Axios Closer

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January 20, 2022

Welcome back! Happy Thursday!

Today's newsletter is 662 words, a 2½-minute read.

🚀 Situational awareness: Netflix shares are down more than 19% after-hours as the company failed to meet its own forecast for new users in the quarter. Go deeper.

🔔 The dashboard: The S&P closed down 1.1%, unable to sustain morning gains.

  • Biggest gainer? Morgan Stanley (+4.3%). The financial services company extended its gains from yesterday following strong fourth-quarter results.
  • Biggest decliner? Garmin (-6.1%). ¯\_(ツ)_/¯

1 big thing: Peloton pumps its brakes

Data: FactSet; Chart: Axios Visuals
Data: FactSet; Chart: Axios Visuals

Peloton’s popularity is falling as swiftly as it shot up, Hope writes. 

Why it matters: Not all pandemic habits stick around. Peloton's trajectory over the past two years exemplifies how challenging it's been for companies to gauge shifts in consumer demand — particularly in sectors heavily altered by the pandemic.

Driving the news: Peloton is set to freeze production of its Bike and Tread equipment temporarily beginning next month, according to a CNBC report today. 

  • A Peloton spokesperson did not immediately respond to a request for comment. Its next earnings report is due Feb. 8.

The plans shouldn’t come as a big surprise.

  • Peloton admitted to overestimating demand for its machines and virtual classes back in November.
  • The company has also been looking for other ways to cut costs — in the form of potential layoffs and store closings, CNBC reports.

By the numbers: Peloton ended the September 2021 quarter with $805 million in revenue, a 14% quarterly decline. 

Flashback: Peloton’s value in the market reached a record $49.3 billion in January 2021 when COVID cases surged.

  • Around that time, the company said it couldn’t keep pace with demand and a few months later broke ground on a new factory.

2. Charted: Union membership slumps

Note: Unionized workers are members of a labor union or similar employee association; Data: BLS ; Map: Baidi Wang/Axios

The percentage of Americans who are members of a union plunged back to its pre-pandemic low in 2021 despite several high-profile efforts to organize workers at employers like Starbucks and Amazon, Nathan writes.

By the numbers: 10.3% of workers belonged to a union in 2021, matching 2019’s low. It's down from 10.6% in 2020, when the share temporarily spiked due to a disproportionate and temporary decrease in total nonunion workers due to pandemic shutdowns.

The big picture: The national unionization rate has been steadily drifting down for decades. It was 20.1% in 1983, the first year of comparable figures.

3. What's happening

💰 Goldman Sachs boosted its annual bonus pool for top investment bankers by 40%–50%. (Reuters)

🤳 Twitter rolled out functionality for users to verify and protect nonfungible tokens (NFTs) used as profile pictures. (CoinDesk)

💲The Fed released a discussion paper examining the pros and cons of a potential U.S. central bank digital currency, or CBDC. (Press release)

4. Amazon's fashion foray goes brick-and-mortar

A retail apparel showroom floor

The Amazon Style store in Los Angeles will offer hundreds of brands. Photo courtesy of Amazon

Sometimes if you can beat 'em, join 'em anyway.

Driving the news: Having already launched physical bookstores and grocery stores despite upending those fields online, Amazon is now opening a clothing store, too, Nathan writes.

Why it matters: The move to open the store, which Amazon calls its first, in Los Angeles later this year underscores the company's ambition to continue expanding its physical footprint, building lucrative connections between its digital platform and new brick-and-mortar locations.

  • “The foray should worry other apparel retailers as, if successful, it would give Amazon a presence in malls and locations where traditional retailers have reigned supreme," GlobalData Retail managing director Neil Saunders wrote.

How it works: The Amazon Style store will carry hundreds of brands and items such as apparel, shoes and accessories.

  • Customers can use the Amazon Shopping app to scan items and request their size be sent to a fitting room.

What we're watching: Algorithms will suggest what items you should wear based on what you scan with your phone in the store.

5. M&M's say goodbye to high heels

Animated M&M characters with white shoes stand side by side.

Photo courtesy of M&M's

Even M&M's deserve to be comfortable.

What’s happening: Candymaker Mars Wrigley is giving its fictitious M&M's characters a makeover. Most notably, the green M&M is ditching high heels for sneakers in the redesign, Nathan writes.

  • It’s a bid to make the characters “current” and more “representative of our consumer,” Mars Wrigley North America president Anton Vincent told CNN.

The big picture: High-heeled shoes are becoming less relatable. Sales were declining before the pandemic and then continued their descent when the crisis began.

6. What they're saying

"[It’s] important to focus on how crypto mining can affect the affordability of electricity for American consumers.”
— Rep. Frank Pallone (D-N.J.), chair of the House Energy and Commerce Committee, during today’s hearing on the energy impacts of blockchain technology.

Editor's note: Item 6 in yesterday's newsletter was corrected to reflect that André Leon Talley was raised in North Carolina (not Washington, D.C.).