LIZ: AS WE’VE BEEN TELLING YOU
IT IS THE WEEK FOR RETAIL
EARNINGS.
BIG NAME BRANDS OPEN THEIR
QUARTERLY BOOKS, ECONOMISTS ARE
PREDICTING AT LEAST FOR RETAIL
SALES THAT SHOPPING, RESTAURANTS
, OTHER RETAIL OUTLET
S ROSE EIGHT-TENTHS OF A
PERCENT IN APRIL THAT’S MONTH-
OVER-MONTH AND THAT WOULD
ACTUALLY MATCH THE MARCH
INCREASE BUT IT’S HALF THE
INCREASE REPORTED FOR
FEBRUARY.
THE DATA POINT COMES AS BIG
NAMES FROM WALMART TO TARGET,
LOWE’S, AND A WHOLE BUNCH OF
OTHERS RELEASE QUARTERLY RESULTS
THIS WEEK GIVING INVESTORS A
GAUGE OR A WINDOW INTO AMERICAN
CONSUMER SENTIMENT.
MANY OF THE COMPANIES REPORTING
WORK WITH A FIRM.
SHARES OF THE BUY NOW PAY LATER
LENDER ACTUALLY GOT A BOOST LATE
LAST WEEK AFTER THE COMPANY
REPORTED A NARROWER THAN
EXPECTED QUARTERLY LOSS, BUT
QUITE FRANKLY THE STOCK HAS SEEN
75% CHOPPED OFF THIS YEAR TO-
DATE SO RIGHT NOW, A FIRM
DOWN ABOUT 3% IT WAS ACTUALLY
HIGHER EARLIER LET’S BRING IN
MATCH LEVCHIN, THE FIRM CEO AND
CO-FOUNDER.
LET’S GET TO THE CONSUMER AHEAD
OF THE BIG NUMBERS TOMORROW.
HOW ARE YOUR CUSTOMERS SHIFTING
OR SLOWING THEIR SPENDING AS WE
CONTINUE TO SEE PERSISTENTS
INFLATION FOR DECADE HIGHS?
>> SO I THINK INFLATION IS
DEFINITELY ON PEOPLE’S MINDS.
I THINK IT’S NOW A VERY VERY
AWARE TOPIC.
FOLKS ARE COMING TO US, FRANKLY,
TO HELP THEM REGAIN SOME OF THE
SPENDING POWER THEY ARE LOS
ING BECAUSE OF THIS HIGH
INFLATION.
THERE’S ALSO A VERY CLEAR
ROTATION OF SEGMENTS, IF YOU
WILL, CONNECTED FITNESS WITH
OLDER AGE THIS TIME LAST YEAR,
TODAY IT’S DEFINITELY NOT THE
FASTER-GROWING SEGMENT.
ON THE OTHER HAND, THERE IS 120%
YEAR-ON-YEAR GROWTH IN TRAVEL
WHICH IS BOTH UNDERSTANDABLE AND
I THINK HEARTWARMING PEOPLE ARE
FINALLY GETTING OUT OF THE LOCK
DOWNS AND TRAVELING.
LIZ: YEAH, I REMEMBER IN THE
BEGINNING, WITH A FIRM, I
BELIEVE THAT ONE-THIRD OF YOUR
REVENUE CAME FROM PELOTON.
THAT WAS ONE OF YOUR VERY FIRST
PARTNERSHIPS, AND OBVIOUSLY, WE
KNOW THE SITUATION WITH PELOTON
IS SHIFTING AS WELL.
WE ARE GOING TO GET RETAIL SALES
TOMORROW.
I HAVE NO DOUBT CONSUMERS ARE
SPENDING.
YOUR FULL YEAR GROSS MERCHANDISE
VALUE OF WHAT, 15.14 BILLION
SHOWS THAT, BUT CONSUMERS ARE
NOTORIOUSLY BEHIND THE 8 BALL
WHEN IT COMES TO READING THE
WRITING ON THE WALL AND IF
YOU READ THE WRITING ON THE WALL
, INCLUDING, YOU KNOW,
LLOYD BLANKFEIN, FORMERLY AS CEO
OF GOLDMAN SACHS, WE’RE HEADING
FOR WHAT COULD BE A RECESSION.
HOW WOULD YOU AT A FIRM PREPARE
FOR SOMETHING LIKE THAT?
>> YOU KNOW, I THINK IT’S
DEFINITELY ON THE MINDS OF EVERY
CEO OUT THERE, ESPECIALLY IN THE
PAYMENTS BUSINESS.
WE TRACK ALL OF OUR CONSUMER
BEHAVIORAL DATA, ESPECIALLY BY
THAT I MEAN REPAYMENT DATA AND
TO DATE, THERE’S REALLY NOT BEEN
A SERVICE IN THE FORCE IF YOU
WILL, BUT OUR BUSINESS DESIGN,
IF YOU WILL, IS WE DON’T LEND
MONEY IF WE DO NOT BELIEVE THE
BERN PAR BORROWING CAN PAY
US BACK.
THAT’S THE CORNERSTONE OF NOT
CHARGING LATE FEES OR DOING
DEFERRED INTEREST ALL THE STUFF
THE INDUSTRY IS INFAMOUS FOR ,
IT’S ALL ABOUT HEDGING YOUR BETS
VIS-A-VIS WELL MAYBE THIS
CONSUMER IS NOT OKAY BUT
WE’LL MAKE MONEY ON THEM ANYWAY,
WE ONLY TRANSACT WITH CONSUMERS
WE BELIEVE THROUGH OUR UNDER
WRITING MODELS WILL BE FINE
PAYING US BACK AND AS RECESSION
CAUSES PEOPLE TO LOSE THEIR JOBS
, ET CETERA, THAT IS WHEN I
START WORRYING.
TO-DATE, AMERICA’S FULLY EMPLOY
ED.
I THINK CONSUMERS ARE SPENDING
MONEY THEY ARE EARNING AND
PRICES ARE GOING UP AND THE FED
IS TRYING TO DO SOMETHING ABOUT
IT BUT FUNDAMENTALLY A VAST
MAJORITY OF THE FOLKS BORROWING
MONEY FROM A FIRM AND BEYOND ARE
VERY WELL-EMPLOYED AND CAPABLE
OF PAYING THEIR BILLS.
LIZ: WELL THAT’S GOOD TO HEAR
BUT THIS IS WHERE I WORRY.
WE WERE IN AN ATMOSPHERE OF FREE
MONEY, YOU KNOW, EASY TO BORROW,
VERY LOW INTEREST RATES, NEAR
ZERO.
SOMEBODY PAYS THE MERCHANT, THAT
BE YOU IN EXCHANGE FOR THE BUY
NOW PAY LATER.
THE PROBLEM IS WHEN THE COST OF
CAPITAL GOES UP AS RATES RISE,
YOU KNOW, YOU’RE SHOULDERING
THAT.
I KNOW YOU HAVE DIFFERENT WAYS
WHERE YOU FUND, BUT HAVE YOU
MODELED FOR A MEANINGFUL JUMP IN
INTEREST RATES AND HOW YOU WILL
BE ABLE TO SERVICE THE LOANS
THAT YOU OWE OR THE DEBT THAT
YOU OWE.
>> ABSOLUTELY, AND THAT’S
CERTAINLY FRONT AND CENTER TO A
LOT OF OUR PLANNING.
WE ARE VERY VERY VERY PREPARED
FOR ALL SORTS OF NEUTRALITIES.
WE OBVIOUSLY TRACK THE CURVE.
WE ARE VERY CAREFUL ABOUT BOTH
WHAT THE FED MIGHT OR MIGHT NOT
DO, BUT WITHOUT DIVING INTO
EXTREME, LIKE HOW DO YOU HEDGE
INTEREST RATE CHANGE WE ARE WEEP
-PREPARED AND MANAGE THE
RATES THAT WE PAY AS WE
BORROW SO THAT WE CAN LEND.
LIZ: I KNOW IN YOUR QUARTERLY
REPORT YOU ANNOUNCED YOU’RE
EXPANDING WITH SHOP A FRIDAY.
WE JUST SPOKE WITH THE PRESIDENT
LAST WEEK, WE LOVE THEIR
PARTNERSHIP WITH YOU BUT WHERE
ELSE DOES THIS OPPORTUNITY GO
AND CAN YOU MEANINGFULLY ASSIGN
A NUMBER TO YOUR BOTTOM LINE
THAT WOULD COME FROM THE SHOPIFY
DEAL?
>> I THINK IT’S PROBABLY A BAD
IDEA FOR ME TO DISCLOSE NUMBERS
THAT WE DON’T TALK ABOUT
ELSEWHERE, BUT WE LOVE OUR
PARTNERSHIP WITH SHOPIFY, THAT’S
THE RIGHT VERB TO USE.
THEY HAVE BEEN AN EXCEPTIONALLY
GREAT PARTNER AND WE LIKE TO
BELIEVE WE PAID THEM BACK
SIMILARLY.
THE PARTICULAR EXPANSION IS
REALLY COOL IN A SENSE THAT WE
LAUNCHED A YEAR AGO AND WE
REALLY ONLY DELIVERED ONE
PRODUCT TO THEM WHICH IS THIS
REALLY SHORT-TERM SIX WEEKS
REALLY REALLY SIMPLE PRODUCT
THAT WORKS GREAT FOR BEAUTY, FOR
FASHION, LESS EXPENSIVE
PRODUCT.
THERE’S LOTS OF OTHER STUFF
PEOPLE SELL ON SHOPIFY ANYTHING
FROM REALLY EXOTIC PLANTS TO ALL
SORTS OF HARDWARE PEOPLE
MANUFACTURE IN THEIR SPARE TIME.
THOSE THINGS COST A LOT MORE
MONEY AND THE SIX WEEK RETAIN
MENT CYCLE JUST ISN’T LONG
ENOUGH SO WE’RE FINALLY BRINGING
TO SHOPIFY SELLERS ALL SORTS OF
TERMS THAT THEY CAN OFFER TO
THEIR SHOPPERS SO WE EXPECT A
MEANINGFUL CONTRIBUTION TO THE
BUSINESS FROM THAT OVERTIME.
LIZ: MAX, I KNOW THAT ITS BEEN A
VERY ROUGH TIME FOR MANY
COMPANIES.
OBVIOUSLY, EVEN THE APPLES OF
THE WORLD HAVE SOLD WAY OFF.
WE’RE SEEING A LOT OF DISCOUNTED
SHARES ELSEWHERE, BUT WHEN YOU
GUYS WENT PUBLIC, I BELIEVE YOUR
MARKET CAP WAS AROUND
$25 BILLION.
IT’S AT 5 BILLION RIGHT NOW.
HOW DO YOU ENGAGE WITH INVESTORS
WHO ARE LIFTING THEIR SHOULDERS
AND SAYING WHAT DO I DO, MAX?
WHAT IS THE ANSWER AND WHEN DO
YOU FORESEE SOMETHING LIKE THIS
SOLIDIFYING AND TURNING THE
STOCK AROUND?
>> YOU KNOW, AS ONE OF THE
LARGEST PERHAPS THE LARGEST
INDIVIDUAL SHAREHOLDER OF THIS
COMPANY, I AMEX TEAMLY
ALIGNED WITH MY BOTH RETAIL
INSTITUTIONAL INVESTORS TO SEE
THE STOCK GO BACK OUT.
I THINK THAT’S PROBABLY THE BEST
CONVERSATION OPENER I HAVE TO
COME UP WITH.
THE ONLY WAY I KNOW HOW TO DO
THIS THAT IS INDEPENDENT OF
MARKET CYCLES AND SORT OF
DISRUPTIONS THAT WE SEEN PLENTY
OF IN THE LAST FEW MONTHS IS
CONTINUOUSLY DELIVERING GREAT
RESULTS.
THE THING THAT I CAN TELL MY
SHAREHOLDERS IS LOOK, OVERTIME
IT IS A WEIGHING MACHINE NOT A
VOTING ONE.
WE WILL CONTINUE DELIVERING ON
ALL THE PROMISES WE MAKE AND
OVERTIME, THIS WILL BE REWARDING
TO US AND TO YOU.
LIZ: IT’S THE ONE PROBLEM WITH
GOING PUBLIC, RIGHT?
YOU’VE GOT TO ANSWER TO THE
SHAREHOLDERS ON A QUARTERLY
BASIS AND THINGS TAKE A LONG
TIME.
>> I’VE GOT BROAD SHOULDERS.
LIZ: I GET IT MAX GOOD TO SEE