Costco sales drop with inflation, Elon Musk merges Twitter with X Corp.
Shoppers shy away from higher prices and Twitter merges with Elon's new X Corp.
Highlights:
Costco sales slump but investors do not seem to mind.
Headline inflation continues its slow return to 2%.
Twitter is no longer a solo social platform as it merges with X Corp.
Listen to the following article:
Costco shares fall alongside sales
As consumers begin to consume less and make more financially driven decisions spending will subsequently fall as well. This means stores like Kroger KR 0.00%↑, Target TGT 0.00%↑, and Walmart WMT 0.00%↑ will have to work harder to generate sales. Costco COST 0.00%↑, a cult favorite, is already feeling some early effects.
In March the wholesale retailer saw comparable sales fall 1.5% in the US. Even if you exclude gasoline that number only improves to a gain of 0.9%. E-commerce, an area Costco is not known for, saw a drop off of 12.7%. Total sales for the month were $21.71 billion, an increase of 0.5% from $21.61 billion seen the previous March.
On the news of the sales decline Costco shares fell roughly 4% but have since recovered.
The comparable sales downturn may continue to make headlines as consumers get battered by inflation throughout the grocery store. Costco provides shoppers with great deals on bulk items but many shoppers will opt to purchase one normally-sized peanut butter instead of 2 family-size jars as times get tough.
A new study from CNBC shows that 58% of Americans are living paycheck to paycheck. Costco, with its annual $60 Gold Star Membership, may not be the average American’s go-to store when budgets get tighter.
While all stores promote their “huge savings” not all only sell items in bulk. The war for the consumer is only heating up as the economy cools down.
CPI slows once again
Wednesday brought more CPI data and this month’s reading was another welcomed one.
CPI increased just 0.1% for the month and sits at 5.0% year-over-year, down from 6.0% in February. Both month-over-month and year-over-year numbers came in 0.1% lower than the consensus expectation.
We did however see a 0.4% month-over-month increase in Core CPI, a value that is stripped of the impacts of food and energy costs. The year-over-year value came in at 5.6%, a 0.1% increase from the February value.
Those ever-crucial yet volatile areas of the economy helped to bring down the headline numbers, with energy costs sinking 3.5% and food costs unchanged.
There were also positive movements in other areas of the economy, shelter costs ticked up 0.6%, the smallest gain since November, used vehicle prices fell 0.9%, and medical care service prices fell 0.5%. The complete list of price actions can be seen below:
Twitter becomes X Corp, partners with eToro
Twitter no longer exists, this flashy headline is all over the place, but like most things on the internet, it is not 100% truthful. Twitter still exists. The bird is not gone, just held under a newly formed shell company, X Corp.
X Corp. is the newest of Elon Musk’s X companies. In April of last year it was reported that Musk had set up three companies in Delaware, all with variations of the name ‘X Holdings’. The latest company is incorporated in Nevada, a place Ann Lipton, associate dean at Tulane University’s law school, says reduces fiduciary responsibilities.
Lipton stated, “It is understood in the corporate world that incorporating in Nevada is what you do if you want to have fewer fiduciary obligations. It’s just harder to sue officers and directors of Nevada companies for breach of fiduciary obligations if you’re an investor.”
Elon teased the move by tweeting:
Elon Musk has long held the belief that an “everything app”, similar to WeChat, is the future. This “super app” concept would allow users to message, bank, and even order food all in the same place.
Twitter has begun to see subtle changes that hint at the direction Elon Musk seems to be taking. Cash Tags allow users to search stock charts and eToro has partnered with Twitter to bring investing closer to the social platform. With just one click users are transferred to the investment brokers website.
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Leave your thoughts from this weeks stories in the comments below.
Elon is finding ways to turn around Twitter and make a profit.
You could definitely say if Twitter becomes a brokerage, it could become a threat to other big names (ie Etrade, Schwab, Robinhood) and bring a lot of traders who enjoy the social aspect of it.
In turn though it could alienate existing users (me included), who might not want to see Twitter cluttered with “financial gurus” post their ideas. I rather have that centralized on apps that are more adapt to it.