It feels like the 1st time... a space company went public
Hey Snackers,
Appropriate timing for the 1st ever space IPO.
The S&P 500 rose to a fresh record high on word US trade talks with China got their mojo back. More on that Virgin Galactic IPO below.
Virgin Galactic is the 1st publicly traded company dedicated to space
Take me to your leader... Virgin Galactic's founder is Richard Branson — he hit billionaire and British "Sir" status by founding Virgin Records music, Virgin Atlantic airline, and Virgin Hotels. But Richard called this IPO "the most satisfying" of all. Virgin Galactic's ticker is "SPCE," now traded on the NYSE after Monday's IPO.
This business is astronomically unprofitable... Since its 2004 launch, VG exists because Sir Branson has invested almost $1B to own 51% of the shares today. Here's its corporate timeline:
- Past: 600 very wealthy people (including Bieber and Leo DiCaprio) splurged $250K for a spot on Virgin's virgin voyages for summer 2020. They get a 90-minute ride on a hybrid spaceship/airplane for 3 minutes of spacetime.
- Present: VG only brought in $2.4M in revenue last year, but spent $140M, causing a Jupiter-sized loss.
- Future: Initially only affordable by the ultra-Bieber-rich, VG wants to make space tourism accessible to all humans over time by eventually lowering prices.
Virgin Galactic is incomparable... Investors love "comps" that help them assess the value of one company by referencing another (it's easier to evaluate Lyft when you know how much Uber is worth). But Virgin's comps don't exist in the public markets.
- Tourism?: Airlines or cruise lines don't feel the same as Virgin.
- Tesla?: Both catered to the wealthy initially with hopes to eventually lower prices for the rest of us.
- Private: The real comps are Elon Musk's SpaceX and Jeff Bezos' Blue Origin. But those 2 pals kept their space companies private, so Virgin investors face an uncharted public market ride.
Tiffany surges 32% after a shiny acquisition offer from LVMH
But did they get down on one knee?... Luxe-glomerate Louis Vuitton Moët Hennessy (aka LVMH) just offered $14.5B to buy up jewelry icon Tiffany. LVMH is run by the world's richest non-American (Bernard Arnault) and it owns 75 brands, from fancy champagne to fancy handbags. But here's the potential couple:
- LVMH: Its founding goes way back to 1987, it's headquartered in Paris, and worth $214B.
- Tiffany: Founded in 1837, Tiffany is HQ'd in NYC — but worth 1/14 of LVMH.
Breakfast at Tiffany's $215 semi-affordable earrings display... Tiff's board hasn't decided to accept/reject the offer. But if it goes through, the acquisition will up LVMH's jewelry game from just 8% of its sales today. Meanwhile, 92% of Tiffany's revenues are straight-up jewelry (and over a quarter of that is engagement-related).
This acquisition come down to T.L.C... Timing. Location. Customer. (Forget "the 4 C's"):
- Timing: With Chinese tourism down, Tiffany's sales dropped 3% last quarter — and the stock price has fallen 1/3 from its all-time high.
- Location: LVMH is focused on growing in the US with a new Texas factory and a partnership with Rihanna — America has more millionaires (19M) than France, UK, Germany, China, and Japan. Combined.
- Customer: Tiffany wants to be the “luxe for less" jeweler by tossing Dakota Fanning in some commercials — LVMH craves that millennial appeal.
Beyond Meat hit a huge corporate milestone — then the stock fell 10%
Thanksgiving's coming up... Vegan kids are hatching "swap the turkey with meatless meat" plans to trick carnivorous dads. Beyond Meat gave shareholders something to celebrate heading into the holiday quarter:
- Growth in all the right places: Revenues more than tripled to $92M, way outpacing costs, leading to its first ever profit.
- How much profit per pound?: A $12 4-pack of quarter-pounder Beyond burgers resulted in 52 cents of profit (based on last quarter's 4% net profit margin).
- What about the future?: Beefy strong — Beyond boosted its revenue projections for the 2nd-straight time as orders from restaurants for sizzle-able pea patties beat expectations.
So why did shares drop 10%?... Not totally clear. Our guess: the end of Beyond's "lockup period." Today's the 6-month anniversary of Beyond's IPO, which means early pre-IPO investors are finally eligible to sell their stock (lockups apply to most newly-listed companies). So nervous investors may have sold to avoid dealing with a potential increase in Tuesday's new "lockup" sellers.
The growth is in restaurants — not groceries... Beyond surged over 200% after its IPO, but has fallen from that high. Food-glomerates like Kellogg and Nestlé have dropped some plant-based competition — and they've shown up in grocery stores. But restaurants (like McDonald's, Taco Bell, and Dunkin') power 45% of Beyond's revenues — and those already quintupled (5x) this year.
What else we’re Snackin’
- Sprint: Fitbit surges 31% on word Google-owner Alphabet is considering acquiring the fitness tracker
- Loud: Spotify jumps 16% after podcasts power it to a surprise profit
- Moving: JPMorgan wants to shift thousands of high-earning workers out of NYC to save money on salaries (and probably late-night Seamless orders)
- Flying: Allbirds', the online-focused direct-to-consumer shoe brand, wants to whip up 20 new physical stores next year
- Arriving: Uber unveils what its new fleet of food delivery drones will look like — spoiler alert: fancy rotating wings
- Truce: AT&T makes peace with the activist investor hedge fund that pushed it to pursue major strategy changes
Tuesday
- Earnings from Pfizer, Advanced Micro Devices, and Mastercard
- "Davos in the Desert" kicks off — aka a big financial/tech/policy meeting in Saudi Arabia that attendees protested last year after the Khashoggi murder
Disclosure: Authors of this Snacks own shares of Beyond Meat, Tesla, and call options in Spotify.
Correction: In yesterday's newsletter, we incorrectly said Netflix doesn't have a company that's offering it free as a "promo puppy." It's actually been offered free to certain T-Mobile customers since 2017.
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