Latest / What the Flux / Qantas faces $500 million profit drop | Apple is putting ads on the Maps | Labubu hype hits reality

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Qantas faces $500 million profit drop | Apple is putting ads on the Maps | Labubu hype hits reality · What the Flux

• 0:05
  Speaker 1: This is what the Flux I'm Brett and aren't Justin
• 0:07
  Speaker 1: and it's Friday, the twenty seventh of March doesy boy.
• 0:10
  Speaker 2: It might not feel like it when you open the news,
• 0:12
  Speaker 2: but Australians have actually gotten richer. According to the ABS,
• 0:15
  Speaker 2: total household wealth increase two and a half percent. The
• 0:17
  Speaker 2: main driver here that was good old residential property doing
• 0:20
  Speaker 2: the heavy lifting once again and superannuation coming in its
• 0:23
  Speaker 2: second place. But here is the catch. These figures are
• 0:25
  Speaker 2: from December last year and I've only just been released now,
• 0:29
  Speaker 2: so yes, we were richer. The real question is whether
• 0:32
  Speaker 2: that still holds up today.
• 0:34
  Speaker 1: Flux Dam We are back once again this Friday with
• 0:36
  Speaker 1: quick sticks, giving away fifty dollars to the smartest person
• 0:39
  Speaker 1: in the Flux community who adds US three business questions
• 0:41
  Speaker 1: as quickly as they possibly can when they receive the notification.
• 0:44
  Speaker 1: So if you were to win the start up your
• 0:45
  Speaker 1: weekend on a high, make sure to download the Flux
• 0:47
  Speaker 1: app have your notifications turned on your chance to win.
• 0:50
  Speaker 2: Three massive stories today. Juzy boy, let's do it for
• 0:53
  Speaker 2: our first Quantus could see profits dropped by around five
• 0:56
  Speaker 2: hundred million bucks as it struggles to balance its flights
• 0:59
  Speaker 2: and huge spike in prices.
• 1:00
  Speaker 1: Nothing like a geopolitical conflict to send airline profits into
• 1:03
  Speaker 1: a tailspin, Bman, So tell me more so.
• 1:05
  Speaker 2: Obviously, Quantus is Australia's large airline. It's been able to
• 1:08
  Speaker 2: remain standing when it's domestic competitors like Ansett and Tiger
• 1:11
  Speaker 2: and Bonzer and Rex. They've all fallen, haven't they.
• 1:14
  Speaker 1: I have And over the past few years, Bman, Quantus
• 1:16
  Speaker 1: has been living its best life.
• 1:17
  Speaker 2: Number of passengers has jumped over twenty two percent in
• 1:19
  Speaker 2: the past two years alone.
• 1:20
  Speaker 1: Well, and your profits have consistently tipped the scales over
• 1:23
  Speaker 1: one point two billion bucks, including the COVID years.
• 1:25
  Speaker 2: Of course, But jose Wait Qwny didn't anticipate a regional
• 1:28
  Speaker 2: war right now.
• 1:29
  Speaker 1: No, no, no, And now Quantus could see its profits
• 1:31
  Speaker 1: drop sharply if the conflict in the Middle Ages continues
• 1:34
  Speaker 1: to drag on.
• 1:35
  Speaker 2: According to Quantus as a format chief economist Hawny could
• 1:38
  Speaker 2: suffer a falling profit from nearly one point two bill
• 1:41
  Speaker 2: down to just five hundred and forty four mil this
• 1:43
  Speaker 2: financial year.
• 1:43
  Speaker 1: And the main culprit fuel prices, of course, which are
• 1:46
  Speaker 1: one of the biggest costs for any.
• 1:47
  Speaker 2: Airline, and Quantus is not the only one suffering.
• 1:50
  Speaker 1: No no no. Other airlines globally, like United Airlines in
• 1:53
  Speaker 1: the US and Air New Zealand, have also started to
• 1:55
  Speaker 1: cut their flight schedules.
• 1:57
  Speaker 2: Thankfully, for the Big Q, it's hedged a chunk of
• 1:59
  Speaker 2: its fuel, so they're not yet feeling the pain.
• 2:02
  Speaker 1: But the longer this war drags on, the longer this
• 2:04
  Speaker 1: will hurt Quantus form.
• 2:05
  Speaker 2: So what's the key learning here?
• 2:07
  Speaker 1: Fuel is one of the biggest costs for airlines and
• 2:09
  Speaker 1: it's also one of the most unpredictable.
• 2:11
  Speaker 2: In fact, in recent years, fuel has typically made up
• 2:13
  Speaker 2: about twenty five to thirty percent of quantus total operating costs.
• 2:17
  Speaker 1: So when oil prices move, profits move with it.
• 2:19
  Speaker 2: But here's where it gets a very interesting juzzy boy,
• 2:21
  Speaker 2: because Quantus does not just buy fuel at today's price.
• 2:24
  Speaker 1: Nope, it hedges a portion of the fuel that it needs,
• 2:26
  Speaker 1: which means it locks in prices ahead of time.
• 2:28
  Speaker 2: In fact, Contus has around eighty one percent of its
• 2:30
  Speaker 2: fuel hedged for the second half of FI twenty six.
• 2:33
  Speaker 1: So if oil price is spike like they have a
• 2:35
  Speaker 1: large chunk of Quantus's fuel has been bought at older
• 2:38
  Speaker 1: cheaper prices.
• 2:38
  Speaker 2: Which protects profits in the short term.
• 2:41
  Speaker 1: But those hedges eventually expire, and if high fuel prices
• 2:45
  Speaker 1: stick around, Quantus will be forced to buy fuel at
• 2:47
  Speaker 1: the new higher prices.
• 2:49
  Speaker 2: So you essentially get a delay effect. The fuel shocks
• 2:51
  Speaker 2: don't hit immediately, but actually creep in over time.
• 2:54
  Speaker 1: And that's why investors are so concerned about Quantus because
• 2:56
  Speaker 1: if this war persists, it's really going to hurt Quantus's
• 2:59
  Speaker 1: bottom line.
• 3:00
  Speaker 2: For our second story, Apple is putting ads on Apple
• 3:03
  Speaker 2: Maps and quietly turning your next cafe search into an
• 3:06
  Speaker 2: ad battle with Google.
• 3:08
  Speaker 1: Well, well, well, Apple Maps is entering the ad game,
• 3:10
  Speaker 1: b man, So tell me more.
• 3:11
  Speaker 2: Apple is the three point seven trillly in US dollar
• 3:14
  Speaker 2: bohema that was founded in Steve Jobs's parents' garage in
• 3:16
  Speaker 2: nineteen seventy six.
• 3:17
  Speaker 1: And since then it's released the Mac computers, the iPod,
• 3:19
  Speaker 1: the iPad, the iPhone, Apple Watch, MacBooks, and a whole lot.
• 3:22
  Speaker 2: More, not to mention it's software products like the app store,
• 3:24
  Speaker 2: Apple Music, iCloud, Apple TV Plus.
• 3:27
  Speaker 1: And the man Let's be honest. Apple Apps has long
• 3:29
  Speaker 1: been known as the it'll do alternative if you don't
• 3:32
  Speaker 1: have Google Maps.
• 3:33
  Speaker 2: Yeah, but now Apple is planning on milking it for
• 3:35
  Speaker 2: all it's worth. That's a right.
• 3:36
  Speaker 1: Apple's rolling out paid ads inside its Maps out in
• 3:39
  Speaker 1: the middle of this year, So.
• 3:40
  Speaker 2: Businesses will now be able to pay to appear at
• 3:43
  Speaker 2: the top of search results in Apple Maps.
• 3:44
  Speaker 1: So when you search best coffee, in the top result
• 3:46
  Speaker 1: might not be the best coffee, it might be the
• 3:48
  Speaker 1: best paying coffee.
• 3:50
  Speaker 2: Yep. The first rollout will take place across the US
• 3:52
  Speaker 2: and Canada, but if it works expected everywhere.
• 3:54
  Speaker 1: And clearly Apple's trying to capitalize on intent based advertising,
• 3:57
  Speaker 1: which has been Google's bread and butter.
• 3:59
  Speaker 2: For young So what's the key learning here?
• 4:01
  Speaker 1: Intent based advertising is all about catching someone at the
• 4:04
  Speaker 1: exact moment they're ready to take action.
• 4:06
  Speaker 2: Think about the difference between scrolling Instagram versus searching best
• 4:10
  Speaker 2: Thai food near me.
• 4:11
  Speaker 1: On Instagram you might be inspired to buy something.
• 4:13
  Speaker 2: On Maps or Google Search you already planning.
• 4:16
  Speaker 1: To, and advertisers will pay a premium to show up
• 4:19
  Speaker 1: in that exact moment.
• 4:20
  Speaker 2: In fact, search ads which capture intent converted around four
• 4:23
  Speaker 2: point four percent on average, compared to just zero point
• 4:26
  Speaker 2: five to seven percent for display ads.
• 4:28
  Speaker 1: And Google rakes in them all analysts estimate the Google
• 4:31
  Speaker 1: Maps generates arend eleven point one billion US dollars per
• 4:34
  Speaker 1: year in total revenue.
• 4:35
  Speaker 2: And that is why Apple wants a slice of this
• 4:37
  Speaker 2: gigantic pie.
• 4:38
  Speaker 1: For our third and final story, Popmart's Lebubou empire is booming,
• 4:42
  Speaker 1: but a twenty percent share price drop shows hype doesn't
• 4:45
  Speaker 1: always equal happily.
• 4:47
  Speaker 2: Ever, after Popmark goes from cute collectibles to not so
• 4:50
  Speaker 2: cute market reaction, what is going on here? Okay?
• 4:52
  Speaker 1: So PopMart International Group is the company behind those crazy
• 4:55
  Speaker 1: popular blind box toys.
• 4:57
  Speaker 2: You know, the ones where fully grown out line up
• 4:59
  Speaker 2: for our and over their hard earned money to see
• 5:02
  Speaker 2: which jagged tooth elf months so they can get their
• 5:04
  Speaker 2: paws on, and.
• 5:05
  Speaker 1: The man absolutely exploded in popularity.
• 5:08
  Speaker 2: Jusi boy Laboobu has gone so viral that Popmark is
• 5:11
  Speaker 2: now teaming up with Sony Pictures to turn it into
• 5:14
  Speaker 2: a movie, and.
• 5:15
  Speaker 1: So it's no surprise that Laboobo's financials went through the roof.
• 5:18
  Speaker 2: Pop Mart's revenue jumped one hundred and eighty five percent
• 5:21
  Speaker 2: to five point four billion US.
• 5:22
  Speaker 1: Dollars and it's profit jumped over three hundred percent as well.
• 5:25
  Speaker 2: But despite that growth, the market expected even more.
• 5:28
  Speaker 1: In fact, be Man, their shares dropped more than twenty
• 5:30
  Speaker 1: percent in a single day after these results.
• 5:32
  Speaker 2: You see, Juzy Boy investors got nervous about a slowdown
• 5:35
  Speaker 2: in the fourth quarter.
• 5:36
  Speaker 1: And that led to concerns that demand for the pop
• 5:38
  Speaker 1: mark characters might not last forever.
• 5:40
  Speaker 2: So even with blockbuster growth, the market is starting to
• 5:43
  Speaker 2: ask is this a long term brand or just a
• 5:45
  Speaker 2: viral moment?
• 5:46
  Speaker 1: So what is the key learning here?
• 5:47
  Speaker 2: Hype can build a business, but it can also break
• 5:50
  Speaker 2: one just as fast.
• 5:51
  Speaker 1: Yeah, we know that hype driven businesses can scale insanely
• 5:54
  Speaker 1: fast because they.
• 5:55
  Speaker 2: Tap into culture. One product goes viral and suddenly everyone
• 5:58
  Speaker 2: needs to spend fifty dollars on a bark without knowing
• 6:00
  Speaker 2: what is inside. But be Man, if.
• 6:02
  Speaker 1: Consumer attention shifts, the demand can drop just as quickly
• 6:05
  Speaker 1: as it rose.
• 6:06
  Speaker 2: And Josie Boy. There's a cautionary tale here with spin Master.
• 6:09
  Speaker 1: I remember spin Master back in twenty sixteen when they
• 6:11
  Speaker 1: released hatch moles.
• 6:12
  Speaker 2: Those were the eggs that kids had to care for
• 6:15
  Speaker 2: until it hatched into a toy creature.
• 6:17
  Speaker 1: Yeah, hatchamuves exploded in twenty sixteen with nearly eighty million
• 6:20
  Speaker 1: bucks in sales alone that year.
• 6:22
  Speaker 2: But by twenty nineteen, Hatchabules saw sales fall by forty percent.
• 6:25
  Speaker 2: Kids just got over it. So PopMart is clear trying
• 6:28
  Speaker 2: to reduce this risk.
• 6:29
  Speaker 1: But right now, be man investors. I'm convinced that these
• 6:31
  Speaker 1: sharp toothed little elves are the real deal long term
• 6:34
  Speaker 1: plucked out. If you've been following the news, listening to
• 6:36
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• 6:39
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• 6:41
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• 6:43
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• 6:45
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• 6:48
  Speaker 1: could be the greatest starts of the weekend of all time.
• 6:50
  Speaker 2: Thanks for listening and we'll see you on Monday.