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🎧 Joe Rogan just signed another $250mn deal with Spotify. February 9, 2024 | Peel #644 Silver Banana goes to... [CapLinked. ]() In this issue of the Peel: - 💀 The U.S. might raise tariffs on Chinese imports?! - 🌟 Disney’s Mouse House is going to become a Mouse Mansion… - 🎧 Joe Rogan just signed another $250mn deal with Spotify. Market Snapshot 📸 = Banana Bits 🍌 - For the first time in history, the S&P 500 [hit 5,000 intraday](… now we’re just waiting for it to close there - Pinterest [followed Snap’s earnings](=) playbook instead of Meta’s - Despite the fears, credit and debit card spending [are still normal]( - Big Dawg Joey B is now legally getting put on blast for his [“bad memory”](=) Open a Caplinked Enterprise VDR and Become a Coachella VIP What sounds better: drinks with a VDR salesman or your VDR provider sending you on an all-expenses paid VIP trip to Coachella? If you didn’t pick Coachella, there’s nothing we can do for you (except maybe judge you a little bit). For those who are into having a great time, CapLinked is literally sending you to Coachella. And not just some choke-on-dust tickets either. We’re talking the VIP package, with exclusive food and drink vendors, shaded lounges, and even air-conditioned restrooms. All you have to do is sign up for an Enterprise VDR and you’ll be out partying like (and maybe even with) a rockstar. [Here’s how to claim your wristbands.]() Macro Monkey Says 🐒 The Dragon and The Eagle Two countries, both alike in dignity—over the fair Pacific, where we lay our scene… Alright, that’s about all the Shakespeare I know, so I promise I’ll stop there. But like Romeo and Juliet, no amount of rules, effort, or finger-waving from ostensibly asexual parents can keep the U.S. and China apart. Hateful Marriage or Loving Divorce? Tariffs, export restrictions, and a U.S. presidential election in 2024—oh my, indeed. We all know the U.S. and China like to pretend as if they don’t get along. But decades of enormous trade activity and economic partnerships suggest otherwise. However, in recent years, particularly since the Donnie T administration began in 2016, an economic decoupling fitting with the prevailing adversarial narrative of the two nations seems to have actually started to unfold. And we can see this below: [Source](=) Yet, this economic decoupling might exist only on paper. Trade deficits occur when Country A imports more goods from Country B than it exports to Country B. And in recent years, the U.S.’s trade deficit with China has reached record lows. That means the U.S. is buying a lot more goods from China than China is from the U.S. Tariffs and other trade barriers imposed by President Donnie T still exist and don’t seem to be doing much to stop the flow of Chinese goods into the U.S. But Donnie T is apparently ready to kick it up a notch. 60% Tariffs? As reported by [the WSJ](), the leading Republican presidential candidate has now floated a 60% tariff—or surplus charge—on Chinese goods coming into the U.S. in order to reduce the dependency of American buyers on goods from China. The current 25% rate has done little. And, even the effect it has had, such as increasing U.S. imports from countries like Mexico and Vietnam, still can’t get away from China. This is because many of the intermediate goods (a.k.a. goods used in the production of other goods) that manufacturers in Mexico and Vietnam use to produce goods and then sell to the U.S. come from China anyway. The deficit might be growing, but it’s basically only on paper. Who Cares? Well, you should. Countries that trade with each other are generally less likely to blow each other up, history shows, even if only by a marginal amount. We’ll take marginal when the two sides have a total of 5,744 nuclear warheads (that we know about), but there’s more to it than just the collapse of civilization. China relies on exports like Uncle Sam relies on you racking up credit card debt to drive GDP growth. In order to keep their goods competitive on the global stage and particularly with the world’s largest customer—the U.S.—other measures may take place. [Source]() The most famous and frequent move in order to do so is lowering the value of China’s currency, the yuan. Government officials will reduce the relative value of the yuan in order to make Chinese goods cheaper to international buyers. Now, China is seeing domestic purchasing power plummet as well, with deflation hitting its [fastest rate in 15 years in January](. [Source]() There’s a lot contributing to this beyond just trade woes with their former/future spouse in the U.S., including: - A declining population - High unemployment among Chinese youths - Real estate sector trouble in recent years, and - Lingering impacts of the country’s “zero-C-19” policy Regardless of the cause, however, it’s clear the world’s second-largest economy and second-most populous country hasn’t been able to effectively resolve economic issues just yet. And a 60% tariff on Chinese goods to the U.S. sure won’t help either. The Takeaway? The tension oozing out of international trade dynamics between the U.S. and China is off the charts. This is great when it comes to not blowing each other up, but leaders on both sides of the Pacific aren’t exactly keen on mending the relationship. This could spell very bad news for China and likely would have some non-ideal ramifications in the U.S. as well, but it could be great for growing manufacturing powerhouses like Mexico, India, Vietnam, and others. Place your bets now. What's Ripe 🤩 Arm Holdings (ARM) 📈47.9% - After years of going to the gym, my arms haven’t come close to growing 48%. Arm Holdings did that in a single day. Anyone got steroid recs? - The chip designer soared thanks to Q4 sales of $824mn, dominating estimates, along with an EPS beat. Guidance for $900mn in Q1 blew ‘em away as well. - Does the AI boom have a new leader? Potentially, as Arm’s forward P/E is more than double Nvidia after Thursday's boom. Disney (DIS) 📈11.4% - Looks like Mickey has decided to actually make some money off his streaming service. Disney+ slashed losses last quarter and gave itself—along with the [WSO Alpha]( portfolio—a big day of outperformance. - EPS at the Mouse House came in at $1.29/sh vs the $0.99/sh expected, while revenue missed just slightly amid an ongoing proxy battle with Nelson Peltz. - Disney also announced a $1.5bn bet on Epic Games along with teasing us with the launch of ESPN’s own streaming service in late 2025. What's Rotten 🤮 PayPal (PYPL) 📉11.2% - Solid quarterly numbers don’t mean sh*t to Wall Street without the right projections for the future. PayPal learned that the hard way. - Yesterday, the payments firm was anything but your pal as EPS and revenue both beat, yet guidance for flat 2024 earnings threw cold water on any hype. - Plus, account growth saw a measly 2% in the final quarter of 2023, with monthly active users actually falling annually, although only 0.6%. New York Community Bancorp (NYCB) 📉6.5% - Roller coasters are supposed to be fun, but not for NYCB. Shares suffered again on Thursday after a brief rise on Wednesday thanks to a rocky CRE market. - A day after appointing a new executive chair and a meeting with analysts, fears of loan losses related to office and other properties dominated again. - Turns out the fat quarterly loss posted last week and the enormous cash pile set aside for loan losses couldn’t be ameliorated with a motivational speech. = Thought Banana 🤔 The $250mn* Man From humping stools on stage to watching Fear Factor contestants choke down deer testicles, and now getting drunk with comedians, professional fighters, and Elon Musk on the world’s largest podcast—by far—Joe Rogan has had quite the career. The bald leader of the invasion of Austin, Texas, by (former) Californians, just added a new title to his LinkedIn profile—Spotify’s favorite toy. The Joe Rogan Experience inked a new deal with their real mothership over this past weekend, one that could be worth upwards of $250mn according to estimates. But… we gotta put a BIG asterisk next to that $250mn number. Here’s why: What Happened? Over the past 5yrs or so, Spotify has spent over $1bn on building a podcasting empire. Tens of millions of dollars were paid out to massive shows and stars, such as $60mn to Alex Cooper of Call Her Daddy, $20mn to the insufferable Meghan Markle and Harry what’s-his-name, and most of all, >$100mn to podcasting Papa Joe Rogan. Hinging these deals on exclusive distribution on their platform, Spotify has become far and away the largest audio streaming service on Earth, with much of their booming growth led by Papa Rogan himself. [Source]( But now, the game has changed. Originally, Spotify’s strategy hinged on exclusivity—forcing fans of podcasts like JRE and a myriad of others to subscribe to their service in order to access full episodes. That strategy seemed to work out in terms of building an audience, but now, it’s time to make some money. What’s Happening? Rogan’s original Spotify deal, signed in May 2020 and estimated at the time to be worth $100mn (now confirmed to be worth>$200mn), has just hit its expiration date. Instead of breaking up, Rogan and Spotify have opted to renew their vows, but under different terms. Doing away with exclusivity, Spotify’s new deal with JRE centers on a new way to rake in Rogan’s revenue: ad sales. Little detail has been released publicly on this new deal, but a few facts are clear: - It includes an upfront payment from Spotify to Rogan, along with a - 50/50 split of ad sales on JRE across all platforms the show is published The shift from exclusivity to ad sales signals a few things. Some potential reasons could include: - Exclusivity did not drive subscriber conversions at the rate Spotify was hoping for - Spotify wants to spread out the nonsense it receives for alleged misinformation from Rogan and his guests - The audio platform feels the global podcasting audience has grown large enough that they can make more from ad sales than subscriptions - A realization on Spotify’s part that brands play little role in deciding which platform to stream audio on - Rogan did not want to be limited to publishing full episodes solely on Spotify What’s Going To Happen? With 574mn monthly active users, 236mn of which are Premium subscribers, Spotify’s popularity has skyrocketed from 271mn total and 124mn subscribers at the end of 2019. Monetization of the platform has gone well at the same time, but this recent action by CEO Daniel Ek and the rest of the firm’s management signals a shift in strategy. Podcasting is a rare medium in which suffering through advertisements isn’t considered “suffering” nearly to the same degree as other mediums: [Source]( Study after study shows that podcast listeners—largely due to feeling a “relationship” or even a “friendship” with the hosts of their favorite podcasts—actually don’t mind ads. Unlike other mediums, podcasting feels like a friend recommending something to you. Given the effectiveness of these ads, podcasting platforms can charge more to advertisers per unit of listeners. So, it could be that Spotify has decided that they prefer a reliance on effective ad sales as opposed to forced subscriptions with low conversion rates. Now, the only question is—how much of that $250mn is Jamie getting? 💭 The Big Question 💭: Are you buying Spotify shares after this? Do you think Rogan made the right choice to stick with Spotify, or should he have gone independent? What’s next in the world of audio streaming? Banana Brain Teaser 💡 Yesterday 🗓 Of all the students in a certain dormitory, ½ are first-year students and the rest are second-year students. If ⅘ of the first-year students have not declared a major and if the fraction of second-year students who have declared a major is 3 times the fraction of first-year students who have declared a major, what fraction of all the students in the dormitory are second-year students who have not declared a major? Answer: 1/5 Today 🕐 If the average (arithmetic mean) of x, y, and z is 7x and x does not equal to 0, what is the ratio of x to the sum of y and z? Send your guesses to vyomesh@wallstreetoasis.com Wise Investor Says 🤓 “I see money as freedom. I see it as a way to control your environment, to buy your own time back.” — Joe Rogan How Would You Rate Today's Peel? 😁[All the bananas](=) 😐[Meh](=) 😩[Rotten AF]() Happy Investing, David, Vyom, Jasper & Patrick [ADVERTISE](=) // [WSO ALPHA]( // [ACADEMY](=) // [COURSES]() // [LEGAL](=) [Unsubscribe]( IB Oasis Corp. (aka "Wall Street Oasis") 20705 Saint Charles St Saratoga, California 95070 United States (617) 337-3353