🚗 Tesla cannibalized itself

Tuesday, October 6, 2020 by Robinhood Snacks | Disclosures

Cooler Screen control center: "Hit her with the Mountain Dew"

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Hey Snackers,

Hard seltzer is the go-to for OG beer companies tapping into "not-beer" trends. But this is giving us Starbucks vibes: PBR hard cold brew. Don't accidentally grab it for the 8 am Zoom.

Stocks jumped Monday after President Trump said he would be discharged from the hospital that day. Investors were also hopeful about renewed urgency for a new stimulus deal after September's concerning jobs report.

1. Tesla hits a delivery record thanks to its cheaper models (it's cannibalizing itself)

Christmas came early for Elon... Tesla delivered a record number of vehicles last quarter, accelerating its recovery after the pandemic slowdown. It's still (very) far from its goal of 20M vehicles/year, but the growth is impressive:

  • Tesla delivered 139K vehicles during the quarter ending September 30. That’s a 44% increase from the same quarter last year.
  • ~90% of deliveries consisted of the $35K+ Model 3 or the $50K+ Model Y crossover. Just 10% of deliveries consisted of the $75K+ Model S or X.

Sounds S3XY... That's Tesla Model S, 3, X, and Y (classic Elon humor). Deliveries last quarter were dominated by Tesla's new cheaper models, which cannibalized sales of the original luxe models. For most people, the pricier models are just too... pricey. Especially when they can now become Tesla owners through a cheaper (still sweet) ride.

  • Cannibalization: The terrifying term for when a company's new product is so attractive that it devours sales of its other products.
  • The con: Companies fear cannibalization because it often steals sales from more profitable products.
  • The pro: Lower-cost versions of products drive more sales volume and guard against competitive disruption (#disruptyoself).

Tesla achieved cannibalization success... Last year, cannibalization was a problem for Tesla. In July 2019, Tesla posted record deliveries but lost $408M because its top-selling Model 3s sold for less than what they cost to make. Now that Tesla has reduced the cost of car batteries, it can actually profit on those Model 3 & Y sales — it posted 4 straight quarters of profit, and is expected to report a 5th this month.


Hit 'em with the double entendre... Cooler Screens just raised $80M to bring interactive screens to cooler aisles. Basically, the idea is to turn your 7-Eleven fridge doors into digital billboards. While it may sound like a Facebook ad stuck on a fridge, Cooler Screens has two key differentiators:

  • In-store: Most retail sales still come from physical stores, but there aren't actually ads in stores (they're all chilling on Amazon or Facebook #adparty).
  • IoT-enabled: The screen knows when your Walgreens is out of Mountain Dew, so it'll showcase Coke instead. Or it can highlight the tub of Häagen-Dazs that literally just went on sale.

Cooler story, bro... If this sounds like something out of a "Black Mirror" episode, that's because it kind of is. Cooler Screens offers merchants AI-powered inventory tracking, plus real-time pricing and sales data.

  • For customers: According to its CEO, you could ask the screen to show you all the vegan ice cream, or to see the calories in a DiGiorno frozen pizza (579).
  • Also: In addition to flashing nutritional facts, the screen lets you make digital payments on the spot. It doesn't collect your personal info, though (thaaanks).

Point-of-Sale ads are powerful... If you're in a grocery store, you're there to buy something (RIP free samples). Cooler's ads are getting you at the exact place/time when your purchasing intent is hottest. Cooler says that products behind digital doors sell 2X to 10X more. It's already in 50 Walgreens, and is planning to expand to 2.5K more.


Not your usual cocktail... On Friday night, we learned that President Trump had tested positive for COVID-19. While he was hospitalized at Walter Reed National Medical Center (he was admitted Friday and left yesterday), he was treated with a high dose of an experimental antibody "cocktail" from American biotech company Regeneron.

  • The treatment isn't FDA-approved yet, but it's in the final phase of human testing. Trump's doctor made a "compassionate use" request to get individual approval from the FDA.
  • Regeneron stock soared 7% on Monday on news of the presidential treatment, and is up 62% for the year.

Warp-er Speed... In July, Regeneron received $450M as part of Trump's "Operation Warp Speed" to quickly develop COVID-19 vaccines and treatments — the US has invested over $10B in Warp Speed so far. If Trump recovers, that high-profile success could help fast-track approval for Regeneron's treatment.

  • Regeneron says it's on track to make 300K doses of the treatment by the end of 2020. FDA approval could mean big business – especially now, when COVID cases are rising as colder weather drives people inside.

This could be the ultimate Earned Media win... Earned media is basically free publicity (the opposite of paid media advertising). If Regeneron gets credited with helping save the US President's life, that's a significant unpaid win. It would be way more valuable to boosting brand perception than any ad Regeneron could buy.

What else we’re Snackin’
  • Coco: Coke discontinues its Zico coconut water. Since 2018, Coke has killed off 275+ underperforming "zombie brands" (RIP Odwalla).
  • Dark: Regal Cinemas owner Cineworld is temporarily shutting movie theaters in the US and UK as release dates keep getting delayed.
  • Check-in: Airbnb is reportedly looking to raise ~$3B in a December IPO. It's one of the biggest turnaround success stories of the pandemic.
  • Heartfelt: Big pharma Bristol Myers is buying MyoKardia for $13B to expand its heart drug business.
  • Shopped: Facebook brings shopping to Instagram's IGTV videos, and plans to test it on Reels. The goal: let #influencers monetize more.

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Snacks Daily Podcast

Cannibalize thyself... Sounds like an anti-inspirational quote from Hamlet, actually Tesla's strategy for EV mass production.

Tune into our highly digestible 15-minute pod to hear more about why Tesla's cannibalization is S3XY.


Disclosure: Authors of this Snacks own shares of Tesla

ID: 1355074

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