Friday May.10, 2019

Tariffs upstreamed Uber

_When Snacks gets to cover the hair removal industry_

Hey Snackers,

Hit the Wheaties with a Made In USA spoon.

You've got Uber's IPO this morning. And fresh US tariff increases on $200B worth of Made In China stuff hit Cinderella-style midnight last night — American/Chinese negotiations continue today, but the trade war officially escalated.

Your Snacks team is on the floor of the New York Stock Exchange today for it all — Follow us @RobinhoodSnacks.

IPOing

Uber IPOs today: Here's what you need to know

ETA ASAP... 10 years ago, someone watched a car approach via a smartphone map app. Now it's time for Uber's IPO. The OG ride-hailer set a price of $45 for shares to open for trading today (that's a bit on the lower end of the range they expected, which was up to $50 a share). Total company value = $82B.

The "S-1": do it... This tell-all document is required of all companies going public (and should be required reading for anyone thinking of investing). It's like a dating profile for pre-IPO companies. Unlike Tinder, it's not just your top pics with puppies — it's required to be honest and balanced:

The good: Uber wants to own food and freight delivery, too – Its Uber Eats app has more 5-star ratings on the App Store than Uber (1.4M vs. 888K). And all those tractor-trailer big rigs might get an Uber sticker and start offering you water.
The bad: Competition. From lots of places. In "personal mobility" alone (ride-hailing, bikes, and scooters), Uber lists 20 competitors, including planned robo-taxi fleets from GM, Tesla, and Google's Waymo. #NotJustLyft

This is 1-star timing... IPOs give us wedding-like vibes — you plan it in advance, and hope anything "beyond your control" won't ruin it. Instead of rain, Uber had to worry about a trade war. New tariffs on China hit last night. And Lyft's poor stock performance (down 37% since its high) doesn't help. There's no "IPO timing" insurance.

Sip

A couple craft beer legends merge in $300M deal

Two brewmasters walk into a bar... and they merge operations. Sam Adams-owner Boston Beer Co. is the nation's 2nd biggest craft brewer. IPA-legend Dogfish Head is #13 (the pride o' Delaware). Now they're merging in a $300M deal: The Dogfish husband and wife co-founders earn $127M in Boston Beer stock, while other Dogfish investors get $173M in cash.

Let's just mix them... The brew-mance actually began in February when the two CEOs met at a beer fest in Boston (we approve: one of your Snacks Managing Editors met his fiancée at a VT brew fest). Then they realized how "beautifully complementary" their portfolios are. Adorable. Now they've got two goals:

"High-end" anything: The duo will keep things artisan, but not necessarily beer — Boston Beer's Angry Orchard cider is a top-performer.
But stay "legally craft": They'll keep their status as craft, even after they're merged — As long as no more than 25% of either label is owned by a non-craft company.

This is how you take on Big Beer... AB InBev, Diageo, Molson Coors, and other brew-glomerates have bought up craft beers for years (here's where). Corona's Constellation Brands dropped $1B for Ballast Point microbrew in 2015. Two-packed craft beer can fight for shelf space. And it's why Boston Beer's CEO expects "more consolidation in the craft beer industry."

Shave

Harry's Shave acquired by Schick owner for $1.4B

This is awkward... Edgewell Personal Care just paid $1.37B for Harry's, the direct-to-consumer guy-and-gal shave company. Investors hated it. Shares of Edgewell fell 16% Monday for a couple other reasons, too:

Edgewell also reported earnings, and sales fell 10% in the 1st quarter. Edgewell owns your parents' bathroom cabinet: Schick razors, Playtex, Banana Boat, and Wet Ones, among other brands.
Edgewell's value by market capitalization is just $2.1B. So its acquisition of Harry's was wildly huge considering its size. It'll take on debt and issue new shares to pay for the "combination."

The disrupted just ate the disrupters... Gillette and Schick owned a comfortable, high-profit razor duopoly. Now they kind of do again after acquiring up the companies that disrupted their coziness:

Procter & Gamble owns Gillette, and then bought Walker & Company's razors for people of color.
Unilever snatched up Dollar Shave Club last year.
Edgewell has Schick and Wilkinson Sword (razors with British accents), and now Harry's.

Time to subscript-ify. Everything... The Harry's co-founders impressively convinced a generation to buy a razor and sign up for regular blade/cream refills. It makes sense (most facial hair grows kinda consistently). Edgewell has other products ready for subscript-ify: Body wash, tampons, napkins. Time to Harry-ify them all.

What else we’re Snackin’

Awkward: Facebook's co-founder (and Zuck's ex-roomie) argues the man has too much power... And their creation is a monopoly that should be broken up
Run: Nike's new app uses augmented reality to measure your feet and perfect your shoe size
Flattery: Sears reveals a new logo. Looks a lot like Airbnb's.
Up: Blue Origin (Jeff Bezos' side hustle rocket company) reveals a moon lander to take humans up by 2024
Hardcore: GoPro hits 220K active paying subscribers for its service that saves all the action footage you'll probably never watch
Digestible: Our Snacks crash course on IPOs...

Friday

Uber's IPO
US tariffs on $200B of Chinese goods increase from 10% to 25%
Earnings from Marriott and JD.com

Correction: Yesterday we mentioned that $40B was stolen from a crypto exchange. It was actually $40M.

Latest Stories

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

Joshua Topolsky

We get results!

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This earnings season is fully operational

Balancing Act

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Acrobatic Accounting

So, you want to join the circus?

Megan DeMatteo

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?

Apple reportedly cuts Vision Pro production due to low demand

Seriously, relax

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Economy keeps on humming along

Meta exhaustingly tries to merge the metaverse and AI

Gonna have to rename the company... again

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Chris Black

Black’s Gold

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Can you justify a $335 trashcan? Yes.

Here’s how.

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Biden signs a bill that could ban TikTok — but the #ForYou fight is far from over

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Nia Warfield

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Matt Phillips

4/24/24

Chipotle continues to go on a tear, hitting a sales record

Hey it might not be the kind of AI stock investors are all hot and bothered over, but don’t sleep on the burrito business.

Chipotle posted much better-than-expected results on Wednesday, with sales rising 14% to a record $2.70B in the first quarter, which is like a billion additions of guac.

Profits jumped 23% to $359M.

Chipotle has quietly cruised higher over the last year. It’s up 63%, compared to the 24.5% gain for the S&P 500 over the 12 months through Wednesday’s close. Not bad for a rice-and-beans based business model.

Rani Molla

4/24/24

Facebook had great earnings, the market hates it

Facebook reported impressive earnings. Record first-quarter revenue thanks to AI! Profit up 117% compared to a year earlier! But at the same time, its capital expenditures are going up and it’s expecting second quarter revenue potentially lower than analyst estimates. So in other words, the future doesn’t look as bright as the present.

All in all the stock is down more than 10%. (Basically the opposite of what happened with Tesla yesterday).

Net net

4/24/24

Earnings can’t stop, won’t stop

Rani Molla

4/24/24

Why Tesla investors are holding on to hope for a cheap car

Despite terrible earnings numbers last night — declining vehicle sales, disappointing revenue and profit, enormous spending — Tesla stock is up more than 10% as of midday. That’s a welcome move for the car company, that’s been among the worst performers this year in the S&P 500.

Why the about face?

While Reuters reported earlier this month that Tesla is no longer making its long-awaited $25,000 mass-market car — news sent the stock, already suffering from headwinds across the EV industry, down even further— Tesla reported during its earnings that it’s going to make cheaper cars than it currently has.

Before the second half of next year, Tesla said it will release “more affordable models” that “will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.”

So rather than release the $25,000 Model 2, Tesla is incorporating some of that technology into its existing models. UBS called it the Franken-3Y2.