Axios Closer

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August 11, 2022

🤸‍♀️ Thursday is winding down. Let's review...

Today's newsletter, edited by Pete Gannon, is 678 words, a 2½-minute read.

🔔 The dashboard: The S&P 500 closed flat (0.1%).

  • Biggest gainer? Devon Energy (+7.3%), following a report from the International Energy Agency that raised its oil-demand outlook.
  • Biggest decliner? Enphase Energy (-3.4%), which makes solar-based energy solutions, possibly in contrast to the same report.

1 big thing: Gaming’s big struggles

Illustration of a video game controller with sports-related buttons
Illustration: Annelise Capossela/Axios

Pent-up demand for real-world fun took business away from companies that crank out digital gaming, Hope writes.

Why it matters: The slowdown is expected to continue as consumers continue to adjust their spending amid high inflation and worries of economic slowdowns, industry leaders warn.

Driving the news: "The reopening," Sony CFO Hiroki Totoki said, is one factor that caused gaming software sales to decline 25% in its fiscal first quarter.

  • Take-Two Interactive’s CEO admitted on Monday the company is seeing consumer “softness.”

In contrast: Roblox’s CEO David Baszucki has dismissed concerns about more potentially negative impacts to its business from inflation or a recession

  • “We have traditionally been … immune to these types of economic cycles,” Baszucki said on an earnings call on Wednesday.

Yes, but: Roblox, the virtual gaming platform popular with kids and teens, reported that it added about 1 million fewer new users in the second quarter than analysts expected.

The big picture: Gaming companies have been considered recession-proof, Bloomberg notes, but that no longer seems to be true.

💭 Our thought bubble: The gaming sector was always going to cool a bit following the surge of the pandemic, but there are other things to watch, Axios Gaming author Stephen Totilo writes.

  • The pandemic wreaked havoc with the development cycles around games as teams struggled to adapt to remote and hybrid work. So 2023 could be a loaded calendar for pent-up game releases.

Go deeper.

2. Charted: One word — plastics

Data: ICIS; Chart: Nicki Camberg/Axios

The hunt for cooling inflation picked up another positive clue today, Hope writes.

  • Prices paid to manufacturers and suppliers in July fell by 0.5% from June, according to the Producer Price Index gauge.

Why it matters: This was the first monthly decline since April 2020 and was due primarily to the recent dip in energy prices.

By the numbers: 80% of the decline in the index for final demand goods specifically is attributable to gasoline prices, which fell 16.7%, the Bureau of Labor Statistics noted this morning.

The big picture: Other oil-price sensitive inputs are also seeing a decline in prices, including plastics.

3. What's happening

⚖️ Robinhood Markets must face market manipulation claims stemming from last year's "meme stock" controversy, says a U.S district court judge. (Reuters)

👿 A ransomware attack cost HanesBrands $100 million in net sales in its last quarter. (Axios)

4. Activist targets the Gray Lady

The New York Times building
Photo: Angela Weiss/AFP via Getty Images

Activist investor ValueAct Capital has disclosed a 7% stake in the New York Times, Axios' Pete Gannon writes.

Catch up fast: Activists typically seek to build significant stakes in companies they feel are undervalued by public investors.

  • True to their name, they often publicly push companies to pursue strategies that boost share prices in the short term (or long term, depending on who you're asking).

Details: ValueAct is focusing on the NYT's subscriber bundles, saying it believes the company needs to drive that strategy "with urgency," Bloomberg reported.

  • The activist said it believes that's the biggest opportunity to accelerate growth, stave off competition and provide "long-term stability of the platform.”
  • Shares in the New York Times closed up 10.8% from Wednesday.

What they're saying: The New York Times said it has held discussions with ValueAct.

  • "The Board and management team will continue to make decisions that we believe are in the best interest of the Company and all Company shareholders," Danielle Rhoades Ha, the New York Times' SVP of external communications, said in a statement.

5. What we learned from the teary CEO selfie

via LinkedIn

LinkedIn just experienced its equivalent of Gal Gadot singing to soothe people during the pandemic, Hope writes.

Why it matters: The viral crying selfie post from Braden Wallake of HyperSocial is a reflection of:

Go deeper.

6. What they're saying

“We’ve never seen a property market slowdown of this size and severity.”
— Logan Wright, director of China markets research at Rhodium Group to the WSJ, on China's increasingly deteriorating property bubble, which is compounding its economic woes.

Thanks to Sheryl Miller for copy editing today's (and every day's) newsletter.