🔋 Exxon’s electric hedge
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Hey Snackers,
A cargo pilot had to whip a U-turn back to NYC last week after a horse got loose in the plane’s cargo hold. Which, come on: if you’re going to fly your horse, at least seat ’em in stagecoach.
Stocks ticked up yesterday as investors continued to ride the high of Tuesday’s softening inflation #s. Meanwhile, fresh data showed that retail sales slipped slightly last month.
Exxon hedges its big oil bet by investing in lithium, a key ingredient of the EV future
Power move… Exxon is expanding its non-oil investments to mining the metal used in electric-vehicle batteries: lithium. The energy giant aims to start mining lithium in Arkansas in 2027, and plans to become one of the world’s top producers by ramping up production to ~100K tons by 2030. Though Exxon is known for fossil fuels, fun fact: Exxon scientists invented the lithium-ion battery (now used in EVs) in the ’70s, but stopped making batteries shortly after. The oil co’s return to the biz may be surprising after recent events:
Exxon recently bought oil producer Pioneer Natural Resources for $60B. Experts saw it as a sign that energy titans (including Chevron, which recently bought rival Hess for $53B) are betting on a fossil-fuel-filled future (say that 5x fast).
Two futures… The International Energy Agency predicts that lithium usage will 40x from 2020 to 2040 as drivers shift from gas-powered → electric. The Biden admin’s also bullish on an e-future: yesterday it announced a $3.5B fund for manufacturing lithium and other advanced batteries. But carmakers like GM and Ford have reined in ambitious EV production goals, citing consumer demand that isn’t accelerating fast enough. Lithium prices have slumped from record highs in 2022 (when many were snapping up the metal), but producers say the market wobbles are just “road bumps.”
It’s the “why not both?” approach... Exxon’s version of wanting both hard- and soft-shelled tacos is betting on oil- and electric-powered futures. Its lithium bet could be a self-fulfilling prophecy: Exxon’s US-mined lithium will likely be cheaper than the int’l imports the industry currently relies on (Exxon plans to use a new, faster mining method). That could make EVs cheaper for price-conscious buyers. Exxon said lithium demand is expected to 4x by 2030.
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Racking up poor showings, Disney’s Marvel faces superhero franchise fatigue
Avengers disassembling… Marvel movies have averaged 17% of US box-office sales in recent years. But after raking in $30B over 15 years, Disney’s Marvel Studios is struggling to overcome its latest bad guy: franchise fatigue. The MCU just logged its worst-ever opening weekend with “The Marvels,” pulling in $47M domestically on a $250M budget. Days ahead of the flop, Disney boss Bob Iger diagnosed the studio with a quantity-over-quality problem. Now Marvel’s slashed its 2024 releases from three to one.
Bleak-quels: “The Marvels” is a follow-up to “Captain Marvel,” which was anything but a flop, earning $100M more in its first weekend than its sequel. The latest “Thor” and “Ant-Man” movies rank among the MCU’s worst-reviewed flicks.
Delay-Man: The next “Captain America” has been pushed nine months, while “Blade” — originally planned for this year — is scheduled for 2025 on a tight (for Marvel) $100M budget.
Headwinds: The director of Marvel’s 2023 bright spot, “Guardians of the Galaxy 3,” is now running rival Warner Bros.’ DC Studios. Meanwhile, Jonathan Majors (the MCU’s next star villain) is facing a high-profile trial over assault charges.
Spandex can only stretch so far… In case you haven’t noticed, Marvel’s pretty prolific. The studio’s released at least three films a year since 2016 (exception: 2020). Catching up on the MCU (33 films, ~22 series) would take a new fan 5+ days. Pressuring the pace: a Disney mandate that there should never be a lapse in new superhero content. The resulting workload led to critically panned CGI, and Marvel’s VFX workers voted to unionize in August.
Even superheroes need time off… Poor openings and bad reviews reflect a loss of brand trust from once obsessive Marvel fans that has Disney worried. The entertainment powerhouse is betting that more distance between releases can give audiences and creatives a chance to recover from spandex burnout.
What else we’re Snackin’
Bull’s-eye: Target stock popped after it reported that Q3 profit grew 36%. Still, sales ticked down as inflation, debt, and interest rates put a damper on discretionary splurges like onesies and pumpkin candles.
Chipping: Microsoft said it’ll release a new AI chip to power its own AI apps and its cloud customers’. The move could help the ChatGPT investor reduce its dependence on Nvidia’s chips, which dominate the market.
Rack: TJX’s quarterly sales rose 9% as discount seekers scoured its TJMaxx and Marshalls racks for affordable treasures. TJX raised its guidance, expecting a strong (discount) holiday shopping szn.
Snip: Meta said it plans to allow Threads users to delete their accounts without being forced to delete their Instagram. The X rival saw users plummet after an initial boom, but still gets 100M monthly active users.
2for1: Last month, home sellers offered concessions (like cash for repairs) to buyers in 35% of sales, up from 28% a year ago. Freebies may help speed sales as 23-year-high mortgage rates drag on the market.
Thursday
Earnings expected from Alibaba, Walmart, Macy’s, Warner Music Group, Dole, Ross, and Gap
Authors of this Snacks own shares of: Disney, GM, Microsoft, Nvidia, Walmart, and Warner Music Group
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