⚽️ FIFA might break up with EA

Thursday, October 21, 2021 by Robinhood Snacks |
A FIFA by any other name would play as sweet [Dmytro Aksonov/E+ via Getty Images]

A FIFA by any other name would play as sweet [Dmytro Aksonov/E+ via Getty Images]

Yesterday’s Market Moves
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Hey Snackers,

Facebook reportedly plans to change its name to reflect its growing focus on the metaverse. We might soon be saying, “She didn’t accept my Horizon friend request.” Tweet us your suggestions for Facebook’s new name @RobinhoodSnacks.

The market-tracking S&P 500 index closed at a fresh record today, as investors digested another round of earnings. Snap stock plunged 25% after quarterly sales missed expectations, while WeWork shares jumped on their first day of trading — two years after its botched IPO.

Brows(e)

Return of the "try me" moisturizers... Ulta is Sephora's less swanky rival, with 1.3K US stores compared to Sephora’s 2.7K global stores. Ulta shares have dropped 13% since its investor day on Tuesday. Its three-year growth outlook missed expectations, though it expects to outpace the rest of the beauty industry.

  • Beauty sales plunged last year, as face masks replaced lip gloss and Zoom face replaced foundation. Meanwhile, consumers became even more digitally savvy. Now...
  • Beauty is glowing up, as we refresh our makeup bags instead of refreshing Netflix. Last quarter, Ulta's sales surged 56% from 2020, surpassing pre-pandemic levels.

TikTok blush... As the shift to digital continues, Ulta is following Sephora’s lead and rolling out same-day delivery. But IRL browsing is key, too: Ulta customers who shop both online and in stores typically spend 3X more than online-only shoppers. So Ulta plans to open 50 new stores a year, and have 100 mini shops inside Target this year. But the juiciest update from Ulta:

  • “Digital store of the future”: Ulta just invested in AI company Adeptmind, which aims to power a new personalized search engine for a futuristic shopping experience.
  • Think: Tailored recs and content-driven product discovery on Ulta’s platforms. The goal: to "seamlessly merge content with commerce.” About that...
  • Ulta’s launching a media platform that partners can use to advertise on Ulta’s site and app. A new editorial team will create “culturally relevant” content, including beauty tips.
THE TAKEAWAY

Being a social hub > using a social hub... Product discovery and spending have shifted to TikTok and Insta. But instead of only advertising on social platforms, Ulta wants to create its own social commerce hub. That way Ulta — not Insta — will gain valuable browsing data that it can use to sell targeted ads to brand partners. By making its digital sales channels more like content-focused social apps, Ulta could unlock a big new revenue stream.

Breakup

It’s getting Messi… A breakup between a soccer power couple could be coming. Video-game giant Electronic Arts (EA) and soccer org FIFA have released a new FIFA game together for 28 years, making FIFA the best-selling sports-game franchise ever. Fans love that FIFA lets them play with friends while rooting for their favorite teams. But EA is reportedly considering walking out on its longtime teammate.

Trouble in the FIFA-verse… EA has made $20B+ from the FIFA franchise over the past 30 years or so, and FIFA currently makes $150M in yearly licensing fees from EA. But their 10-year contract ends after next year’s World Cup in Qatar, and they can’t agree on a new deal. Here’s why:

  • Putting the “fee” in FIFA: FIFA wants to double the yearly licensing fee it charges EA to use its name.
  • Open relationship: EA wants exclusive rights to develop FIFA extensions like arena gaming tourneys and NFTs, but FIFA wants to limit EA and launch its own ventures.
  • Uneven split: FIFA, a nonprofit, made more than half its nearly $270M in revenue last year from its EA deal. But EA, which is valued at $40B, made $5.5B last year distributing several hit games like Madden, The Sims, and Apex Legends.
  • New partners: EA has already lined up 300+ partners from national leagues to players’ unions, and filed to trademark “EA Sports FC.” Now, FIFA could start looking for a new gaming partner like Epic Games or Activision Blizzard.
THE TAKEAWAY

You need the name to join the game… But you only need loyal fans to keep playing. EA leveraged FIFA’s brand to generate buzz and build a huge global fan base: More than 31M people have played FIFA 21 since it launched last fall. But EA’s games themselves are what keep fans plugged in. Most sports fans don’t abandon their teams when they trade star players; EA hopes customers show similar loyalty.

What else we’re Snackin’

  • Mixer: The FDA authorized Moderna and J&J boosters and mix-and-match jabs from different drug makers, just weeks after giving Pfizer the green light.
  • Charged: Tesla posted record sales and profits last quarter despite production slowdowns related to chip shortages and port blockages.
  • Pinned: PayPal is reportedly in late-stage talks to acquire Pinterest for about $39B, in a bold bid to compete with e-commerce-forward rivals like Shopify.
  • Found: Alibaba stock jumped this week after founder Jack Ma went on his first foreign trip since last November, and he seems to be alive and well.
  • Pantry: Snack giant Nestlé raised its annual forecast after reporting stronger-than-expected sales, as pandemic staples like instant coffee and pet food keep thriving.
  • Bail: Exxon board members are reportedly considering plans to abandon some of the oil and gas giant’s biggest projects ahead of a company vote.

Thursday

  • Jobless claims
  • Earnings expected from: Snap, Intel, AT&T, Chipotle, Southwest Airlines, Tractor Supply, Quest Diagnostics, and Barclays

Authors of this Snacks own shares of: Netflix, Tesla, Moderna, and Snap

ID: 1886445