Hey Snackers,
Toys 'R' Us is making a comeback (in time for the holidays).
So are markets. The Fed revealed it's more likely to cut interest rates this year than raise them. And despite oil prices jumping on fresh tensions with Iran, both the Dow and S&P 500 set record highs last week.
Who's up...
"Searchable Log of All Conversation and Knowledge"... You know the acronym as Slack, the office messaging tool whose CEO/founder predicts the end of work email within 7 years. It boasts 10M daily active users, while the number of paying corporate accounts is growing (at 95K right now). Like plenty of other tech, it's losing money still as it spends to beat competition from Facebook ("Workplace") and Microsoft ("Teams"). Shares rose 49% on Day #1 of trading, even as Slack chose to go public via a "Direct Listing" — not an IPO. Here are 3 reasons why it did:
- A direct offering doesn't raise new money like an IPO would, (but it still gave early investors the chance to sell their stock in the public markets).
- That's why it was cheaper than an IPO (you don't pay the investment banking fees of issuing new shares).
- And Slack's got a big enough brand to list shares without needing an IPO-style promotional roadshow (Spotify pulled the same direct listing move last year).
New crypto, who dis?... Facebook revealed its blockchain-based cryptocurrency, "Libra": its logo is three exotic-ish waves, it'll be ready to use by the world's 2.4B FBers by 2020, and it's a "stable-coin" (backed by real money like the US dollar so the price shouldn't swing as much). 27 other companies will share oversight of ZuckBucks along with Facebook. And with the new cryptocurrency, you can pay friends in Libra, then easily convert to whatever currency you want to send back to your old school bank account. It's also Facebook's plan B if regulators cut down on its ad biz.
Shavasana smells great... because Lululemon's expanded from apparel to introduce its own selfcare products. The deodorant, shampoo, lip balm, and face moisturizer are strategically aluminum-free and marketed gender-neutral to cure "hot yoga face." It's Lulu's first step to lean into its new 5-year plan hard: “Become the experiential brand for people living the sweatlife.”
...And who's down
A signal of how bad things have gotten... Blue Apron was forced to cook up a "reverse stock split." The stock price got so small ($0.55 heading into last week) that the meal kit pioneer is merging every 15 of its own shares into 1 to boost the price to a less embarrassing number (fractions aren't in season). Now a single serving of Blue Apron stock is around $7, but its logistics, competition, and customer loyalty challenges are the same.
Limited breadsticks... Olive Garden owner Darden Restaurants fell 4% Thursday on word the number of visitors at its top chain actually slowed (despite them being assured that they were family). Olive Garden makes up half its parent company's sales, but it wants more "quality" customers (their words), so it's cutting back on "value meals."
I'm not feeling lucky... Google faced a few more existential issues with the free internet last week:
- Reports surfaced that Google Maps is being manipulated in order to drown competition in an ocean of fake business pins.
- And Google Calendar was down for three hours due to an outage. "Fashionably panicked."
- Then the FTC opened an investigation into Google-owned YouTube for the way it protects/exposes children's privacy.
Earth's biggest cannabis company falls 8% because investors are impatient
"I must not have done it right"... That's the uninspired reaction from investors after Canopy Growth's earnings just before the weekend. Based in Canada, the world's largest cannabis corporation fell 8% based on these low-lights:
- Revenue for its high-end dried weed jars, prescription-looking softgel canisters, and yoga-friendly vapes (check these out) only rose 13% from last quarter to $94M (Canadian dollars).
- Good ol' supply and demand was an issue, as Canopy sold 9.3K kilos of "product" and expects to grow 34K kilos this quarter. That surplus-y situation pushed the average price of pot sold down 11% to $7.49/gram.
Going from black market to white is tough... Hype for Canada's recreational weed legalization last October pushed Canopy's market value to $13B. Now it needs to convince cannabis buyers to switch from "their guy" to "the man," AKA Canopy's corporate-branded products. It also has to deal with regulation, taxes, and advertising rules that limit it to medical-style bland marketing.
Canopy is the pot stock in global prep mode... Thanks in part to the $4B investment it got from Corona-owner Constellation Brands, Canopy has acquired production facilities, device companies, and retail stores — The value chain is Canopy's from plant to pipe. Now it's awkwardly waiting for growth catalysts:
- Ontario: The biggest province by population (40% of Canada's pop) just got marijuana retail stores in April, so first-time Canadians are trying it out.
- US: Not legal yet nationwide, but when/if it is, Canopy's acquisition of pot producer Acreage Holdings will be legally complete.
- UK: Last month it acquired London-based This Works, a natural skincare developer with a CBD interest.
- Gummies: Edibles are legalized in Canada this fall, and Canopy's new 197K square foot plant will be ready to start cooking.
What else we’re Snackin’
- Work: 4 résumé tricks that are actually traps
- Life: 5 decision-making strategies we decidedly love ("the 90% rule" is a game-changer)
- Money: How the S&P 500 is your stock scoreboard
- Venture: Billionaire venture capitalist Tim Draper's 1 question that determines if he'll invest
- Crypto: The most comprehensive guide on Facebook's new Libra cryptocurrency we could find
- Do: Behold, the daily routines of creative famous people (Darwin was a napper)
This Week
- Monday: USA vs. Spain World Cup game (Round of 16)
- Tuesday: Earnings from Micron and FedEx
- Wednesday: Earnings from General Mills, Blackberry, and Rite Aid. 2 nights of Democratic presidential debates begin.
- Thursday: Earnings from Nike, Walgreens, Peak Resorts
- Friday: Earnings from Constellation Brands. President Trump leaves for Japan for the G20 summit and trade meeting with Chinese President Xi.
Disclosure: Authors of this Snacks own shares of Lululemon and Amazon