💨 Juul’s last puff?

Thursday, June 23, 2022 by Robinhood Snacks |
The FDA’s big warning label (Mario Tama/Getty Images)

The FDA’s big warning label (Mario Tama/Getty Images)

The FDA’s big warning label (Mario Tama/Getty Images)

The FDA’s big warning label (Mario Tama/Getty Images)

Yesterday’s Market Moves
Dow Jones
30,483 (-0.15%)
S&P 500
3,760 (-0.13%)
Nasdaq
11,053 (-0.15%)
Bitcoin
$19,985 (-3.44%)

Hey Snackers,

SpongeBob and Mr. Krabs are fictional, but this newly spotted sea critter isn’t: scientists have discovered a fluffy crab that wears a sponge as a hat. Call it a Bikini Bottom mashup.

Stocks dipped slightly after Jerome Powell told Congress that the Fed’s rate-hiking crusade against inflation could cause a recession. J. Pow doesn’t think the central bank will need to provoke a downturn, but said taming inflation is “absolutely essential.”

Burnt

Empty pod… Juul’s empire could be disappearing in a cloud of mango-flavored vapor. Yesterday WSJ reported that the FDA plans to ban Juul in the US. Refresher: In 2020 the FDA asked smoke juggernauts to apply to sell e-cigs (even un-flavored ones). Fast-forward to now: British American Tobacco’s Vuse — which just unseated Juul as the top US vape — got approved to stay on the market. But it sounds like Juul’s 125K-page application hasn’t.

  • Glory daze: Juul became the top US e-cig seller in 2018, three years after launching its sleek vapes. That year, Marlboro maker Altria splurged $12.8B for a 35% stake in Juul, which was threatening its cig biz. Then…
  • Things went up in smoke: The FDA banned flavored e-cigs in 2020 while investigating whether companies were marketing to kids, who were getting hooked on USB-like vapes.
  • Puff, puff, plunge: Juul ditched flavored pods and its e-cig market share plummeted from 75% to 42%. Altria’s $13B Juul stake was worth just $1.6B as of March. Now it could lose its US biz.

Burned on both ends… Last week the FDA announced separate plans to limit addictive nicotine in traditional cigs. The rule isn’t expected to go into effect for years, if at all. But regulatory heat could hurt cig sales, which are already forecast to fall to $95B this year from $99B last year. For Altria it’s a double whammy.

THE TAKEAWAY

Regulators don’t like getting burned… neither do investors. The FDA says Juul ignored its warnings on marketing. Altria’s stock has fallen 13% this year while it’s tried to save Juul. But shares of rivals BAT and Philip Morris International are up as they’ve shifted focus to “smokeless” tobacco products, like IQOS, and avoided regulatory drama with vapes.

Scrolly

New CBD candle launch… #retweet. Shopify and Twitter have joined forces to help tweeters shop while scrolling. Shopify powers online sales for merchants like Allbirds, Heinz, and your local succulent shop. It already controls over a 10th of the global ecommerce market, and now it could get more:

  • Check in: Twitter’s giving Shopify merchants the option to display up to 50 products on their profiles, plus features like live-stream hauls. Shopify’s paying Twitter for the perks.
  • Check out: Shopify thrived mid-pandemic when businesses moved online. But the stock has slid 75% this year while sales growth has slowed for four quarters straight.

Viral Tok ad > TV spot… As ad revenue slows, social giants are expanding shopping features to drive more $$. Creatively named launches include “Insta Shop,” “Twitter Shops,” and “TikTok Shopping.” While social commerce still makes up less than 5% of online shopping, it’s growing fast:

  • 4X: Shopify said that orders placed through social apps like Snap and TikTok quadrupled last quarter from a year ago.
THE TAKEAWAY

Big biz is moving from D2C to C2C… from direct to consumer to connect to consumer. It’s not enough for companies to have a website, one-click checkout, and shipping. To really connect, brands have to be where consumers are most connected (i.e.: social). That’s why US social sales could hit $168B by 2027 — nearly five times bigger than last year.

What else we’re Snackin’

  • Pause: President Biden’s urging Congress to suspend federal gas and diesel taxes for three months by borrowing $10B from the Highway Trust Fund. It could ease #PumpAnxiety, but may not have enough support.
  • Yurt: Airbnb’s giving away $10M to hosts who want to build Insta-worthy rental properties, from hobbit holes to UFO rooms. It’s part of the “experiential travel” trend that’s been booming.
  • Maple: Canada approved legislation that would force platforms like YouTube, TikTok, and Netflix to show Canadian users a quota of Canadian-made content (think: more Drake and J. Biebs).
  • Copy: Russian companies are knocking off Western brands that stopped doing biz in the sanctioned country (Coca-Cola = CoolCola, Fanta = Fancy). And firms can’t protect trademarks there.
  • Ship: Maersk, earth’s #1 container-shipping co, says shipping costs have surged ~30% since the pandemic’s start. Experts say pricey supply struggles could stick for a while.

Snack Fact of the Day

The cost of raw materials for EVs has more than doubled during the pandemic

Thursday

  • Jobless claims.
  • Earnings expected from Accenture, HB Fuller, Winnebago, FedEx, Darden Restaurants, and Rite Aid

Authors of this Snacks own: shares of Shopify, Snap, Twitter, and Netflix

ID: 2257580