Wednesday Mar.25, 2020

🍃 Pot's panic-buying pop

_Corporate America mobilizes for the virus fight_

Hey Snackers,

You've probably heard about some terrible Zoom meeting gaffes recently, but one live video mistake is bringing joy to people's hearts: this Italian priest left Facebook AR filters on while live-streaming his mass.

The Dow enjoyed its best day since 1933, surging 11% on stimulus hopes. While the $2T stimulus deal is reportedly near the finish line, Congress hadn't locked it in by market close yesterday.

Produce

Project Apollo: Ford, GE, and 3M lead America’s corporate mobilization war on COVID-19

Corporate America puts on its war cape... In World War II, Ford produced B-24 bombers to help the war effort. Today we're fighting a very different battle against an invisible foe: COVID-19. Now, Ford and its corporate peers are stepping up to try and provide the "weapons" we need to virus-fight.

Doctors and nurses need to be healthy to treat and help sick people. To protect them, we need filtering masks and respirators — but there's a serious shortage.
To treat really sick people having trouble breathing, we need ventilators — but there's a more massive shortage of those. NY has just 7K of the 30K ventilators it expects needing to treat a surge in hospitalized patients.

Reducing the supply gap... American corporations are teaming up to help slash the shortage for respirators and ventilators:

3M and Ford will produce a new Powered Air-Purifying Respirator to protect healthcare workers from the virus. They'll also boost production of 3M's current respirator product.
Fiat will produce up to 1M masks to donate to emergency personnel, while Ford is creating disposable respirators from 3D printers (could produce at least 1K/month once approved).
Ford is working with GE to boost production of GE Healthcare ventilators, while GM will team up with Ventec Life Systems to majorly increase ventilator production.
PS: Ford's calling this "Project Apollo", because the Apollo 13 mission had to build ventilators in a life-or-death emergency (kind similar to right now).

The Defense Production Act is the next step... The DPA gives the federal government power to force and incentivize businesses to produce goods required for national defense. The White House used the DPA for the 1st time during the COVID-19 pandemic yesterday, to get 60K testing kits. Despite corporate America's voluntary efforts, we might need a lot more DPA-usage to get the ventilators and respirators we need.

Smoke

Pot sales are soaring on lockdown panic

If it helps people stay glued to the couch... that's one way to fight the COVID-19 spread. North American weed producers are seeing a major sales boom. As lockdowns continue across the US and Canada, panicked pot buyers are stocking up on their brownies, gummies, and smokeable weed products in particular. All this panic even though...

Cannabis stores have been listed as "essential services" (not mandated to close) in over 12 states. Others that can't remain open are shifting to delivery/pickup.
On Monday, the Mayor of Denver ordered all recreational weed stores to close — then he reversed the ban just a few hours later on widespread outrage.

Hitting new highs, after years of disappointment... Since recreational weed was legalized in parts of the US and Canada, sales slowed. Demand was over-hyped and producers ended up over-producing: shares of Canadian cannabis giants Aurora Cannabis, Tilray, and Canopy each started 2020 down ~60% from their 2018 highs. But now...

+50% = How much recreational weed sales across the key markets of California, Colorado, Oregon, and Alaska were up last week.
+150% = Spike in weed sales in the SF Bay Area after the "stay-at-home" order was issued (compared to same time last year).
+100% = How much online cannabis sales on Canada's gov-run Ontario Cannabis Store jumped in only 2 weeks.
One guy even purchased enough weed for 9.5 years of daily joint-smoking.

This probably won't change long-term weed demand... The surge in sales is giving pot stocks a boost — in the last 5 days, Canopy is up 35% and Tilray is up 43% (though both are still down over 70% from a year ago). Still, the bump in sales will likely dwindle when things get back to normal. And if people have a lot hoarded, it may actually hurt cannabis companies more in the long-run (they'll lose out on future sales).

What else we’re Snackin’

Snacky: Snack giant Mondelez (maker of Oreo and Ritz) will hire 1K workers to meet increased snacking demand from virus lockdowns.
Postpound: The 2020 Tokyo Olympics will be postponed likely to 2021, according to Olympic Committee member Dick Pound.
InstaDistance: Instagram launches a Co-Watching feature so you can scroll its feed together with friends during a video chat (and feel less lonely).
Cola: Coca-Cola will suspend its production in India, as the country orders a complete lockdown for its 1.3B people.
RT: Twitter warns about its profits as reduced coronavirus spending cuts into its ad sales.

Wednesday

Earnings expected from Paychex and Micron Technology

Disclosure: Authors of this Snacks own shares of Twitter

ID: 1129750

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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.

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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.

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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.

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

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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.

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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.

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“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.

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