☕️ Starbucks pulls a "BYOD"

Thursday, March 19, 2020 by Robinhood Snacks | Disclosures

When you're the only one who BYOD'd

Dow Jones
19,899 (-6.30%)
S&P 500
2,398 (-5.18%)
6,990 (-4.70%)
$5,333 (-2.33%)
10-Yr US Treasury

Hey Snackers,

Reality TV comes back to reality: contestants on the German TV version of "Big Brother" have been secluded from the world since Feb 10th — producers finally broke the coronavirus news to them. The show (ironically, centered on people confined in a house) will go on.

US markets tanked again. The Dow lost 1.3K points and the S&P 500 fell 5% as the viral sell-off hit a new low. The Senate approved the House's 2nd coronavirus aid bill — it'll provide paid emergency leave to affected people as well as additional food, medical, and unemployment benefits.

1. After years of prep, Walmart's online grocery biz has its big moment

Virtually stocking up on nut butters... Online grocery shopping has surged in this virus economy — whether it's delivery or curbside pickup, the less human contact required, the more popular a service becomes. But one player in the e-grocer surge stands out aggressively: Walmart. While the market has plummeted, Walmart stock just hit an all-time high.

  • 1/3: That's the fraction of shoppers who bought online groceries in the past week, according to a recent survey.
  • Nearly half were 1st-time egrocery customers.
  • 58%: Walmart's huge share of those new e-grocery customers (Amazon trails with 14%, Target with 10%).

Walmart is America's grocery... With 11.5K stores worldwide and 2.2M employees, Walmart is also Earth's biggest brick-and-mortar retailer. And it's spent the past 5 years aggressively expanding its ecommerce infrastructure:

  • 3.2K locations let you pickup groceries curbside, while 1.6K spots deliver to your door.
  • 90% of Americans live within 10 miles of a Walmart, which also helps.
  • 56% of Walmart's sales are now from groceries.

Coronavirus is giving e-grocery its moment... Online grocery is still in the toddler stage with early adopters. Walmart's ecommerce biz is still unprofitable, but its online sales grew 37% last year (largely thanks to groceries, and its ecommerce sites are live in 10 countries). After you try e-ordering Walmart's asparagus and cashew butter, investors think you'll stick around for the cheap socks and absurd number of locations (likely) nearby.


It's a BYOD event... "Buy The Dip" refers to a strategy of buying stocks when their prices are low (taking advantage of "sale" price), and eventually selling if the prices rise (quick reminder: they can fall, too). Starbucks is kind of doing the same thing, but with its own stock — we're calling it: "Buy Your Own Dip" (not to be confused with Superbowl-related "bring your own dip").

  • Starbucks will buy back about $2B of its own stock from investors.
  • In the past month, Starbucks' stock price has fallen nearly 40%. Hence, the dip.
  • FYI, by splurging on its own shares, the coffee legend reduces its assets (cash) which can boost its return on equity.

Stock buybacks are (kind of) like gifts to shareholders... By buying back a large amount of its own shares (reabsorbing them), a company can improve its stock's price because the number of shares outstanding falls. The fewer shares are out there, the more your ownership/earnings per share increase. Another way to reward shareholders is through paying out dividends to them.

  • In 2019, Starbucks reportedly returned $12B to its shareholders through dividend payments and repurchases of 140M shares.
  • The 40M shares Starbucks is now buying back make up around 3% of its outstanding total (and would cost around $2B at the current stock price). Might not be the best time to make multi-billion purchases buuut...

Starbucks is flaunting its confidence... when no one else is. Nervous companies are cancelling buybacks and dividend payments — the biggest American banks already cancelled buybacks on growing concerns that the virus will hurt business and cash could be tight in the future. But for those who can swing it, buybacks are easier/cheaper when the stock price is low. Even mid-outbreak, Starbucks is optimistic in its:

  • Stores: Starbucks has banned sipping-in but will still let you take coffee to-go or drive thru in the USA and Canada. Also, 90% of its China stores are now reopened.
  • Delivery: Its new partnership with Uber Eats will be available nationwide by end of April. Nice timing.
What else we’re Snackin’
  • Bubi: Fox will buy streaming service Tubi for $440M to bump its streaming game and provide more reach for its ad partners
  • Awkward: Tesla is ordered to shut down manufacturing at its Fremont, CA factory... 1 day after Elon said he'd "personally be at work" there
  • Homey: Shares of struggling meal-kit deliverer Blue Apron soar 70% because ordering groceries takes a lot of work to turn them into dinner (and lunch and breakfast)
  • Banned: Amazon forbids its warehouses from stocking nonessential items (eg, jade rollers) on virus shortages through April 5th
  • SOS: Boeing asks for $60B in aid for itself and the wider US aerospace industry, looking for support from both private and public sources
  • Closed: The NYSE will temporarily close its trading floor and move fully to electronic trading on March 23 after some traders tested positive for COVID-19
Snacks Daily Podcast

Apple did something no other company has done: make a big product announcement mid-coronavirus crisis.

The most exciting part: It's (finally) killing its (really) problematic thin keyboard.

Tune into our 15-minute pod to learn why even America's most valuable company suffers mess-ups (even the Fruit has had product fails).


Disclosure: Authors of this Snacks own shares of Starbucks, Tesla, and Amazon and fractional shares of Apple

ID: 1124116

Subscribe to Robinhood Snacks

Our Editorial Principles
Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.

Getting “early access” to options or Web is defined as signing up with a valid email address for a spot in Robinhood Financial’s respective waitlist queues for Web or for options. Getting “early access” to Robinhood Crypto is defined as signing up with a valid email address for a spot in Robinhood Crypto’s waitlist queue. Early access to the waitlist for Web, options, or Robinhood Crypto should in no way be construed as confirmation that a brokerage account with Robinhood Financial has been opened or will even be approved for opening. Priority may be given to Robinhood Gold subscribers and existing customers of Robinhood Financial.

Free trading of stocks and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered. Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing. Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Additional regulatory guidance on Exchange Traded Products can be found by clicking here.

Options transactions may involve a high degree of risk. Please review the options disclosure document entitled the Characteristics and Risks of Standardized Options available through https://about.robinhood.com/legal or https://www.theocc.com to learn more about the risks associated with options trading.

The cash management program is expected to be offered by Robinhood Financial LLC. The cash management program, when operational, will be an added program to Robinhood brokerage accounts and will not be a separate account or a bank account. Robinhood Financial will provide additional information on the cash management program once it is operational to help customers, including those with “early access,” to determine if they want to add the program to their brokerage account.

Robinhood Snacks newsletters and podcasts reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed Robinhood account or any other account, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and customers may lose money, including their original investment. Robinhood Financial LLC, member FINRA/SIPC.

Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success. Robinhood Financial LLC, member FINRA/SIPC.

Third party information provided for product features, communications, and communications emanating from social media communities, market prices, data and other information available through Robinhood Markets, Inc., Robinhood Financial LLC or Robinhood Crypto, LLC are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or cryptocurrency or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any information about Robinhood Crypto on any Robinhood website (including www.robinhood.com and blog.robinhood.com), the Robinhood platform, e-mails, or any other communications, are meant for informational purposes only and are not intended as an offer, solicitation, or advertisement for Robinhood Crypto or any goods or services offered by Robinhood Crypto. The Robinhood website provides its users links to social media sites and email. The linked social media and email messages are pre-populated. However, these messages can be deleted or edited by users, who are under no obligation to send any pre-populated messages. Any comments or statements made herein do not reflect the views of Robinhood Markets Inc., Robinhood Financial LLC, Robinhood Crypto, LLC, or any of their subsidiaries or affiliates.

Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Trading in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. Cryptocurrency trading requires knowledge of cryptocurrency markets. In attempting to profit through cryptocurrency trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial cryptocurrency trading. Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. Cryptocurrency trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system. Several federal agencies have also published advisory documents surrounding the risks of virtual currency. For more information see, the CFPB’s Consumer Advisory, the CFTC’s Customer Advisory, the SEC’s Investor Alert, and FINRA’s Investor Alert.

Robinhood Crypto, LLC has a seller of payment instruments license in Georgia, with reference number 61417.

Robinhood Crypto, LLC has a money transmitter license in New Jersey, with reference number 1803456-C22.

Please note that an Alaska money transmission license does not cover the transmission of virtual currency.

Check the background of Robinhood Financial LLC and Robinhood Securities, LLC on FINRA’s BrokerCheck.

Robinhood Terms & Conditions    Disclosure Library    Contact Us    FAQ

© 2020 Robinhood. All rights reserved.