💄 Kim K = Unicorn of the Day

Tuesday, June 30, 2020 by Robinhood Snacks | Disclosures

When the newly-minted billionaire sisters arrive at Thanksgiving

Dow Jones
25,596 (+2.32%)
S&P 500
3,053 (+1.47%)
9,874 (+1.20%)
$9,154 (+0.35%)
10-Yr US Treasury

Hey Snackers,

June 2020: The corona-conomy month in which plants began to enjoy a richer cultural life than humans — 2,000 potted plants were seated in the red velvet chairs of Barcelona's prestigious opera house, where a string quartet played them a private Puccini concert. Not a dry cacti in the house.

Markets jumped on Monday as investors shrugged off coronavirus surges and rollbacks of reopenings in the US.

1. Coty doubles down on Kardashian, investing $200M in Kim at a $1B valuation

No one keeps up with the Kardashians... as well as cosmetics giant Coty. In January, the beauty company bought 51% of Kylie Cosmetics for $600M. Now, almost-billionaire Kylie Jenner has an almost-billionaire sister to contend with:

  • Unicorn Glow: Coty will dish out $200M for a 20% stake in Kim Kardashian's makeup brand KKW Beauty. The deal values KKW at a fresh-faced $1B.
  • Instagram Glow: Coty shares soared 14% on the Insta-famous partnership — but they're still down a cakey 57% for the year.

Extreme Makeover: Kardashian Edition... Coty is a 116-year-old company that wants to appeal to the new generation (see: entire website in lowercase). But its biz is a little outdated:

  • License model: Coty buys exclusive licenses to develop cosmetics for big beauty brands (like Hugo Boss perfumes and Gucci lipsticks), then gives them a wider market distribution.
  • Acquisition model: Coty acquired Procter & Gamble's beauty business for $12.5B in 2016, gaining brands like Cover Girl and perfume licenses for brands like Burberry. But now...

Coty wants the "Instagram Model"... Sales of Coty's owned and licensed products have been declining. Meanwhile, it has to shell out big bucks for their marketing/distribution. Coty's Kardashian investments reduce some of that expensive grunt work, while tapping into a younger market:

  • Influencer marketing: Kim K's 177M Insta followers are an instant audience for her brand. That's less marketing spend for Coty.
  • Direct-to-consumer model: Most of KKW's sales are online, unlike Coty's 70+ other brands. This Direct-To-Consumer biz model cuts out the retail store middle man for more beautiful profits.

Good thing there's no "dislike" button... Facebook is getting hit by a wave of corporate thumbs downs, as part of a boycott called "Stop Hate for Profit." The goal is stronger policies on Facebook to combat misinformation and hate speech from spreading on online:

  • Participants will pause advertising on FB/Instagram until at least July — BTW: ad sales make up almost 100% of FB's revenue.
  • 93 companies have joined the boycott so far, including blue-chip big shots like Verizon and Colgate-Palmolive. Unilever is boycotting both FB and Twitter for the year. Starbucks and Coke are pausing social media ads as a whole.

Heating up... While boycotters like Patagonia have a history of activism, investors were concerned to see less outspoken (and bigger) corporations involved. Case in point: FB stock plunged 8% after Unilever joined the chat. That's when FB said it'll start labeling political speech that violates its rules and banning hate speech on ads. That's a shift from the laissez faire approach it took on controversial Trump posts. Boycotters say it's not enough.


Facebook might be too big to cancel... thanks to its 3B users across Facebook, Instagram, WhatsApp, and Messenger. FB platforms are so deeply ingrained in the world's social psyche that the 2018 #deleteFacebook movement barely made a blip on numbers. Since the world's population isn't dropping FB, most companies probably can't either:

  • It's a prime marketplace thanks to its hyper-targeted ads — FB has so much info on its users that it can guarantee a steakhouse ad won't be wasted on a vegan. Also...
  • The world's top 100 brands only account for 6% of FB's ad sales — for millions of smaller businesses, FB is the only effective way to reach new customers.

The old college try... Four years after signing the biggest apparel deal in the history of college sports, Under Armour wants out. The $280M, 15-year deal gave UA the exclusive right to design all uniforms for UCLA's Varsity teams. But UA isn't feeling the team spirit anymore:

  • UA says it's allowed to back out of the contract because: “We have been paying for marketing benefits that we have not received for an extended time period."
  • UCLA doesn't buy it and says it'll do everything it can to fight UA's decision (we spy a lawsuit).

Protect this Balance Sheet... This move is more about cost-slashing than UCLA marketing. In May, UA said it was planning to cut $325M in costs for 2020. UA got hit hard in the corona-conomy:

  • Sales fell 23% and it posted a $590M loss thanks to corona-closed stores.
  • UA expects sales could fall 50%-60% this quarter — now it's trying to build an emergency fund to weather the storm.

Under Armour is too much ‘ath’, not enough ‘leisure’... Consumer preference is shifting toward versatility — especially in the corona-conomy, where 1 pant can triple as a workout, Netflix, and grocery shopping outfit. UA has been highly focused on technical performance, not as much on leisure. That's why UA's stock is down 55% this year, while leisure-friendly Nike is down only 6% and leisure-obsessed Lululemon is up 25%.

What else we’re Snackin’
  • Treat: Gilead will begin charging US hospitals around $3.1K per patient for its coronavirus treatment remdesivir — it's been donating doses since May.
  • Sweat: Lululemon acquires home fitness startup Mirror for $500M — the $1.5K interactive workout screen is Black Mirror-worthy.
  • Frack: Fracking pioneer Chesapeake Energy files for bankruptcy on fallen oil and gas prices (and a hidden wine cave).
  • Takeoff: The FAA will begin recertification test flights of Boeing's 737 Max, which has been grounded since March (but could return by fall).
  • Soft: Microsoft is permanently shutting down all 83 of its physical stores, but will convert four into "experience centers."
  • Sold: Oil giant BP will sell its petrochemicals business for $5B, meeting its $15B divestment target a year ahead of schedule.

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Snacks Daily Podcast

Every day you see the news stories we carefully curate and Snack-ify. What you don't see are all the stories we considered, but decided to pass on.

Tune into our extra digestible pod to hear some of our "almost, but definitely not" headlines from today we decided not to cover, including:

  • Luckin board tries to get rid of Chairman, Chairman tries to get rid of board.
  • CAA and NEA launch VC firm for ASAP production (+4 acronyms = 90% pass probability).

Disclosure: Authors of this Snacks own shares of Twitter, Microsoft, Luckin, Lululemon, and Starbucks

ID: 1230199

Subscribe to Robinhood Snacks

Our Editorial Principles
Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.

Getting “early access” to options or Web is defined as signing up with a valid email address for a spot in Robinhood Financial’s respective waitlist queues for Web or for options. Getting “early access” to Robinhood Crypto is defined as signing up with a valid email address for a spot in Robinhood Crypto’s waitlist queue. Early access to the waitlist for Web, options, or Robinhood Crypto should in no way be construed as confirmation that a brokerage account with Robinhood Financial has been opened or will even be approved for opening. Priority may be given to Robinhood Gold subscribers and existing customers of Robinhood Financial.

Free trading of stocks and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered. Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing. Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Additional regulatory guidance on Exchange Traded Products can be found by clicking here.

Options transactions may involve a high degree of risk. Please review the options disclosure document entitled the Characteristics and Risks of Standardized Options available through https://about.robinhood.com/legal or https://www.theocc.com to learn more about the risks associated with options trading.

The cash management program is expected to be offered by Robinhood Financial LLC. The cash management program, when operational, will be an added program to Robinhood brokerage accounts and will not be a separate account or a bank account. Robinhood Financial will provide additional information on the cash management program once it is operational to help customers, including those with “early access,” to determine if they want to add the program to their brokerage account.

Robinhood Snacks newsletters and podcasts reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed Robinhood account or any other account, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and customers may lose money, including their original investment. Robinhood Financial LLC, member FINRA/SIPC.

Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success. Robinhood Financial LLC, member FINRA/SIPC.

Third party information provided for product features, communications, and communications emanating from social media communities, market prices, data and other information available through Robinhood Markets, Inc., Robinhood Financial LLC or Robinhood Crypto, LLC are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or cryptocurrency or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any information about Robinhood Crypto on any Robinhood website (including www.robinhood.com and blog.robinhood.com), the Robinhood platform, e-mails, or any other communications, are meant for informational purposes only and are not intended as an offer, solicitation, or advertisement for Robinhood Crypto or any goods or services offered by Robinhood Crypto. The Robinhood website provides its users links to social media sites and email. The linked social media and email messages are pre-populated. However, these messages can be deleted or edited by users, who are under no obligation to send any pre-populated messages. Any comments or statements made herein do not reflect the views of Robinhood Markets Inc., Robinhood Financial LLC, Robinhood Crypto, LLC, or any of their subsidiaries or affiliates.

Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Trading in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. Cryptocurrency trading requires knowledge of cryptocurrency markets. In attempting to profit through cryptocurrency trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial cryptocurrency trading. Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. Cryptocurrency trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system. Several federal agencies have also published advisory documents surrounding the risks of virtual currency. For more information see, the CFPB’s Consumer Advisory, the CFTC’s Customer Advisory, the SEC’s Investor Alert, and FINRA’s Investor Alert.

Robinhood Crypto, LLC has a seller of payment instruments license in Georgia, with reference number 61417.

Robinhood Crypto, LLC has a money transmitter license in New Jersey, with reference number 1803456-C22.

Please note that an Alaska money transmission license does not cover the transmission of virtual currency.

Check the background of Robinhood Financial LLC and Robinhood Securities, LLC on FINRA’s BrokerCheck.

Robinhood Terms & Conditions    Disclosure Library    Contact Us    FAQ

© 2020 Robinhood. All rights reserved.