Stop trying to make OnlyCans happen
Hey Snackers,
Five men who spent four years stranded at sea are finally returning home. Good luck to whoever is catching them up.
Stocks climbed yesterday, changing course after Fed Chairman Jerome Powell calmed worries over rising interest rates. The Dow notched a record high.
Ghosted, then unghosted... Snap can relate. Two years ago, Snap stock was languishing around $10/share. After going public in March 2017, Snap consistently failed to beat earnings estimates for nearly a year. But the little ghost has been wowing investors over the past year, and its shares have more than 4X'd. In 2020, Snap's sales growth was more than 2X Facebook's (granted: Snap is younger, smaller, and still unprofitable). This week...
Bring back the rainbow puke filter... Investors were also impressed with Snap's new strategy to grow ad revenue in non-messaging features (it's not all about Taco Bell face filters). A key growth opportunity: the Snap Map.
Snap is past its tween stage... though many of its users aren't. It's maturing into much more than just a place to send double chin pics. Over the past year, Snap has launched new features, from Mini apps to Spotlight (a TikTok copycat that has over 100M monthly users). It also plans to invest more in content, like original shows for its Discover feed. This different mix of products is key to driving more ad revenue, which Snap badly needs to become profitable.
The most annoyed-sounding company name... Ardagh Group (pronounced: ard-ugh?) is one of the world's largest metal and glass packaging companies. Think: Heineken bottles, minus the beer. Now the publicly-traded company is spinning off its can business into another public company. The new can-only company is valued at $8.5B. Unsolicited name suggestion: OnlyCans.
Weird SPACaging... The new company is going public by merging with a SPAC — a company that goes public only to acquire a real company. The SPAC is betting on the continued growth of canned drinks, which are more enviro-friendly: aluminum is easier to recycle than plastic (Ardagh calls it "infinitely recyclable"). OnlyCans has two trends going for it:
Commodity is hard to conquer... Ardagh is selling "shovels" in the seltzer gold rush. But at the end of the day, an aluminum can is an aluminum can. And Ardagh can't control the price of a commodity like aluminum. Aluminum prices have risen over the past year, partly thanks to the "canned-everything" trend. Aardagh also has to compete on price with companies like Ball Corp, which makes Coke cans. That's likely why Aardagh's profit margin is slim.
Authors of this Snacks own shares of: Snap and Google
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