Latest / What the Flux / Amazon Australia's Prime position | Mars plans to sell sweet sweet bonds | Tesla becomes the new challenger to Uber

Transcript

Amazon Australia's Prime position | Mars plans to sell sweet sweet bonds | Tesla becomes the new challenger to Uber · What the Flux

• 0:05
  Speaker 1: This is what the Flux. I'm Brettan. I justin and Wednesday,
• 0:08
  Speaker 1: the fifth of March, Juzy boy, it's a sad day
• 0:10
  Speaker 1: for all the og Skype users. Microsoft has announced it
• 0:13
  Speaker 1: will be shutting down Skype this May after acquiring it
• 0:16
  Speaker 1: nearly fifteen years ago, or as they like to call it,
• 0:19
  Speaker 1: retiring the product. All Skypes colleagues must be chipping in
• 0:23
  Speaker 1: for its very large retirement gift.
• 0:27
  Speaker 2: Three and a half trillion dollars is in the superannuation
• 0:30
  Speaker 2: industry in Australia and the average Australian has more than
• 0:33
  Speaker 2: one and a half super funds. If you're sitting there
• 0:35
  Speaker 2: thinking that is me, there is only one place to go.
• 0:38
  Speaker 2: That is in the Flux Academy. This month ll we
• 0:40
  Speaker 2: color everything related to Superer, what it is, how to
• 0:42
  Speaker 2: use it and how to choose the super fun most
• 0:44
  Speaker 2: suitable for you.
• 0:45
  Speaker 1: Make sure to go to the Academy this month to
• 0:46
  Speaker 1: check it all out. Three colorful stories today, Juzzy boy,
• 0:49
  Speaker 1: let's do it for our first. Amazon Australia has seen
• 0:52
  Speaker 1: this revenue jump to seven point seven billion bakarunis in
• 0:56
  Speaker 1: the last financial year, which is up nearly twenty percent
• 0:59
  Speaker 1: compared to last year, the.
• 1:00
  Speaker 2: Zon arriving at the doorstep of serious dominance. B Man,
• 1:03
  Speaker 2: So tell me more.
• 1:03
  Speaker 1: Well, juziboy, we know the Zon started in nineteen ninety
• 1:07
  Speaker 1: four as a humble online bookseller, didn't make.
• 1:10
  Speaker 2: A profit for many years, back when being an unprofitable
• 1:12
  Speaker 2: company was not cool.
• 1:14
  Speaker 1: Now, Amazon launched in Australia in twenty seventeen, and while
• 1:17
  Speaker 1: they did start pretty quietly, they've spent a lot of
• 1:20
  Speaker 1: money building up that brand. Here.
• 1:21
  Speaker 2: In fact, be man, Amazon spent around twenty billion dollars
• 1:24
  Speaker 2: investing in Australia.
• 1:25
  Speaker 1: Seems to be paying off for the zone. Now. It's
• 1:28
  Speaker 1: local revenue jumped nearly twenty percent. It's e commerce business
• 1:31
  Speaker 1: in Australia jump twenty three percent. How about that cloud
• 1:34
  Speaker 1: computing division aws up eighteen percent. But the winner winner
• 1:37
  Speaker 1: Chicken Dinner was Amazon Prime. Yeah, Amazon's Prime loyalty subscription
• 1:42
  Speaker 1: program jump thirty nine percent just for the last year.
• 1:45
  Speaker 2: And b Man, Amazon law, Amazon's loyalty program is the
• 1:47
  Speaker 2: subscription service that just keeps on delivering literally and financially.
• 1:51
  Speaker 1: So what is the key learning here?
• 1:53
  Speaker 2: Loyalty programs do more than just keep your customers loyal.
• 1:56
  Speaker 2: They keep your customers spending.
• 1:57
  Speaker 1: Get this one, juzy boy. Amazon Prime members sped around
• 2:00
  Speaker 1: one thousand bucks per year on Amazon.
• 2:03
  Speaker 2: Oh, non Prime members spend between one hundred and five
• 2:05
  Speaker 2: hundred dollars.
• 2:06
  Speaker 1: And that's the beauty of Amazon's loyalty program.
• 2:08
  Speaker 2: Yeah, not only does it generate four hundred and eighty
• 2:10
  Speaker 2: million dollars in revenue in Australia alone, but it's a
• 2:13
  Speaker 2: full blown customer spending booster.
• 2:15
  Speaker 1: They're on top of that, Amazon has a ninety three
• 2:18
  Speaker 1: percent retention rate of Amazon Prime, and that is after
• 2:21
  Speaker 1: the first year.
• 2:22
  Speaker 2: And they man that's why so many other companies have
• 2:24
  Speaker 2: tried to replicate Amazon Prime's loyalty program. You've got Uber
• 2:27
  Speaker 2: with Uber one, West Farmers with one, Pass, Coals has
• 2:30
  Speaker 2: its Coals Plus.
• 2:31
  Speaker 1: And Cogan with its cogud one as well. And while
• 2:33
  Speaker 1: it took a while for Amazon to hit its full
• 2:35
  Speaker 1: potential in Australia, you can now see why it's starting
• 2:38
  Speaker 1: to squeeze out local e commerce players.
• 2:41
  Speaker 2: For our second story, mar Zinc, the snack and sweets giant,
• 2:44
  Speaker 2: is planning to sell twenty five to thirty billion US
• 2:47
  Speaker 2: dollars worth of bonds next week to finance its takeover
• 2:50
  Speaker 2: of Kelenoba.
• 2:51
  Speaker 1: This deal looking extra chewy. Tell me what's going on here? Okay?
• 2:54
  Speaker 2: So, mar Zinc is the family owned human food, pet
• 2:57
  Speaker 2: food and snacking behemoth.
• 2:59
  Speaker 1: Started way back nonineteen eleven in the US of eight
• 3:01
  Speaker 1: and is the owner of some of the mega food
• 3:03
  Speaker 1: brands globally.
• 3:04
  Speaker 2: We'd be talking Mars Bar obviously, and Milky Way, Mars's
• 3:07
  Speaker 2: arch nemesis.
• 3:08
  Speaker 1: Not to forget Maltese's Eminem's TwixT Delicious and Extra Chewing Gum.
• 3:13
  Speaker 2: And let's not forget that Mars is fueling our four
• 3:15
  Speaker 2: legged friends as well with pet foods like Whiskers and
• 3:17
  Speaker 2: Royal Cannon.
• 3:18
  Speaker 1: But Josie woit. In August last year, Mars announced they
• 3:20
  Speaker 1: would acquire Kelenova for thirty five point nine billion bucks
• 3:24
  Speaker 1: US dollars may add in an all cash deal.
• 3:26
  Speaker 2: Arue Kellanova's the owner of Pringles and pop Tarts, Nutra Grain,
• 3:29
  Speaker 2: Elsiembars and Josie.
• 3:31
  Speaker 1: How are pop tarts these days? Are they still good? Delicious?
• 3:34
  Speaker 2: And this combined company will be one of the top
• 3:36
  Speaker 2: five package food and beverage companies in the whole wide world.
• 3:39
  Speaker 1: Wait, someone's got to fund these pop tarts and this deal. Yep.
• 3:42
  Speaker 2: So now Mars is planning to sell up to thirty
• 3:45
  Speaker 2: billion US dollars of bonds in order to pay for Kelenover.
• 3:48
  Speaker 1: And if this lands, this bond offering could become one
• 3:51
  Speaker 1: of the largest M and A financing deals since twenty thirteen. Interesting,
• 3:55
  Speaker 1: So what is the key learning here? When it comes
• 3:57
  Speaker 1: to funding an acquisition, businesses have three main option.
• 4:01
  Speaker 2: Option one pay for it with the cash that they
• 4:03
  Speaker 2: have on hand, but when we're talking tens of billions
• 4:05
  Speaker 2: of dollars that becomes pretty rare.
• 4:06
  Speaker 1: Or Option two raise capital for the acquisition by issuing
• 4:10
  Speaker 1: new shares.
• 4:11
  Speaker 2: When a company creates new shares and dilutes the current ownership.
• 4:14
  Speaker 1: And option three would be debt financing like a loan or.
• 4:16
  Speaker 2: Bondsman Corporate bonds are a very common way for large
• 4:19
  Speaker 2: companies to raise the capital without diluting their ownership, and.
• 4:23
  Speaker 1: When a company issues bonds, it's essentially taking a loan
• 4:25
  Speaker 1: from investors.
• 4:26
  Speaker 2: They promised to pay interest known as coupon payments, and
• 4:28
  Speaker 2: eventually return the principal amount at the maturity of the bond.
• 4:32
  Speaker 1: And jazaweight bonds are often used to finance major acquisition.
• 4:35
  Speaker 2: Remember when Microsoft sold nearly twenty billion dollars worth of
• 4:38
  Speaker 2: bonds to fund its LinkedIn acquisition.
• 4:40
  Speaker 1: Or when Anheuser Busch in BEV issued forty six billion
• 4:43
  Speaker 1: US dollars of bonds that was to finance its acquisition
• 4:46
  Speaker 1: of sab Miller.
• 4:47
  Speaker 2: So Aman Masses already masters the chockey game, and this
• 4:51
  Speaker 2: bond financing will give it a serious play for the
• 4:53
  Speaker 2: snack throne as well. For our third and final story,
• 4:56
  Speaker 2: Tesla is now taking steps to launch a ride sharing service.
• 4:59
  Speaker 2: It could compete directly with Uber Lift and weimo.
• 5:03
  Speaker 1: Genuine question, is there anything Tesla won't spook at one
• 5:06
  Speaker 1: stage or another? Tell me more, okay?
• 5:09
  Speaker 2: So, Tesla is the electric car giant that was founded
• 5:11
  Speaker 2: in two thousand and three and launched the world's first
• 5:13
  Speaker 2: mass market electric vehicle, the Model three.
• 5:16
  Speaker 1: Now Elon Musk, one of the co founders of Tesla,
• 5:18
  Speaker 1: has tested everything under the sun with Tesla, from the
• 5:21
  Speaker 1: bulletproof cyber truck to AI powered Optimus robots.
• 5:25
  Speaker 2: But now, be man, he's gone one further because Tesla
• 5:28
  Speaker 2: has filed a charter party carrier permit in the US.
• 5:31
  Speaker 1: Essentially, this is a license that will allow Tesla to
• 5:35
  Speaker 1: own and operate a fleet of ride sharing cars and
• 5:38
  Speaker 1: be Man.
• 5:38
  Speaker 2: We know that Musk has spoken about an autonomous ride
• 5:41
  Speaker 2: sharing network for about ten years.
• 5:42
  Speaker 1: Been interestingly Jose boyit the license that they applied for
• 5:46
  Speaker 1: will have human drivers that is so twenty eleven, with
• 5:50
  Speaker 1: a plan to shift to full self driving at some
• 5:52
  Speaker 1: stage in the future. And be Man.
• 5:53
  Speaker 2: We know that Tesla's castles fell by more than forty
• 5:56
  Speaker 2: four percent in January this year.
• 5:57
  Speaker 1: And its dock price has dropped around this year, so
• 6:01
  Speaker 1: it's clear why.
• 6:01
  Speaker 2: It's trying to push into the ride sharing market. So
• 6:04
  Speaker 2: what is the key learning here?
• 6:05
  Speaker 1: When a company's core business slows down, it often needs
• 6:08
  Speaker 1: to find new ways to grow, grow, grow.
• 6:10
  Speaker 2: Think about it, by Man. Ride sharing is kind of
• 6:12
  Speaker 2: a natural extension for Tesla.
• 6:13
  Speaker 1: Well, it already has the cars, and it has brand
• 6:15
  Speaker 1: loyalty even if it is declining. And be Man. By
• 6:18
  Speaker 1: jumping into ride sharing, Tesla can build a new revenue stream,
• 6:21
  Speaker 1: but also begin playing around with its self driving ambition.
• 6:23
  Speaker 1: And be Man.
• 6:24
  Speaker 2: We've seen other companies like Apple expand into new industries
• 6:27
  Speaker 2: when their primary market's matured Yeap.
• 6:29
  Speaker 1: Apple moved from iPhones into services like Apple Subscriptions and
• 6:32
  Speaker 1: Apple TV Plus, which now makes up more than twenty
• 6:35
  Speaker 1: one percent of its total revenue, so it's clear that.
• 6:38
  Speaker 2: Tesla is planning a ride sharing service as a stepping
• 6:40
  Speaker 2: stone towards its autonomous taxi dream Flex Am, do you
• 6:43
  Speaker 2: know what your superfund returned last year on your superbalance? Well,
• 6:47
  Speaker 2: if you don't, there is a lot to know and
• 6:49
  Speaker 2: a lot to consider. We have it all covered in
• 6:51
  Speaker 2: the Flux Academy this month. Make sure to download the
• 6:53
  Speaker 2: Flux app to check it all out.
• 6:55
  Speaker 1: Thanks for listening, and we'll see you on Friday.