Hey Snackers,
The 2021 energy we need: In May, SoftBank's earnings deck featured slides of literal unicorns falling into the "valley of coronavirus" (to represent its tech investments). Its latest deck includes a goose laying golden eggs, subtly titled: "Softbank = producer of golden eggs."
Stocks closed at record highs (again) as investors focused on progress toward a $1.9T stimulus package and strong tech earnings.
The man, the meme, the legend... Elon Musk is making crypto headlines (again). Bitcoin surged as much as 20% to a record high of $47K yesterday, after Tesla revealed it invested $1.5B in BTC. Tesla also said it'll start accepting the crypto coin as payment for its cars (casual). Tesla's not the first company to get in on Bitcoin, but it's the biggest so far.
1 BTC = 1 Model Y?... Tesla’s move isn't a total shocker: Elon has been a big crypto cheerleader recently, and his Twitter endorsements have been credited with boosting coins like BTC. But why would Tesla's board allow it to pour $1.5B of its $19B cash reserves into a volatile crypto? In PR speak: To “diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.” Human translation: "We have some extra cash and think it’s a good investment."
To go mainstream, a cryptocurrency must pass the "faith & acceptance" test... and Tesla's investment just brought Bitcoin closer to that. The US Dollar has value because it's backed by the government and controlled by the Fed. Bitcoin is a decentralized currency (aka: not controlled by a central bank), so it's value lies in people believing it has value. Tesla's latest move is a big vote of confidence: it could inspire other companies to invest and speed up mainstream Bitcoin acceptance. But if BTC crashes and Tesla loses on its investment, then it could have the opposite effect.
Bitter as Lululemons... Barely a year after launching, Target's athleisure line "All In Motion" has hit $1B in annual sales. The private label sells things like sports bras, leggings, and yoga mats (pandemic trifecta). And it's quickly catching up to 23-year-old Lululemon, which made $2.3B in sales from January to September 2020.
Cutsey generic name (check)... Private labels like All In Motion, Good & Gather (food), and Cat & Jack (kid's clothes), are profit puppies for Target. They're not Target-branded, but they're Target-owned. Tarjay has launched more than 30 of these brands — and 10 of them are doing more than $1B/year in sales. Private labels are cheaper to supply than external brands, so the profit margin is usually higher. Especially for private label clothing:
Big retailers are becoming mini malls... And winning a spot on their shelves is becoming more crucial. Retail-pocalypse drove mall staples like J.C. Penney and Neiman Marcus to bankruptcy last year, while the pandemic accelerated retail closures. That's partly why 25% of US malls are expected to close by 2025. Meanwhile, Target and Walmart are transforming into one-stop-shops for all your needs, from groceries, to home decor, and fashion. That's why Ulta, Levi's, and Disney, have moved into Target – and why Sephora is moving into Kohl's.
Authors of this Snacks own shares of: Apple
ID: 1517266