Monday Jul.13, 2020

📲 🎵 TikTok's future (or lack thereof)

_When the TikTok ban nightmare becomes reality_

Hey Snackers,

On Friday, you tried to open Spotify for a weekend playlist. When that didn't work, you went to Pinterest for quarantini inspo. When that didn't work, you turned to Tinder as a final resort, but that crashed too. Turns out, it was all because of... a Facebook glitch (it's all connected).

In markets: The tech-heavy Nasdaq surged 4% as the US set record high COVID cases — because social media, ecommerce, and cloud computing are all lockdown-friendly.

On our pod: The “SoulCycle of fertility” just raised $32M to make egg freezing happen cheaper. Tune into our highly snackable pod to hear how Kindbody is using the fresh cash for its "Little Sister" expansion strategy.

Dance

TikTok's future is cloudy as the US looks into a security ban (India's already on it)

"How to become YouTube vlogstar"... Every TikTok stars' Google search last week after millions of like/view counts suddenly went to zero. TikTokers thought it was the first sign that their precious app had been banned. It was a glitch, but their fears are far from unfounded. The viral video app is owned by China-based Bytedance, the most valuable private startup in the world (~$100B). Before we dig into TikTok's possible demise, let's recap the impressive rise:

Within a few months of its 2018 US launch, TikTok reached #1 on the App Store, beating giants like Instagram and YouTube. In 2019, TikTok had over 738M global downloads.
Today, TikTok has been downloaded over 2B times and has an estimated 80M users in the US alone.

Clock's TikToking... Security concerns around TikTok's ties to China are heating up. The US already bans employees of many government agencies (like the Army) from having TikTok on work phones. Last week, Wells Fargo told employees to remove it from company devices. Amazon did the same, then weirdly backtracked. Also:

India full-on banned TikTok (and 58 other Chinese apps) on national security concerns. India was TikTok's largest market by far, driving 660M downloads since 2017. This may cost Bytedance $6B in lost ad sales.
President Trump said he's considering banning TikTok and other Chinese apps. Leaked moderation guidelines reveal TikTok has censored content critical of China. And the administration is worried American user data could be passed to the Chinese gov. Interestingly...
China itself bans TikTok — Chinese nationals use Bytedance's Douyin, the original, non-international version of TikTok: Same branding, same parent, separate content (which is censored by the Chinese gov).

TikTok has big US market influence... despite being a non-public, non-US company. Its explosive growth has major implications for American media. It's the biggest threat for disrupting social giants like Facebook, Snap, and Twitter. It contributed to Quibi's flop. And recently, it's been trying to appeal to the American gov: it brought on a former Disney exec as CEO and is considering adding a non-China HQ. But more TikTok bans could be coming — that would significantly reduce competition for US media companies.

Highs

Who's up...

Turn me on with your electric wheel... Electric vehicle startup Rivian raised an astounding $2.5B in its latest funding round — without ever having released a single product. Rivian wants to be the 1st to bring all-electric pickup trucks to roads and it's developing 100K electric delivery vans for Amazon (ETA 2021). Producing all these EVs is capital-intensive — so investors have poured in $5.3B since 2019 (about 1/2 the value of Lyft).

Bezos sweating over $21... Walmart stock jumped 7% on a report that it's shipping a $98/year rival to Amazon Prime this month. Creatively-named Walmart+ perks include: same-day and 2-hour grocery delivery, product deals, and gas discounts. Walmart is the US grocery leader, but half its top-spending families now have Prime memberships. Walmart doesn't want to lose them to Amazon — it's hoping this perk-filled subscription will secure long-term grocery loyalty.

Lows

...and who's down

More turbulence ahead... United shares plunged on news it may have to furlough almost half its US workforce, despite the billions of federal funds it received. Airlines that took $25B in federal payroll support aren't allowed to furlough, lay off, or cut pay until Oct 1 — United's holding off until then. But it's now burning through $40M a day on high costs and near-zero sales (American and Delta feel the pain, too). October layoffs could be on the horizon.

Blame the $2 hand sanitizer... Walgreens lost $1.7B last quarter — bummer, since it made $1B during the same quarter last year. The shift to sales of less-profitable items (like TP vs. prescription meds) and higher labor costs (like extra sanitizing) contributed to the huge profit decline. Now Walgreens is cutting 4K jobs. But it's also making a $1B investment on a big bet: in-store doctors offices. Walgreens is splurging on a 30% stake in a medical startup to get you in for checkups (even when you're just trying to grab Doritos).

What else we’re Snackin’

Ponder: Why time feels so weird in 2020 (with some interactive exercises to test your sense of time — we aced).
Visualize: How Big Tech makes its billions — breaking down the revenue streams of the 5 largest tech giants.
Explore: The most secluded natural hikes in the US (in case you weren't getting enough solitude).
Grow: 6 verbs that make you sound weak, no matter your job title — "think" is the hardest to cut, we think.
Struggle: Why you feel at home in a crisis — we've kind of evolved to handle them.
Learn: What is opportunity cost? It's the trade-off of making one choice over another (like Netflix vs. squats).

🍪 Thanks for Snacking with us! Want to start getting Snacks every day? Sign up here.

This Week

Monday: Earnings expected from Pepsi
Tuesday: Earnings expected from Delta, Chase, Citi, and Wells Fargo
Wednesday: Earnings expected from UnitedHealth, Goldman Sachs, and eBay
Thursday: Weekly jobless claims. Earnings expected from Netflix, Domino's, Johnson & Johnson, and Morgan Stanley
Friday: Earnings expected from BlackRock

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

ID: 1242142

Latest Stories

Pop Quiz!

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.

What’s up doc?

HOP TO IT

Joshua Topolsky

We get results!

This earnings season is fully operational

Balancing Act

Acrobatic Accounting

So, you want to join the circus?

Megan DeMatteo

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

Economy keeps on humming along

Meta exhaustingly tries to merge the metaverse and AI

Gonna have to rename the company... again

Rani Molla10h

Chris Black

Black’s Gold

11h

Can you justify a $335 trashcan? Yes.

Here’s how.

15h

Biden signs a bill that could ban TikTok — but the #ForYou fight is far from over

Jamie Wilde

Read

15h

Gucci’s parent braces for sliding sales, as luxury demand unravels over high prices

Nia Warfield

Read

Matt Phillips

4/24/24

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.

Rani Molla

4/24/24

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

4/24/24

Earnings can’t stop, won’t stop

Rani Molla

4/24/24

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.