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Hey Snackers,
Crushing social lives wasn't enough for Excel spreadsheets. They're also taking over our genetic code: scientists had to rename human genes to stop Excel from erroneously reading them as dates.
The S&P 500 finally notched a record close yesterday, after a week of hovering just below. The market has rallied over 50% since its corona-induced March 23rd low. The S&P's fresh all-time high confirms the start of a new bull market and the end of Wall Street's shortest bear market.
Renovate
Home Depot has its best quarter in 20 years — the "House Hype" is (still) real
Swapped the $30 red lipstick... for a $30 red Adirondack chair. Americans shifted their spending from restaurants and clothes to the only place that matters now: home. People re-painted kitchens, re-tiled floors and finally changed the broken toilet seat. We thought the DIY "house hype" might be slowing back in May. Based off Home Depot's latest earnings report, the hype is still strong:
- Home Depot's sales soared 23%, coming in at $38B. That's Home Depot's biggest quarterly sales growth in almost 20 years.
- It's extra impressive growth for a big old retailer like Home Depot, which is past its peak growth spurt. During the same quarter last year, sales jumped just 1%.
And yet... the stock fell after the news. Home Depot's CEO didn't sound too hyped about the outlook for this quarter. He's uncertain how long the home spending boom can last:
- US retail spending jumped for the 3rd straight month in July. But the $600/week boosted unemployment benefit expired at the end of July.
- Stimulus checks boosted spending, but now they've been... spent. TBD if we'll get a 2nd round (they could be smaller).
- DIY Home Makeover isn't an everyday thing. Cleaning companies like Clorox can expect continued demand, but there's only so many times you can landscape your garden.
Home Depot is consistent... It has paid dividends to shareholders for 134 quarters in a row. On Sept 17th, it'll pay each shareholder $1.50 per share as a cash dividend. Home Depot took home ~$11B in profit last year, which is about the same as what Amazon made. Yet Amazon is worth 5.5X more because investors see more potential future profit growth. Home Depot's present is pretty strong, though.
Study
Chegg sales soar on the e-learning surge — a decade of acquisitions just paid off
$357 for a Macro textbook... And you better get the new 19th edition. You shell out $300 for a textbook you only use for 3 months, then sell it for $50 (or use it as a dumbell). Chegg wants the days of rent-priced books to be over. The EdTech company is known for digital and physical textbook rentals. As learning moved remote, Chegg racked up a straight-A earnings report:
- Sales soared 63% from the same quarter last year. Chegg brought in $153M because Calc is hard, but remote Calc is harder.
- New subscribers jumped 67% on the rush for more learning support. Chegg added more subscribers in 3 months than in all of 2018.
Sexier than textbooks... Chegg wants to be more "Netflix of Learning," less "Blockbuster of Studying." While textbooks are a hook, most of Chegg's sales come from digital study materials and tutoring. It offers $19.95/month Study Packs that include homework solutions, practice sets, and Q&A with "experts."
- Chegg has been on an e-learning buying spree since 2010. Acquisitions include: a tutoring platform, a flashcard tool, and an $80M online coding school. Those acquisitions are seriously paying off now.
Chegg owns the whole customer value chain... Chegg isn't just a middleman platform that connects you with something (like Airbnb or Uber). It's one of the few digital platforms that owns the content, transactions, data, and distribution channels. This direct ownership, combined with the scale of its offerings, is helping it benefit from the e-learning surge — Chegg's shares have doubled this year.
What else we’re Snackin’
- WFO: Amazon is expanding its physical offices and adding 3.5K new corporate jobs in 6 US cities — work-from-office isn't dead after all.
- Lazy: Reclining couch-chair maker La-Z-Boy posts a surprise quarterly profit on strong demand (WFH with your feet up).
- Surprise: Corporate software giant Oracle is reportedly in advanced talks to buy TikTok's US operations.
- Cartload: Walmart's ecommerce sales nearly double on e-grocery and curbside pickup. The average shopper spent 27% more per transaction.
- Epic: Fortnite-maker Epic Games says Apple threatened to block it from developing apps on all of its platforms.
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