Hey Snackers,
CHEW. GRIN. SMYL. CUTE. We'd take DMPL.
SmileDirectClub missed a huge branding opportunity for the stock's ticker symbol: it went with "SDC."
Stocks enjoyed their 7th-straight win as the ortho-disruptor suffered through its IPO.
SmileDirectClub drops 28% on its IPO, earning a (bad) superlative
First impressions... They're supposed to be SmileDirectClub's thing. Shares dropped 28% on its 1st day of trading as the unicorn transformed into a public company — that makes it the worst-performing major IPO since 2000. But it doesn't change its goal: "democratize access to a smile you’ll love."
"Serious concerns"... That's what orthodontists think of SmileDirectClub's biz model. The canine-disruptor has harmoniously combined online with offline to straighten teeth for less than those concerned traditional dental offices:
- "Telemedicine" = Online: SmileDirectClub sends you a tooth-mold impression kit to create a clear aligner, but your check-ups are done remotely through a doctor online — just like hair loss/ED startup Hims.
- "SmileShops" = Offline: It's built 300 aggressively-lit "SmileShops" if you crave hands-on, in person help with those biting molds.
- The Result: SmileDirectClub claims its treatment costs $1.9K (vs. $6K-$8K for traditional braces) and it takes 6 months on average (vs. 18 months).
The IPO was a failure, but getting there was a huge success... There are 2 types of investors - existing/early shareholders (like venture capitalists and Golden State Warrior Draymond Green) and new investors (anybody who bought shares at the IPO). While the new shareholders' stock fell on Day #1 (IPO stocks are volatile), the existing shareholders have enjoyed SmileDirectClub's value rise.
- August 20th, 2019: SmileDirectClub issued its S-1 statement to go public, last valued at $3.2B.
- September 11th, 2019: Investor enthusiasm during the week-ish long roadshow let SDC set the price of shares at $23, valuing the company at $8.9B.
- Yesterday: The stock price fell big, but its value is still almost $7B — more than double its last official valuation when it started the process.
Under Armour aggressively commits to an anti-athleisure lifestyle
Under Armour hates brunch... Not really (but kind of). The house-protecting brand has decided to commit to what it does best: "Technical Apparel." Under Armour is doubling down on non-casual gear and its leaders made it clear on CNBC:
- CEO/Baltimore-legend Kevin Plank: "It's all performance."
- COO: Under Armour is "becoming a louder brand." Point taken.
This is purely anti-Lulu... On our Snacks team's unofficial "apparel spectrum," here's where Under Armour falls:
- "Leisure" (one extreme): Chill apparel brands from Vans to Sperry. Nothing athletic about it. Under Armour has no interest.
- "Athleisure" (the middle): The $350B global market is dabbled in by Nike, but dominated by Lululemon. Under Armour doesn't want to fight for market share from the existing leaders.
- "Technical Performance Apparel" (the other extreme): Under Armour wants to own this — the more high-performing and intense it gets, the more UA separates itself from Nike, Outdoor Voices...and Lulu.
But UA does love Lulu's brand moves... Under Armour also announced it's doubling its physical stores to 2.5K by 2023 — and they won't discount. Currently, a shocking 90% of its locations are outlet stores. Under Armour is jealous that Lulu controls its own locations — that lets it maintain a full-price, discount-free, premium brand status.
GE is officially selling off $38B of itself (to save itself)
Let's start with the less-bad... 127-year-old General Electric isn't behind the app-tastic consumer tech you love – But it's big with big products. Really big. Like the kind of stuff entire countries and industries buy. Behold these numbers:
- 2/3 of all airplanes that take-off are flying on GE-made engines.
- 90% of "transmission utilities worldwide” are equipped by GE-made turbines.
GE is basically taking donations... The OG conglomerate has been mocked for mismanagement, accused of the largest accounting fraud since Enron, and its stock lost 75% of its value in 2 years. So to desperately raise cash, it's selling off its dearest assets like a 3rd grade bake sale. Now check out these numbers:
- It's sold off its transportation unit (trains) for $21B.
- And it's selling its oilfield services (Baker Hughes) for $2.7B.
- Yesterday, GE claimed the total amount it's selling off should raise $38B.
- But the company is only worth $80B, so it's selling off nearly half its value for cash.
- And that $$$ isn't going to invest in new projects: it's to pay down a whopping $105B in debt.
- Get this — GE owes so much more money that it has a negative net worth.
Pensions are GE's silent disadvantage... If you want to see how old GE is, look at its pensions: the regular payments it dishes out to its retired workers. The total it owes these GE-faithful is $27B, spending ~$1B per year on them. So while nimbler startups can invest in growth, GE is paying back its lenders and hooking up its city-sized population of retirees.
What else we’re Snackin’
- Team: PayPal's Venmo and Pepsi team up for a loyalty program ("PepCoin") that puts cash in your Venmo account when you buy Pepsi products 🥤🥤🥤🥤
- PG: Walmart's streaming service, Vudu, introduces "Family Play" — a feature that skips through sex and drug scenes
- Slip: BP says it will sell off its oil projects to hit climate change goals
- Calories: Kraft Heinz dips as investors worry it's got no plant-based strategy
- Open: Gap's Old Navy goes anti-Retail-pocalypse, planning 800 new stores to nearly double its total number
- $$$: The US budget deficit (government spending minus what the government takes in) passes a key $1 trillion (with a "T") mark for the 1st time since 2012
Friday
- Cloudflare's cyber-security IPO
Disclosure: Authors of this Snacks own shares of Lululemon
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