Vail buys 17 mountains (then hits Après)

Wednesday, December 11, 2019 by Snacks
_Should have done Ikon Pass_

Should have done Ikon Pass

Yesterday’s Market Moves
Dow Jones
27,882 (-0.10%)
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3,133 (-0.11%)
Nasdaq
8,616 (-0.07%)
Bitcoin
$7,224 (-1.71%)
10-Yr US Treasury
1.842%

Hey Snackers,

We've reached "trend-scendence"... the stage where trends converge. Taco Bell's new Oatrageous Taco combines oats with a meat-alternative — the result is an oat-based taco stuffing.

Markets dipped again Tuesday, but we're waiting to try on Lululemon's earnings report, which arrives today.

Pow

1. Vail Resorts stock is powered by 17 new ski resorts

6am Shred Report... It's actually an earnings report from Vail Resorts, which owns 37 ski resorts that Tom & Gisele would feel comfortable Après-ing at. Plus, another 42 resorts are included in its "Epic" ski pass. Vail shares rose on word it's sold 22% more season passes than at this time last year, but we hit ice while running over those numbers.

  • Pro move: Read Vail Resorts' actual earnings report before your next trip — it's subtly packed with intel on your go-to mountains (there's a 6-person chairlift coming to Okemo).

Pizza vs French fries. Boarders vs Skiers... Epic Pass vs Ikon Pass. Society is increasingly divided between the 2 imperial ski passes that all the resorts band together under. Global warming forces them to team up — and that forces skiers and boarders to pick a side early in the season.

  • The passes: Vail's Epic Pass covers 79 resorts. Alterra's Ikon Pass offers 41. Your friend group this winter will be the humans who also have your pass.
  • The reality for resorts: Just 1 degree warmer could turn a blizzard into rain. Less dependable snow makes owning an independent resort tougher.
  • The insurance policy: By joining an alliance like the Epic or Ikon pass, mountains can protect themselves from a lame winter — fellow alliance-members with better weather can provide soft snow cover to fall back on.
THE TAKEAWAY

Don't let Vail's acquisitions distract you... The number of Epic Season Passes sold jumped 22%. Sounds awesome. But that's because the pass added 17 new resorts this year. If you had a Mount Snow pass, now you've probably got an Epic one (because Vail acquired it and many others). Sales grew in part because Vail literally absorbed new mountains — that doesn't make its existing biz more profitable. In fact, it lost money last quarter (snowmaking = expensive).

Negotiated

2. A Trade Peace: the USMCA is about to replace NAFTA for the US, Canada, & Mexico

A Democrat, a Republican, and President Trump walk into a bar... and actually agree on something. Nancy Pelosi announced that her House of Reps would support the USMCA: The consonant-heavy trade treaty between the US, Mexico, and Canada that the President signed in November last year. It takes awhile, but this bill should become law by January (quick reminder on how that works).

Stick one of those huge red bows on this car deal... Markets celebrated the kumbaya progress on trade cooperation. If you're CEO'ing a company, now you've got certainty on how much cross-border business will cost you (at least within North America). But the USMCA majored in cars (and it's obsessed with them):

  • It requires that 30% of workers on a car sold in the US be paid at least $16/hour. That means more work for higher-paid US & Canadian workers and less for lower-wage Mexican ones.
  • That also means the price of cars will rise, especially adorable sedans that are mainly made in Mexico (they'll be tariffed unless they achieve that minimum wage requirement).
  • In non-car news, US farmers producing dairy, eggs, and turkeys can finally sell up north into Canada now. Great, eh?
THE TAKEAWAY

Trade is good, when done right... Econ 101 = Trade benefits consumers and businesses. Countries should produce whatever they've got a competitive advantage in. From cars to microwaves, Mexico and China have been winning more factories and jobs — American consumers benefited from lower prices and American companies benefited from higher profits. The failure has been in government policy, which hasn't helped US workers who lost manufacturing jobs as a result. This USMCA deal focuses on supporting them (and it does).

What else we’re Snackin’

  • Fueled: Virgin Galactic shares jump 7% because one analyst thinks the first publicly traded space travel company's hypersonic bet can disrupt the airline industry
  • Doggone: Wag was supposed to be the Uber for dog-walking — now investor Softbank is selling its nearly 50% stake in the startup back to the startup because it wants out
  • Sweat: Google's $2.1B acquisition of Fitbit gets a healthy invesigation by the Department of Justice (they're worried about Big Tech knowing your heart rate)
  • VSCO-wned: VSCO, the Gen Z-shipped photo-sharing app, just acquired Rylo, a video-editing startup with a 360-degree camera that makes a party wherever it is

Wednesday

  • Saudi Aramco's stock begins trading on the Saudi Arabian stock exchange (it's the world's most valuable company by far)
  • Earnings from Lululemon and American Eagle

Disclosure: Authors of this Snacks own shares of Lululemon, Apple, and Uber

ID: 1033620

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