🎵 TikTok chooses Oracle (as chaperone)

Tuesday, September 15, 2020 by Robinhood Snacks | Disclosures

This guy needs a Driftwell

Dow Jones
27,993 (+1.18%)
S&P 500
3,384 (+1.27%)
11,057 (+1.87%)
$10,691 (+3.59%)
10-Yr US Treasury

Hey Snackers,

"In the right environment, our burgers...could decompose." — McDonald's, trying to bust the myth that its burgers don't decompose. Very reassuring.

Stocks jumped yesterday, clawing back losses from the S&P 500′s worst week since June and the Nasdaq’s worst week since March.

1. TikTok chooses Oracle as its American partner (sorry Microsoft)

A TikToker and a database walk into a bar... The wait to see who TikTok’s US parent will be is over and it’s… anticlimactic. Yesterday, Oracle confirmed it struck a deal with TikTok-owner Bytedance to become a “trusted technology provider” (read: not owner). Oracle would reportedly be managing TikTok’s US data. The deal still needs approval from the US and China. Somehow, this endless saga only started last month.

  • #1: Trump says he'll ban TikTok on concerns that Americans' user data could be shared with the Chinese government.
  • #2: Change of plans. The ban will happen unless an American company strikes a deal to acquire TikTok's US operations by September 20th.
  • #3: Oracle and a Microsoft-Walmart tagteam emerge as the leading suitors.
  • #4: China throws a wrench into acquisition talks, saying it needs to approve the sale of TikTok and its algorithms.
  • #5: Microsoft gets rejected by TikTok. Oracle does "Say So" Doja Cat dance.

Less of a parent... more of a guidance counselor. While Oracle will possibly get a stake in TikTok’s US assets, this isn't an acquisition. The "tech provider" role is vague, but it likely means TikTok will be moving its data to Oracle's cloud (and off Google's, where it is today). Oracle could also get TikTok to use its marketing software for ads. TikTok is a big sexy catch of a customer, so Oracle stock jumped 4% on the news.


Is this a good deal for the US?... It certainly is for TikTok — the Tok gets to keep its 100M American users without giving up ownership of its business. But Trump has insisted the only way TikTok can avoid getting banned is a sale to a US company (this isn't that). Will Trump back off that demand? A few reasons he might:

  • Jobs: The US gets an American TikTok HQ with 20K employees.
  • Popularity: Trump will avoid the wrath of American TikTokers ahead of the election.
  • Connections: Oracle's founder/Chairman/CTO Larry Ellison is pretty tight with Trump.

Introduce the problem... then solve the problem. After decades of pumping you full of caffeine and sugar, Pepsi wants to help you chillax. That's why it just intro'd Driftwell, the ASMR of the canned drinks world:

  • Driftwell (to sleep): The Millennially-packaged mini cans contain enhanced flat water with blackberry lavender (sounds pleasant, whatever that is).
  • "Sip into relaxation": What Pepsi wants you to do. Driftwell's calorie- and sugar-free drink contains relaxing L-theanine (the star of green tea) and magnesium.

The problem/solution premium... The health shift we've seen in recent years means junkier foods/drinks have lost steam. Sugary sodas are being replaced with CBD-vegan-gluten free kombucha. Pepsi's "problem" drinks are waning, but now it can make double the $$$ by offering "solution" drinks, too. And these premium drinks command premium prices:

  • $4: Price of a minican 10-pack of Pepsi — then you need Driftwell to sleep.
  • $18: Price of a minican 10-pack of Driftwell — then grab a Pepsi to wake you.

"Functional drinks" are 2020's big bev trend... These provide more than just sugar/alcohol/caffeine — they feature 1 ingredient with purported health benefits. Coke launched Coke Energy with B vitamins and guarana. ABInbev's Bud launched hard green tea and coconut water. DrPepper invested in "smart energy" drink Adrenaline Shoc (sounds healthy). Sales of functional bevs came in at nearly $32B in 2019, up 7% from 2018. We can expect to see growth accelerate during an anxiety-inducing health crisis.


The cash runway doesn't look good... Pun 100% intended. Delta, like other airlines, is strapped for cash. Domestic travel is down ~60% from last year and daily costs are still sky-high (Delta's losing $27M/day). The government's $25B in airline bailout funds runs out on October 1st, and mass layoffs are expected. As a cherry on top of the cash-crunched sundae, US airlines just permanently scrapped their $200 change fees for domestic flights. Sooo...

  • Delta will use its SkyMiles program to raise $6.5B. It's using the frequent flyer program as collateral to borrow the money (basically, mortgaging your miles).
  • If Delta can't pay back the $6.5B loan, it won't get its planes taken away. Instead, the lenders will get to keep the $$$ Delta makes from lucrative SkyMiles sales.

Please explane... Airlines earn money from frequent-flier programs by selling miles to banks and retailers that award them to customers. American Express is able to drop you those sweet travel rewards points since it bought them en masse from airlines. And each time you swipe your Delta co-branded card, Delta gets a little money from AmEx.


Delta is a credit card company now (more than ever)... Few things drive loyalty like the metallic traveler status. In 2019, $4B in sales from Amex made up 8% of Delta's revenue. Delta expects annual AmEx sales to hit $7B by 2023. Delta is also AmEx’s largest co-branded account, making up 20% of AmEx balances worldwide. Delta’s passenger sales fell 60% in the 1st half of 2020 — But sales to American Express dropped just less than 5%. With its passenger biz decimated, Delta's leaning into cards more than ever.

What else we’re Snackin’
  • Green: Google announces that its carbon footprint is now zero — it invested in offsets to compensate for all of the carbon it ever created.
  • Sold: ViacomCBS will sell CNET Media Group to Points Guy-owner Red Ventures for $500M — it's trimming down its editorial biz to focus on streaming.
  • Shmoney: Chip supplier Nvidia is acquiring chip designer Arm from Softbank for a massive $40B.
  • Zon'd: Amazon plans to hire 100K extra employees in the US and Canada, continuing its pandemic-induced hiring spree.
  • Drugz: Big pharma company Gilead agreed to acquire cancer-drug company Immunomedics for $21B. Immunomedics stock doubled in value on the news.
  • YouTok: Google's YouTube is launching its own version of TikTok with "Shorts." It's testing the feature in India before expanding to more countries.

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

Snacks Daily Podcast

We've been busy whipping up a new way for you to digest your daily Snacks... Don't worry, we're not calling it Snacks+ (looking at you Disney, Apple, Walmart).

Snacks Daily Video has officially dropped (fewer words, more of our faces):

  • 1 video a day
  • 2 stories
  • 3 minutes

Check us out and let us know what you think:

Follow on Instagram @RobinhoodSnacks Subscribe on Youtube

  • The big Apple product event (we're expecting a new watch)
  • Earnings expected from Adobe and FedEx

Disclosure: Authors of this Snacks own shares of Delta, Amazon, and Apple

ID: 1331806

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.