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The Insta Influencer IPO

Monday, June 10, 2019 by Robinhood Snacks | Disclosures

"Imagine the likes coming for these frames"

Last Week’s Market Moves
Dow Jones
25,984 (+4.71%)
S&P 500
2,873 (4.40%)
Nasdaq
7,742 (+3.88%)
Bitcoin
$7,728 (-11.06%)
10-Yr US Treasury
2.085%

Nice timing, National Rosé Day.

The Dow gained every day last week on a magnum of market-moving news:

  • 😚 Tuesday: The Fed hinted it would save the economy with lower interest rates if America's multiple trade wars became too problematic.
  • 👎 Friday: The May employment report wasn't-so-hot — only 75K new jobs were last month.
  • 🤝 Later Friday: The trade war President Trump started with Mexico was called off.

Add it all up and the Dow snapped its 6-straight weekly loss streak.

Highs
1. Who's up...

Pea protein is living its best life... Shares of Beyond Meat surged 40% higher Friday on word its revenue tripled in the 1st quarter — 15% of American restaurants now boast meat-alternative burgers (we're not just talking black bean patties). Shares of the 10-year old vegan champion are now up 451% since its May 2nd IPO as production launches across the pond.

Stick it up on the shelf... Months after putting itself on the auction block, Barnes & Noble has been sold to hedge fund Elliott Management for $638M (that's more than Wall Street thought it was worth, so shares jumped over 50% last week). After closing 150 stores in the last decade, B&N's desperate turnaround plan to lure Millennials with wine/beer/snacks-filled "experiential" concept stores didn't work. Its new owner is reading Harry Potter for magical inspo.

The fire's been put out... GM, Ford, and even German car makers (BMW, VW, and Daimler) all produce some fleets south of the border for US customers. So their stocks were down on fears of new Mexican tariffs. But leaks throughout the week that a deal to cancel them was in gear (+ Friday's final Trump Tweet-nouncement) rebounded the auto stocks.

Lows
2. ...And who's down

$125M... That's how much Jack Daniel's owner Brown-Forman is losing each year because of tariffs. Sales rose just 1% last quarter because Europe's retaliatory tariffs specifically targetted America's finest (whiskey, jeans, and motorcycles). The happy hour bright spot: Sales of Brown-Forman's tequila brand combo (Herradura and el Jimador) jumped 13%.

You're dead to me, Amazon... FedEx made the bold move to end its frenemy-ship with the ecommerce beast. Shockingly, Amazon only made up 1.3% of FedEx's annual biz. Then Amazon got deeper in the shipping game — It opened an air cargo hub in Kentucky last month and now lets local logistics entrepreneurs drop-off Amazon packages. Last week's drone delivery teaser (coming from Amazon "in the coming months") was the last straw for FedEx.

Wedding's off... Fiat Chrysler and Renault planned a $40B summer merger. Then a Japanese relative canceled the nuptials. Renault has a long/incestuous relationship with Japan's Nissan (they own a significant chunk of each others' shares) — Apparently Nissan felt betrayed it wasn't asked by Renault for its merger blessing, so Fiat Chrysler pulled out over the family drama.

IPO'd
3. Influencer fashion pioneer Revolve just surged 89% on IPO day

FOMO = The competitive advantage... Founded in '03, Revolve pioneered influencer marketing as social media became a thing. Now the fashion company that finds buyers with hashtags had the 2nd best IPO of 2019 — Its shares nearly doubled on its first day of trading on Friday. Revolve knows our generation's not watching TV or reading magazines, so it meets you on Instagram (where the eyeballs are).

  • It sells clothes under 21 of its own brands and hundreds of others, marketing them through its 3,500 influencers' social media accounts.
  • And it gives them no-filter-needed venues to pose for — Revolve throws 100s of Coachella-fied #RevolveAroundTheWorldTrips events annually to get the floral-print tankinis in your feed.

Not just beautiful people with millions of followers... Revolve tracks fashion styles based on what's getting clicked, shared, and bought by its 3M+ Insta followers — Then its algorithm detects patterns from the data to determine if sequins are in or wrap dresses are out.

  • The Goal: “Constant newness” — Revolves adds 1,000 new styles/week based on what its learning (fast) from its trends-tracking algorithm.
  • The Purpose: “Less inventory risk” — Since Revolve better predicts what the insta-scrollers will want, it has fewer misses and keeps unwanted inventory low.
  • The Result: 79% of Revolve's clothes were sold at full price, helping nail a $31M profit look last year.
THE TAKEAWAY

Revolve's greatest strength is its greatest weakness... It expects Insta to remain the home of fashion discovery – But a single tweak to how the social network works could cut off its main sales channel. We've seen this before — Online publishers or even Zynga's mobile games have been hurt badly because of a Facebook algorithm change. Now social media regulation could mess with Revolve's marketing mojo, too.

What else we’re Snackin’
  • Work: 5 interview questions that we all probably answered wrong
  • Life: The best grad advice for the Class of 2019 from a bunch of CEOs
  • Money: 5 money questions to ask before launching a startup
  • Venture: Venture capital legend Scott Kupor's new book explains VC and his one motto: "Better to be informed"
  • Crypto: The iPhone's first step into Bitcoin and cryptocurrency
  • Do: 6 days until Father's Day — Get on it
Snacks Daily Podcast

Today's 15-minute Snacks Daily pod:

  • Jetblack is the online shopping concierge whose users spend $1,500/month on average (spoiler alert: It's owned by Walmart)
  • The US grocery wars are one of the most exciting business battles right now — And German chain Aldi just opened up a new front
  • We try on the Revolve IPO
This Week
  • Monday: Earnings from recreational vehicle icon Thor
  • Tuesday: Earnings from Dave & Buster's. Team USA plays Thailand in the Women's World Cup
  • Wednesday: Earnings from Lululemon and Restoration Hardware
  • Thursday: Gig economy platform Fiverr IPOs
  • Friday: Online pet food legend (and "pet humanization" fan) Chewy.com IPOs

Disclosure: Authors of this Snacks own shares of Beyond Meat, Amazon, Lululemon, and Volkswagen.

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