🕹️ Minecraft Attempts to Diversify

MARKET UPDATE

Good Morning Investor! Shares of retailer Macy’s ($M) surged over 9% on Friday, after news emerged of Arkhouse in coalition with Brigade Capital, raising thier buyout offer for Macy's to $6.9 Billion. Meanwhile, in the world of virtual reality, shares of Meta ($META) rallied over 5% after CEO Mark Zuckerberg teased the company’s “most advanced piece of technology on the planet in its domain”.

TODAY’S BIG HEADLINES

Minecraft Attempts to Diversify

Koss, the Next Meme Stock

Amazon Invests In Luxury

SOFTWARE & GAMING

Minecraft Attempts to Diversify🕹️

Digging for Gold: The gaming world is facing some serious headwinds lately, and even Mojang Studios—the geniuses behind the wildly successful Minecraft—are feeling the pinch. In a bid to diversify their revenue, Mojang is exploring merchandising, education, and content-streaming to avoid putting all their eggs in the gaming basket.

• If a behemoth like Minecraft is looking for spare change under the couch cushions, you know the gaming industry is in for a bumpy ride.

• The gaming sector is going through a massive contraction, with layoffs happening left, right, and center. Microsoft, which owns Mojang, is trying to turn the ship around by transforming its games division into a services-based offering. They’re hoping this change will be the life raft the division needs.

The Big-time Players: Minecraft isn’t just any game; it’s a titan in the industry, boasting around 15 million monthly active users (MAUs) over the past two years. This places it in the same league as sensations like Fortnite and Roblox ($RBLX).

• Minecraft is aiming to mimic the diversification strategies of its competitors, like hosting virtual concerts and brand tie-ups in their blocky universe. They’re taking notes from Fortnite and Roblox, which have turned their games into virtual event spaces and marketing platforms.

• Whispers of further layoffs within Microsoft's gaming division continue to circulate. Just months after shedding 9% of their staff, Microsoft seems to be trimming more branches in a desperate attempt to stop the bleeding. The layoffs are a stark reminder that even the giants aren’t immune to the industry’s current turbulence.

TECH HARDWARE

Koss, the Next Meme Stock🎼

Headphone Gold: Koss Corporation ($KOSS) has been acting like a meme stock on steroids, skyrocketing 206% since last Tuesday, with an additional 25% rally on Friday. And the excitement doesn’t seem to be dying down. But does this headphone maker truly deserve all this hype?

The Lesser Known Powerhouse: While it might not be as famous as Sennheiser, Audio-Technica, or Beyerdynamic, Koss is no slouch. This Wisconsin-based company caters to every customer segment imaginable, offering high-quality, budget-friendly, professional, and audiophile products. From over-ear to on-ear, earbuds to wireless headphones, Koss has been delivering the goods for over 60 years. Fun fact: they were the first audio company to commercialize high-end electrostatic (ES) headphones way back in 1968.

• 2023 wasn’t exactly a chart-topping year for Koss in terms of sales, bringing in just $13 million—26% less than the previous fiscal year. However, their net income took a surprising leap from $1.26 million in 2022 to $8.3 million in 2023. Talk about making lemonade out of lemons!

Meme Stock Club: Interestingly, meme stock king Roaring Kitty hasn’t breathed a word about Koss. His timeline is devoid of mentions of audiophiles, headphones, or any related buzzwords. Yet, retail investors are flocking to KOSS shares, drawn by its penny stock allure. With only 11.86% of the public float held by institutions, it doesn’t take much organized poking to send this stock soaring.

LUXURY & FASHION

Amazon Invests In Luxury👜

Tech Invades Fifth Avenue: Brick-and-mortar stores are hardly synonymous with cutting-edge innovation, yet Saks Fifth Avenue’s parent company just made a tech-savvy move. Their deal to acquire rival luxury retailer Neiman Marcus includes an unexpected player: Amazon.

• HBC, the owner of Saks and its discount sibling Saks OFF 5th, confirmed this week that it’s snapping up Neiman Marcus for $2.65 billion.

• Once the ink dries on this deal, the four iconic brands will be merged into a new entity, Saks Global. Despite the corporate shuffle, each brand will continue to operate under its own name, maintaining the illusion that nothing has changed. Meanwhile, tech titans Amazon ($AMZN) and Salesforce ($CRM) are set to invest and take minority stakes in the new company.

Big Tech’s Influence: According to the CEO of the freshly minted company, the tech giants will “future-proof” these upscale brands, helping them harness customer data and streamline logistics. This boost is much needed, as the department store industry has been on the struggle bus lately, with Macy’s shuttering 150 stores.

• The deal gives Amazon, America’s largest clothing retailer, a foothold in the lucrative luxury market, known for its high margins and big spenders. It's like swapping out old chandeliers for smart lights – classy and tech-savvy!

MORE NEWS

Additional market-moving events🌎

Texas Up Next: Storm Beryl is expected to hit Texas on Monday in the form of a Hurricane. Much disruption is expected to be caused by the storm. (NPR)

French Left-Wing Triumphs: France’s left-wing coalition thwarts far right in parliamentary run-off vote. (CNBC)

Iphone’s & AI: Iphone Supplier Foxconn’s new AI server business is sending revenues on a tear. (Fortune)

Meta’s AI Gets Integrated: A new WhatsApp beta version for Android lets you send photo to Meta AI, then ask it questions about or edit the image using prompts. (The Verge)

OUR PICKS

Our selections performance👾

On Monday the 11th of March, we released our “two superperformers” stock picks which we believe will provide significant outperformance compared to the S&P 500. Then on the 12th of June we released our next stock selection.

Here’s how the three stocks have performed since:

• Evolution AB: 1,119.50 SEK (📉-14.70%)

• Hims & Hers Health: $20.78 (📈+43.61%)

• PayPal: $59.76 (📉-5.79%)

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