Tuesday May.11, 2021

🎸 Live Nation's slingshot moment

_Dreaming of The Weeknd 2022 [Flashpop/DigitalVision via Getty Images]_
_Dreaming of The Weeknd 2022 [Flashpop/DigitalVision via Getty Images]_

Hey Snackers,

If you ever download Snack, a "Tinder meets TikTok" dating app for Gen Z... just know that we had no hand in this.

Tech stocks plunged to start the week, weighing down the whole market. The techy Nasdaq index tumbled 2.5% yesterday.

Live

Live Nation had a terrible quarter, but its stock soared on "slingshot" potential

Screw it, we'll do it... on Zoom. In 2020, concert giant Live Nation saw its sales plunge 84% from 2019, because the nation was 0% live. Last quarter, Live Nation's sales were down 79% ("live factor" = still low). It's a sad tale... but Live Nation isn't crying to The Weeknd in bed.

Save your tears for another day... Live Nation stock jumped 4% yesterday after a Jefferies analyst called it a pure-play reopening stock. Despite the massive sales plunge and big losses, Live Nation shares are trading higher now than they ever were pre-pandemic. Ariana Grande fans are having withdrawal, and Wall Street is upbeat about Live Nation's reopening potential, for two reasons:

  • Bad Bunny (2022): Live Nation is seeing the effects of "significant" pent-up demand for concerts, saying bookings are seriously booming. It has already booked twice as many shows for 2022 as it did in 2019.
  • Live (From Home): Last year, Live Nation invested heavily in streaming. It took a majority stake in livestreaming platform Veeps, outfitted 60 of its 289 concert venues with livestream tech, and announced a virtual concert series that launches this month.

Live Nation could be a "slingshot stock"... We're calling it slingshot potential. "Recovery stocks" are companies that could rebound to pre-pandemic levels. "Slingshot stocks" go a step further — they could surpass pre-pandemic levels. Live Nation says its concerts are returning stronger than they were in 2019. Plus, it now has a new source of sales to pad its balance sheet: live streaming. Another potential slingshot stock is Carnival, which says it already has more cruise bookings for 2022 than it did in 2019.

Hack

The US' largest fuel pipeline gets hacked by "DarkSide" (gas could get pricier)

Like a bad LimeWire download... except way worse. Colonial is the largest fuel pipeline in the US — and it just got majorly cyberhacked. Colonial is what the East Coast runs on (besides Dunkin'): its 5.5K-mile system carries nearly half of the gas and diesel consumed on the East Coast. Over the weekend, that car fuel and heating oil stopped moving.

SaaS's evil twin... Colonial was hit by a ransomware cyberattack, forcing it to temporarily halt all pipeline operations. Ransomware = hijacking computer systems and demanding payment for the release of the "hostage." The culprit is a hacking group called DarkSide (makes sense). DarkSide is the evil alter ego of a software startup. Instead of kombucha, it drinks companies' tears.

  • The motive: Instead of selling Software-as-a-Service, DarkSide sells RaaS (Ransomware-as-a-Service) to criminals, who carry out the attacks. DarkSide says it has no political motives, and is purely driven by $$$.
  • The fallout: If the pipeline system is down for more than a few days, consumers will likely start to feel the pain. Think: rising gas prices and/or shortages.
  • The PR move: DarkSide is now implementing "moderation" checks to make sure its clients don't debilitate companies that could cause societal problems. So thoughtful.

Cyberattacks aren’t only a threat to cyberspace... they're increasingly targeting critical infrastructure. Think: pipelines, power grids, hospitals, and schools. These "physical" attacks hurt their targets, but they also pose a wider threat to public security. For example, hackers could hijack pipelines' control valves and sensors. Software runs almost everything, so the risk is widespread. That's why government agencies and corporations are investing more heavily in tools to fight ransomware attacks. That could be a boon for cybersecurity companies like FireEye, Palo Alto Networks, Zscaler, and Fortinet.

What else we’re Snackin’

  • Vax: The FDA authorized the Pfizer-BioNTech Covid vaccine for 12- to 15-year-olds, making it the first shot approved for children in the US.
  • Thanks: 44 states and territories are urging Facebook to abandon its plans to launch Instagram for kids (what could go wrong?).
  • Spacey: Virgin Galactic shares fell 9% after it reported another quarterly loss (and failed to reveal a date for its next spaceflight test).
  • Robucks: Video game platform Roblox revealed that sales more than doubled from 2020 (thanks to your 12-year-old cousin).
  • Ethereal: Ethereum, the cryptocurrency that powers NFTs and "DeFi" apps, briefly hit a new record of $4.1K yesterday.
  • Cakey: Coty stock plunged 13% after the cosmetics giant revealed quarterly sales fell from a year earlier (moisturizer > bronzer).

Tuesday

  • Earnings expected from Roblox, EA, Unity Software, Palantir, and QuantumScape

ID: 1642800

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French luxury fashion conglomerate Kering has seen its shares fall ~10% in the last 24 hours after reporting that sales at its flagship brand Gucci had dropped 21% in its latest quarter.

Kering’s other brands, which include Yves Saint Laurent, Bottega Veneta, and Balenciaga, fared slightly better — but the only real bright spot was the company’s eyewear division, where sales rose 24% (9% on a comparable basis).

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Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

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Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

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