Wednesday Apr.03, 2019

$2B for future Ubers

*New CEO, new recipes*

Hey Snackers,

Warning: That new Netflix price hike hits in 1 month.

Markets dipped Tuesday heading into a fresh round of US/China trade talks on DC soil.

Out

Blue Apron surges 15% after C-suite switcheroo

This is awkward... Blue Apron announced its CEO and its Chief Technology Officer (who is also the last co-founder still there) are "pursuing new opportunities." Linda Kozlowski (Etsy's former COO) is now top chef. Investors were so into the change that they bought up shares 15% in after-hours trading.

Chefs in the kitchen... So many. Aggressive jumps into the meal kit market from big fish (Amazon, Walmart, Kroger) and little ones (Plated, HelloFresh, Sun Basket) hit Blue Apron hard — Shares have fallen 90% since its 2017 IPO. And the number of customers has fallen, too:

December 31, 2016: 1,000,000+ customers
December 31, 2017: 746,000
December 31, 2018: 557,000

Food tribes are the future... Gluten-full? Keto-ish? There's probably a meal kit for you. To stand out, Blue Apron's partnering with beloved brands to reach as many food-focused segments as possible. The stock popped in December after it partnered up with Weight Watchers. Here are the others:

Blue Apron + Fitbit + Adidas = Activity rewards for carb-loaders
Blue Apron + Gimlet = Podcasts for food lovers
Blue Apron + GrubHub = Meal kits for lazy people
Blue Apron + J. Crew = Chinos for meal kit lovers

Pharma'd

Walgreens falls 13% to become the Dow's worst of 2019 so far

We appreciate the candor... First, Walgreens became the worst-performing stock among the 30-company Dow Jones index. Then, its CEO called last quarter the "most difficult we have seen" as profits fell 14%. He even downgraded expectations for the full year — he expects zero profit growth now.

The CEO said, "no excuses"... But there were reasons. And he was happy to blame them for Walgreens' struggles.

"A weak cough, cold and flu season": Lack of fevers was good for society, but bad for sales of medicine, tissues, and bed-side ice cream.
"Continued de-emphasis of select products such as tobacco": Under pressure to follow CVS's leadership (the rival quit tobacco in all its stores), Walgreens tested out tobacco-less stores. Turns out it hurt sales, so Walgreens won't expand the pilot.
FYI: It hopes that adding CBD products to 1,500 locations can help ease some of that pain.

Insurance companies. They can be bullies... When Walgreens sells prescription anything, it's paid by customers (a small co-pay) and insurance (the rest). And insurance companies keep growing through mergers. Now they're flexing their pricing power by paying Walgreens less for drugs you buy.

Customers of monopolies suffer.
And the health insurance market keeps getting more monopoly-ish.

Venture

Andreessen Horowitz transforms venture capital with new $2B fund

15 million shares... That's how much stock venture capital legend Andreessen Horowitz owned in Lyft before the IPO. Now the decade-old VC's raised $2B in cash for a unique fund to find Lyft #2. And #3. And #50. And they like using big terms to do it.

Their first fund wanted to invest in "megalomaniacal founders".
Then they created the concept of "software eating the world".
And the "a16z" nickname is a coding thing — starts with an "a," ends with a "z," and has 16 letters in between (we didn't get it, either).

Cue the makeover montage... Early stage venture investing not enough? Transform into a "Registered Investment Adviser." That's what a16z is doing. RIA life comes with extra regulatory rules — But it gives a16z freedom to drop money into more crypto and regular old public stocks, too. Other VCs will just watch (or follow).

a16z breeds unicorns... Since starting the fund in 2009, it's invested in Instagram, Buzzfeed, Dollar Shave Club, Skype, and Soylent. And in 2019, its shares in Slack, Lyft, Pinterest, and Airbnb will probably (or have already) become publicly traded. This portfolio page is really a humble-brag trophy case.

What else we’re Snackin’

Un-super: AMC's website crashes as Avengers tickets hit pre-sale
Crypto: Bitcoin surges (but not on the April Fools' joke buyers thought it jumped on)
InstaFamous: Facebook pops on word its new Instagram ecommerce feature could add $10B by 2021
Miles: Delta rises 6% after a 10-year extension to its AmEx credit card contract
Caught: Wynn Resorts execs may have concealed its founder's #MeToo misconduct

Wednesday

A judge hears arguments in the SEC's case against Elon Musk's tweeting
US/China trade talks head to DC

Latest Stories

Bottom lines

April 19: AmEx up, paint ain’t, banks sank

Norway now has a wealth fund worth $290k+ for every citizen of the country

William Coulman, David Crowther5h

More wind power capacity was installed last year than ever before

Tom Jones, David Crowther6h

Do you want to run the State Department of McDonald’s?

A couple of days ago, a tweet making fun at McDonald’s hiring a “Manager for Diplomatic Relations” went viral.

At first glance, the idea that McDonald’s, a burger franchise known for its double quarter pounders and perfectly salted fries, is expanding its diplomatic influence with policy makers in Foggy Bottom and the world at large sounds comical. But it’s actually crucial.

There are more than 40,000 McDonald’s locations spread across 115 countries around the world, and 90% of these stores are independently owned and operated franchises that pay royalties to the parent organization to operate. Tens of thousands of franchises operated by different owners with different beliefs, priorities, and values can get complicated, fast.

As we noted in Snacks in February, McDonald’s received heavy backlash from franchisees in countries including Saudi Arabia, Oman, Jordan, Kuwait, and Pakistan after McDonald’s Israel donated thousands of free meals to IDF personnel. But it wasn’t McDonald’s, as an entity, that made the donations. It was the owner of the company’s Israel franchises, who was acting under his own volition.

Tom Jones, David Crowther

The data doesn’t lie: Taylor Swift is the biggest pop star on the planet

TOPSHOT-CORRECTION / AUSTRALIA-ENTERTAINMENT-MUSIC-SWIFT

Matt Phillips

Nuke stocks up on AI excitement

For most of humanity, the thought of “nuclear-powered AI” sends a shiver down the spine. But the stock market is all for it! Just check out the list of top performing S&P 500 stocks this year. Just behind established AI plays — Super Micro Computer and Nvidia, you’ll find Constellation Energy, the largest operator of nuclear plants in the U.S. NRG Energy, which also operates nuclear plants, isn’t far behind. Bloomberg reports that CEO of power distributor Exelon — which spun off Constellation in 2022 — says in the Chicago area alone, AI could drive a 900% jump in demand for energy from data centers.

Rani Molla

China makes Apple remove WhatsApp, Threads, Signal and Telegram from app store

In its latest move to restrict foreign tech, Beijing has ordered Apple to remove a number of popular messaging apps from its app store there, including WhatsApp, Threads, Signal and Telegram.

These apps had only been available through VPNs but were popular nonetheless, according to the Wall Street Journal.

Apple said the Chinese government asked them to remove the apps in the iPhone maker’s second biggest market over “national security concerns.” Last week, China told its state-owned telecoms to phase out the use of US chips by 2027.

Exclusive | China Orders Apple to Remove Popular Messaging Apps

Rani Molla

Tesla's recall reveals just how bad Cybertruck delivery numbers have been

Thanks to a recall of Tesla’s Cybertrucks, we now know how many of them have actually been delivered: 3,878 since the EV company began releasing them to customers in November.

In its third and fourth quarter earnings report, Tesla said that its current Cybertruck production capacity was greater than 125,000 a year. Musk had previously said he expected to produce 250,000 Cybertrucks a year by 2025.

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

The recall is over an issue with the gas pedal pad that, the National Highway Traffic Safety Administration says when pressed, “may dislodge, which may cause the pedal to become trapped in the interior trim above the pedal.” The cause of the issue: “unapproved” soap that the manufacturer used to aid in getting the pad on the pedal.

A Cybertruck customer this week posted a TikTok about a terrifying incident in which this happened and “held the accelerator down 100%” in his 6,000+ pound vehicle. Thanks to some quick thinking where he held down the brake and put it in park, he wasn’t injured.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Tesla recalls the Cybertruck for faulty accelerator pedals that can get stuck

Either way, that’s a lot more than the roughly 775 it’s delivered each month so far.

This is the long-awaited Cybertruck’s second recall since it came out five months ago.

Millie Giles & David Crowther

Cocoa hits $11,000

Cocoa prices are breaking records on an almost daily basis — with cocoa futures closing at (another) all-time high of $11,020 per metric ton yesterday.

That’s up 158% since the start of the year, and over 4x on the typical prices seen in 2022 — as crop production continues to fall short of demand.

Major cocoa-producing nations like the Ivory Coast and Ghana, which between them grow about two-thirds of the world’s cocoa, have seen excessive tree failure due to disease, changing weather patterns, and hot, dry conditions causing devastating droughts.

As such, consumers are starting to see the effects of the largest cocoa supply deficit in over 60 years: “shrinkflation” and reduced-cocoa recipes might soon hit your favorite chocolate bars, and Hershey stock was recently downgraded. Unfortunately, the worst may still be yet to come: the International Cocoa Organization expects production to lag behind demand by 374,000 tons for the 2023-24 season.

Why the World of Chocolate Is in Crisis

12h

Governments and companies tackle the climate crisis as damage intensifies

Jack Morse

Read

12h

Extreme weather has cost the US $2.6T, and the number keeps rising

Max Knoblauch

Read

12h

The cost of waste: e-junk and emerging tech add to America’s pollution prob

Nia Warfield

Read

12h

The biz of electric vehicles: the EV transition hits speed bumps

Bitcoin business will lose billions in the halving

Investors and miners have spent months prepping for the crypto-shattering event lying in bitcoin’s code. It’s finally arrived.

Friday, April 19th

13h

What’s happening

Casey Newton

Platformer

19h

Meta’s new AI paves the way for social networks where nothing is what it seems

Five ways of thinking about Llama 3, its latest large language model

Screenshot of Meta’s AI image generator, frog in a bathrobe

Matt Phillips

22h

World out of balance: It costs the US 3¢ to make 1 penny

The cost of producing the US penny rose 13% in fiscal 2023 to 3.07 cents. Yes, that means that Uncle Sam loses more than two cents for every cent it produces. (And no, you can’t make it up on volume.)

For the record, that’s the 18th-straight year the penny’s face value has been below production costs, fueling calls for abolishing the lowest value denomination coin. Canada started to phase out the penny in 2013, joining Australia, Brazil, Finland, New Zealand, Norway, and Israel, according to Smithsonian Magazine.

3.07¢

Pop Quiz!

What’s the world’s busiest airport?

Don't be a sucka

Rani Molla

24h

Netflix is going to stop sharing subscriber numbers

After posting subscriber numbers that beat expectations today, Netflix says it’s no longer going to share those numbers starting in the first quarter of 2025. That’s a big deal since subscriber numbers have long been one of the main metrics that investors have looked at.

“In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential,” its shareholders letter read. “But now we’re generating very substantial profit and free cash flow.” The company said that it will focus on revenue and operating margin as its main financial metrics, while it will look at time spent on the platform to gauge customer satisfaction.

Another way to read this? They’ve hit market saturation and just aren’t going to be growing that much anymore, and they thought they’d end on a good note. Going forward they’re focusing on how to get more money out of the customers they do have.

They’re doing so by cracking down on password sharing and charging for extra members. They’re also pushing people to ad tiers, which are more profitable than non-ad tiers.

“Scaling ads to become a more meaningful contributor to our business in ‘25 and beyond,” Netflix said.

Netflix’s ads membership grew another 65% in Q1 over the previous one, after rising 70% the quarter before, and 40% of signups in ad markets continue to be for those ad plans.

4/18/24