🛍️ Buy now, pay never?

…and the ethereum Merge could yield “security” status [Disclosures](   A case of the BNPL blues (Daniel Harvey Gonzalez/Getty Images)   Last Week’s Market Moves   Dow Jones 30,822 (-4.13%) S&P 500 3,873 (-4.77%) Nasdaq 11,448 (-5.48%) Bitcoin $19,740 (-7.64%) Dow Jones 30,822 (-4.13%) S&P 500 3,873 (-4.77%) Nasdaq 11,448 (-5.48%) Bitcoin $19,740 (-7.64%) Hey Snackers, The lightest Bud isn’t Light: it’s Zero. [AB InBev]( Budweiser is set to [promote]( its booze-free beer at the World Cup in Qatar this November/December, aiming to reconcile its role as the official beer sponsor of a tournament being held in a majority-Muslim country with strict alcohol laws. Stocks had their worst week since June after a disappointing inflation report and an [ominous warning]( from [FedEx]( heightened economic concerns. The techy Nasdaq index plunged a whopping 5.4% for the week. FedEx shares tanked 21% on Friday (its worst daily loss ever) after it announced major cost-cutting measures on softening demand. Btw... Do you want to start getting Snacks daily? Or prefer to unsubscribe? Manage your subscription preferences [here](. BNPL Regulators announce plans to crack down on BNPL giants, threatening their path to profits “Buy now” is the easy part… It’s the “pay later” that gets tricky. Buy now, pay later companies help you sport that $400 Aritzia coat now and pay for it later in monthly installments. BNPLs gained popularity by [positioning]( themselves as trendier credit-card alternatives for Gen Z — with fewer strings attached (think: no interest, just late fees). Now they’re facing serious heat, and they can’t deal with it later: - Regulated: Last week the Consumer Financial Protection Bureau [outlined]( plans to regulate BNPL businesses like Klarna, [Affirm]( [PayPal]( and [Block]( Afterpay. - Risky business: Regulators said BNPLs pose risks to consumers because they lack protections, harvest data, and encourage over-borrowing. - Credit rules: Officials plan to regulate BNPLs like credit-card companies, which means BNPLs may have to add pricey safeguards and do more credit checks. Boom earlier, crash later… BNPL giants thrived during the pandemic when interest rates were low and stimmy cash was flowing. BNPL loans jumped from $2B in 2019 to $24B last year (a 12X increase). But as the economy soured and IOUs increased, so did BNPL’s blues: - Gucci to grapes: Mid-pandemic, stimmy-flushed shoppers used BNPL for luxuries like Balenciaga bags. Now 15% of BNPL users are “buying now, paying later” for gas and groceries. - Missed payments: ’Flation-stressed folks are increasingly struggling to pay for necessities up front, and more BNPL users are racking up late fees — and failing to repay their loans. THE TAKEAWAY Pain now can mean gains later… BNPL’s looser-than-credit rules helped attract users. But now its lax policies are hurting the bottom line: despite soaring revenues, Affirm’s still unprofitable and Klarna’s losses tripled in the first half as bad debts mounted. Affirm shares are down 75% this year, while Klarna’s valuation dropped 85% in July. Now that BNPL staples face stricter rules (read: higher costs), it may be even more difficult for them to reach profitability short term. But regulation could help them reduce bad debt long term. Events Coming up this week... No Powell pause… aka: Pow-se. On Wednesday the Fed is expected to hike interest rates by a “jumbo” 75 basis points (or even 100) after August inflation came in [hotter]( than expected. Though it slowed from July, inflation was still up 8.3% from last year. The spooky numbers sent stocks tumbling to their worst day in two years. Analysts expected better results since gas prices fell, but food and rent kept rising. Now investors predict even more pain from the Fed chair, who’s committed to fighting #flation with aggressive hikes. Up in smoke… Cannabis sales are sparking upward worldwide, but not all sellers are feeling the high. Last quarter, Canadian pot giant [Aurora Cannabis]( saw its revenue drop 8% while losses 5X’d as it struggled to cut costs. In the US, canna-fans are starting to trade down for cheaper greens as inflation kills the buzz. Shares of Canadian cana-rivals [Tilray]( and [Canopy]( are down 50%+ this year as US legalization slows, while Aurora’s down 80%. We’ll see whether Aurora’s sales slumped (as analysts forecast) when it hashes out results tomorrow. Zoom Out Stories we’re watching... The Merge went smoothly… but there could be bumps ahead. [Ethereum]( successfully shifted from proof of work (energy-guzzling) to proof of stake (efficient) last week, eliciting relieved cheers from crypto fans. Now investors can stake their ETH to earn yield (think: interest), creating added incentives for crypto titans and hedge funds to [hold]( ether. But there could be trouble ahead: ethereum devs are warning of post-Merge bugs, and the SEC said Thursday that a crypto that allows people to stake coins and earn yield might be a [security](. Construction disruption… The pandemic housing boom has gone bust, and it could hit homebuilders hard. In July, new-home construction [fell]( 10% as soaring mortgage rates and high prices make homes less affordable. US home sales have [fallen]( for six months straight, and homebuilder confidence has [dropped]( for eight months (the worst slump since 2007’s collapse). But homebuilding giants [Lennar]( and [KB Home]( both of whom report Wednesday, posted rising sales last quarter and upheld their growth forecasts. That could be because inventory’s still tight. ICYMI Last week's highlights... - [Photoshop]( [Adobe]( agreed to buy design-software startup Figma for $20B — its largest acquisition by far. Cue: Adobe stock had its worst day since 2010, as investors worry that it’s overpaying to quash competition. - [Searched]( The EU ordered [Google]( to pay a record $4B after it lost its appeal to an Android-related antitrust ruling. Crackdowns abroad could increase pressure in the US, where tech regulation has stalled. - [iCharge]( [Goldman Sachs’]( loss rate on [Apple]( Card loans is the worst among major US credit-card issuers (read: problems with bad FICO scores). Banks with more subprime exposure would feel the hit of a recession first. What else we're Snackin' - [Yikes]( Mortgage rates surpassed 6% for the first time since 2008, pushing many hopeful homeowners out of the market. The typical monthly mortgage payment is now roughly $2.3K — up 66% from a year ago. - [VChina]( Chinese investments in US venture-capital funds are on pace to hit $880M this year, the second-highest level in over a decade. President Biden’s urging greater scrutiny of Chinese involvement, especially in chips and AI. - [Fix]( The superrich are hiring “fixers” (aka: luxury-lifestyle managers) to fulfill wild requests. Think: a one-of-a-kind [Mercedes]( impossible dinner reservations, or even an expedition to explore the Titanic. Want your Snacks daily? The Daily Newsletter Get fresh takes on financial news every week day. Try a sample: 👗 [Shein’s American dream]( • Sep 16, 2022 ☎️ [Google’s $4B anti-fine]( • Sep 15, 2022 🤢 [The inflation Grinch]( • Sep 14, 2022 [Subscribe to the Daily]( Snack Fact Of the Day The autumnal equinox — when day and night are the same length — will happen on September 22, marking the beginning of fall [Read more]( This Week - Monday: Earnings expected from AutoZone - Tuesday: Earnings expected from Stitch Fix and Aurora Cannabis - Wednesday: Fed’s interest-rate decision. Earnings expected from General Mills, Lennar, Trip.com, H.B. Fuller Co., and KB Home - Thursday: Jobless claims. Earnings expected from Costco, Accenture, FactSet, FedEx, and Olive Garden owner Darden - Friday: National Great American Pot Pie Day Authors of this Snacks own: ethereum and shares of Aurora Cannabis, Block, Canopy Growth, Apple, and Google ID: 2430617 Robinhood Snacks newsletters reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC (Member [SIPC]( and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are for informational purposes only, and are not a recommendation of an investment strategy or to buy or sell any security, digital asset (cryptocurrency, etc) in any account. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. 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