elon Musk's announcement that Twitter has found a new CEO. They also dive into the latest Peloton drama where the company has recalled over 2 million bikes; not good if you're a stockholder! Plus, why workers are happier than ever and who will make more money on tour: Taylor Swift or Beyonce? Learn more about our sponsor, Fidelity: https://fidelity.com/stocksbytheslice Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

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pwc.com slash U.S. slash brew AI. That's pwc.com slash us slash brewaI. Good morning brew daily show. I am Neil Fryman. And once again, I'm not Toby. Today on the program, we'll talk about a surprising finding

about Americans' happiness with their jobs. And Taylor Swift and Beyonce go head to head on the race for a billion dollar tour. That's right. We have a great show. In addition to those stories, we're going to talk about the worst corporate job in America and why you might want to drive to get your next Amazon package. Neil, let's ride.

Kyle, it's a big day. It is my first shorts pot. Wow, the first shorts pot. Free the kneecap. Free the kneecap. That is actually a huge move. I'm still in pants. You didn't text me this morning.

I looked at the weather, and it was going to be 87, and I'm not wearing pants in 87 degrees. So, especially in the New York City subway, which is notoriously well-wethering. That is 870 degrees, yes. Also, it is Friday and every Friday, Kyle, you're subbing it for Toby, so I don't know if you've done this before, but we do fast week slow week. Oh, wow. Where I ask you whether it was a fast week or a slow week. This was a very fast week.

Yeah. Yeah. Why? I was hosting the pod, so there's always stuff going on. It's been a lot of fun. And, yeah, we made it to Friday. So, happy Friday, everyone. Was it a fast or slow week?

It's always pretty much a fast week for me. Time flies when you're having fun. And I really enjoying hosting the pod with you and Kelsey. So it's been it's been great. You do live life in the fast lane. I do. Yes. Not much sleep.

Well, Neil, I have some breaking news for you. And that is that the worst corporate job in America is actually up for grabs. It is not the bankruptcy lawyer for bed bath and beyond. It is actually the CEO of Twitter. That is right. Elon Musk announced that he will be stepping down as CEO of Twitter to become executive chair, chief technology officer and head of trolling. Musk is making the move after purchasing Twitter for $44 billion in October, which means he lasted in the CEO role about seven months.

And he said that this move is actually a result of, quote, too much work. So nice to know he's working hard. Whoever is selected as the new CEO is going to have a lot of work to do as well. Twitter's revenue has fallen 50% since October as a result of massive decline in advertising. Musk said this in March. And the company's Twitter blue subscription service plan has also been failed. drawing less than 1% of the user base and removing a whole lot of blue check marks Neil mine included Neil is this where you announce you're the next CEO of Twitter

well he said he knows who it is and it's a woman and so I'm not going to be the next CEO of Twitter who do you think it's gonna be well it was kind of fun yesterday everyone was floating around names mostly jokingly like Shiv Roy Elizabeth Holmes Caroline from FTX we in the newsletter this morning we posited it would be Shoshana from girls I don't know if you watch that show, but she would be a great pick. Great CEO. The Wall Street Journal did kind of report the reality, unfortunately, which kind of poured cold water on all of those great recommendations.

They said that Linda Yaccarino, who's the NBC Universal's head of advertising, is in talks to become the new CEO of Twitter. She is known as the Velvet Hammer because of her tough negotiation skills. Wow. So yeah, she has apparently has really tight, tight relationships with ad agencies and marketers, which is kind of important for Twitter's turnaround. People were pointing to this interview that Yaccarino gave with Musk in Miami Beach in January as, you know, maybe the time that they met and connected. So we'll find out in six weeks whether it's actually going to be here, her, but multiple outlets corroborated the Wall Street Journal story that she was kind of the. successor to be. Yeah. If your nickname is the Velvet Hammer, I feel like you, that's just like a great fit for the CEO of Twitter. Meanwhile, Tesla stock was up 2% on the news as, you know, you mentioned

that Musk said he was working too hard. And Tesla stock has been under pressure while Elon Musk has been, you know, focusing on whatever he's doing at Twitter for the last couple months. But he said he never wanted to be CEO of Twitter forever. Well, he did that poll where he asked people, should he stay as CEO? So I guess he listened to the poll. Yeah. So the number, one charge for, the number one task for Yacarino or anyone who comes in, as you said, is to stem the flow of advertisers out. So of the top 100 advertisers on Twitter before Musk bought the company, 37 spent absolutely nothing in the first quarter this year. And another 24 reduced their average monthly spend on Twitter by more than 80%. Wow. So bringing in a head of advertising actually

makes sense, though bringing in a fictional character. Might make more sense. Might make more sense. A lot more sense. But either way, you said it's a tough corporate job because, you know, how much power are you going to actually have? Twitter is a software company, and Elon Musk said he's going to be a head of product. Yeah. So everyone's kind of just saying they're going to be a puppet to Musk's whims. It doesn't seem like he's someone who would let go of the power easily, to your point.

And I just think Twitter is a really hard business. Like, it's never been a successful business. It's ads are always tough, so it makes sense to bring in someone from ads. but we'll see what happens with the new CEO. SpaceX as Elon is not CEO of SpaceX, I think. And so he's shown that he can be relinquish. All right, let's move on to Peloton, which just cannot catch a break. The exercise equipment company issued a recall for 2.2 million of its flagship bike products

that were sold in the U.S. between 2018 and 2023. The problem is this faulty seat that could come off when you're riding it, which means you could get injured, especially if you go as hard as I do. Peloton found 13 reports of injuries, including a fractured wrist, lacerations, and bruises. You don't need to take your bike back into the store, first of all, because they're extremely heavy and hard to move. But they say you should contact Peloton on its website to get a free seat. Shares continued their decline yesterday, falling almost 9% to their lowest level since Peloton IPOed in 2019. I feel like the whole point of biking inside on a stationary bike is to avoid injury.

This is the fourth time the company has had to issue a recall for their product. And they also have raised $550 million in venture capital. So I think that this is a business that is, as you can see, with the stock price, faltering a little bit. But I think it is a great product. And I think that Peloton is probably one of the sexier acquisitions we're going to see in the next 12 months. It could happen. That's been rumored for a while, but there's this new CEO in town, Barry McCarthy, who joined in 2022. And he's like, give me time. Give me time to turn this thing around. But they have a huge inventory glut. If you remember back in 2020 and 2021, people were literally waiting four to five months to get a Peloton because they couldn't make enough fast enough.

They were about to spend a couple hundred million dollars on a factory to produce their own bikes. They scrap that plan because the last thing they need to do now is make more bikes. And they jacked up their media plan, which is $44 a month now from $39 a month. And you know what? Like you said, Peloton is a great product. I think the addressable market is a lot less than we all expected in 2020 and 2021. I mean, just look at Lulu Lemon and Mirror. Remember?

Lulu Lemon bought Mirror, which was this, I mean, it's literally a mirror that you, that takes you, you're working out. Yeah, it's kind of another at-home fitness gadget. And so it spent $500 million on Mirror in June 2020 when we all thought no one would ever go to gyms again. And it wrote down, it took a $443 million charge related to Mirror last year. So basically, that $500 million has been wiped out and it's looking to sell Mirror. So it admitted that that acquisition was a complete bust.

Yeah, I think Peloton partnering with a company that has a lot of integrated services already in the home, an Apple and Amazon would just make a lot of sense. It would make the product not have to be only that product. but kind of fit into, again, a more integrated home. So we'll see what happens. But you love Palaton, so I hope. It's a great product. It is just a much smaller company.

Should be a much smaller company than we all thought. I just want to do a quick gym check-in because people are talking a lot about going back to gyms. I wanted to see how gyms were doing post-pandemic, whether it's been lower or higher. And actually, visits to fitness locations were up 9% in February 2023 compared to the same month in 2020. And February 2020 was before the pandemic happened. So this demise of gyms is completely overblown. More people are going to gyms now more than ever. Kind of interesting. If Peloton can create an in-home sauna, then they will get my business. I think anyone can create an in-home sauna.

It's just really expensive. Just need a lot of rocks. All right, moving on. We are officially living in the upside down because Americans actually like their jobs. I can't believe it in a new conference board survey job satisfaction hit a 36 year high last year 62% of us workers said they were satisfied with their jobs uh an all time high for some context in 2022 it was about 58 percent and in 2010 right after the recession recession just 42 percent of u.s workers said they were satisfied a little on the methodology of the study the conference board pulled u.s workers across 26 different categories like commutes job security the vibe of your whether your coworkers smell and they reported you know 62% said all things were Gucci. Yeah, I think, you know, you started this so aptly when it's breaking news that workers are happening. We're probably in a bad spot, but I just want to note too one of the interesting parts of the study is men's satisfaction was higher

Totally than women's in every component especially in areas as leave policies, bonus plans, promotions, communication, organizational culture. The big takeaway I had from this is that hybrid work, which we do think will be a kind of permanent change from COVID creates more autonomy both in the job you can stay home maybe you have to like do laundry so you carve out it or on a Thursday to do it and I think it's allowed people to find a better fit for their actual talents because now you don't just need a job in New York City you might be able to do a hybrid job anywhere or a remote job anywhere so more freedom inside of the job place and in the current work and more freedom to find the best fit job for you so flexible job is is definitely a big thing. You can fly, you know, you have a bachelor party. You can fly out Thursday night, too, and do a remote work thing on Friday if your job allows that. Are you referencing when you didn't

invite me to your bachelor party? Believe me. If I ever have a bachelor party, you will be invited. But it's also this tight labor market, right? Like three point, our unemployment rate is 3.4%. If you do not like your job, you can very easily leave it and find one that you may, that you enjoy more or at least pays better. So there were all these people switching during the pandemic where they're like, okay, they're going to pay me more. They're looking for workers. There's this huge labor shortage. And so that might be a huge contributor as well. We'll see what happens if they're, you know, the job market has remained very strong despite all of these mass layoffs by tech companies in the past few months. So we'll see what happens if there is

actually a downturn because you think that job satisfaction would probably go lower if there is a recession, but they've been calling a recession for a very long time and it still hasn't happened. The last thing I'll say is the age breakdown was also really interesting that 44% of adults under 30 said they were happy at work, but 67% of workers 65 and older reported they were extremely are very happy at work. They see the light at the end of the tunnel. They're like, I don't have to do this that much longer. But that breaks down with happiness in general. I've seen this, that older people are generally just much more happier than we are.

Yeah, you have a giant U-curve throughout your life. You're like extremely happy when you only know Legos, then you have life, and then you can, happy as you're retiring. Well, we have that to look forward to, and we'll get to the next stories after we take a quick break. It's time to refresh your yard during spring backyard days at the Home Depot. Get low prices guaranteed on propane grills starting $179, like the next grill 3-burner gas grill, or get $50 off a select Weber Spirit grill and bring big flavor to your backyard.

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All right, Neil, let's get into the stock of the week and the dog of the week where we pick a stock that's doing quite well and a stock that maybe isn't. And I want to note up top. I'm a philosophy major, so this is clearly not financial advice. I just learned what the term liquidity meant yesterday. Now, I might not know a lot about stocks, but what I do know a lot about, my name is Kyle, after all, is energy drinks. So the stock of the week is Celsius. Okay. So let's break this down. Celsius has generated $290 million in revenue for the first quarter, which is a 95% surge over the past year. The North American market, the North American revenue accounted for 96% of the sales, which more than double, which more than doubled with 101% pop.

Celsius earnings more than quadruple to 34.4 million or 40 cents on the share. An analyst were actually expecting 20 cents on the share. This drink has become a phenomenon. It's seen the market share in the country's energy drink double. So Celsius now owns 7.5% of the market. However, research still hasn't discovered why you need a Celsius if you're just sending emails all day. They say they have a proprietary blend of ingredients that's like not just caffeine, but it gets your metabolism going. Someone might need to fact check that.

They don't fact check energy companies, energy drink companies. Don't do fact track. And this is also not health advice. It was a great week for Celsius, though. It's a bad week for Fahrenheit. Neil, I'm going to say a name I haven't said since eighth grade, flowrida. How does he fit into this story? Flowrida.

Well, back in January, Celsius had to pay $82 million to Flowrider. I don't know. Is he a rapper? Is that the best of a rock star? So they had an endorsement contract going on where Flowrider marketed the company from 2014 to 2018. And so he sued them for a breach of contract. And the funniest part about all of this is that he sued them for $30,000. And they messed up so hard that he was awarded $82 million in the verdict.

And then at his press conference, he drank a Celsius as a kind of final FU. Absolutely power move by Floraida. But yeah, tell me about Celsius. Celsius was up, we said this is the stock of the week. It reported great earnings. And it's up 23%. You are firmly embedded in the energy drink market. I think you are 95% monster.

So what is Celsius for people who don't know and why is it taking over? Yeah, I mean, it's sad to admit that I drink a lot of energy drinks. So YouTube commenters, please be kind on me. I think it is an attractive option. It's like low in sugar. They've done a great job at branding it. And they have this like aura around them that it's more than just the caffeine. It is like going to boost your metabolism.

I do think a major trend in drinks in general is no sugar or low sugar alternatives. We're seeing it with Gatorade. We're seeing it with like, I mean, Diet Coke has always been a staple of Coke zero. So I think they're playing into that. They have a great branding. And I expect their market share to continue to increase. Yeah. So Celsius is one to watch.

I want to get into the dog of the week, which is a stock that didn't do well. I'm talking about Sonos. Sonos makes high-end speakers. and that is just not what people are buying right now. Its stock lost more than a fifth of its value this week, so down more than 20% after reported earnings. It's sales for its speaker business plunged 24% in the first quarter, and the CEO said, it's not going to get any better.

Sales guidance lowered for the remainder of the year. Very similar story to Peloton, where everyone, and you weren't here when we talked about the mattress companies earlier this week, but they surged during the pandemic when everyone was upgrading their homes and no one was doing anything else. But now everyone has, you know, a great speaker lineup. They've got their Peloton already. They've got their mattress.

And they're just spending more on experiences rather than good. So Sonos is seeing this drawdown in sales. And there's not really a clear growth path for Sonos right now. So investors are kind of sour on it. This is another company that I've heard acquisition groomers around as well or partnerships with some kind of cool tech companies. let's move on to Amazon. And throughout Amazon's history, I think it's made us ask important questions, Neil.

Will people buy books online? Will people be comfortable with Alexa and Voice AI in their homes? And now their most recent question is, is $10 enough to make anyone go to Coles? What do I mean by this? Amazon is offering U.S. customers $10 to pick up orders that cost 25 or more at pickup points like Amazon Fresh, Whole Foods, or Coals, Amazon has said that this is not a promote like a big promotion. It's not a cost cutting service. It really is just there to increase knowledge of these single access points because the more people that pick up from there, the lower cost it is for Amazon to ship. So they want to make them quite popular. Amazon has also hiked the price of its annual prime subscription that includes free shipping benefits by $20 to $139. So this is really interesting on the shipping side of the equation. It is also interesting on the

return side of the equation. They've started charging some customers $1 if they return a package to a UPS store rather than an Amazon pickup that is closer to their location. And this is actually not uncommon. The post-purchase logistics company Narvar found that found a 41% charge, 41% charged some kind of return shipping fee, which is up from 33% in 2021. Seems like the days of cheap shipping and free returns might be over. world we live in, right? You have to pick up your delivery. Yeah. You don't know what is this, but you can't. The 1990s? But it is funny how I think it's very similar to what we were talking about in the streaming wars yesterday that all these companies were racing for growth and lowering

prices and trying to acquire users at the expense of profits. Now they're pulling back and focusing on profitability and not so much growth. Same thing. I think we're seeing what happened with Amazon, on as you described and other delivery companies where it's like, okay, time for us to make some money here because we are subsidizing all of this online shopping, delivering it to you to your doorstep, we're gonna process all your returns for free. I mean, this has been an amazing subsidy for customers

and it's spurred a lot of sales for these companies too, but their investors want profitability right now and this is, delivery is so expensive. And imagine if you're in a rural area, where a driver has to deliver a package and then drive three miles along a dirt road to deliver another package, that is a lot of expense and you're not gaining that much from it. So if you can say, hey, all of you in this town in Minnesota, can you just, I don't know why I randomly pick Minnesota. That's a random place.

Shots fired at Minnesota, Neil. It is, it's a really interesting element. And I think the return stuff is so fascinating, too, because I've heard of some companies where if you want a refund to return it, they just say, keep it. Because it's more expensive for us to figure out the get it back recatalog it re restore it and so they just let you keep it All right I want to I've been itching to talk about this story for the entire show So if I've been rushing a little bit either it's the shorts or I just really want to get to this story But this week in Sweden I don't know if you saw Beyonce kicked off her Renaissance tour Joining Taylor Swift on the road who's in the middle of her eras tour

So now we have the two queens of pop both on their men stadium tours simultaneously. The question everyone is asking is, will either of them hit $1 billion on their tour? I'll give you the tail of the tape here, okay? Yeah, break it down. Taylor Swift, 52 stops and is estimated to bring in $500 to $600 million. But as of now, our tour is only in the United States. She could announce some overseas stops, which she has been weaker at than Beyonce.

But depending on how many tour she announced in Europe or anywhere else, could get up to that one billion mark. Meanwhile, Beyonce, definitely going international. She has 57 stops on her tour. This investor, Peter Cohen, was writing, and Forbes did some math and said that on the high end of the range, this is a very high end estimate, obviously, but Beyonce could bring in $2.1 billion,

and the lower end was also $300 million. So it's quite a wide range. Do you think either of them can break a billion? I think it's never a good idea to bet against Taylor Swift or Beyonce. Like these are two incredible business people and Honestly icons and this the tour stuff is so fascinating because it's not just the tour but it's the merchandise as well and they talk about having Taylor Swift particularly has a really extensive merchandising strategy people lining up for hours to get Limited Edition concert merch at the shows and this is how artists have to make their money now

It's not going to be selling albums necessarily or making a lot of money from Spotify streams. It's going on these mega tours and selling merchandise direct to consumers and Speaking of merchandise, I mean, there's this one estimate that Taylor Swift could sell 30,000 pieces of merch per show, okay, with an average, with an average price per item of $80. So that's $2.4 million per night just in merch, 70% of which goes to Taylor Swift. Yeah. And so yeah, you were mentioning. So I just want to throw it out there because that is a crazy number. Yeah. But also, yeah, our artists need to go on tour to make money.

and they are this year, they're saying could be the biggest live music year ever because it's not just Taylor Swift and Beyonce, it's Bruce, it's the weekend, it's cold play, it's red hot chili peppers, it's Drake,

it's Madonna, it's pink. Wow. And these are acts, the big thing here is these are acts that don't just fill NHL and NBA stadiums. These are acts that can fill football stadiums. Yeah.

So if you can get a football stadium of people to come to your show and do a couple dozen shows, then you will make a zillion dollars or maybe a billion in the case of Beyonce and Taylor Swift. Should mention before we go that no artist has ever topped $1 billion. So the current record holder is Mr. Elton John. Oh, wow. Yes.

So his farewell tour, the Yellow Brick Road tour, has made $800 million so far. And then right after that is Ed Shear-in, who brought in $776 million. So either Taylor Swift or Beyonce will bring down the boys. I think my dad is probably $100 million. of that Elton John because he is the biggest Elton John fan. And Neil, I think it is a shame

that you didn't mention that your shorts are Beyonce shorts. Well, I wasn't going to bring that up to offend any Taylor Swift people, but now that you mention, yes, they are. That is a show for you. We got a big weekend coming up

with more NBA and Mother's Day. Happy Mother's Day. Happy Mother's Day to Dory Hagey and all. Happy Mother's Day to Ellen Freyman. We'll talk on the phone probably later today. Love it. We love to hear from you.

So be sure to email us at Morning Brewdaily at MorningBrew.com with all of your comments, questions, NBA team comparisons. And a big thanks to everyone who made this show possible. The producer and editor is Emily Milliron. Our technical director is Euchenna Waogu. Samantha Vela's and Raymond Lue are the associate producers. Billy Minino is on audio. Hair and makeup was recalled over a faulty air hairdriere. Devin Emery is our chief content officer and our show is a production of Morning Brew.

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