Hey Snackers,
Venmo just whipped up some actual/official etiquette guidelines — 76% of your friends prefer initiating a "$14 for 🌮🥑🌮__"__ venmo payment over receiving a brutal venmo request (so don't send one). And payback within 24 hours is now ideal turnaround time.
Markets barely budged to start the week, while McDonald's decided to share an update...
McDonald's burger market share rises for 1st time in 5 years
Extra fries... Pairs with the 40M more "fresh beef" Quarter Pounder burgers that McDonald's pumped out last quarter compared to a year before. McD's revealed that sales of Big Mac's new anti-frozen cousin are up 30% since it introduced the option in 2018 — And for the 1st time in 5 years, it gained market share in the obscurely delicious "informal burger category."
Ronald deserves a Masters Degree... in smiles and supply chain management. The creation of a "fresh beef" option was a major investment by the McDonald's team — It took 4 years to install a new process to go from cow-to-mouth faster and never frozen. Here's what that "massive transformation" included:
- Designing new fridges to handle fresh beef at the right temperature.
- Distributing new kitchen utensils (aka spatulas) to every participating franchise about to flip the softer burgers.
- Training 3,000 restaurant operators to prepare the actual patties.
This is why you invest in your growth... Just as McD's is spending on its supply chain to accommodate the new patties, it's pursuing another major overhaul: The $6B nationwide renovation of the majority of its 14K US stores by 2020. Fresh beef is a case study on how investing big into your infrastructure can cook up major payoffs.
The biggest US casino was just created — And Carl Icahn orchestrated the whole thing
"One + One = Five"... That's how Carl Icahn described the merger of Eldorado Resorts and Caesars Entertainment, announced Monday. Teaming up creates the largest US casino operator, with 60 gambling spots across 16 states. Technically, Eldorado is buying Caesars (faux gondola situation included), but they'll share ownership 51%/49%. Here's the receipt:
- Price: Eldorado's paying $8.5B in cash and some stock to acquire 100% of Caesars' shares.
- Debt: Caesars carries some baggage — $8.8B of debt. That now belongs to Eldorado.
- Total cost: The law of addition gets us to $17.3B Eldorado is throwing on the table for all of Caesars' chips.
"Sir, I strongly suggest you hit"... Carl Icahn made this happen. Here's how:
- His hedge fund Icahn Enterprises bought up 9.8% of Caesars' shares. Then he went public with it, and announced that the company should sell itself.
- Caesars' directors immediately gave Carl 3 seats on the board and let him help choose the next CEO.
- Carl's ownership rose to nearly 16%, and he wielded his power to push for the highest bid from Eldorado.
- Carl's shares will now be bought for $13.01 — That's a 51% return in just 4 months since he snagged the board seats.
This is American-style investor activism... Carl Icahn helped create that term in 1985, when he famously took control of TWA Airlines, turned himself a nice profit, and then left (TWA ended up in bankruptcy 3 times). Here's that activist playbook:
- Buy a big chunk of a company's shares.
- Publicly demand change (often insulting management's competence).
- Hope to sell after changes have boosted the stock.
As Carl likes to put it: "A lot of people die fighting tyranny. The least I can do is vote against it."
"The Viagra for women," Vyleesi, gets FDA approval (and then the stock drops)
Guy sex problems generate billions of profits... Not so much for women. AMAG is trying to change that with "Vyleesi," which just earned FDA approval to treat premenopausal Hypoactive Sexual Desire Disorder. That affects 5.8M American women, yet only 1 other type of therapy is available on the market. But here's how it's different from Viagra:
- Viagra treats arousal problems. When you want to have sex.
- Vyleesi treats desire problems. When you want to want to have sex.
The 2nd problem is harder to cure... This isn't a pill. Vyleesi requires injection in the thigh or abdomen 45 minutes before sex. And it actually affects the brain (unlike Viagra, which affects one thing). Vyleesi's branding though looks strategically more like a new direct-to-consumer soap startup, brushed with hints of Millennial pink.
The news didn't go down as planned... Two key stocks are involved in this story: Palatin Technologies (which developed the drug) and AMAG (the just-outside-of-Boston company licensing/marketing it). Their stocks were up as high as 39% and 12% after the news... until this article. A science reporter panned the drug for its brutally pill-less injection and unpleasant side effects. Wall Street is concerned.
What else we’re Snackin’
- Blush: Ulta Beauty falls as Amazon launches its own online store for stylists, makeup, and hair care pros
- Guilt: Microsoft founder Bill Gates reveals that his 'biggest regret' was letting Google's Android win mobile
- Spin: Spotify drops after an analyst worries about the outcome of its negotiations with music labels
- Price?: Healthcare stocks dip on executive order requiring price tags for everything medical
- Tab: Del Frisco's steakhouse was acquired by a private equity firm with a thing for restaurants, and the bill is $650M