Friday May.03, 2019

Beyond Meat. Hangry.

_Good, gooder, "beyond"_

Hey Snackers,

Zuckerberg's got a secret $59M Lake Tahoe compound (buying through a limited liability company = discrete).

Markets are more focused on April's big jobs report due out Friday morning.

Payday

The Taser CEO gets paid $246M (only if his company does reeeeally well)

Tasers are having a moment... Nationwide focus on police conduct has departments buying up Tasers, body cameras, and software to upload the footage. Taser inventor Axon Enterprises makes all that, and just granted CEO/co-founder Patrick Smith $246M in compensation — 20x the pay of a normal (still very rich) big company CEO. But read the fine print...

Dangling million dollar carrots... The board wants Smith to capitalize on the Taser era. So they've set up performance-based targets that will turn his stock options into real dollars:

Stock price: All the Axon shares out there are worth $3.8B total right now. There are 12 "market cap" milestones that will convert his options to cash money as it hits points on the way up to $13.5B.
Revenues: They're currently at $400M. If it reaches $2B, Smith will score 8 separate stock option bonuses.
Profits: Yup, there are 8 more prizes based on profitability targets.

Smith's living on the edge... Although technically (based on accounting rules) he got "paid" $246M this month, it was all in stock options — Those have no value unless they "vest" (aka hit those goals above). His current salary is just $24K. He doesn't get rich unless his company does too.

Bleed

Beyond Meat surges 163% on record IPO day

Compliments to the chef... Beyond Meat enjoyed the biggest 1st day jump of any stock since 2000: +163%. Shares of the plant-based protein pioneer actually surged so fast they had to be halted by Nasdaq. Despite just $90M in annual revenues, Beyond is now worth twice as much as all of Shake Shack ($3.8B vs. $1.8B).

It's all about reducetarians... Not vegans. A Nielsen survey says just 6% of Americans are vegetarian, and half that are veganites. But 39% now crave to eat more plant-based foods and less animal-based ones. Beyond's pea-based protein strategy is targeting those meat "reducetarians."

Grocery stores (58% of revenues): Beyond's sold in 15K so far — And 93% of Kroger customers who bought the Beyond Burger also bought animal meat.
Restaurants (42%): Beyond Burger is served in 12K restaurants that also offer plenty of beef — Carl’s Jr., TGI Fridays, and BurgerFi.

A big IPO isn't necessarily a successful IPO... Beyond Meat issued 9.5M raw, new shares to brand new investors this week to raise money to grow. Naturally, it aimed to sell at the highest price. Thursday's insane jump though shows it under-priced the shares and could have raised more money:

$25/share: That's the price at which Beyond Meat issued shares = $238M raised.
$68.70/share: That's the price after Day #1 of trading = $653M potentially (but not) raised.
$415M: that's how much money Beyond Meat "left on the table" by IPO-ing at a share price that seemed to be too low.

Play

Activision Blizzard still can't beat Fortnite

Free-to-play video games... are the arch-enemy of pay-to-play companies like Activision Blizzard. The gamer's 1st quarter revenues fell 8% from last year — And since gaming juggernaut Fortnite (owned by private company Epic) took over social lives beginning July 25, 2017, Activision's stock is down 28%.

🎮 Q1 Lowlight: Monthly active gamers dropped to 345M from 374M last year.

Pwnd by Fortnite... Activision's new games aren't impressing, so it's trying out different ways to win:

Make addicting games: Average time spent by customers on its games was 50 minutes per day last quarter.
Learn to play their game: Fortnite trained a generation of players to pay money for extra, in-game features (virtual players need costumes) — But those sales actually fell for Fortnite from $1B to $800M.
Build stadiums: Overwatch League (a pro e-sports tournament) depends on live-gaming with live fans of Activision's popular battle game. It's launching Call of Duty League soon, too.

Gamers need to stay focused... To deal with shrinking revenues, Activision already laid off 750 employees this year to cut costs. The still-active Acti-visionaries (new nickname) are working on its top games only — Call of Duty, Overwatch, and Warcraft — which are on their last lives. Others are already Game Over (RIP, Destiny).

What else we’re Snackin’

Flip: Shake Shack shares hit 7-month high (and it's opened up in China and Rhode Island)
DVR: Sinclair buys up Fox sports channels from Disney for $10B
Well: Weight Watchers jumps 15% as it announces it'll lean more on Oprah for 2019
Raising: Tesla's selling $2B in stock and debt to raise more cash — And Elon's buying $10M shares
Hiring: Facebook closes in on a settlement with the FTC to stick a privacy-focused exec at the company's "highest levels"
Virgin: Berkshire Hathaway (Warren Buffett's firm) buys shares of Amazon for first time

Friday

The big April jobs report

Disclosure: Authors of this Snacks own shares of Beyond Meat, Tesla, and Amazon

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Tangential remarks

Nicolai Tangen, the CEO who holds the purse strings of Norway’s $1.6 trillion sovereign wealth fund, thinks that his fellow Europeans don’t quite stack up to US employees when it comes to pure hustle, telling the Financial Times in a recent interview that there is a difference in “the general level of ambition” and that “the Americans just work harder”.

Tangen has clearly been putting his money — or more specifically Norway’s — where his mouth is: the sprawling Norwegian oil fund, now one of the largest investors on the planet, has been pumping more capital into its US holdings in the past decade, while decreasing its investment into European entities.

The troublesome news for our European readers? Tangen might be onto something. According to data from the OECD, American workers are putting in almost 60 hours a year more than the weighted average for OECD nations… a benchmark that workers from countries in the European Union are already ~180 hours shy of.

Europeans ‘less hard-working’ than Americans | FT

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$70B

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Google’s parent company crushed earnings expectations, initiated a cash dividend for the first time, and authorized a fresh $70B in share repurchases for good measure. The market likes it very much.

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No, Apple hasn’t cut its Vision Pro production estimates in half

Quite a few news outlets are reporting that Apple thinks it’s only going to sell 400,000 to 450,000 Vision Pros in 2024, compared a “market consensus” of 700,000 to 800,000. They’re all citing a note from Apple analyst Ming-Chi Kuo.

Obviously there’s no question that Apple’s $3,500 face computer will have a limited audience and could be a huge flop, but this also doesn’t seem like accurate news.

The issue is that 1) this 400,000 number isn’t new. Back in July of 2023, the Financial Times reported that Apple planned to make fewer than 400,000 units in 2024, reducing its initial projections of 1M units, citing two people close to Apple and, the Chinese contract manufacturer assembling the device. 2) It's unclear who was estimating 700,000-800,000 Vision Pros in the first place, but it appears that it was Ming-Chi Kuo himself?