Hey Snackers,
Here's an absurd headline that somehow makes sense in 2020: "Seven-hour flight to nowhere sells out in 10 minutes." Airlines are running flights that land... where they took off.
Stocks dropped Monday, and it wasn't driven by Big Tech stocks (for once). Investors were concerned about rising COVID infections. Meanwhile, no real progress has been made on a 2nd stimulus package in the US.
Rev me up when September ends... Six-year-old electric truck startup Nikola is having a wild month. Barely a week ago, GM announced it's dropping $2B for an 11% stake in the freshly IPO'd startup. GM will also be producing Nikola's trucks, and Nikola stock soared 40% (because: Nikola hasn't actually sold a vehicle yet). Then things went from 100 to 0 real quick:
Dude, where's my e-car?... Apparently, rolling down a hill. As one of its callouts, Hindenburg said a promo video showing a Nikola semi-truck prototype traveling on a road was fake. Turns out, the truck was simply rolling down a hill — aka: not moving itself. Nikola's response: "Nikola never stated its truck was driving under its own propulsion in the video." It simply described it as "In Motion." Trueee.
Is Nikola the next Theranos?... First, we should note that Hindenburg has a direct interest in Nikola's stock plunging. It's a short-selling firm, so it's literally putting money on Nikola failing. Also: GM likely did some real due diligence before investing. But Theranos also managed to raise huge sums from investors before its products saw the light of day — that story that ended with a massive fraud. We don't know if the Nikola allegations are true, but the founder's resignation isn't an inspiring sign.
Day #182 of no free samples... Sigh. Wholesale clubs are able to offer cheap prices by cutting out the retail middleman, charging yearly membership fees, and selling in industrial-sized bulks. When you think of warehouse clubs, you're probably thinking Costco, Sam's Club, and 30-pound packs of bacon. But smaller East-Coast-based BJ's is outperforming both:
BJ's is basically a wholesale grocery... Excellent thing to be during a pandemic/economic crisis. 72% of BJ's sales come from groceries — that's more than Costco and Sam's can say. BJ's stores are smaller, and it has only 200 locations compared to Costco's ~800. But it carries more than double the amount of items thanks to its food-focus (think: 10 varieties of choco milk compared to Costco's Kirkland).
Pandemic winners are recovery laggers... Unless your name is Zoom, pandemic growth spurts likely mean slower sales as things "normalize." Last quarter, people were eating home more, saving up more, and shopping in bulk for fewer grocery trips. BJ's got lucky with its existing business. But now grocery sales are falling as restaurants reopen, and grocery competitor Walmart+ just launched. The bar is higher for BJ's stock gains to continue.
A lot can change in a year... and for once, we're not not talking pandemic/lockdown/recession. Mobile banking app Chime is now worth nearly 10X more than it was 18 months ago. Since just December, Chime has doubled its valuation:
But don't call it a bank... Chime partners with banks to offer checking/savings accounts. "We’re more like a consumer software company,” according to Chime's CEO. It's no surprise that he'd like that rep to land. Software companies are thriving, while Big Bank stocks are down over 30% for the year on expected loan defaults.
Chime's value increased thanks to the pandemic... at least in part. You're not going into your local branch to get cash and free coffee with powdered cream. Many people who didn't feel comfortable with banking online before have now gotten used to it. The move away from cash means that Chime cards are getting swiped/linked more often (again, their core biz). Throw in massive unemployment, and Chime’s no-fee banking seems even more attractive.
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Disclosure: Authors of this Snacks own shares of Walmart and Amazon
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