🍔 Beyond's profit misteak
Hey Snackers,
Looks like some people got a little too into their Tiger King binge. 10 armed policemen and a helicopter responded to an urgent call about a tiger on the loose, only to find that it was a sculpture created by someone's talented granny.
Stocks dipped Wednesday as investors learned US private employers laid off a record-shattering 20.2M Americans in April alone.
Beyond Meat turned a profit last quarter, but that may be a bad thing
My plant-based brings all the boys to the yard... And they're like, "it's better than pork." Beyond Meat can teach you, but it has to charge (a lot). Beyond Meat, known for its patties made of pea-protein, saw sales rise 141% last quarter. It even turned a $1.8M profit. Not huge, but significantly better than the $6.6M loss it took last year. Beyond's facing a coronavirus see-saw situation:
- The Up: WFH and the closure of restaurants has caused supermarkets sales to rise as people cook more meals at home. Plus, national corona-caused meat shortages position Beyond to gain new customers.
- The Down: Restaurants are closed, meaning Beyond is no longer supplying plant-based meat to all those sit-in diners — Beyond's sales dropped at the end of March as eateries shuttered.
Too pricey for that frozen aisle life... Restaurant sales made up just 42% of Beyond’s total sales last quarter, down from 59% the previous quarter. Corona-conomy poses a perfect opportunity for Beyond to beef up its grocery game — but...
- Beyond may be too expensive for big grocery growth: Beyond Burgers are sold as 2-patty packs for around $5.99 — that's $12/pound, compared to $5/pound for real ground beef at Whole Foods (and you can buy beef in bulk, unlike Beyond). That's why...
- Beyond is now planning to offer discounts and value packs to some US retailers — it's hoping that offering lower prices and larger packages will allow it to capitalize on corona-conomy hoarding needs.
We think Beyond is too young to be chasing profits... It should focus on growth instead. Beyond's profit was mainly because its plant-based meat enjoys a high price tag. But it's still lagging cheaper meat-substitutes from MorningStar and Conagra in terms of market share. The value packs and discounts are a step in the right direction — they'll cut into profit in the short-term, but set Beyond up for increased growth.
Disney's profits plunge on empty parks (and more): a reflection of corona-conomy
The emptiest place on earth... Mickey and Cinderella have been living off stale churros since March 16, waiting for Disneylands to reopen. Disney's net profit fell a whopping 91% this quarter, and the magical company took an un-magical $1.4B hit on its earnings — blame corona-conomy, which is affecting all aspects of Disney's empire (some more than others):
- Parks/cruises: Disney's Parks, Experiences, and Products division (a key profit driver) was the worst hit, with a 10% sales dip and a massive 58% drop in operating profit.
- Cable networks: Disney's ESPN has no live sports to stream, and ad sales are falling since advertisers aren't splurging on commercials for things you probably won't buy.
- Studio entertainment: With movie theaters shut, Disney decided to put its expensive blockbuster releases (like Mulan) on hold. AMC's CEO loves this decision.
- Streaming: Disney's Direct-to-Consumer segment — which includes Disney+ and Hulu — was up 260% and raked in $4.6B in sales (Disney+ now has an impressive 54.4M subscribers). The streaming surge helped Disney's 21% overall sales growth.
Disney is like a microcosm of the corona-conomy... As the world's largest entertainment company, it encompasses media, experiences, retail, and even travel (cruises).
- Like the corona-conomy, Disney benefited from the surge in digital entertainment, but was overburdened by overall losses in key areas. All divisions of Disney's franchise machine affect each other (no Mulan movie = no Mulan toys).
- Disney's future was as brilliant as fireworks just a few months ago — now it's furloughing 100K workers, cutting dividends, and shaving exec salaries.
Disneyland's reopening will be a major morale indicator for the US... Whenever it happens. It'll mean things are relatively back to "normal." In China, Disneyland Shanghai is scheduled to reopen on May 11 — but with temperature screenings, masks, and capacity capped at 30% (and Snow White will have to keep a distance from guests). Disneyland Shanghai was closed on Jan 25 — almost 2 months before US Disneylands closed.
What else we’re Snackin’
- Lyfted: Lyft reports having more active riders than last year, despite coronavirus' impact.
- Health: CVS' sales jumped 8% last quarter, but fell in April — CVS thinks Americans are now ignoring/delaying medical needs.
- Loony: Alphabet's internet-connectivity balloon company Loon partners with AT&T to provide internet in disaster-stricken areas.
- Sad: Airbnb is laying off 25% of its employees after its sales in 2020 are projected to come in at just half of 2019's.
- Read: The New York Times added a record number of new subscribers, but projects ad sales will fall 50% this quarter.
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Thursday
- Weekly jobless claims
- Earnings expected from Uber, Roku, AB InBev, Live Nation, Hilton, Booking Holdings, Expedia, Dropbox, Reynolds, and JetBlue
Disclosure: Authors of this Snacks own shares of Disney, Beyond Meat, and CVS
ID: 1178810