Table of Contents:
- PayPal & Alphabet Partnership
- Meta Connect 2025
- Fed Day
- Duolingo Duocon Review & More
- CrowdStrike Fal.Con 2025
- DraftKings & Prediction Markets
- Uber & Lyft
- Trade Desk Press Coverage
- Mercado Libre M&A
- Headlines
- Macro
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Next week's content will include updated valuation multiple comp sheets, a review of MongoDB's Investor Day, a Rubrik Earnings Review & so much more. I have been traveling this past week and am excited to get back to the office and in the swing of things.
1. PayPal (PYPL) & Alphabet (GOOGL) – Partnership
The two companies struck a multi-year partnership announced this week. PayPal will use Alphabet’s AI services to bolster its operations and will “partner with Google Cloud Platform (GCP) to reimagine its technology foundations and infrastructures. That sounds like a contract is coming for GCP. PayPal will get branded checkout and Hyperwallet Payouts distribution gains across the half dozen products Alphabet provides to 2+ billion people. PayPal Enterprise Payments (Braintree-based) will become a “key processing provider for GCP, Google Ads and Google Play” as well.
For Alphabet, this is a fine partnership. They probably get a new cloud contract and incremental traffic for their AI services to improve more quickly. For PayPal, this is great news. All they had to offer was using Alphabet’s world-class AI services and cloud infrastructure. They should be doing those two things anyway. And now, PayPal has a real opportunity to incrementally boost volume and overall market share thanks to what should be a nice boost to visibility and distribution. More distribution alone does not mean more volume. There are a lot of checkout options. But this is why CEO Alex Chriss and PayPal have worked so hard to make their most known checkout option also the most rewarding. It now can more meaningfully stack rewards thanks to a larger partner network and strong customer lifetime value and its budding ads platform (now expanding to Germany and the U.K.). And it can do so in omni-channel settings thanks to its aggressive “PayPal Everywhere” push.
The only annoying piece of this news is how vague the added distribution language was in the press release. That makes it hard to quantify how large this partnership truly can be. It should be very meaningful, but we’ll have to wait and see.
- PayPal added link-based peer-to-peer payments during the week, extending interoperability and convenience.
2. Meta Connect 2025 Zuck Keynote
Smartglasses Traction:
Zuck confidently proclaimed that the company’s Ray-Ban smartglasses are on a “sales trajectory similar to the most popular consumer electronics of all time.” That probably means the company will sell 5-10+ million units this year, considering he thinks eclipsing that benchmark for 3rd-generation hardware is a clear signal of future ubiquity. He’s not declaring this the next iPhone or guaranteeing omnipresence, but he is saying the product is off to a fantastic start.
New Ray-Ban Glasses:
Meta announced an updated Ray-Ban model with double the battery life as well as 3K video resolution. It comes with a cool new feature called Conversation Focus. This helps users amplify the voices of people who they’re talking to in a crowded room and tune out everyone else. They also tried to tease Live AI in a real-time demo, but it did not work as planned. That can happen when you’re introducing new features in a truly live fashion. The company blamed the wifi connection, and the CTO Andrew Bosworth (Boz) was visibly annoyed with himself and his team. I’m sure it will be rectified.
- The new line of Ray-Ban glasses come in more colors and shapes
- There are limited edition clear and matte black frames
- Starting price is $379
New Oakley Vanguard Glasses:
Zuck unveiled a new Oakley model with up to 9 hours in battery life. It offers 3K video recording with a 122-degree field of view and stabilization technology to maintain quality footage – even on rocky terrain. Its open-ear speaker is 6 decibels louder than the Meta Oakley HSTN.
Vanguard model comes with a Garmin integration, enabling a seamless ability to pre-set triggers for video recording (speed, heartbeat etc.). Meta preps an aggregated video of the footage with stats to share.
- Announced a new Strava integration to “graphically overlay statistics” while they run.
- These are its “most water-resistant glasses yet.”
- Glasses start at $499 and will start shipping October 21st.
Meta Ray-Ban Display:
Zuck also excitedly debuted a version of the Ray-Ban glasses with a new, Meta-built display. They’re fittingly called Meta Ray-Ban Display. It’s large enough to read a text, and is placed off to the side, avoiding blocking views. The technology is “crisp on the sunniest of days” and is "sharper than any headset” on a pixel-per-degree basis. In the image below, you can see what this looks like from Zuck’s point of view on the right:
This more advanced hardware will also come with Meta’s first neural band, unlocking hand movement-based hardware control. It has 18 hours of battery life and is water resistant. In a live demo that actually worked, Zuckerberg texted Boz, but the video call he tried to start with it did not go as planned. They blamed the wifi again.
Another cool feature for these glasses is live subtitles. Customers can have conversations they’re having displayed for them with minimal latency, which should be quite valuable for hearing-impaired individuals. The starting price is $799 and this will start shipping in a couple of weeks (I’m sure after they fix some bugs).
Meta Horizon Studio:
Meta believes they need to improve support for creators building metaverse worlds and immersive new experiences. While many think consumer interest and demand is the primary bottleneck holding this part of the business back, Meta thinks turbocharging quality supply growth will be a massive help for the Metaverse. Along those lines, Meta Horizon Studio combines all of the AI tools Meta has been working on for Metaverse world creation. It greatly automates and expedites the process of creating new games and other experiences, with an agentic AI assistant coming soon to make things even more efficient.
Meta Horizon Studio will be powered by the new “Meta Horizon Engine.” This will replace the Unity Software product they were using and will provide the foundation and backbone for future app-building in the Metaverse. It allows Meta to support 5x the number of people per world. As part of this product announcement, Zuck also introduced a product called “Hyperscape Capture.” This allows people to use their Quest headsets to scan a room and quickly generate a full digital twin. Whether it’s revisiting cherished memories, remotely attending a concert or upgrading real estate touring processes, there are many use cases for technology like this.
Entertainment Hub:
Meta is launching an entertainment hub as a new video content viewing destination on Quest. Like Roku, this will provide a centralized dashboard that organizes various channels and applications. Universal Pictures, Blumhouse and Disney+ were the content partnerships Zuck announced today. I’m sure there will be many more.
Take:
Regardless of live demo hiccups, Meta is clearly the leader in smartglasses and it’s easy to see why this is the perfect hardware for the age of AI. As Zuck so frequently says, glasses can easily see and hear what we do – without distracting us. They can seamlessly collect relevant data to help users more effectively than something like a phone. I do think these are going to become more popular as the products advance and Meta should be the primary beneficiary. I’m still not all that bullish on their metaverse focus, but I am quite excited about smartglasses.
3. Fed Day
a. Updated Summary of Economic Projections (SEP)
For 2025, GDP is now expected to rise by 1.6% Y/Y vs. 1.4% as of the June SEP. 2026 estimates also rose from 1.6% to 1.8% since the June release. Long-run GDP growth expectations remain 1.8%.
For 2025, there have been no changes to the 4.5% unemployment rate projection since June. The actual unemployment rate is currently 4.3%. For 2026 and 2027, projections were 4.4% and 4.3%, respectively. Both improved 10 basis points from the last SEP release. There are also no changes to its longer-run projection of 4.2% unemployment.
For inflation, the Core PCE for 2025 is still expected to be 3.1%. For 2026, estimates rose from 2.4% to 2.6% since the last meeting. For 2027, they stayed at 2.1%. No changes to its long-run 2% inflation target.
The Fed funds rate median projection for 2025 moved from 3.9% to 3.6%, which points to 2 more cuts this year. Notably, there’s actually an FOMC member with an end-of-year rate projection implying 5 more cuts this year. The interest rate projection range also widened from 80 bps to 150 bps since June, pointing to a lot more board member disagreement on the path of forward policy. For 2026, the rate target moved from 3.6% to 3.4%; for 2027, it moved from 3.3% to 3.1%. No change to the Fed’s 3% long-run target.
b. Important Changes to the Fed Statement
- Removed language on “swings in net exports affecting growth rate.” Replaced that with more general language on “recent indicators suggesting moderating growth.”
- Added “job gains have slowed” (we know) and removed “labor market conditions remain solid.” They also added that “downside risks to employment have risen,” which in their minds justified the cut.
- The wording “inflation remains somewhat elevated” changed to “inflation has moved up and remains somewhat elevated.
c. Powell Presser
Employment:
Monthly job gains have averaged 29,000 over the last 3 months. That slower pace of hiring is partially related to modestly softer labor demand, which is why they see unemployment moving from 4.3% to 4.5% by January. This is what Powell was referring to when speaking about greater downside risks in employment metrics. At the same time, a lot of this slowing job growth is not demand related. The greatly reduced pace of immigration has materially impacted the labor supply available to employers for certain jobs. That’s having a large impact on slowing payroll growth, but doesn’t put upward pressure on the unemployment rate. This creates what Powell called an “unusual” dynamic in which payroll and employment metrics aren’t as tightly correlated as they typically are.
Inflation:
Powell rightfully pointed out that the modest pickup in recent inflation readings is goods-related. Importantly, services disinflation has continued. This supports the idea that inflation is currently a one-time, tariff-driven adjustment event, which means the new policy should work its way through the inflation data in the coming months and metrics should again improve. If inflation was still driven heavily by services or something else more structural, that would be more concerning. Powell conveyed willingness to look past what he probably expects will be a short-term dose of inflation in order to support labor markets.
d. Take:
The Fed is clearly not declaring victory on inflation, but they do think it has moderated enough from its peak to allow this cut (and probably a couple more this year). That is because incremental labor market fragility is presently a greater risk than inflation.
Cuts are very good for liquidity, risk asset valuations and (on a 6-12 month delay) consumer confidence. At the same time, the consumer confidence piece is really only true when cuts aren’t in response to a sharply deteriorating labor market. When that’s the case, employment weakness is a materially larger economic headwind than modestly easier policy is a tailwind. The worsening in the labor market has been quite gradual and orderly to this point while the unemployment rate still looks great. To me, the most important thing of note is that hiring weakness is tied to the reduced immigration rather than a structural decay in hiring appetite. If that’s true (and I think it is), consumers should keep spending and the economy should be poised for steady growth.