Latest / What the Flux / Cettire's luxury price crash | Tesla's got a Musk-brand-issue | OpenAI's plans to acquire Chrome

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Cettire's luxury price crash | Tesla's got a Musk-brand-issue | OpenAI's plans to acquire Chrome · What the Flux

• 0:05
  Speaker 1: This is what the Flux.
• 0:06
  Speaker 2: I'm Brett and I'm justin and it's Monday to twenty
• 0:09
  Speaker 2: eighth of April.
• 0:10
  Speaker 1: Jusee boyd, the countdown is on. And no we're not
• 0:12
  Speaker 1: talking about the federal election. We're obviously speaking about the
• 0:15
  Speaker 1: RBA's cash rate announcement in just a few weeks time.
• 0:18
  Speaker 1: In fact, Westbax says that a cash rate drop is
• 0:21
  Speaker 1: a done deal if inflation numbers are in line with expectations.
• 0:25
  Speaker 1: And Jessie boy, you don't hear banks throwing around the
• 0:28
  Speaker 1: done deal words very often, do you, So they must be.
• 0:31
  Speaker 2: Pretty down confident, a big collboy weft pacus out. As
• 0:34
  Speaker 2: we roll into the end of the month at April,
• 0:36
  Speaker 2: this is the time when you need to get your
• 0:38
  Speaker 2: financial house in order. One of the things you should
• 0:40
  Speaker 2: be doing every single month is checking your credit score
• 0:42
  Speaker 2: to see if it's gone up, if it's gone down,
• 0:43
  Speaker 2: and if there have been any applications made it might
• 0:46
  Speaker 2: not have been yours. We have it all covered in
• 0:48
  Speaker 2: the Flux app with our credit health check ap Make
• 0:50
  Speaker 2: sure to download the Flux app and check your credit
• 0:52
  Speaker 2: score today.
• 0:52
  Speaker 1: Three revolutionary stories today, Jusi boy, Let's do it for
• 0:55
  Speaker 1: our first, Satire, the luxury fashion marketplace has suffered its
• 0:59
  Speaker 1: first lot in three years after it continues to get
• 1:02
  Speaker 1: squeezed left, right and center.
• 1:04
  Speaker 2: Lots of attention on Setire right now be Man and
• 1:06
  Speaker 2: not the good type, so tell me more well.
• 1:08
  Speaker 1: Setire was founded in twenty seventeen here in Australia and
• 1:11
  Speaker 1: bills itself as a luxury online fashion retailer.
• 1:15
  Speaker 2: Yeah, it stocks everything from Gucci loafers which I know
• 1:17
  Speaker 2: you love, to save the rent, clutches and many many
• 1:20
  Speaker 2: more products.
• 1:21
  Speaker 1: In fact, it sells more than five hundred thousand products
• 1:24
  Speaker 1: a year from more than twenty five hundred luxury brand
• 1:27
  Speaker 1: and be Man.
• 1:27
  Speaker 2: Setire grew its business by offering luxury goods at low
• 1:30
  Speaker 2: wer prices.
• 1:32
  Speaker 1: A bit like a luxury outlet of the Internet.
• 1:34
  Speaker 2: And that's because it operates in the gray market.
• 1:36
  Speaker 1: In other words, it sources luxury products from outside traditional
• 1:40
  Speaker 1: brand channels.
• 1:40
  Speaker 2: But now be Man. Setires reported a real ugly quarter yep.
• 1:44
  Speaker 1: It's sales landed at two hundred and sixty million bucks,
• 1:46
  Speaker 1: which was basically unchanged from last year.
• 1:49
  Speaker 2: But the biggest hit was that Setire suffered its first
• 1:51
  Speaker 2: loss in three years.
• 1:53
  Speaker 1: YEP, it copped a four point seven million dollar loss
• 1:55
  Speaker 1: for the March quarter. Now, might I remind you that
• 1:58
  Speaker 1: at its peak, Setire devaluation of two billion dollars, but now.
• 2:02
  Speaker 2: Its share prices dropped more than twenty five percent last
• 2:04
  Speaker 2: week and its valuation is sitting just at two hundred
• 2:07
  Speaker 2: and fifty million.
• 2:08
  Speaker 1: Dollars, a monstrous fall from the glory years.
• 2:11
  Speaker 2: The main reason for the four B man Setire is
• 2:13
  Speaker 2: copying margin compression everywhere that it is.
• 2:16
  Speaker 1: So what is the key learning here?
• 2:18
  Speaker 2: Margin compression is what happens when a business's costs rise
• 2:21
  Speaker 2: faster than its revenues.
• 2:22
  Speaker 1: For Setire, it's the worst of both retail worlds.
• 2:25
  Speaker 2: Yeah, their costs are up, their revenues are flat, and
• 2:28
  Speaker 2: discounts are hurting their profits as well. So b man,
• 2:30
  Speaker 2: that means even when Setaire do make a sale, they're
• 2:33
  Speaker 2: earning less profit from every dollar.
• 2:35
  Speaker 1: And does it boit? Margin compression is a major red
• 2:38
  Speaker 1: flag for investors.
• 2:39
  Speaker 2: Yeah, it shows that the business is either losing its
• 2:41
  Speaker 2: pricing power or it can't control its costs at all.
• 2:44
  Speaker 1: And in retail post COVID, it's not about growth it
• 2:47
  Speaker 1: or costs anymore. It's really about sustainable profit.
• 2:50
  Speaker 2: So it's no surprise Setaire's share price dropped twenty five
• 2:53
  Speaker 2: percent just last week.
• 2:54
  Speaker 1: For our second story, Tesla has seen its profits plummet
• 2:57
  Speaker 1: seventy one percent, but it's share price still jumped more
• 3:00
  Speaker 1: than five percent.
• 3:01
  Speaker 2: Jeez, that sounds strange. There must be more to this story,
• 3:03
  Speaker 2: be man, so tell me more. Well.
• 3:05
  Speaker 1: We know, Tesla is the og electric vehicle poster child.
• 3:08
  Speaker 2: YEP. It was founded back in two thousand and eight
• 3:10
  Speaker 2: and co founded by the zany, unhinged and wild Elon Musk.
• 3:13
  Speaker 1: And we've already spoken about how Tesla has battled with
• 3:16
  Speaker 1: a decline in sales, So be.
• 3:18
  Speaker 2: Man, it's fair to say we didn't realize how bad
• 3:20
  Speaker 2: things were looking.
• 3:21
  Speaker 1: We're talking to seventy one percent drop in profits compared
• 3:23
  Speaker 1: to last year, and that is down to four hundred
• 3:27
  Speaker 1: and nine million US dollars.
• 3:28
  Speaker 2: And be man, they had a thirteen percent slide in
• 3:31
  Speaker 2: car deliveries as well, which is their worst result since
• 3:33
  Speaker 2: twenty twenty two.
• 3:34
  Speaker 1: And while the cars haven't changed, the vibe around the
• 3:37
  Speaker 1: brand definitely has.
• 3:37
  Speaker 2: Yeah, plenty of people reckon Elon's political escapades have rubbed
• 3:41
  Speaker 2: Tesla buyers up the wrong.
• 3:42
  Speaker 1: Way, as well as a whole lot more competition in
• 3:45
  Speaker 1: this ev market.
• 3:46
  Speaker 2: Yeah, get this. Tesla sales dropped sixty percent in Germany
• 3:48
  Speaker 2: this January.
• 3:49
  Speaker 1: And they were down thirty percent here in Australia.
• 3:51
  Speaker 2: So be man. It's no surprise that Elon Musk will
• 3:54
  Speaker 2: now be stepping back from the US Government's Department of
• 3:57
  Speaker 2: Government Efficiency aka DOGE, and I'm in the back of
• 4:00
  Speaker 2: this news. Tesla's share price actually jumped five.
• 4:03
  Speaker 1: Percent because finally Elon can focus on Tesla and hopefully
• 4:06
  Speaker 1: for investors, stay away from the headlines. So what is
• 4:09
  Speaker 1: the key learning here When a CEO is a huge
• 4:12
  Speaker 1: part of their company's brand, that every move can shake
• 4:15
  Speaker 1: public opinion and perception for better or worse. In Tesla's case,
• 4:19
  Speaker 1: Elon Musk has ridden the highs and lows of Tesla
• 4:21
  Speaker 1: since it launched, Like the time he posted that he
• 4:23
  Speaker 1: would take Tesla private for four hundred and twenty US
• 4:26
  Speaker 1: dollars per share a.
• 4:27
  Speaker 2: Reference to smoking marijuana, all.
• 4:29
  Speaker 1: The time he threw a sledgehammer at his cyber truck
• 4:31
  Speaker 1: to demonstrate its bulletproofness.
• 4:34
  Speaker 2: Man. With his focus on DOGE the Government Department, investors
• 4:37
  Speaker 2: have grown concerned over his lack of focus.
• 4:39
  Speaker 1: And the impact that Doge is having on brand Musk.
• 4:42
  Speaker 2: Which is effectively brand Tesla.
• 4:45
  Speaker 1: So Jazi boy. Since Musk joined Donald Trump in the government,
• 4:47
  Speaker 1: Tesla's share price has taken a whack of near forty percent,
• 4:51
  Speaker 1: and these poor.
• 4:51
  Speaker 2: Profit announcements aren't building confidence in the brand either.
• 4:54
  Speaker 1: So clearly Muskie Musk understands its time to focus on
• 4:57
  Speaker 1: his companies before it's potentially too late.
• 5:00
  Speaker 2: For our third and final story, open Ai, the owner
• 5:03
  Speaker 2: of chat JPT, wants a slice of Google's Chrome if
• 5:06
  Speaker 2: Google's forced to sell Chrome by the courts.
• 5:09
  Speaker 1: Shots have been fire, Tell me more, juzzy boy.
• 5:12
  Speaker 2: Okay, so be man. We spoke last week about how
• 5:14
  Speaker 2: US courts have ruled Google has illegal monopolies.
• 5:17
  Speaker 1: Both in online search as well as advertising technology and.
• 5:20
  Speaker 2: Be man, Well, it's not clear what the outcome will
• 5:22
  Speaker 2: be from the judge. It could result in the breakup
• 5:24
  Speaker 2: of Google.
• 5:25
  Speaker 1: And now OpenAI has entered the chat Yeah.
• 5:28
  Speaker 2: Open AI's head of products said they'd be keen to
• 5:30
  Speaker 2: buy Google's Chrome if the court forced Google to sell it.
• 5:33
  Speaker 1: Now OpenAI says it previously offered to integrate Google Search
• 5:37
  Speaker 1: into chat JBT, but Google said nowe jose.
• 5:39
  Speaker 2: Yep we've got Gemini and be man. In the hypothetical
• 5:42
  Speaker 2: case that open ai did buy Chrome, it could be
• 5:45
  Speaker 2: a game changer.
• 5:46
  Speaker 1: Well, it would allow them to skip the middle man
• 5:48
  Speaker 1: like Google when it comes to getting customers.
• 5:51
  Speaker 2: So what is the key learning here?
• 5:52
  Speaker 1: Vertical integration happens when a company controls multiple stages of
• 5:56
  Speaker 1: its supply chain or product delivery.
• 5:59
  Speaker 2: Think of the example of a coffee company. If they're
• 6:01
  Speaker 2: vertically integrated, they might own the farm, the roastery, and
• 6:04
  Speaker 2: the cafe as well.
• 6:05
  Speaker 1: And for technology, it's when the company owns the backhand software,
• 6:08
  Speaker 1: the customer facing platform, and the underlying data as well,
• 6:11
  Speaker 1: and a man.
• 6:11
  Speaker 2: Google is the poster child for vertical integration.
• 6:14
  Speaker 1: It owns the Chrome browser, it owns the Android operating system,
• 6:17
  Speaker 1: it owns Google Search Engine.
• 6:19
  Speaker 2: And baman. That kind of integration is super powerful, but
• 6:22
  Speaker 2: it's also what regulators argue is anti competitive.
• 6:24
  Speaker 1: On the other hand, open ai right now relies on
• 6:27
  Speaker 1: partnerships to reach those users.
• 6:28
  Speaker 2: Through Microsoft's Edge browser or their iOS integrations.
• 6:32
  Speaker 1: So if OpenAI did acquire Chrome, it would gain a
• 6:35
  Speaker 1: direct user base, but b man.
• 6:37
  Speaker 2: It kind of feels like open ai would start building
• 6:40
  Speaker 2: its vertically integrated empire of its own.
• 6:42
  Speaker 1: So while this may sound good in theory, if you
• 6:44
  Speaker 1: bet that the regulators will be having none of this.
• 6:47
  Speaker 2: Buck sam Every single month your credit score gets updated,
• 6:50
  Speaker 2: to make sure to check it out. See your credit
• 6:52
  Speaker 2: score in April.
• 6:53
  Speaker 1: Thanks for listening, and we'll see you on Wednesday.