💻 Zoom's happiest hour

Wednesday, September 2, 2020 by Robinhood Snacks | Disclosures

Corporate happy hour intensifies

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Hey Snackers,

Startup names are getting less silly, according to Crunchbase. “People are a bit longer with the names and going back to English words.” Guess Snax is a no-go.

Stocks ticked up to start September, building on August's historic gains.

Soar
1. Zoom's quarterly profit soars 3,330% as abnormal becomes its normal

Corporate Happy Hour has never been happier... Zoom absolutely smashed earnings last quarter (for a reason that requires no explanation). In just 3 months, the videoconferencing service made double the amount of money that it did during its entire 2019 fiscal year:

  • +355%: Zoom's quarterly sales more than quadrupled compared to the same quarter last year, clocking in at $663M. Sales for its entire 2019 fiscal year were $331M. Womp.
  • +3,300%: Zoom's quarterly profit was almost 33X bigger, coming in at $186M compared to $5.5M last year. Double womp.

Zoom, zoom, zoom... Investors brought Zoom to their room on Tuesday, sending the stock soaring 40%. Zoom's market cap is now $129B, up from $25B a year ago. It's worth more than IBM and Lyft combined, or as much as four Twitters. Why the wild stock surge?

  • Wild growth: Sure, other corona-conomy winners like Netflix and Clorox did well. Compared to Zoom, their growth was as yawn-worthy as a beachside virtual background.
  • Wild forecast: Zoom significantly upped its full-year growth forecast. Corona winners like Netflix and Home Depot didn't, suggesting they may have passed peak pandemic surge.
  • Wild situation: Zoom investors believe you'll be Zooming into the future, whether you stay remote or return to the office.
THE TAKEAWAY

This is abnormally fast growth... for a publicly-traded, relatively mature company. For reference, let's look at some best quarters from the past: Apple killed it in 2008 with iPhone 3 and 90% sales growth. Facebook liked itself in 2014 with 72% growth. Netflix won an Oscar in 2011 with 50% growth. Zoom slayed in 2020 with 355% growth. Zoom is growing abnormally fast because its product was/is positioned to thrive during these abnormal times.

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We promise this isn't about Amazon... Suuureee. Walmart unveiled the deets of its Amazon Prime subscription rival, Walmart+ (creative). The service launches on September 15th and costs $98/year, less than Prime's $119 price tag (take that, Bezos). Here's what's in the cart:

  1. Unlimited free delivery: Free delivery from Walmart stores for over 160K items, from groceries to tech (with a $35 minimum order). Walmart's driving it up "as fast as same-day."
  2. Scan & Go: Scan bananas and t-shirts using the Walmart app in stores, then pay in-app for a cashierless-experience (can see this one going wrong — #fakescan).
  3. Fuel discounts: Save up to 5 cents a gallon (wow) at 2K gas stations.

But does it come with TikTok?... Walmart wants to acquire TikTok to leverage its massive ecommerce reach (wait for it — to crush Amazon). Walmart+ is yet another play to compete with the 'Zon. Prime is the secret sauce of Amazonian success, because perk-filled subscriptions are loyalty builders.

THE TAKEAWAY

This isn’t a Prime-killer, but it might stop the bleeding... Let's be honest: these perks probably won't win Walmart new customers. But they might keep existing customers from ordering more on Prime — especially when it comes to grocery delivery:

  • Walmart makes over half its sales from groceries and is the US grocery leader. Its online grocery biz has been growing dramatically. Buuut...
  • Over half of Walmart’s top-spending families have Prime memberships — since they're paying $119/year, they might as well use Amazon's free grocery delivery instead. Walmart's hoping Walmart+ will keep them loyal.
What else we’re Snackin’
  • Musky: Tesla shares dipped 5% after the e-car icon said it's selling up to $5B in stock to cash in on its wild rally.
  • Cashed: Patreon, the website where you pay your favorite YouTuber, has reportedly raised $100M at a $1.2B valuation.
  • Mommy: Nike is launching its 1st-ever maternity activewear line (it's been 6 months since lockdowns — lots of babies coming soon).
  • Cuts: Ford reportedly plans to cut ~1K salaried jobs in North America as part of its $11B restructuring plan.
  • TokOff: TikTok acquisition talks reportedly hit a roadbump over China's new export restrictions.

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Snacks Daily Podcast

Choco-legend Nestle is famous for Nesquik, Nespresso, and Nes-KitKats.

But it's dropping a sugary $2.6B to acquire... a peanut-allergy treatment company. Nestlé's not building an allergy-proof Kit Kat — it's building a health science division.

Tune into our sweet 15-minute pod to hear why this low-growth, Swiss company needs (sometimes random) high-growth products.

Wednesday

Disclosure: Authors of this Snacks own shares of Amazon and Apple

ID: 1320132