💴Tesla cashes in on its high

Friday, February 14, 2020 by Robinhood Snacks | Disclosures

Tesla: "Let's get this bag"

Dow Jones
29,423 (-0.43%)
S&P 500
3,374 (-0.16%)
9,712 (-0.14%)
$10,242 (-1.74%)
10-Yr US Treasury

Hey Snackers,

"Underwhelming." How Nestlé described demand for its low-sugar chocolate bar, Milkybar Wowsomes — it was (Nes)quickly taken out of production.

Markets dipped on word of a spike in deadly coronavirus cases.

1. Tesla is finally cashing in on its stock price, offering $2B in new stock

Time to get money... Tesla's stock has been having a moment — its market cap is now $144B, worth nearly double Ford and GM's combined $83B value. Now, Tesla is cashing in by issuing $2B worth of new stock — 2 weeks after Elon said raising money "doesn't make sense." Tesla stock dipped at first (because new shares dilute the value of existing shares), but quickly bounced back.

Unusual move for a large, public company... but it makes sense. That's because swings in a stock price don't directly affect the company -— A Tesla stock surge doesn't influence its bottom line. Unless the company decides to issue and sell new shares:

  • IPO: An Initial Public Offering price does matter, because the company is directly selling new shares for the first time to the public (the higher the stock price, the more $$$ the company collects).
  • Secondary Market: Once those shares are in the hands of regular investors, we are the ones who benefit or lose from the stock price's rise/fall. When you own a stock and sell it high, you get money, not the company.

Tesla shares are kind of like second-hand Gucci bags... Gucci only makes money off the initial purchase — not when the original buyer sells the special edition purse for a higher price years later. Neither do publicly-traded companies when you sell their shares. But by offering new shares to the public, Tesla can raise cash to fund its projects, like the 4th Gigafactory that's currently finding space in a forest near Berlin.


The classic Heinz ketchup bottle... hasn't changed much during the company's 151-year history. Condiment legend Heinz merged with mac-n-cheese icon Kraft back in 2015 to form Kraft Heinz. The food giant's latest 5% drop in quarterly sales knocked shares down 8% Thursday — probably a result of Kraft's lack of healthy food options:

  • Think of processed pantry puppies like Jell-O, Oscar Mayer, Capri-Sun, and Lunchables — all Kraft Heinz brands. All boasting unpronounceable ingredient lists.
  • Consumers have been moving away from super-processed foods, towards healthier/trendier "whole" foods snacks like Greek yogurt, almond butter, and protein bars that show off their (lack of) ingredients.

Kraft's labels are in pain... The company had to write down the value of its old-school brands by $15B last year — just yesterday, Kraft Heinz announced that Maxwell House coffee is worth $213M less than you thought. Add that all up and Kraft Heinz's stock has plunged over 70% in the past 3 years, and 40% in the past year alone.


Kraft needs to ketchup to the times... because it's getting left behind by its rivals. Its sugary Big Food peers have been busy acquiring cool, health-centric startups — without having to innovate themselves:

  • Kellogg bought RXBar, when it was the fastest growing nutrition bar in the US.
  • General Mills bought Annie's Organic and Epic meat-based bars.
  • Hershey's acquired SkinnyPop popcorn.

Not so fast... Microsoft scored a huge win by snagging the Pentagon's $10B cloud computing contract (aka the "JEDI" deal) back in October. Cloud-competitor Amazon wasn't so pleased, so it appealed the decision in December. Now, a federal judge ordered a temporary block on JEDI in response to Amazon's lawsuit.

  • JEDI: Over 10 years, Microsoft would modernize/build the Department of Defense's IT in the cloud (cloud: think a Google Doc stored on the internet, vs. an OG Word Doc stored on your laptop). Microsoft's servers would store/crunch government data.
  • AWS: Amazon's cloud-computing giant makes up 12% of Amazon's revenue, but a whopping 63% of its profit. Amazon claims President Trump sabotaged its bid because he doesn't like The Washington Post (which Amazon CEO Jeff Bezos owns).

The DoD is America's largest employer... That means big data. And big data means big cloud cash — cash that's now on the line because of this temporary block. If the judge decides the DoD needs to reconsider its decision, Microsoft could lose the biggest cloud contract in US history.


Cloud is the new oil... Like oil back when everything in the economy needed to be shipped and delivered in trucks, today's economy runs on cloud computing — Companies are moving to cloud providers to store their data and manage their biz apps, instead of doing it themselves. Now cloud leaders like Amazon, Microsoft, Oracle, and IBM are increasingly fighting over these big cloud deals.

What else we’re Snackin’
  • Makeover: Snapchat is testing (another) new redesign
  • Stream: Around 20% of America's TV-consumption is done via streaming, according to a new report (and Netflix is on top)
  • Sub: Rihanna's Savage x Fenty line is accused of duping customers into signing up for a $50/month subscription service through deceptive marketing
  • Arriving: Tripadvisor predicts that its Experiences and Dining biz will eclipse its OG hotel revenues this year
  • Double: Roku revenues jumped 49% thanks to more advertising bucks

Sign up for Robinhood, our commission-free investing app, and get a free stock. Already on Robinhood? You'll still get a free stock for getting a friend to sign up (they'll get one too).

Snacks Daily Podcast

Biting deeper into our 3 stories. And the Westminster Dog Show is America's 2nd longest running sporting event. What's the first? Listen to today's 15 minute Snacks Daily pod.


Disclosure: Authors of this Snacks own shares of Amazon

ID: 1090892

Subscribe to Robinhood Snacks

Our Editorial Principles
Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.

Getting “early access” to options or Web is defined as signing up with a valid email address for a spot in Robinhood Financial’s respective waitlist queues for Web or for options. Getting “early access” to Robinhood Crypto is defined as signing up with a valid email address for a spot in Robinhood Crypto’s waitlist queue. Early access to the waitlist for Web, options, or Robinhood Crypto should in no way be construed as confirmation that a brokerage account with Robinhood Financial has been opened or will even be approved for opening. Priority may be given to Robinhood Gold subscribers and existing customers of Robinhood Financial.

Free trading of stocks and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered. Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing. Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Additional regulatory guidance on Exchange Traded Products can be found by clicking here.

Options transactions may involve a high degree of risk. Please review the options disclosure document entitled the Characteristics and Risks of Standardized Options available through https://about.robinhood.com/legal or https://www.theocc.com to learn more about the risks associated with options trading.

The cash management program is expected to be offered by Robinhood Financial LLC. The cash management program, when operational, will be an added program to Robinhood brokerage accounts and will not be a separate account or a bank account. Robinhood Financial will provide additional information on the cash management program once it is operational to help customers, including those with “early access,” to determine if they want to add the program to their brokerage account.

Robinhood Snacks newsletters and podcasts reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed Robinhood account or any other account, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and customers may lose money, including their original investment. Robinhood Financial LLC, member FINRA/SIPC.

Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success. Robinhood Financial LLC, member FINRA/SIPC.

Third party information provided for product features, communications, and communications emanating from social media communities, market prices, data and other information available through Robinhood Markets, Inc., Robinhood Financial LLC or Robinhood Crypto, LLC are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or cryptocurrency or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any information about Robinhood Crypto on any Robinhood website (including www.robinhood.com and blog.robinhood.com), the Robinhood platform, e-mails, or any other communications, are meant for informational purposes only and are not intended as an offer, solicitation, or advertisement for Robinhood Crypto or any goods or services offered by Robinhood Crypto. The Robinhood website provides its users links to social media sites and email. The linked social media and email messages are pre-populated. However, these messages can be deleted or edited by users, who are under no obligation to send any pre-populated messages. Any comments or statements made herein do not reflect the views of Robinhood Markets Inc., Robinhood Financial LLC, Robinhood Crypto, LLC, or any of their subsidiaries or affiliates.

Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Trading in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. Cryptocurrency trading requires knowledge of cryptocurrency markets. In attempting to profit through cryptocurrency trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial cryptocurrency trading. Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. Cryptocurrency trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system. Several federal agencies have also published advisory documents surrounding the risks of virtual currency. For more information see, the CFPB’s Consumer Advisory, the CFTC’s Customer Advisory, the SEC’s Investor Alert, and FINRA’s Investor Alert.

Robinhood Crypto, LLC has a seller of payment instruments license in Georgia, with reference number 61417.

Robinhood Crypto, LLC has a money transmitter license in New Jersey, with reference number 1803456-C22.

Please note that an Alaska money transmission license does not cover the transmission of virtual currency.

Check the background of Robinhood Financial LLC and Robinhood Securities, LLC on FINRA’s BrokerCheck.

Robinhood Terms & Conditions    Disclosure Library    Contact Us    FAQ

© 2020 Robinhood. All rights reserved.