☕️ U-turn

Why TikTok’s shopping pivot is a big risk... January 31, 2024 [View Online]( | [Sign Up]( | [Shop]( [Morning Brew]( PRESENTED BY [Incogni]( Good morning. Congrats to everyone who made it through Dry January. As a prize, you will all be receiving one extra day of February. —Cassandra Cassidy, Sam Klebanov, Matty Merritt, Adam Epstein, Neal Freyman MARKETS Nasdaq 15,509.90 -0.76% S&P 4,924.97 -0.06% Dow 38,467.31 +0.35% 10-Year 4.059% -3.2 bps Bitcoin $43,606.70 +0.71% GM $38.15 +7.80% *Stock data as of market close, cryptocurrency data as of 11:00pm ET. [Here's what these numbers mean.]( - Markets: Stocks were [mixed]( on Tuesday, with investors in a holding pattern as they await a decision on interest rates from the Fed at the conclusion of its two-day meeting today. The road was smoother for GM, which climbed 8% after [demolishing]( quarterly revenue expectations by $4 billion.  E-COMMERCE [TikTok’s big pivot to shopping risks putting off users]( [A collage of shopping products on TikTok]( Illustration: Francis Scialabba, Photo: TikTok Years ago, it seemed like TikTok might fill the void left by Vine. Now, it’s closer to becoming one big [virtual department store](. TikTok is [testing a new feature]( that will automatically identify products in videos and allow users to click into a page that displays similar items for sale. The feature is part of TikTok Shop, the app’s e-commerce platform that launched last year. It intends to combine the ease of shopping on a platform like Amazon with recommendations from TikTok influencers. Like it was for Cher Horowitz, shopping is TikTok’s strategy for success. It’s allegedly [targeting $17.5 billion]( in sales in the US in 2024, relying on e-commerce to sustain revenue growth beyond social media advertising. According to The Information, the company also plans to build livestreaming facilities across the US from which creators could sell products to viewers—like QVC…if it was for Gen Z and people obsessed with LED strip lights. But the master plan could backfire As the company leans further into shopping, it has to compete not only with established giants Amazon, Temu, and Shein but also, perhaps, against its own users. TikTok user growth is slowing down: The app saw 3% YoY quarterly growth in 2023, compared with 12% in 2022, according to market intelligence firm Sensor Tower. And there’s some evidence that TikTok Shop may be [partially to blame]( - Users have reported that the new automatic shopping feature is full of cheap tchotchkes and counterfeit copies of popular items. (According to guidelines on the TikTok site, selling counterfeits in the TikTok shop is prohibited, and users who encounter them are asked to report them so they can be removed.) - Across multiple Reddit threads and TikTok videos, users said the Shop feature diminished the app experience and ruined their For You Page. Is the writing on the wall? Last January, Instagram removed the Shop tab from its app after backlash from some users who thought it took away from IG’s main focus. While consumers like to get their inspiration from social media, it’s not yet clear if they love shopping where they scroll.—CC   PRESENTED BY INCOGNI [Take back your data]( [Incogni]( Like it or not, some of your personal info is probably floating around the internet. And it’s not just scammers who might be after it. Data brokers will sell your address, phone number, and more to anyone willing to pay. To stop them, you could comb through their sites and remove your data bit by bit. Or you could kick back, relax, and have [Incogni]( scrub your personal info for you. Incogni can help you limit public access to your information, lower the risk of identity theft, and [keep your data from being sold](. Reclaim your data with Incogni and its 30-day money-back guarantee. Use [code MORNING for 55% off](. WORLD [Tour de headlines](#) [Google and Microsoft logos]Francis Scialabba Microsoft and Google rode the AI wave to huge quarters. Microsoft posted revenues of ~$62 billion in its fiscal Q2 ending Dec. 31, a year over year [increase]( of 17.6% and ahead of analyst’s expectations. That was its best revenue growth in seven quarters, thanks to the release of new AI-enabled Office products. Meanwhile, Google reported strong results, too: Ad revenue at YouTube [skyrocketed]( to $9.2 billion in Q4 of last year, up from below $8 billion the year before. Alphabet CEO Sundar Pichai said YouTube is “already benefiting from our AI investments and innovation.” Alphabet’s total revenue was up 13% year over year to ~$86 billion. UPS slashed 12k jobs. The shipping giant said it will require employees to return to the office five days a week this year as it changes how it operates amid a [slowdown in demand](. Revenue declined in Q4, while annual sales fell 9.3% in 2023. Amazon, its biggest customer, accounted for 11.8% of revenue last year, up from the year before, as revenue from other customers declined due to lower demand and more in-store pickups, executives said. UPS is also dealing with higher labor costs due to the deal it made with the Teamsters union to avoid a strike last summer. The IMF has the US to thank for raising its global forecast. The International Monetary Fund—the UN’s flagship financial agency—said the global economy will grow 3.1% this year, a slight increase from its projection in October. That’s largely due to the [strength of the US economy]( which has defied economists’ expectations, growing 3.3% in the fourth quarter of 2023. But the improved outlook was also boosted by economic stimulus in China, which has faced deflation and a real estate crisis, among other issues. Other economies, including India, Brazil, and Russia, also performed better than expected, helping to juice the IMF’s forecast. AUTO [General Motors makes a U-turn on hybrids]( [GM going back to hybrid]( Francis Scialabba Years after GM discontinued the Chevy Volt and left hybrids in the rearview mirror to go all-out on EVs, the automaker is putting it in reverse. It’ll again [start offering]( Americans plug-in hybrids that can run on gas and in all-electric mode, CEO Mary Barra said yesterday. The company still plans to phase out gas-guzzling cars in the US by 2035, but hybrids will now serve as a stepping stone, Barra said. The EV rush didn’t pan out The about-face comes after key dealers [pushed GM]( to send them hybrids since demand for EVs hasn’t been as electric as expected, per the WSJ. Despite government incentives and automakers betting big on battery-powered cars… - Many drivers are put off by EVs’ priciness and worried about the lack of charging stations. - Though EV sales grew 52% last quarter from Q4 2022, per Cox Automotive, many carmakers slashed prices and cut EV production goals as unsold cars began collecting dust in dealer lots. Meanwhile, hybrids have been [selling like hotcakes]( helping GM’s competitor and the world’s biggest carmaker, Toyota, rake in record profits. GM is still doing fine…profit jumped 12% in 2023, despite the autoworkers strike costing it over $1 billion last fall. And it hopes to post record earnings next year.—SK   TOGETHER WITH DUTCH MENDENHALL [Dutch Mendenhall]( Get the scoop before you invest . Where is the market headed? Everyone wants to know. Best you can do is gather as much information as you can ([from the best sources](. But that’s harder than it seems. We made it easy. [Read this free report now](. ENTERTAINMENT [Wizards and Vikings galore at Epic Universe]( [Entrance to Celestial Park drawing.]( Universal Parks USA Eat a mushroom and start believing in magical creatures, because NBCUniversal has finally [released]( detailed plans for its new theme park, Universal Epic Universe. The Orlando park won’t open until the summer of 2025, but here’s what to expect: - Guests will enter through Celestial Park, an astronomy-themed centerpiece with water features and a lot of greenery. - There will be another Harry Potter land—but unlike the other two at Universal Orlando, it will bring the Ministry of Magic to life. - Other sections include How to Train Your Dragon: Isle of Berk, Dark Universe (focused on classic Universal movie monsters), and Super Nintendo World. What else could you possibly need? Comcast, which owns NBCUniversal, said 2023 was the most profitable year for its theme parks division. Its existing Super Nintendo Worlds were a major factor. And Comcast isn’t alone. It turns out buying a $14 corn dog and gawking at a giant Bowser are exactly how consumers want to spend their time. Disney, the other heavyweight in the theme park industry, saw its “experiences” category jump 16% in sales last year, making it the company’s fastest-growing division. Last year, the Mouse House said it would invest $60 billion in its parks and cruises over the next decade.—MM   GRAB BAG [Key performance indicators](#) [South Korean President Yoon Suk Yeol and his wife Kim Keon-hee]Chesnot/Getty Images Stat: A $2,250 Dior handbag is throwing South Korean politics into chaos just three months before pivotal legislative elections. First Lady Kim Keon Hee may have violated anti-bribery laws when she was [secretly recorded]( accepting the luxury purse from Choi Jae-young, a pastor based in the US. Choi said that Voice of Seoul, a left-leaning media outlet, provided him with the bag and the hidden camera as part of an anti-corruption sting operation. He also claims Kim accepted Chanel products worth $1,340. The hullabaloo threatens the chances of President Yoon Suk Yeol’s right-wing party from regaining a majority in Parliament. A recent survey found that 56% of South Koreans believe Kim needs to apologize. Quote: “Whiny snowflakes.” That’s how billionaire hedge fund founder and Harvard alum Ken Griffin [described his alma mater’s]( current students while speaking at a conference in Miami yesterday. Griffin, who gave $300 million to the Ivy League university last year, is withholding further support over what he sees as Harvard’s inadequate response to antisemitism on its campus since the October 7 Hamas attack on Israel. Griffin said he won’t support the school until changes are made, but he didn’t specify what changes he’d like to see. Claudine Gay resigned as president last month after her widely criticized appearance at a congressional hearing on campus antisemitism. Read: Meet the “robot wranglers” who make sure androids don’t wander off at the workplace. ([Wall Street Journal]( NEWS [What else is brewing](#) - [Elon Musk]( is (temporarily) no longer the richest person in the world after a Delaware judge struck down his $55 billion Tesla pay package for being excessive. Tesla’s board now must propose a new compensation plan for its CEO. Musk, who can appeal to the state’s Supreme Court, is worth a measly $154b without the package. - [Citibank]( was sued by NY AG Letitia James for allegedly failing to protect customers from online scams. - [The US Olympic figure skating team]( will receive better-late-than-never gold medals after Russian skater Kamila Valieva was disqualified for doping at the 2022 Beijing Games. - [Toyota]( urged the owners of 50,000 older vehicles in the US to get repairs over a potentially deadly airbag problem. - [The Kansas City Chiefs’]( win over the Baltimore Ravens set a record as the most-watched AFC title game ever, with over 55 million viewers. - [Chita Rivera]( the legendary Broadway star of West Side Story and Chicago, died yesterday at 91. RECS [Wednesday to-do list] Go acoustic: This neat site allows you to [play around]( with harmonics. Ball out: Infographics showing how the [price of Super Bowl tickets]( has changed—and who’s buying them (other than Taylor Swift). Trade with Joe: The products that won the 15th annual Trader Joe’s [Customer Choice Awards](. And don’t forget to floss: How a goldendoodle named Ollie is [helping patients relax]( at the dentist. An SMB owner's dream: Discover how to [unlock the power of financial automation](. Learn more at [bill.com]( *A message from our sponsor. GAMES [The puzzle section](#) Word Search: Sometimes, our Word Search includes pics of cute puppies. Other times, like today, it puts you face-to-face with insects. [Check it out](. Add the booze With Dry January coming to a close today, this quiz will ask you to add the alcohol. We’ll give you a list of ingredients that form a cocktail minus the primary alcohol component (there may be a secondary alcohol included). For .5 points, name the type of booze that completes the cocktail, then for another .5 points, name the cocktail. - Agave syrup, lime juice, orange liqueur, ________ - Simple syrup, water, bitters, orange + cherry for a garnish, ______ - Ginger beer, lime juice, ______ - Lemon juice, simple syrup, club soda, _______ - Mint leaves, simple syrup, ______ - Kahlúa; heavy cream, ______ - Cranberry juice, orange juice, peach schnapps, _____ SHARE THE BREW [Share Morning Brew]( with your friends, acquire free Brew swag, and then acquire more friends as a result of your fresh Brew swag. We’re saying we’ll give you free stuff and more friends if you share a link. One link. Your referral count: 0 [Click to Share]( Or copy & paste your referral link to others: [morningbrew.com/daily/r/?kid=a905682a]( ANSWER - Tequila; Margarita - Bourbon; Old Fashioned - Vodka; Moscow Mule - Gin; Tom Collins - Bourbon; Mint Julep - Vodka; White Russian - Vodka; Sex on the Beach Word of the Day Today’s Word of the Day is: hullabaloo, meaning “a commotion or fuss.” Thanks to Meghan from Baltimore, MD, and many others for preventing one by giving us the suggestion. Submit another [Word of the Day here](. Written by [Adam Epstein]( [Cassandra Cassidy]( Sam Klebanov, [Matty Merritt]( and [Neal Freyman]( Was this email forwarded to you? Sign up [here](. 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