February 15th, 2023

Good Morning!

Today's article is brought to you by: 95% human and 5% AI

Banger Tweet of the Day

I'm glad Dr. Patel BA, CFA, ACCa Esq. got himself a baddie.

Market Update

📈📉 It seems that nobody really knew what to make of the January inflation print - Stocks started the day up, then turned negative, and finally ended the day flat as  Headline Inflation (CPI) came in at 6.4%. 

The tech-heavy NASDAQ still finished positive 💪

Biggest Movers

🟢 🚗 Tesla finished yesterday up 7.5% on a rating upgrade from Barclays. News of Tesla workers launching a union campaign also hit the wire late yesterday afternoon.

🟢 🏘 Airbnb jumped 10% after hours after reporting Q4 results. More below. 

Inflation Softens Slightly, Causing Mixed Reactions from the Market

Inflation started the year in small decline as the January print came at 6.4%, just .1% below December numbers.

The Good:

• January marked the seventh straight monthly decline in headline inflation since its 9.1% peak in June. 

• Measures that exclude volatile or lagging data (food, shelter, energy) are showing much better trends than the January headline suggests.

The Bad: The declines are declining - On a monthly basis CPI rose 0.5% from December to January, up from a 0.1% increase in December. 

Where from Here: Markets weren't sure what to make of the news as markets jumped up and down all throughout the day. 

The print seems in line with JPow's comments last week that getting inflation back to 2% will be long and bumpy.

Bing's AI Screws Up its Demo

AI isn't perfect (yet) — during Microsoft's demo last week showcasing its new AI search tool, the AI chatbot hallucinated wrong answers to seemingly simple requests.

What went wrong: During the demo, the AI chatbot was asked a range of requests to show off its breadth of knowledge, it got plenty wrong:

• The chatbot got financial figures wrong when asked to analyze both Gap and Lululemon.

• It made up false product information on a pro's and con's list for a pet vacuum.

• It gave false nightlife info about certain clubs when asked for a 5 day itinerary in Mexico City.

• Read the full list of inaccuracies here.

Google vs Bing: It's interesting to note that when Google's AI chatbot gave wrong answers during the demo, everyone was all over it and the stock fell 10%.

When Bing's AI chatbot gave wrong answers, it took an independent researcher on Substack to sniff it out, and the stock didn't budge.

• Microsoft kind of rushed to integrate the tech into Bing, wanting to grab the spotlight and shake things up in Search. 

•  Google has been much slower to move publicly, advocating for a safe & responsible release; however, they seemed shaken by Microsoft's release and so they rushed to follow behind. Now, both have eggs on their face (or search engine). 

• A Microsoft spokeswoman acknowledged the errors and said the company is looking further into it while accepting that mistakes will be made along the way.

Bottom Line: If you're using chatGPT or something similar for work, school, etc., make sure to verify any information you're receiving before sending it along. 

Business Bytes

🚗  Ford Halts Production and Shipments of its electric F-150 Lightning due to potential battery issue (CNBC)

The company declined to disclose details of the issue, and it's unclear when the stop-shipment and halt in production orders will be lifted. The stock was down ~1% today

💰 Salesforce yields to activist pressure with harsh new policies for engineers, salespeople (Techcrunch)

Under pressure from activist investors, the company is implementing much stricter performance metrics for engineers, and putting sales members performance under a microscope.

Potential reviews for engineers could include a "quantity of code" check - a proxy for productivity, while certain salespeople are being offered a strict one-month PIP or leaving with an exit package.

🤖  Github CoPilot for business is now available (Github)

CoPilot, built on top of OpenAI, acts as an AI pair programmer helping developers write code in a more productive and efficient manner.

✂️  Meta/FB is reportedly planning a fresh round of layoffs (Techcrunch)

The news comes shortly after Zuck dubbed 2023 the "Year of Efficiency". The company already reported layoffs for roughly ~11,000 workers last November.

AirBnb is Profitable and Investors Love It

AirBnB reported their best Q4 to date yesterday, sending the stock up ~10% after hours.

Q4 By the Numbers: All the below numbers are the highest the company has reported in any fourth quarter, typically a slower period for the company compared to the summer time. 

• 88.2 million Nights and Experienced Booked

• $13.5 billion in Gross Booking Value

• Revenue of $1.9 billion, 24% YoY growth

• Net Income of $319 million

• Free Cash flow of $455 million

We Love Profitability: AirBnB has performed better than many of the covid high-flyers because they were one of the few to actually start turning profits.

CEO Brian Chesky made huge commitments to profitability while Covid was still an existential threat to their business, they're now reaping the rewards. The company reported $1.9 billion of Net Income in 2022.

GARP: While the stock is down since going public in late 2020, the company now presents a nice mix of Growth and profitability at A Reasonable Price [if you believe in the durability in the business]. 

Thank you so much for reading, go out and make today a great one!

Much love,

Andrew