🌎 The US ships "TikTok Global"

Monday, September 21, 2020 by Snacks
_TikTok's new parents: Oracle, Walmart, and Bytedance investors (in that order)_

TikTok's new parents: Oracle, Walmart, and Bytedance investors (in that order)

Last Week’s Market Moves
Dow Jones
27,657 (-0.03%)
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10,793 (-0.56%)
Bitcoin
$10,952 (+5.44%)

Hey Snackers,

We're thinking of RBG's powerful legacy: "Fight for the things that you care about, but do it in a way that will lead others to join you." There is still plenty of work to be done, but we have so much progress to thank her for.

Stocks notched their 3rd straight weekly loss, dragged down by heavyweight Big Tech stocks (again). Still no real update on a 2nd stimulus package.

On our 15-minute pod: InFarm just snagged a fresh $170M to put farms inside grocery stores. Tune in to hear how InFarm is crushing costs with vertical kale.

Dance

1. TikTok's deal with Oracle & Walmart gets Trump's approval (ban averted, for now)

Could write a 7-volume series after this ends... If it ever ends. The TikTok ban saga has dramatically reversed course (again). In August, President Trump said he would ban TikTok unless an American company acquired its US operations by September 20th (aka: yesterday). The concern is that TikTok's Chinese-owned parent Bytedance could pass American data to the Chinese government.

  • A week ago: TikTok chose Oracle over Microsoft as its American partner (read: not owner). Trump wants an American company to own a majority of TikTok, so it was unclear whether he'd sign off.
  • On Friday: Sounded like no. Trump said TikTok downloads and updates would be banned starting yesterday. Then...
  • On Saturday: Trump approved the Oracle deal, giving it his "blessing." TikTok would partner with Oracle and Walmart to create a US-based company called “TikTok Global” (ironic).

Deep breaths... The ban on US TikTok downloads will be delayed to September 27 — but it could be scrapped altogether if the partnership moves forward. Here's the deal:

  • Oracle would get a 12.5% in TikTok Global and would store its data on the Oracle cloud in the US.
  • Walmart would get a 7.5% stake and provide ecommerce and other online-shopping-related services.
  • Bytedance keeps 80% ownership. Buuuut: since US venture firms own 40% of Bytedance, TikTok Global would technically have majority American ownership.
  • The US gov would get 25K new US jobs at a TikTok HQ. Also: a potential TikTok Global IPO on an American stock exchange for even more US ownership.
THE TAKEAWAY

TikTok Global would be the new TikTok... The TikTok we know and love/hate isn't allowed in China. China has Bytedance's Douyin, the non-international (censored) version of TikTok. The international TikTok is already banned in its largest market of India, and has faced scrutiny from Europe, Canada, and others. If this US-based TikTok Global is formed, they'll all probably get on it.

Highs

2. Who's up...

Is this the real life?... Is this just fantasy (sports)? DraftKings stock soared 32% last week, notching an all-time high on news of an ESPN deal. DraftKings' sportsbook and fantasy offerings will be integrated as links on ESPN's website. The sports betting app will also get promoted on ESPN studio shows and segments. The stock is up 52% this month as live sports roar back to life (minus fan-filled stadiums).

No flake zone... Investors showed up big after Snowflake went public last week. The adorably-named cloud data management company (not as cute) had the biggest software IPO ever. Snowflake stock more than doubled in value on its 1st trading day. VIP institutional investors bought shares at the IPO price of $120. By the time Snowflake hit the market, it was trading at $245 — retail investors like us missed out on the big jump.

Lows

3. ...and who's down

Reel in the nautical puns... Shares of cruise operator Carnival sank 15% last week on a boatload of bad news (sorry). Carnival lost $2.9B last quarter and it literally only has 1 ship sailing right now. Oh, and it also just announced a $1B sale of new stock to raise money at the worst possible time — Carnival stock is down ~70% this year, so it's selling shares at a major low point. But it's losing $770M/month and only has $8B in cash left, so it's desperate.

Try offering "flights to nowhere"... Delta 's cash runway doesn't look too good: it's losing ~$800M/month while domestic travel is down ~60% from last year. The government's $25B in airline bailout funds runs out on October 1st. Now Delta is mortgaging its frequent flyer program to raise cash. Last Monday, Delta announced it would use its SkyMiles program as collateral to raise $6.5B in debt. On Thursday, it upped that to $9B.

What else we’re Snackin’

  • Live: 7 lessons from the Stoics to live a good life, no matter your circumstances — focus on what you can control (yourself).
  • Work: 4 must-ask interview questions that will separate top performers from the pack.
  • Feel: 3 things that will make you happier than money, according to research (#3 really isn't hard to do right now).
  • Reframe: Why building a muscle for uncertainty is the most important thing you can do — like squats, for your brain.
  • Sweat: 10 resistance band workouts that work your entire body (demonstrated in GIFs).

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Disclosure: Authors of this Snacks own shares of Walmart, Microsoft, and Delta

ID: 1337633

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