over 2 years ago • 3 mins
Coca-Cola reported better-than-expected earnings on Wednesday, as the drinks giant went to whatever lengths necessary to get noticed.
What does this mean?
Coke’s products have been in high demand ever since entertainment hotspots opened up again, but the company wanted even more attention last quarter: it just about doubled its marketing budget from last year, and recently launched a massive soda ad campaign for the first time in five years. And the blitz seems to have worked: the company’s organic revenue – without the effects of currency swings and acquisitions – grew by a better-than-expected 14% last quarter compared to the same time last year. The company upped its full-year profit outlook too, which could be why investors are craving Coke right now: they sent its shares up on Wednesday.
Why should I care?
For markets: It has to be Coke.
There might be another reason investors are keen on Coke: it’s a consumer staples company, meaning it sells goods that customers need no matter what. That bodes well in times like these, since it allows Coke to pass higher costs onto customers without losing them to competitors. And that’s exactly what it did: the company upped the average price of its products by 6% last quarter and still sold 6% more than the same time last year.
The bigger picture: Would you like a Coke with that?
Coke’s long-term partner McDonald’s has had a good few months too: the fast food giant announced on Wednesday that revenue was up last quarter by a better-than-expected 14% versus the same time the year before. That’s down to some canny reprioritizing: the entire restaurant industry has been struggling to find staff recently, so McDonald’s simply shifted its focus to delivering straight to peckish customers’ doors.
Keep reading for our next story...
Robinhood’s quarterly earnings came in well below expectations earlier this week, as the jack of all trading apps proves it isn’t quite the expert it made itself out to be.
What does this mean?
Business was booming for Robinhood earlier this year, not least as retail investors rushed to get their hands on viral cryptocurrencies like dogecoin. But the company did warn that trading activity might drop off once lockdowns loosened up, and it wasn’t wrong: revenue from all-important crypto transactions fell 78% last quarter compared to the one before. And Robinhood isn’t expecting much from Christmas either: the company said it’ll see more of the same as we head into a (hopefully) coronavirus-lite festive season.
Why should I care?
For markets: This decline is starting to snowball.
Investors sent Robinhood’s stock down 10% on the back of the update, which means it’s now below the price it was trading at when the company first hit the stock market. That revelation alone could be enough to turn investors off even more – especially those who invested before the IPO, who might want to lock in their gains in case the price falls any further. That sudden rush of selling, then, would only accelerate Robinhood’s downward spiral.
Zooming out: Everyone wants to Rent the Runway.
Investors seem more optimistic about clothing rental company Rent the Runway, which made its stock market debut on Wednesday. The company’s been benefiting this year as newly liberated fashionistas paint the town red again, and it’s seen the number of subscribers – who make up 80% of its overall revenue – more than double since February. It’s no sure thing, mind you: the clothes it buys constantly need replacing, which could impact its bottom line going forward. No such worries for investors on Wednesday: they initially pushed Rent The Runway’s shares up 10%.
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