The Rundown - Zyn Halts Online Sales Amid Investigation, Apple Shuts Down 'Buy Now Pay Later' Service

Episode Date: June 18, 2024

Stock market update for June 18, 2024.

Public.com presents the rundown, your daily market update in five minutes. My name is Zadadmani, and today is Tuesday, June 18th. In today's episode, we tell you why Apple is getting out of the buy now, pay later business. It might be a 4D chess move. Also, Zinn is being investigated by officials in Washington, D.C., and sales have been halted. And then stick around to the end of the show to find out why EVMaker Fisker is filing for bankruptcy and other fun facts about companies that have filed for bankruptcy this year. All right, let's go.

This is the summer of the stock market. The stock market continues to move higher. Both the NASDAQ and S&P 500 were in the green yesterday to start off the week and closed at record highs. The NASDAQ has made record highs for six straight trading days. And the S&P has made record highs five of the last six days. So just an incredible winning streak right now. I mean, the only thing hotter than the stock market right now is this heat wave. I mean, oh my God, it's hot outside.

Now, one thing that is cooling off a bit is retail spending. We just got May retail sales numbers this morning, and retail sales only rose by 0.1% in May compared to April. That's less than the 0.2% that economists were expecting. And if you exclude auto sales, the number gets worse. Retail sales actually dropped 0.1% in May. Now, consumer spending is a big part of the U.S. economy. So if there continues to be more data that shows that consumers are cutting back on spending, maybe that will get the Fed more reason to cut interest rates.

I guess we'll have to see. Let's run through some headlines. Starting with Apple. Apple is getting out of the Buy Now Pay Later business. Kind of. Apple announced yesterday that they're shutting down their pay later program later this year, which allowed customers to pay off purchases that you made on Apple Pay on an installment plan.

Now, you'll still be able to use Buy Now Pay Later through Apple Pay, just not directly through Apple. Apple says that other Buy Now Pay Later companies like Affirm will be integrated into iOS 18 when it comes out later this year. Now, I think this is a very smart move by Apple because Apple got a ton of negative press last year when they announced their buy now, pay later service. There are a lot of critics to buy now pay later services and that leads to people going further into debt. And I think Apple heard the criticism and they realized that they were making an insignificant amount of money that it wasn't worth the headache. So now they're still going to have it, but they're just going to let

third parties handle it. So they don't get any more bad press. And Apple will still make some money because the transaction has to be through Apple pay. So Apple still makes money and no more bad press. Apple's playing chess out here. Let's switch gears and talk about Zinn. You can't buy Zinn nicotine pouches on Zinn.com anymore. Zinn's parent company, Philip Morris, is halting sales on the website after the company's unit that produces Zinn called Swedish Match North America was hit with a subpoena by officials in Washington, D.C.

These officials in Washington, D.C. are investigating whether the company has complied with a ban on the sale of flavored products. Now, this is not a total outright ban of Zinn. In fact, Philip Morris said that Zinn.com represents a very small portion of the their actual sales, so the impact on the company's business is probably going to be negligible, unless this is just the beginning of a wider regulatory crackdown. Kind of reminds me of what happened to Jewel. Remember those? By the way, the popularity of Zinn has exploded over the last couple years.

Zinn has been in the U.S. for about 10 years now, but it's gotten really popular recently. Shipping volumes of Zin pouches in the U.S. reached nearly 132 million cans in Q1, which is an 80% jump from a year ago. It's crazy. Philip Morris actually acquired SMNA, the company that makes Zinn back in 2022, as part of a push into oral smoke-free products, which is a category they expect to drive over $2 billion in U.S. revenue. Let's quickly recap the GameStop shareholder meeting yesterday. It finally happened, highly anticipated, and it fell pretty short. In fact, the meeting itself was pretty short.

It was only about 20 minutes long. CEO Ryan Cohen said that GameStop is focused on profitability, cutting costs, and closing stores. And that was kind of it. He didn't really answer any questions. going to specifics. He did bring up the fact that GameStop has a strong balance sheet with a ton of cash, thanks to all the shares that they sold recently because of the meme stock rally. But beyond that, they didn't really go into specifics. So I don't really know what meme stock investors were expecting to hear. But yeah, it doesn't look like the shareholder meeting lived up to the hype.

And the stock dropped 12% yesterday following the shareholder meeting. That's tough. Let's talk about some stocks making moves today. Starting with Chegg. The online learning platform is up in the pre-market after they announced they plan to lay off about 23% of their workforce, which is about 441 employees, and refocus the company on its core audience. I mean, it's been a pretty bad year for Chegg. The stock is down 75% this year and recently hit a 52-week low. So management is doing whatever they can to turn this company around. Investors were liking the turnaround plan so far as stock is up 20% in the pre-market in response to this news. You know, I wonder what role ChatGGPT played in Chegg's struggling right now, because I'm sure a lot of

students now turn to chat GPT for help on their homework instead of going to Chegg. So we'll see if this restructuring plan does anything to keep Chegg chugging along. That was bad. A stock not doing so good this morning. In fact, it's been doing pretty bad for a while now, is Fisker. The seven-year-old EV maker filed for bankruptcy late Monday. Now, there were rumors that this was going to happen for a couple months now, but it's now official.

It really hasn't been great for Fisker. The company released its first car just a year ago, right when the EV hype started to fizzle out. So no surprise, the company struggled selling the car. because not many people want EVs. And on top of that, the reviews weren't good. And the company essentially ran out of cash. So now they're headed for bankruptcy.

The company has already halted production on all their cars, and they began laying off employees in closing warehouses. Now, what's crazy about Fisker is they went public back in 2021 via a SPAC, which was pretty popular thing to do back then. And at one point, the stock was trading above $28 a share with a market cap of over $8 billion. But now the stock is down like 99% and trading below $0.5. sense. Yeah, not great. I wonder what happens to all the fiscers that people bought. I mean,

what happens if something goes wrong? They're like, they're never going to be able to get them fixed. All right, let's wrap the show with a fun fact. And speaking of bankruptcy, I'm going to give you some fun facts about bankruptcies that have occurred this year. Heading into June of this year, there were 275 U.S. corporate bankruptcy filings in 2024. Now, that's just below last year's 277 filings through May. But this year, nearly 20% of bankruptcies have come from consumer discretionary sectors because Americans have scaled back on spending. Some of the high-profile companies that have filed for Chapter 11 bankruptcy this year, Red Lobster, the hospital operator Stewart Healthcare, and my personal favorite, Express. I honestly bought a lot of clothes from Express.

Kind of shocked that they filed for bankruptcy. I mean, if Abercrombie's making a comeback, how is Express not figure this out? Come on. But yeah, don't be surprised if we see more high-profile companies file for bankruptcy this year, maybe even more EV companies. Well, all right, guys, that's the rundown for today. I hope you guys enjoyed today's episode. If you did, that are giving us a five-star rating on Apple and Spotify. It really does help the show. And remember, the stock market is closed tomorrow in observation of Juneteenth, so no show tomorrow for us, but we'll be back here on Thursday. Thank you guys so much for listening. Shout out to Connor and Mike for all the work behind the scenes, and we'll see you guys back

here on Thursday. This is the rundown, your real-time resource for news events and trends in the markets. All views presented in the show reflect the opinions of the guests. You should not take any mention of a publicly traded security as recommendation to buy, sell, or hold that security, rundown guests are not financial advisors and are not affiliated with public holdings or its subsidiaries. You should make your own financial and investment decisions or consult. Respective professionals, learn more at public.com disclosures. In partnership with Zayidamani, brokerage services for U.S. listed, registered securities are offered

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