Tuesday Nov.19, 2019

Kylie Jenner's paper wealth becomes real wealth

_Coty wants Kylie’s color_

Hey Snackers,

Bottle, draft, or almost 100? PBR is trying to make 99-packs of beer a thing.

Markets trickled higher to new record highs as T-Mobile's CEO put a date on his exit (May 2020) and Saudi Aramco stuck a price tag on itself ($1.7 trillion = Earth's most valuable company).

Transform

Ford's new Mustang Mach-E electric SUV isn't just a "compliance car"

Biggest product unveil since the Model T... Ford needed something big. So it hired a former Michigan Wolverine football player to be CEO. That's when Jim Hackett ordered designers to build an electric SUV inspired by its iconic Mustang sports car. On Sunday, Ford unveiled that Mustang Mach-E. Shares barely budged because electric cars are just a rounding error for Ford, but this signals a new focus on electric.

Don't call it a "compliance car"... Don't. Car companies that didn't completely embrace electric (that's everyone except Tesla and maybe Toyota/Nissan/Honda) still offered electric or hybrid cars — but those were "compliance cars":

You love profiting off SUVs and pickup trucks, which get bad gas mileage.
But the government requires that you hit minimum fuel efficiency standards for your whole vehicle fleet.
So you build compliance cars — electric or hybrid cars with incredible (or infinite) miles per gallon.
Picture this: It's like the table full of Sprite, Dr. Pepper, and fruit punch in the corner at a sophomore party. School rules require just as much alcohol as non-alcoholic.
But the Mustang Mach-E is built to compete, not comply.

Competition in Elon's mirror is closer than it appears... Tesla's first "everyman" electric car kinda has a rival in the low-ish priced Mach-E. Ford's starts at about $44K, which falls to $37K after a federal tax credit — that's about the same price as Tesla's lowest priced Model 3. Plus, the Mach-E is 100% SUV, which Americans always call shotgun on.

Blush

Kylie Jenner sells $600M worth of her makeup company to Coty

That deal really makes your lips pop... Kylie Jenner is selling 51% of her Kylie Cosmetics beauty brand to old school icon Coty, and there's nothing Kris Jenner can do about it. That $600M splurge boosted Coty stock 2.6% and values Kylie's startup at $1.2B. But the viral number is 51% — it gives Coty control of the company, even if Kylie remains its face and 49% owner.

Maybe she's born with it... maybe it's actually Instagram. Coty dominates ancient brands stuck in your middle school bathroom from CoverGirl to Clairol (it even does Adidas' cologne) — and its stock has fallen over 60% in the last 4 years. The new generation of cosmetics was born on social media.

Non-celeb makeup founder: Insta-candy packaging powered Emily Weiss' Glossier to a unicorn-status valuation over $1B.
Extra-celeb makeup founders: Kylie Cosmetics enjoys free marketing from her 151M-strong Insta account. Older sis Kim Kardashian's brand boasts 4M more for KKW Beauty. The Honest Company is fueled by founder Jessica Alba, while Goop is dependent on Gwyneth (and her Third Eye).

We’ve seen this face before... except in food, beverages, and razor blades. Older company's brands are out of style, so older company acquires upstart rivals.

Harry’s Razors got acquired by the owner of Schick (2019)
RXBar was acquired by Kellogg’s (2018)
San Diego-based Ballast Point Brewery was acquired by Constellation Brands (2015)
If you can't beat 'em, buy 'em.

What else we’re Snackin’

Heard: Spotify stock drops 5% on word Amazon is whipping up its free music service on more devices
De-Foamed: Dunkin' is ending its relationship with styrofoam cups in New England by December 1st
WeUpdate: WeWork is cutting at least 4,000 jobs to reach some financial stability — here's the email its Chairman just sent to WeWorkers about it
Replaced: Airbus snags $30B of new plane orders as Boeing's trust drama continues
Exec: T-Mobile is losing its long-haired, magenta-infused CEO John Legere after 7 years — he's stepping down in May as CEO but will stay on the board

Tuesday

Google's cloud-based gaming service, Stadia, launches (reviewers aren't feeling it)
Earnings from Urban Outfitters, Home Depot, and TJX

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

ID: 1015805

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Sales of what are up 136% since 2019?

Don't be a sucka

$70B

Alphabet shares are soaring in the after-market session, with a initial jump of more than 10% implying a gain of upwards of about $200B in market value when the stock opens tomorrow morning.

Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

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No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?

Apple reportedly cuts Vision Pro production due to low demand

Seriously, relax

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Gonna have to rename the company... again

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Chipotle continues to go on a tear, hitting a sales record

Hey it might not be the kind of AI stock investors are all hot and bothered over, but don’t sleep on the burrito business.

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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Facebook had great earnings, the market hates it

Facebook reported impressive earnings. Record first-quarter revenue thanks to AI! Profit up 117% compared to a year earlier! But at the same time, its capital expenditures are going up and it’s expecting second quarter revenue potentially lower than analyst estimates. So in other words, the future doesn’t look as bright as the present.

All in all the stock is down more than 10%. (Basically the opposite of what happened with Tesla yesterday).

Net net

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Earnings can’t stop, won’t stop

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Why Tesla investors are holding on to hope for a cheap car

Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

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.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.