Morning Brew Daily
Walmart Warns of Tariff Price Hikes & Dick’s Sporting Goods' Risky $2.4B Deal
Fri, 16 May 2025
Episode 584: Neal and Toby recap Walmart’s Q1 earnings and how tariffs will likely cause price hikes. Then, Dick’s Sporting Goods acquires Foot Locker for a massive $2.4B that may open the door into international markets. Meanwhile, the Dog of the Week is UnitedHealth Group and the Stock of the Week is Coinbase. Also, Harvard has been unknowingly sitting on top of an original Magna Carta when it thought it was a copy…this whole time! Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Visit endthecampaign.com for more Listen to Morning Brew Daily Here: https://www.swap.fm/l/mbd-note Watch Morning Brew Daily Here: https://www.youtube.com/@MorningBrewDailyShow 00:00 - Apple Vision Pro on Price is Right 03:15 - Walmart Price Hikes 07:40 - Dick’s Purchases Foot Locker 11:00 - SOW: Coinbase 15:45 - DOW: UnitedHealth Group 19:00 - Magna Carta at Harvard 22:00 - Headlines Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What is the true cost and reception of the Apple Vision Pro?
Happy Friday. Hope anyone who put a meeting invite on your calendar today realizes their error and cancels it immediately. Okay, here is a question. How much does an Apple Vision Pro cost? The contestants on a recent episode of the Price is Right Primetime Edition We're asked this by Drew Carey, and they answered $1,000, $750, $1,001, and $1,270. That is off by thousands of dollars.
As you all know, since you listened to this podcast, the Vision Pro Virtual Reality Headset retails for $3,500. And when Carey revealed the true cost, the audience gasped in disbelief. The clip has since gone viral. Toby, what's your takeaway?
My takeaway is I would also stink on the prices, right? So no shade to these people whatsoever, but the hits just keep coming for the Apple Vision Pro. The Wall Street Journal wrote a deep dive on early adopters of the technology who have now had the device for over a year, and it was tough to read. Here are a smattering of quotes from the piece. It's just collecting dust.
I think I've probably used it four times in the last year. It's still way too heavy. I wouldn't recommend anyone buying it unless you're really rich and you don't know what to do with your money. Despite all of that, though, Apple is still shipping updates to this product. They just announced a new feature that lets you scroll with your eyes.
We'll see if people stop rolling them long enough to actually use it. Now, a word from our sponsor, Iterable. Neil, you ever done the New York City airport mix-up? Toby, no.
I actually double-checked my tickets.
Well, so do I, but one time I thought I was flying out of JFK. Turns out my flight was at LaGuardia. Nothing worse than rushing to security to find your gate, only to realize you're 13 miles away from where you need to be.
What's even crazier is that's how most marketing still works. You think you know where your customer is, but you're showing up in the wrong place at the wrong time with the wrong message.
Iterable fixes that. It ditches the old-school campaign calendar and replaces it with AI-driven, moment-based marketing. So you're not guessing where your customer might be.
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Chapter 2: Why is Walmart raising prices due to tariffs?
Walmart, a retailer known for rolling back prices, is going to start rolling them up. On the company's earnings call yesterday, execs said they'll be raising prices on some products by the end of the month, attributing the hikes to President Trump's tariffs on other countries.
CEO Doug McMillan said, we will do our best to keep our prices as low as possible, but given the magnitude of the tariffs, even at the reduced levels announced this week, we aren't able to absorb all the pressure. The higher tariffs will result in higher prices. CFO John Rainey chimed in, the magnitude and speed at which these prices are coming to us is somewhat unprecedented in history.
Walmart imports about one-third of the stuff you see in stores from abroad, with most of that chunk coming from China. The U.S. and China agreed to significantly lower tariffs on each other at the beginning of the week, but the current rate of 30% on Chinese goods is apparently still too high for Walmart to eat all those costs. It is an ominous sign for American shoppers when Walmart-
the biggest chain of them all, says it'll have to pass on tariff costs. The company is considered a bellwether for the U.S. consumer since 90% of the population lives within 10 miles of a store and people from every walk of life shop there.
Even with tariffs, though, Walmart said its business is chugging along just fine and didn't change or scrap its guidance for the year as other companies have in recent weeks. It's just too big of a ship to be thrown off course by the trade war winds. But still, if the tariffs weren't real yet, they are now.
Yeah, Walmart is just so good at dodging price hikes, which is why it was concerning to hear them saying that they're going to hike some prices. One, it is very good at doing this because it has massive leverage with its vendors. It's just so big. Two, it sources two-thirds of its merchandise in the U.S., groceries making up the majority of that.
And three, it can keep the cost of everyday items like those groceries low because it can raise prices on other items like electronics and household goods. So groceries account for roughly 60% of its business, which is where consumers would feel the most impact, the most bite from those price hikes.
So the fact it can keep those prices in check will probably lead to actually a similar pattern post-2008. Walmart emerged from that financial crisis. with an even bigger market share, even more brand loyalty, because it was able to keep those staples low.
So we're almost seeing a similar pattern emerge here, where keep the everyday items where they're at, but then raise prices elsewhere across the business to offset those.
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Chapter 3: What are the implications of Dick's Sporting Goods acquiring Foot Locker?
All right, it's Stock of the Week, Dog of the Week time, where Neil and I pick one stock from the week's news who figured out the New York Times Thursday crossword without hints, and one stock who needed a little help to figure out that theme. Neil, I actually lost the pre-show game of onion dicing because my eyes were watering too much. So you are up first.
What's our Stock of the Week? My stock of the week is Coinbase. The largest crypto exchange in the country has popped 19% this week after it was invited to join the S&P 500 on Tuesday. It's another watershed moment for the crypto industry's move into the traditional financial world as Coinbase becomes the first crypto company to join the benchmark index.
If you're wondering who it's replacing, that would be Discover, which is getting eaten by Capital One in a mega merger that was just approved. Shares of companies typically rise when they're added to the S&P 500 because the funds that track the index have to add the new company to their portfolios. So it's like joining a club where you're paid to be a member.
But as great as the week started off for Coinbase, it ended the week on a couple of major sour notes. First, Coinbase revealed that cyber criminals had swiped some personal data of its users and were demanding a $20 million ransom payment in order to not release that information to the public.
Then, the New York Times reported that the SEC has been investigating whether Coinbase inflated its user numbers in past disclosures. With the new Trump administration going more lax on crypto, Coinbase thought it didn't have to worry about the Fed's breathing down its neck. Apparently not so. So it's been a whirlwind, one step forward, two steps back. back kind of week for Coinbase.
Yeah, when they were added to the S&P 500, we're like, oh, lock for stock of the week. Like, it's fine. And then as the week progressed, these news stories kept dropping. We're like, ah, I don't know. It still is up for the week. So we're like, all right, we'll put it in the stock of the week column. Let's talk about this hack, though.
On Thursday, they reported that cyber criminals based overseas were using social engineering to steal customer data by attacking support agents located overseas. And they said that the incident could cause up to $400 million to fix. But it's not the worst thing in the world because no passwords and private keys were compromised. And so that's the bread and butter of an exchange like Coinbase.
So definitely not a headline that you want right on the heels of you joining the S&P 500, but unfortunately one that they have to deal with right now.
And Coinbase stock has been on a true roller coaster over the past few months. Right after President Trump was elected, which Coinbase donated $75 million to crypto-friendly policy candidates around the country. So they were a huge corporate player in the election. So they shot up 31% the day after the election. But this spring, it's been a different story with Bitcoin.
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Chapter 4: What makes Coinbase the Stock of the Week and what challenges is it facing?
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United Health Group has been an absolute lock for dog of the week as things went from worse to worser for the nation's biggest healthcare company. First, longtime CEO Andrew Witte stepped down for personal readings leading to a double-digit drop in the stock. Then the Wall Street Journal reported that the DOJ had opened a criminal probe into the company for possible Medicare fraud.
That came on the heels of investors suing UHG this month for allegedly downplaying the business impact of the December killing of UnitedHealthcare CEO Brian Thompson. It's all led to a stock route almost unfathomable for a company of UnitedHealth's size and scope.
Over the last month, the stock is down 53%, shaving off more than $300 billion from its market cap and leading to a growing crisis of confidence over the most influential player in American healthcare. Neil, this company was once the most influential stock in the Dow Jones by weighting, but now it has fallen to 16th. Pretty shocking.
This company is imploding right now. There's a criminal investigation into possible Medicare fraud, a devastating hack last year that's still feeling the effects from into its payment system. There's antitrust investigations into its past acquisitions, the murder of one of its top executives last December, an actual business model that's hurting from much higher costs.
I mean, you just go down the line and you talk about the new CEOs coming in. Stephen Hemsley He's getting paid $60 million in an equity award to come in and fix it. It almost doesn't seem like enough because those problems are so many. It's lost so much in value. Truly something we just haven't seen before in many, many years for a company of this size to fall so quickly.
Yeah, it used to be everyone knew UnitedHealth Group because it just dominated the Dow Jones so much. Because remember, the Dow Jones is price-weighted, which is just an interesting way to form an index at all. And UnitedHealth always had the highest share price. However it went, basically the Dow went.
But for most of its history, it just doesn't really go that much of anywhere because it's just this big, hulking monolith that is just... always been what it's been, but now it is just so numerous, the amount of issues that it has faced. Like we've talked about it multiple times and we're like, we have to do it for dog of the week.
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Chapter 5: Why is UnitedHealth Group the Dog of the Week?
I was going to say, got to get David Carpenter to start looking around my apartment because this thing is extremely valuable. They bought it for a little over $27. Well, how much does it cost now? What is the market price for an original Magna Carta? There are only 24 originals out there in the world. The last Magna Carta sold.
was purchased for $21.3 million in 2007 by the billionaire David Rubenstein, who now owns the Orioles. So they are sitting on a big chunk of change, and it might be the biggest bargain buy in history.
I'm trying to think of anything else, but to buy something for $27, for now it to be worth over $20 million, I don't think you would have made that much money if you bet on Leicester City to win the Premier League back when they did.
maybe just early on Berkshire Hathaway. But I did want to know, how did Carpenter just know immediately that this was the real document?
Chapter 6: What is the significance of Harvard discovering an original Magna Carta?
Apparently, there's a few telltale signs, but one of the biggest ones was the style of handwriting and the big E at the start of the first line, which apparently is, if you are trained in this sort of thing, it's just like a neon green flashing light that says, hey, this is a real copy because only this particular period was written or copied in this particular handwriting. So
I can't imagine going through and doing the double take, zooming in. That moment must have just been pure electricity going through his body because apparently he was looking at a copy, but he's like, whoa, whoa, whoa, this is the real deal, baby.
Chapter 7: What are the key headlines to watch this week?
And you know who's doing a victory lap is librarians because they do the dirty work of digitizing all of these archives. The librarian at Harvard said behind every scholarly revelation stands the essential work of librarians who not only collect and preserve materials, but create pathways that otherwise would remain hidden. So kudos to librarians.
You do so much work under the surface and you apparently made Harvard a lot of money, except they did say they're not going to they're not going to sell it. and they'll just put it on display for the public. Very cool story there. Okay, let's sprint to the finish this Friday with some final headlines.
New Jersey transit riders are used to dealing with disruptions and delays, and that was when people were driving the trains. Now they are not. Starting this morning, just after midnight, 450 engineers for the nation's third largest transit network went on strike, the first New Jersey transit strike in more than 40 years, over a wage dispute with the agency.
With no trains currently running, as many as 350,000 New Jersey commuters are now in the lurch, and a contingency bus plan to bring people where they need to go will only handle 20% of daily ridership. Toby, this is going to be chaos.
Yeah, it's going to be chaos, especially when you look at the concert schedule coming at MetLife Stadium. First, there's a Shakira concert on both Thursday and Friday. And then also Beyonce and The Weeknd are coming to the venue over the next three weeks.
So unless you iron it out, those Uber prices are just going to go nuts because it's reliably the only way you can actually get to the stadium at that point. So we'll see. Pay is the big issue here. We'll see if they can come to a deal. Hopefully before Monday.
I think that'll be like the deadline when everyone starts going back to work.
AI progress might not be as parabolic of a line as we were all expecting. Meta just announced that it is delaying the rollout of its newest flagship model over concerns that Behemoth, as it's called, isn't that much better than prior versions. Originally, April was the planned launch date before shifting the launch to June. Now Meta is saying at least fall or even later.
And Meta is not alone in these training stumbles. GPT-5, the next iteration of OpenAI's everyday model, was supposed to drop around mid-2024, but in February, Altman said that the model was still months behind. So Neil, some nervy times at big AI companies that have plowed billions of dollars into training these things and need to see improvements to justify the costs.
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