🍩 Dunkin' gets fancy

Friday, February 7, 2020 by Robinhood Snacks | Disclosures

"You hear about the styrofoam cups?"

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Hey Snackers,

It's the final day of the 1st annual TBOY Awards 🏆 Yesterday, Sweden's Spotify was teary-eyed taking home the trophy for Best Foreign Firm. Our final award will go to one (un)lucky winner...

The nominees for Best Product in a Failing Role are: 🥁 🥁 🥁

  • Snapchat, Spectacles
  • Facebook, Portal
  • Harley Davidson, LiveWire (the electric hog)
  • Hasbro, Baby Yoda 2019 holiday toys (non-existent)

You can vote on Twitter @RobinhoodSnacks. Markets kept rising after China announced it'll cut tariffs in half on $75B of US goods (part of fulfilling its side of the trade deal).

Sip
1. Dunkin' is slowly but surely "fancy-fying" itself

When you think "Dunkin"... you envision a 64-ounce styrofoam cup and a glazed chocolate donut on a frosty January morning before hockey practice in Canton, Mass. Now, that vision is evolving to include espresso shots, alt-meat breakfast sandwiches, and 'power muffins.' While Dunkin' reported 4th quarter earnings Wednesday, we've noticed that it has been subtly fancy-fying itself:

  • Better coffee: Before, coffee meant coffee. Now, Dunkin's investing $60M in fancy new brewing equipment at every cafe. It's updated its espresso cups, changed its espresso recipe, and trained its employees to be 'espresso certified.' It also added iced coffee taps and cold brew.
  • More than Donuts: In September 2018, Dunkin' dropped 'Donuts' from its name as part of a rebrand. Last year, Dunkin' started selling Beyond Meat breakfast sandwiches and nitro-brews. Now, it's launching oat-milk lattes nationwide.
  • No styrofoam: Dunkin' said it would eliminate its foam cups worldwide by April 2020. And no more double-cupping ice coffees in winter.
THE TAKEAWAY

Dunkin' doesn't want to alienate its hardcore faithful... So it's been stealthy. Kinda like your college friend who studied abroad in Paris and now refuses dining hall coffee – but more subtle. It's because Dunkin' can rake in more $$$ for premium drinks paired with alt-meat sandwiches. And Wednesday's earnings confirmed that fancification is working:

  • Espresso sales surged almost 40%.
  • Dunkin' enjoyed its biggest quarterly sales improvement in 6 years.
Wake

Can you get night sweats in the daytime?... Casper shares jumped 13% on 2020's biggest IPO yet. The pioneer of Direct-to-Consumer mattresses wants to make the "sleep economy" a thing (like fetch) — yesterday's IPO had more nightmarish vibes. A month ago, Casper was worth $1.1B. Today, it's worth $500M. These 5 numbers from its IPO paperwork caused that:

  • $92M = Its (growing) loss in 2019
  • $80M = The money it lost specifically on returned/refunded/discounted mattresses
  • $423M = The amount it's dropped on marketing since 2016
  • 201 vs 9 = How many times Casper mentioned "brand" vs "profitable" in that S-1 paperwork

You've heard of "private" and "public" markets... But there's actually a subtle 3rd market that touches companies in the short window before their IPO — We're calling it the "Pre-Public Market," and it's what messed with Casper.

  1. The Private Market: These are the private Venture Capital firms that stuck money into the startup since 2014 to drive its valuation to $1.1B as you were tempted by Facebook ads to buy its California King.
  2. The Public Market: These are the public retail investors (like you and us) who brought its stock up 13% yesterday after the IPO.
  3. The Pre-Public Market: These are the institutional investors who got to hear Casper's roadshow pitch in the short month leading up to the IPO — between the Private and Public Markets.
  4. Casper was forced to lower its stock price by 55% in order to get those institutional investors to bite, dropping its valuation to $490M just before yesterday's IPO.
THE TAKEAWAY

This just shocked the entire Direct-to-Consumer startup industry... Warby Parker glasses. Allbirds shoes. Away suitcases. Glossier cosmetics. Rent The Runway clothing. These DTC unicorns have been itching to IPO themselves — and they're all valued around $1B. Casper's sad debut could mess with their next private fundraise or maybe even make them rethink IPOs (like trying to get acquired instead).

Tweet

Back from the spa... Twitter is feeling refreshed after posting $1B in quarterly revenue for the first time. What it really wants you to know: it's "healthier" now ("health" was mentioned 8 times in its shareholder letter — more than "profit"). To Twitter, healthy means fewer trolls, less fake news, less trolling. Twitter's self-betterment moves:

  • Made it easier to report problematic/abusive content and introduced a feature to hide certain replies — Twitter calls this "proactively limiting the visibility of unhealthy content."
  • Invested in employees and AI to help remove deepfakes (photos/videos altered to trick you). On Tuesday, Twitter said it would apply warning labels to tweets with "false" or deceptive media.
  • Banned political ads. And labeled actual politicians who are actually running in 2020 elections.

The Keto-worthy mindfulness cleanse is working... Twitter's daily users grew to 152M from 145M last quarter. But more interestingly, there was a 27% drop in bystander reports on tweets that violate the terms of service.

THE TAKEAWAY

Spa treatments are expensive... Twitter's quest to glow up came at a price. It posted lower profit than expected, making $119M vs $225M last year. And it's expecting costs to climb further — Twitter's adding 20% more staff this year. But its newly aggressive focus on "health" could set it apart from the rest of social media, and investors are excited for Tokyo 2020 and the US presidential election driving people to Twitter.

What else we’re Snackin’
  • Flaky: Kellogg's cereal sales keep dropping — so it's betting on snacks and fake meat instead
  • Surge: Uber stock jumps 4% after shocking the world with plans to be profitable (early) by the end of this year
  • Downer: Aurora Cannabis' CEO/co-founder is stepping down — the Canadian marijuana producer has cut 500 jobs because pot demand wasn't big enough
  • GPS: Google Maps turns 15 and gets a makeover

Sign up for Robinhood, our commission-free investing app, and get a free stock. Already on Robinhood? You'll still get a free stock for getting a friend to sign up (they'll get one too).

Snacks Daily Podcast

WWE (World Wrestling Entertainment) stock dropped 9%, in a speedo-clad modern day Wall Street bodyslam. But its latest earnings report is really about its CEO/Founder Vince McMahon and his new football league, the XFL.

Tune into our 15-minute pod to learn why.

Friday
  • The big US jobs report for January
  • Earnings from AbbVie

Disclosure: Authors of this Snacks own stock of Beyond Meat

ID: 1082146

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