The Rundown - Pepsi Acquires Poppi for Nearly $2B, Forever 21 Files for Bankruptcy (Again)

Episode Date: March 17, 2025

Stock market update for March 17, 2025.Deep Dive: How Junk Food Giants Are Battling GLP-1s & RFK Jr.’s Health Crusade

Public.com presents the rundown. Your daily market update in five minutes. My name is Zaid Admani, and today is Monday, March 17th. In today's episode, we get you ready for an action-pack week. We got earnings, we got a Fed meeting, and maybe even a surprise or two. We also talk about Pepsi's deal to buy Poppy and explain why big snack companies are getting into the health space. Then stick around to the end of the show to find out why the top 10% of Americans

are spending their money like crazy. We got a great show for you today. Let's go. Last week was a brutal week, but we got a nice relief rally on Friday to help ease the pain. The S&P 500 was up 2.1% on Friday, and the NASDAQ was up 2.6%.

In fact, more than 90% of stocks than the S&P were in the green. I mean, it was just one of those great days. But despite the big rally on Friday, both the S&P and NASDAQ dropped more than 2% last week, making that four-week. of losses in a row. So a bit of a losing streak right now. Looks like March madness started a bit early for investors. And the madness continues this week. It's already off to a bumpy start.

We just got the retail sales data for February. And the data wasn't so great. Retail sales in February were up 0.2% compared to January. That's less than the 0.6% that was expected. So it looks like consumers might be cutting back on spending a bit. So we'll see how the markets react to that news. And the rest of the week should be interesting as well, especially Wednesday, because Jerome Powell and the Fed will announce their decision on interest rates, and we get a Jerome Powell press conference. Right now, the markets don't expect the Fed to make any changes to interest rates at this meeting, but they're going to be looking at Jerome Powell's press conference for hints of a future rate cut.

I'm sure Jerome Powell will get a ton of questions about tariffs and Trump. So should be a fun one. We're going to be tuning in on Wednesday afternoon when the press conference goes down and recapping all of it on Thursday's episode. So make sure you guys are subscribed to the podcast to stay in the loop. And beyond just the Fed meeting, we still have a couple of interesting earnings left, too. Nike and FedEx both report on Thursday after the market closed. Personally, looking forward to the Nike report to see how the turnaround efforts are going under Nike's new CEO, Elliot Hill.

And who knows, we might get a random tariff shock this week. I'm refreshing Trump's true social feed right now. Haven't seen anything pop up this morning, but I got my guard up at this point. You know, it'd be nice to not have any tariff drama for a week. And finally have a winning week in the markets. Let's run through some headlines. And we got some big news coming out of the soda industry. Pepsi is buying the soda startup Poppy for $1.65 billion.

You know, Poppy is one of those drinks that brands itself as a healthy alternative to soda by reducing sugar and adding ingredients like prebiotics. And they've gotten very popular since they launched back in 2018. It was even featured on Shark Tank where they scored an investment from a shark who was behind brands like vitamin water and Vita Coco. And these healthy soda brands like Poppy and others like Alipop have gotten so popular now that traditional soda companies are trying to get into the space.

Like Coca-Cola launched their own prebiotic soda last month called Simply Pop. Pepsi was going to launch their own brand as well, but they decided to just buy Poppy instead. So this is a huge win for Poppy, and I wonder how the Poppyheads feel about this. You know, personally, I'm not a big Poppy guy. Now that it's part of the Pepsi umbrella,

I wonder if that hurts their brand a little bit. I don't know, we'll have to see. And I wonder if this means that Alipop, the other leading player in the space, gets acquired soon. Alipop has been putting up some impressive numbers. They did over $500 million in sales in 2024, more than double the $200 million it did in 2023.

So these healthy brands are having a moment right now. Funny enough, we actually did a deep dive episode about this topic just this past weekend. We discussed the challenges that these snack giants like PepsiCo and, Mondalese and Coca-Cola are facing with consumers cutting back on unhealthy snacks and choosing to buy these healthier alternatives. So if you want to learn more about the snack industry and the challenges that they face and

what impact weight loss drugs are having on the industry, highly recommend checking out our deep dive episode. It's actually a video podcast, so you can watch the video version of it on Spotify or YouTube. Let's shift gears and talk about another company facing some challenges right now. Forever 21. The retailer has filed for bankruptcy. Again, this is the second time they filed for Chapter 11 bankruptcy.

in the past six years. In this latest bankruptcy filing, the company says it's been hurt by rising costs of inventory and wages, and they're also getting wrecked by competition from Chinese e-commerce platforms like Sheehan and Timu. Now, the last time forever 21 filed for bankruptcy was back in 2019,

and it resulted in more than 30% of its stores shutting down. It was then acquired out of bankruptcy by Spark Group, which is a joint venture that includes Simon Property Group, authentic brands, and Brookfield. Now, ironically, Spark entered into an agreement with Sheehan in 2023, which gave the Chinese e-commerce company a third of the group shares and the rights to one day open up stores within Forever 21 locations. So Sheehan owns a third of the company that owns Forever 21, and Sheehan's also somewhat

responsible for Forever 21 going bankrupt. Kind of a frenemies relationship between these two companies. So we'll see what happens with Forever 21 this time. I remember Forever 21 in its heydays. The store was very popular in the early 2000s. I remember seeing him at every mall. They appealed to young women with designer-style clothing for extremely affordable prices.

But now you can get like a pair of jeans on Timu or Sheehan for like a buck 50. So it's kind of hard to compete with that. Now another wrinkle in this story is that Sheehan and Timu were taking advantage of a loophole that allowed them to send low value packages to the US without paying import duties or tariffs. It was called the de minimis exception.

The de minimis exception was ended for China by President Trump in February as part of his tariff plans for China. So that might help Forever 21 a little bit, but I just don't know if, like, teenagers are going to malls anymore, you know? That might be a bigger problem. Let's talk about some stocks making moves today. Norwegian cruise lines shares are rising this morning after JP Morgan upgraded the company to overweight with a price target of $30.

JP Morgan notes that there's been no decline in demand for cruising, even though macro uncertainty is rising. Investors have been concerned about the world of travel after airlines cut their guidance last week, but that doesn't seem to apply to cruising. People aren't canceling their cruise trips just yet. So that's some good news for Norwegian cruise line, and shares of the company are up more than 4% this morning on this news.

They currently trade around $20 a share. So the stock has some room to run before it hits J.P. Morgan's $30 price target. On the flip side, shares of a firm are falling after CNBC reported that Walmart agreed to an exclusive deal, with Calarna to provide buy now pay later service to Walmart's customers. This deal will integrate Klarna's services into Walmart's One Pay app and it's going to launch in the coming weeks per CNBC. A firm was previously working with Walmart and now that business is going to Calarna and as a result, shares of a firm are down more than 13% this morning. A firm is now going to miss out on Walmart's

255 million weekly customers. So that's definitely a big blow. Let's wrap the show with the Fun fact. The wealthiest 10% of Americans, which are those that make more than $250,000 a year, are responsible for half of all U.S. consumer spending per Bloomberg. That's the largest share going all the way back to 1989. Back when this data started first getting collected, the richest Americans accounted for 40% of all consumer spending. Now it's up to 50.

So I wonder if the stock market taking a dip will have any sort of impact on this at all. Because wealthy Americans tend to have a lot of their wealth tied up in the stock market. And if stock prices keep falling, maybe wealthy Americans will cut back on consumer spending. And that'll have a ripple effect on the economy as well. So I think keeping an eye on consumer spending data will be very important. Like we talked about today, we're already starting to see a bit of weakness. Well, all right, guys, that's the rundown for today. Thank you guys so much for listening.

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