Thursday Apr.23, 2020

🌯 Chipotle is an ecommerce company now

_Chipotle's new product unveil: the e-rrito plus_

Hey Snackers,

Want to spice up your company's Zoom life? You can now invite a llama, goat, or other farm animal to your video conference through a new service: "Goat 2 Meeting." We heard cows are udder geniuses on marketing calls.

It all comes down to this... The #SnacksMadness Championship is upon us: Tesla Model 3 vs. Costco Annual Membership. Who will be your Snacks Madness TBOY? Vote here.

Stocks jumped Wednesday as some solid earnings lifted investor morale. We're looking at you, Netflix and Chipotle.

Stream

Netflix’s obsessive content-hoarding ways help it slay the subscriber game

So like, did Carole do it?... Asked the 34M people who streamed “Tiger King” in its first 10 days. We know Netflix has been benefitting from the lockdown economy — it’s practically the epitome of a “stay-at-home” stock. But its quarterly numbers shocked even the biggest optimists:

15.8M: The number of new paying subscribers that Netflix added this quarter — over double the 7.2M expected.
182M: Netflix's total paying subscribers worldwide — that fresh Flix user base is 22% larger now than it was a year ago. Oh, and it doesn’t include moochers or password sharers.

“I just finished Netflix”… Highly unlikely. Those new shows “magically” appearing on Netflix during quarantine?… That warm feeling that Netflix will continue releasing thrilling Spanish-language series even when the world ends? All part of the plan...

Netflix is like that paranoid neighbor hoarding 10K cans of corn in the basement — except Netflix hoards content, throwing anything it can get its hands on into the cart. No one is laughing at these hoarders now.
While film/TV production is paused, Netflix has a fat pile of already-produced content so it can premier fresh shows/movies for the next 2 years, according to the CEO. Netflix gets to keep launching new shows, while actually producing zero.

The more you grow now, the slower you grow later... Just like the growth spurt you had as a kid, Netflix is having a major growth spurt in the lockdown economy — but it's not likely to last at this crazy pace. Netflix already takes up 72% of home streaming time. The new subs it's gaining now will likely take away from its future growth. Plus, people who aren't getting on the Netflix bandwagon during lockdown will probably never get on at all.

Eat

Chipotle is now an ecommerce burrito company — so the stock jumped 12%

Guac is virtual... Chipotle was feeling the pain of the corona-crisis: after two months of double-digit growth, its sales dropped 35% during the last week of March. But the burrito legend stuck to its guns and saw the bowl half full — it even bumped hourly employee pay by 10% and doled out bonuses. Most importantly, though... it went extra digital this quarter:

3%: How much Chipotle’s same-store sales increased.
81%: How much digital sales jumped for the quarter.
100%: How much digital sales jumped in March alone — online orders 2X’d.

A techy burrito factory… Chipotle has been turning into one, and the transformation has accelerated while its tables are closed:

App Game: Chipotle upgraded its app and promoted its Rewards program, which now has 11.5M members. Daily sign-ups 4X'd in April — 65% of those new loyalists are first-time Chipotleans.
Delivery Game: Chipotle partnered with DoorDash, so you can get your tortilla-wrapped barbacoa delivered. In March, it added Uber Eats as a partner and began offering free delivery.
Takeout Game: Over a year ago, Chipotle created drive-thru "Chipotlanes" for fast pickup post-mobile order. Nuff said.

A new leader can completely change a company's direction... CEO Brian Niccol (formerly Taco Bell's leader) took Chipotle down a completely different Chipotlane. In the 2 years before he became CEO, Chipotle's stock fell 60%. In the 2 years since, Chipotle is up 246% thanks to Niccol's forward-looking biz moves (shoutout Chipotlanes). Niccol may not be a gourmet foodie, but his digital strategy is coming in clutch.

Watch

AT&T’s cable triple whammy: the cord-cutting has (officially) accelerated

Not just a phone network… AT&T is a jack of all media and communications trades. It owns pretty much everything, except for your spirit: CNN, HBO, TBS, Warner Bros, DirecTV, and (of course) AT&T wireless are just a few of its many possessions. There's a lot going on. And you know what they say about jacks of all trades...

Master of none?... AT&T's earnings this quarter were not pretty, with sales and profits both declining. The corona-conomy has dealt a triple whammy blow to AT&T's prized media possessions:

Cord-cutting: With a bunch of new streaming services coming out + no live sports on cable networks, many are ending their relationship with cable. AT&T's cable biz lost 4M in the past year, and 1M just this quarter.
Lost Ad Sales: Ad-pocalypse is hitting all the TV channels, which are losing out on big commercial $$$ as advertisers save instead.
No Production: With video production grinding to a halt, AT&T's future TV and movie lineups will have big COVID-19-caused voids.

It's official: cord-cutting has accelerated... Last month, we summarized “accelerating trends” that we predicted would happen in the corona-conomy. AT&T's earnings provide the data confirming that cord cutting is taking off. AT&T has lost 19% of its cable and DirecTV subscribers in the past year. HBO Max, which launches on May 27 for $14.99/month, is AT&T's big streaming hope to offset cable losses.

What else we’re Snackin’

Snappy: Snap soars on 44% quarterly sales growth (thank those loud video ads) and 39M new users — it now has 229M daily Snapchatters.
Vicky: Victoria Secret's split from L Brands might not happen — the firm which was supposed to take it private is trying to bail (since Vicky closed stores and skipped rent).
Ground: Delta has its first quarterly loss after a 10-year streak of annual profits.
Reach: Facebook invests a whopping $5.7B to become the biggest minority shareholder in India's largest telecom operator, Reliance Jio Platforms.
Shortage: Tyson shuts its Iowa pork plant indefinitely thanks to a COVID-19 outbreak (Smithfield did the same thing last week at its South Dakota plant).

Thursday

Weekly jobless claims
Earnings expected from Amazon, 3M, Domino's, Alaska Air, Intel, T-Mobile, and Blackstone

Disclosure: Authors of this Snacks own shares of Disney, Delta, Chipotle, Blackstone, and Amazon

ID: 1162882

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What’s happening

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?

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HOP TO IT

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We get results!

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This earnings season is fully operational

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So, you want to join the circus?

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4/25/24

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?