Hey Snackers,
We've been brewing up some 2020 Halloween costumes: Injured unicorn = WeWork on crutches. Self-driving electric star = Ariana Grande on a Bird scooter. Scary SPAC = a skeleton stuffed with cash. And of course, Goldman Sachs CEO DJ D-SOL (claaasssic).
Stocks ticked up yesterday on a quadruple-whammy of Big Tech earnings. We're covering Amazon today, and snack-ified the rest for you in our "What Else" roundup.
Amazon triples its profit in a record quarter (but it's feeling guilty)
The only one having a good 2020... Amazon brought in record-high sales last quarter, breaking its all-time high from the previous quarter. We lost count of how many fleece sweatpants we 1-click ordered, and Amazon probably would've lost count of how much $$$ it raked it (if it weren't required to report that to the SEC):
- Profit tripled from the same quarter last year, coming in at a truly huge $6.3B.
- Sales jumped 37% to a record $96B, topping analysts' expectations.
- But the stock fell after earnings because Amazon expects to see less profit during the holiday quarter than it did last quarter. Sounds... counter-intuitive.
Quick, create a diversion... Amazon knows that its mega sales were driven by a world-shattering pandemic, so it made sure to highlight all the good things it did for the world last quarter. It:
- Is creating more than 200K new jobs, half of which are permanent roles that pay at least $15/hour with benefits.
- Donated millions to support educational efforts, COVID-19 relief charities, and wildfire-related causes.
- Expanded its Climate Pledge and ordered 100K electric delivery vans from Rivian (expect to see them all on the road in 2030).
Amazon's future: cloudy with a chance of breakup?... Amazon's cloud computing unit AWS made up a whopping ~57% of its profit last quarter and ~12% of sales. As Congress continues to grill Big Tech on its monopoly-like ways, this question will probably come up: why does the largest e-commerce service also own the largest cloud computing service?
Chewy unleashes virtual vet visits to mark its online turf
"How are you feeling today, Pickles?"... That's the vet talking to your dachshund over Zoom. Pet supplies deliverer Chewy has been thriving on the pandemic puppy-palooza. Now it's launching a telehealth service to connect pet owners with licensed vets.
- It's free for customers who use Chewy's "Autoship Program" — sounds like a FedEx internship, actually a way to set up routine deliveries.
- Consistent sales (aka: recurring revenue) from subscriptions like Autoship are growth engines, and this new perk could boost sign ups.
- But it's pretty basic (for now). Vets help with issues like "my dog ate a sock" and can't prescribe meds.
Chewy's chewing on two major trends... First, the pet-palooza: adoptions have jumped on the "everything-from-home" life. One shelter received 1,000 requests for the same (painfully cute) bulldog puppy. Chewy has been profiting off high demand for furry friends. The second trend:
- Virtual healthcare: Telehealth interactions could hit 1B by the end of the year.
- Telemedicine bigshot Teladoc just saw visits triple to 2.8M last quarter, and sales more than 2X’d. Teladoc stock is up 162% this year.
Chewy is guarding its turf... and marking its territory in the pet industry. By bundling pet-related services, Chewy is trying to build loyalty and steal Milk-Bones orders from Amazon (it's all about Amazon again). Chewy should add pet insurance to its "Barking Bundle," just like Lemonade recently wrapped it into its insurance package (@Chewy: feel free to accept our bundle name suggestion).
The US economy grows at its fastest rate ever after a record plunge
Did you get a tan?... Our old friend the US economy is looking much better than it did the last time we checked in on it. But it's not the Fenty concealer or the Maldives trip — it's the GDP (aka: the total value of all goods and services produced by a country over a period of time — aka: the economy).
- GDP grew at a 33.1% annualized rate in the 3rd quarter (July-September), the fastest ever. This rate shows how much GDP would grow over a year at the Q3 pace.
- In the previous quarter, GDP plunged at a worst-ever 31.4% annualized rate, shrinking 9% from Q1. So this is a serious rebound.
But everything is relative... and context is key. While the quick quarterly spike is impressive, the economy is still around 3.5% smaller than it was at the end of last year. TLDR: better than last quarter — still down overall.
It's likely slowing down from here... The stimulus injection that fueled last quarter's rebound has expired. The enhanced unemployment and federal checks boom is over, airline aid is gone, and negotiations for a 2nd stimulus still haven't come together. Until more financial help arrives, we can buckle up for another slowdown.
What else we’re Snackin’
- Unripe: Apple stock fell after the Fruit revealed that iPhone sales dropped 20% from last year. Overall sales just barely rose, thanks to iPad and Services growth.
- Zuck: Facebook reported user declines in North America, but ad sales were up an impressive 22% despite this summer's ad boycott.
- Found: Alphabet shares soared after the Google-owner crushed earnings expectations thanks to strong ad sales (ad-pocalypse is dead).
- Tunez: Spotify's audience grew more than expected last quarter and streaming hours are back up as people commute more.
- Yum: Yum Brands gets saved by the Bell — quarterly sales jumped 8%, fueled by Taco Bell's return to same-store growth.
- Gassy: Oil giant Shell surprisingly boosts its dividend payout to shareholders 6 months after reducing it for the 1st time since WWII.
🍪 Thanks for Snacking with us! Want to share the Snacks? Invite your friends to sign up here.
Friday
- Earnings expected from Exxon, Chevron, and Under Armour
Disclosure: Authors of this Snacks own shares of Amazon, Apple, Google, and Tesla
ID: 1392712