Five interesting things that Hodges Capital research analysts discovered this week...
#1 MASS CASUALIZATION: "I think we all know that hybrid work is here to stay. And so, whether it's that or sneakers with your tuxedo or your dress, we are not going back to less comfort in our lives. I can tell you that. Sneakers alone are $80 billion in sales in North America and Europe. And the category is projected to grow at a mid-single-digit rate." Mary Dillon, CEO of Foot Locker
#2 RECORD-BREAKING PROFITS: Saudi Aramco announced record 2022 profits of $161 billion, up 46.5% from the prior year, according to CNBC. That is the best year on record for the oil giant, which is ~95% state-owned.
#3 COLLEGE: According to an analysis by Chartr and the National Student Clearinghouse Research Center, 685,000 fewer students were enrolled in post-secondary education in America this spring, a 4.1% decline from 2021. Spring enrollment in 2021 was down 3.5% from 2020. The decline in enrollment marks the 11th straight year that total spring enrollment has dropped in the U.S. Undergrad enrollment declined 4.7% year-over-year, and community college enrollment fell by almost 8%. While the pandemic had an impact, the bigger issue has been cost. The cost of getting a college degree in the U.S. has risen ~1200% in just 40 years. During that same time, overall inflation is up ~285%.
#4 THE RISE AND FALL OF DEPOSITS: Deposits at Silicon Valley Bank (SVB) increased by 220% to $191 billion from 1Q20 to 1Q22. Quantitative easing increased the liquidity in the financial system, which drove the record $329 billion in equity financings in U.S. venture capital-backed companies in 2021. SVB highlighted that they banked nearly half of the U.S. venture-backed technology and life science companies. As venture capital funding dried up, SVB's client cash burn increased by 2X from pre-2021 levels. Before the run on the bank, deposits fell by $26 billion from 1Q22 to mid-1Q23.
#5 AMAZON'S CUT: According to analysis from data firm Marketplace Pulse, Amazon is pocketing more than 50% of the seller's revenue, up from 40% five years ago. Sellers are paying more because Amazon has increased fulfillment fees and made spending on advertising unavoidable. A typical Amazon seller pays a 15% transaction fee, 20-35% in fulfillment fees, and up to 15% for advertising and promotions.
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