Lyft's profit ETA: TBD

Thursday, August 8, 2019 by Robinhood Snacks | Disclosures

That glass was actually spiked seltzer, not beer

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Hey Snackers,

We can confidently say we didn't expect this: Arizona Iced Tea is coming out with weed gummies.

Markets are still recovering from Monday's worst drop of the year — now Uber reports earnings today fresh after Lyft.

1. Turns out Sam Adams isn't really a beer company anymore

Carb problems... Beer feels 'em. We've been chatting with you for weeks about declining sales (beer is now under 50% of all alcohol consumed in the US). And Boston Beer Co. is obsessed with ales — it owns Sam Adams, just bought IPA fan Dogfish Head, and often touts its beard-approved craft status. But research firm IRI recently reported this stat: Only 25% of Boston Beer's biz is beer.

That means 75% is non-beer stuff... In fact, its new profit puppy is super clear: Truly Hard Seltzer. The citrus-infused, gluten-free option has been Boston's summer tailgate champ, driving the company's 21% increase in shipments last quarter. Here's the rest of Boston Beer's non-beer, beach-beverage roster:

  • Truly: Sorry, had to mention this one again — its sales surged 163% last quarter from the year before (prepping for peak summer).
  • Twisted Tea: The hard iced tea sat back and enjoyed 22% sales growth.
  • Angry Orchard Cider: Just came out with a "rosé" option, because, rosé.
  • Other non-beer bets: A hard kombucha called Tura and a "craft" hard tea that goes by Wild Leaf.

Pure beer stocks are disappearing... Boston Beer isn't really a beer company anymore. Corona-owner Constellation Brands is big on whiskey, vodka, and CBD-infused experi-beverages. Bud-owner AB-InBev is also investing hard in non-beer options, like Babe. Meanwhile, Molson Coors dropped last week because it's overly dependent on Coors. The beer legends that are succeeding do it by trading what's on tap for what's light, fruity, or Cannabis-y.

Three drug dealers are getting sued by 35 states... The stocks of McKesson Corp, Cardinal Health, and AmerisourceBergen fell on a report from Bloomberg that they offered $10B to settle opioid lawsuits. Those 35 states had a completely different number in mind.

There's plenty to blame for America's opioid epidemic... Purdue Pharma invented (and aggressively marketed) the addictive Oxycontin, while doctors over-prescribed it. Then there are these 3 prescription drug distributors — they hook up pharmacies with the pills (aka the drug dealer's drug dealer). Here's why that $10B they offered to end the whole thing is a problem:

  • The allegation: 35 states believe the drug distributors turned their heads to what was obviously a dangerous problem.
  • The painful example: Some US counties had over 100 pills distributed per person, per year — to make more profits. 100 opioids per person.
  • The counter: Instead of accepting a $10B settlement, the 35 states proposed drug distributors pay up $45B. Big difference.

What matters to stocks isn’t when news becomes official... it’s when news becomes credible. Investors reacted fast to Bloomberg's credible report, dropping drug distributor stocks — so by the time an official verdict is reached, the fine could already be "baked in" to the drug distributors' stock prices. Just like Facebook shares barely budging after its $5B fine became official last month — the news was already baked in.


"Use code EARNINGS to get 15% off your 1st ride"... Lyft jumped on word that revenues surged 72% to a new record high. But because those discount codes it dishes out to drive growth are getting expensive, we noticed its growing loss.

  • Last year’s 2nd quarter = Lyft lost $179M
  • This year’s 2nd quarter = Lyft lost $644M
  • The good news: That loss was huge, but Lyft thinks 2019 is its "peak loss" year — losses will shrink from here on out (and hopefully/eventually become profits).

But then we noticed 2 other stories... and both looked less good on Lyft. Together, they highlight a couple major issues that de-woke Lyft's previous wokeness.

  1. It's not handling harassment well: If a driver bothers you, Uber's got a panic button that takes just 1 click to report – The Washington Post notes that it takes a bunch of clicks to reach Lyft's safety team (and their responses haven't been satisfactory).
  2. Congestion — it's a problem: Uber and Lyft commissioned their own report on traffic. Turns out a whopping 14% of vehicle miles traveled in San Francisco are ride-hails — and ~40% of driver time overall is spent cruising around without riders.

Lyft had one advantage over Uber... Reputation. Uber owns more of the ride share market, offers more services (like Uber Eats), and has more big bets (like UberFreight). Lyft had a #DeleteUber reputation advantage that helped it gain market share last year. It can't afford to waste that.

What else we’re Snackin’
  • Headline: The New York Times falls as its subscriber growth slows — but it's closing in on 5M total subscribers (it wants 10M by 2025)
  • Done: FedEx is ending its ground-delivery contract with Amazon
  • Future-ish: Nike acquired an AI company to predict what consumers actually want
  • Discounts: Groupon launches a membership program to keep its daily deals relevant (and snag recurring revenue from ya)
  • Down: Heavy-duty truck orders just hit their lowest level in 9 years — and that could be an early economic indicator
  • Uplifted: Weight Watchers jumps 43% on hopes Oprah is fueling the comeback
Snacks Daily Podcast
  • Biting deeper into Lyft, Boston Beer's non-beer summer, and pharma's opioid price tag.

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


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