December 14, 2022

Today's Topics

Hi! Even with FTX founder Sam Bankman-Fried now in custody, the crypto world is still in the spotlight. Binance, the world’s biggest exchange, has reportedly faced a $1.9bn wave of withdrawals in just 24 hours. Today we’re exploring:

  • Shrinking saving rates. Americans are struggling to set money aside.
  • Plus adds ads. Disney+ has a new ad-supported tier, just like Netflix.
  • Grill power. Weber needs a boost from its $3.7bn buyout.
Not yet a subscriber? Sign up free below.

There was some good news on the inflation front yesterday, as the consumer price index (CPI) came in at +7.1% year-on-year, down from the +7.7% figure seen in October. On a month-to-month basis the index was only up 0.1% in November.

Although we have to remember that things overall are still more expensive than they were a month or a year ago — just that the pace of price rises has slowed — it's still unequivocally good news for everyone's piggy banks.

Saving for a rainy day

Indeed, a slowdown in inflation is just what American consumers needed, as recent data showed that the average saving rate for consumers had dropped to just 2.3% in October — its lowest level since 2005.

During the pandemic, the personal saving rate ballooned for a few months as consumers braced for the worst, skipping even modest luxuries and saving their stimulus checks for a rainy day. Now those rainy days have arrived, and saving is the luxury many can't afford.

Plus adds ads

Last Thursday Disney announced their new pricing model for their streaming service, which included Disney+ Basic, a $7.99 per-month ad-supported tier. That move follows their biggest streaming rival, Netflix, which introduced their own ad-supported tier at a comparable $7 per-month earlier this year.

The move to ads — a revenue stream that’s not exactly novel for video content — is potentially Disney and Netflix's way of pre-empting a streaming market that could be starting to slow. As more services have launched, consumers are increasingly sensitive about paying for 3, 4 or 5+ streaming services — cheaper ad-supported tiers could be one way to keep new subscribers coming in.

Perfect timing

The timing of Disney’s late 2019 launch was impeccable: lockdowns came quickly, binge-watching practically became an international sport, and Disney+ gained over 85 million subscribers in just 12 months as a result.

However, as people started turning off their TVs and venturing back outside their subscriber count appeared to stall, only adding 2.1 million in Q3 21. That made their target of 230-260m subscribers and profitability by 2024 a lofty ambition — one that they have since scaled back.

With a cheaper ad-supported tier, and slightly less-lofty ambitions, Disney now looks to be back on the right trajectory for its 2024 targets. Whether Disney+ passes Netflix’s subscriber count, which is growing even more slowly (currently at 223m), remains to be seen.

Not yet a subscriber? Sign up free below.

Closing the lid

Weber, the grill-maker beloved by barbecue enthusiasts around the world, is being taken private by BDT Capital in a buyout deal worth ~$3.7bn, capping off a brief 16-month spell as a public company.

Originally a metal works founded all the way back in 1893, the Weber we know today got its start in the 1950s. George A. Stephen, frustrated with the state of outdoor cooking, chopped a metal buoy in half, added air vents and legs and created the original kettle barbecue, a design that’s lasted ever since, and helped take Weber to nearly $2bn of sales and a successful IPO last year.

But this year, things have cooled for the grill-makers.

After raising $280m during the equity market boom, Weber, with their range of state-of-the-art grills, restaurants and recipe books, looked like a tasty proposition. But since then sales have lagged in each quarter of 2022, with investors subsequently offloading their shares. Indeed, the company’s market cap had fallen by more than 70% in a year before BDT made their offer.

The terms of the deal are particularly striking. BDT clearly believe the market grossly underestimates Weber — offering a whopping 60% premium to the share price (relative to Oct 24th).

More Data

• New data shows nearly half of Americans between 18 to 29 live with their parents.

• With Tesla shares down 60% this year and a $44bn discretionary purchase, Elon Musk is no longer the World's Wealthiest man.

• A pair of Levi's jeans found in a shipwreck from 1857 have just sold for $95k.

Hi-Viz

• Take a look inside this virtual art gallery that displays 34 new pieces every day.

Pew Research has released their most striking findings of 2022 – with charts!

Off the charts: Which apparel company, that saw its share price fall 13% in the last 5 days, has built a huge direct-to-consumer business since 2016? [Answer below].

Answer here.

We're a fully bootstrapped, independent media company. If you enjoyed this data-driven newsletter, sharing it with your friends helps us out a lot.
Not yet a subscriber? Sign up free below.

Recent newsletters

Stocked up: Nike and Adidas have mountains of unsold inventory
A tale of 2 Swiss banks: A marriage of (regulatory) convenience
Darts at the board: Y Combinator's strategy, visualized