Speaker 1: This is what the Flux I'm brand and I'm just then,
Speaker 1: and it's Friday, the thirty first of January.
Speaker 2: Does it boy? Three of the four major banks in
Speaker 2: Australia believe the Reserve Bank will cut interest rates in February.
Speaker 2: That's after we saw trimmed mean inflation slow by more
Speaker 2: than even the RBA was expected. The only bank sticking
Speaker 2: their neck out that would be NAB. They reckon the
Speaker 2: rate cut will only happen.
Speaker 1: In May by themselves the man yep, Fux adam. If
Speaker 1: you want to stand by yourselves with fifty bucks in
Speaker 1: your front pocket this weekend, there is only one place
Speaker 1: to do it. It is in the Flux app playing
Speaker 1: quick sticks today. If you're the first person to answer
Speaker 1: three business or finance questions correctly, then you will win
Speaker 1: fifty dollars, no questions asked. Make sure to download the
Speaker 1: Flux AUP and turn your notifications on to win it
Speaker 1: money today.
Speaker 2: Three electrifying stories today, Juzzy boy, let's do it for
Speaker 2: our first zip Co, the buy now, pay later company
Speaker 2: has seen it. Chares plummet more than twenty five percent
Speaker 2: after its second quarter earnings fell short.
Speaker 1: Been one hell of a rollercoaster for Zibity, DoD aarbe Man,
Speaker 1: So tell me.
Speaker 2: More, Okay? So Zip is an Aussie by now pay
Speaker 2: Later provider that started in twenty thirteen.
Speaker 1: And the Man. From twenty twenty, Zip went on a
Speaker 1: bit of an acquisition spree.
Speaker 2: It bought Quadpay in the US for four hundred mil.
Speaker 2: It bought Twisto in the European Union, and bought steaks
Speaker 2: in companies like Payflex, Spotty ten.
Speaker 1: Do these names ring a bell? Juzzy boy, but ben Man.
Speaker 1: When Zip's losses started to grow, its share price started
Speaker 1: to plummet. So Zip cut all of its divisions except
Speaker 1: for Australia, New Zealand and the US Soluber.
Speaker 2: Surely it's built its business back up and its share
Speaker 2: price with its Australian business becoming profitable, but.
Speaker 1: Now be Man. Zip's announced its second quarter results, which
Speaker 1: on paper look pretty good.
Speaker 2: Ebit up more than fifty percent from the same quarter
Speaker 2: last year.
Speaker 1: Revenue up more than twenty percent as well.
Speaker 2: But its profit margin was squeezed tighter than your jeans
Speaker 2: after your big summer break, jussy Boy.
Speaker 1: And be Man that had investors running to the paddic button.
Speaker 1: Zip share price dropped more than twenty five percent.
Speaker 2: In fact, trading volumes in Zip yesterday jumped over three
Speaker 2: times the norm.
Speaker 1: So what is the key learning here?
Speaker 2: When a company has a history of share price volatility,
Speaker 2: investors are way more sensitive to any bad news.
Speaker 1: You see, be Man. When trading volume skyrockets, it usually
Speaker 1: means one of two things. Investors are either panic selling
Speaker 1: or greedily buying in And in Zip's case, it was
Speaker 1: a full blown sell off. Might I remargi be Man?
Speaker 1: Between March twenty twenty one and October twenty twenty three,
Speaker 1: Zip's investors lost ninety eight percent of their share value
Speaker 1: on paper.
Speaker 2: Luckily, ZIP has bounced back and they've been on a
Speaker 2: positive trajectory recently.
Speaker 1: But even though revenue and ebitdaua up, that squeeze profit
Speaker 1: margin had everyone hitting the cell battery.
Speaker 2: For our second story, Tesla's a revenue and profit fell
Speaker 2: short of expectations after major discounting of its cars, but
Speaker 2: they're planning to get even cheaper.
Speaker 1: Oh, Tesla owner's rolling around in their heated seats because
Speaker 1: their resale value has been smashed.
Speaker 2: So don't we more well, Jazzy Boy. Tesla was the
Speaker 2: og Electric vehicle company founded in two thousand and three.
Speaker 1: Fun fact, b Man. While Elon Musk is considered the
Speaker 1: founder of Tesla, he actually joined the company as chairman
Speaker 1: about twelve months after a.
Speaker 2: Launch, and two thousand and nine court settlement allowed him
Speaker 2: to technically call himself a founder.
Speaker 1: The founder or not. Elon Musk has propelled Tesla to
Speaker 1: enormous heights. Tesla became the go to car for electric
Speaker 1: vehicle officionados.
Speaker 2: In fact, Tesla was more valuable than thirty five of
Speaker 2: the next biggest car made now.
Speaker 1: But now be man At Tesla's warned that its fourth
Speaker 1: quarter results were well below expectation.
Speaker 2: In fact, its revenue of twenty five point seven billion
Speaker 2: US dollars was nearly two billion dollars below what Wall
Speaker 2: Street expected.
Speaker 1: Chuck. On top of that, it's gross profit margin dropped
Speaker 1: more than two percent below expectations. And what's the reason
Speaker 1: for the squeeze in revenue and profit margin will be
Speaker 1: man at.
Speaker 2: Tesla has been discounting its cars, so rather than continuing
Speaker 2: to discount its existing models, Tesla has announced plans for
Speaker 2: a new model in the first half of twenty twenty five.
Speaker 1: So what is the key leading here?
Speaker 2: As industries, mature prices tend to fall, margins tend to shrink,
Speaker 2: and only the strongest survive.
Speaker 1: You say, be Man. In the early stages of an industry,
Speaker 1: companies can charge premium prices.
Speaker 2: That's because there are fewer competitors and higher demand for
Speaker 2: this innovation of new product.
Speaker 1: And this is exactly what Tesla experienced in the EV
Speaker 1: market in the early day.
Speaker 2: In fact, its entry level roadster in two thousand and
Speaker 2: eight was one hundred and twenty thousand dollars and be man.
Speaker 1: In the early twenty tens, Tesla's gross profit margin was
Speaker 1: nearly thirty three percent.
Speaker 2: But as competitors enter the space, pricing pressure it builds
Speaker 2: and builds.
Speaker 1: And that meant EV companies like Tesla are forced to
Speaker 1: differentiate through pricing, by offering cheaper models or through unique
Speaker 1: features like software technology and b man. As a result,
Speaker 1: Tesla's gross profit margin has more than half to sixteen
Speaker 1: point three percent.
Speaker 2: So Tesla now finds itself in a battle against cheaper
Speaker 2: EV manufacturers like Bid and even Volkswagen. For our third
Speaker 2: and final story, Meta will pay Donald Trump a twenty
Speaker 2: five million dollar settlement for shutting his accounts after those
Speaker 2: January six riots.
Speaker 1: Jeez, the Zuckerberg uturn just keeps on keeping on, b man,
Speaker 1: So telling me.
Speaker 2: More well for some context, Juzzy Boy. After the jan
Speaker 2: six riots in twenty twenty one, which Donald Trump inspired,
Speaker 2: it's fair to say old Trumpy wasn't so popular in
Speaker 2: big tech.
Speaker 1: Circles, in particular with Meta.
Speaker 2: In fact, Trump used to say that Mark Zuckerberg Facebook
Speaker 2: slash metas founder would spend the rest of his days
Speaker 2: in prison.
Speaker 1: Very scary stuff for me, man. These days things have changed.
Speaker 2: Trump's Facebook and Instagram profiles were reinstated in twenty twenty three, and.
Speaker 1: Since Trump's reelection, Zuck has really cozied up to the
Speaker 1: new administration.
Speaker 2: And now Meta has settled a lawsuit with Trump that
Speaker 2: will require Meta to pay about twenty five million bucks
Speaker 2: to him and his entities.
Speaker 1: The new President's relationships with business leaders are very transactional.
Speaker 2: It seems the Zuck likes to fly in the political breeze.
Speaker 1: So what is the key learning here?
Speaker 2: Most businesses don't lean red or blue politically, They lean green.
Speaker 1: AKA, it is all about the dollars.
Speaker 2: And Meta is up there with the very best of them.
Speaker 1: We know that Zuck is capable of aligning himself with
Speaker 1: those in power.
Speaker 2: Yep. Zuck attended Trump's inauguration and donated one million bucks
Speaker 2: to the Inaugural Fund.
Speaker 1: He also traveled to Mara Lago in November to me
Speaker 1: with Trump after the election, and this could pay off
Speaker 1: handsomely for Beta, particularly when it comes to future regulation
Speaker 1: in the US and around the world for social media blocks.
Speaker 1: An make sure you are on the Flux app, you
Speaker 1: have your notifications turned on, to win at Money today,
Speaker 1: and have fifty bucks in your pocket. All you got
Speaker 1: to do is make sure you're the first person to
Speaker 1: answer the three business questions correctly, and it is all yours.
Speaker 2: Thanks for listening, and we'll see you on Monday.