Hey Snackers,
Happy March, and happy Women's History Month! If your 2021 resolutions vanished faster than scented spray-on hand sanitizer from Trader Joe's, this Monday the 1st could be a good chance to reset.
Markets had a bad week, dragged down by tech stocks: the tech-heavy Nasdaq index plunged nearly 5%. Investors were spooked by rising interest rates. For more on why these affected stocks, check out our snackable explainer.
DraftKings crushed sales, but it has a marketing reliance problem
Who ya got?... DraftKings doesn't miss the days when Russian ping pong was the biggest live action on TV. Now, every major sports league is back in (bubble) action, and the sports betting app's shares have nearly 4X'd over the past year. Also helpful: 20 states (plus DC) have legalized online sports betting, and more are working on it. On Friday, DraftKings shares popped 6% after it raised its revenue outlook for 2021 and delivered strong sales:
- 2X: DraftKings' revenue more than doubled compared to the same period in 2019, as people hit the screens instead of the stadiums.
- $65: The average revenue DraftKings made per monthly user, up from $42 in 2019. It had ~1.5M monthly paying users last quarter.
Love don't cost a thing... but attention does. DraftKings now says it's the top iGaming operator in the US, but that flex-worthy title comes at a price: DraftKings spent nearly $500M on sales and marketing in 2020 — that's ~80% of its revenue for the year. It basically spent 80 cents for every $1 of sales it brought in. Think: commercials, FB ads, and $500 sign-up bonus promos. While that helped it grow sales and users, DraftKings lost ~$844M for the year.
- Airbnb is taking the opposite approach: In 2020, Airbnb pulled back on all marketing because its bookings took a pandemic plunge.
- Then something weird happened: Airbnb's site traffic bounced back to 95% of 2019 levels without any marketing spend. Last quarter, 90% of Airbnb's traffic was unpaid.
- Now, Airbnb CEO Brian Chesky says the company will never spend as much on marketing (as a % of sales) as it did pre-pandemic.
"Go-to" marketing is the best marketing... DraftKings has serious competitors like FanDuel, William Hill, and Penn National Gaming. Meanwhile, Airbnb is the clear go-to when people look for short-term rentals. Chesky thinks Airbnb doesn't need all that marketing, because "it's a noun and a verb in pop culture" (#flex). Companies like DraftKings and DoorDash rely on expensive promos to snag customers from competitors, but that "loyalty" can fade easily. Having "go-to" status reduces the need for marketing, increasing the chances of profitability.
Who's up...
Screenshot these numbers... Snap shares soared to a record on Wednesday after it updated investors about its biz. Snap expects 50% annual sales growth for the next few years (music to investors' ears). With 265M daily users, Snap says it reaches 90% of 13- to 24-year-olds in the US. Investors also liked Snap's new strategy to grow ad sales in non-messaging features, like Snap Map. 35M businesses are already on Map, and Snap will continue Yelp-ifying to drive sales. With a growing mix of products, investors think Snap is past its pics-only tween stage: shares have more than 4X'd over the past year.
Not the band... But if Carvana had a theme song, it would be "Come as You Are." The online used-car seller saw its shares jump 8% after earnings on Friday. Carvana's quarterly sales jumped 65% from 2019, and profit soared 71% to an impressive $244M. People were scared of public transit, and many moved out of cities to WFS (work-from-suburb). That pumped up car demand and prices, especially for used cars: used vehicle prices soared a whopping 14% in 2020. Those increases boosted sales for online car sellers like Carvana and Vroom.
...and who's down
Arrived cold... DoorDash shares plunged 18% for the week after it dropped off its first earnings report as a public company. DoorDash beat expectations on quarterly sales, which more than tripled from 2019 as burrito-in-bed replaced Friday night out. But its quarterly loss more than doubled to $312M — that didn't sit well with investors. Also unappetizing: DoorDash expects order volume to fall in 2021 as restaurants reopen and people ditch the bed for the bar.
Try meditation... Workhorse had a rough week. The electric van maker saw its stock lose more than half its value over the week. Investors were bummed that Workhorse lost a key contract to build USPS' next-generation of mail trucks. Instead, Oshkosh will get $482M to assemble 50K to 165K USPS trucks over the next 10 years. Workhorse brought in less than $1M in sales in the first nine months of 2020, so this government contract would’ve made a big difference. BTW: Workhorse reports earnings today.
What else we’re Snackin’
- Rewire: How complaining rewires your brain for negativity.
- Do: 20 realistic micro-habits to live better every day.
- Check: See if you qualify for a $1.4K stimulus payment.
- Think: Five mental frameworks to adopt for an exceptional life.
- Live: How to forgive yourself (and actually mean it).
- Chill: Eight things to remember when you're feeling overwhelmed.
This Week
- Monday: Women's History Month begins. Earnings expected from Zoom, Nio, Workhorse, and Novavax
- Tuesday: Earnings expected from Target, Lemonade, Nordstrom, Ross, and Kohl's
- Wednesday: Earnings expected from Snowflake and Wendy's
- Thursday: Weekly jobless claims. Earnings expected from Costco
- Friday: Earnings expected from Big Lots
Authors of this Snacks own shares of: Snap
ID: 1543608