Monday Feb.24, 2020

💫 Plug Power hits "cult speed"

_When a stock hits "cult" speed_
_When a stock hits "cult" speed_

Hey Snackers,

Lavender Jasmine, Cedar Balsam and... 100% Fresh Beef? McDonald's just introduced a line of burger-scented candles. Choose from aromas like Pickles, Cheese, and eau de Ketchup to make your whole house smell like a Happy Meal.

The Dow slid last week while the Nasdaq suffered its worst day in a month. And growing coronavirus concerns are expected to keep investors nervous again this week.

Moon

Plug Power looks like the latest "cult stock" to want to join Tesla and Virgin Galactic

This is a smog-free zone... Upstate New York's Plug Power wants to be the "leader in powering electric motors" — but it's 23-years-old and definitely isn't that. It's taking a different approach than Tesla to clean electric motors: The Hydrogen Fuel Cell. Now it's getting major attention from investors in its 24th year.

  • Battery electric: Drives ~250 miles on a charge. Great for most car owners, because 99% of drives are shorter than that. Charge the car overnight with your garage outlet.
  • Fuel cell electric: For industrial vehicles (think forklifts, buses, delivery trucks), battery doesn't work as well because charging takes hours. And hours of not moving is big lost $$$. Fuel cell is as green as battery, but takes minutes to fill up instead of hours to charge up.
  • For the chemistry fans (how Fuel Cell works): Hydrogen and Oxygen enter a fuel cell engine, then electricity, heat, and water go out.

But you've still never heard of Plug Power... Until this year. In January, the company announced a major order from one Fortune 100 company — the single order will generate nearly as much revenue ($172M) as Plug Power made in the entire past year ($191M). It also announced a new engine it's working on specially for delivery trucks. But its stock has risen over 150% in 5 months and 27% just last week... despite 2 decades of consistent unprofitability.

We have to talk about "cult stocks"... 3 stocks this year have enjoyed gigantic stock price jumps that can't really be explained by fundamentals or company news. Tesla and Virgin Galactic both hit the upper stratosphere of Wall Street recently, and elements of their inexplicable rise can be seen in Plug Power (although valued at under $2B, Plug Power is much smaller). We noticed a cult stock formula:

  • Each features a combo of charismatic leader, revolutionary product, and tons of attention on Reddit.
  • CNBC credits Plug Power's rise to campaigns on Reddit, while the Financial Times cites "coordinated buying."
  • In the long run, fundamental profitability is the key driver of a stock price, so cult stocks can be vulnerable to fall if their buzzy status passes.
Highs

Who's up...

Put your back Intuit.... The creator of TurboTax and QuickBooks is adding to its clique of popular financial products, just in time for tax season. Intuit is close to striking a deal to buy privately held Credit Karma for $7B — its largest acquisition ever. In 2009, Intuit acquired budget tracker Mint for $170M. Now Intuit's splurging more because it wants to be aggressively involved in your daily finances (not just your yearly tax frenzy).

Tastes better when you DIY... Domino's global sales jumped 8%, sending shares up 30% last week. It's one of the only big chains that refuses to partner with delivery apps like Gruhub and DoorDash. For years, it's taken a DIY approach to delivery, investing big in its own app — now it's expanding GPS-pizza tracking for hangry orderers. FYI, takeout now makes up nearly half of Domino's orders — and it's more profitable than delivery (because delivery costs extra time & money).

Lows

...and who's down

Don't hate the player... hate the benchmark. Shares of Warren Buffett's legendary holding company Berkshire Hathaway rose 11% in 2019 — not bad, right? Until you compare that with the S&P 500, which jumped 31.5% last year. That means that if you'd invested in an S&P 500-tracking ETF for all of 2019, you would've made a 31.5% return (that's almost triple the return of Buffett's baby). But Warren reminded us as always in his annual letter to shareholders (which came out Saturday) that Berkshire has performed twice as well as the S&P 500 historically since 1965.

Secret goes private... Victoria's Secret was sold off by struggling parent L Brands. And get this: the lingerie chain is only worth $1.1B as a private company. Vicky hasn't adapted well to an era of inclusivity and bralettes — slowing sales and bad PR dropped L Brands' value by 75% over 5 years. With the sale of VS (and its PINK brand), all L has left is a healthy-ish Bath & Body Works brand. Scented shower gel may help clean the financial woes.

What else we’re Snackin’

  • Wonder: A cool, interactive map shows the state of math today (check out those prime numbers)
  • Achieve: 3 ways to set realistic goals (and actually accomplish them)
  • Maximize: Living in a super-expensive city? Here are 10 more affordable ones that Americans are fleeing to
  • Money: How an "abundance mindset" could help you make more (and retire earlier) than a "frugality mindset"
  • Search: Craigslist is a rare survivor of the more democratic web we lost (25 years later, it still doesn't turn users into data)

This Week

Disclosure: Authors of this Snacks own stock of Beyond Meat and fractional shares of Berkshire Hathaway (Class A)

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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 thatthe 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.

Hours worked

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.

Hours worked
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$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.

Business
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?

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?

 Max Holloway and Mark Zuckerberg

Meta exhaustingly tries to merge the metaverse and AI

Gonna have to rename the company... again

Rani Molla4/25/24