Monday Apr.22, 2019

Zooming is the new Pinning

_Unicorns are coming_

Highlight of our 4-day holiday-shortened week: The joy of discovering Amazon's (adorable) mascot. It's orange, blob-ish, and goes by "Peccy."

Despite hype-citement for two big IPOs, the S&P 500 slipped for its 1st weekly loss in a month. But profits are winning: 74% of 1st quarter earnings so far have beaten analysts' expectations. That's pushed markets to within 1% of their record highs.

Highs

Who's up...

Get Yoshi a passport... For the first time, the Chinese government will allow Nintendo's Switch gaming console to be sold in China, along with a new Super Mario Brothers game. Shares of the Japanese legend jumped 12% to their highest point in 6 months as they enter Earth's biggest gaming market.

Acquisition with an asterisk... Canadian cannabis icon Canopy Growth rose 4% for its 4/20 Eve "complex transaction with a simple objective": Buy American pot producer Acreage Holdings. The $3.4B deal only happens if the US government first legalizes cannabis nationwide. If it does, Canopy will own Acreage's 20-state head start.

Best week ever... First Qualcomm ended its patent dispute with Apple. Then it rekindled the relationship — iPhones will be powered by Qualcomm chips for the next six years (at least). The cherry on top was the announcement from Qualcomm's only other real competitor in 5G phone chips — Intel — that it's quitting that biz. Add it all up and Qualcomm stock rose 42% last week.

Lows

...And who's down

"Alexa, what happened to Spotify stock?"... It fell after Amazon stealthily launched free music (with ads) for anyone with an Echo device (no Prime membership needed). Now Spotify's not the only one offering Adele for free, streaming, and on-demand.

If these two should not be joined in matrimony... speak now. The Justice Department might. The WSJ reported that regulators plan to block the $26B merger of US telecom's #3 and #4 players because it would be an "unacceptable threat to competition." That dropped shares of Sprint and T-Mobile.

Bonus: T-Mobile also just launched a banking product — More on that in our podcast.

Describe your pain on a scale from 1 to 10... Healthcare investors are feeling it as the 2020 election oven preheats. "Medicare For All" from the left has health insurers Cigna, United Health, and Anthem down over 10% in just six trading days. And momentum in DC to stop drug price-gouging has pharmaceutical companies Pfizer and Eli Lily off over 8%.

IPO

Pinterest and Zoom jumped on IPO Day — Here are the differences

Rookie report... IPO-Palooza continued with Pinterest and Zoom, which both debuted Thursday. Digital tackboard Pinterest jumped 25% on day #1 of trading, while the video conference pioneer surged 72%. Here are the scouting reports:

Zoom's mission: “To make video communications frictionless.”

Opportunities: This century's flexible work-from-home rules boost corporate needs for non-brutal video chat.
Challenges: Google, Microsoft (which owns Skype), and Cisco are resource-rich and have been doing this for years.
Fun fact: Uber likes to zoom — Its employees clock 14M meeting minutes of Zoom per month.

Pinterest's mission: “To bring everyone the inspiration to create a life they love.”

Opportunities: 80% of US women age 18-64 who have children use it. So do over half of Millennials. That combo sets trends.
Challenges: Pinterest says it's a social network for positivity — But social networks are ad companies, which means competing with Facebook and Google. Snap's a case study in trying to do that.
Fun fact: 88% of Pinners purchase a product they pin.

One's focused on the now, the other on the future... The Silicon Valley pair evolved from unicorn status by going public, and they're both worth similar amounts based on their share price ($13B for Pinterest, $16B for Zoom). But Zoom's already profitable ($7.5M in 2018) with 344 customers paying $100K or more per year. Pinterest isn't profitable ($63M loss) with its 250M users. Not all ex-unicorns are alike, so it's best to learn up on their pedigrees.

What else we’re Snackin’

Work: 28 ice-breaker questions for your next team meeting (we brought #8 up at dinner)
Life: An app that manages your privacy for you @Alexa
Money: Netflix/Hulu/Spotify. Subscriptions add up. Here are 7 ways to deal.
Venture: Serena Williams' "secret" venture capital portfolio
Crypto: How blockchain technology could change the art world
Do: Calculate all the plastic trash you generated in the last year

This Week

Monday: Tesla hosts mysterious "Autonomy Investor Day". Stock markets closed in Europe and China for Easter Monday, open in US.
Tuesday: Earnings from Snap, Twitter, Verizon, eBay, Lockheed Martin
Wednesday: Earnings from Facebook, Chipotle, Domino's, Microsoft, Boeing, PayPal, Tesla
Thursday: Earnings from Ford, Comcast, Intel, Starbucks
Friday: Earnings from Chevron, Exxon Mobil, Deutsche Bank. We get our first peek at America's 1st quarter GDP. Avengers: Endgame opens in movie theaters.

Disclosure: An author of this Snacks owns shares of Amazon and Tesla.

Latest Stories

Friday, Apr 26th

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?

13h

HOP TO IT

Joshua Topolsky

We get results!

14h

This earnings season is fully operational

Acrobatic Accounting

So, you want to join the circus?

Megan DeMatteo

Rani Molla

16h

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?

Apple reportedly cuts Vision Pro production due to low demand

Seriously, relax

17h

Economy keeps on humming along

Meta exhaustingly tries to merge the metaverse and AI

Gonna have to rename the company... again

Rani Molla19h

Chris Black

Black’s Gold

19h

Can you justify a $335 trashcan? Yes.

Here’s how.

24h

Biden signs a bill that could ban TikTok — but the #ForYou fight is far from over

Jamie Wilde

Read

24h

Gucci’s parent braces for sliding sales, as luxury demand unravels over high prices

Nia Warfield

Read

Matt Phillips

4/24/24

Chipotle continues to go on a tear, hitting a sales record

Hey it might not be the kind of AI stock investors are all hot and bothered over, but don’t sleep on the burrito business.

Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

Rani Molla

4/24/24

Facebook had great earnings, the market hates it

Facebook reported impressive earnings. Record first-quarter revenue thanks to AI! Profit up 117% compared to a year earlier! But at the same time, its capital expenditures are going up and it’s expecting second quarter revenue potentially lower than analyst estimates. So in other words, the future doesn’t look as bright as the present.

All in all the stock is down more than 10%. (Basically the opposite of what happened with Tesla yesterday).

Net net

4/24/24

Earnings can’t stop, won’t stop

Rani Molla

4/24/24

Why Tesla investors are holding on to hope for a cheap car

Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.