...and bank account fees hit record highs
| Dunkin' trying to close a private equity deal | |
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Hey Snackers, 10% of Twitter users post 92% of all tweets, according a new study. That's a shocker... to absolutely no one. Stocks dropped sharply yesterday as COVID-19 infections jumped in the US and Europe and talks for a pre-election stimulus package stalled (again). | |
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Dunkin' might sell itself for $8.8B and go private — but why? | The hot gossip in Canton, Mass... Dunkin' might go private. The Coolatta-and-cruller legend confirmed it's in sale talks with private equity-backed Inspire Brands (the owner of Arby's, Sonic, and Jimmy John's). - Inspire wants some sugar with its salty lineup. So it's reportedly willing to drop nearly $9B to take Dunkin' private.
- Dunkin' stock surged 16% because the price represents a 20% premium over its Friday stock value. By buying Dunkin', Inspire would more than double its total restaurant locations.
Bang a U-ey... Dunkin' has been fancy-fying itself over the years. It dropped "Donuts" from its name, invested in flashy brewing systems, got its employees "espresso certified," and served up oat-milk lattes and Beyond Meat sandwiches. Drive-thrus, green tea Refreshers, and a buzzy deal with TikTok star Charli D'Amelio have boosted its biz during the pandemic. - US same-store sales dipped 19% last quarter since you weren't hitting Dunkies before ice hockey practice.
- But Starbucks' sales fell 40% last quarter, making Dunkin' look like the Brady of corona coffee. Dunkin' stock has climbed much more than Starbs' this year.
| THE TAKEAWAY | This is the opposite of a regular PE deal... Rule #1 in the private equity playbook: find a struggling company, revamp it, and flip it for more. Dunkin' isn't a fixer-upper: it brought in a record $1.4B in sales and $242M in profit last year, and its stock is at an all-time high. But going private could shield it from the obligations and scrutiny that come with being public. That gives it more freedom to transform its brand. | |
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Banks set record-high account fees to juice more out of the struggling retail biz | Check your checking account... You might be paying more fees than usual. When we stash cash in an account, banks benefit because they can use that idle money to make more cash (by investing or loaning it). That's why banks often pay interest (usually tiny) on your deposits. Now, Americans are paying record fees for interest checking accounts and getting record-low returns: - The average monthly account fee is at a high of $15.50.
- The average balance needed to avoid that fee is at a high of $7,550.
- Annual percentage yield is at a low of 0.04%.
Bad news for our wallets... Banks raised fees to squeeze more money out of their consumer businesses, which are suffering. As interest rates hit fresh lows, banks got paid less on consumer loans. Meanwhile, cash-strapped Americans used credit cards less and hoarded money. To sum up Big Banks' latest quarter: - Trading revenue soared: JPM Chase, Citi, and Goldman cashed in on major trading and investment activity for Wall Street clients.
- Consumer banking revenue fell: Chase, Citi, and BoA saw Main Street banking revenue drop on less credit card swiping and lower interest payments.
| THE TAKEAWAY | Banks' consumer struggles reflect the economy... The extra $500/week in unemployment benefits expired in July — right around when banks' latest quarters started. The stimulus check boom is over — that money's spent, and negotiations for a 2nd stimulus have been dragging on for months. Until more aid arrives, banks are squeezing consumers because they're getting squeezed, too. | |
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What else we're Snackin' | - Musky: Tesla recalled over 50K Model S and X cars in China over potentially faulty and unsafe suspensions.
- Wow: Chinese fintech giant Ant Group is set to raise over $34B in the world's biggest-ever IPO (aka: initial public offering).
- Ride: Uber says it'll likely shut down most CA rides unless Prop 22 passes, after a judge ruled that Uber and Lyft drivers are employees.
- Status: Apple is making a new entry-level AirPods model and a second version of the AirPods Pro (say goodbye to the stem).
- Vote: Facebook is prepping emergency measures for possible election unrest, including slowing the spread of certain posts.
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The Snacks Daily Podcast | "The name's Bond... Stream Bond." MGM has reportedly tried to sell its latest James Bond film to Netflix and Apple. The studio asked for $600M for the stream rights to its (unfortunately-named) "No Time To Die." Tune into our thrilling 15-minute pod to hear how much a Bond blockbuster is actually worth. | | | |
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Tuesday | Disclosure: Authors of this Snacks own shares of JPM Chase and Starbucks ID: 1385790 |
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