Hey Snackers,
Your Zoom background could become your real background: Barbados wants to offer a 1-year visa so you can work from its pristine beaches. It's remote work, with a rum punch.
Markets ticked up thanks to positive results from Moderna's COVID vaccine trial. Also: US manufacturing activity had a record surge in June — but rising coronavirus cases could slow the recovery.
Big Banks report surprisingly strong earnings — but they can't celebrate yet
Free lollipops at the teller... JPMorgan Chase, Goldman Sachs, and Citi all announced expectation-beating earnings driven by record trading revenues. The Fed has been on a corporate bond buying spree, lending companies money at near-zero interest (to grease up the economy). Banks cashed in on underwriting and trading all those bonds. Stock trading also surged on corona volatility (banks made bank on that, too).
- JPM's overall trading revenue surged almost 80% to a record. Bond trading revenue doubled, helping JPM rake in $4.7B in profit from April - June.
- Goldman's bond trading revenue soared 150% for its biggest earnings win in 10 years.
But this was a very unusual quarter... because of the multi-trillion dollar cash cushion the government unleashed on the economy. The Fed's massive bond-buying spree brought cash into banks. Financial safety nets, like stimulus checks and extra unemployment benefits, led to Americans' income actually rising 10% in April (despite extreme unemployment). Now...
- Some safety nets are closing: The extra $600/week in unemployment benefit is set to end next week. Yesterday, the 3-month delay for tax filing ended.
- JPM said loan defaults had been limited thanks to the gov's financial stimulus boosts. Now that benefits are ending, that could change.
Banks aren't celebrating yet... JPM CEO Jamie Dimon thinks the worst of the recession lies ahead. Now that the big stimulus training wheels are coming off, many might not be able to pay back their loans, so banks are setting aside massive amounts of cash in advance to cover these expected losses. JPM, Citi, Goldman, and Wells Fargo saved $30B for these loan-loss provisions this quarter (on top of over $19B last quarter). They're prepping for an economic storm.
Zoom gets into hardware with a $600 multi-cam monitor (aimed at your boss)
Zoom, Zoom, Zoom, Zoom... I want you in my room. That's how Zoom hopes you'll feel about its new $599 video chat device. The hardware, called "Zoom for Home – DTEN ME" (catchy), is not actually being made by Zoom. Zoom's partner, DTEN, is producing it — Zoom just loads its software on:
- The hard specs: The 27-inch screen monitor comes with three wide-angle cameras, eight microphones, and touchscreen display. So everyone can see your Zoom Face in HD.
- The soft specs: Zoom software is pre-loaded and the interface gives you easy access to popular features. Exciting stuff like: start meeting, make call, choose generic background.
Why you so obsessed with Meet?... Zoom for Home is Zoom's bet that WFH is here to stay. With COVID cases surging in the US, remote work won't be losing steam any time soon. Zoom wants to capitalize on that (even more than it already has) — so it's investing in an immersive, souped-up WFH setup.
- It's not alone... Google’s Nest Hub, Facebook’s Portal and Amazon’s Echo Show are similar video chat devices. They're also much cheaper than ZFH (e.g. Nest Hub costs $90).
- But have you ever seen anyone actually use those? Zoom thinks its synonymousness with "WFH" gives it a better shot (than FB's flopped Portal). Plus: it doesn't really want you to buy ZFH...
Zoom is really trying to win over your boss... Given the $600 price tag, it's clear that Zoom is targeting employer wallets (not employees). As WFH drags on indefinitely, companies have whole task forces dedicated to making remote employees feel as engaged and productive as possible. Zoom wants to convince companies that it can recreate real-time collab productivity at home. If it succeeds, ZFH could become an "expensed" fixture.
Fresh off its IPO, Lemonade adds Pet Insurance — it's all part of the plan
How to make insurance sexy... Call it "Lemonade" (in Millennial cursive), throw it in an app, and add pink buttons everywhere. Digital insurance startup Lemonade refers to itself as a "cocktail of delightful experience." Its stock jumped 139% on its IPO day this month and has barely budged since. Now it's launching Pet Insurance: the sweet new vertical will complement its core renters/homeowners insurance.
- Lemonade data revealed: 70% of Lemonade customers have pets, but less than 2% have pet insurance. That's not a good feline for the 68% un-insured dogs and kitties.
- Non-Lemonade data revealed: Americans spent over $75B on pets in 2019, and puppy love has only accelerated in the corona-conomy. Chewy sales soared 46% last quarter on extra pet pampering and adoptions.
The art of the cross/up-sell... Lemonade is pricing its pet insurance at $12/month. But existing customers who bundle it with their home/renters policies get a 10% discount.
- Cross-sell: Lemonade is trying to juice more out of its customers by throwing in this extra offering it knows they'll want.
- Upsell: Lemonade can also lure in new customers with its affordable pet insurance, then upsell them its pricier core home insurance.
Lemonade needs to increase your Lifetime Value... if it wants to become profitable. 90% of its customers are 1st-time insurance buyers. Page 131 of Lemonade's S-1 reveals its simple master strategy to gradually increase their monthly payments: expand to new products. Lemonade gets you with renters insurance at 25, bumps you to pricier condo insurance at 30, then will add on Auto, Life, and Umbrella insurance by your 50th b'day. Growing with customers now means Lemonade needs to launch new products ASAP.
What else we’re Snackin’
- Bollying: Google invests $4.5B for an 8% stake in India's #1 telecom company, Reliance Jio (Facebook dropped almost $6B for 10%).
- Possible: Impossible Foods partners with meal kit company Home Chef to make plant-based burgers Kit-Possible.
- UnitedWealth: Insurance giant UnitedHealth has its most profitable quarter ever, raking in over $6.6B in profit on people staying away from doctors offices.
- Lucky: Apple wins a major tax battle with the EU — now it no longer has to pay $15B in back taxes to Ireland.
- Lanez: Chipotle will hire 10K workers as it expands its mobile-order drive-thrus (aka "Chipotlanes").
- Unicorn: Thrasio becomes the fastest profitable company to hit a billion-dollar valuation.
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Thursday
- Weekly jobless claims
- Earnings expected from Netflix, Domino's, Johnson & Johnson, and Morgan Stanley
Disclosure: Authors of this Snacks own shares of Chipotle and Apple
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