Hey Snackers,
We usually put politics aside. However, we just have to extend congratulations to Parker the Snow Dog, who was just elected to be the Honorary Mayor of Georgetown, Colorado. Mayor Parker has a long track record of being unanimously adorable.
All 3 major indexes plunged over 4% yesterday on continued concern about coronavirus' spread beyond China. With Thursday's fall, the S&P 500 is down 12% since the record high it reached last week and we officially have a market "correction."
Budweiser can't just blame coronavirus for its lager-pocalypse (blame Corona, too)
Not a Stella quarter... AB InBev — the owner of beer legends Budweiser, Stella Artois, Becks and Goose Island — announced that its profits plummeted 75% last quarter to $114M. Shares fell over 9% on the buzz-kill earnings from Earth's largest brewer. Here's the biggest drama:
- Classic Americana Budweiser is now losing share in its largest market: The US.
- And sales of labels Budweiser and Bud Light have been hit hardest.
Shoulda gone harder on seltzer... AB's "share of throat" (that's actually what they call it in the beverage biz) has declined significantly as Americans move away from beer to on-trend drinks. Specifically, Bud's admitted that it's getting hit by hard seltzer.
- Seltzer market share has grown over 3X since a year ago, now making up 2.6% of all US alcohol sales.
- Bud tried to get in on the party with Bon & Viv seltzer (acquired in 2016), Natty Light Seltzer (launched in August), and finally Bud Light Seltzer (launched in January).
- But even with Bud Seltzer (and its Post Malone-starring Super Bowl ad), AB was too late — it's still lagging competitors.
Bud can't acquire its way out of this one... The last time Big Beer was under threat it was from craft beer. Beer giants (including AB-InBev) acquired a bunch of IPA/craft ales to protect themselves. This time, the threat is hard seltzer, but the disruptors are already too big to buy. Boston Beer Co's Truly and Mark Anthony Brands's White Claw dominate the market (about 85% of hard seltzer). AB will have to leverage its 3 existing seltzers instead.
Square stock pops 4% as its underdog Cash App nears "profit puppy" status
Be there or be Square... Not too bad. Square stock jumped 4% yesterday on strong quarterly earnings, which included a 46% jump in sales to $1.3B. Square is Jack Dorsey's mobile payments processing company that makes money in 3 key ways (same Jack as the one running Twitter).
- Seller Ecosystem: You've probably seen Square's sleek tablets at craft coffee shops, or swiped your card through a little white reader plugged into an iPhone at a taco truck. Sellers can easily process transactions, and Square gets a cut of each swipe.
- Square Capital: Offers loans to Square's sellers and small businesses, then collects interest and fees.
- Cash App: Offers peer-to-peer money transfers (like Paypal's Venmo), and collects fees on credit card transactions. It also offers a debit card and launched stock trading in October.
When the underdog comes in clutch... While small business card processing is Square's primary biz, its consumer-facing Cash App has been a star in its earnings:
- Cash App's revenue increased 147% from last year to $361M in the 4th quarter.
- Monthly users doubled from 7M to 15M in 2018, and hit 24M in 2019.
- For reference: In April 2019, Venmo reported having 40M yearly users.
Square's got the "monetize users" thing down... Paypal/Venmo doesn't. And Square's monetizing both its sellers (businesses) and buyers (consumers). It attracts sellers onto its easy payments tech, then hooks them in with other services like loans and payroll. On the Cash App side, it promotes consumer engagement by offering promotions through the Boost program. And the more you spend on its card/app, the more Square gets paid.
Beyond Meat's sales tripled, but it (and its stock) still lost
Was expecting something meatier... Beyond Meat's sales tripled for the quarter as it sprints around food shows trying to lock up deals with fast food chains. But investors were disappointed by its losses: the previous quarter, Beyond was profitable — this past quarter, not so much. So the stock got quarter-pounded, falling over 10% on the news.
- Beyond's quarterly loss was $452K. Not bad, considering last year's same-quarter loss was $7.5M.
- Buuuut... investors were looking for a repeat of last quarter's profitability — once you go profitable, unprofitability looks even uglier.
Alt-meat life be like a rollercoaster... Beyond has had some stock trauma since its IPO in May. It nearly quadrupled after going public — then it dropped by half. Still, the IPO was a big, meaty marketing win: Awareness of the Beyond Meat brand has nearly tripled since its IPO. There was also a crazy week of alt-meat packed news leading up to Beyond's recent earnings:
Is Beyond the LaCroix of plant-based meat?... When the barriers to entry are low, competition comes easy: LaCroix was the first mover to start the flavored sparkling water frenzy, but it was soon inundated by a carbonated wave of rivals (Pepsi, Coke, Spindrift, et al). Similarly, Beyond Meat pioneered alt-meat meat life. Now, competition is everywhere (Impossible, Kellogg, Tyson, etc.) — and that's slowing Beyond's plant-based growth.
What else we’re Snackin’
- Dashing: DoorDash takes the first step towards going public by submitting pre-IPO paperwork
- Nonplussed: Walmart is quietly working on an Amazon Prime competitor called Walmart+ (because adding a plus makes everything cooler)
- Bestie: BestBuy reported expectation-topping earnings for its latest quarter, thanks to positive holiday sales (and a strong next-day delivery game)
- Swipey: Tinder renews its viral, Choose Your Own Adventure-style series 'Swipe Night' for a 2nd season — it wants you to find love through gaming
- Caffeinated: Panera launches an unlimited coffee subscription for $8.99/month for its rewards members (because when it comes to coffee, the limit does not exist)
Friday
- Consumer Spending Report (tells us how much we're splurging)
Disclosure: Authors of this Snacks own shares of Square and Beyond Meat
ID: 1103922