Fake meat faces real Wall Street hate

Monday, May 20, 2019 by Robinhood Snacks | Disclosures

Tariffs going off like...

Last Week’s Market Moves
Dow Jones
25,764 (-0.69%)
S&P 500
2,860 (-0.73%)
7,816 (-1.28%)
$7,964 (+14.07%)
10-Yr US Treasury

That Game of Thrones finale will probably cost the US economy $3.3B in lost productivity today (for comparison, the Super Bowl lost us $4.4B and holiday shopping destroyed $35.4B).

Markets meanwhile dipped (again) last week as a trade war mentality settled in for the long haul.

1. Who's up...

Thanks for nothing... Snap shares rose 14% last week even though the company made zero announcements. Facebook already copied Snapchat's Stories feature, making the app's user growth almost disappear. But Zuck also cloned Snapchat entirely, calling it "Instagram Direct." Fortunately for Snap, that was shut down last week since Direct never caught on.

Mandarin for "Venti"?... In just 2 years, upstart Chinese chain Luckin Coffee built 2,400 stores. It's still behind Starbucks in China, but cravings for its tech-savvy, app-driven, pick-up-style grab-and-go stores emboldened it to IPO — aka list shares publicly so they're accessible to regular investors like you and us. On Day #1 of trading, the stock popped 18%.

Because you need Tide to Go ASAP... Walmart became the 1st to offer free 1-day shipping on orders $35 or more (beginning in Vegas and Phoenix). Now Walmart's shares are creeping up to a record high after announcing quarterly ecommerce sales surged 37% from last year.


"That Beyonce record is tight"... Old school prep retailer Ralph Lauren is urgently trying to convince Gen Z it gets them (the reliably polo-covered Baby Boomer crowd is slowing). But Ralph's stock dropped 7% on evidence its Instagram-friendly and "Family Is Who You Love" marketing campaigns aren't connecting in its home market of North America.

We take our sparkling water with a side of seltzer... That helped boost National Beverage Corp's stock seven times higher from 2014 to 2018, as its LaCroix was the only real option for soda-defiant Millennials. Now it's been downgraded by two analysts because LaCroix's mango-essence lifestyle faces serious competition from Pepsi (Bubly) and Coca-Cola (sparkling Dasani and Smartwater).

Trade, trade, go away... President Trump delayed tariffs on cars from allies in Europe and Japan and ended steel tariffs against allies Mexico and Canada. But one thing's clear: The trade war with China is here to stay. Here's who that hurts:

  • John Deere stock fell 10% because China's not buying as many American soybeans. Plus, the Chinese steel that makes the tractors run like a deer now costs more.
  • Caterpillar dropped 4% because China is the biggest construction nation in the world (and Caterpillar's backhoes need a home).
  • Tesla dipped 10% to its lowest point in a year because China is its 2nd biggest market.

A Burn Book hall of famer... Shares of Beyond Meat fell 4% Friday after getting the attention of famous hater Citron Research. The hedge fund's core business strategy is betting against a company's stock and making money if the price falls. Its latest target is the plant-based "meat" company that just IPO'd. The shade was summed up in Citron's tweet:

"Beyond Meat has become Beyond Stupid" — @CitronResearch

Fake meat, real blood... Citron thinks Beyond Meat is over-valued. So it borrowed stock of the company in order to sell it at today's high price. Then it hopes to buy it back cheaper when the price falls. The difference between those two prices = profit (that's called "shorting a stock"). Here's what Beyond Meat's stock has done so far:

  • The IPO price on May 2 was $25.
  • The pea-protein food-maker's stock surged 163% on Day #1 to $65.
  • By Friday, shares had climbed all the way to $87.
  • Citron thinks they'll fall back to $65 after Beyond's first earnings report, as hype from meat-minimizing reducetarian Millennial investors dies off.

It depends on how you define "competition"... By one measure, Beyond Meat has a monopoly. By others, it has thousands of competitors. The big question is if "fake meat" is a fad or the long-lasting future-Big-Mac it wants to be.

  • 🏦 Publicly traded meat alternatives: No competition (yet). Earth's 2nd biggest animal meat producer, Tyson Foods, is working on plant-based foods to rival Beyond.
  • 🚀 Not-yet-public meat alternatives: Impossible Foods (which just raised $300M last week and makes the Impossible Whopper), along with some other startups.
  • 💯 Non-meat proteins: Avocados, tofu, eggs, milk, beans, nuts, chickpeas, tempeh, seafood, yogurt, cauliflower, quinoa, peanut butter, chia seed, potatoes...
What else we’re Snackin’
  • Work: The art of finding out why you didn't get the job
  • Life: The best time to book summer travel (21-28 days pre-trip)
  • Money: Bonds — What they are and how they work
  • Entrepreneur: One founder or three co-founders? The data says less is more
  • Crypto: The tangled history of the buzzwords "blockchain" and "Bitcoin"
  • Do: Guess which pic of Larry David is older (the Seinfeld creator doesn't age)
Snacks Daily Podcast

Today's 15-minute Snacks Daily pod:

  • Startup suitcase icon Away hits a $1.4B valuation — It's part of a new breed of Unicorns: "Brand-icorns"
  • Amazon leads a $575M investment in Deliveroo — And breaks ground on its own air force base
  • John Deere is the perfect illustration of trade war badness for business
This Week

Disclosure: The authors of this Snacks own shares of Beyond Meat, Tesla, and Amazon.

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