🛒 Walmart's e-ssential quarter

Wednesday, May 20, 2020 by Robinhood Snacks | Disclosures

Essentials Club initiation

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Hey Snackers,

Ever wonder what to do when you're wearing a mask but also holding a plate of hot fries? Eating and mask-ing no longer have to be separate, thanks to this new remote-controlled mask that opens with your mouth. TBD whether it works for burgers, too.

Stocks dipped Tuesday, taking a breather from Monday's big Moderna-driven market rally. More on that below.

Vaccinate
1. Moderna gets closer to hacking COVID-19: a $27B biotech selling 0 products

Maybe she's born with it... Maybe it's $3B in funding. Moderna is a biotech company based out of Cambridge, MA (classic) that wants to hack coronavirus with its cutting edge tech. It raised $2.3B in funding, then shed its magical Unicorn cape to go public in 2018 (résumé item: Moderna had the largest biotech IPO — ever). On Monday, Moderna elevated markets with news that phase 1 trials for its COVID-19 vaccine candidate yielded positive results.

  • Over 100 coronavirus vaccines are currently in development around the globe — Moderna's is among the 8 front-runners that have started human trials (including Johnson & Johnson and Pfizer).
  • Moderna does things differently... Its bread and butter is mRNA, the messenger that sends protein-making instructions from our DNA to our cells (like a DM with a recipe for at-home Power Bars, except not at all).
  • Instead of using a weakened virus to make vaccines, Moderna is literally re-engineering mRNA to teach our cells how to make virus-destroying antibodies. If successful, this tech could be modified to target a wide range of viruses and diseases. But...

No mRNA vaccine has ever been approved for human use... Yet. But these gene-based vaccines can be developed more quickly than OG, established ones. Moderna's ambitious plan is to have its vaccine ready for emergency use as soon as this fall. The FDA gave it permission to start the 2nd phase of testing — Moderna's aiming to be in the 3rd/final round by July.

THE TAKEAWAY

Moderna hasn't sold a single thing yet, but it's worth $27B... Moderna's got a lot in its pipeline, but no sell-able products to show for it (yet). But its pre-product cutting-edge tech is exactly what's getting investors excited — Moderna has almost quadrupled in value this year. Now it's making an opportune sale of new stock, hoping to raise an extra $1.3B — couldn't have timed it better.

Shop

Padding required to make it through these aisles... Walmart, aka the largest US retailer, just unveiled a value-sized cartload of earnings. The numbers are for February, March, and April — half semi-normal, half full-blown pandemic. Walmart's corona-conomy success is far from shocking, but it tells an interesting story:

  • -5.6%: Walmart's foot traffic actually fell almost 6% compared to last year. Buuut...
  • +16.5%: Spending per transaction jumped, meaning Walmart carts were 16.5% fuller — shoppers visited less, but stocked up more.
  • +74%: Online sales soared, thanks to Walmart's meaty e-grocery operation— 3.2K locations were hot on curbside pickup, while 1.6K made delivery dreams come true.
  • +10%: How much total sales surged compared to last year. Despite the $900M the 'Mart dropped on COVID-related expenses (like hiring 235K extra workers), it still had a higher operating profit.

Like that 21+ ID card... Walmart's got a cool ID of its own — it's part of the "Essential Club," aka the group of businesses that are allowed to stay open during lockdown periods.

  • Like Walmart, Kohl's sells clothes, toys, and home essentials (like Walmart, because Walmart sells everything).
  • Unlike Walmart, Kohl's does not sell groceries.... That's why its sales for the same quarter tanked almost 44% — Kohl's 1.5K stores were shut for almost half the quarter. #Nonessential
THE TAKEAWAY

The biggest 2020 stock driver: are you e-ssential?... There are two major components that influence a company's corona-conomy success, and Walmart checks both boxes:

  • Essentialness: When mandated shutdowns for non-essential businesses started, stores like Kohl's couldn't suddenly start slinging groceries to qualify to not have to close. And sales that would have happened at Kohl's probably happened at Walmart instead (again, because Kohl's was closed).
  • E-Readiness: Companies like Walmart, Amazon, and Target already had robust ecommerce platforms built out pre-corona (their stocks are trading near all time-highs). Companies that aren't as digitally-savvy suffered — Kohl's stock is trading at 1998 levels.
What else we’re Snackin’
  • Faceshop: Facebook launches "Shops," a way for businesses to set up free storefronts on FB and Insta — the ecommerce push is real.
  • Switcheroo: TikTok snags Disney's Head of Streaming, Kevin Mayer, to be its new CEO — Mayer was a top contender for the CEO job at Disney (spoiler: didn't get it).
  • Canceled: Nasdaq moves to delist Luckin Coffee from trading, over a month after news that it faked its 2019 sales numbers (#FakeBrews).
  • Jackpot: Casinos in Louisiana and Mississippi reopen after a two-month closure — the lines have already formed.
  • Fly: Airlines have seen a small uptick in bookings over the past few weeks — Southwest says new bookings are finally outpacing cancellations.

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

Snacks Daily Podcast

LeBron joined the Heat, the Obamas signed with Netflix, and Joe Rogan goes to... Spotify.

Spotify just snagged exclusive rights to the biggest podcast in the world: The Joe Rogan Experience is now a 100% Spotify experience.

Tune into our digestible pod (on Spotify, why not) to hear why Joe Rogan is a precious orchid in Spotify's "Gated Garden."

Wednesday

Disclosure: Authors of this Snacks own shares of Walmart and Luckin Coffee

ID: 1192392

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