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What Do Companies Do When Things Get Bad? Simply Stop Reporting Those Bad Things

What does a company do when growth in certain segments of their business is slowing, but they don't want investors to worry about it? Simple - they stop reporting it. With management's top priority being the company's share price, it's better to just not report something than risk their stock falling.

Microsoft is the latest company to join this growing trend by informing investors they will no longer report Xbox Live user numbers to investors. Microsoft has decided to stop reporting the monthly active users (MAU) figure, which it has done since 2014, as growth in the online gaming service is slowing. Microsoft says the change in reporting is due to new gaming services it has introduced through acquisitions, causing the Xbox Live MAU metric to "only capture a subset of of opportunities across Microsoft's platform."

Microsoft is the fourth notable technology company to go this route since last summer. Apple announced last year it would stop reporting unit sales for its largest revenue segment - the iPhone, iPad and Mac. Less than two months later, Apple reported its first decline in revenues and profits in more than a decade.

Besides Microsoft and Apple, the two largest companies by market capitalization and the only members of the trillion dollar club, Oracle and Twitter also decided less is more. Last summer, Oracle announced it would stop reporting specific revenue for cloud infrastructure and platform as a service. Similarly, Twitter decided after three-consecutive quarters of MAU declines that the solution is to just not report it anymore.

So when growth starts slowing, removing segment reporting is becoming a popular trend among publicly traded companies. Just to be sure the stock has a floor under it, executives have two other tricks up their sleeves. In the cases of Apple, Microsoft and Oracle, buybacks are being placed to the tune of tens of billions of dollars to keep shares around all-time highs. But just to be sure investors are happy with earnings reports, non-GAAP reporting is another trick that is now being implemented by some 90% of S&P 500 companies.

Leftover Crumbs

  • They'll need a lot of EV charging stations. As part of its plan to hit zero emissions by 2030, Amazon has agreed to buy 100,000 electric delivery trucks from Rivian, which will hit the road in 2021. The news comes just two days after FedEx reported dismal earnings and lowered its outlook, in part from ending its ground-shipping contract with Amazon. It is the largest order to date for the Michigan-based company, which has received investments from Amazon as well as auto industry giants Ford and Cox Automotive. 

  • Will it have to go in a different freezer? After seeing enough demand to offer the Impossible Burger nationwide at Burger King, Impossible Foods is now bringing the scientific burger concoction to grocery stores. The burger backed by investors such as Bill Gates and a slew of Hollywood celebrities will hit the freezers at 27 Gelson's Market stores across southern California today. Impossible Foods is aiming to sell the burger that "bleeds like beef" nationwide by mid-2020. 

  • We can process that check for you. Payments startup Stripe Inc. is now the third-most valuable startup in the U.S. after receiving $250MM in new funding yesterday. The latest funding round brings the fintech company's valuation to $35 billion, which now trails only Juul Labs Inc. and The We Company, both of which have seen their valuations slashed lately. Stripe's valuation has now jumped 56% since its last funding round in January, when it was valued at $22.5 billion. 

  • There's going to be 500 children that are probably driving a nicer car than you. Sports car maker Bugatti has sold out of its $33,000 kiddie car, the Bugatti Baby II, in just three weeks. The kiddie car, which is more expensive than popular cars such as the Volkswagen Jetta and Ford Mustang, has a “child mode” with a whopping 1.4 horsepower. These 500 lucky children will have to wait to cruise around between nap time and snack time, however, as the car doesn't go into production until next year.  

  • Coming soon to HGTV - house flippers getting foreclosed on. House flippers, people who buy and sell a home within a 12-month period, are now seeing their lowest returns since 2011. Despite the Federal Reserve not seeing signs of inflation, eating into flippers' returns are high home prices and increasing costs of materials. Likely inspired by all the house flipping shows on HGTV, lending volume for flips was up 31% in the second quarter of this year to a 13-year high.