Hey Snackers,
In 2019 dog-owners paid people to walk their dogs for them. In 2020, people pay dog-owners to walk their dogs for them. Spain's Civil Guard wants citizens to know that "essential outings" don't include walking a dog you rented on Facebook.
Markets inched up Tuesday — 100M Americans now live in states making moves to reopen (or that were never closed to begin with). Meanwhile, Italy, Spain, and France have eased lockdown restrictions as virus tolls fall.
NBC's Peacock streaming service disrupts itself
What would Michael Scott do?... Our thoughts when we heard NBC was pulling The Office out of Netflix. Now Comcast-owned cable king NBCUniversal is embarking on a broad restructuring of its entire media biz — NBC is moving its news network, cable channels, and streaming all under 1 giant umbrella:
- The new unit, NBCUniversal Television and Streaming (that's a mouthful), includes NBC's news networks (NBC, CNBC, MSNBC), cable channels (like Bravo, USA and E!), and NBC's new streaming service Peacock.
- Peacock is the new kid among NBC's old cable types — it launched on April 15 to Comcast subscribers, and will launch nationwide in July.
If you thought Peacock was just a fun little dip into streaming... you were wrong. NBC is now putting streaming at the center of its media operations and future aspirations. The barely-launched streamer is getting a head seat at the table with NBC's established old guard.
- CEO Jeff Shell hopes the new structure will set NBC up for future success "during this transformational time in the industry.”
- Cord-cutting has accelerated in the corona-conomy, and ad sales are suffering on fallen spending — NBC might see its subscription streaming service as a way to fill those gaps.
NBC is cutting its own cord... Despite cable's decline, many still stick with it for live sports, news, and award shows. NBC has that on lock, from the NFL to SNL to America's Got Talent. Now it can combine live broadcasts and on-demand video all on one platform (Peacock). To be competitive, NBC would have to offer a way lower price than Hulu+ Live TV, which is already doing this on-demand + live streaming content model for $55/month (not that different than cable).
Wayfair sales soar because it puts the "home" in WFH — but still no profit
Zooming from a teal Daulton Side Chair... Wayfair is the somewhat-chic, kind-of-techy, relatively affordable online furniture and home decor store — you probably know someone under the age of 30 in Boston who works there. Now Wayfair is winning in the lockdown economy:
- Sales jumped 20% last quarter as people flocked to Wayfair websites to make their homes (and home offices) more palatable for 24/7 lockdown living.
- Despite the sales boost, Wayfair lost $286M last quarter. Still...
- Wayfair stock shot up 24% to its highest point in a year and is now up 132% in a month.
If it acts like tech... Wayfair doesn't call itself a furniture company. It calls itself "the e-commerce leader in home." Despite its furniture fame, Wayfair doesn't actually manufacture any of the 14M products it sells across its five websites — it just connects furniture-makers with customers and takes a cut (so it doesn't really have to touch your geometric area rug).
Online-only doesn't mean business runs cheap... At first glance, we marvel at why techy companies like Lyft (with seemingly just an app and a few offices to run) are still losing billions a year. It's because they've got massive (though not immediately obvious) expenses:
- Wayfair still hasn't been able to turn a profit, since it's dropping major $$$ on costs like marketing, customer service, and delivery.
- In 2018 Wayfair splurged over $1.3B on marketing alone, which helped erase the profit it made on $7B worth of goods sold.
Uber is reportedly leading a $170M investment in (desperate) Lime
Not the good Corona & Lime combo... You used to see people with wind-swept hair cruising on Lime scooters, which littered sidewalks and street corners in flocks of neon green. Now, not so much. Lime has seen its business evaporate through the course of the pandemic — now it might be getting juiced by Uber:
- Come-Up: Lime is the 2nd fastest startup to have reached unicorn status, after its scooter peer/frenemy Bird. Love them or hate them, scooters were hot venture capital fodder.
- Come-Down: In March, Lime voluntarily suspended service in almost all its locations, laid off almost 20% of its staff, and only had around $60M in cash left out of $700M raised.
- Come-Downer: Uber is reportedly in talks to lead a $170M investment in Lime that would slash Lime's valuation by almost 80% compared to its last one (from $2.4B to just $510M).
Scooting my way DownRound... Money raised in a down round reduces a company's valuation because shares are offered at a lower price than they were in the previous funding round — it's kind of a desperate move, and Uber's squeezing it for what it's worth:
- Uber already owns a small stake in Lime, but under this fundraise it would get to significantly up its control (at a big discount).
- Uber would get to transfer its uber-unprofitable Jump line of e-scooters/bikes to Lime, offer both services in its app, and eventually get the option to buy out Lime at a set price in a few years.
Consolidate or bust (in a buyer's market)... Despite its swift rise to unicorn-status, Lime was losing money even pre-corona. But the pandemic seems to have pushed it to the verge of bankruptcy — Uber's taking advantage of that desperation to consolidate the scooter market. With its core rides biz nearly non-existent right now, Uber isn't cruising itself. But if scooter/bike travel returns to life faster than ride-share, Uber will have way more control of the market.
What else we’re Snackin’
- Minnie: Disney profit dropped 58% in its parks and cruises division as the number of Disney+ subscribers passes Canada's population.
- Hangry: Nearly 1 out of 5 US Wendy's are out of beef — there's been a national meat shortage since plants have slowed production or even shuttered.
- Drive: Fiat Chrysler plans to restart auto production at its US factories on May 18th after losing $1.8B last quarter on plant shutdowns.
- Sit: Delta puts a limit on seating capacity for its planes (not that overcrowding is a huge problem right now) to 60% through June 30.
- Vape: E-cig maker Juul moves its HQ from SF to DC (so it can be closer to all its lawsuits).
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