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RIP Spirit Airlines & GameStop Wants to Buy eBay for $56B
00:26:48
Pour one out for Spirit & GameStop wants eBay
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- [00:02]
A
Consider this comparison. PwC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PwC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like@pwc.com US Brewai. That's pwc.com/us/brewai.
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B
Good morning, Brew Daily Show. I'm Neal Freyman.
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C
And I'm Toby Howell.
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Today, and it was all yellow. We pay tribute to the now defunct spirit Airlines.
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C
Then GameStop is trying to buy eBay. It's Monday. May the fourth be with you. Let's ride.
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B
Good morning. Well, this was sad news. Ask Jeeves is no longer. On Friday, Jeeves and his home website ask.com announced they were shutting down after almost 30 years of answering your questions on the Internet. Before there was let's consult Claude or I'll Ask Chat. There was jeeves, a Web 1.0 avatar of an English butler who first appeared in 1996. Ask Jeeves was popular for a time like when I was in 8th grade, but was soon demolished by Google and other search engines, and most of us were surprised to find out it still existed at all in 2026. Toby I'm putting Jeeves on my Mount Rushmore of early Internet characters alongside Clippy, Homestar Runner, and MySpace.
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C
Tom Absolutely. And right next to my Tamagotchi, which is dead at this point. But Ask Jeeves was way ahead of its time because the whole point of it was you could ask conversational questions and get a response in natural language. What the heck does that sound like? That sounds like the AI chat bots of today. The issue with Jeeves, though, was the quality of response would kind of ebb and flow from time to time, which did open the door for Yahoo and Google to eventually step through. But Jeeves was an innovator, man. It actually pioneered thumbnails for link results on web pages. That's just a modern staple of the Internet at this point, but that came from Jeeves. So, Jeeves, you remind us of a previously less insidified Internet. We're sorry that you are no longer to be, but, you know, you persevered for a long time.
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B
And now a word from our sponsor AT&T business. Happy Small Business Week, Toby.
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C
Hey, thanks. Did you get me a present? You know, since I'm a small business owner.
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B
Sure did.
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Is it lots of money?
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Better it's Advice. Check out at&t Business for dependable connectivity that helps keep your daily operations running. They understand your unique challenges and needs like connectivity that helps power transactions, customer interactions and remote access.
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C
I wouldn't have said no to a fat stack of cash, but this is a great gift.
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B
To explore affordable connectivity solutions that can transform your operations at business.att.com/small-business if you were on Spirit NK 1833, a 2 hour and 39 minute flight from Detroit to Dallas that touched down after midnight on Saturday, you were a part of history. This was Spirit's last flight ever. The ultra budget airline said it was shutting down early Saturday because it was running out of cash to keep the company operating. In a statement, CEO Dave Davis said sustaining the business required hundreds of millions of additional dollars of liquidity that Spirit simply does not have and could not procure. This is tremendously disappointing and not the outcome any of us wanted. Spirit had been struggling for years, entering bankruptcy twice, but spiking fuel prices from the war in Iran were the final nail in the coffin. The airline was paying an extra 10 to 15 million dollars in expenses just on fuel each week, money it didn't have. The airline said that 17,000 direct and indirect employees have lost their jobs in the past few weeks. President Trump had formed a controversial plan to bail out SP with a $500 million emergency lifeline, but after pushback from some other officials in the administration, it was agreed that letting Spirit die would be the best course of action. Toby Spirit was like the dive bar of aviation. Rowdy, loud, colorful, not at all pleasant, but it was cheap and got you from point A to B without breaking the bank. Spirit shutting down is really the end of an era for ultra discount air travel in the US and passengers are worse off for it.
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C
Yeah, it is going to be bad for you as a flyer. A Fly Fair analysis conducted by Business Insider showed that when Spirit exited from dozens of routes back in 2024, that pushed fares up by roughly 14%. So some fares shot up by over $100 per route because there was never that anchor there that had the lowest prices that would bring everyone else's prices down with it. But also on the flip side, Spirit has gotten very small despite the amount of airtime it gets over recent years. According to the New York Times, in May 2024 Spirit operated 3.4% of all domestic flights. This month, that number is expected to get down to 1.1% so again, it was not a big airline towards the end of its life, which could offset the impact of it going under.
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B
It just seemed bigger than it was because maybe it's yellow planes are very visible. And we were outside on Friday and I, we saw a Spirit plane taking off from New York and I turned to you and I said, this is going to be the lat, probably going to be the last Spirit flight we ever see in the air. So pretty sad. And so what if you are a Spirit customer? Well, you're going to automatically get a refund if you purchased your flight through Spirit directly, credit or debit card, and then if you booked it through a travel agent or a third party website, go to them and get your refund. Other airlines are also stepping in with what they're calling rescue fare. So other airlines like United, Southwest, JetBlue, American, if they operate a route that Spirit was operating just last week and you're sort of stranded, well, they offer price capped fares so you can turn to them for what are known as rescue fares. They're not going to last long, just maybe a few days to get people back to where they were. So other airlines are stepping in as they usually do when an air, when the other one goes belly up.
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C
A lot of memes and jokes were spilled online yesterday of Delta customers watching Spirit customers, you know, join their flights. But I do think that there is some truth to those memes about, you know, the different approaches from the airlines because Spirit really got squeezed on all sides. They got squeezed from above, from bigger rivals like Delta, United, American. But also they just totally missed the premium cabin shift that went on in the entire airline industry. That's the moneymaker at this point. We've talked about this so much on the show is that first class and business class is expanding because you can charge so much money to less price sensitive customers. And that's where all the profitability of these airlines is coming from. Spirit went in the opposite direction. It worked for a while through the 2010, they were actually profitable. 2019 was their last profitable year. But when jet fuel prices spike as much as they have, that business model doesn't work anymore. And you don't have the cushion of the premium cabin to fall back on. You end up going bankrupt.
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B
There's a lot of finger pointing about, like why Spirit went defunct and who was to blame for it. A lot of people blamed the Biden administration and their doj, which stopped a merger that would have seen The Spirit and JetBlue link up on antitrust grounds in 2024. Then on the other side, there was pushback, saying, okay, but if we didn't have this fuel price spike, which was adding $50 million a week in expenses to Spirit because of the war in Iran, then it still would have continued to go on. Obviously was struggling and very unprofitable. And then the other people are saying, this is a badly managed airline. They missed all of the airline trends that you were saying. So there's. It's probably a cornucopia of problems that sent Spirit to its grave.
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And just to end on a semi upbeat note, so we did mention that 17,000 jobs are going to be lost because Spirit is f. The bright spot is that demand in the industry right now is very high for pilots, for mechanics. So a lot of those competitors going to hoover up some of those people who lost their jobs. So hopefully that's the silver lining here, is that they end up in a good employment situation and Spirit will liquidate
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B
its airline fleet, and I guess they'll have to go in for a paint job.
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C
I want to buy one of those planes. How can I get my hands on one of those yellow planes? All right, moving on. GameStop is going big game hunting. It made an offer to acquire eBay for $56 billion, sort of the same way that an endeavoring frat boy might make an offer to take Sydney Sweeney on a date. The difference in size between these two companies is large. GameStop's market cap is around $11 billion. EBay's is 45 billion. GameStop did 3.6 billion in sales last year. EBay did 3.1 billion last quarter. But GameStop CEO Ryan Cohen has ambition in spades. And a commitment letter from TD bank to provide $20 billion in financing, which, along with the 5% stake GameStop has quietly been building in ebay, could be enough to actually get this thing done. It's not like GameStop is afraid of trying new things either. A few Years ago, when NFTs were a thing, GameStop launched an NFT marketplace. More recently, GameStop has bought large amounts of Bitcoin because why not? And if you squint, you can see how eBay's marketplace of collectibles, old tech and used Goods overlaps with GameStop's customer, Neil. Apparently, shareholders of both companies are interested in this Hail Mary. Shares of ebay jumped over 10% after the report came out on Friday, while GameStop shares rose around 5%.
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B
I think to fully understand what's happening here, we have to go inside the mind of Ryan Cohen, who's the CEO of GameStop. Now, Ryan Cohen was the co founder of Chewy, which is an e commerce pet products company. He sold that for $3.5 billion, became a billionaire in 2017 and then became sort of a hero to retail traders over those years. And then Covid hit and GameStop did meme stock things. And at that time, Ryan Cohen started buying a stake in GameStop. Stop. And criticizing the board for not turning around its business into a digital behemoth. And then eventually he became the on the board and then eventually in 2023 became the CEO of GameStop. And he's always had just much greater ambitions for that what is a struggling video game retailer. And then earlier in January he said, I'm going big game hunting. I think I'm going to buy something really big. And he said it's going to be, quote, ultimately genius or totally, totally foolish. But his goal is to turn GameStop and maybe with eBay into a $100 billion retail giant.
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C
What is the plan though? Like how do you jump from GameStop owning eBay to $100 billion giant? And I think GameStop has sort of found its footing recently because they've pivoted towards higher margin items away from, you know, your old copy of we Sports resorts, towards things like trading cards, towards things like retro games, retro consoles, kind of capitalizing on this nostalgia wave. He says, wait a second, you know who sells a lot of those things? It is ebay. Maybe the symbiotic relationship between our company and ebay could be that Graham's GameStop operates as the brick and mortar stores to authenticate some of the items that are sold on ebay. He also thinks that ebay is leaving some money on the table when it comes to live e commerce. He says that is the place that it can compete with Amazon because Amazon has eaten everyone's lunch recently, I think actually to the startup called Whatnot, which is a live stream e commerce seller that was recently valued at eleven and a half billion dollars. So if you just tack on a Whatnot business, then you start to get closer to that $100 million, $100 billion valuation that he wants.
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Closer, but maybe not, not close, not,
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not quite all the way there. But that's generally the concept of how these two businesses could work together.
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Right. It's not clear though whether ebay will want these advances because ebay is doing its reinvention thing again into collectibles, into higher quality fashion items. And it's doing really well. Revenue in the last quarter jumped 20%. Its stock is up about 50% over the past year. So when thinking about a potential acquisition, these Bernstein analysts wrote, why disrupt things? The turnaround is working. Ebay just bought Depop, which you talked about a couple of months ago, which is a secondhand reseller site to get more Gen Z. So things are going pretty well for ebay. It is much smaller than it used to be in the 2010s in the 2000s, but its turnaround is working right now, so it's a little unclear why it would court the advances of Ryan Cohen and GameStop.
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It's time for our Winners of the Week in the segment where we share two stories that had a better weekend than Celtics haters. The I won the pre show game of who can run longer at world record marathon pace, so I'm up first and my winner of the weekend is the new sheriff in town In Omaha this Saturday, Greg Abel took the reins of the famous Berkshire Hathaway annual shareholders meeting, the first time a bunch of finance nerds descended upon Nebraska to not be serenaded by Warren Buffett. Everyone was eager to see if able would bring the same wit, insight and stewardship to the $1 trillion conglomerate that Buffett had for six decades. And as you might have guessed, given this is a Winner of the Weekend segment, Abel passed his first test with flying colors. He started things off with a tribute to the greats that came before pulling a page from the sports world by hanging jerseys of Buffett and Munger above the main stage. But when it came time for Abel to take the mic, you could already see how his leadership approach differs as he brought up lieutenants who lead Berkshire Hathaway's various businesses to speak alongside him, so something Buffett rarely did. As for what was discussed, AI was a big theme, with Abel promising shareholders that Berkshire is looking into the tech, while the power demands of data centers is good news for its energy and utility businesses. Neal Definitely a little weird to not see Buffett taking the main stage, but everyone came away impressed at what Abel is bringing to the table.
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B
Abel is able now. This was this whole thing seemed intended to show that the brand of Berkshire Hathaway, the values it represents, is bigger than one single person. And after all, few people could have imagined Apple without Steve Jobs. Warren Buffett was there on on the stage with the other board of directors because he's still the chair. And there were a lot of parallels to Apple actually Tim Cook and Steve Jobs transition. Tim Cook was actually at in Omaha for this and Buffett asked Tim Cook to stand up and he said how Would you like to step into the shoes of Steve and come through with his record? I mean, it's one of the miracles of American business management. So obviously, Buffett and Abel have jobs and Tim Cook on their mind and talking about a smooth transition. Obviously, now Tim Cook is leaving as well. But on the also the brand management front of Berkshire Hathaway, they play this video of Buffett's testimony to Congress in 1991 before every annual shareholders meeting at Berkshire Hathaway. And in it, Buffett says, lose money for the firm and I will be understanding. Lose a shred of reputation for the firm, and I will be ruthless. So this was all about maintaining the brand reputation.
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C
Yeah, and it was just little details that showed that Abel got it. He had a can of Cherry Coke, which is Warren Buffett's favorite drink, next to him as he was kind of giving his notes. There was a little bit of Charlie Munger, Warren Buffett esque, back and forth between Greg Abel and Ajit Jane, who is Able's number two. Basically, they were talking about the shade of Hormuz. Jane's response was the short answer is, it depends on the price. And Abel's reply to that was, I like your Charlie answer. So there were all these little nods and winks at the previous duo that was were stewards of this company for a long time. And that got good reactions from longtime attendees. People commented on the healthy dynamic between Greg and Ajit. A lot of people said that Abel was able to talk very deeply about many of the businesses, which showed that he is a shrewd operator, not just someone who can stand up there and give, you know, folks these sayings. So. So people liked that. And they need a shrewd operator right now because what also happened was Berkshire Hathaway gave its Q1 earnings, and they were a little bit shaky. Operating earnings grew 18% from last year, but that actually fell short of estimates from analysts. So it does look like they need a little bit of a pick me up, because shares in Berkshire Hathaway have been lagging the S&P 500 since Buffett has stepped down. So it is a fascinating time to be the leader of this big conglomerate, because big shoes to fill stocks not doing well. You got to get things going. You can't just rely on the can of Cherry Coke next to you and goodwill to, you know, turn this business around. All right, we're going to take a quick break and come back with Neil's Winner of the Weekend right after this.
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C
Neil let's make a deal.
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B
Last time you said that I ended up painting her fence and you did
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C
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B
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B
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C
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- [17:34]
B
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C
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B
Get $1,000 of Vanta today by going to vanta.com brew that's vanta.com morning brew. My winner is the Savannah Bananas. The baseball team didn't compete in the most important sporting event of the weekend, but it probably was the most entertaining and historic. On Saturday night, The Savannah Bananas versus the Texas Tailgaters drew a sold out crowd of 102,000 to Kyle Field, the football stadium at Texas A and M, which was the largest crowd in the team's history. 102,000 people attending a baseball game whose outcome does not matter. Well, it's not just baseball. If you haven't heard of the Savannah Bananas. They're like if a baseball team and a traveling circus had a baby layering on entertainment elements to the game. Harlem Globetrotter style and Americans are obsessed. In the last few years, banana ball has exploded thanks to its intense focus on the fan experience and mega popularity on social media. And what was once one team, the Savannah Bananas, has expanded into a fully Fledged league. This summer, the six teams that comprise the Banana Ball League will play 190 games across 45 states and 75 stadiums. The Bananas are the brainchild of one man, Jesse Cole, who's not hard to spot in public because he's always wearing a yellow tuxedo. Cole was the general manager of a struggling summer collegiate baseball team when he had a vision to judge up games to get butts in seats. Now he presides over a massive entertainment company with no outside investors and no advertising that rakes in over $100 million in revenue per year. Toby Love him or hate him, the Savannah Bananas are a juggernaut.
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C
People love to hate on the Savannah Bananas. But to all the haters out there, it's not for you. Like that's the big underlying premise here is that it's for children and it's for families and clearly there's a demand out there for it because they're selling out 100,000 seat stadiums. It is fascinating too that Savannah Banana's players makes around $100,000 per year on average in their salary, which sounds great for fake baseball, but it's not even close to real baseball salary. So if they are outdrawing MLB teams that maybe at some point the money catches up too. And then you start seeing MLB players start to in the not their primes of their careers, but the tail end of their careers start to move that way. It would be fascinating to see if this league starts to capture more of a mind share when it comes to professional athletes devoting their time to it. Because clearly the eyeballs are there. Maybe the money will follow.
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B
Yeah, let's dive into why people love to hate the Savannah Bananas. So they're just so earnest and they kind of flip baseball on its head. They have very unique roles for banana ball. First of all, the games are played within a two hour time limit. You got like one point per inning. Whoever gets the most run per inning until the last inning when all runs count. Probably the most famous rule breaking pioneering innovation of banana ball is that when a fan catches a foul ball, it's an out. And you've probably seen this on social media. There's clips of they break into song over the course of a game, the umpires are dancing. It's just a very earnestly joyous affair. It doesn't cue to traditional baseball in that many ways. But people are obsessed and you can't say, you can't overstate the impact of social media on the Savannah Bananas success. I mean I've seen so many Viral videos across all social media platforms. They have 15 million followers followers, including more TikTok followers for the Savannah Bananas than every major league baseball team combined.
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I mean they do TikTok dances while they're on the mount. Of course you're going to do well on TikTok. And of course baseball traditionalists are going to be mad. They also brought out Dude Perfect during this game, which a lot of people think that this is the same content that, you know, Savannah Banana's people watch. It's Dude Perfect. Which are the trick shot artists. But Tyler Toney, who is this, you know, great multi sport athlete who does a lot of the perfect videos, stood up to bat and a pitcher, Chris Clark, whose baseball career probably hasn't panned out in the way that maybe he wanted it to, struck him out like looking showing that there is still levels to this. These are still very good athletes. Most of them are, you know, former college guys or pro guys that never quite panned out. So they are still very good at their sport. We should say that like they aren't just. Just in the same way that the Harlem Globetrotters were incredible basketball players. Maybe they're not competing at the highest level, but they're still extremely talented.
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People will be studying what Jesse Cole did in Harvard Business School case studies for decades to come because he turned this very small collegiate baseball team in Savannah, Georgia into a. An absolute media colossus. Very instructive to hear what he was studying. He said, I haven't learned from the baseball industry. I learned from Saturday Night Live. I learned from the Grateful Dead. I learned from Cirque du Soleil. I learned from WWE. I learned from Taylor Swift. I learned from Mr. Beast. I learned from Jeff Bezos and Amazon. I learned from Apple. So he is learning from everybody except baseball because he's all about putting on a show and they do that so successfully.
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C
What is he learning from Jeff Bezos and Apple and Saturday Night Live? He's just throwing buzzwords out.
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B
All right, but you created Savannah Bananas and you didn't. Okay, it's Monday, so here's what you need to know to stay ahead in the week. Ahead on Wall street, this week will be dominated by jobs and earnings. Friday brings the April jobs report, which will reveal how the labor market has weathered the war in the Middle east so far. After March's blowout numbers, economists expect April job growth to slow down to below 100000. On the earnings front, it's another busy stretch with more than 100s&P companies reporting including Palantir, Disney, McDonald's and AMD. Earnings season has been just incredible so far. Companies are crushing it and lifting stocks to all time highs.
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C
Yeah, so far about 34 of large US companies have reported earnings and Journal is calling it the best earnings season in years. The S&P 500 earnings per share growth is around 19% of the quarter. That is twice the average of the past decade. So in terms of companies doing well, we're at the apex of that right now. It is pretty amazing. Net profit margins at their highest in 15 years as well. So yes, there's lots of macroeconomic headwinds, the Iranian war, a shaky jobs market too that we'll get more insight into this week. But in terms of how companies are doing, they're doing just fine.
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Tonight is the party of the year. The Met Gala and I went towards a list fundraiser for the Costume Institute. The main questions are which celebs will show up and what insane outfits will they wear to match the theme, which this year is called Tailored for you. We know that Beyonce, Nicole Kidman and Venus Williams will be there because they've been tapped as co chairs as well as Jeff Bezos and his wife, Lauren Sanchez Bezos because they're personally underwriting the whole thing.
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C
Another year, another invite lost in the mail for poor Toby and Neal. But yeah, the Wall Street Journal had this story with the headline how Jeff Bezos broke into fashion's inner circle. And the answer was a lot of money. He gave the man a lot of money. Maybe we should try it next year, Dale.
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B
In sports, the NBA playoffs enter their second round. In the east, the Sixers, God bless them, take on the Knicks. And Detroit faces Cleveland in the battle for Lake Erie. In the west, the Lakers try to dethrone OKC and Kyle Haggie's Timberwolves square off against Wemby and the Spurs. And if that's not enough sports content for you, playoff hockey and the Champions League Soccer semifinals are also on deck.
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C
I'm all the way back in on the NBA playoffs. I watched the 76ers play. Joel Embiid is quite literally impossible to root for. He spends 50% of his time on the ground rolling around, but still happy that your Sixers beat the Celtics.
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B
The opposite of banana ball. All right, finally a few celebrations are in store. Today is May the fourth. Star Wars Day. Cinco de Mayo is tomorrow. Then Mother's Day, the mother of All Male Days is on Sunday.
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C
May. Sneaky. A great month for holidays. May the fourth. Maybe not actually a real holiday. But single. Cinco de Mayo. Very fun. Mother's Day Send your mom a letter. Bring a smile to her face. It's just I saw a tweet recently of a new dad realizing that the way he loves his child is the way his parents loved him. And it brought him horror because sometimes we're a little mean to our parents. So with that realization in mind, make sure you give your mom a call or send her a letter.
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B
That is all the time we have. Thanks for starting your morning with us and have a wonderful start to the weekend. If you'd like to reach us, send an email to Morning Brew daily at Morning Broadcom or DM us on Instagram at Ambi Daily show let's roll the credits. Emily Milian is our supervising producer. Raymond Lu is our senior producer. Our producer is Olivia Graham and our associate producer is Olivia Lake. Hair makeup I find your lack of faith disturbing. Devin Emery is our president and our show is a production of Morning Brew.
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C
Great show, Danielle. Let's run it back tomorrow.
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E
Some Follow the noise Bloomberg follows the money. Whether it's the funds fueling AI or crypto's trillion dollar swing, there's a money side to every story. Get the money side of the story. Subscribe now@bloomberg.com.