iPhone. iPad. iTariffs.

Friday, August 2, 2019 by Robinhood Snacks | Disclosures

Square retires from these food delivery wars

Dow Jones
26,583 (-1.05%)
S&P 500
2,954 (-0.90%)
8,111 (-0.79%)
$10,427 (+3.33%)
10-Yr US Treasury

Hey Snackers,

You've got 3 days left in Shark Week — schedule here (we suggest the Return to Shark Island).

Stocks suffered their second-straight brutal drop on fresh macro news — The US/China trade war hit a freaky new level because talks in Shanghai went the wrong way (details below).

1. Square falls 7% — and it's selling Caviar to DoorDash for $410M

Switch hitters are rare... Square's winning a batting title with its consumer and small biz facing businesses, processing your latte purchase from the neighborhood spot. The digital payments icon announced revenues rose 44% to $1.2B (sounds pretty good). But Square spent so much on growth that it suffered a $7M loss. Here are its 3 areas of focus.

  1. Business biz: Square's "seller ecosystem" is for companies. Its software and card-swiping tech helps businesses collect payment for that buddha bowl. Once Square gets to know companies' payments, it can even lend to them.
  2. Consumer biz: Square's Cash App is the alt-Venmo that also trades Bitcoin. The peer-to-peer payment app makes up just under a quarter of company revenues, but its physical card can be used anywhere. Plus, it's the #1 free finance app 2 straight quarters.
  3. Delivery: Square acquired restaurant delivery app Caviar to get you your chicken curry and process the payment. But now it's making a change...

Who ordered the Caviar?... DoorDash. Square is selling Caviar to another food delivery app. Square CEO Jack Dorsey is busy building payments ecosystems (+side-hustling as Twitter's CEO) — no time to fight in food delivery wars. It's not a bad return though: Square bought Caviar in 2014 for $90M. Now it's selling to DoorDash for $410M of cash and shares.


This is a rare miss for Square... The stock had risen 40% so far in 2019, and had more than tripled in the past two years. Becoming the best money friend of businesses was already an accomplishment. Then its Cash App came out of nowhere, becoming the best friend of fantasy football league coordinators who need to track down league dues.


Arctic-functional... Fifth Avenue-fashionable. According to Canada Goose its jackets are packed with humanely-sourced goose down and lined with fur from coyotes in "overpopulated" areas (where the carnivores attack pets). So dropping $1,000 on a faux-rugged parka makes you feel ok. Canada Goose's website said so. But shares fell after the New York Post noticed that website changed.

  1. Deleted: No more "traceability video" to see where that coat's feathers and fur came from.
  2. Replaced: "We ensure ethical sourcing" is now "we're committed to ethical sourcing."

This goes back to 2017... And it begins with the People for the Ethical Treatment of Animals:

  • PETA got its hands on a video of a bunch of guys man-handling geese in an inhumane way. PETA alleges it was a Canada Goose supplier (Canada Goose denies this).
  • The FTC began looking into Canada Goose for “potentially false and misleading advertising” given all the our-fur-is-humane material on their website.
  • NY Post noticed Canada Goose made "prompt, corrective action" to its website by totally watering-down its ethical promises.

There's market value in 'wokeness'... Definition: Being acutely aware of social injustices and acting accordingly. We're seeing corporations take stands on social issues, from Nike's Kaepernick campaign to Patagonia's climate change initiatives. But Canada Goose's un-wokeness cost shareholders a 5% drop — investors think customers judge values as much as they do style.


100% of Made In China is tarriff'd... Trade negotiators returned from chats in Shanghai this week, reporting to President Trump that China had broken too many promises — it's not buying more US crops, and it hasn't stopped selling the addictive pain reliever fentanyl. So the president started tweeting.

  • Before: $250B worth of stuff the US imports from China each year was tariffed by 25% (think of it as a 25% tax) — mostly business products like steel and machines.
  • Starting September 1st: The remaining $300B of Chinese imports get tariffed by 10% — and your wallet will notice this time (more in the takeaway).

Tariffpalooza affects nearly everything... The S&P 500 (a helpfully broad measure of the whole stock market) dropped 2% after the announcement. Then oil prices plummeted 7% because this escalation could hit global trade. GE and Caterpillar both dipped 4% because they produce and sell there. Best Buy dropped 11% and The Gap dipped 8%.


You’re gonna notice it this time... For political reasons, the tariffs have so far targeted the kind of things that probably don't affect your life ("steel beams" part of your daily routine?). But to escalate the trade war further, Trump started taxing the toys (Barbie, Hot Wheels), clothing (check your label), and tech (likely what you're reading this on) that consumers (read: voters) buy.

FYI: Apple dropped 2% because AirPods, MacBooks, iPhones, and iAnything are China-made and will likely get more expensive because of this.

What else we’re Snackin’
  • Fresh: Burger King will expand its plant-based Impossible Burger partnership to over 7K stores next week
  • Haul: GM's profits rose 2% as it sold 1.9M vehicles worldwide last quarter
  • Worthy: Pinterest jumps 13% after its 2nd ever earnings report — it's focusing on "wellness activities" and leaning into pin-worthy ecommerce
  • Subsidize: Jeff Bezos sold $1.8B of his Amazon stock...to fund his space venture, Blue Origin
  • M-word: Facebook falls as the FTC looks at its WhatsApp and Instagram acquisitions for intent to create a monopoly
  • Fuego: Lyft just suspended its e-bike service in San Francisco because the batteries have been catching fire
Snacks Daily Podcast
  • Kellogg's cereal sales fell again (shocker). But snack sales jumped (shockingly). We break down snacks trends, Snacks-style

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


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

© 2019 Robinhood. All rights reserved.