🐐 Grand Theft FarmVille

Tuesday, January 11, 2022 by Robinhood Snacks |
GTA: Farm Edition [Moment via Getty Images]

GTA: Farm Edition [Moment via Getty Images]

Yesterday’s Market Moves
Dow Jones
36,069 (-0.45%)
S&P 500
4,670 (-0.14%)
Nasdaq
14,942 (+0.05%)
Bitcoin
$41,620 (-0.58%)

Hey Snackers,

Leonardo DiCaprio finally won an Oscar in 2016. Now he has his very own tree species. After the star’s climate activism helped save a critically endangered tree in Cameroon, scientists named it Uvariopsis dicaprio.

Tech stocks jumped today, even though Jerome Powell said at his confirmation hearing that the Fed is prepared to raise interest rates. Omicron is causing a nationwide “sickout,” leading to empty grocery shelves, more flight cancellations, and some closed retailers (even a Walmart). Meanwhile, Facebook-owner Meta is mandating Covid boosters for all office workers.

Farm

1. GTA maker Take-Two says it’s buying Zynga for $12.7B, as pandemic mobile gaming booms

Grand Theft FarmVille... Instead of rolling in a sleek Zentorno, you're cruising on a goat. Take-Two Interactive agreed to buy mobile-gaming icon Zynga for $12.7B. Zynga makes hit apps like FarmVille, Words With Friends, and CSR Racing. Take-Two is known for computer and console franchises like GTA and NBA 2K — but has started snapping up smartphone games.

  • Take-Two said it would buy Zynga's shares for a 64% premium to their Friday price. Zynga shares soared 41% yesterday. Take-Two investors were less thrilled: The stock slumped 15%.
  • One of the gaming industry's largest acquisitions ever: The Zynga deal, expected to close by June, shows that Take-Two is serious about mobile.

Billions in the palm... Wild stat: Consumers now spend more on mobile games than on console and PC games combined. Zynga makes $$ through its in-game buying biz (tokens, etc.), plus its smaller ad biz (accidentally clicked mid-game). The pandemic supercharged scrolly-tappy gaming: In the first quarter of 2021, users spent a record $1.7B per week in mobile games. Also: Children’s screen time soared during the pandemic, and parents and researchers are worried about kids developing gaming addictions.

  • Zynga shares have plunged since August, when it saw audiences drop as pandemic restrictions eased (instead of WWF, you played IRL Scrabble). But last quarter, Zynga notched record third-quarter bookings and narrowed losses, while ad sales nearly doubled.
  • Mobile is booming: Take-Two said it expected mobile to make up more than half its bookings in the next fiscal year, up 5X.
THE TAKEAWAY

Mobile can “maxim-eyes”... Maximize users while minimizing costs. We’re spending more time (and money) on our phones. Mobile now accounts for over half of the $180B gaming industry, and is the fastest-growing segment. While social-media games like FarmVille can cost less than $250K to make, GTA 5 cost $265M to develop and market (and took three years to create).

Jackpot

Upping the ante… NY legalized mobile sports betting this weekend, just in time for yesterday’s college-football championship and next week’s NFL playoffs. Before, New Yorkers had to enter New Jersey to bet on sports. Now they can gamble from their couches. Last year US gamblers spent $40B betting on sports — double from 2020.

  • Betting apps from DraftKings, FanDuel, Caesars, and Rush Street started taking NY bets on Saturday. Five other companies are waiting for approval.
  • NY officials expect to generate $480M in gambling tax revenue this year, with most proceeds going to education and tax relief.

What happens in Vegas… hasn’t stayed in Vegas. Since the federal sports-betting ban was lifted in 2018, 30 states and DC have legalized live sports betting, but only 18 have legalized mobile betting. NY is the largest state yet to go mobile, but NJ has the highest gambling revenue of any state, snagging one-fifth of the US’s gambling bucks.

  • Atlantic City = cheaper hotels: Gamblers in NJ, the second state after Nevada to legalize gambling, have wagered 63X more than NY gamblers on sports betting.
  • Analysts expect NY’s betting biz will surpass NJ’s in 2024. Ohio, Maryland, and Nebraska plan to launch sports betting soon.
THE TAKEAWAY

The house always wins… but it doesn’t necessarily win big. As gambling is legalized more widely, betting companies’ revenue is expected to 5X by 2026. But new markets don’t guarantee bigger profits: NY’s 51% tax on gambling revenue — 4X as high as NJ’s — will eat into apps’ profits as they grow. Shares of DraftKings and PointsBet have fallen more than 60% over the past year as the companies splurged to compete for customers.

What else we’re Snackin’

  • Hike: Goldman Sachs predicts the Fed will raise interest rates four times this year, one more than previously expected. The goal: Reel in (still soaring) prices while unemployment is nearly back to normal levels.
  • Jibbitz: Crocs’ quarterly sales spiked an expectation-beating 42% from last year. The “ugly” shoemaker’s Croc-star earnings throughout the pandemic have shown that functional is (still) the new fashionable.
  • High: Tilray shares spiked 14% after the pot giant reported an unexpected quarterly profit. Sales jumped 20% from last year on demand for “beyond the leaf” products like ready-to-drink cocktails and THC lagers.
  • mRNASAP: Pfizer announced deals to expand use of its mRNA tech beyond Covid vaccines, including a $1.3B agreement with gene-editing company Beam Therapeutics to develop treatments for rare genetic diseases.
  • Ad: Cable titan Discovery (which owns the Food Network) bought a 10% stake in OpenAP, an ad-targeting group that helps TV networks get more specific data on viewers. NBC, Fox, and Viacom have also invested.

Snacks Daily Podcast

Airport icon Clear has bought Argentinian startup Whyline to help fight the inconvenience and germs of long lines — and not just at TSA checkpoints.

Tune in to hear why line-killing software is having a moment.

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Snack Fact of the Day

More than 1 in 10 first-time home buyers sold crypto last quarter to fund down payments
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Tuesday

  • Earnings expected from: Albertsons

Authors of this Snacks own: Bitcoin and shares of Zynga, Clear and Pfizer.

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