Hey Snackers,
"Heart full of equity, you're an asset..." Lyrics from the new Justin Bieber album, in which he romantically likens his wife to a stock. Biebs is obviously a hardcore Snacker.
The S&P 500 and Nasdaq rose to record highs, fueled by rising tech shares.
Low as a kite... Google's parent Alphabet is shutting down energy kite startup Makani, which wanted to make wind energy cheaper by flying power-harvesting wind turbine kites in the air (tbh, they look more like small planes). But yesterday, Alphabet announced that it's pulling the plug on one of its most innovative companies. It's an attitude shift:
Getting in a gym sesh before 7am... Google's moonshot goals are a little more ambitious — and waayy more expensive. CEO Sundar Pichai has said Alphabet will increasingly start seeking 3rd-party investors for Other Bets, because:
Other Bets are 'future insurance'... Google is big enough to afford moonshots, and in a way, it can't afford not to take them: It risks being left in the dust when a huge opportunity hits (#DontMissTheNextiPhone). So far, its 1 big win is Waymo (valued over $100B). But... Makani is the 1st moonshot to shutter since Pichai became Alphabet's CEO in December as the co-founders, who were major champions of the passion projects, retired. We think that signals a shift in openness to fund riskier moonshots.
An OGPS makes a comeback... An original GPS company. We're talking Garmin. The GPS-tech company was founded in 1989 by Gary Burrell and Min Kao (hence, "Gar-Min"). Its stock just hit a 12-year high on an A+ earnings report: quarterly profit nearly doubled, jumping to $361M in Q4. Garmin has a bunch of divisions, but it's lost some of its consumer-appeal over the years. Enter the smartphone...
To beat iPhone... go where iPhone won't have service. And Garmin's winning in areas like: Marine GPS (no bars in the ocean), Aviation GPS (does inflight WiFi even work?), and Outdoors (think extreme skiing). Garmin wants to be 35K feet in the air and 30K leagues under the sea — anywhere iPhone can't.
Don't underestimate the power of Barriers to Entry... The road less traveled is usually toughest, but Garmin uses it to its advantage. Marine/aviation are tougher areas for others to enter than regular consumer markets — that means less competition. GPS guiding a military plane is a bigger technical responsibility than GPS guiding you to Starbucks. With big responsibility comes a fat profit margin — Garmin made 74 cents of profit for every $1 of aviation sales.
Disclosure: Authors of this Snacks own shares of Alphabet and a Bitcoin
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