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Speaker 1: This is what the Flux.

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Speaker 2: I'm Brett and I'm justin and it's Monday to twenty

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Speaker 2: eighth of April.

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Speaker 1: Jusee boyd, the countdown is on. And no we're not

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Speaker 1: talking about the federal election. We're obviously speaking about the

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Speaker 1: RBA's cash rate announcement in just a few weeks time.

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Speaker 1: In fact, Westbax says that a cash rate drop is

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Speaker 1: a done deal if inflation numbers are in line with expectations.

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Speaker 1: And Jessie boy, you don't hear banks throwing around the

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Speaker 1: done deal words very often, do you, So they must be.

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Speaker 2: Pretty down confident, a big collboy weft pacus out. As

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Speaker 2: we roll into the end of the month at April,

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Speaker 2: this is the time when you need to get your

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Speaker 2: financial house in order. One of the things you should

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Speaker 2: be doing every single month is checking your credit score

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Speaker 2: to see if it's gone up, if it's gone down,

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Speaker 2: and if there have been any applications made it might

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Speaker 2: not have been yours. We have it all covered in

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Speaker 2: the Flux app with our credit health check ap Make

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Speaker 2: sure to download the Flux app and check your credit

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Speaker 2: score today.

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Speaker 1: Three revolutionary stories today, Jusi boy, Let's do it for

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Speaker 1: our first, Satire, the luxury fashion marketplace has suffered its

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Speaker 1: first lot in three years after it continues to get

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Speaker 1: squeezed left, right and center.

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Speaker 2: Lots of attention on Setire right now be Man and

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Speaker 2: not the good type, so tell me more well.

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Speaker 1: Setire was founded in twenty seventeen here in Australia and

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Speaker 1: bills itself as a luxury online fashion retailer.

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Speaker 2: Yeah, it stocks everything from Gucci loafers which I know

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Speaker 2: you love, to save the rent, clutches and many many

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Speaker 2: more products.

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Speaker 1: In fact, it sells more than five hundred thousand products

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Speaker 1: a year from more than twenty five hundred luxury brand

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Speaker 1: and be Man.

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Speaker 2: Setire grew its business by offering luxury goods at low

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Speaker 2: wer prices.

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Speaker 1: A bit like a luxury outlet of the Internet.

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Speaker 2: And that's because it operates in the gray market.

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Speaker 1: In other words, it sources luxury products from outside traditional

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Speaker 1: brand channels.

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Speaker 2: But now be Man. Setires reported a real ugly quarter yep.

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Speaker 1: It's sales landed at two hundred and sixty million bucks,

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Speaker 1: which was basically unchanged from last year.

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Speaker 2: But the biggest hit was that Setire suffered its first

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Speaker 2: loss in three years.

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Speaker 1: YEP, it copped a four point seven million dollar loss

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Speaker 1: for the March quarter. Now, might I remind you that

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Speaker 1: at its peak, Setire devaluation of two billion dollars, but now.

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Speaker 2: Its share prices dropped more than twenty five percent last

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Speaker 2: week and its valuation is sitting just at two hundred

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Speaker 2: and fifty million.

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Speaker 1: Dollars, a monstrous fall from the glory years.

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Speaker 2: The main reason for the four B man Setire is

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Speaker 2: copying margin compression everywhere that it is.

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Speaker 1: So what is the key learning here?

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Speaker 2: Margin compression is what happens when a business's costs rise

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Speaker 2: faster than its revenues.

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Speaker 1: For Setire, it's the worst of both retail worlds.

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Speaker 2: Yeah, their costs are up, their revenues are flat, and

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Speaker 2: discounts are hurting their profits as well. So b man,

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Speaker 2: that means even when Setaire do make a sale, they're

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Speaker 2: earning less profit from every dollar.

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Speaker 1: And does it boit? Margin compression is a major red

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Speaker 1: flag for investors.

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Speaker 2: Yeah, it shows that the business is either losing its

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Speaker 2: pricing power or it can't control its costs at all.

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Speaker 1: And in retail post COVID, it's not about growth it

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Speaker 1: or costs anymore. It's really about sustainable profit.

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Speaker 2: So it's no surprise Setaire's share price dropped twenty five

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Speaker 2: percent just last week.

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Speaker 1: For our second story, Tesla has seen its profits plummet

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Speaker 1: seventy one percent, but it's share price still jumped more

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Speaker 1: than five percent.

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Speaker 2: Jeez, that sounds strange. There must be more to this story,

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Speaker 2: be man, so tell me more. Well.

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Speaker 1: We know, Tesla is the og electric vehicle poster child.

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Speaker 2: YEP. It was founded back in two thousand and eight

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Speaker 2: and co founded by the zany, unhinged and wild Elon Musk.

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Speaker 1: And we've already spoken about how Tesla has battled with

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Speaker 1: a decline in sales, So be.

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Speaker 2: Man, it's fair to say we didn't realize how bad

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Speaker 2: things were looking.

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Speaker 1: We're talking to seventy one percent drop in profits compared

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Speaker 1: to last year, and that is down to four hundred

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Speaker 1: and nine million US dollars.

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Speaker 2: And be man, they had a thirteen percent slide in

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Speaker 2: car deliveries as well, which is their worst result since

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Speaker 2: twenty twenty two.

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Speaker 1: And while the cars haven't changed, the vibe around the

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Speaker 1: brand definitely has.

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Speaker 2: Yeah, plenty of people reckon Elon's political escapades have rubbed

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Speaker 2: Tesla buyers up the wrong.

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Speaker 1: Way, as well as a whole lot more competition in

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Speaker 1: this ev market.

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Speaker 2: Yeah, get this. Tesla sales dropped sixty percent in Germany

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Speaker 2: this January.

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Speaker 1: And they were down thirty percent here in Australia.

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Speaker 2: So be man. It's no surprise that Elon Musk will

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Speaker 2: now be stepping back from the US Government's Department of

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Speaker 2: Government Efficiency aka DOGE, and I'm in the back of

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Speaker 2: this news. Tesla's share price actually jumped five.

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Speaker 1: Percent because finally Elon can focus on Tesla and hopefully

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Speaker 1: for investors, stay away from the headlines. So what is

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Speaker 1: the key learning here When a CEO is a huge

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Speaker 1: part of their company's brand, that every move can shake

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Speaker 1: public opinion and perception for better or worse. In Tesla's case,

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Speaker 1: Elon Musk has ridden the highs and lows of Tesla

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Speaker 1: since it launched, Like the time he posted that he

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Speaker 1: would take Tesla private for four hundred and twenty US

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Speaker 1: dollars per share a.

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Speaker 2: Reference to smoking marijuana, all.

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Speaker 1: The time he threw a sledgehammer at his cyber truck

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Speaker 1: to demonstrate its bulletproofness.

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Speaker 2: Man. With his focus on DOGE the Government Department, investors

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Speaker 2: have grown concerned over his lack of focus.

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Speaker 1: And the impact that Doge is having on brand Musk.

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Speaker 2: Which is effectively brand Tesla.

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Speaker 1: So Jazi boy. Since Musk joined Donald Trump in the government,

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Speaker 1: Tesla's share price has taken a whack of near forty percent,

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Speaker 1: and these poor.

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Speaker 2: Profit announcements aren't building confidence in the brand either.

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Speaker 1: So clearly Muskie Musk understands its time to focus on

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Speaker 1: his companies before it's potentially too late.

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Speaker 2: For our third and final story, open Ai, the owner

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Speaker 2: of chat JPT, wants a slice of Google's Chrome if

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Speaker 2: Google's forced to sell Chrome by the courts.

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Speaker 1: Shots have been fire, Tell me more, juzzy boy.

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Speaker 2: Okay, so be man. We spoke last week about how

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Speaker 2: US courts have ruled Google has illegal monopolies.

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Speaker 1: Both in online search as well as advertising technology and.

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Speaker 2: Be man, Well, it's not clear what the outcome will

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Speaker 2: be from the judge. It could result in the breakup

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Speaker 2: of Google.

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Speaker 1: And now OpenAI has entered the chat Yeah.

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Speaker 2: Open AI's head of products said they'd be keen to

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Speaker 2: buy Google's Chrome if the court forced Google to sell it.

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Speaker 1: Now OpenAI says it previously offered to integrate Google Search

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Speaker 1: into chat JBT, but Google said nowe jose.

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Speaker 2: Yep we've got Gemini and be man. In the hypothetical

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Speaker 2: case that open ai did buy Chrome, it could be

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Speaker 2: a game changer.

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Speaker 1: Well, it would allow them to skip the middle man

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Speaker 1: like Google when it comes to getting customers.

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Speaker 2: So what is the key learning here?

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Speaker 1: Vertical integration happens when a company controls multiple stages of

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Speaker 1: its supply chain or product delivery.

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Speaker 2: Think of the example of a coffee company. If they're

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Speaker 2: vertically integrated, they might own the farm, the roastery, and

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Speaker 2: the cafe as well.

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Speaker 1: And for technology, it's when the company owns the backhand software,

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Speaker 1: the customer facing platform, and the underlying data as well,

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Speaker 1: and a man.

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Speaker 2: Google is the poster child for vertical integration.

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Speaker 1: It owns the Chrome browser, it owns the Android operating system,

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Speaker 1: it owns Google Search Engine.

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Speaker 2: And baman. That kind of integration is super powerful, but

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Speaker 2: it's also what regulators argue is anti competitive.

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Speaker 1: On the other hand, open ai right now relies on

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Speaker 1: partnerships to reach those users.

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Speaker 2: Through Microsoft's Edge browser or their iOS integrations.

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Speaker 1: So if OpenAI did acquire Chrome, it would gain a

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Speaker 1: direct user base, but b man.

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Speaker 2: It kind of feels like open ai would start building

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Speaker 2: its vertically integrated empire of its own.

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Speaker 1: So while this may sound good in theory, if you

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Speaker 1: bet that the regulators will be having none of this.

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Speaker 2: Buck sam Every single month your credit score gets updated,

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Speaker 2: to make sure to check it out. See your credit

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Speaker 2: score in April.

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Speaker 1: Thanks for listening, and we'll see you on Wednesday.