❄️ Canada Goose bundles up

Thursday, October 1, 2020 by Snacks
"_Why haven't you ordered your Canada Goose yet?!"_

"Why haven't you ordered your Canada Goose yet?!"

Yesterday’s Market Moves
Dow Jones
27,782 (+1.20%)
S&P 500
3,363 (+0.83%)
Nasdaq
11,168 (+0.74%)
Bitcoin
$10,726 (-0.18%)

Hey Snackers,

Zoom has been a great democratizer of fashion. Gucci loafers and Marshall slippers have the same status on Zoom: invisible. Prada's not about it, so it's putting its huge logo on shirt collars so you can flex on the conference.

Stocks ticked up yesterday even after the, uh... "debate" on Tuesday night, which inspired as much confidence as a wingless plane. Investors were hopeful about some positive job growth for September.

Brr

1. Canada Goose stock pops because it's the early winner of January date night

Throw in AirPods and a Starbucks latte... and the Canada Goose fit is complete. Canada Goose stock popped 8% yesterday because it's the corona-conomy winner that came in from the cold. The stock just got a confidence-boosting analyst upgrade, now that winter is coming and outdoor activities seem here to stay:

  • On Friday, NYC Mayor de Blasio announced that outdoor dining will be a year-long thing. 8M New Yorkers can devour pizza al fresco all winter long.
  • New Yorkers love: Eating at restaurants and complaining about the cold. That's where Canada Goose comes in with its fur lined $1K jackets.
  • Fun (depressing) fact: You could buy 31 shares of Canada Goose stock for the price of one parka.

It's gonna be a long, cold winter... Love Island, Upper East Side. Canada Goose's sales fell 63% last quarter compared to last year and the stock slipped 30% from January to early September. Tight wallets, closed stores, and no travel hurt its fur-lined pockets. Buuut: the stock is up 30% this month as Northeasterners prep for a pandemic winter.

THE TAKEAWAY

Canada Goose could thrive in a K-shaped and V-shaped recovery ... If the economic recovery turns out to be V-shaped, as President Trump says, then most Americans will quickly recover economically (and wealthy Americans will continue to buy $1K parkas). If it turns out to be K-shaped, as Joe Biden says, then only wealthy Americans will quickly rebound (and will still buy $1K parkas). But the recovery could also take neither of those shapes.

Sad

2. Disney lays off 28K employees as theme parks remain closed/barely open

The opposite of magical... Disney is laying off 28K employees across its Parks and Experiences division — around 67% are part-time workers. Disney’s parks in Florida, Paris, and Shanghai have reopened with limited capacity, but its major CA parks are still shut. That's a massive hit to the entire biz.

  • Parks & Experiences accounted for ~40% of Disney's sales in 2019. Last quarter, that division's sales plunged 85% and Disney lost over $3B.
  • Even though some parks have reopened, the limited foot traffic and Candy Apple sales aren't enough to make up for Disney's massive losses.

And then there's "popcorn Disney"... While we don't have the official numbers yet for the $300M budget "Mulan," we do know that Disney postponed almost all of its movies scheduled for release in 2020. Marvel blockbuster “Black Widow" was pushed back to May 2021. That's another big hit to Disney's wallet.

THE TAKEAWAY

There's a light at the end of Splash Mountain... While Disney's parks and movies divisions are struggling, its streaming and cable network segments are thriving. Disney's streaming networks (Disney+, ESPN+, and Hulu) now enjoy over 100M subscribers, and Disney's ESPN is finally back with live sports to watch. That means more subscription and ad revenue to soothe Mickey's woes. That's why Disney stock is up since its (brutal) earnings in August.

Direct

3. The Unusual Suspects: Asana and Palantir go public through Direct Listings

Like a DM vs. a $10 Papyrus greeting card... Direct Listings are generally cheaper and faster than IPOs. When a company chooses to take its stock public via DL instead of IPO'ing, they aren't creating new shares to sell. Owners of private stock (early investors and employees) unleash their existing shares to the public, so the company isn't raising any fresh cash. Yesterday, two companies took this simpler route to going public:

  • Palantir is the secretive software company that crunches data for big clients like the government. The stock closed slightly lower than the opening price.
  • Asana is the team task management tool where you get anxiety by looking at a board of color-coded objectives. The stock ended the day slightly up.

I'm different, yeah I'm different... DLs are rare, but it's even more unusual to see non-consumery companies do them. Only two well-known companies, Slack and Spotify, have DL'd (until yesterday). Their stocks soared on Day 1 since we're all familiar with what they do. Not so much for Palantir and Asana.

  • Pros: DLs don't involve paying big fees to investment banks. They don't dilute the value of existing stock because: #nonewstock.
  • Cons: Those investment banks that advise on IPOs also help build up interest in the stock from investors and can guarantee a certain amount will be sold. DLs don't get that promo service.
THE TAKEAWAY

Going public is turning into an "à la carte" menu... and companies are taking advantage of the options. Before, there was 1 way to go public: the expensive prix-fixe menu IPO (no, you can't swap fish for the meatballs). Companies have been increasingly looking to DLs and SPACs to go public without paying fees to banks. Private companies will be following Asana and Palantir's stock to gauge the success of this new option.

What else we’re Snackin’

  • Slide: Facebook is integrating FB Messenger chat with Instagram DMs, pushing toward its goal of a unified messaging system across its apps.
  • Kardash: Kylie Cosmetics warns that customer data may have been compromised in a Shopify breach caused by "rogue" Shopify workers.
  • Ouch: Nikola's $2B deal with GM (expected to close yesterday), is reportedly in jeopardy after major allegations against Nikola's founder.
  • Divorce: LVMH is counter-suing Tiffany to avoid having to acquire it for $16B, calling the jeweller's recent financials "catastrophic."
  • Affordable: Ford slashes the price of its all-electric Mustang Mach-E crossover by as much as $3K.

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Thursday

Disclosure: Authors of this Snacks own shares of Disney, Shopify, and Amazon

ID: 1349520

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