🌱 Scotts Miracle (cannabis) Gro

Thursday, February 4, 2021 by Snacks
_Scotts' suburban alter ego_

Scotts' suburban alter ego

Yesterday’s Market Moves
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13,611 (-0.02%)
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$37,347 (+4.27%)

Hey Snackers,

Zoom's way of getting in on the return to the office: virtual receptionists for contactless check-in (don't ask them where the bathroom is).

Stocks barely budged yesterday, but legislators made some moves: the Dem-controlled House passed a resolution that would allow Congress to pass a $1.9T Covid relief bill — without Republican support. Now it's up to the Senate.

Pot

1. Scotts Miracle-Gro won 2020 thanks to lawns, but it could win 2021 thanks to pot

Potting soil, pot... Same thing, right? Scotts Miracle-Gro has a green thumb in more ways than one. You might know Scotts for its gardening and lawn care products. But Scotts is also kind of a cannabis company: its hydroponic systems help "specialty crops" grow indoors with special lighting and no soil. Shocker: weed growers love it. Scotts made both sides greener last quarter:

  • Lawn and garden sales soared 147% from 2019, as Scotts rode the House Hype trend. Stir-crazy hours bring May flowers: we stocked up on soil food to level up our lawns.
  • Hydroponics sales jumped 71% as more US states legalized recreational pot and a Dem-controlled government appeared more likely.
  • Scotts total sales more than doubled from 2019, and it posted a first quarter profit for the first time. Now it's even doing a Super Bowl ad (fitting).

Every rose has its Hawthorne... A few years ago, Scotts decided it wanted a piece of the pot market (minus the pot). So it bought up 50 hydroponics-related brands, which now make up its Hawthorne division. Last quarter's growth was primarily driven by the lawn/garden segment, which makes up more than half of Scotts' total sales. But Hawthorne makes up the rest, and it's quickly catching up.

THE TAKEAWAY

Investors are optimistic about federal legalization... of pot. The Democrat-controlled Congress and White House support decriminalizing cannabis at the federal level. Just this week, Senate Majority Leader Chuck Schumer unveiled a plan to end the federal marijuana prohibition, arguing it's good for racial justice. Meanwhile, more states are legalizing recreational use. That's partly why Scotts' stock has nearly 2X'd over the past year. Also: the Global X Cannabis ETF, which tracks a number of pot stocks, is up 75% this year.

Date

2. The key to Match’s international dominance: being a dating incubator

Hit 'em with the read receipts... Dating legend Match Group owns Tinder, Hinge, OkCupid, and 20+ other e-romance businesses. As you spent #romantic nights in bed swiping, Match's full-year sales jumped an expectation-topping 17% (think: Tinder Gold subscriptions). But investors weren't swooning over Match's underwhelming forecast for 2021: the stock plunged 8% yesterday.

Love knows no borders... neither does Match's business interests. Match makes more $$$ internationally than it does in North America — and international users are growing faster. In Japan, Match’s second-highest grossing market after the US, sales have soared 600% over the last five years. Now Match owns the top two dating apps in Japan: Tinder and.... the opposite of Tinder.

  • Pairs Engage: Match's concierge app designed to help Japanese singles marry within a year. The app suggests 30 potential husbands/wives each month. You get 90 days to decide if you want to exclusively date (no pressure).
  • Pairs is trying to disrupt Japan's arranged-marriage industry, by offering a faster/cheaper way to get hitched.
THE TAKEAWAY

Match is a dating lab... more than a dating company. It dominates online dating because of this (self-proclaimed) differentiator: an "ability to deploy learnings from across our portfolio" in new businesses. Match tests new concepts and strategies through different apps, then applies its learnings to its dozens of services. Think: monetization, video dating, and safety tools. It used strategies from Tinder to scale up Hinge post-acquisition. And it'll likely use learnings from Pairs to expand to other countries with arranged-marriage industries. Its soon-to-be public rival Bumble doesn't have that same breadth (yet).

What else we’re Snackin’

  • iCar: Apple is reportedly close to finalizing a deal with Hyundai-Kia to make an Apple-branded, self-driving EV.
  • Eary: Spotify's quarterly sales grew 17% from 2019, but the stock dropped 8% on a wider-than-expected loss.
  • Stim: Biden is reportedly willing to compromise on eligibility requirements for the next round of stimulus checks, but remains firm on the $1.4K amount.
  • Sip: Vivino, the Shazam for wine, raised $155M in fresh funding. More than 50M wine lovers now use it for recs.
  • Vax: Johnson & Johnson said its single-shot Covid vaccine was 66% effective overall (that's good). Now it's seeking FDA authorization.
  • Jazzy: Shares of marijuana-based drug maker GW Pharmaceuticals jumped 45% after Jazz Pharma agreed to buy it for $6.7B.

Thursday

  • Weekly jobless claims
  • Earnings expected from Snap, Pinterest, Ford, and Clorox

Authors of this Snacks own shares of: Match and Apple

ID: 1510976

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