🏈 Disney’s sports-betting play

Friday, November 12, 2021 by Robinhood Snacks | Disclosures
A little undercooked [Giuseppe Elio Cammarata via Getty Images]

A little undercooked [Giuseppe Elio Cammarata via Getty Images]

Yesterday’s Market Moves
Dow Jones
35,921 (-0.44%)
S&P 500
4,649 (+0.06%)
Nasdaq
15,704 (+0.52%)
Bitcoin
$65,189 (+0.33%)

Hey Snackers,

Forget the Gatorade: Israeli archaeologists discovered an ancient gold ring they believe was worn for wellness benefits — including warding off hangovers.

Stocks closed the day higher, but ended the week in the red as inflation fears loomed over investors. Meanwhile, Johnson & Johnson shares got a boost after the healthcare company announced it was splitting into two companies.

Wager

1. Disney eyes sports betting to fuel its entertainment biz as streaming slows

Baby Yoda sad... Investors weren’t chanting “Hakuna Matata” after Disney's quarterly earnings. Mickey's biz hasn't quite rebounded to pre-pandemic levels. Last quarter, sales jumped to $18.5B (compared to $19.1B for the same quarter back in 2019). Worse, Disney's profits were less than 25% of what they were pre-Covid. While Space Mountain is back, Disney's Parks and Experiences unit disappointed on profit big time. Streaming did not save the day...

  • Disney minus: Disney+ gained 2.1M subscribers, the smallest rise since it launched two years ago and less than half what Netflix added.
  • Frozen audience: CEO Bob Chapek said Disney+ is still on track to hit 230M to 260M subs by 2025, but some investors worry growth is tapping out.
  • FYI: Disney's media biz, including streaming and cable, now makes up 70% of its sales.

From Belle to betting... Now that's a pivot. Chapek said "sports betting is a very significant opportunity" for Disney, and the company is pursuing it "aggressively" through its ESPN brand. ESPN has suffered as millennials continue cord-cutting, and streamer ESPN+, like Disney+, is still losing money. Gambling could be a lucrative way for Disney to attract young sports fans.

  • ESPN has reportedly had talks with sportsbooks, including DraftKings and Caesars Entertainment, to license its famous name for a whopping $3B.
  • ESPN already has sports-betting content on its platforms through marketing deals, but licensing could create an ESPN-branded betting platform.
THE TAKEAWAY

Some vices might be losing taboo status… According to Disney's research, gambling won't hurt Disney's brand but will strengthen ESPN's. Chapek said gambling doesn't have the same rep it did a decade ago. Thirty-two US states have legalized sports betting, and this week New York approved online-betting licenses for nine operators. Yet shares of sports-gambling companies tell a different tale: DraftKings, Penn National Gaming, and FanDuel owner Flutter are all down this year.

Burnt

Pea protein takes an L… Plant-based-patty powerhouse Beyond Meat has lost some of its bite. While overall sales grew last quarter, Beyond’s US sales dropped 14% from last year — and its loss nearly tripled. Beyond blamed lower demand, plus production-related snags. It also gave a disappointing forecast for this quarter, citing pandemic uncertainty. Shares tumbled 13% yesterday, pulling Beyond’s market cap down to $5B from its 2019 high of $14B.

Beyond Beyond… Beyond is estimated to control about a quarter of the US alt-meat market, but plant-based competition is growing. Big Food companies may be an even bigger threat than smaller rivals, like Impossible Foods. Globally, Beyond sells in 122K stores while Impossible is in 20K — but Big Food companies like Tyson and Kraft are nearly everywhere.

  • Kroger saw a surge in sales of its plant-based meat brand Simple Foods last year, while food giants like Tyson, Hormel, and Kraft have launched their own alt-meat products.
  • Beyond and Impossible have lowered prices to compete with Big Food, which can afford to undercut smaller rivals.
  • Partnerships with chains like Starbucks and McDonald’s have helped Beyond and Impossible grow, but aren’t taking off as fast as expected.
THE TAKEAWAY

Novelty builds brands… but it doesn’t necessarily build loyalty. Restaurant partnerships helped make Beyond the most recognized plant-based brand. Dunkin dumped Beyond in June because of low Beyond Sausage sales. McDonald’s is serving the Beyond “McPlant” burger at only eight of its 14K locations. And KFC still hasn’t given Beyond Meat chicken nuggets a permanent spot on its menu. Impossible has also had a few partnership fails.

What else we’re Snackin’

  • Sold: The average US home now sells one week after hitting the market — the shortest time frame in 22 years.
  • eSingle: Alibaba’s “Singles Day” shopping event was hampered by supply-chain troubles, which resulted in higher costs and delays for the Chinese ecomm titan.
  • Headline: The DOJ and SEC are investigating Ozy Media, which shut down last month over accusations that it misled prospective investors.
  • Payout: Miami plans to pay its residents a “Bitcoin dividend” following the launch of its MiamiCoin cryptocurrency, which has already generated $21M+ in revenue.
  • Wipes: Shares of Jessica Alba’s Honest Company jumped 10% yesterday after it reported a boom in sales of skin care, diapers, and baby wipes.
  • Swerve: Chinese real-estate developer Evergrande avoided default for the third time this year after making interest payments on its $300B debt.

Snacks Daily Podcast

“Less than 1% of all Bored Apes have the gold fur trait”— a description that helped an NFT of a cartoon ape sell for a record $3.2M.

Tune in to hear how funky monkeys relate to the metaverse.

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Snack Fact of the Day

This week Rivian became America's biggest IPO since Facebook after raising nearly $12B

Friday

  • Earnings expected from AstraZeneca and Warby Parker

Authors of this Snacks own: Bitcoin, and shares of Disney and Starbucks

ID: 1919413