Hey Snackers,
Chipotle's Avocado Line: not the one that forms when they're refilling the guac. "Chipotle Goods" is a limited-edition clothing line of fashion items dyed with... 300M avocado pits. Because avo-pink is the new millennial pink.
The market ticked up slightly as US lawmakers continued negotiations on a new coronavirus stimulus package.
Disney's sales plunge 42% because hybrid ecosystems don't help in a pandemic
Mickey had a lonely quarter... Disney's sales plunged 42% because Splash Mountain isn't corona-friendly. Disney lost an unhappy $5B, compared to a $1.4B profit last year. Disney's US parks, resorts, cruises, and Disneyland Paris were closed for the entire quarter. Turns out, 3 out of 4 of Disney's biz divisions are pandemic losers:
- Parks and Experiences sales plunged 85% on corona-closures, coming in at less than $1B. Disney lost $2B on parks (compared to a $1.7B profit last year).
- Studio Entertainment sales sank 55%, since Disney hasn't been able to release a new movie to theaters since mid-March. The big-budget Mulan remake got its theatrical release postponed a million times — now it'll skip theaters for $30 online rentals starting September 4th.
- TV channel sales dropped 2% — Disney-owned channels like ABC, ESPN, and Nat Geo suffered from the acceleration of cord-cutting.
- Streaming was the only winner — sales jumped 2%. Disney now has 100M paying subscribers across its streamers (including Disney+, Hulu, ESPN+). Disney+ alone has over 60M paid subscribers, less than a year after launching (Netflix has 193M).
A tale of two business ecosystems... The more techy an ecosystem, the better it likely performed last quarter. Case in point: Amazon sales soared 40% and it doubled its quarterly profit (basically, opposite of Disney). That's because all of Amazon's biz lines directly benefited from the corona-conomy: ecommerce, cloud computing, streaming video, and grocery delivery — all highly corona-friendly.
COVID helped the digital economy... But hurt nearly everything else. It's simple, but true: the more a product can be enjoyed with a few taps on a screen, the better it likely performed in the corona-conomy.
- Having a "hybrid" ecosystem like Disney's isn't beneficial during times like these. That's why the tech-heavy Nasdaq index keeps hitting record highs.
- Now Disney is looking to double down on its techier side: CEO Bob Chapek Chapek said it'll launch a new streaming service in 2021. The less it involves leaving home, the better.
Take Two's sales soar as video games become the escape route of 2020
If I could escape... I would, but first of all, GTA. Grand Theft Auto might not be Gwen Stefani's version of escape, but it is for millions in the corona-conomy. Digital fantasy worlds apparently thrive in a pandemic/recession: video game publisher Take Two nearly doubled its profit last quarter. Now T2's stock price is at a record high, up 35% from its pre-COVID highs.
- +54%: How much T2's sales soared from March to June, a 1st fiscal quarter record.
- +127%: The spending surge from microtransactions in games like NBA 2K and GTA.
- People were not only spending more on T2's games, but also spending more in T2's games.
T2's not the only one... It's all connected in the gaming industry. US spending on video games surged 26% in June, the highest for the month in over 10 years. That lifted the tide for all gaming players, both on the hardware and software side:
- Sony's gaming sales surged 33%, helping it crush earnings estimates. Sony's PlayStation Plus subscription service added a best-recorded 3.4M users. Now Sony's gearing up to launch its next gen of PlayStation consoles just in time for the holidays.
- Microsoft's gaming sales soared 64% thanks to Xbox games and subscriptions. Microsoft is now working on integrating Xbox with its upcoming "Netflix for games" service, which lets you play from your smartphone or tablet.
The big threat to gaming companies is democratization... For decades, a handful of video game publishers acted as gatekeepers of the gaming world. Take Two's console games sell for up to $60+, and the latest consoles they're played on (like Xbox) sell for ~$400. But now "cloud gaming" — like Microsoft's "Netflix for games" service — is threatening that exclusive biz model. When you can play high-quality games straight from a smartphone, that opens doors for developers, and for prices of Take Two's games to drop.
What else we’re Snackin’
- Geek: Best Buy stock approaches its all-time high as consumers stock up on electronics for WFH (and school-from-home).
- Glowing: L'Oreal sales rose in July for the 1st time since January (more DIY hair dye, less lipstick).
- Beyonded: Beyond Meat's US retail sales nearly tripled compared to a year ago as it pushed to make its plant-based patties more affordable (and hoardable).
- Driver: Ford CEO Jim Hackett is unexpectedly retiring — he'll be succeeded by COO Jim Farley, who was a change-maker at Toyota.
- Blockbuster: Movie theater chains Cinemark and Regal push back on AMC's decision to slash its theatrical window for Universal films to 17 days.
- Slick: Oil giant BP reports a historically bad $17.7B loss for the quarter and cuts its dividend.
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