Hey Snackers,
A family that had booked a European vacation before the virus recreated the entire 15-hour flight in their living room. "Lounge Chair Air" flight was complete with baggage checks, boarding passes, and disappointing airline food. Never give up on your dreams.
Stocks were dragged down by free-falling oil which traded below zero for the first time ever.
And FYI, the Snacks Madness Semifinals is finally here — who will make it to Wednesday’s championship round? Vote for your pick today @RobinhoodSnacks.
Oil drops a shocking 200% in 1 day — and prices goes negative for the 1st time ever
When opposite day is the new reality... There is so ridiculously little demand for oil right now that we could theoretically be getting paid to fill up our own tanks. The world's economic engine was switched off almost overnight — planes aren't flying, people aren't driving, factories aren't operating. That means oil demand has taken a massive nosedive. And things just got (literally) even more negative for oil.
- In 2008, oil hit a record high of $140 a barrel — it has hovered not too far from an average of $70 ever since. That is, until the corona-conomy came for its head.
- Yesterday, the price of a barrel plunged from about $17 to less than $1. Oil officially gained 99 Cents Store status. Then... things got worse.
- Oil plunged below zero and went negative for the first time ever. The price of the futures contract for West Texas Crude fell to negative $38 a barrel.
A crude awakening.... We've got so much unused and unwanted oil around that US energy companies have nowhere to store it. Even with the recent OPEC production cuts, it's still way too much (it'll always be too much if no one wants it). That's why sellers are literally paying buyers to take their oil inventories off their hands.
Eye on the futures (contracts)... If the price of oil goes up, airlines will lose since they have to pay more for oil — if the price goes down, oil companies lose, since their product's worth less. Both airlines and oil companies want to protect themselves from price fluctuations, so they can "hedge" their costs/revenues using futures contracts, which hand off the risk (and potential reward) to investors.
- Investors agree to buy or sell oil in the future at a set price. Buyers hope the price will go up because they would get to buy oil for less than it's worth (vice versa with sellers).
- Right now, oil contract buyers are scrambling to sell before they are forced to pay way more than oil is actually worth.
Uber's (very) low-key $810M government contract win could be a game-changer
Extremely Quiet & Incredibly Vague... While casually perusing the US General Services Administration website (as we often do for fun), we noticed an interesting update: Uber just got the greenlight to sell its services to the US government, allowing it to compete for $810M worth of gov spending over the next 5 years.
- Back in November, Uncle Sam was looking to find the best vendor for its future "Governmentwide Rideshare/Ride-hail Passenger Services to meet the on-demand passenger transportation needs of Federal employees while carrying out official duties." TLDR: Expensed rides for gov-employees.
- Uber responded to this Request for Proposal, outlining how it can be the best gov-employee transporting service thanks to its massive fleet, emailed receipts, safety, etc. Must have been convincing, since Uber won approval to serve as a vendor.
Pass the red tape... Since these projects are funded by taxpayer money, vendors have to jump through hoops for approval. The gov needs to ensure contracts are awarded fairly, to the most deserving company at the best price. No bribery, corruption, or waste. Uber will have to do more red tape dancing if it wants the full $810M to cruise Nancy or Mitch from marble building to marble building.
This could be a game changer for Uber... This almost uni-contract ("unicorn contract") would be a huge boost to Uber's ride-hail biz, which has been struggling during the corona-crisis on near-zero demand.
- Spending on Uber rides has dropped over 80% in March — Uber just yanked its 2020 forecast and wrote down $2B in losses for its investments.
- If Uber gets the whole $810M, that would equal 6% of its total annual revenue. The US government has 2.1M full-time employees, meaning lots of steady long-term business.
Facebook launches its FOMO-driven gaming app to take on Twitch and YouTube
Get'cha head in the game... Looks like Zuck got some inspo from High School Musical. In case Facebook didn't already control enough of our social lives, it just launched a social gaming app to take on Amazon's Twitch and YouTube Gaming. The creatively-named Facebook Gaming app just launched on the Google Play Store:
- Play & watch: Users will be able to watch friends and famous gamers play in real-time, and send their gaming idols "Stars" (digital tokens that cost/can be redeemed for money) for their virtual escapades.
- Want to game with friends?: Challenge any FB friend to a tournament (anybody can create one — not just the pros).
- "Go Live": This feature lets users livestream games directly from their phones/computers to FB (without needing to install 3rd party software), giving it a leg up on competitors like Twitch.
Couldn't not do it... Gaming is thriving in the lockdown era: entertainment + social + virtual = quarantine success story. That's why FB decided to launch its app months earlier than scheduled (the iOS version isn't even ready to roll yet). But this FOMO-driven gaming push goes way back...
- Messenger Games: In May 2017, FB intro'd casual/innocuous games on Messenger — Words with Friends, Angry Birds, and Tetris with your FB pals right through the app.
- Gaming Tab: In May 2019, FB added a dedicated gaming tab to its mobile app. It even signed deals with famous gamers to stream exclusively on FB — a direct jab at Twitch and YouTube.
- Gaming App: FB has been testing it in Southeast Asia and Latin America since Fall 2018. Now it's launching worldwide.
Facebook isn't a gaming phenom, but it has numbers on its side... In the first 3 months of 2020, FB’s game streaming platform racked up 554M hours of views, compared to 1.1B hours for YouTube and 3.1B hours for Twitch. But...
- FB has an active user base of 2.5B people (over half of the 4.5B people on earth with internet access). 700M of those users already interact with FB gaming content. Gaming leader Twitch has 140M users.
- Facebook has an existing network on a widely adopted platform — friends don't have to switch between services to interact via messaging, gaming, or streaming.
What else we’re Snackin’
- Juicy: Shake Shack returns its $10M loan to the US gov — since small businesses are having trouble getting loans, the Shack (which has $100M on hand) felt bad about taking.
- Rally: Shopify becomes Canada's 2nd most-valuable stock with a market value of over $73B after an 8-day rally.
- News: Australia will force Google and Facebook to share money from ad sales with Australian media companies in exchange for using their content.
- Grounded: United Airlines takes a $2.1B quarterly loss because of the virus hit, and is applying for extra gov loans up $4.5B.
- Cloudy: Chinese ecommerce giant Alibaba will pour $28B into its cloud infrastructure over the next 3 years to be more like Amazon.
Tuesday
- Earnings expected from Netflix, Coca-Cola, Snap, United Airlines, Chipotle, SAP, Lockheed Martin, and Texas Instruments
Disclosure: Authors of this Snacks own shares of Uber, Amazon, Chipotle, Alibaba, Shopify, and Alphabet
ID: 1159512