🚘 Toyota’s testing scandal

…and Dollar Tree might trim its branches   Hold my Prius (Yuichi Yamazaki/Getty Images)   Sponsored by Yesterday’s Market Moves   Dow Jones 38,807 (+0.25%) S&P 500 5,354 (+1.18%) Nasdaq 17,188 (+1.96%) Bitcoin $71,164 (+0.88%) Dow Jones 38,807 (+0.25%) S&P 500 5,354 (+1.18%) Nasdaq 17,188 (+1.96%) Bitcoin $71,164 (+0.88%) Hey Snackers, Ikea’s [offering]( 10 people $16/hour to work at its upcoming Roblox virtual store. Someone’s gotta serve the digital meatballs. The S&P 500 climbed to a fresh record yesterday after Nvidia’s market cap crossed $3T for the first time. The chipmaker [dethroned]( Apple as the second most valuable US company, trailing only Microsoft. Brake Toyota’s safety-test scandal dents the auto industry’s already ailing rep Tokyo vise… Japanese auto authorities are [clamping]( down on Toyota, the world’s biggest carmaker by volume, over falsified safety-certification tests. It’s part of a regulatory sweep of Japan’s auto industry (the fourth largest) that also found that Honda, Mazda, Suzuki, and Yamaha all used incorrect or manipulated data. In response, Toyota and Mazda said they’d halt shipments of some vehicles, and Yamaha stopped shipping one of its motorcycle models. Carmakers said that vehicles already on the road were safe to drive. - Bow: Toyota Chairman Akio Toyoda (the grandson of Toyota’s founder) bowed as he apologized to customers, saying, “These acts shake the very foundations of the certification system.” Check-engine light… Japanese regulators have the entire industry in the shop for a checkup. It all started last year when Toyota subsidiary Daihatsu was found to be undermining certifications by, for instance, copy-pasting test results taken from one side of the car to the other. That kicked off an investigation of nearly 90 manufacturers’ certification procedures. Before Daihatsu, airbag maker Takata rocked the industry after its falsification of safety-test data led to recalls of 67M airbags. And before that, Volkswagen’s faking of emissions data in 2015 (#dieselgate) resulted in the automaker paying $25B in fines. - Recalls jumped by nearly half in the decade to 2022. With analysts saying car production has become increasingly complicated, automakers looking to keep costs down might cut corners — especially in Japan, where testing requirements are especially rigorous. THE TAKEAWAY Scandals shake confidence… and confidence matters a lot more for a car than a Shein tube top. While the certification scandal probably won’t rattle revenue much, a loss of confidence could hurt auto companies in the long run. It could ding legacy carmakers that tout their manufacturing mastery as a selling point over newbies like Tesla (which has also seen recalls pile up). Sponsored by EnergyX The Lithium Boom Did you know It takes 10,000 iPhone batteries worth of Lithium to make 1 EV? With over 350M+ EVs projected to be sold globally by 2030, demand for Li is projected to soar and current extraction methods won’t be able to meet the demand. So when [EnergyX revealed that their technology could extract 300% more lithium than traditional methods]( investors everywhere took note. They’ve inked deals with top lithium producers including POSCO who is building a 100k ton/year plant, secured a $50M strategic investment from GM, and won a $5M DOE grant. Most recently, they acquired a 90,000-acre mining asset with up to 5.5M tons of lithium. Now, [EnergyX is accepting investors for a limited time.]( This is a unique opportunity to invest on the ground floor as the company is set to unlock a massive lithium supply. [Learn more about becoming an EnergyX shareholder here.]( DISCOUNT Dollar Tree is considering a sale of Family Dollar as retailers feel a trade-down squeeze One big unhappy family… Nearly a decade ago, discount retailer Dollar Tree added Family Dollar to its family tree, buying the brand for $8.5B. Now the $25B bargain biz is signaling it’s time for Family Dollar to move out: Dollar Tree’s [exploring]( spinning off or selling the chain as it struggles to compete with Dollar General. Family Dollar has weighed down Dollar Tree’s branches: yesterday Dollar Tree reported that Family Dollar’s same-store sales grew just 0.1% last quarter (and while they have nearly the same # of stores, Dollar Tree contributes 14x more operating income). Family Dollar has become a problem child: - Ratadealie: This year Family Dollar was fined $42M (the largest-ever monetary food-safety penalty) for knowingly distributing food and other items from a warehouse hosting rats and birds (both living and dead). - Bargain-binned: Dollar Tree announced in March that it would close about 1K Family Dollars. Experts said many were understaffed, in poor condition, and too close to one another. Since 2018, OSHA has fined Dollar Tree $13M+. Competition is measured in cents… Inflation has boosted discount specialists as shoppers hunt for deals. Dollar General is the fastest-growing US retailer with 18K stores. Recently, major chains including Target, Walmart, Walgreens, and Amazon Fresh have discounted thousands of products to win back thrifty shoppers. Competing on price has become more important after SNAP benefits (aka food stamps) were reduced last year, leaving some families with $250 less per month. That’s less $$ to spend at Dollar Tree and other go-to retailers for shoppers with low incomes. THE TAKEAWAY If you can’t love something, set it free… Consumers are balking at high prices, and April retail sales came in well below expectations. That’s a ripe environment for low-price retailers, but analysts have said that Family Dollar is hurting Dollar Tree’s ability to reap the rewards. Despite demand for deals, Dollar Tree’s shares are down about 19% this year. What else we're Snackin' - [Zen]( Lululemon shares stretched 11% after the leggings legend raised its profit forecast and announced $1B more in stock buybacks. While Lulu’s Q1 sales were flat in North America, they jumped 25% overseas. - [Panshopticon]( TJX’s chains including TJ Maxx and Marshalls require some workers to wear body cams (goal: “deter crime”). In one survey, 35% of retailers said they were considering body cams. - [AIpple]( Apple is said to have teamed up with OpenAI to bring ChatGPT to the iPhone. Potentially driving the deal: data suggests the iMaker hasn’t kept pace with its rivals in the race to hire AI-software devs. - [Stale]( Campbell’s snack biz (think: Goldfish, Milanos, Kettle chips) is getting crunched as consumers cut back on extras. While Campbell’s meals and bevs biz grew 15% in Q3, snacks fell 2%. - [Hawt]( Texas’ economy has been red hot as corporate biggies like Tesla and Oracle move in for lower taxes and “more favorable” regulations. Now the Lone Star State’s looking to open a national stock exchange. Snack Fact Of the Day There are more US job openings than there are unemployed Americans [Read more]( Thursday - Weekly jobless claims - D-Day - Earnings expected from Nio Inc., Big Lots, Toro, JM Smucker, ABM Industries, DocuSign, Rent the Runway, and Vail Resorts Authors of this Snacks own shares of: Amazon, Apple, Microsoft, Nvidia, Tesla, and Walmart Advertiser’s Disclosure: *Past performance is no guarantee of future results. Start-up investments are speculative and involve a high degree of risk. Those investors who cannot afford to lose their entire investment should not invest in start-ups. Companies seeking startup investment tend to be in earlier stages of development and their business model, products and services may not yet be fully developed, operational or tested in the public marketplace. There is no guarantee that the stated valuation and other terms are accurate or in agreement with the market or industry valuations. Further, investors may receive illiquid and/or restricted stock that may be subject to holding period requirements and/or liquidity concerns. This is a paid advertisement for EnergyX’s Regulation A+ Offering. 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