Tuesday Apr.09, 2019

Ironman and Thor saved a stock

"_Watch what I can do to AMC shares_"
"_Watch what I can do to AMC shares_"

Hey Snackers,

The great oat milk shortage of 2019 is almost over (a new factory's arriving ASAP to increase production by 10x).

The great win streak isn't. The S&P 500 rose for the 8th-straight day for its longest stretch in over a year.

Sip

CBD-focused New Age Beverage surges 39% on Walmart hookup

Sparkling water wasn't mindful enough... So New Age Beverage happened. It's leading the wellness beverage space with exotic kombucha-esque drinks. New Age shares surged 39% Monday as it signed a Walmart distribution deal — three low-sugar/carb/calorie Bob Marley-branded energy teas will hit shelves of Earth's biggest retailer.

The deal smelled of CBD... (but it was technically CBD-free). New Age bought the Marley brand in 2017. With the blessing of Bob's family and a partnership with a cannabis investment fund, New Age turned to CBD: The relaxing, psychoactive-less pot extract you see everywhere.

  • In January, New Age announced plans for a CBD-enhanced "Marley Mellow Mood" flavor within the next year.
  • Those 15.5-ounce cans would be filled with 25mg of "pharmacy-grade" CBD.
  • The CEO already projected $30M in sales nationwide in the first year of CBD Mellow's launch.
  • And you can already find Mellow on Amazon — But it's got no CBD. And there's a reason.

One main factor affects New Age's CBD future... The federal government. While cannabis is legal in some US states, it's still not legal federally. That's an issue if you're distributing nationwide with, say, Walmart. May 31st is the FDA's public hearing on CBD foods, so New Age has its calendar circled. Until legalization, only CBD-free New Age drinks are included in the Walmart deal.

Oscar

AMC theaters jumps 9% thanks to huge Avengers ticket pre-sale

Best superhero in a supporting role... goes to Avengers: Endgame. Pre-sale tickets for the roughly 712th edition of the Marvel movie series immediately broke records. That's why a research analyst upgraded shares of AMC Entertainment, and they jumped 9% on the report.

Don't care about IMAX or 3D-printed massage recliner seats... Your Snacks team ID'd three trends that explain why movie theaters are still a growing business:

  1. International: AMC's got a deal to bring movies to Saudi Arabia for the first time. And China's expected to become the world's biggest movie market soon.
  2. Remakes, reboots, & blockbusters: Global hunger for spandex'd superhumans is insatiable. Aladdin, Lion King, and Pikachu are joining this year's summer movie lineup, too.
  3. Subscriptions: MoviePass brought subscriptions to movies, but AMC's running with it — Its copycat "Stubs A-List" program ($24/month for 3 movies/week) has 19M members now.

International growth > Domestic problems... With Netflix standing by, it's easy to decline Saturday's expensive $50 movie-out-for-two. North American box office sales barely budged over the past decade (just up ~1% per year). But AMC's tapping into a still growing industry: Exporting American-style movie theaters abroad for American-style movies.

Buzzkill

One particular analyst made General Electric fall 5%

Don't take it personally, GE... The "equity analyst" job description involves being judgy. Really judgy. About stocks. And JPMorgan's analyst for General Electric announced he thinks the stock's not worth as much as everybody else thinks. It's just his opinion, but investors listen, so GE shares fell 5%.

GE's come a long way... Just not long enough, according to Stephen Tusa:

  • The Golden Era (1892-2016): GE became the American corporate conglomerate legend, making machines that moved people, mountains, and power.
  • The Reckoning (2016-2017): Tusa was first to call out GE for its profitability problems in a 235-page memo in May 2016. Here's his follow-up a year later (a quick 133-page read). Shares are down 68% since 2016.
  • The Cleanup (2018-today): Fixing GE is a work in progress, but shares have risen 50% on that progress so far.

A 127-year-old is really, really slow to change... GE's been impressively honest with itself about its problems. It's on its 3rd CEO in two years, written down the value of a bunch of its poorer divisions, and chosen just three it'll focus on going forward (aviation, power, and renewable energy). Tusa sees a lot more work to do.

What else we’re Snackin’

  • Talent: Sony jumps 8% on word an activist hedge fund just invested big in its entertainment future
  • Out-out: Nissan's legendary CEO Carlos Ghosn was already in Japanese jail for tax dodging — Now the board has officially replaced him
  • Harmony: Sonos and Ikea just partnered up to make a speaker lamp together
  • Waft: Juul (e-cig maker) got a letter from Congress asking about its investment from Altria (real cig maker)

Tuesday

  • The first time Levi's reports its quarterly earnings since its March IPO
  • Israel's presidential election

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Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

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While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

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French luxury fashion conglomerate Kering has seen its shares fall ~10% in the last 24 hours after reporting that sales at its flagship brand Gucci had dropped 21% in its latest quarter.

Kering’s other brands, which include Yves Saint Laurent, Bottega Veneta, and Balenciaga, fared slightly better — but the only real bright spot was the company’s eyewear division, where sales rose 24% (9% on a comparable basis).

With Gucci responsible for roughly two-thirds of the company’s profit, the ongoing struggles of the brand are weighing heavily on the bottom line: the company expects recurring operating profit to drop 40-45% in the first six months of the year.

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Kering Warns Profit to Tumble Following Gucci Woes in China

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With Gucci responsible for roughly two-thirds of the company’s profit, the ongoing struggles of the brand are weighing heavily on the bottom line: the company expects recurring operating profit to drop 40-45% in the first six months of the year.

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Yesterday, the FTC sued to block Tapestry Inc’s $8.5B acquisition of Capri holdings. The agency is worried that a merger between Tapestry, which owns the Coach and Kate Spade brands, and Capri, which owns Michael Kors, would eliminate competition in the market.

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

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Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

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