Thursday Jun.18, 2020

🚌 Uber does public transit

_A 5-star Uber bus ride is born_
_A 5-star Uber bus ride is born_

Hey Snackers,

A tuna conspiracy is shaking the food world to its (alba)core. The former Bumble Bee CEO was sentenced to 3+ years in jail "for his lead role in a conspiracy to fix the prices of canned tuna." He was also ordered to pay a fine, to the tuna $100K.

Stocks dipped at the end of yesterday's volatility. The tech-heavy Nasdaq got a little green bump — But "reopening stocks" like cruise and airlines closed in the red.

Ride

Uber will sell its software to transit agencies to Uber-ify public transport

Can I still get the AUX cord?... Not the type of question bus drivers like to get. Uber is selling its ride-tracking, route-mapping software to public transit agencies on a subscription basis. We're calling it UaaS: Uber as a Service. It's Uber's latest move to diversify beyond gig ride-hailing. And CA's Marin County Transit is the first guinea pig:

  • Booking: When Marin riders open the Uber app, they'll see an option for Marin's public transport van. They can book it just like a regular Uber, but with no booking fee.
  • Paying: Riders pay a $4 per mile fare, but share it with other riders going the same direction. Fares are then passed directly to Marin Transit.

Tech-ifying public transit... Uber already includes public transit info in-app in some big cities. Like: what's the fastest subway line and how much will it cost. But now it's actually getting paid by a transit agency to include it as a booking option through its app. Right now, the Marin service only includes four six-seater vans. Uber thinks it could grow way beyond this:

  • Uber plans to partner with more transit agencies after testing the waters in Marin for $80K. Imagine what Uber could charge San Francisco or Mexico City?

Uber is worried about the future of gig... Uber always insisted that it's just a tech company. Now it's selling its techy platform as its most valuable asset — not its army of gig workers. Since CA no longer classifies gig workers as contractors, gig icons like Uber may have to start giving them benefits like full-time employees. This new anti-gig product adds a new revenue stream that could offset some gig-related losses.

Package

Beyond Meat wants to make plant-based accessible to all with its new value pack

Summer BBQ just got plant-ier... Plant-based meat icon Beyond Meat is expanding beyond the four-pack. The corona-crisis and a national meat shortage has won the alt-meat gang some bandwagon fans: Last week, sales of meat alternatives nearly tripled compared to the year before. And Beyond wants more in on the stay-at-home, food hoarding action:

  • Meat the "Cookout Classic": That's the value pack of 10 meatless patties that Beyond just unveiled for $15.99. It's 8 patties stronger than its traditional, unhoardable 2-pack.

This is more than just Grill Season marketing... It's a pricing war with (literal) beef. The new value packs lower the price of Beyond meat per pound, narrowing the price gap with traditional (cheaper) beef patties:

  • $12/pound: That's what's a 2-pack of Beyond patties sells for at Target. AKA "Beyond Budget."
  • $5.26/pound: That's the price of real beef according to the Dep't of Agriculture.
  • $6.40/pound: That's the plant-based poundage of Beyond's new value pack — aggressively narrowing the gap with beef.
  • Beyond's goal: "Making plant based meat accessible to all." For a limited time only, of course — the value pack will only be available through summer.

Early adopters are not enough... Once your product gets its early fan base, you have to knock down barriers to go mainstream. Beyond is focused on the first one: price. It managed to turn a profit last quarter because its patties are so pricey. Now it's chasing growth by competing on price with beef and cheaper meat-substitutes like Morningstar. It may want to extend this beyond "limited time."

What else we’re Snackin’

  • Stop: Bankrupt Hertz suspends its plan to sell $500M in new shares after SEC objections — the stock was briefly halted from trading yesterday.
  • Musky: New Tesla registrations in California fell 37% in April and May.
  • Travel: Airport checkpoint staple CLEAR launches a product that links biometric data (like fingerprints) to COVID-19 health data.
  • Raise: Target will raise its minimum wage for hourly workers to $15, up from the pre-pandemic $13.
  • Moderate: The DOJ proposes a rollback of the wide legal protections online platforms enjoy — it could make companies like Facebook liable for the content users post.

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Thursday

Disclosure: Authors of this Snacks own shares of Uber and Beyond Meat

ID: 1219882

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Do you want to run the State Department of McDonald’s?

A couple of days ago, a tweet making fun at McDonald’s hiring a “Manager for Diplomatic Relations” went viral.

At first glance, the idea that McDonald’s, a burger franchise known for its double quarter pounders and perfectly salted fries, is expanding its diplomatic influence with policy makers in Foggy Bottom and the world at large sounds comical. But it’s actually crucial.

There are more than 40,000 McDonald’s locations spread across 115 countries around the world, and 90% of these stores are independently owned and operated franchises that pay royalties to the parent organization to operate. Tens of thousands of franchises operated by different owners with different beliefs, priorities, and values can get complicated, fast.

As we noted in Snacks in February, McDonald’s received heavy backlash from franchisees in countries including Saudi Arabia, Oman, Jordan, Kuwait, and Pakistan after McDonald’s Israel donated thousands of free meals to IDF personnel. But it wasn’t McDonald’s, as an entity, that made the donations. It was the owner of the company’s Israel franchises, who was acting under his own volition.

There are more than 40,000 McDonald’s locations spread across 115 countries around the world, and 90% of these stores are independently owned and operated franchises that pay royalties to the parent organization to operate. Tens of thousands of franchises operated by different owners with different beliefs, priorities, and values can get complicated, fast.

As we noted in Snacks in February, McDonald’s received heavy backlash from franchisees in countries including Saudi Arabia, Oman, Jordan, Kuwait, and Pakistan after McDonald’s Israel donated thousands of free meals to IDF personnel. But it wasn’t McDonald’s, as an entity, that made the donations. It was the owner of the company’s Israel franchises, who was acting under his own volition.

Nuke stocks up on AI excitement

For most of humanity, the thought of “nuclear-powered AI” sends a shiver down the spine. But the stock market is all for it! Just check out the list of top performing S&P 500 stocks this year. Just behind established AI plays — Super Micro Computer and Nvidia, you’ll find Constellation Energy, the largest operator of nuclear plants in the U.S. NRG Energy, which also operates nuclear plants, isn’t far behind. Bloomberg reports that CEO of power distributor Exelon — which spun off Constellation in 2022 — says in the Chicago area alone, AI could drive a 900% jump in demand for energy from data centers.

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China makes Apple remove WhatsApp, Threads, Signal and Telegram from app store

In its latest move to restrict foreign tech, Beijing has ordered Apple to remove a number of popular messaging apps from its app store there, including WhatsApp, Threads, Signal and Telegram.

These apps had only been available through VPNs but were popular nonetheless, according to the Wall Street Journal.

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

Business

Tesla's recall reveals just how bad Cybertruck delivery numbers have been

Thanks to a recall of Tesla’s Cybertrucks, we now know how many of them have actually been delivered: 3,878 since the EV company began releasing them to customers in November.

In its third and fourth quarter earnings report, Tesla said that its current Cybertruck production capacity was greater than 125,000 a year. Musk had previously said he expected to produce 250,000 Cybertrucks a year by 2025.

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

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Markets

Cocoa hits $11,000

Cocoa prices are breaking records on an almost daily basis — with cocoa futures closing at (another) all-time high of $11,020 per metric ton yesterday.

That’s up 158% since the start of the year, and over 4x on the typical prices seen in 2022 — as crop production continues to fall short of demand.

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Cocoa prices

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Cocoa prices
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World out of balance: It costs the US 3¢ to make 1 penny

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3.07¢
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Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.