Hey hey Flux fam!

Here's everything you need to know today - in under 3 minutes.

Today's big stories:

🎈Redbubble reckons competition is killing its profit margins

💰Beforepay shares tank at IPO

💊Unilever wants to buy GSK, the company behind Panadol

Oh and get this...

Looks like companies are growing a conscience. Australia’s environmental and social bond market is set to grow by around 25% to a whopping $25 billion this year.

Strong competition bursts Redbubble's bubble and that's just business, baby

Background: Redbubble is an online marketplace where artists can sell their artwork. But not just on a canvas, we're talkin' art on t-shirts, cushions, custom facemasks...you name it.

What happened: Between March 2020 and January 2021, Redbubble shares soared a whopping 1,300%. But after that? Things started going south. 

What else: Redbubble just provided a trading update. Transactions are down. Profits are down. And profit margins have been crunched thanks to strong competition and poor loyalty. That's gotta hurt! 

So what's the key learning?

💡A profit margin indicates how much profit has been made on each dollar of sale within a business. It is often as an indicator of a company's financial health and growth potential.

💡When it comes to profit margin, there are a few things at play.

Quantitative factors

• Your volume of sales and the cost of producing your product.

Qualitative factors:

• Advertising, seasonal changes and the strength of your competition.

💡When competition is high, businesses are forced to drive down their prices, or increase their advertising spend. And in the words of T-Swizzle, Redbubble knows this All Too Well.

Beforepay could use some cash before payday after their shares tanked at IPO

Background: Beforepay is a new-age lending app that gives you a short-term loan before you actually get paid. It's kind of like a payday lender or pawn shop reincarnated in your phone.

What happened: Beforepay users have four weeks to repay the loan plus a 5% transaction fee. That ends up being a 60% annual interest rate (yikes!).

What else: After launching in 2019, Beforepay went public on Monday, listing at $3.41 per share. But by noon, shares had tanked over 40% to just $1.90.

So what's the key learning?

💡Thanks to a loophole in Aussie credit legislation, apps like Afterpay and Beforepay aren't regulated by strict lending laws, like other financial institutions and banks.

💡This has allowed companies like Beforepay to lend to almost anyone. In fact, nearly 25% of Gen Z Aussies have used a pay on-demand service. 

💡But lending money willy nilly can be extremely risky - because it may be tricky recover these funds when you haven't done your due diligence. And it's this fact that may have spooked Beforepay investors.

Unilever wants to pull the lever on Panadol's parent company - but investors say it ain't it

Background: Unilever own over 400 brands in over 190 countries. We're talkin' Omo, Dove, Ben & Jerry's and Rexona. On the other hand, GlaxoSmithKline (GSK) make prescription medicines, vaccines and some consumer health products like Panadol, Sensodyne and Ventolin.

What happened: Unilever has chucked in a few proposals to acquire GSK's consumer healthcare business for around $95 billion. That's laaarge!

What else: This deal could have been a match made in heaven...except shares in Unilever tanked around 7% after the news. Some Unilever investors reckon the company has "lost the plot" over its sustainability agenda.

So what's the key learning?

💡The CEO and board of a public company have a responsibility to act in the 'best interests' of their shareholders. 

💡For some investors, 'best interest' means short-term profit maximisation. For others, it may mean taking sustainable steps today to help the business in the long run.

💡This all comes at a time when many institutional investors are reshaping their investments towards ethical and sustainable businesses. But some investors, like the Unilever investors, are voting with their feet (aka their dollarydoos).