The Everything Shortage worms into social media and internet advertising. Facebook and Google better walk that back pronto.
By Wolf Richter for WOLF STREET.
Snap, which owns the Snapchat app, disclosed this evening two tidbits that turned into bombshells that blew up its own shares, which plunged 25% in after-hours trading, along with the shares of social media giants that make money from advertising, in one fell swoop:
- Facebook: -6%
- Twitter: -6%
- Pinterest: -3%
- even Alphabet: -2.5%
- Intel: -9% … OK wait, that’s a separate issue.
Snap said in its earnings release – “earnings” being a misnomer because it lost $72 million in the quarter to add to its losses stretching back for 10 years – that there were two “significant headwinds”:
One, the privacy settings and consumer-tracking changes Apple had announced in February for its iOS platform to give consumers some protection from tracking “impact the way advertising is targeted, measured, and optimized,” Snap said.
And two, the Everything Shortage. The “global supply chain issues and labor shortages” impact Snap’s advertisers that then would advertise less because they’re low or out of merchandise to sell, and there’s less reason to advertise, right before the holiday selling season.
“While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS,” CEO Evan Spiegel said at the earnings call.
Snap is impacted through its apps when they run on consumers’ Apple devices.
Those privacy settings that Apple had implemented were expected to cause some pain in the advertising business that lives off consumer tracking and analysis. But Spiegel said that the hit to Snap’s advertising business was more than expected.
This is an issue, according to the gut-or-algo reaction tonight, that, if it hits Snap, it’s going to hit the advertising business of other social media companies – hence the share-price plunges in sympathy.
Concerning the Everything Shortage and its connection to advertising revenues by social media companies, Spiegel said that global supply chain interruptions and labor shortages would reduce the “short-term appetite to generate additional customer demand through advertising.” And so less money from advertisers for social media companies.
And, anathema for the markets, “it is difficult to predict the trajectory of these challenges,” he said.
“Unfortunately, these changes are occurring during a season when our advertising partners would normally expect their supply chains to be operating at peak capacity, and at a time when we would otherwise expect peak advertising demand to drive peak contestation, and therefore peak pricing, in our auction,” CFO Derek Andersen said.
Given these headwinds – the revenue hit from Apple’s privacy settings and the revenue hit from the Everything Shortage, including the labor shortage – Snap lowered its Q4 revenue projections to a range between $1.16 billion and $1.20 billion, well below the average expectations by analysts of $1.36 billion.
Google and Facebook better walk this back pronto.
They have to paint this as a company-specific issue that only impacts Snap. Because all heck is going to break loose if it turns out that the Everything Shortage – which is a shortage of physical goods and labor – is starting to hit revenues of companies that have nothing to do with physical goods, but are making their money off the Internet by tracking consumers and showing them ads.
If Google and Facebook don’t walk this back, it would mean that the Everything Shortage is now winding its way into the corporate money machine in insidious ways.
While at it, Intel shares plunged nearly 9% afterhours.
Intel reported earnings, which missed. It lowered its projections, with revenues to decline by 3% year-over-year in Q4, gross margin to drop by 6.5 percentage points, and earnings per share to plunge by 40%. And then CEO Pat Gelsinger explained how much it would cost to make the company competitive again.
He’d returned to Intel in February to straighten out the company that over the past 10 years had focused on incinerating $84 billion in cash on share buybacks.
He put a stop to those share buybacks and is now trying to get the company back on track, after its technology and manufacturing were surpassed by others, including Taiwan Semiconductor Manufacturing. And now there’s a price to pay.
The price to pay — in addition to the costs and risks that occur when competition blows by you — now includes up to $28 billion in capital spending just for next year, Intel said. That’s a huge pile of money in one year, even for Intel, amounting to over one-third of its annual revenues, and it sure would be nice now to not have incinerated all this cash on share buybacks.
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Even though I have been burned by Intel stock in the past, I am recent investor again. Glad to see engineering has taken the reigns.
That’s actually the best investing idea I’ve heard in a long time.
Interestingly Taiwan and Turkey have a similar GDP (Turkey’s is actually slightly larger), yet most Emerging Market ETF’s are about 20% Taiwan and only about 1.5% Turkey. Also China’s GDP makes up 1/2 of the total GDP for all EM countries yet most ETF’s only contain about 20% China.
I suppose China invading Taiwan would most likely solve this problem.
Business is financed different in different countries. USA business funds mostly through equities.and corporate bonds. Germany uses banks to finance a lot of business so their weighting in stock etf’s is small for their economic size.
How about GDP per capita? Turkey is a basket case compared with Taiwan. Currency has spiraled down from near parity a few years back to 7: 1 last time I looked. Then there is the related but separate problem of Erdogan.
This Taiwan thing has me puzzled. Is there inside info that the US and allies UK, Oz and Japan are going to let this happen? If the US abandons Taiwan, after saying repeatedly it won’t, then China could overwhelm the defense.
If it doesn’t and folks still think this is going to be a cakewalk for China then they are out of touch with military reality. All I could suggest for reading would be our only comparable on this scale: D-Day. The Allies had complete control of the intervening ocean, and near total control of the air. The CCP will have neither. The distance to Taiwan is more than twice that to Normandy, so with satellite surveillance there is no possibility of surprising the defense by leaving at night and arriving at dawn.
If the US and allies contest this, it is possible not a single intact unit will reach Taiwan. The US subs alone could take out the escorts.
But suppose the CCP wins, and the KMT hardliners don’t blow up TSC, to whom will the new owners sell the chips? Obviously there would be a total US embargo, with at least UK, Japan, Oz following and probably most of Europe.
Fortunately, is is pretty likely the CCP does not see war with the US etc. as an investment opportunity.
The actual machines needed to make new CPU’s are from companies in America, Japan, and the EU. You need machinery from all three regions to make anything new. All three have agreed to protect their technologies involved with chip making. Tawain is a buyer of this equipment and the world leader in bring it together. They also don’t do the majority of the chip design and need foreign software.
Like said before, there is a strong chance IF tawain were successfully invaded (A VERY BIG IF), that these factories would be leveled. Without the foreign made machines, the factories could not be reopened. Even if the factories survived the initial invasion, they would still be vulnerable to sabotage by locals (mainly arson).
If China threatens to use nukes. It supposedly, would only take months for Japan to develop its own and retrofit existing missles. At that point China will no longer have any substantial leverage. America might also give/loan nukes to Japan and others.
Before the 1970s, when in order to isolate the Soviet union, America switched it’s recognition of China to the mainland, America had nukes stationed in Taiwan. If situations deteriorated badly, America could just deliver nukes to Taiwan, which might stop entire invasion plan. China would still threaten and bully Japan, which might cause Japan to develop its nukes.
Over time, less and less things are being made in China, while the Xi virus pandemic temporarily spiked demand from them. You cannot trust any CCP numbers and part of the imports from them have been greatly boosted by inflation (i.e. Total imports are shrinking, possibly excluding Xi pandemic, but inflation hides a lot of it. It’s also important to remember that China is largely and increasingly a final assembly point for most “made in China” things. Anything warlike would further erode the Chinese economy. Already the Chinese economy is shrinking. Also, the demographic are declining, at this moment China has the highest number of workers to its total population, it will ever have. Even if it successfully boosts birth rates. It takes nearly 20 years for higher births to result in new unskilled factory workers and upto nearly 30 years for new births to add to highly skilled labor force (19 years including pregnancy to get an adult + 4 to 8 years of college and grad school + upto several more years to become significantly good at the job), by then increased birthrates, could be counterproductive.
Right now, the next “”election”” for the ruler of China happens next year, only top CCP officials, actually get to “cast a vote”. Xi is barely holding onto power and likes to boost nationalism with tawain invasion threats.
It’s also important to remember that over 90% of the top CCP officials have family members outside China. Most top CCP officials are not loyal to China. Half of the Chinese military budget is for “internal security”, i.e. for the CCP to hold onto power.
If China tried to invade Tawain, India could try to take Tibet. India is better prepared to take Tibet than for China to hold it, even if a Taiwan invasion wasn’t happening. Alot of major rivers originate in Tibet and so the CCP invaded it back in the 50s, China is redirecting Tibets rivers over time, which will result in famines in parts of Asia, if allowed to continue. Eventually, a war will be fought between India and China over Tibet, this would be the Golden opportunity for India to take it.
It’s even less likely but, Russia could also seize the Taiwan invasion attempt, to liberate Xinjiang, the reason to do this, would be to separate China from Central Asia. Russia and China are not allies, and if China attempts an invasion of Taiwan, the resulting backlash from the rest of the world, would make China much weaker and would make the fake friendship between Russia and China into a negative value. This would also make, if India invades Tibet, Russia and India into neighbors, turning them into the 2 dominant powers in Asia. It’s unlikely, but such an easy golden opportunity doesn’t present itself often.
As a Marine veteran I’d like to ask Nick how many of my brother Marines he is willing to sacrifice to save Taiwan? 5,000, 10.000? How many sailors? Then there’s the little issue of impact on the environment. Many of our ships have nuclear reactors. What will the impact be on the South China sea when a nuclear reactor is ruptured and sinks to the sea bed? Think Nick, its not a game.
It’s a hit smack dab in thee wallet, please let us buy back and do over.
at least they are only 5 years behind TSMC and likes
maybe they can do XI and steal patents to make super duper computer chips
why do you think chinese have super hypersonic weapons merika only dreams about
forgot – woke military
“IF”? China invades Taiwan….
The Taiwanese will do what the Afghans did…..
“We’re with you!”
When China invades Taiwan, you will be rich. FIFY :)
Isn’t it just ridiculous? … like all these financial shenanigans it was easy to see how it would play out and now it has … but who cares because the stock is up right? This is exactly why you don’t blow all your money on buybacks … now you need it… and if it hadn’t gotten blown on buybacks maybe they would have decided to use the money along the way to stay current an invest in the company’s future every year like they should.
Snap has been a net taker in society. They have burned through $8.2 billion in capital. At some point, the market stops feeding them capital.
Meanwhile the two largest gold miners are paying out combined $2.75 billion in dividends this year (around 4%)
and they are out of favor. I guess there is a saying going around that BANG is the new FANG. Time will tell if miners can buy love.
Lol actually making money is out of favor. They would be flying high if they were losing billions every year. We are living in bizarro world where down is up and up is down.
Escierto opined: ‘… actually making money is out of favor.’
MMT seems to be in charge these days. According to the administration … “Milton Friedman is not.” Even though the only crime he committed was DESCRIBING the phenomena.
You have that backwards, Escierto. MMT describes fiat monetary operations as in effect since the Nixon shock and the collapse of Bretton Woods. Friedman describes nothing relevant to current institutional arrangements, and won’t unless there is a return to commodity money (viz a gold standard)
My refrigerator started making this insidious creaking door noise just in time for Halloween. Gave up trying to buy a refrigerator replacement because nothing is available with a water filter. Everything worth buying is ridiculously back-ordered. Darn shortage.
Oh but happy, I purchased a home last year. After my divorce, I was reeling financially, and there were huge COVID fears in real estate, but I have young children so I decided to buy anyway. Everyone was super afraid of COVID and there were houses that people wanted to get rid of immediately – even in the Bay Area.
I just barely afforded my Bay Area home (negotiated down the price with the seller thankfully as she was about to die so she didn’t care). Now, the home has appreciated in a year over 700K after a major tech company announced an office close by and the huge price growth of the past year, no way I could afford my home or any home within 50 miles of my current residence.
As an early 30’s Bay Area millennial, it feels like a casino and you either risk it all and win (a basic middle-class life) or fall further and further behind. We live in crazy times. Most of my friends (if not dual-income in tech or finance) don’t have kids and are nowhere close to affording a home.
Goldman Sachs’ 16% estimate of housing growth next year is flat out wrong based on past rates of family formation and childbearing. There is way less family formation going on than in the past. I would bet that 40-50% of Millennials will end up childless in 20 years and have no need for a large middle-class home.
My only daughter, at 42 years old and her 42 year old husband, are childless by choice. No grandchildren for me! But that’s OK as they are a happy and self sufficient couple.
Daughter, 1 child. Son, says there will be none. For daughter she was concerned about another pregnancy (1st one tough), autism, etc. Son has seen every one of his friends end up in Splitsville. Both are financially set and stable and don’t want to risk that, either.
New reality for the times. Looking before you leap. What a concept.
Great article and informative comments.
It’s not surprising that people are opting out. It’s just much harder to have children these days – there is no community and no public resources. Everything is so expensive from housing to child care.
Specifically in the Bay Area, I’m very happy that I had my children in my mid-20s. While it was hard, childcare and basic services have gone up so much.
I have a master’s degree in STEM. My income has in no way increased proportionally to the cost of living here.
It’s just much harder to have kids with no community support and few other kids and parents in the neighborhood. The stress of having children, working long hours at stressful jobs definitely led to our divorce. It’s smart to avoid it if you can.
I knew I wanted to have my children young so that I could play with them, relate to them and be young enough to enjoy my grandkids. Some things are far more important than money.
To buy a home and have two children in my neighborhood today, and I’m not in a great school district, you’d need to have a huge windfall. You need at least $500K in downpayment. Plus probably a monthly income of at least 300K, probably closer to 400K would be good. Not that many people can achieve that.
This was a very solidly middle-class, middle-income neighborhood, even for Gen Xers.
you meant annual income, not monthly right?
Sorry, yup annual, not monthly.
Sound like Cupertino, north San Jose area. Very possibly Sunnyvale, although I doubt it. But a year with $700K increase in value is pretty decent. Hopefully you refi’ed at a decent rate… unless the original loan was already good.
Yep I am seeing some 2X to 2.5X house gains at NC beaches from Jan 2020 panic to today’s prices. Unbelievable to make $300K- $500K while vacationers paid the carrying cost.
Speaking of appliances, my clothes drier belt failed today. Like most of my stuff it’s old. Googled it and it’s an easy repair.
Hopped ony my 31 mph monster scooter and took off on the 8 mile ride to Lowes. Part was in stock and raced back home at break neck speed. $12 for the belt and 50 cents gas and it’s all done. Lovely fall day for a ride made it all better.
It’s really an easy repair if it happens to you. I try to never let a repair person in my house as I was engineer and it’s a big defeat if I can’t fix a mechanical device.
Youtube/etc have really been a godsend for DIY’ers…seeing videos of all sorts of repairs *really* helps and I am constantly amazed by the range of fixes that people post for free.
It does make me wonder about the future of repair call services since 1) they tend to be absurdly overpriced just to get personnel to come out and 2) my guess is that a high percentage of services calls are for things that are actually pretty simple.
My dryer did not have a tensioning wheel, but a tension guide semi circle wear plate. I couldn’t figure it out. I finally found the exact design on You tube. I felt dumb once I saw how simple it was.
Most big appliances could be redesigned to be very easy and cheap to keep going for decades. In order for this to happen, they would have to be legally forced to. It’s likely if they are allowed to, that appliances could have their parts chipped in order to prevent non authorized repairs.
Most actual homeowners are very inept at fixing house and no YouTube videos are going to save them.
New houses though, have less and less problems over time (they are better designed), and actual fixes needed will drop over time. The only major exception, is that some new houses, particularly single floor houses have thinner foundation walls, which does cause major issues, not a DIY fix. It’s a cost savings measure.
The repair call services will survive, unfortunately for many of their customers.
Yes I agree! I don’t mind paying my repair man if it makes sense and can “keep the old one going” so to speak. I had a plumber replace the valve in my shower handle and it was almost $300. Now, I have to beg to get them to even show up. So, had to replace one in my apartment and …you guessed it, thanks to UToob I was able to do it myself. Did the whole thing for $95 and got the puller tool for a nice addition to my tool chest. I also can use the PEX for easy plumbing and oh my that guy that invented “Sharkbite” fittings – well, I hope he is on the beach with the cold drink and he has my vote! I feel empowered – ok, yes, it takes me twice as long and many re-dos and screw ups and wasted pieces of plastic pipe, but it’s still much cheaper and less begging than calling Joe the plumber! Cheers!
Here’s a tip I got from a friendly repairman about 15 years ago. Scrape food off dishes before putting them in dishwasher. Your washer will last 2x-3x longer. I’m still on the same washer 🙂
Well done Old School.
There will be more and more self sufficiency learned in the coming years.
Know how….and tools…..
I have always consciously positioned myself with super-short supply-lines to needs. Aging mom is 5 miles away. Big food store is 1/2 block away. Wooded park abuts my property, big-box store is a walk over the river and through the woods. I don’t touch a car or phone in any day unless there is a necessity to do so. I pioneered the no-kids model (college in 70s, got out of higher ed in 1981). (For that, being a caretaker child now, I realize the bill comes later, probably rather harshly for me, but I have so much freedom, time and economic benefit now!) So my refrigerator failed this summer and the smaller replacement was $235. A bonus was $10 per month off my energy bill (to about $15/month, summer and winter). My deep strategy is, things break, so have the smallest point of failure/disruption when they do. So I slept like a baby through 2008, piling up equity in the home with no interruption of anything. Coming of age in 70s culture told me I had choices for the large parts and contours of my adult life. I chose one that would sip resources and not degrade the planet’s treasures for a pointless menu of contemporary conceits and “fulfillments,” which will be gone (or mouldering in a landfill) in the blink of an eye anyway.
Meanwhile in other news…
Traffic is back to normal…
The 4 mile traffic jam has finally cleared up just past Lowe’s…
Police say they have no idea what caused it…. :)
Ditto in the Bay Area on 101, 880 and 280. All around me they keep building massive one and two block size, 5 and 6 story apartment and townhouse complexes. Single family homes is a thing of the past in the Bay Area.
Developers tell city leaders to build along commuter routes (trains and buses) and they will not take there cars. Yeah, lets see how that works out? In Portland they built a apartment complex with no parking. Now all the neighbors are complaining of all the apartment dwellers jamming up the street parking.
Glad you landed on your feet. Divorce is really, really tough.
2 pieces of advice (which you look like you don’t need.)
1. Luck is like a light bulb – it shines when the current is on. You made a decision. You weren’t overwhelmed by all the surrounding noise.
2. You cannot turn back the clock, but you can rewind it. Looks like you have a faithful clock.
Real estate is a casino. Your property may have increased in theoretical value like mine has but it doesn’t do you any good. You can’t sell it as you still need to live somewhere – unless you are thankfully about to die. And the casino always collects it’s property taxes. What has a $700K increase done to your taxes? Mine have been a bonanza to the county.
It’s more difficult for families to have children when society is actually becoming poorer, even though it’s disguised by artificial fake prosperity.
Interesting article Wolf. You expose an element of inter-connectedness that many folks might not be aware of. Pain to follow.
I’ve had conversations with my clients, all of whom are in tech sector. They all have reduced their compensation offer to new employees by as much as 40%. Now, imagine someone who was making $100K, now will be making $60K. That is huge. The real economy is collapsing; it is only Wall St. and FED printing that is not collapsing.
Yet, you have con artists such as Cathie Wood who is telling people stocks are in a bull market till 2038.
This is simply not true. First off, the data disagrees. Second off, I’m a tech CEO and wages have gone up 20-40% since beginning of the year. Third, I know folks in tech across the world and wages have gone up, not down.
If you sample the best ______, wages are rising. If you sample the dying, wages are falling.
Yeah, I’ve heard of the alternate universe. Tell it to someone who is not in the nitty gritty of the tech job market. What is wrong with you people spreading false news? Are you paid for it? How do you profit from your lies?
Do you think by rejecting my statement in this little conversation, somehow the stock market won’t collapse? What you and I say will have no bearing; but stop spreading lies.
What lies exactly? This is data, Dan. I didn’t speak to the stock market. Indeed, we live in a reality where the stock market could take a nasty hit, while wages continue to rise. That would be a good thing.
A friend who is a manager at an old school tech company has lost 20 of his 26 computer programmers since covid to other companies. They probably made 75k to 90k in a midwest city. All left for higher wages One program was given $250k in RSU stocks besides a big raise.
So, you are a tech CEO, right?
Tell us about a few specific technologies that you use in your business and what is their purpose. And don’t give some general technologies. Tell me about what technology your teams are using for ML modeling.
Dan, why would I have to explain any of that? And, how exactly is it relevant? We’re talking about hard data here. Go look it up bud, it’s all around us. Not even the Fed can get enough of wage pressures at this point.
Dan you are wrong and Wut is right. Wages here are sky rocketing. I work in tech and i didn’t go up 20 percent but i did get a 27k bump at start of this year. I cant speak for other companies but the one i work for had record breaker raises this year as well as other perks. Cheers.
“Tech” is very broad, both geographically and technically. Both of you could be right.
Disappointing that you’d rather have a flamewar than sort it out, though.
Did you run the BS checker on that?
No, but I did run it on yours and it was off the charts. 🤣🤣🤣
Every bull market breeds a worthless Wall Street celebrity good at self-promotion and garnering attention and not much else.
Maybe if they are help desk or repairing printers.
Companies can’t find talent. One friend said he is topped out at his gov contractor, pretty young making $115k, said his old boss hit him up and he is trying to jump to $130+.
Another friend that works for AWS said it’s a good time to be looking.
Turned on my linkedin feel free to contact me option and it’s giving me tons of jobs. Mostly cloud architect stuff. If I can pick up a bump for $40K or more and job looks fun/challenging I will jump. Need to keep up with the jump in house prices.
Thank you, Ethan. This sounds more like the reality of tech today. Go get that pay jump.
And don’t forget to ”keep up” with the best latest location(s) E!
Some say there are places now either wanting or trying to avoid becoming the latest Austin,,, for some reason,,,
Can’t exactly relate to the tech wages currently, but remember well the HUGE bumps back in the late ’60s for anyone able to fix programs in binary,,, or at least track down the errors…
Had a lot of fun then in Jovial, and later in Fortran, etc.
Much too slow for me, and had to go back to carpentering for the exercise AND the money being SO much better than the programming.
Whoa……..Sounds like some problems out there. There are many that think we are at the edge of a cliff. What do you think ??
Everyone can see that we are at the edge of cliff. The only idiots who can’t see it are in crypto, Tesla, or Wall St. lala lands; but soon enough, they’ll pay the price for their stupidity.
Speaking of Tesla, Wolf hasn’t much written about it lately. Maybe we were all wrong and it’s gonna really dominate the market for decades to come?
The fact that they managed to report that level of profit in this environment is exceptional. I’m a skeptic but it seems they are doing many things right.
I’ve written about it in broader terms, for example here:
As a tech CEO in advertising, this isn’t a normal Q4. That’s for sure. I started my company out of the Great Recession, and this is the weirdest Q4 yet in terms of market trends. It is possible to navigate and mostly driven by shortages. I think the shortages will pass by Q2 2022.
Let me ask you again:
So, you are a tech CEO, right?
Tell us about a few specific technologies that you use in your business and what is their purpose. And don’t give some general technologies. Tell me about what technology your teams are using for ML modeling.
If you run into Bobber, tell him this is how I BS check my sources 🤣🤣🤣.
Time to cut out this ad hominem crap. Your comment of tech workers’ wages getting cut by 40% was called out as BS. Take it like a man :-]
Dan, I am not online waiting for your reply. The fact is, you’re wrong.
My knowledge in tech has absolutely nothing to do with this, so I have 0 intention to answer an irrelevant question. I just called you out where the data disagreed with you, nothing else. I backed it up with my own position, and what I’m seeing within the technology sector.
Now, if you’re in tech, and earning less, then you’re doing it all very, very wrong. I’m sorry you’re struggling.
What’s your business model?
Spying on people and selling their data.
What if they don’t like that and figure out a way to block it?
“Those privacy settings that Apple had implemented were expected to cause some pain in the advertising business that lives off consumer tracking and analysis. But Spiegel said that the hit to Snap’s advertising business was more than expected.”
Who are these companies? Snap huh, whut? Places for social media victims to kvetch? Intel? Linux runs perfectly on AMD.
Pro tip. You can get a $20 dollar unlimited talk and text monthly subscription with no data from t-immobile. No data means no background data reporting on all your farts to central command.
Your phone. your online presence, and the record of your purchases are not your total reality. Just shart that off. Become an autonomous person that can find their way around without a robot voice leading the way.
Linux may run perfectly on AMD, but AMD is in for hard times as well. AMD motherboards need the same (or substantially similar) GPU boards, memory chips, HDDs, and power supplies that Intel boards do. It is the lack of parts (or very slow delivery of parts) that is killing chip customers.
The demand is there for devices, but try getting the latest devices!
At least that is the problem in Australia, although overall demand is down as well due to lockdowns and strikes.
I have ten year old AMD processors delivering more of the the non sanctioned porn than you can imagine, Mr. Biden.
It must be hard on Intel when potential customers can’t get their hands on the latest chips and motherboards from them. Also, support components, say from NVidia, are out of stock (at least in Australia). Without developers getting their hands on the latest hardware the applications that can take advantage of that hardware are not developed. Without applications demand falls further. A vicious cycle develops.
My company has customers, we have requirements, but we can’t get parts or parts only arrive VERY SLOWLY. Of course, having some customers in hard “lockdown” regions doesn’t do much for demand either.
Welcome to the era of “Post Buy Back” !!!!
“former President Donald Trump announced that he would be launching his own social media platform. In addition to setting the stage for an early 2022 launch of Truth Social, he also announced that it has entered into an agreement with Digital World Acquisition (NASDAQ:DWAC) to come public. DWAC stock has risen an astounding 336% since this morning.”
Does this mean he finally can spell hamberders correctly? As If Elon Musk, Chamath Palihapitiya, Michael Saylor, Cathie Wood are not enough; we needed another con artist.
Sour grapes Dan. Let me guess, you missed the boat on DWAC, just like you missed the upswing on ARK* and TSLA. Didn’t you?
I am enjoying a bottle of fine OH right now thanks to DWAC bump today.
Nacho Bigly Libre,
In order to buy your “bottle of fine OH,” did you sell your DWAC and use that cash to fund the bottle, or did you leverage your gains without selling by using DWAC as collateral? The latter is what lots of people are doing. And that’s how stock market leverage grows so fast.
I sold for my bottle. hic!
I trade options but I don’t buy anything on leverage. I don’t want to get margin called. And I don’t want the GME treatment – when brokerages didn’t let buy orders through.
The Dems should be in full panic mode now. The only way they can survive is with total censorship of the truth.
Half of America will immediately become users. This will help end the November 2020 corruption America witnessed but is not allowed to talk about.
Also, this is the big reason why social media stocks took a hit.
Investors see this.
I would like to see a platform without censorship of political opinions. However, I doubt this one will be any different than the rest. They too will censor what they don’t agree with, only it will be from the right. If it isn’t anonymous it will fail.
Rumble was supposed to be an alternative to utube, but is a huge disappointment.
Try brandnewtube.com if you want to beat the censors.
I too would like such a site P!
Problem is that, unless closely monitored for focus and ”probity” AKA politeness AKA non personal ”stuff” etc., etc., all the ones out there have become cess pools by any name one chooses, where the focus is on and by folks getting their somethings/ya yas off at other commenters rather than addressing the issue of the article.
Folks have probably asked the Wolf to do such a site, but he is likely already busy enough with Wolfstreet.com, eh
Update: You can spell out YouTube fully. It hasn’t been a tripwire in years. Now it’s just YouTube links (like any links) that will send the comment to moderation.
The Democratic are hardly going to panic because this latest Trump venture is going to be another scam. It was set up in a SPAC for Trump to scam a few gullible investors out of their money which he will take once the company is set up, thus leaving the sheeple holding the bag.
Saving grace for Snap et al.: “When business is good you should advertise. When business is bad you MUST advertise.”
The point of the article is that there is no point in advertising if you have no inventory of stuff to sell.
David Stockman is wicked smart at seeing the big macro picture. He said about 5 years ago that the advertising industry just isn’t big enough to support the market caps of the tech firms that are hoping to steal it away from tv and print even if they get every dollar it’s just not that much money.
Is this touted advertising model only applicable to handheld devices? Is that the market focus? With Adblocker and a mute button I don’t see how there is actually any money in it? My wife and I have vowed to never own a smart device, but it is getting harder and harder to maintain that commitment and we are rural.
Went to lunch the other day after the Covid drought. Sat in proximity to a young couple. The woman was endlessly cycling through a scroll, and the young man was alternating between talking and scrolling. You think they were looking at adverts? Cat videos? Instagram with adds tacked on? What an effed up World. I found it quite sad, actually. Privacy and freedom demands in every other protest in a society of being continually tracked and shilled. Crazy. I cannot believe there is actually profit in that for companies. Or, was actual profit :-)
Advertising is just another market vastly inflated by the artificial economy.
Half the money spent on advertising is wasted but they don’t know which half.
Bought the Trump SPAC (ticker DWAC) that’s going to be his new media platform. Made bigger percentage gains in a few hours than I have on any short or long term trade, ever. Real work doesn’t pay in this clown world.
Yep. Fed is making it worse. If rates stay at zero we are all going to be asset rich with nothing available to buy.
Not a hold. Take profit.
Luckily I managed to sell for almost 400% above my entry point and a profit of ~$30k.
Obviously I’m happy with the result, but it’s also strangely upsetting. The whole idea of “investing” as a way to make money is nonsense. With work undervalued, I have to gamble just to try and maintain my purchasing power. Multiply that out by all the affected people and the underutilization of our collective skills, education, and time is tragic.
I think the only useful part of investing is capital raises. I would disallow trading altogether, or maybe limit it to one week a year, if I could.
When median income is $34K, half the country isn’t worth advertising to because they have no money.
I started off the year intending to make it a low buy year, instead it became a big buy year, due to stuff going to heck in a straight line. Coke Cola can advertise all they want, but I stopped buying it two years ago, because I couldn’t afford it back then, still can’t. I could list many more items. I don’t even care about the shortages anymore, can’t afford to. Next year is shaping up to be a no buy year.
In a real economy, when the economy crashes, there is no money to spend; that causes all the prices to come down, and thus make life a bit less difficult.
But now, they con artists at the FED and the scammers of Wall St have pumped up all asset prices even higher than before; this has caused commodities to inflate instead of deflate.
Now, we have lower income, but also much higher prices thanks to that POS Powell. It’s going to be extremely hard on the poor and the middle class.
Fed knows printed money handed out gets people to spend it, but it’s a tool to use in an emergency. They have been on a 20 year print run and the economic patient is dying.
The Intel stock drop show why we are losing the semiconductor race. Yes,earnings were off slightly but it was mostly about Wall Street throwing a fit that Pat plans to spend 29 $Billion this next year on Fabs. The financial sharks were happy when Intel was incinerating cash in buybacks but they whine and cry when it is time to stop burning the furniture and get out to the wood lot and do the hard dirty work of laying in the next winters firewood supply.
Dan did you miss the last few years? People saved more money working from home and getting company and gov payouts. This can not all be blamed in Powell. Wages have also gone up. You do have to blame the consumer here as they are buying now in a race against inflation. Until they out their wallets away and have a buyers strike…. We are all to blame.
I saw a BLS chart that says blue collar workers are down in wages in Q3. The chart breaks it down by demographics, genders and ethnicity. Joe Donuts is broke and can’t afford the donuts anymore, might have to call him Joe NoDonuts.
Government payouts can be blamed on Powell because the government payouts are money borrowed from Powell. That money when spent goes to increase inflation. If Powell raised rates the government could not afford to borrow from the Fed.
Or maybe Joe Nonuts 🙂🙂
I think Feb/Mar is when the bill comes due for all this we prudent people have endured…
The money is gone…
Supply Chain caught up but too late for Xmas…
Tax bill coming…
Student loans have to be paid…
Housing and autos correcting…
Loans from 401k needing to get paid back…
The lower 60% will try to keep spending but put it on credit cards and then walk away…
Interest rates rising…
Energy will stabilize or decrease…
The lower 60% have zero slack and the free money is over…
The only thing I see that may change things is politics trying to keep the Dems in control…
But I don’t really see that happening given the giveaways and inflation…
Come on Pet. I’m a budget guy too, but can’t afford Coke?
I will say this, when just buying a can there is a generic Cola at half price at my near corner store that I doubt most people could tell from Coke. So I buy it. Adding an oz of rum is a budget issue.
Good thing you added ‘Cola’ or everyone would say: who can!
I never did drugs because I got addicted to nice things at a young age and enjoy them more. Dad was bringing me huge bottles of French perfume and soaps when I was still in grade school. Nice jewelry too from around the world. Plus as a teen had hundreds of bootlegged albums from Asia in rainbow colors. Just a few of the things I got to appreciate at a young age.
I drink a lot of soda, so yes, I couldn’t afford it anymore. Started buying the cheap stuff and went from $5.49 a 12 pac to $1.99 a 12 pac. So the savings was significant, and I have a very nice handbag to prove it, which I also bought at a discount.
This is how I know substitution affects any consumer item. If it’s not worth it anymore you stop buying it, no matter how much you like it. Now, I wouldn’t buy most luxury items, even if I had the money, because I don’t perceive the value as being there in most.
I forgot to add a story about why I never became a big drinker as well.
When I was about ten my dad caught me tasting the booze in a shot glass leftover from entertaining his friends. He very calmly took the bottle of whiskey, poured me a shot, and made me drink it. I almost died.
He then showed me where he kept the bottle and said to let him know anytime I wanted to have another drink. He would be happy for the company because my mother didn’t drink.
Never drank much after that, didn’t seem to be that much fun.
Nick Kelly (and others)
Decades ago spent several years working for one of the most powerful global grocery industry’s merchandisers. He always inevitably labeled most all the soda waters sold as, “Belly Wash”. Especially the generic ones including his own company’s.
And he wasn’t wrong.
Median household income is about double $34K but agree with your post otherwise.
Sorry, picked that up from an old video I recently watched.
People forget how much the Spanish Flu pandemic changed the world. It brought on an abrupt end to WW1 and government stimulation brought own the Roaring 20s, which resulted in the Great Depression. So far, we are o n the same path. But, of corse the Fed has learned those lessons!
Robert Russell- “we are o n the same path”- Very insightful, but instead of the “same” I would say we are on the historically “rhyming” path.
The 2008 recession/crisis is a lot like the 1914 crisis (beginning of WW1).
It took ~15 years for that to age into the 1929 crash. That would be about 2023, I guess.
I don’t think the problems we have now are “as serious” (millions of deaths from war and pandemic), but they are serious enough. One of the “sentiment” reasons for the 1920s was that people (understandably) thought they had survived a bad war and pandemic, so it was time to “enjoy life”- maybe a bit too much.
I suspect we will see some kind of very volatile price reaction in the real economy and the financial markets in the next few years.
Financial instruments need a reversion to mean event.
If this is the beginning of a 21st century “roaring 20’s”, the end is going to be one spectacular economic and financial crash, even bigger than I expect as probably the biggest pessimist on this blog.
It’s taken a 5X increase in government debt this century and a 9X increase in the Fed’s balance sheet since 2007 just to (supposedly) keep median income flatlined since 1999. Check FRED; it’s up a whopping 6%, not annually, in total.
With inflation heating up due to spreading fake purchasing power to the masses during COVID, I’m waiting with baited breadth to hear what’s going to cause the economy to “moon rocket” for the rest of the decade.
On Hogmany ( Jan1 ’20) I emailed a friend saying.
” I wonder if the 20’s will be ‘Roaring’, like the last time, not that I was there, you understand.”
Within months we both regreted how I had tempted fate.
I just have to say that. Someday TSMC might just swallow Intel or our deep state will demand a merger of the two behemoths for national security reasons.
Not going to hold my breath sir.
Internet advertising is utilitarian, has no value added, and therefore is useless.
Are you speaking from experience? :)
You been talking to my ex-wife?
The only advertising worth considering is classified advertising. I was in it for 25 years and customer could easily track results. Especially if a tracked phone number or other way of determining source is used. The rest is park bench advertising for the birds.
What value did advertising ever add? Information perhaps, but now we have Wikipedia. I guess advertising keeps the “creative class (chattering class?)” alive (barely), but that’s its only value. I pay for my local woke newspaper but only read the obits. Oh to be a listicle creator, what a great vocation!
The obits from most newspapers can be read for free at Legacy dot com.
He says unironically, while commenting on an ad-supported site.
Why don’t you ask Wolf whether ads provide him any value?
Ads? There are ads here? Where?
AdWords works like a clock, however much you can hate Google
Didn’t the stock market hit new highs today? Probably not a good time for a revenue/profit collapse?
The article provides an interesting financial system information related to the online advertising world, which is opaque to most people.
We see the click-bait surrounding most online content. Who would not instantly perceive and avert attention from the pendulous list of “you might be surprised” and other crass baiting at the bottom of so many web pages?
It doesn’t give any confidence in humanity that the advertising world actually makes profit from psychological techniques designed to mislead, often lies.
From what I was told (long ago, may be apocryphal), corporations can get 50% tax deductions. So tax payers are helping to fund the mass mesmerization of morons.
“It doesn’t give any confidence in humanity that the advertising world actually makes profit from psychological techniques designed to mislead, often lies.”
Didn’t you also mean the Govt and MSM in that statement?
I’ll have to think about that – seems like comparing apples to oranges to bananas
Not to ‘Nuts’??
100% at least WAS the deduction when I was briefly advertising dp.
”Word of mouth” happened directly thereafter, totally unrelated to the advertising, and was the case until final retirement in ’19.
I firmly believe behind the curtain is deflation, not inflation.
Car sales has plummeted and Intel down 9%, what this tells you. It’s the demand drop through the floor. However, the rate of decreasing supply *outpace* the rate of decreasing demand, i.e. you see price inflation but there is A LOT LESS DEMAND.
Liquidity is critical everywhere.
Its actually both, deflation and inflation will run side by side but different products. This will go on until we see complete collapse of monetary system. Then it will be a “reset” and new digital currency.
I respectively disagree. We are gonna see stagflation first before we see deflation.
Extensive use of SOCIAL MEDIA classifies You as an IDIOTIC LOOSER !
Intel will be forced to cut their dividend. Until they do the stock is a sell.
As for snap and the other advertisers, ad blockers are a must in this low trust economy of ours. It’s not just that they steal our privacy and sell it to anyone with a buck. Too many web pages are full of malware that can take over your computer. These companies would be out of business if most people had even a basic understanding of personal security.
I wonder if the use of ad blockers in browsers, such as the automatic blocking done by Brave, has had an appreciable effect on advertising.
To get some idea of how much gunk is downloaded in the background, here are the current numbers from my Brave browser:
“2,918,014 Trackers & ads blocked, 29.56 GB Bandwidth saved, 1.69 days
I use a computer rather than a TV or phone for most of my data accessing, so my numbers are higher than average, but that’s still a lot of crap that isn’t getting fed into my brain.
Many people are also mad at the MSM and the increasing censorship on major web sites such as Facebook and YouTube. Perhaps some of them are doing a bit of guerrilla “economic warfare” and trying to both save time and money and also deny ad revenue to the censors.
Yes, ad blocking on basic sites like mine plays a role, and ad blocking eats my lunch, thank you!
But in the Snapchat app, you cannot block ads. On Google Search, you cannot block search ads either (the headlines with the “Ad” in front). You cannot block what Facebook is sending you. Ad blockers and browsers like Brave can only block third-party content. If the ad originates from within the same organization (server), it cannot be blocked.
For example, Brave cannot block the ad you see at the bottom of this article (metal shingles for roofs) because that ad comes from my server.
So yes, ad blockers and Brave eat my lunch (thank you!), but they don’t affect the social media ads much. That’s a technology that goes far beyond browsers and ad blockers.
There is a browser extension called F.B. Purity that will block most sponsored content on Facebook. FWIW
The problem that I have, and perhaps some others, is that advertisers don’t know when to quit… and not just internet….
A 90 minute movie stretched to 2.5 hours for ads… a web page bombarded with ads for revenue… a football game to 4 hours… etc…
What I cannot stand are ads that ruin my experience whether it’s reading a web page or some other circumstance…
For valuable content or experience, I will pay not to have the ads or just not participate at all…
I’m grateful for this site and how it’s handled even though I use an Adblock..
I do put my money where my mouth is and drop some coin in the donation mug…
Wolfs articles are one thing and terrific , but the commenters are stars here as well…
I just started using TUBI. Yes there are commercials but what I consider a reasonable number. Just enough to give you time to run out to the kitchen and get a snack. Gained 10 lbs since starting TUBI.
COWG (and others):
Not being aggravated by 4 hr sports events (if u do view) and the awful accompanying ads is to use the “stop and resume” facility on your TV hand held device.
I record anything that I wish to watch including any movies or sports events; whatever.
Then I play back and fast forward thru the stupidities.
If a live program I do the same thing.
I understand why advertising.
I just don’t want to be involved.
On my desk top I use AdBlocker and it does the job.
Now, i have to figure out how to apply AdBlocker to my new million square inch “Smart TV”…..I know it has something to do with the cable internet modem.
Sorry Wolf. I block as much as I can from everybody. BTW, you block some of my stuff so we are even.
But I thought the metal roof ad was an article that I found very informative. Actually a good example of how advertising should be done. I always wondered why everyone did not use metal or tile roofs or metal that looked like tile. I had to reroof a house years ago and I used asphalt over asphalt so I did not have to take the old roof off.
And Snapchat, Google, and Facebook are of no interest to me.
You forgot to add that you have donated generously to my site multiple times and that you have a WOLF STREET beer mug, and so thank you! You’re more than welcome to block the ads. That’s what ad blockers are for :-]
Wolf, just for you, I found the little shield icon with a lion’s face on the right side of the URL window in Brave, and I turned off the blocking for the ads.
You are now the only site I am allowing to display ads. Enjoy your lunch.
As for social media, while fumbling around to locate the ad controller, I found that Brave does have some ability to block it. These are the controls listed under ‘Settings -> Social Media Blocking’:
“Social media blocking
Allow Google login buttons on third party sites
Allow Facebook logins and embedded posts
Allow Twitter embedded tweets
Allow LinkedIn embedded posts”
BTW, for YouTube, there is an app named “Demainstream” that removes most MSM links from the suggested videos list, see the ‘Readme’ section here for links:
This means that it’s easier for guys like me to find guys like you on channels such as Wealthion, because you don’t get buried beneath MSM stuff.
There, I just gave you a free ad, and told your readers how to tune out your competition.
Now we are even.
So the business model of running a giant virtual billboard and selling the behavioural data of marketing-manipulated drones to those who manipulated them in the first place does not earn you billions and make the market go to “new all-time-highs” any more.
Sounds like a beginning of a return to sanity.
Years ago, traveling in Mexico, there was often a (rich folks’) toll road and a free road for the commoners. The Internet free road now seems like a trashed Vegas strip of insipid attention-grabbing noise, probably groping for the loose change and impulsive moments of the bottom 50 percent (in means, IQ, etc.). Its stupidifying feedback calls to mind the world depicted in “Idiocracy.” Once that scene gets crowded enough, and the margins on overpriced impulse junk (and the outrage industry?) get thin enough, what might this do (and Wolf sharply asked this here) to our current “national champions” of tech? I can’t think of the title, but a book published a year or so back made the case that many of today’s innovations are tinkering around the edges of smartphones, whereas the big leaps were, more like, the arrival of indoor plumbing and electrification, a century or more ago. I wonder whether all this diversion of brains to this version of path-dependent tech history will live up to the touts (though I am very glad every putz does not have a “flying car”).
If the phrase “outrage industry” is yours I congratulate you. I’ll be using it from now on. Pretty much sums up the interweb.
You might be thinking of Robert Gordon’s “The Rise and Fall of American Growth” which is actually 5 years old now.
The story was that social media companies are immune from margin pressure resulting from shortage induced inflation.
This ends that story.
Friend called from NoCa to tell me that panhandlers had taken over the square in our old town. They aren’t even nice, she said. They just demand money. I told her in the old days SF was full of them, and some made a good living. You had to have a spiel, a story, and some were very good. Advertising has degraded as well. McLuhan used to call it creative content. At its core advertising is a tax. The tax collectors become more persistent when revenue is falling. We use googles search engine every day, and pay no use fee. (other than our ISP and buying hardware). Libraries have free online access and gov offers free cell phones to the needy. Likely the books aren’t balancing and this has to do with wealth distribution or the lack thereof. A free platform based solely on advertising revenue seems like a solution, if it were possible for it fail only on the macro level. In turn it impoverished us all.
The stock market is much more difficult than people believe. INTC stock is down about 60% in real terms in the past 20 years.
Do stocks always “come back” to their price after a bear market?
You might need to wait a long time.
Intel has some fine technology, engineering, etc. Stock price responds to more than just those variables.
Problem is INTC missed the smartphone application processor market.
Weren’t they in a pissing contest with Apple back then?
INTC made some big mistakes … like selling their XScale and ARM business years ago because they thought X86 was all they needed. Bad management.
Furthermore, QCOM has some very anti-competitive qualcom arrangements in the market.
I hear Powell said today that inflation will be transitory, but persistent. Will somebody please give him a dictionary? Aren’t “transitory” and “persistent” antonyms? I guess this is what happens when a Fed chair gets backed into a corner through missteps and foul play, and there is nothing legitimate left to say.
It reminds me of the final scene in Gladiator, when Maximus slowly but surely pushes the knife into the emperor’s neck, as the Emperor attempts to defend himself with feeble arm thrusts.
“ I hear Powell said today that inflation will be transitory, but persistent…”
That’s what Custer said about the Indians…
The weather folks say that about hurricanes when they hit the Gulf too.
As a small chemical manufacturer, I can attest to the no advertising. During a typical year, I spend about $60K in advertising. This year, I told the three trade magazines I advertise in I wouldn’t be advertising this year.
When they reached out about my plans for 2022, I said I won’t be advertising in 2022 either. At this rate, I wouldn’t be shocked to forgo advertising in 2023.
Nemo, drop ad size and duration. If monthly rotate among the 3 mags. If you have been advertising for years, a small buy in the same place may work as good as the larger buy. People looking for your ad will find it and realize you are still in business as well as new customers.
Put up a small but thorough description of your products on your own website, and then a couple of ”short timers” on a ”trade” website 2 or 3 times a year N3.
Many talented web site creators out there these days who will make the site for you for a couple grand or so if you cannot do that kind of work your self.
Maintenance is well less than 10% of $$ you mention.
Why doesn’t it seem like anyone understands advertising doesn’t work
Why do we pay so much for goods and services that these companies even have the money to have an advertising budget.
We need to bring these companies to their knees and stop buying stuff we don’t need for prices that are way way to high in the first place. We can change the world but we gotta make some sacrifices to do it first.
ALSO WHO THE HECK WAS BUYING 120 million shares of SNAP yesterday. The company and all social media companies are worthless. Why would you buy shares of a worthless company for $50? Can someone please explain to me why anyone would buy a single share of a company whose only source of income is advertising which as stated B4 clearly doesn’t work.
I’ve always pictured the USA following the footsteps of the UK at 100yrs distant.
A once great empire and companies and currency gradually declining and going the way of the Dodo or Italy which is a magnificent remnant of the Roman empire, all the pride and history is there, but the economic clout is long, long, gone.
UK still tries to cling on to military greatness but everybody knows it is a joke, apart from the colonel Blimps who promote it.
Intel’s statement is absolutely reminiscient of great UK names that came to realise they had dropped the ball. They would announce a super new recovery plan to re-establish their greatness. That $29bn will likely just be a drain on capital going forward, as the co. gets left further and further behind, until the name ‘Intel’ is the last asset to become the badge on a cutting edge manufacturer’s heritage range.
UK clung on to Arts, some design and ‘services’, whisky, tourism, heritage but don’t worry folks our Boris has a turnaround plan to make us World leaders again in Green technology. They never give up and settle for Italy.
Prior to Edward Bernays ads were more informational and straightforward. Bernays, the nephew of Sigmund Freud, realized that people don’t buy rationally. His fusion of Freud’s principles about the subconscious mind with his experience in propaganda during WWI led him to revolutionize advertising.
His influence has never been fully recognized. He changed the American breakfast from grains to bacon and eggs. He popularized cigarette smoking by women. He was an advisor to top politicians, major companies, and the military.
A truly brilliant man who fully understood psychological manipulation. Once you’ve read his work and about the things he did, you’ll understand how this relatively obscure person in our day and age was listed as one of the top 100 most influential people of the 20th century.
His book “Propaganda” is available as a free download on the the internet.
100% correct here on the pernicious effects of Bernays, who was also influential in propaganda circles — see Adam Curtis “Century of the Self.”
I think you may have America’s breakfast turn backwards, though — it went from protein to carbs, not the other way around.
Nope. Look it up. The pork industry hired Bernays to promote pork, and the target was bacon and eggs.
Looks like the bull market **maybe** falling apart. Little mentioned is what all those MILLIONS of UNEMPLOYED are doing or NOT doing – such as spending.
Something BIG is going to happen, question is when?
Facebook missed on revenue but beat on earnings. That 50 billion stock buyback though.