Tuesday Aug.04, 2020

🎵 Microsoft wants TikTok

_Microsoft: "How to Lose a Global Superpower in 45 Days"_
_Microsoft: "How to Lose a Global Superpower in 45 Days"_

Hey Snackers,

A 17-year-old from Tampa has been accused of masterminding the massive Twitter hack. The teen used celeb handles (like those of Elon Musk, Joe Biden, and Kanye) to orchestrate a high-profile Bitcoin scam. Wonder how that'll look between "Conversational French" and "Ultimate Frisbee MVP" on the college application.

The market ticked up yesterday and the tech-heavy Nasdaq index soared to an all-time high on stock gains from heavyweights Apple and Microsoft.

Acquire

Microsoft is trying to buy TikTok's US operations (with a 45-day deadline)

Lots to TikTok about... The video sharing phenom owned by Chinese Bytedance has faced a torrent of scrutiny over its China ties. In June, India (aka the world's 2nd most populous country) fully banned TikTok over national security concerns. In July, President Trump considered banning TikTok in the US on concerns that American data could be passed to the Chinese government.

  • On Friday, Trump said he will ban TikTok (the Committee on Foreign Investment has broad powers over foreign-owned companies). Out of TikTok's ~800M users, 100M are US-based.
  • On Sunday, Microsoft confirmed its rumored talks to buy TikTok's US operations. Trump is reportedly on board, but with big stipulations.

How to lose a country in 45 days... Microsoft is giving off Kate Hudson vibes. Trump reportedly gave Microsoft 45 days to secure a deal with Bytedance. By September 15, Microsoft has to prove that it can move American TikTok data to the US and separate TikTok from Bytedance's access (aka, cut China out). If the acquisition goes through, Microsoft would own and operate TikTok in the US, Canada, Australia, and New Zealand.

  • For Trump, letting Microsoft buy TikTok is better than igniting the wrath of 100M TikTokers with a ban ahead of the November elections.
  • Keeping TikTok could also mean more jobs. TikTok 3X'd its US employees this year, with plans to hire 10K more (it's also a major NYC tenant).

It's not ideal, but there aren't many options... This deal would be making a Big Tech company even bigger. But Microsoft is one of the few with the knowhow and relationships to pull off a highly-regulated acquisition. It's also one of the only companies rich enough to afford the potentially $50B price tag. Besides Xbox and LinkedIn, MSFT hasn't ventured much into the social world. This deal would make the US digital ad market more competitive by creating a rival to Facebook and Google.

Shop

Corona-conomy forces Levi's and other retailers to innovate (or perish)

Haven't felt a jean waistband since March... Levi's sales plunged 62% last quarter because you've been wearing the same sweats for five months. As brick-and-mortar stores shuttered and social outings evaporated, the jean icon's sales went the way of the elephant pant leg. That forced Levi's to accelerate its consumer strategy shift. Our 2 highlights:

  • Same-day delivery: Levi's partnered with Uber to drive your high-waisted shorts to your door, just in time for that last-minute picnic. Curbside pickup is also an option.
  • Fancy ecommerce: Levi's new virtual concierge program lets you have a one-on-one chat with a store associate (from your couch).

It's all about controlling "the experience"... Since Levi's can't control other stores' closures, it's focusing on selling directly through its own stores. That allows it to foster a more premium brand experience (and price up its products).

  • 2020 retail bankruptcies will likely be the highest in a decade: Lord & Taylor is the latest to go bankrupt this year, joining Neiman Marcus, J. Crew, and 40 others.
  • "Experiential Retail" is key to drawing back customers, both virtually and in-store. A great example: Burberry's new "social retail" store, which integrates social media and gaming with your shopping experience.

In an omnichannel world, physical stores are key... An omnichannel sales strategy means seamlessly blending the digital and physical worlds. And Levi's is all about that omnichannel life — that's why its CEO thinks physical stores are still "critical" (Levi’s is opening 70 new ones this year). Levi's is also using its brick-and-mortar shops to quickly send products to consumers — 30% of its ecommerce shipments in May came from stores, not big distribution centers.

What else we’re Snackin’

  • Wiped: Clorox sales surged 22% for the quarter on corona-cleaning — the germ-wiping icon promoted president Linda Rendle to CEO.
  • SPAC: E-truck maker Lordstown Motors will go public by merging with special purpose acquisition company DiamondPeak— the SPAC deal values Lordstown at $1.6B.
  • Gassy: Marathon Petroleum sold its Speedway gas stations for $21B in cash to 7-Eleven's Japanese parent company Seven & I.
  • Secured: Google is paying $450M for a 6.6% stake in home security company ADT to help with Nest installation and service.
  • Electrify: Electric vehicle company Nio, aka the "Tesla of China," said July car deliveries jumped 322% compared to last year.

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Tuesday

Disclosure: Authors of this Snacks own shares of Microsoft, Sony, and Bitcoin, as well as put options of Disney.

ID: 1292000

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