The difference between "Profit Puppy" & "Promo Puppy"

Monday, October 28, 2019 by Robinhood Snacks | Disclosures

"What do you mean you don't need our streaming passwords anymore?"

Last Week’s Market Moves
Dow Jones
26,958 (+0.70%)
S&P 500
3,023 (+1.24%)
Nasdaq
8,243 (+1.90%)
Bitcoin
$9,511 (+15.95%)
10-Yr US Treasury
1.796%

Hey Snackers,

A SoftBank moneybag handing out blank checks. Elon Musk's lawyer with view-only access to his Twitter account. "Beyond" + "Your Name" (looks like you but made from plants).

Let us know your best 2019 business-themed Halloween costumes.

Markets rose last week after a hefty serving of earnings reports. More coming this week from heavy hitters in tech, plus the 1st ever space tourism IPO and a Fed decision.

Stream
1. "Promo puppies," and the Netflix/Disney/HBO Streaming Wars

Cancel your plans to see people... Your binging schedule is about to take over all social commitments — Apple TV+ hits November 1st ($4.99/month), then Disney+ takes position #1 in your bookmark manager on November 12th ($6.99/month). But last week we noticed that plenty of these new Netflix rivals will actually be free:

  • Verizon is giving away 1 year of Disney+ free to customers with unlimited plans.
  • Apple is offering 1 year of Apple TV+ free to customers who buy a new Apple device (iPhone, Mac, iPad).
  • AT&T announced its HBO Max (debuting in April) will be free to subscribers who have HBO already.
  • T-Mobile revealed a partnership with Quibi (the name is a mashup of "quick" & "bites"). Details are TBD, but we wouldn't be surprised if the mobile-first premium video is free to those with T-Mobile plans.
  • Netflix’s deal with T-Mobile goes waaaaaay back to 2017. But “Netflix on Us” only happens for T-Mobile users if your account has 2 lines.

The era of password mooching is over... Mobile phone companies are paying for your streaming. Binge-able content for free is their "promo puppy." Let us explain.

  • "Profit puppy": The part of a company's business that makes a huge chunk of the profits. Like Ford's F-150 pickup truck, Lululemon's yoga pants, or Amazon's cloud service, AWS — they all drive profits.
  • "Promo puppy": A shiny, cuddly, free perk that attracts customers to sign up. Think free streaming for a year, free shipping with Prime, or "60K reward points if you spend $4K in the first 4 months" — they all drive sign-ups.
THE TAKEAWAY

Promo puppies are discounts in disguise... It’s not clear who’s subsidizing the Disney+ account that Verizon offers for free. Is Disney+ giving it to Verizon customers, or is Verizon paying, or something in between? For customers, these promo puppies make you love Verizon and get addicted to Disney+ — both brands win. Discounts have the same outcome, but make the discounted thing look cheap.

Highs

New Tesla collector's item... Profits. Shares surged 27% last week after Tesla revealed it made more money than it spent over the last 3 months (Elon's still never pulled that off for a whole year). Plus, that battery-producing gigafactory in China is ahead of schedule, and so is the new Model Y crossover.

Survivor... WeWork stock isn't publicly-traded since it canceled that IPO. At least it's not bankrupt. The injured unicorn that loses $219K each hour was weeks from running out of cash — then SoftBank (a Japanese fund that's the top investor in WeWork) bailed it out with billions of new money. Ex-CEO Adam Neuman walks away with $1.7B, yet employees' options are nearly worthless. If you're keeping score, WeWork's valuation fell from $47B to $8B and now SoftBank owns 80% of it — but it's still in business.

Lows

No rest 'till everyone is Primed... Amazon showed investors it'll do whatever it takes to beat Walmart and Target in the shipping wars — like spending 46% more on shipping so your packages arrive in 1 day instead of the old 2 (that hurt profits last quarter). Then the Trump Administration crowned Microsoft winner of its coveted $10B Defense Department deal — Amazon was in line to win the contract until politics got involved (the President's not a fan of CEO Jeff Bezos).

Hoodie formal... Mark Zuckerberg tossed on a tie and visited Congress to defend Facebook's Libra cryptocurrency. We learned how he's pitching Libra (to help the world's un-banked) and how it'll make money (the ability to "buy with Libra" would let Facebook charge more for ads). Zuck's biggest surprise: He won't launch Libra unless US regulators OK it, which may not happen. Then Friday he unveiled Facebook's new news tab, which finally pays news agencies directly — but only 30M of Facebook's 2.6B users are expected to use it.

What else we’re Snackin’
  • Work: The "Minternship" (real thing). It's meant to fix your mid-career worries
  • Life: And the "Micro-vacation" (also real thing) to take time off when you don't have time
  • Money: To retire at 65, Millennials may need to save half their paychecks
  • Invest: A 3rd rate cut in a row could boost stocks overall. Here's why
  • Venture: 4 Venture Capitalists on what to expect when you're expecting VC funding
  • Crypto: China passes its 1st ever cryptocurrency law
Snacks Daily Podcast
  • Budweiser-owner AB InBev is experiencing a US "Bud-pocalypse" with its share of America's beer market falling way under 6%.
  • Europe's Airbus is 2019's airplane champ, already cranking out 500+ jets while American rival Boeing struggles.
  • Waste Management pushes you to recycle (hard) — so it can boost profits. We're covering how markets can improve the environment.
This Week

Disclosure: Authors of this Snacks own shares of Beyond Meat, Lululemon, and Tesla.

ID: 994855

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