🩸 Theranos’ bitter end

Wednesday, January 5, 2022 by Robinhood Snacks |
“I have the same jersey as an NFT” [RgStudio/E+ via Getty Images]

“I have the same jersey as an NFT” [RgStudio/E+ via Getty Images]

Yesterday’s Market Moves
Dow Jones
36,800 (+0.59%)
S&P 500
4,794 (-0.06%)
Nasdaq
15,623 (-1.33%)
Bitcoin
$46,110 (-0.70%)

Hey Snackers,

Add this to your list of things to leave in 2021: “Wait, what?" just topped the ranking of banished phrases for 2022. The runners-up: “new normal,” “you’re on mute,” and “supply chain” (guilty).

Tech stocks fell yesterday as the industrials-heavy Dow index snagged its second record high of the year. New data showed that supply issues (again) are easing — a positive for industrials, manufacturing, and energy companies.

Blood

1. Theranos’ Holmes is criminally convicted, a rare fate for a tech exec, while biotech heats up

Get the jury some takeout... After a whopping 50 hours of deliberations, jurors found Theranos founder Elizabeth Holmes guilty on 4 of 11 charges in her criminal trial. The 37-year-old was convicted of three fraud counts against investors in her disgraced blood-testing startup, and one count of conspiracy to commit fraud.

  • Investor-focused verdict: Holmes was acquitted on four separate counts that alleged she defrauded patients who paid for Theranos' misleading tests.
  • Holmes faces up to 20 years in prison for each count when sentenced, though it's unlikely she'll get the max sentence of 80 years. Still, it’s unusual for a Silicon Valley exec to actually go to prison.

Bad blood money... Theranos claimed that with just a few finger pricks of blood its tests could detect health conditions from cancer to high cholesterol. Holmes raised $900M+ from investors, growing the company to a $9B valuation and becoming the youngest female self-made billionaire on paper. Holmes was convicted for lying to investors about the accuracy of Theranos' machines. And still…

  • Biotech funding = undented. Despite the cautionary tale, funding for private US biotech companies has nearly 3X'd since 2015 to $27.2B (and boomed since Covid).
  • The regulatory gap that allowed Theranos to sell its tests hasn’t been closed, and other companies have used it to roll out unapproved diagnostic tests to patients.
THE TAKEAWAY

Industry investors are mostly unfazed... Theranos doesn’t seem to have dramatically changed how investors select companies to fund, or how openly startups share information. Notably, Theranos’ funding wasn’t typical of the traditional Silicon Valley model — it was largely backed by prominent individuals (like Walmart's Walton family and Rupert Murdoch). Also notable: Theranos’ board was light on medical experts, while including distinguished former national-security leaders (James Mattis, Henry Kissinger). Still, the Theranos saga shows the importance of rigor and transparency when it comes to due diligence.

Swap

The MVP of sports merch… is now also the MVP of sports cards. This week, sports merch business Fanatics bought 70-year-old sports-card icon Topps for a reported $500M. Now, Fanatics owns the rights to sell trading cards of players in the MLB, NBA, and NFL. (BTW: Topps also owns Ring Pops and Bazooka gum, but its nostalgic candy biz wasn’t part of the deal.)

  • Partner powerhouse: Fanatics pays 300+ teams and brands — like the NFL, Manchester United, and Nascar — to sell their merch as an official partner.
  • Versatile player: Fanatics’ valuation nearly tripled to $18B last year, and it split into four companies: merch, trading cards, gaming, and NFTs.
  • MVP: Fanatics’ own cards biz is already worth $10B itself. Fanatics owns 80% of it, and players and investors own 20%.

The Tesla of trading cards… Trading cards have boomed during the pandemic, fueled by growing interest in digital collectibles like NFTs. To cash in on the collecti-craze, Fanatics first teamed up with the NFL and NBA. Now, by buying Topps and partnering with the MLB, Fanatics can also sell baseball cards, both physical and digital. Last year, Topps reportedly sold $560M of physical and digital cards in 100 countries.

THE TAKEAWAY

The Disney-fication of sports could be digital… Just as Disney turned its popular characters into park rides, video games, and stuffed animals, Fanatics hopes to milk its sports rights for all they’re worth. As Fanatics buys the rights to fan-favorite sports licenses, official Yankees NFTs and digital Tom Brady jerseys could be coming soon. Startup Top Shot has sold over $800M worth of NBA NFTs since launching in 2020, including a nearly $400K LeBron NFT. The NFT market is expected to expand more than 5X by 2025, with much of its growth driven by sports collectibles.

What else we’re Snackin’

  • Bye: Over 4.5M Americans quit their jobs in November — the highest on record — as the favorable labor market prompts many to pursue better opportunities. Only 17% of workers say their wages have kept up with inflation.
  • KFB: Beyond Meat shares jumped 7% after KFC said it would add Beyond’s plant-based fried chicken to its menu nationwide for a limited time as consumers look to trim meat consumption in the new year.
  • Beef: President Biden laid out a $1B plan to curb record high meat prices, which are largely controlled by just four companies. The funds will be used to help farmers and smaller producers.
  • Cruise: Mercedes rolled out its new James Bond-esque Vision EQXX electric sports car, which the company claims can travel 648 miles on one charge (a longer range than any EV on the market).
  • Coins: For the first time, large banks in countries including Australia and Spain are letting customers trade and save crypto. The global crypto market has grown 5X since 2020 and is valued at well over $2T.

Snacks Daily Podcast

Wild stat: GM was the best-selling car company in the US every single year from 1931 to 2020.

Last year Toyota broke its streak.

Tune in to hear why Toyota’s success comes down to eliminating “muda” — a manufacturing decision and a philosophy.

Apple podcast button
Google podcast button
Spotify podcast button

Snack Fact of the Day

The S&P 500 notched 70 closing highs last year, the most recorded in a single year since 1995
Read more

Wednesday

  • Earnings expected from: UniFirst and Simply Good Foods

Authors of this Snacks own shares of: Walmart, Tesla, GM, Disney

ID: 1976166