Tuesday Oct.13, 2020

⚾️ The Red Sox IPO

_Sox stock Opening Day_
_Sox stock Opening Day_

Hey Snackers,

If you need a break from our success-obsessed work culture, celebrate Finland's National Day of Failure by trying to fail more. Failure inspo: “Most great people have attained their greatest success just one step beyond their greatest failure.” #Fail2Win #FailSoHard

The tech-heavy Nasdaq soared for its best day in a month, boosted by a 6% jump in Apple ahead of the Fruit's big event today. Expect a fresh iPhone unveil.

Bogey

The Red Sox could become a public stock in an $8B merger

Forget ringing the NYSE bell... this IPO is more of a 1st-pitch type event. Boston Red Sox owner John Henry is reportedly in talks to take the Sox public (SOX stock?) through an $8B deal. Henry's holding company Fenway Sports Group also co-owns Liverpool, the English soccer team whose fans might be even more heated than Boston fanatics (intense).

  • Meet RedBall Acquisition Corp: That's the SPAC — aka, the public company without a company — that would merge with Fenway to take the Sox public.
  • SPACs go public for the sole purpose of one day acquiring a real company and taking it public via marriage (romantic).
  • RedBall raised $575M in August to buy sports-related businesses — based on its name, it probably always had eyes for the Sox.

Paging Xander Bogaerts... A publicly-traded sports company is kind of like a Bogey monster — very rare sighting. Almost all 123 teams across the NBA, MLB, NFL, and NHL are privately held. Most have one very wealthy owner (or multiple ones). But the Sox could soon be owned by anyone with $1 to put in a brokerage account. Talks are still in early innings, though.

Going public means pulling off the cloak... of financial secrecy. When a company becomes publicly traded, it's required to file reports with the SEC detailing its financial performance (plus other juicy info). Retail investors (like us) can access these deets for decision-making purposes. If the deal goes through, Sox fan-vestors will finally get a view into the team's ballin' (or not) finances.

Stop

Twilio, the company that's secretly texting you, hits new highs on a $3B splurge

When DoorDash texts you more than your friends... Text "STOP." Cloud company Twilio helps other companies communicate with customers — think: text notifications, emails, support calls. Twilio hides personal info so you can call your delivery driver without knowing their 617 area code. You don't see Twilio, but you definitely just used it. Its customers include:

  • Uber: When you rush for that "Honda Civic is 2 minutes away" text.
  • Instacart: When you call your shopper to say they got the wrong almond butter.
  • DoorDash: When you get the play-by-play of taco's life journey.

Nailed it... ICYMI, it's a good time to be in remote communications. Twilio stock jumped last week after the company raised its sales expectations for the quarter, and has more than tripled in value this year on continued growth.

  • 200K+: How many customers Twilio had last quarter, 4X more than in 2017.
  • $401M: Twilio's sales last quarter, up from $115M in the last quarter of 2017. Buuut: it's still not profitable.
  • $3.2B: How much Twilio's dropping on customer data startup Segment. Twilio stock hit an all-time high on yesterday's news.

Like selling shovels in a gold rush... Companies like Shopify and Doordash are corona-conomy winners, but they're using Twilio to support their pandemic surges. That makes Twilio a winner (by the transitive property). Companies don't reinvent the wheel to build all their own tools — they tap others for help. But with great opportunity comes great competition: Microsoft just launched a calling/messaging service that competes with Twilio head-on.

What else we’re Snackin’

  • Mickey: Disney says its "primary focus" for entertainment is streaming and plans a major Disney+ focused reorg of its media division.
  • Chromey: Regulators are reportedly considering forcing Google to sell its Chrome browser (it's an antitrust thing).
  • Book: Facebook reverses course and bans Holocaust denial content under its hate-speech policy as part of a wider moderation push.
  • Green: Sony snags the #1 spot on the Wall Street Journal's list of the 100 most sustainably managed companies in the world.
  • Reviewed: Yelp will begin flagging businesses accused of racist behavior in its app.
  • Niet: Microsoft is trying to dismantle a huge Russian criminal bot network that it fears could freeze US voter-registration systems.

🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.

Tuesday

Disclosure: Authors of this Snacks own shares of Microsoft, Disney, Google, Apple, and Uber

ID: 1364760

Get Your News

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Latest Stories

Markets
Net net
1h
Earnings can’t stop, won’t stop
Business
Rani Molla
3h

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.

Read more
Spotify Q1

Spotify’s finally turning its user growth into serious cash flow

Tom Jones, David Crowther3h
Job switchers and stayers

The FTC is banning non-compete clauses

Why that might make job switching even more lucrative

Millie Giles, David Crowther4h
Matt Phillips
4h
Hasbro pretty much entirely depends on Magic: The Gathering to make a profit

Sponsored by
Go Deeper with Market Depth

Nasdaq TotalView powers the need-to-know data serious investors rely on.

Read more
Scuba Diving in the Wild Blue Yonder in French Polynesia
William Coulman, David Crowther
4h
Thousands of bank branches have closed across America

America has lost thousands of bank branches. The latest closure? JPMorgan’s iconic 45 Wall St. address.

Bank scene
5h

TikTok versus the United States

Casey Newton
Senate Takes Up Foreign Aid Package Passed By House
Culture
William Coulman & David Crowther
6h

Not so Gucci

French luxury fashion conglomerate Kering has seen its shares fall ~10% in the last 24 hours after reporting that sales at its flagship brand Gucci had dropped 21% in its latest quarter.

Kering’s other brands, which include Yves Saint Laurent, Bottega Veneta, and Balenciaga, fared slightly better — but the only real bright spot was the company’s eyewear division, where sales rose 24% (9% on a comparable basis).

With Gucci responsible for roughly two-thirds of the company’s profit, the ongoing struggles of the brand are weighing heavily on the bottom line: the company expects recurring operating profit to drop 40-45% in the first six months of the year.

Gucci execs will be hoping that new designer Sabato de Sarno can turn the iconic brand’s fortunes around, particularly in China where demand has dropped precipitously. His designs only started hitting stores in February.

Gucci sales

Kering Warns Profit to Tumble Following Gucci Woes in China

Kering Warns Profit to Tumble Following Gucci Woes in China

With Gucci responsible for roughly two-thirds of the company’s profit, the ongoing struggles of the brand are weighing heavily on the bottom line: the company expects recurring operating profit to drop 40-45% in the first six months of the year.

Gucci execs will be hoping that new designer Sabato de Sarno can turn the iconic brand’s fortunes around, particularly in China where demand has dropped precipitously. His designs only started hitting stores in February.

Gucci sales
World
Good morning
10h
What’s happening

Your inbox is ready

Subscribe and thrive

Snacks provides fresh takes on the financial news you need to start your day. Chartr provides data visualizations on business, entertainment, and society. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

11h

Starbucks is challenging a labor watchdog’s power in a far-reaching Supreme Court case

Max Knoblauch
Read
11h

What a US TikTok ban could mean for the rest of the market

Rebecca Moretti
Read
11h

Goldman ditches its robo-advisory biz as it breaks up with consumer banking

Jamie Wilde
Read
Markets
Worse than expected
23h
Ugly numbers, but Tesla shares bounce
Elon Musk
Rebecca Moretti, Rani Molla
23h
Just the start

Banning
TikTok

What it means for the rest of the market

Business
Jack Raines
4/23/24

The FTC vs. Big Handbag

The Federal Trade Commission has sued to block big tech, big grocery, big vacuum, and now, big… “affordable luxury handbag.”

Yesterday, the FTC sued to block Tapestry Inc’s $8.5B acquisition of Capri holdings. The agency is worried that a merger between Tapestry, which owns the Coach and Kate Spade brands, and Capri, which owns Michael Kors, would eliminate competition in the market.

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

FTC Moves to Block Tapestry’s Acquisition of Capri

FTC Moves to Block Tapestry’s Acquisition of Capri

The crux of the FTC's argument lies in the scope of the "accessible luxury" handbag market, where Tapestry competes with Michael Kors, with the FTC saying the following:

Where Tapestry and Capri most vigorously compete against one another – mainly between Tapestry’s Coach and Kate Spade brands against Capri’s Michael Kors brand – is in the “accessible luxury” handbag market. Today, Coach, Kate Spade and Michael Kors continuously monitor each other’s handbag brands to determine pricing and performance, and they each use that information to make strategic decisions, including whether to raise or lower handbag prices.

The deal would eliminate fierce head-to-head competition on many important attributes including on price, discounting, and design. Tens of millions of Americans that purchase Coach, Kade Spade, and Michael Kors products could face higher prices

While Capri and Tapestry are two of the largest players in this market, winning an antitrust case won't be so straightforward, as consumers have other options at similar price points, including Marc Jacobs (owned by competitor LVMH), Tory Burch, Cuyana, and Mansur.

Matt Phillips
4/23/24

Tesla had a good ride, but the stock’s price destruction is historic

Few people have created as much value as Elon Musk. The iconoclastic entrepreneur took Tesla from a market capitalization of roughly $2 billion at the time of its IPO in 2010 to $1.2 trillion in early 2023. That’s a return of about 55,000%. Musk made a lot of people a lot of money.

On the other hand, Tesla shares are down nearly 60% since their all-time peak. The company has ceded ground in EVs, prompting a series of profit crushing price cuts to preserve market share. The cumulative loss in market value over that period is pushing $800 billion. Few corporate executives have presided over such a degree of value destruction.

And it could get worse, as people are bracing for an ugly update when Tesla reports after the close Tuesday.

Jack Raines
Opinion
4/23/24
Starbucks could use a CIO

Customers give Starbucks billions of dollars in prepaid credits each year. Should the coffee chain be investing it?

Starbucks American Coffee Chain Cafe In Amsterdam
Tech
Rani Molla
4/23/24

Smaller AI models are in

Tech companies that have long touted the enormity of their AI models are now saying size doesn’t always matter.

Microsoft is the latest tech company to introduce smaller AI models, as part of its Phi-3 tech family. Last week Meta released two smaller models of its AI Llama 3 and earlier this year Alphabet did the same. All are open sourcing these models to encourage wider adoption.

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft Makes a New Push Into Smaller A.I. Systems

Microsoft says its smallest model, which can fit on a smartphone and wouldn’t need to be connected to the internet to work, is nearly as good as OpenAI’s GPT-3.5. A Microsoft exec suggested this less expensive model could be a good fit for online advertisers, if not doctors.

Business
wake up!
4/23/24
Morning earnings report
$127

The average bitcoin-transaction fee hit an all-time high of $127 on Friday.

The temporary spike came as the halving cut miner rewards and traders forked over huge sums of BTC (skewing the average) to be included in the first post-halving block.

Adding fuel to the fee fire was the launch of Runes, a new protocol that lets developers create memecoins on top of the bitcoin blockchain. The debut was so popular that fees popped as traders fought for limited block space.