← The Rundown
The Rundown
Delta Taps Amazon for Wi-Fi, McCormick Buys Unilever’s Food Business for $45 Billion
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Public.com presents the rundown, your daily market update in under 10 minutes. My name is Zaydad Mani, and Today is Tuesday, March 31st. In today's episode, we'll tell you about Delta's latest deal with Amazon to bring faster WI Fi to the skies. We'll also break down a mega food merger between McCormick and Unilever, then stick around to the end of the show to find out how much Allbirds just sold for. It's a pretty shocking number. We gotta great show for you today. Let's go. Well, stocks struggled on Monday with the S P500 dropping.4% while the Nasdaq was down 0.7%. The Dow did squeeze out a 0.1% gain, but nobody cares about the Dow. You know, what's interesting is that Mondays have typically been the market's favorite day since the war started. In fact, the S P500 has gone up every single Monday since the war, usually because investors were getting some sort of positive headlines or true social post over the weekend. Well, that streak has finally come to an end. You know, I think at this point, investors aren't as willing to blindly trust every headline and truth social posts about the Iran situation. It all really comes down to oil. And as long as the Strait of Hormuz is still closed like it still is, oil will stay elevated and that will keep stocks under pressure. And the thing is, no one knows when the Strait of Hormuz will be reopened. In fact, there was a report from the Wall Street Journal last night that Trump is willing to end the war with Iran without reopening Hormuz. So that's why oil prices keep rising. Brent crude, which is the international benchmark for oil, is trading around $116 a barrel, while WTI, which is the US benchmark, closed above $100 yesterday for the first time since 2022. And consumers are starting to feel that at the pump, gas prices just crossed $4 a gallon nationally for the first time since 2022. They're up more than a dollar from a month ago. At these price levels, you're probably going to start hearing the phrase demand destruction being this is when consumers and businesses simply start using less energy because they can't afford it. In fact, there are already reports of countries all over the world declaring emergencies because of energy shortages. So there is a lot of uncertainty right now and the vibes aren't great. We're going to continue to stay on top of everything and break it down for you here every single day. So make sure you guys are subscribed to the podcast and tuning in every day. To stay in the loop, let's run through some headlines, starting with airline Wi Fi. Delta Airlines just announced a deal to bring Amazon satellite Internet service called Leo on 500 of its planes starting in 2028. Delta says this service will deliver Internet speeds that are three to five times faster than what passengers get on flights today. And we're talking like streaming 4K video on an airplane. Now this is a big deal for Amazon because right now SpaceX's Starlink is absolutely dominating the satellite Internet space and more specifically the airline WI Fi market. Starlink has signed deals with airlines including United, Southwest, Alaskan Air, British Airways, Air France and Emirates. So I guess for Amazon, landing Delta one of the biggest and most premium airlines in the world is a pretty big win. Now Amazon has a lot of work to do to catch up to Starlink. StarLink has about 9 to 10,000 satellites already in orbit and they're also a proven service. Amazon, on the other hand, only has a few hundred satellites in orbit, but they think their service will end up being better than Starlink. So we'll see what ends up happening. But there's a deeper play here when it comes to Amazon and Delta. Delta already uses Amazon web services for a ton of their back end operations. So Delta CEO Ed Bastian sees this as more than just a WI Fi deal. Two companies are also talking about building more personalized in flight experiences, including better content on seat back screens. Maybe all Delta flights will have Amazon prime video content on there. Who knows? Personally, I'm just happy that airline WI Fi is getting better and free. You know, I was always the guy that would pay the $8 to buy the WI Fi and most times it would barely work. Now we're getting WI Fi that's free and can stream Netflix in 4K. Let's shift gears and talk about a big shake up happening in the food industry. McCormick is buying Unilever's food business in a deal worth $45 billion. Now when you think of McCormick, you're probably thinking of all their spices. You know, they own brands like Frank's Red Hot Ch Cholula, French Mustard and all those little red cap spice bottles sitting in your cabinet right now. But after this deal, McCormick will get a lot bigger, adding brands like Hellman's Mayo and Nor's seasoning. Those are two massive brands. In fact, 70% of Unilever's food sales came from those two brands alone. And now they're going to be under the McCormick umbrella. See for Unilever, this is a huge strategic pivot. Their food business makes up more than a quarter of their overall sales and it's actually one of their most profitable divisions. But the growth just hasn't been there lately. Sales and food have lagged behind Unilever's personal care and beauty brands for years now and that was dragging down the company's overall growth targets. So the company is shedding the weight and getting leaner. No pun intended. Last year they spun off the ice cream business, which now is trading separately as Magnum Ice Cream Company. Before that, they sold their tea business. Now they're shedding their food business. What's left will essentially be a health and beauty company with brands like Dove and Axe. This deal is expected to close in mid-2027, assuming it gets shareholder and regulatory approval. The market's initial reaction isn't great though. McCormick and Unilever stock are both down around 4 to 5% this morning at the time of this recording. Now since we're on the subject, I have a mini hot take here. I think that Cholula is kind of overrated. All right. I'm kind of afraid to say it because Cholula stands are going to come after me in the comments, but it's just how I feel. All right, there are better hot sauces out there. Lets talk about some stocks making moves today. Shares of the drug maker Contessa are absolutely ripping higher this morning, up more than 40% after Eli Lilly agreed to buy the biotech company in a deal worth up to $7.8 billion. Contessa is a UK based drug maker developing treatments for sleep disorders like narcolepsy and excessive daytime sleepiness. Their elite therapy is still in mid stage trials. So Eli Lilly is paying a big premium for potential here. By the way, this would be Eli Lilly's biggest acquisition since they bought Luxo oncology for about $8 billion back in 2019. And it's another sign that Lilly is trying to build out their business beyond just weight loss drugs. Obviously Lilly has been printing money with their GLP ones like Zepbound and Manjaro. But they know they can't just be a weight loss company forever. So now they're using all that cash to bulk up other parts of the pipeline. Recently eli Lilly spent $2.4 billion to buy Orno Therapeutics to build out their next gen cell therapy capabilities. They spent over a billion dollars on autoimmune drug maker Ventix. So yeah, I think it's a smart move by Eli Lilly to start Diversifying while they're making all that cash from the GLP1s. Now, sticking with the winners here, let's talk about Marvell. Their shares are up around 9% this morning after Nvidia announced that they were taking a $2 billion stake and the chip company. This deal brings Marvell deeper into Nvidia's AI ecosystem, which should make it easier for customers to build specialized AI compute using Nvidia's infrastructure. To me, the bigger picture here is that Nvidia seems to be handing out $2 billion checks to every AI company in the world. Over the last few months, they've invested in coreweave, Nebias, Synopsys, Coherent, and Lumentum. Now, on the flip side, let's talk about Constellation Energy. This stock is down around 5% this morning after the company provided an underwhelming investor update. So investors were hoping that Constellation would announce a new deal to sell nuclear power to a tech company for AI data centers. But that announcement never came. You know, Constellation's stock has tripled over the last two years because of these deals they've signed with Meta and Microsoft. But the CEO said they're still working on new deals, but aren't ready to announce anything yet. So the concern for investors is that the Constellation growth story is now losing momentum, that the stock is down around 19% this year and down about 28% from its highs back in October of last year. Let's wrap the show with a fun fact. The sneaker company Allbirds is being sold for just $39 million. I don't know if you guys remember Allbirds, but they were the hottest shoe company in Silicon Valley. Every tech bro was wearing them. In fact, the company was worth around $4 billion at its peak after IPOing in November of 2021. Now, I'll be honest with you. I had a pair of Allbirds and they were great shoes. But is selling comfortable wool sneakers isn't enough to build a $4 billion company? Allbirds eventually fell out of fashion and sales started to decline despite the company expanding into other products like leggings, jackets and running shoes. Those just never really caught on. Now, to make matters worse, the company opened a ton of retail locations, which increased their costs significantly and that led to the eventual downfall of the company. And they're being bought by American Exchange Group, which is a footwear and accessories company that you've probably never heard of. I guess the lesson here is that the sneaker and apparel market competitive, especially when you have giants like Nike and Adidas to compete with. And despite all birds having a tech first reputation, at the end of the day, they were just selling shoes. You know, it kind of blows my mind that allbirds was worth $4 billion back in 2021. It's just another reminder of just how crazy 2021 was. Well, all right guys, that's the rundown for today. Hope you guys enjoyed today's episode. If you did and you have like 5 extra seconds, consider giving us a 5 star rating on Apple, Spotify, YouTube, or wherever you listen to your podcast. All that engagement really does help us out and it helps other people find the show. Thank you guys so much for listening, watching and commenting. Shout out to Mike and Connor for all the work behind the scenes and we'll see you guys back here tomorrow.