Apple's Wearables = 1 Starbucks

Friday, November 1, 2019 by Robinhood Snacks | Disclosures

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Hey Snackers,

Candy hangovers are real too. We're survivors.

Before daylight savings messes with your mornings (FYI, this Sunday), investors are focused on the big October Jobs Report that arrives today — it could've been affected by last month's GM strike.

1. Wearables are the surprise MVP of Apple's latest earnings report

iPhone is too good... You're not replacing/upgrading your pocket's best friend often enough, and that's a problem for Apple. But now it's found 2 saviors. 1 was expected, 1 is a surprise:

  • Services (sales up 18% last quarter): You knew about this one — Apple's made $46B over the past year in sales of iCloud, Apple Music, etc. And (starting today) Apple TV+.
  • Wearables, Home, and Accessories (up 54%): Apple's AirPod and Apple Watch division is living its best life — it's grown over 50% for two-straight quarters.

Apple's side hustles are entire companies... That Wearables division has the same sales as Starbucks. Services is bigger than Delta. And since 3/4 of Apple Watch sales are 1st-time Watch buyers, there's room to grow. But Apple's getting greedy — CEO Tim Cook thinks new $249 noise-cancelling AirPod Pros complement the regular ol' $159 Airpods. He thinks you should buy both.


That explains Apple's "record high" situation... iPhone sales have boringly dipped for four-straight quarters, but Apple's stock has never been higher. It's creatively replaced its lost biz with a new one focused on covering your body real estate with Wearables. As a reward, Apple's enjoying its $1.1 trillion market cap — making it the most valuable public company in the world (again).


Whip out the celebratory Boston Creme... Dunkin' shares rose 6% after its earnings report — the stock's tripled over the last 5 years as it dropped the "Donuts" from its name to focus on getting America to run on it. Investors are rewarding last quarter's commitment to the 4-part grand slam of chain restaurant profitability: 1. Premium items: The 1 specific beverage mentioned in the entire earnings report: "Cold Brew" — Dunkin's new higher-priced option doesn't get latté-style barista art, but does drive profits. 2. Breakfast: To make breakfast your daily habit, Dunkin' added menu items like the new Beyond Meat breakfast sandwich — it goes nationwide on 11/6. 3. Digital Loyalty guilt: 25% of transactions in some cities are now paid with the "DD Perks" app. Dunkin' increasingly tempts you to return for that Coolatta with points. 4. Delivery/Pick-Up: There's fast food peer pressure to deliver via 3rd party app. So even though your coffee routine is probably delivery guy-free, Dunkin has partnered up with GrubHub, just in case.


This is the new playbook for fast food... Chipotle is testing pickup, Shake Shack is pushing fried chicken sammies, and Starbucks' app is America's 2nd most-used mobile payment platform. Investors are evaluating fast food brands on this 4-part gameplan: Premium items, breakfast, loyalty apps, and delivery. Everyone's doing it.


Tapped out... Too much investment pain. WWE stock dropped 16% Thursday after its 3rd quarter earnings revealed serious injuries to its pro wrestling business model:

  • Sales rose just 1%, profits got erased by 2/3, and bodyslams doubled. That last part wasn't real (we were acting).

WWE runs a good, clean operation... with 3 business lines: Media/TV, live events, and consumer products (picture action figures and t-shirts). Its media division gets most of the love from investors, bringing in about 78% of total revenues. WWE does TV HBO-style — cable and streaming (plus pay-per-view):

  • TV: Like HBO, you can watch WWE Smackdown on cable through its deal with Fox.
  • Streaming: Like HBO Now (and soon "HBO Max"), WWE will happily collect your $9.99/month in return for streaming access to Stone Cold Steve Austin and the Undertaker. But subscriber numbers dipped 9% to 1.5M.

The main issue is Saudi Arabia... WWE actually hosted the 1st ever wrestling match last night in Saudi Arabia featuring women. But its TV deal in the Middle East and North Africa is delayed — and some analysts think it's never happening. Adding that entire geography would've brought a lot of revenue at little extra cost to WWE (the matches are already happening — feeding video to Egypt doesn't cost that much). Investors crave those easy extra profits, but aren't sure they'll happen.

What else we’re Snackin’
  • Un-pinned: Pinterest stock plummets 20% after its loss doubled on spending to expand expand Pinterest boards internationally
  • Stuffed: Kraft Heinz shares surged 13% even though its Velveeta-powered sales fell another 5% — investors hope it's hit a turnaround point
  • Powdered: Estée Lauder enjoyed its 11th straight quarter of sales beating analysts' expectations as it pumps out more makeup at airports
  • Early: Disney's streaming service, Disney+, arrives this month — and it's already got a million signed up pre-launch
  • Snuffed: Marlboro-owner Altria writes-down its investment in Juul by $4.5B after the latest ecig health issues
Snacks Daily Podcast

Molson Coors just made the biggest pivot in the beer industry that we've ever seen — new name, new HQ, new firings, and it wants to move "beyond beer" (their words).


Disclosure: Authors of this Snacks own shares of Beyond Meat

ID: 1000371

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