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Good morning and happy Friday.
Sex sells, but is VSXY a buy? As part of a turnaround plan to usher in “a new era of sexy,” Victoria’s Secret announced Thursday that it will soon change its stock ticker from VSCO to VSXY. The retailer will hardly be the first publicly traded company to list its shares under a tongue-in-cheek shorthand. Motorcycle-maker Harley Davidson trades as HOG, Papa John’s as PZZA, Petco as WOOF, Ferrari as RACE, and Ontario-based cannabis firm Canopy Growth trades on the Toronto Stock Exchange as, you guessed it, WEED.
Alas, it cuts both ways. Monday.com has the perfect ticker at the moment: MNDY. With its shares down 46% this year, every day sure feels like a Monday for investors.
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What’s worth the most, brains or bucks?
OpenAI this week claimed that one of its research models cracked the “Erdős planar unit distance problem,” a challenge that has bedeviled human eggheads for 80 years. Not to be outdone, rival Anthropic recently told investors it had solved the seemingly equally intractable arithmetic problem of running an AI company where revenue tops costs, claiming it was on track to post a profit in the second quarter, according to a report in The Wall Street Journal.
As both companies prep IPO filings, with OpenAI’s coming as soon as today, we’re guessing investors might be a little more infatuated with the latter’s eureka moment than the former’s. So how exactly did Anthropic pull it off?
A Wrinkle in Time
Previously, Anthropic told investors it probably wouldn’t achieve full-year profitability until 2028 at the earliest, though the meteoric growth rate of its Claude AI tools is helping it reach that milestone sooner on a quarterly basis. The result? An expected $559 million in operating profit on $10.9 billion in revenue in the current quarter, up from $4.8 billion in the first quarter.
A deeper look at the equation reveals a few more key variables at play:
- First: Efficiency. Per financial projections seen by the WSJ, Anthropic expects to spend 56 cents on compute power for every dollar generated, down from 71 cents in the first quarter. It’s a sign that the AI industry is crawling toward the efficiency of scale that built Silicon Valley.
- The second and likely more critical variable: timing. Anthropic has been a bit slower than OpenAI to sign on to massive data center deals, allowing it to tip into profitability … for the moment. User demand is already pushing up against the limits of its compute capacity, and the company told investors that it likely won’t be profitable for the whole year as it loosens its grip on the capex hose. Scale still has its costs.
  Open the Books: Those costs, however, are lower than OpenAI’s. The competing AI firm and ChatGPT-maker actually posted more revenue than Anthropic in the first quarter, scoring around $5.7 billion in sales, according to a report by The Information this week. But the company doesn’t expect to achieve profitability until around 2030. Its compute demand is still dominated by consumer users on free tiers, whereas the Anthropic user base is largely composed of enterprise clientele. OpenAI’s models are also tightly intertwined with Nvidia’s architecture, which is proving more expensive than the Google TPUs and Amazon Trainium chips that Anthropic has largely leaned on.
Written by Brian Boyle
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As the country’s biggest private employer and biggest retailer, Walmart has an unparalleled view into the lives of US workers and consumers. The quarterly reports from its Bentonville, Ark., headquarters are the retail market equivalent of encyclicals from Rome.
On Thursday, the company’s executives suggested that shoppers confronting soaring energy prices may be running out of gas and offered a conservative outlook. It was enough to rattle the faith of some investors, with Walmart shares falling 7.3%.
Future Imperfect
Walmart had a fine quarter. In the period from February to April, profit at the company climbed 19% year over year to $5.3 billion, in line with Wall Street’s expectations, and sales jumped 7.3% to $178 billion, beating expectations. That capped a relatively impressive week for big box retailers, which also saw Home Depot, Lowe’s and Target top estimates. The implication is that consumers’ devotion to shopping didn’t wane in recent weeks, despite the gloom around inflation and gas prices resulting from the Iran conflict.
What sent Walmart shares tumbling Thursday was a warning from executives that sales growth will slow to 4% to 5% from May to July, as the elevated cost of living tests consumers’ willingness to part with their hard-earned, less valuable dollars. To make matters more difficult, some conditions that have eased the pain of inflation (up 3.8% in April on an annualized basis) are sunsetting:
- On a call with analysts Thursday, Chief Financial Officer John David Rainey noted the company “probably saw some benefit from tax refunds,” which gave consumers an extra financial cushion. In part because of the One Big Beautiful Bill Act, the average tax refund this year is up 11% to $3,462, according to IRS data.
- Rainey also warned that if the Strait of Hormuz remains closed, food prices “heavily dependent upon fertilizer, nitrogen and phosphates” shipped through the Persian Gulf will go up. Fuel prices, too, he said, will lead to “upward pressure on average unit retail prices.”
Passing on Gas: The average price of a gallon of gas in the US is $4.56, up from $3 when the US attacked Iran in late February, according to AAA. Rainey said Walmart, which operates over 400 gas stations, is seeing consumers pare back on gas purchases the most in years: “In the most recent period, the number of gallons that customers fill up with when they come to our fuel stations fell below 10 for the first time since 2022. That’s an indication of stress.”
Written by Sean Craig
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Photo via Superhuman AI
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Pharma companies are one-upping each other’s GLP-1s. Eli Lilly said Thursday that its next-gen drug, retatrutide, cleared a late-stage trial, helping patients lose an average 29% of their weight over 80 weeks.
Retatrutide is nicknamed the “triple G” drug because it targets GLP-1, GIP and glucagon while other drugs target one or two of the appetite-regulating hormones. About 45% of patients who received the highest dose of the weekly injection lost 30% or more of their body weight, a figure on par with results after gastric bypass surgery. Lilly’s blockbuster drug, Zepbound, sees weight-loss results closer to 20%.
Growing Market, Shrinking Waistlines
The weight-loss market is far from its peak, with JPMorgan analysts estimating that 25 million Americans will be taking GLP-1 drugs by 2030, up from 10 million last year. Eli Lilly and Novo Nordisk are duking it out while fighting off much smaller compounded competitors to secure their spot in Americans’ medicine cabinets. Lilly has pulled ahead of Novo to command more than 60% of the GLP-1 market and wants to keep its lead:
- While Zepbound’s lower threshold could be a good fit for some patients, retatrutide may appeal to those looking for more dramatic results. And together with Lilly’s new pill, Foundayo, the pharma company has a triple-threat drug lineup.
- But Novo’s not going down without a fight. Last spring, it paid $2 billion for the rights to a drug that, like retatrutide, targets all three “G” hormones. Novo’s Wegovy pill, meanwhile, has brand-name appeal that’s helping it pull ahead of Foundayo. Both pills are on track for blockbuster sales as their low prices and jab-free format appeal to new patients.
More Is Less: Pricing competition among Lilly, Novo, and generic competitors has made weight-loss drugs more accessible. While lower prices could mean more prescriptions, analysts expect them to tighten overall sales in the long run. This year, Jefferies lowered its growth estimate for the weight-loss market from more than $100 billion by the early 2030s to $80 billion. Goldman Sachs analysts slashed their estimate from $130 billion by 2030 to $105 billion. Other analysts are waiting to see whether volumes can pick up enough to offset falling prices.
Written by Jamie Wilde
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- Skip the Staycation: The CEO of low-cost UK carrier EasyJet said the airline has “seen absolutely no issues with fuel supply” and that travelers shouldn’t panic about the Middle East conflict.
- Rebalancing: JPMorgan Chase CEO Jamie Dimon said the lender’s hiring will focus less on bankers and more on “AI people;” JPMorgan is deploying AI tools across its global investment banking operations.
- Turns Out Some of the Most Interesting Things Happening in Business Don’t Show Up in a P&L. Join 1.5M readers getting the unconventional side of business — oddball companies, bold founders and moves that defy categorization. Smart, offbeat, always worth it. Subscribe to The Hustle.*
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