Hey Snackers,
We're telling you because we love you and we love rigatoni — The lifetime pasta pass for Olive Garden hits today. There are 50 of them, they cost $500, and they entitle your face/belly to unlimited pasta forever.
Cheese could help markets psychologically recover from one of the worst losses of the year. The Dow plummeted over 3%, but not because of stocks – it's a reaction to a signal in the bond market (more below).
Let's start on page #3... of WeWork's S-1. That's the required tell-all document a company must file before an IPO, telling potential investors key details on the biz. And that's where things got awkward, talking about "the energy of We" (WeWork's actual holding company name). The 9-year-old, $47B huge-icorn with 604K work-stations worldwide wants to IPO soon and this unveil makes it feel like a sorority sect. Here's the surprising stuff:
__There are 2 key numbers to work into your head...__Investors are curious about the $905M WeWork lost in just the first half of this year, 25% more than the same period last year (but it is on pace to double revenues). But WeWork wants you to focus on the 2 years time it takes individual locations to turn profitable, and WeWork has opened over 100 so far this year.
Forget co-working... WeWork is now "space-as-a-service." WeWork says it pioneered the term — The play on "software-as-a-service" is WeWork's attempt to appear like a tech company so investors will judge it like a tech company and be cool with the huge losses it's making now. It does though reflect all the things We is now doing outside of coworking:
Dun dun duuuuuun... The ringtone reserved for crisis situations was buzzing on Wall Street for a strange reason: The yield curve inverted. Translation: The interest rate the US government borrows at was higher for a 2-year loan than a 10-year one. Translation^2: The last 7 economic recessions were warned by this unusual solar eclipse-meets-blood-moon situation.
Everyone thinks the global economic party is going to be less fun... Which increases the chance that'll be the case. Central banks are lowering their country's interest rates on concerns that their economy could slow down. Here's why that's bad for markets:
A lot's changed since December... Back then, the Fed was planning to increase interest rates in 2019 at least twice because the economy was doing so well. Since, the US vs. China trade war has spooked everyone.
But first, coffee (earnings)... The "Starbucks of China" is already on track to pass Starbucks as the top espresso chain in tea-thirsty China this year. But just 3 months after its IPO in the US, Luckin Coffee shares dropped 17% after its first-ever earnings report. Before we get into why, get to know Luckin and its Bambi-ish logo:
How does Luckin take its coffee?... With other things now. The biggest update in Luckin's earnings was its moves outside the bean. It's now letting customers order food via app and it's dabbling in vending machines to save on real estate costs. Plus, to poetically "capture different consumption moments," it's now doing Luckin Tea.
Is Luckin' a tech company or a coffee company?... Yes. Both. But investors think it's behaving too Silicon Valley, so they dropped the stock. Luckin has aggressively cut prices of a cup of coffee to compete with Starbucks, which could be unsustainable. But that's kinda a tech move — no different than Uber or Lyft dishing out discount codes for rides to get you on their apps.