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Hey Snackers,
It's Day 2 of the TBOY Awards. Last night, Apple went home with the TBOY Trophy for Best Product in a Supporting Role thanks to AirPods. Join us on Twitter today @RobinhoodSnacks to vote on our next category:
It's been a year of CEO departures. We picked the ones who really left with a bang (not in a good way). Here are the nominees for Best CEO in a Leaving Role:
- Adam Neumann, WeWork
- Steph Korey, Away (for her work leaving, before returning)
- Kevin Burns, Juul
- Carlos Ghosn, Nissan, Renault
Join us @RobinhoodSnacks to vote for the best (worst?) C-Exit.
Rally
Tesla is officially in ludicrous mode — now Earth's 2nd most valuable carmaker
Seriously getting out of hand... Tesla. It's now the world's 2nd most valuable carmaker (behind Toyota), despite never having made an annual profit. The stock's almost quadrupled in value since October. It's almost boring to even bring it up anymore... But the rally also has half your coworkers beginning every meeting asking: when will it end?
- The Past Week: Tesla stock surged 54% — and it's added $56B to its value (that's almost 4 Lyfts)
- The Good: A string of feel-goods fueled some of the rally: rising sales/deliveries, a new factory in China, and its 2nd straight quarter of profitability. Oh, and Tesla's battery partner Panasonic also posted its first quarterly profit for its battery biz.
- The Reality: Tesla's value is double that of Ford and GM's combined, yet Ford and GM produced 39X as many cars as Tesla did last year (14M vs 367K). And they were hugely profitable last year, unlike Tesla.
Tesla is like a young avocado tree... Hot, in-demand on plenty of toast, and primed for growth. OG carmakers like GM and Ford are like mature orange trees. OJ used to be on every breakfast table, but now its demand is slowing. And investors care most about future profit/growth potential, and they're not convinced it's there for the Detroit-based orange growers.
The rally could also be an effect of FOMO hype... Investors hopping on the soaring Tesla bandwagon drive the stock higher, rinse, repeat. It could also partly be a "short squeeze." When you invest "long," you hope to buy low and eventually sell higher. "Short" sellers are the opposite — they're betting a stock will go down.
- Given all the people Doubting Elon's Vibe, Tesla is aggressively shorted — many investors hope the stock falls. They "borrow" and then sell it, hoping that when it's time to give the stock back to their broker, they can buy it at a lower price and turn a profit.
- When TSLA shares rise, that puts pressure on short-sellers to buy shares back sooner (because the more it rises, the more they lose).
- Those buy-backs to close out shorts can help drive Tesla's stock higher... which then squeezed even more short-sellers to buy back the stock and cut their losses.
Swipe
Visa's making a big change to the "swipe tax" from every time you swipe
Meeting the $5 dollar credit card minimum... You added extra oat milk to your cold brew, swiped your card, and walked out of the store with your caffeine. But what went on behind the spending scenes is way more complex. Merchants like your bodega and coffee shop pay $100B+ a year in interchange fees (aka "Swipe Tax") for your credit card usage. Now Visa's changing its fee structure for stores. Some background:
- Merchants' Cost: The coffee shop pays that Swipe Tax every time you pay with a card (usually ~1.8% of your payment). Enter, credit card minimums.
- Banks' Cut: Most of that fee $$$ ends up in the pocket of the bank that issued your card (Chase, Citi, etc.) — because the bank is the one actually paying the merchant and lending you the money via credit (aka, covering your latte).
- Network's Cut: A much smaller cut of the fee goes to the network that facilitates the payment, like Visa or Mastercard. They don't usually issue the plastic or credit, but they make sure money moves from your bank to your coffee shop (and that cold brew charge magically appears on your card statement).
Now, Visa wants to raise fees for some merchants... and cut them for others.
- Raise Fees: For non-swiping, ecommerce companies that you likely gave your credit card info to (think Amazon, DoorDash, and Uber).
- Lower Fees: For companies that require you pay by check to avoid the swipe fees (think real estate, like your monthly rent).
Visa's optimizing, not disrupting itself... It's milking more money out of your credit card purchases. That's why it's raising fees for no-brainer "I'll use credit" purchases, and lowering them where you don't typically swipe (like rent payments). Visa is the world's largest payments processor, but that doesn't mean merchants won't complain. Kroger even banned Visa cards in 2018 because of fees, before reversing the ban the next year.
Stream
Disney+ grows to nearly half as big as Netflix... in just 2 months
Took Netflix 10 years... to reach the 68M US subscribers it has today. After just 2 months, Disney's almost halfway there with 28.6M. That's the headline from Disney's 4th quarter earnings report. It sounds good, but Disney+ actually hurt Disney's profits badly — those new subscribers drove revenues up 36% overall for Disney, but sank profits by 23%.
- Disney+'s 28M: 20% of those Mickey lovers aren't even paying the already low $6.99/month for Disney, they're getting it for free from a Verizon promotion.
- And it's expensive: The cast of The Mandalorian and the CGI gal who whipped up Baby Yoda aren't free. The streaming segment (which also includes Hulu and ESPN Plus) lost $693M last quarter (maybe the $7/month isn't enough).
- PS: A new series about Obi-Wan Kenobi is being developed for next year.
Remember Walt's character ecosystem... He drew it on a napkin back in 1957. Unlike HBO, Netflix, Quibi, and NBC's new Peacock streaming service , Disney+ doesn't need to make profits. It can set a low price to maximize the number of people who fall in love with Baby Yoda, then cash in on its other divisions:
- Media Networks: The division that's still making bank thanks to cable TV packages is still its profit puppy — it made $1.3B in profit in the last quarter.
- Theme parks: 10% more Americans visited its US parks, but this current quarter is expected to feel some pain from coronavirus (an estimated $130B of lost profit).
- Merchandise: Lunch boxes, stuffed toys, Frozen dresses — they're all bundled in with the Disney+ division, so we can't say exactly how sales did.
- Studio Entertainment: Disney is the undisputed king of movies, and Star Wars Episode IX helped profits triple in that division compared to the year before (a Star Wars-free year).
What else we’re Snackin’
- Glowing: LVMH-owned Sephora will open 100 new stores focused on fragrances and hair care in 2020 — it's trying to save itself from malls
- Ghosted: Snap added more daily users than expected (now up to 218M), but investors dropped shares 11% because they weren't happy with the slow revenue growth
- Musical: Disney dropped $75M for the movie rights to Hamilton filmed with the original cast back in 2016 (you'll still have to wait until 2021 to see it on screen)
- Cut: Macy's will close 125 stores and cut 2K corporate jobs over the next 3 years because retail-ocalypse hits department stores hard
- Stalled: Ford's $1.7B quarterly loss essentially wiped out its 2019 profits
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