Friday Apr.09, 2021

🚛 Self-driving IPO

_Costco-sized samples or nothing_

Hey Snackers,

PSA: hide your Barbies, Furbys, and Tamagotchis — Grand Theft Lego has arrived. Lego robberies are on the rise because collectors are willing to pay big bucks for small blocks.

The S&P 500 notched another record high after Big Tech stocks rallied yesterday, despite disappointingly high jobless claims. Last week, 744K Americans filed for unemployment.

Gassy

Costco's sales are rising, but it has a nagging gas problem

Free samples are back... Costco, the Disneyland of bulk retail, just dropped its March sales numbers. Sales growth accelerated from February, jumping 18% compared to March of last year — impressive, since that was the month when 56-packs of TP were more cherished than gold. While pandemic hoarding season has passed, the bulk love has not: Costco's 807 warehouses brought in $18B in sales from March to April this year.

Not just 20-pound salmon... Packaged food is Costco's literal bread and butter, but it also has "ancillary businesses" (read: side-hustles). These include gas stations, which make up 9% of Costco's yearly sales. Gasoline = a convenient perk that lures Costco members to shop more frequently. Stop for the gas, stay for the Costco Muffins (and vice versa). But oil didn't shine last quarter...

As demand for gas fell from December to February, gas prices fell 10% on average. Related to that...
Costco's quarterly gas sales by volume dropped 9% from 2020 as people drove less (and online-ordered Kirkland coffee pods, instead).

Costco has a "gas paradox"... No matter which way gas prices move, it kind of loses either way: When gas prices rise, so do Costco's sales numbers. But its profit margin generally falls — since it's spending more on gas, it keeps less in profit. Its gas biz is also generally less profitable that its other businesses, so the more gas it sells, the more its overall profit margin dips. On the flip side: when gas prices fall, so does sales growth. Costco believes gas stations build loyalty and attract customers — but long-term, it'll have to decide if the "gas paradox" is worth it.

Trucked

Self-driving truck startup TuSimple is IPO'ing — and trucking is having a techy moment

Sounds like an organic food company... actually an autonomous truck startup. San Diego-based TuSimple is planning to go public, targeting an $8B valuation. TuSimple's autonomous trucks have already hit American roads for testing (with human supervision). It wants investors to know it has a lot more on its TuDo list:

TuSimple is developing Level 4 (aka: highly automated) self-driving semi trucks with Navistar, slated to enter production in 2024.
It launched a self-driving freight network partnership with UPS, which is also one of its investors (ETA: live by 2024).

A truckload... There’s a lot of innovation happening in trucking. Two key themes for the truck fleets of the future: electric and self-driving. On the electric side: Tesla, Nikola, and Volvo are a few companies working on electric semi trucks. On the autonomous side: TuSimple, Mercedes-owner Daimler, Google's Waymo, and Volvo are covering self-driving semis. The global truck freight market is worth $4T, and there's a big opportunity for disruptors:

Electric Pros: EV companies have the power of the Green Rush (and green policies) behind them. Plus, a recent study shows electric semis will soon compete economically with diesel trucks.
Autonomous Pros: Self-driving truck companies say they'll cut labor costs, reduce accidents, and increase efficiency for long-haul trips. Think: fewer exhausted drivers... and fewer Amazon drivers peeing in bottles.
But: 3.5M+ people work as truck drivers in the US, and wide-scale automation could significantly cut jobs.

Trucks are the backbone of the online economy... The growth of ecommerce, plus trends like next-day shipping, are boosting demand for trucking (and trucking innovation). But plenty of challenges remain. On the electric side, there's the issue of charging times and #RangeAnxiety. On the autonomous side, there's the risk that these new technologies won't gain acceptance from the public or regulators. There's also the chance that these developing technologies won't work. Even TuSimple notes these as some of its biggests risks ahead.

What else we’re Snackin’

Vaxing: Australia, Italy, Spain, and several other countries are restricting the rollout of AstraZeneca's vaccine over blood clot concerns.
Swiped: Instacart and DoorDash are planning to launch their own credit cards (because you don't spend enough on food delivery already).
Squad: Best Buy launched a $200 annual membership program with perks like concierge tech support. It's an Amazon rivalry (as usual).
Jeanious: Levi's sales fell 13% last quarter, but the stock jumped after it boosted its sales and profit forecast for the first half of the year.
Buzzed: Corona-owner Constellation Brands beat earnings expectations on solid beer sales, plus better margins on fancy wines and spirits.
Bitten: Apple has reportedly postponed production of some MacBooks and iPads due to the global supply chain crunch.

Friday

Authors of this Snacks own shares of: GM, Apple, and Amazon

ID: 1597013

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Tangential remarks

Nicolai Tangen, the CEO who holds the purse strings of Norway’s $1.6 trillion sovereign wealth fund, thinks that his fellow Europeans don’t quite stack up to US employees when it comes to pure hustle, telling the Financial Times in a recent interview that there is a difference in “the general level of ambition” and that “the Americans just work harder”.

Tangen has clearly been putting his money — or more specifically Norway’s — where his mouth is: the sprawling Norwegian oil fund, now one of the largest investors on the planet, has been pumping more capital into its US holdings in the past decade, while decreasing its investment into European entities.

The troublesome news for our European readers? Tangen might be onto something. According to data from the OECD, American workers are putting in almost 60 hours a year more than the weighted average for OECD nations… a benchmark that workers from countries in the European Union are already ~180 hours shy of.

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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?