🛒 Thrive, Survive, or Dive

Friday, May 22, 2020 by Robinhood Snacks | Disclosures

Public Storage: the horror movie

Dow Jones
24,474 (-0.41%)
S&P 500
2,949 (-0.78%)
Nasdaq
9,285 (-0.97%)
Bitcoin
$9,027 (-5.27%)
10-Yr US Treasury
0.676%

Hey Snackers,

Netflix is doing so well that it's now actively trying to reduce its own subscription revenue. If it doesn't hear back from customers who haven't streamed anything in a year or more, it's going to cancel their subscriptions. Netflix: always doing the most.

Markets took a slight dip on depressing unemployment data — 2.4M Americans filed for unemployment last week, bringing total corona-conomy claims to an eye-popping 38M. Rising trade tensions with China also didn't help.

Survive
1. The Retail Thrivers, Survivors, and Divers of the corona-conomy

The Sorting Hat has spoken... We knew the Retail-pocalypse was accelerating during the corona-conomy. Now, we've got more stats to confirm just how much — and results are more varied than you'd expect. Some retailers have thrived, some have survived, and many have taken a big old dive. Let's start with the Divers:

  • L Brand sales plunged 37% — now the Victoria's Secret owner is closing 250 Vicky stores.
  • Macy's sales took a 45% nosedive — the big-box retailer expects a $1B loss. Its buddy Kohl’s suffered a similar fate with a 41% sales drop.
  • TJ Maxx, which was winning with its "affordable splurge" biz just a few months ago, saw sales drop 52% (and suffered an $877M loss).
  • And Neiman Marcus, J.Crew, JCPenney, and Pier 1 have all hopped on the bankruptcy train.

Onto the essential Thrivers... E-savvy — and most importantly, essential — retailers like Walmart, Costco, Amazon (and even Lowe’s) have enjoyed skyrocketing sales and decreased competition from shuttered non-essential retailers.

  • Non-essential Thrivers: Despite closed stores, Lululemon made it into the Thrivers club with its online-ready biz and versatile work-leisure wear.
  • Non-essential Survivors: Best Buy sales fell only 6% and it managed to snag a profit (thanks to curbside pickup and in-demand home tech/appliances).
THE TAKEAWAY

There's no "one-size-fits-all"... But non-essential big-box department stores are feeling the most pain — especially those that weren't exactly thriving before (looking at you, Macy's and JCPenney). Retail apparel sales for the year are down a whopping 52%. Non-essential retailers like Lulu had WFH-friendly products and e-savvy biz models to prop them up — the unlucky rest didn't.

Close

When the party gets shut down before 9 pm... Detroit's Big Three automakers — Ford, GM, and Chrysler — all reopened plants Monday. Update: it's not going well for Ford.

  • Monday: Ford's American assembly plants reopen for production (with health precautions like temp checks and only half of worker capacity).
  • Tuesday: Two employees at Ford's Chicago plant test positive for COVID-19 — the plant is shut down.
  • Also Tuesday: An employee at Ford's F-150-cranking plant in Dearborn, Michigan tests positive for COVID-19 — spoiler: the plant is shut down.

What would Lear do?... Lear is the "iconic" car seat maker that, early on, issued a 51-page "Safe Work Playbook" for resuming production. In true Lear fashion...

  • Ford shuttered the two factories for 24 hours for a little DCD: "deep cleaning and disinfection."
  • It also asked anyone who had been in close contact with infected employees to self-quarantine for two weeks. If you think this "start-stop model" isn't sustainable, that's because...
THE TAKEAWAY

This "start-stop" model isn't sustainable... Shutting down a factory of thousands each time a person tests positive for COVID-19 is not viable long-term. The infected Michigan employees were working a mile away from the main plant — but because parts from their building were brought to the main assembly line, the whole complex had to be shut. As long as COVID-19 is around (or at least until we have a vaccine), this will continue to be an issue.

Store

Even storage can be sexy... with $55M in fresh venture funding packed in. When you think of storage, you probably picture massive orange Public Storage facilities on the side of I-95 that inspire horror-thriller movie plots. MakeSpace wants to be the fun, non-horror version of that — and it just packed up an extra $55M in funding:

  • Unlike OG storage companies, MakeSpace doesn't want you ever to visit its units — its slogan is literally: "Never visit a self-storage unit again!" Niiice.
  • Order in-app: MakeSpace pick ups, stores, and delivers your valuables (or clutter). You don't have to rent a U-Haul or lug anything (MakeSpace really wants you to know: it's not Public Storage).
  • The catch: To keep costs low, units are located in inconvenient places with lower rent — you can't pop by 24/7 to pick up your golf clubs (you get them delivered).

The storage industry shouldn't be popping... Home sales dropped 18% in April, so you'd think there'd be less moving/storing happening. But MakeSpace's sales have grown 30% more than expected because it's actually the opposite:

  • People are moving back to their childhood homes in droves: New leasing in Manhattan and Brooklyn plunged 70% in April.
  • Corona-Spring cleaning: More time at home means more time to clear out and store all that clutter that's been piling up for the past ten years.
THE TAKEAWAY

The return of the non-gig startups... A VC-funded storage startup might be inclined to call itself the "Uber for Storage." But MakeSpace employs only full-timers — this no-contractor biz model is becoming increasingly rare in the startup world. This out-of-the-box thinking in a gigi-fied world could be a selling point — Gig icons like Postmates and Lyft struggle with new gig economy laws, tension with workers, and bad PR.

What else we’re Snackin’
  • WFH: Zuck predicts 50% of Facebook employees could be working remotely within 5-10 years — but they might have comp lowered based on location.
  • Deals: Amazon pushes its deal-apalooza Prime Day (which, ironically, lasts two days) to the fall.
  • Potty: Canadian pot producer Aurora Cannabis acquires American CBD company Reliva in a $40M all-stock purchase to go south of the northern border.
  • Pickup: Car dealerships are struggling with a pickup truck shortage (the people want Chrysler's Dodge Rams) — demand is hot, supply is not.

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Snacks Daily Podcast

The #SnacksChallenge — see how far you can run in the course of 1 Snacks Daily podcast. The record is 3.19 miles, and our pod is 15-18 minutes long.

Tune into our digestible pod to snack on today's 3 stories — but with your ears, not your eyes.

Friday

Disclosure: Authors of this Snacks own shares of Amazon, Lululemon, and Alibaba

ID: 1195143

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.