News of the Week (March 31 - April 4, 2025)

News of the Week (March 31 - April 4, 2025)

11 min read

Table of Contents

Aside from the extremely noisy week in macro-land, it was a quiet week for stock-specific news. I’ve already sent out the two macro and portfolio-specific articles, which can be found here and here. There were no earnings reports or notable investor events as companies gear up to report Q1 earnings over the next several weeks. Profit estimates are also volatile following this week’s tariff announcements, so I wanted to give that time to settle before I do my planned free cash flow comp sheets.

1. Amazon (AMZN) – Various News

This also includes data relevant to all of digital advertising.

Sell-Side Notes:

From the research that I’ve seen, Amazon’s blended tariff will be close to 18%. I actually thought it would be a bit over 20%, so this is modestly good news. Goldman Sachs sees a $7.5 billion, or roughly 9%, hit to 2025 EBIT estimates from new tariffs. For context, Amazon’s stock had already begun pricing in tariffs and fell another 14% after the harsher-than-expected levels were announced this week. We never know if anything is fully priced in, but in this specific case, I’m rather confident that stock declines are coinciding with true forward multiple contraction here. Furthermore, Goldman rightfully called out several potential offsets that Amazon has to combat this $7.5 billion. They can negotiate with manufacturers to make them absorb some of the burden… and there’s nobody else in commerce with more bargaining power than Amazon to do so. Evercore ISI came out with a separate note this week calling that their expectation. They can raise prices, shift to a domestic focus on some SKUs and also shift to countries with lower tariffs (as places like Vietnam also seem poised to eliminate theirs). With that said, even though the 9% hit to EBIT is modest vs. the stock’s current decline, it will likely be smaller than 9%. For context, 2018-2019 EBIT margins for Amazon were stable despite trade war 1.0. These tariffs are much wider-ranging, but the true impact should be smaller than feared today, just like it was 7 years ago.

Mizuho published a note on AWS. They see sales cycle elongation and rising discounting playing out in channel checks. While that’s not ideal, both trends were called very modest compared to 2022 elongation and discounting, which is good to hear. 

Ad Channel Checks:

UBS came out with advertising channel checks on Meta, Amazon and Google. The majority of the 6 businesses surveyed are cutting 2025 spend plans due to heightened uncertainty. Budgets are consolidating on larger platforms and shifting towards performance marketing over brand marketing, which is harder to tangibly calculate the impact of.

More Amazon News:

  • Project Kuiper will launch its first production satellites next week. It will take a long time for revenue here to scale, but as that happens, the margin drag will peak and continue to dissipate. Amazon has front-loaded an immense amount of expense for this specific bet. Now, it is time to begin enjoying watching those costs finally translate into revenue. That should join continued optimization of inbound and outbound fulfillment, inventory algorithms and robotics use cases as more margin tailwinds for this business.
  • It made a bid for TikTok’s U.S. business but that acquisition is not seen as likely to happen.
  • While tariffs may hurt Amazon’s business, the 54% tariff placed on China would have a much sharper impact on Temu’s and Shein’s U.S. businesses. Both are strong Amazon competitors. 
  • Finally, Amazon debuted a new agentic AI model called Nova Act this week. It automates web tasks.

2. Hims (HIMS) – Weight Loss Drugs

Hims made news this week when it announced that it would offer Eli Lilly’s Zepbound. Re-selling these branded drugs at a marked-up price comes at much lower margin than selling compounded, non-personalized GLP-1s, which it was able to do during shortages. Still, this was briefly still seen as a piece of positive news for reducing risk of litigation from various markers of these GLP-1 drugs. Many thought this news meant Hims and Eli Lilly were beginning a new partnership, but LLY refuted that idea. Companies are welcome to resell branded versions of their drugs on any marketplace or app they want to. This is just Hims doing that.

Companies like Eli Lilly and Novo Nordisk spend gigantic sums of money to develop these drugs and are promised exclusivity periods to protect those investments, ensure good returns, and motivate more biotech research. Hims is claiming that personalizing these drugs, through subtle tweaks to dosing or the inclusion of vitamins or something else, provides a loophole to bypass this exclusivity. While I am in no way an expert here, I do not see how that could be allowed without greatly deterring all biotechs from investing in future drug discovery. If a company is allowed to just change a single part of the drug but offer essentially an identical product, there’s no appeal to making these hefty investments because there’s no chance firms will recoup them. As someone who isn’t a legal or healthcare expert, I could easily be wrong… but that’s just how I see things today.

I will say that I have developed a skepticism towards direct-to-consumer healthcare as I’ve made some of my worst stock picks in that space (GoodRx & Teladoc). Hims has executed far better than either of those companies to date, which deserves a lot of praise. I simply think the status quo must remain for Hims to be a great investment and, due to regulation and competition, I do not think it can.

3. DraftKings (DKNG) & Sports Betting

Outcomes:

Déjà Vu. Just like horrendous luck during the NFL football season led to lower hold (take) rates for sportsbooks and guidance misses, the second weekend of March Madness was not kind to these companies. Books thrive when upsets happen… and the four top-seeded teams all made it to the final weekend. As I said last year, bad luck is not a bear case and doesn’t do anything to change things in my mind. Handle (or bet volume) with the weekly data we have in New York for DraftKings rose at a great 30% clip during conference tournaments and March Madness so far. To me, that’s what matters for the long term thesis, even though it matters less for whether or not companies meet quarterly targets. I want to see more volume, strong customer acquisition and great retention. That’s what’s important for DraftKings and all other books profitably growing for a long time. The bad luck will normalize and statistics will revert to the mean.

For those focused on numbers for this quarter, I do not think this one bad week means DKNG or other companies will miss Q1 numbers. DraftKings had been trending well ahead of schedule through the first several weeks of the quarter, and did not bake that into its forecast to provide a larger cushion. 

Prediction Markets: