# 693 – 💞 How I Met Your (AI) Mother – The Average Joe

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    # 693 – 💞 How I Met Your (AI) Mother

    victorlei

    May 13, 2024

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    Good morning. Imagine the year is 2065. You’re surrounded by your loving grandchildren, who beg you to tell the story of how you met Grandma. You give your gray beard a thoughtful stroke, a twinkle in your eye. “Well, it all started when my AI dating concierge met your grandmother’s AI dating concierge…”

    Yep, that’s the dystopian future Bumble’s founder imagines. In a new interview, she said that soon enough, singles looking for love will have AI dating concierges who will go around and match with other users’ AI dating concierges. So get ready to sit back and relax while your AI counterpart handles that messy, frustrating thing known as “falling in love.”


    RESTAURANTS

    Salad-Making Robots Have Powered Sweetgreen’s Stock To Triple-Digit Gains. Next On The Menu: More Robots.

    Roses are red, and salads are green — just like the color of Sweetgreen’s ($SG) stock this year. The urban salad sensation, popular in urban centers like NYC and Chicago, is spreading its leafy goodness nationwide while doubling down on its robot-powered kitchens.

    Sweet success: After reporting earnings, $SG shot up by a whopping 34% on Friday, marking an impressive 240% surge over the past year — now trading at its highest point since its 85% nosedive after going public in 2021. The company had a strong first quarter, boasting its first-ever positive adjusted earnings (EBITDA) and a 26% year-over-year sales jump to $158M.

    • Big losses had been a problem for years — but Sweetgreen has shown major improvements as restaurant profit margins climbed to 18% in the recent quarter, up from 14% a year ago.

    • Rising labor costs are pushing restaurants to explore automation — a bet that’s playing out nicely for Sweetgreen’s new robotic kitchens, called Infinite Kitchens, which debuted last year.

    Robots and salads cross-contaminate

    While these automated kitchens require heavier upfront investments, they can handle up to 70% of a salad’s assembly, a move hailed as “positive” by Citigroup analyst Jon Tower (BBG). Last year, Sweetgreen’s CEO expressed his vision, foreseeing “eventually all Sweetgreen stores to be automated.” The company has ambitious plans for 2024 — aiming to install seven more automated kitchens, retrofitting another three or four, and opening 23-27 new stores.

    • Sweetgreen is also eyeing drive-thrus, a lucrative growth area for other chains, and last week, added beef to its menu, putting its salad bowls in closer competition with Chipotle.

    • A shift towards healthier ingredients has pushed consumers towards brands like CAVA ($CAVA) and Chipotle ($CMG), up 93% and 44% this year, respectively.

    Not like the big guys: Sweetgreen’s first-quarter in-store traffic remained flat, bucking a nationwide slowdown — with US fast-food traffic falling 3.5% in the same period. Consumers have had enough of endless price increases — with many starting to ditch leading chains like Starbucks ($SBUX), which reported US traffic declining 7% in the first quarter of 2024. And $18 Big Mac Meals? Consumers are ditching those, too.

    Read: It’s Not Just You, Your Coworker Is A Robot: Why Companies Are Embracing the Humanoid Hype


    PARTNERED WITH CLEO

    This AI Doesn’t Want To Take Over The Universe — Just Your Spending, And You’ll Be Glad It Did

    From medical diagnostics to self-driving cars, AI has revolutionized the world as we know it — so why not let it revolutionize your wallet?

    Introducing Cleo, the first AI that’s dedicated to your money. This sassy finance chatbot has 71% of users feeling more optimistic about their financial future after just 30 days of use.

    Your new personal money assistant helps:

    • Automate your savings

    • Track all of your expenses

    • Escape overdraft for good

    Cleo provides individualized tips to help you spend better and will roast you when your habits get a little too “out of pocket.” Join 5M Cleo users transforming their finances with the help of this feisty robot.

    Try Cleo for free today.


    LARGECAP RECAP

    🏘️ “Seriously underwater” mortgages aren’t scaring some investors away from real estate

    The move for homeowners in 2024 — seems to be no move. Last week, Gallup released survey results that showed 76% of Americans believe it’s not the best time to buy a house — a slight dip from last year’s record high of 78%. This reluctance isn’t surprising, given the high mortgage rates, climbing home prices, and the ongoing shortage of 7.2M homes in the US.

    • Redfin’s CEO recently described the housing market as hitting “rock bottom,” noting that “sales volume couldn’t be worse. The only people moving right now are the ones who absolutely have to” (MSN).

    • With 30-year mortgage rates still hovering above 7%, buyers are paying an extra ~$1K per month with a 20% down payment on a $500K home compared to the sub-3% rates in 2021.

    Tricky situation: ATTOM warned last week that 2.7% of US homes have loans amounting to at least 25% of their property value — a slight bump from the previous quarter’s 2.6%, but half of pre-pandemic levels. Despite this, some institutional investors are getting ready to pounce. Hedge fund Deer Park Road Management, which made lucrative bets in the housing market during the 2008 crisis, has raised a $170M fund to acquire mortgages — anticipating rate cuts “later this year” to fuel returns.

    🎤 Live from LA… it’s Netflix

    Just when it felt like Netflix ($NFLX) content was getting stale, the streamer pulled a surprise move by pushing into live content. Netflix just wrapped up seven straight days of live shows, including a comedy special from Katt Williams, a Tom Brady roast, and a weeklong talk show hosted by John Mulaney. And this summer? Brace yourselves for a sure-to-be-chaotic live Mike Tyson-Logan Paul boxing match, expected to be the most wagered-on event of the year. This comes hot on the heels of Netflix’s announcement of a 10-year/$5B deal to stream WWE Raw, marking its biggest foray into sports yet.

    • While linear TV networks bid against each other for costly NBA rights, Raw offers Netflix a weekly engagement booster all year at a relatively reasonable price.

    • Netflix is done reporting subscriber numbers — so moving into live content shifts the focus to engagement, which could fuel the growth of its blossoming ad business.

    In-person intrigue: These live events have an added bonus — they expand Netflix’s physical presence. The company’s star-studded comedy festival is drawing crowds in LA — possibly paving the way for Netflix’s venture into immersive retail spaces next year. Live events generated $67.8B last year — so it’s no wonder Netflix wants a piece of the action.


    JOE’S MARKET PULSE

    🔗 Novavax / McDonald’s

    Markets & Economy

    Consumer sentiment takes a hit amid inflation worries: Sentiment plunged from 77.2 in April to 67.4 in May, driven by rising inflation forecasts, with a 3.5% one-year outlook hitting a six-month high. [Read]

    Shoppers opt for cheaper alternatives: As inflation sticks, consumers are gravitating toward store brands, especially in personal care and apparel. It’s good timing for Target ($TGT), which just launched its “dealworthy” store brand. [Read]

    The UK is no longer in a recession: After a shallow recession in the latter half of 2023, the UK sees a 0.6% growth in the first quarter of this year, signaling that the economy is moving in the right direction again. The Bank of England is anticipated to maintain rates at 5.25%. [Read]

    Business & Wealth

    Casino groups to assess business drag of indoor smoking: Shareholders want to know if allowing smoking indoors — as seen in casinos owned by Boyd Gaming ($BYD), Bally’s ($BALY), and Caesars Entertainment ($CZR) — puts a dent in revenues compared to smoke-free spaces. [Read]

    Planet Fitness ($PLNT) raises “classic” $10 membership fee: After 26 years, the fitness chain increases its monthly membership fee to $15 per month for access to a single Planet Fitness location. While no reason was provided for the hike, Planet Fitness believes customers have grown accustomed to price hikes, so they don’t expect it to hurt the business. [Read]

    Huy Fong Foods pauses sriracha production: In news that is sure to trouble heat-seekers, the California-based company says their red jalapenos are too green to smash down into that delicious red hot sauce without affecting the product’s color — so now customers are fearing a shortage. [Read]


    CHART


    DIGIT OF THE DAY

    Single Stock ETF Assets Double in 2024

    Traders crave quick gains, and in the first quarter of 2024, total assets invested in US single-stock ETFs soared to $7.1B, doubling from the previous quarter (WSJ). Nearly a third of this sits in the GraniteShares 2x Long NVDA Daily ETF ($NVDL), boasting returns that outpace Nvidia ($NVDA) twofold this year.

    • While leveraged funds, which magnify gains and losses by up to 3x, have been around for years, interest peaked last year after approval in 2022.

    • Only four funds have risen above $100M in assets — those linked to Nvidia, Coinbase ($COIN), AMD ($AMD), and Tesla ($TSLA) — coinciding with a surge in the prices of the first three.

    Don’t look down: Leveraged ETFs thrive on upward trends, but losses are amplified on the downside. Take the T-REX 2X Long Tesla Daily Target ETF ($TSLT), which has dropped nearly 60% this year, double Tesla’s losses. And that’s on top of a 1.15% fee charged by these funds. As VettaFi’s Todd Rosenbluth puts it, “This is speculative investing like nothing else” (WSJ).


    EXTRA JOE

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