Tesla = Most Valuable US Car Co. (Ever)

Wednesday, January 8, 2020 by Robinhood Snacks | Disclosures

Impossible Foods concocting its pork strategy

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Hey Snackers,

Gambling. It's not legal in New York — so New Yorkers are hopping on the train to Jersey, betting on the platform, then riding back to Manhattan in time for dinner.

Markets dipped Tuesday on worries of fresh US/Iran tension — Today, they may react to Iranian attacks on two US bases in Iraq.

Soar
1. Tesla just became the most valuable US car company. Ever.

As you Musk know... Tesla shares hit full speed lately — they're up 38% in just the last month. Now Tesla's officially become the most valuable American car company in history. Here's how that value got calculated:

  • "Market Capitalization": A company's stock price multiplied by the total number of shares. It's the total value of a company based on its stock price.
  • Production just started at Tesla's new Chinese Gigafactory — and China bought nearly 3 times as many electric cars as the US did in 2018.
  • That's why Tesla's market cap has risen to $85B — beating Ford's $81B record from '99.
  • Today, GM and Ford's market cap is $87Bcombined.

Here's the crazy thing... Tesla's 2019 profits and car deliveries pale in comparison to GM and Ford's:

  • Cars produced per year: GM and Ford produced a combined 39x as many cars as Tesla did in 2019 (14.3M vs. 367.5K).
  • Profits over the past year: Tesla's profit was -$827M (negative, AKA a big loss). GM and Ford's combined profit was over $10B (AKA actual money-making).
THE TAKEAWAY

Investors care less about today, more about tomorrow... Stocks can rise as shareholders believe a company's profits will grow in the years to come. Tesla's cars scream "future" (electric + cyber), while Ford and GM's preach the past (trucks/SUVs + gas). Investors think 17-year-old Tesla has better profit potential than 112-year-old GM and its even older Ford brother.

Plant

We've got no beef with pork... Impossible Foods, the privately-held alt-meat startup and Beyond Meat rival, just launched a new plant-based meat: Impossible Pork. At the risk of not saying pork enough times, Impossible's not porking around here:

  • Resources: Impossible is doubling its Research & Development team so it can whip up more plant-based insert animal here that tastes like the real thing.
  • Results: Impossible unveiled its new pork and sausage products at the Consumer Electronics Show yesterday (Impossible Sausage hits Burger King on Jan. 13).
  • The trade off: Since it's focusing on new products over its existing faux beef ones, Impossible officially stopped competing for a huge/exclusive McDonald's plant-based burger partnership.

"The most significant science project and business endeavor in the world"... That's according to Impossible's CEO, whose environmental concerns back his boasting. Pork is Earth's #1 consumed meat, and Impossible thinks beef is so 2019. Plant-based meatopians love to remind us: pea/soy burgers require 99% less water, 93% less land, and create 90% less greehouse gas than their real beef brethren.

THE TAKEAWAY

Impossible chose research over production... Resources are limited, and companies need to choose where to invest their time/cash. Impossible chose to focus on a new product (pork) rather than more of its existing product (beef). Now, rival Beyond Meat may snag that lucrative plant-based spot in McDonald's burger buns. That's why Beyond shares jumped 12% even though Impossible revealed a new product and partnership.

Reveal

Classic case of rich company, poor stock… Over the last 3 years, Goldman Sachs’ shares have barely budged. Meanwhile, its big bank buddies pop bottles — JPMorgan and Bank of America stocks both rose over 50%. So here’s Goldman’s self-diagnosis: severely un-transparent corporate reporting structure. Now it’s changing:

  • Symptoms: Goldman’s 4 divisions were too obscure. Institutional Client Services, Investment Banking, Investing & Lending, and Investment Management (leaning hard into “Investing”).
  • Prescription: The WSJ reports that Goldman will switch to 4 way-clearer divisions based on customer type: Corporations, Trading Firms, Money Managers, and Individuals (like you and us).

This is how bad it got… Want to know how Goldman’s Apple Card did last quarter? Good luck. Goldman's consumer banking performance was buried in its “Investing & Lending” division, along with a bunch of big loans and venture investments. Like a box of chocolates, investors couldn’t tell what was inside Goldman behind all that corporate structure scar tissue.

THE TAKEAWAY

Investors reward transparency… and that’s why Goldman’s transparent-izing itself. This new corporate structure could reveal to investors critical Goldman insights — like how’s its 3-year-old, millennial-obsessed, digital consumer bank Marcus is actually doing. Investors are more down to reward Goldman stock if they can actually see what’s in it.

What else we’re Snackin’
  • Mylk: Starbucks introduces oatmilk to its stores in the Midwest (cows expected to protest)
  • Sad: In a not-so-Hallmark moment, Hallmark will cut 400 jobs in its family-owned greeting card business
  • Ball-er: Samsung unveiled a new personal assistant, "Ballie" (great name), that will follow you around your house to "support you" (though your dog might think it's a tennis ball)
  • Paper Chase: DoorDash and JPMorgan Chase announce a partnership to win your loyalty in the delivery wars via credit cards benefits when you order in
  • Taxiing: Uber partners with Hyundai to make flying taxis that basically look like glorified helicopters
  • Podtails: Keurig is partnering with Budweiser-owner AB InBev to make cocktail pods a thing
Snacks Daily Podcast

Delta's CEO thinks "wifi should be free on all flights", and Delta just unveiled a "binge button" so you can stream the airplane's movies 24 hours before takeoff.

Meanwhile, JetBlue's working on $8 canned wine.

More in today's 15 minute podcast, where we cover our 3 top stories.

Wednesday

Disclosure: Authors of this Snacks own shares of Beyond Meat, Tesla, Uber, JPMorgan Chase, and Starbucks

ID: 1051638

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