Meta Launches Threads, Costco Membership Crackdown, and the Impact of the Inform Act on Amazon (7/10/2023)

Meta Launches Twitter Rival Threads

Hot off the press, Meta just launched Twitter rival Threads this week. Threads is almost an exact copy of Twitter, Threads lets users share real-time text updates as well as like, comment, and repost. However, there are some differences: Threads doesn’t have DMs (direct messaging) and does not have a chronological-based feed. Since Threads is linked to users Instagram accounts and allowed Threads to reach 1 million users in less than 2 hours! It took the recent AI monster Chat GPT 5 days to hit this mark and Twitter over 2 years!

What does this mean for Meta and Twitter? When Musk acquired Twitter, he immediately started making big changes including controversial content moderation and making user pay to access once free benefits of Twitter. Recently Twitter has seen many site malfunctions. Meta has taken advantage of the Twitter meltdown with Threads and this could be a significant hit for Twitter which it may never bounce back from.

Let’s take a look at how Meta looks right now using our Buffett Fundamentals Tool:

  • $META
  • Current Price: $294.10
  • P/E: 35.48
  • Buffett Bond Capitalized Price Target: $230.91
  • Buffett Equity Bond Pre-Tax Yield: 4.01%
  • Buffett Company Score (0-100): 80.00

Costco follows Netflix in a Membership Crackdown

Costco follows streaming giant Netflix in a membership sharing crackdown. Costco will now start checking membership cards AND photo IDs at the front. It is aiming to end the membership mooching and keep non-members out. To enter and purchase goods at Costco customers must have a membership which costs a minimum of $60/year.

The benefit of a membership to Costco is gaining access to its bulk pricing deals. Costco says one of the reasons for the change is it saw an uptick in people sneaking in with someone else’s card. With the majority of Costco’s income coming from membership fees it’s easy to see why they are making the membership sharing come to an end. We will see if this results in more memberships and income growth for Costco.

Let’s take a look at how Costco looks right now using our Buffett Fundamentals Tool:

  • $COST
  • Current Price: $527.01
  • P/E: 38.98
  • Buffett Bond Capitalized Price Target: $380.45
  • Buffett Equity Bond Pre-Tax Yield: 3.69%
  • Buffett Company Score (0-100): 72.78

Amazon Faces a Challenge as the Inform Act goes into Effect

In late June new legislation named the “Inform Act” went into effect in an effort to end counterfeit sales and reduce retail theft. The law requires major online marketplaces like Amazon and eBay to verify third party sellers personal and financial information. The fine for non-compliance is $50k per violation, a steep cost.

Both Home Depot and Best Buy have been pushing lawmakers to crackdown on digital storefronts where stolen goods can be resold. This law could reduce in-store theft if it makes it harder to resell stolen goods online. We will see if the tighter restrictions affect Amazon’s sellers and its profits in the future.

Let’s take a look at how well McDonalds is doing now with our Buffett Fundamentals Tool:

  • $AMZN
  • Current Price: $127.13
  • P/E: 302.62
  • Buffett Bond Capitalized Price Target: $-5.45
  • Buffett Equity Bond Pre-Tax Yield: -0.22%
  • Buffett Company Score (0-100): 48.33

Buffett Fundamentals Tool Results Image: Apple

Meta Buffet Fundamentals Output
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