🎶 The J Bieber IPO

Wednesday, September 22, 2021 by Robinhood Snacks |
_Getting that musical cheese [Catherine Falls Commercial/Moment via GettyImages]_

Getting that musical cheese [Catherine Falls Commercial/Moment via GettyImages]

Yesterday’s Market Moves
Dow Jones
33,919 (-0.15%)
S&P 500
4,354 (-0.08%)
Nasdaq
14,746 (+0.22%)
Bitcoin
$40,733 (-2.94%)

Hey Snackers,

After galavanting through space, Jeff Bezos has returned to Mother Earth: the Amazon founder pledged $1B to conserve 30% of the world’s land and sea by 2030.

Stocks ticked down for the day, continuing Monday’s sell-off after China’s Evergrande drama spooked global markets.

Biebs

Sound on… Universal Music Group’s stock soared ~40% yesterday after dropping on an Amsterdam stock exchange, giving the world’s largest record label a $53B market cap. UMG represents stars like Taylor Swift, Justin Bieber, Billie Eilish and The Beatles. Now, it’s benefiting from the streaming revival of the music industry.

YouTube to MP3 download… The rise of streamers like Spotify and Apple reversed the music industry’s 15-year, LimeWire-powered decline. Since 2016, record labels’ sales have increased every year. Last year, streaming accounted for 83% of $12B total US music sales. But the “Big 3” record labels — Universal, Sony, and Warner — were privately owned until recently.

  • Hot single: Warner Music went public last summer on the Nasdaq, but only listed 14% of its shares. Since then, its market cap has nearly doubled to $23B.
  • Whole album: Universal Music listed 60% of its shares. Gaming giant Tencent — which licenses tunes for games —already owned a 20% stake.
  • Still in the studio: Sony Music, valued at an estimated $62B, is still only accessible to investors as part of wider conglomerate Sony Group.
THE TAKEAWAY

The digital economy needs a soundtrack… and TikTok, Peloton, and Fortnite-maker Epic Games are paying big bucks for the best beats. The opportunity to supply in-app songs is so huge: already, 10% of the total $22B in global streaming sales last year came from partnerships with popular apps. UMG already partners with Spotify, Apple, Facebook, Snap, TikTok, and video-sharing app Triller. Looking ahead, its CEO expects billions in future deals with makers of smart speakers, connected cars, and social apps.

Subscribe

The Netflix of cars... What Volkswagen's going for. This month, the car giant launched an electric car subscription service in Germany to accelerate its creatively-named “Business Model 2.0.” Volkswagen's goal: transform from a car manufacturer to a "mobility services provider."

  • For ~$600/month, the "AutoAbo" subscription offers access to 2K+ of VW's all-electric ID models.
  • "Everything but the electricity...” Sounds like a TJ's seasoning. The subscription includes insurance, registration, maintenance, and 500 free miles/month.
  • DTR: VW describes the commitment factor as mid-way between leasing and car sharing.

Flexible like pandemic leggings... A typical car lease locks you in for two years. VW's subscription is flexible, with a three month minimum. This week, VW also showed its commitment to low-commitment mobility by filing an offer to buy European rental car giant Europcar. Europcar's 350K vehicles at airports and train stations could support the expansion of VW's subscription footprint.

  • By 2030, VW says that 20% of its sales could come from newer offerings like subscriptions and car sharing. But it has an iffy track record with past attempts.
  • Flexibility is (car) key: “A growing number of people don’t want to own a vehicle permanently," according to VW.
  • That's why car-sharing companies like Zipcar have seen success in NYC and other hubs — and why Uber and Lyft launched car rental services to complement ride-hailing.
THE TAKEAWAY

The new generation is "low commitment"... That requires high-flexibility biz models. Even pre-pandemic, Millennials were moving more often than previous generations. During the pandemic, people moved from cities to suburbs and Airbnbs, and from offices to "work-from-anywhere" locales. 70% of US companies will continue offering remote or flexible work options. And over a third of Gen Z and Millennial workers are looking for new jobs. When you don't know where you’ll be in two weeks, long-term commitments are daunting. Now, more car manufacturers might adopt flexible subscription models.

What else we’re Snackin’

  • Hailed: Uber shares soared 11% on word it could hit adjusted profitability this quarter. Delivery is still thriving, and ride-hail is bouncing back.
  • Block: The Department of Justice sued to block American Airlines and JetBlue's plan to combine East Coast operations, saying it’ll result in higher fares and lower quality.
  • Boost: Johnson & Johnson said a two-dose version of its one-shot Covid vax is 94% effective against symptomatic infection – comparable to Moderna's and Pfizer's.
  • Wager: DraftKings reportedly made a $20B offer to buy UK sports-betting company Entain, which rejected an $11B offer from MGM Resorts in January.
  • Greenish: Shell is selling its assets in the Permian Basin – America’s largest oil field – to ConocoPhillips for $9.5B, as pressure to ditch fossil fuels mounts.
  • Jetsons: Helicopter operator Bristow ordered up to 50 flying taxis from British startup Vertical Aerospace, as the air taxi business lifts off.

Wednesday

  • Fed Chair Jerome Powell news conference
  • August existing home sales
  • Earnings expected from General Mills, BlackBerry, and KB Home

Authors of this Snacks own shares of: Apple, Amazon, Spotify, Snap, Uber, Moderna

ID: 1846428