This is an email from Buy/Sell/Hold, a newsletter by Marker.
Welcome to Buy/Sell/Hold, Marker’s weekly newsletter that’s 100% business intelligence and 0% investment advice. Each week, our writers Steve LeVine and Rob Walker make sense of the most important developments in business right now — and give them a Buy for clever moves or positive trends, a Sell for mistakes or missed opportunities, or a Hold if they’re noteworthy but too early to call.
🦃 In the Pandemic, Everyday is Black Friday 🦃
The Buy/Sell/Hold Analysis
Black Friday has been a cringe-y spectacle for years. But the annual day-after-Thanksgiving ritual of bargain-crazed consumers lining up for hours to jostle (and sometimes physically battle) each other over holiday gifts served a function: The decades-old unofficial holiday supposedly gets its name from being the day that retailers’ balance sheets tip from red to black. So it’s been surprising to note that a fresh attempt to more or less do away with Black Friday stampedes is coming from … retailers.
Home Depot was an early mover, announcing that “Black Friday prices will be available throughout the entire holiday season,” both in-store and online, Bloomberg reported earlier this month. Part of the point is to avoid, or at least tamp down, the doorbuster-sale mosh pits that, in the middle of a pandemic, are actually dangerous. A slew of other retailers from Walmart to Target to Macy’s are signaling similar moves to essentially spread out holiday buying.
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The Grinches among you will not be happy to hear that this means starting early: Best Buy, for example, will reportedly start holiday sales in October. And a group of at least two dozen retailers are said to be concocting a brand new shopping holiday of sorts on October 10. (This event, dubbed 10.10, mimics a massively popular November 11 shopping day in China.) The idea, one organizer says, is explicitly to pull the shopping season forward. Online sellers (including the digital arms of big brick-and-mortar chains) have the same goal, hoping to avoid an expected shipping glut that already has major shipping services boosting fees; as October sets in, expect more online-exclusive deals, sooner than usual.
This promises to be a challenging home stretch for one of retail’s most difficult years on record. But optimists are projecting that holiday spending–which represents an estimated 20% of annual retail sales — will actually grow modestly over last year. So sellers are highly motivated to find ways to make the pandemic holidays as successful as possible, regardless of whether spending is concentrated in a single day, or — both literally and figuratively — spread out. And if that means the end of Black Friday, that would be a gift to us all.
— Rob Walker
⚡ Lightning Round ⚡
⚡ Microsoft and Sony are each targeting two different sets of consumers with the launch of their next-gen video game consoles. Microsoft announced it is simultaneously releasing the Xbox Series X ($499) and less-powerful Xbox Series S ($399), on November 10th, while Sony announced it was simultaneously releasing the PS5 ($499) and PS5 Digital Edition — with no disc drive ($399) on November 12th. It’s a similar strategy to the one Peloton announced last week, when the fitness company revealed plans to sell a cheaper(ish) version of its signature bike alongside a more-expensive alternative — and the same pricing scheme Apple has used for different versions of its iPhones for years. It won’t be long until you can expect to see ads for Hermès’ polyurethane Birkin bag Series B, a steal at $7,000. Buy.
⚡ Nikola stock crashes — then rebounds — following reports of a Justice Department investigation. In last week’s edition of Buy/Sell/Hold, Steve LeVine wrote about why he was down on GM’s deal to own a stake in electric truck startup Nikola. Earlier this week, the Wall Street Journal reported that, following a report by short seller Hindenburg Research that accused the startup of being an “intricate fraud,” the SEC and the Justice Department would be investigating Nikola to find out whether its electric and hydrogen-powered technology is really as far along as it has claimed. The company, which went public in June via SPAC, saw its shares drop 8.3% on Tuesday following news of the investigation, only to be buoyed again by a JPMorgan analyst defending the company’s fundamentals on Wednesday. We’re not quite convinced this isn’t vaporware. Sell.
⚡ Apple announces a virtual fitness product along with its new Apple One subscription. With the future of gyms still very much in question, the market for virtual fitness offerings has exploded, with Peloton, Lululemon/Mirror, and Zwift all seeing remarkable subscriber and revenue growth for their at-home workout classes. Now, Apple wants a piece of the action, too, with Apple Fitness+. Given how unlikely it is that anyone would want a subscription to more than one of these services at once, and that some of these subscribers will eventually go back to the gym when all this is over, it sure looks like there’s a bloodbath ahead. Sell.
⚡ The fashion holdouts have finally caved to Amazon, as the e-commerce giant debuts its “Luxury Stores.” Rather than slotting luxury brands alongside AmazonBasics batteries and counterfeit S’well bottles, Amazon’s new offering promises to give brands much more control over how online shoppers experience their “store-within-a-store,” and is currently open by invitation only to Amazon Prime members. The first brand to debut on Luxury Stores is Oscar de la Renta, which will sell clothing, handbags, jewelry, and perfume — with more brands rolling out in the coming weeks and seasons. Hold.
📈 The Number: $20,000
That’s how much Stripe, the San Francisco-based payments processing company, is offering employees as a one-time bonus if they choose to relocate outside the Bay Area, New York City, or Seattle and take a cut in their base pay of up to 10%, according to Bloomberg.
Ever since the pandemic spurred mass remote-work policies, white-collar workers have started fleeing the expensive cities their employers are based in. A recent survey commissioned by the Manhattan Institute found that 44% of NYC residents earning six figures or more have considered leaving the city since the pandemic began, and 37% said it was at least somewhat likely they would not be living in the city in the next two years. Many have already moved: An August report from Zillow indicated that home values in Manhattan and San Francisco dropped by 4.2% and 4.9% relative to last year, with both markets flooded with new listings.
When the pandemic hit, Facebook was among the first companies to encourage its employees to work remotely, even stating in May that it planned to more actively hire remote workers. But shortly thereafter came the catch: Come January 2021, employees would see their salaries adjusted depending on their geographic location. (Never mind that since these announcements, Facebook has moved aggressively to scoop up office space for itself, agreeing to lease all 730,000 square feet at the former USPS building in Manhattan and buying what was to be REI’s new HQ in Seattle for $367 million.)
We may never know what calculations Stripe’s HR team did to get to the $20,000 figure, but if other companies start offering similar bonuses, expect to see those Manhattan and San Francisco home values drop even further.
— Kaushik Viswanath, Senior Editor, Books, Marker
📖 Marker’s Read of the Week: Rob Walker explores why Slack hasn’t pulled a Zoom during the pandemic.
🔎 Marker’s New Fixation 🔎
A new site is giving VCs the Glassdoor treatment. On VC Guide, founders can anonymously review — and rate on a scale of 1 to 10 — investors they have pitched or made deals with. For startup founders who have struggled to get funding, there’s likely some schadenfreude in seeing VCs in the hot seat for a change. The site is already filling up with a mix of scathing rants (“he was a dismissive, unengaged, and an all-around asshole”), glowing reviews (“the kind of VC that you want to have on your side when the shit hits the fan at 11 p.m. on a Sunday night”), and a whole lot of complaints about being ghosted. As with all anonymous sites, the reviews should be taken with a very big grain of salt. But VCs are clearly paying attention. The site allows investors to leave a response to reviews (à la Yelp or Airbnb), and it’s fascinating to see Silicon Valley bigwigs doing damage control.
— Bobbie Gossage, Deputy Editor, Marker
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