Hey Snackers,
Happy belated 15th birthday, Gmail.
Solid manufacturing data from the US and China got the 2nd quarter going right — And the S&P 500 closed in on its highest point of 2019.
Kellogg's sells off cookie biz to Nutella-owner for $1.3B
Going full paleo?... Kellogg is cleansing its home: For $1.3B, Italian sweets legend Ferrero beat out Twinkie icon Hostess Brands in a multi-month bidding battle for the Kellogg's dessert. The winnings include elf-powered Keebler, Famous Amos, fruit snacks, and even Girl Scout cookies (#SaveTheSamoas).
Cookies need love, too... And that's what Ferrero does — It turns around tired candy brands with marketing love. It recently bought some candy bars from Nestlé for $1B and already reintroduced a "Better Butterfinger" (with bigger peanuts 👌). Kellogg's hadn't been giving its older candy brands the attention they needed, and it shows:
- $4.4B = The 2001 price Kellogg paid for Keebler.
- $900M = The 2018 total sales for Keebler + all the other brands Kellogg's just sold.
Unhealthy isn't totally unhealthy... Kellogg's stock is down 11% in the last year as consumer tastes shift, and its sugar-fueled cereals lose out to chia pudding. But the calorie-infused brands that Kellogg has treated with marketing money are actually doing just fine.
- Cheez-Its (sales up 5% since last year)
- Pringles (up 7%)
- Rice Krispies (up 15%)
The new most profitable company in the world: Saudi Arabia's Aramco (by far)
Long-term exclusive commitment... Saudi Arabia has historically been a one company Kingdom. That's Saudi Aramco, the state-owned oil giant. And as a privately-owned company, Aramco's financials enjoyed secret status. But now that it'll participate in public markets for the 1st time, we get a look at its (gigantic) numbers.
$15B to spare?... That's all Aramco's asking to borrow. To convince investors it's good for the money, it's showing off its profits. And they're extremely connected to whatever oil prices are doing:
- In 2016, profits for Aramco were $13B. That's when the average price of oil hit a 13-year low of $38 per barrel.
- By 2018, profits had surged to $111B thanks partly to oil prices returning to $58 — Aramco's profit was more than Apple, Alphabet, JPMorgan Chase, and Exxon Mobil's. Combined.
- Despite the extreme profitability, Aramco didn't get a perfect credit rating ("A1" = good, but lower than less-profitable American oil companies). Blame the bigger political risk in the region.
This may shake the oil habit... Aramco's profits fund 70% of Saudi Arabia's national budget. That worries Crown Prince Mohammed bin Salman, as car giants and nations go electric. The $15B that Aramco's borrowing will give the Prince money to invest in economy-diversifying anything (he's got a thing for US tech and movie theaters).
World Wrestling Entertainment drops after a TV show takedown
But is it fake?... For 23 full minutes, John Oliver's Last Week Tonight put World Wrestling Entertainment in a figure-four leg-lock. The Sunday night show claimed WWE wrestlers are independent contractors facing brutal work conditions. WWE shares fell 2.3% early Monday before rebounding back.
The ring of public opinion... That's where the stock's moves all played out. WWE was accused of blocking wrestler unions and offering them no benefits, just to save money. Then WWE aggressively denied everything from the HBO segment, claiming it could "refute every point in his one-sided presentation."
Feels like a docu-doozy re-run... High-profile exposés and documentaries that damage a brand can hurt share prices long-term. Here's who else has also suffered from the stuff on TV:
- Blackfish dampened SeaWorld park attendance for years.
- Leaving Neverland could hurt Michael Jackson's Sony music deal.
- The infamous 60 Minutes segment on Lumber Liquidators ripped the lacquer off the wood company's shares.
What else we’re Snackin’
- Reverse: Lyft stock stays volatile, falls 12% on Day #2 of trading
- LéFlix: Netflix unveils its new French content strategy
- Food$: Amazon announces it's cutting Whole Foods prices on Wednesday even lower
- Hired: Tinder snags a new Chief Product Officer to focus on college students
- DTR: Slack chooses the New York Stock Exchange to list its stock
Tuesday
- Earnings from Dave & Buster's and Walgreens