Happy belated Halloween to 14,300+ email subscribers!
I’m thrilled to be kicking off November and pushing further with the original Q4 plan.
Don’t want to sound like a broken record, but October was depressing, looking from a macro standpoint. Some data is publicly available (Q3 earnings, S&P or inflation rates), but some isn’t – which is one of the reasons this newsletter exists.
Plus, Eurozone numbers came up – and they aren’t pretty either.
Great entrepreneurs pay attention to market trends as early as possible. Public results, quarterly earning reports, annual analysis cover market dynamics with 3 to 12 months after a trend kicks in.
Companies don’t conduct layoffs, close shop, decrease their prices immediately after a downturn – it takes a while, a gradual process with casualties on the way. The earlier you establish that, the farther you get.
So here’s what I’ve observed both publicly and privately over the month of October 2023:
- Stock performance in October was pretty poor. We’re repeating June index rates while being in the strongest shopping season ever single year. Some businesses reported good results yet not making a dent in the stock performance – red flag.
- A number of companies missing forecasts after Q3 numbers came in. A clear sign of progress slowing down gradually.
- Tesla is one of these examples which led to a number of automotive executives bashing against EVs as too futuristic for now. Reminds you of halting the metaverse, crypto payments in games, NFTs and others for being a “low priority” now that companies need to generate extra revenue?
- Google Cloud failing to hit projections with a serious gap, leading to ~10% stock drop the day in. Google Cloud provides infrastructure solutions to SaaS and other businesses. While churn rate isn’t unusual, this is a mix of churn + overusage fees (bandwidth, file hosting, data queries), indicating for businesses slowing down or slowly dying.
- Layoffs.fyi reporting nearly 7K employees laid off in October compared to 4,632 in September. Again, this is unusual (Q4 is a stronger season for most industries) + I know of several larger companies slashing talent over the past 2 weeks that didn’t make the public rankings (but are up on the market and actively seeking jobs).
- We see actively degraded financial performance across our clients, businesses, agencies and so. Over 30 of our partners have reported a slower October compared to the summer (which traditionally is slower, with vacations and lower shopping intents). Similar pattern with stores and trading numbers – plentiful tweets and LinkedIn conversations for poor Meta/TikTok traffic, lower conversion rates, higher CPCs impacting performance for stores. Even Amazon Prime day results reported a slight drop in non-Amazon brands.
- Job market: while layoffs have slowed down in the US, I see a growing wave again in Europe. Our open jobs are flooded with applications at the highest numbers since 2018 or 2019. We’re filling up positions that have been only accessible with headhunting, direct introductions, events for the first time in years. Several really niche roles suddenly opened up due to companies going under or selling out and reducing 70% of their staff.
- Asking salaries or rates have decreased at the same time. We have repetitive applicants with asking ranges 20% to 40% lower than the ones a year ago, now going down thanks to decreased talent search and return to the office. Considering the high inflation, this indicates more talent competing for the same jobs, including on-sites; with freelancers and agencies also looking into more comfortable full-time engagements for the time being.
- Training companies seeing a sharp drop in demand (also AI kicking in with helper tutors and materials available for free or low cost).
- Angel syndicates and communities seeing a drop in investments over the past couple of months. This, combined with 5% for US bonds, begs the question of startup potential in its current form + safer investments with fewer surprises after the turbulent 18 months to date.
- Receiving more subscriber replies from managers having trouble scaling or solopreneurs looking into more sales channels. This is always a problem, just a more pressing and frequent one lately.
The market dynamics have been shifting dramatically with the speed of light. Any form of prediction farther than 3 months in is wishful thinking. Annual budget plans and roadmaps are guesstimates at best.
The macro situation isn’t getting any better either – both wars in the EMEA region are still ongoing, with funding distributed across the world. Funds are depleting fast and that jeopardizes currencies and international relationships.
The main businesses we see successful now are the so-called “race to the bottom”, low-cost competitive solutions that are simply more affordable and worthwhile for now. Efficiency, productivity, automation are on the rise (as usual, but faster) as companies try to do “more with less”.
As always, open to hearing from each of you on what you see in the market. We’re stronger together and knowledge is power. Hit Reply or DM me on LinkedIn/Twitter with your own insights.
Yours,
Mario
My Take
How to stay relevant in your niche – If 77% of brands vanish overnight, no one would even notice! How’s that for a horror story? In this week’s slides, we explore actionable strategies to ensure your own enduring influence in your niche.
3 Ways to Drive Customer Loyalty & Revenue – The global e-commerce market is expanding rapidly, providing opportunities for growth and revenue. To better engage customers in this competitive landscape, brands need to prioritize real-time order tracking, connect with customers before they leave the website with personalized messages, and communicate a reasonable return policy to build trust and ensure long-term loyalty.
Vevol Media Investors for pre-seed funding – I’ve been highly impressed by the in-depth analysis and the tactical plan that the Vevol team had put into the business plan when I was introduced to the project. Have a look at their top grade solutions for customer needs.
Newsletter Recommendations
Stacked Marketer – One of my go-to newsletters and a business that we’ve worked with a while ago on the DevriX front. It is loved by marketers who get hands-on with campaigns, who need to stay up-to-date with frequently changing platforms., who need to get an edge, and who need to achieve outsized results with limited resources, aka performance-focused marketers.
The Average Joe – Market trends & insights that are simple, concise, and impactful. This newsletter stands out to me due to the 200,000+ audience that go through market trends and ideas together.
The Early Bird – А special 7:00AM newsletter for those in the US, who feel to be at an information disadvantage. This newsletter covers early stories, that will impact the market every day.
Morning Brew – Аn absolute classic, the Morning Brew delivers top news from a business-minded angle, and deliver it in a short, easy-to-read, actionable, and entertaining way.
Business Strategy
Hollywood Strikes Amplify Criticism of Lavish Media CEO Pay Packages – Striking actors and writers in Hollywood argue they are undercompensated especially in the streaming era, contrasting their situation with the hefty compensation packages of media moguls, which continued to rise even as companies faced financial downturns. Despite some attempts to curb executive pay and growing discontent among investors towards media chiefs’ earnings, structural issues within these media companies and the industry at large make significant reform challenging, keeping the pay gap wide and the discontent simmering.
Tesla Erases $145 Billion in Valuation on Demand Woes – Tesla shares have experienced a significant decline of over 17% in less than two weeks due to concerns about weakening demand for electric vehicles (EVs) and the perception that the investments in EVs may be value destructive rather than value accretive. These concerns have been fueled by Tesla’s revised growth expectations, negative commentary from carmakers and analysts, and warnings from companies in the EV industry, leading to a substantial drop in Tesla’s market capitalization.
X: From $44 Billion To $19 Billion – Elon Musk’s acquisition has seen its value plummet to $19 billion from the $44 billion purchase price, amidst significant operational changes including employee layoffs and modification of content-moderation guidelines which contributed to negative cash flow as of August 2023. Despite these challenges, Musk remains optimistic, envisioning Platform X as an “everything app” with expanded features, while the new management praises the team for aiding in rebranding efforts and launching new features aimed at improving user experience and revenue generation.
Pinterest jumps on better-than-expected third-quarter results – Pinterest reported a favorable Q3 earnings with an 11% increase in sales, exceeding analysts’ predictions. Despite a nearly 2% rise in expenses, the platform saw growth in global monthly active users and a revenue surge, attributed to its distinctive visual search and shopping features. While the Israel-Hamas conflict prompted some advertising pauses, CEO Bill Ready highlighted Pinterest’s resilience and a positive outlook, underscored by a recent Amazon partnership. The company, transitioning from a net loss to a net income, anticipates a reduction in Q4 2023 non-GAAP operating expenses, signaling a strong financial position amidst industry challenges.
Ad-free European Meta -Meta Platforms announced a subscription model for European users to access Facebook and Instagram ad-free, aligning with EU regulations that challenge personalized ad practices. At €9.99 for web and €12.99 for mobile users, this move comes amidst Meta’s ongoing regulatory scrutiny in Europe, aimed at balancing user privacy with its ad-driven revenue model. By offering a paid, ad-free alternative alongside the existing ad-supported plan, Meta navigates regulatory compliance while preserving its advertising business, adapting to the evolving digital privacy landscape in the EU.
Global News
Stocks experienced a rise yesterday, concluding October positively, despite this uplift not being sufficient to prevent the Dow and S&P 500 from recording their first three-month losing streaks since 2020. Attention has now shifted back to the Fed, with anticipations leaning towards the maintenance of interest rates at the current level in today’s meeting.
- S&P: 4,193 (+0.65%)
The average rate on the popular 30-year fixed-rate loan exceeded 8 percent in recent weeks, following a jump in 10-year Treasury yields. After a period of record lows, mortgage rates climbed in 2022 as inflation spiked and the Federal Reserve responded aggressively. The Fed last hiked its key interest rate in July, which brought up borrowing costs on a variety of financial products, including mortgages.
- 30-year mortgage rate: 8.08% (+0.10%)
- 15-year mortgage rate: 7.22% (+0.03%)
There’s virtually no chance policymakers will make a move either way on interest rates when the Fed concludes its two-day meeting Wednesday. What investors will watch, instead, are the signals that come from Chair Jerome Powell and the rest of the Federal Open Market Committee about where they’re leaning for the future.
This week we see Israel’s ground assaults intensify, unions furthering tentative agreements, and the one where we lost a friend.
- Israel confirms it carried out deadly air strike on Gaza refugee camp, and says it killed a senior Hamas commander
- GM and the United Auto Workers union have reached a tentative agreement, meaning all of the Big 3 automakers could potentially end the longest auto strike in 25 years
- Matthew Perry, best known for his role on “Friends,” has died at his Southern California home, according to the Los Angeles Times. He was 54.
Investing Updates
SeedBlink’s Secondary Market Event is underway. During an event, they support buyers and sellers in their negotiating efforts and finalising transaction successfully.
- inHeart– World’s most advanced, AI-enabled DIGITAL TWIN OF THE HEART for image-guided ablations
- FrontWave– raising up to €1M to improve breast screening for early cancer diagnosis.
- Statinf– raising €1M to scale its statistics modeling services for embedded systems.
Note: Got a round going that you want to feature – your own business or a portfolio company? Get in touch.
- Classified Ads Marketplace – This 24-year-old business is a classified ads website, with over 22.6K registered sellers and over 5.4M yearly views. It counts 98% organic and direct traffic from the USA, and over 23.5K email subscribers.
- Monthly Profit: $10.9K
- Monthly Page Views: 900.6K
- Authority Score: 30
- Shopify App Suite– This SaaS business offers a range of various apps to grow Shopify channels. With a profit margin of 93%, low expenses, a high authority score and an email list of 4.1K subscribers.
- Monthly Profit: $4.8K
- Annual Revenue: $62.4K
- Age: 6 years
- Dental Industry Lead Gen Service – This business offers marketing and lead generation services for the dental industry. It operates at a profit margin of 73%, boasts an email list of 3.8K and has a small team in place.
- Monthly Profit: $99.6K
- Annual Revenue: $1.6M
- Age: 4 years
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