Wednesday Feb.10, 2021

💰 Stimulus round #3

_The Stimulus Trilogy_

Hey Snackers,

Great news for pasta lovers: "The Great Bucatini Shortage" of 2020 has been resolved. In case you're more of a linguini fan, here's a (hilarious) investigative article on the bucatini mystery.

Markets barely budged yesterday, taking a breather from Monday's record close.

Stim

What’s in the big $1.9T stimulus (and what’s in it for the economy)

Call it a trilogy... The third of the "stimuli" is coming. In March 2020, we got a massive $2T rescue package (feat. $1.2K checks for most Americans). In December, we got a $900B package to tide us over (feat. $600 checks). Now, Congress is closing in on a $1.9T stimulus. House Dems released some juicy deets yesterday:

$1.4K payments to individuals making up to $75K/year (and $150K for married couples). Payments get smaller after those thresholds, and individuals who make $100K+ get nada.
$400/week unemployment insurance payments through August 29th.
ETA: The goal is to get this through the full House later this month (Congress is busy with Trump's impeachment trial).

Why now... The stock market is at record highs thanks to low interest rates, strong tech earnings, and this upcoming stimulus. But the US economy isn't doing so hot: in January, the economy added only 49K jobs — and the unemployment rate barely budged, falling to 6.3%. That’s still a big improvement from April, when unemployment hit 14.7% after the US lost ~22M jobs. Buuuut...

10.1M Americans are still unemployed, at a rate that’s nearly double pre-pandemic levels. This has especially hurt women of color, who disproportionately work in "essential" industries. To make things worse...
The pace of recovery has slowed each month since June. And some of the improvement is coming from people dropping out of the labor force (they aren't counted as unemployed).
2.3M+ women have dropped out of the labor force since February 2020, compared to ~1.8M men. Women’s labor force participation is at its lowest level since 1988, partly because of child care needs.

This is (hopefully) the final stretch... but it might be the longest and toughest in the road to recovery. It’s getting harder each month for the US economy to gain back jobs, and it could be even harder to bring back people who dropped out. And GDP is taking a hit: the US economy shrank 3.5% in 2020, the largest shrinkage in 74 years. On the upside, GDP is expected to return to pre-pandemic levels by mid-2021 (thanks partly to stimulus spending). But employment isn’t expected to bounce back for several years.

Thread

Reddit's valuation doubles after a $250M fundraise — will it become more like Facebook?

Adorable little alien robot... Reddit's logo is cute, but its threads don't always fit that description. This year, Reddit has been at the center of a social-driven retail trading frenzy. On Sunday, it made headlines again for spending its entire marketing budget on a five-second Super Bowl ad (inspired by the trading frenzy). Now it's making headlines for a different (but also likely related) reason:

Reddit raised $250M, doubling its valuation to $6B from $3B in 2019. Reddit's fresh cultural relevance and an influx of new users lured VCs.

Craigslist aesthetic... The internet has transformed since Reddit launched in 2005 — but Reddit has stayed true to the early 2000s vibes. That's fitting, since it thrives on being the dark horse of social media. Though Reddit and Facebook were founded just one year apart, they couldn't be more different – especially in the eyes of advertisers:

Design: FB gets a Millennial-friendly facelift every few years. Reddit is still sporting the text-heavy Craigslist look.
Identity: Redditors are anonymous, with obscure usernames and no headshots. FB makes you send 10 forms of ID to change your name.
Discoverability: FB is all about a single feed for following friends. Reddit loves interest-specific communities and hard-to-find threads.
Size: Reddit has 50M+ daily users. Facebook has 1.84B, including Instagram and WhatsApp.
Moderation: Facebook gets the brunt of regulatory and media scrutiny around moderation, and has hired thousands of reviewers. Reddit relies on user volunteers and is known for moderation-light policies.
Advertising: Facebook is basically a digital billboard (worth $84B in ad sales last year). Reddit is far from a powerhouse, with $100M in 2019 ad revenue. But that could change...

With more funding comes more pressure... to cater to advertisers and make $$$ for investors. Reddit said it's using some of its new funds to grow its ad biz, and noted that ad sales jumped 90% last quarter from the previous year. But to really capitalize on its engaged communities and cultural relevance, Reddit will likely have to address some of its non-ad friendly traits — and possibly become more like FB (not necessarily a good thing). Most importantly, it'll have to revisit its laissez-faire moderation. Reddit has been criticized for allowing racist/sexist/offensive dialogue on its platform. That could scare off marketers.

What else we’re Snackin’

Tweety: Twitter beat quarterly earnings expectations, but warned that expenses will surge more than 25% this year as it revs up hiring.
WOAT: The 2021 Super Bowl attracted only 96.4M viewers, making it the least watched Super Bowl since 2007.
Lyfted: Lyft shares jumped 12% after-hours, after its quarterly earnings revealed signs of a ride-share recovery.
High: Tilray shares surged after the pot company landed a deal to distribute its medical marijuana in the UK.
Tappy: EA buys mobile gamemaker Glu Mobile, known for Kim Kardashian: Hollywood and Diner Dash, for $2.4B.
Stars: Uber will offer free rides to Walgreens stores to expand Covid vaccine access in underserved communities.

Wednesday

Earnings expected from GM, Uber, Coca-Cola, and Under Armour

Authors of this Snacks own shares of: Uber

ID: 1519431

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Tangential remarks

Nicolai Tangen, the CEO who holds the purse strings of Norway’s $1.6 trillion sovereign wealth fund, thinks that his fellow Europeans don’t quite stack up to US employees when it comes to pure hustle, telling the Financial Times in a recent interview that there is a difference in “the general level of ambition” and that “the Americans just work harder”.

Tangen has clearly been putting his money — or more specifically Norway’s — where his mouth is: the sprawling Norwegian oil fund, now one of the largest investors on the planet, has been pumping more capital into its US holdings in the past decade, while decreasing its investment into European entities.

The troublesome news for our European readers? Tangen might be onto something. According to data from the OECD, American workers are putting in almost 60 hours a year more than the weighted average for OECD nations… a benchmark that workers from countries in the European Union are already ~180 hours shy of.

Europeans ‘less hard-working’ than Americans | FT

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What’s happening

Pop Quiz!

Sales of what are up 136% since 2019?

Don't be a sucka

$70B

Alphabet shares are soaring in the after-market session, with a initial jump of more than 10% implying a gain of upwards of about $200B in market value when the stock opens tomorrow morning.

Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

What’s up doc?

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HOP TO IT

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We get results!

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This earnings season is fully operational

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Acrobatic Accounting

So, you want to join the circus?

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Rani Molla

4/25/24

No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?