What You Need To Know About The FanDuel And DraftKings Merger, Plus Blue Apron Is Valued At $3 Billion

by 6 months ago

morning brew

Here’s your hand-crafted Brew for June 20th.

QUOTE OF THE DAY

“Any requests? Real instruments? No problem.” ––@Twitter, highlighting a new campaign featuring Chance the Rapper. Hashtag it, get mentions for it.

Market Snapshot

  • Major U.S. indexes finished up on Monday, with the Dow and S&P hitting record highs.
  • The Nasdaq rose 87 points in its biggest one-day move since Nov. 7th.
  • The sterling dropped against the dollar as Brexit negotiations kicked off yesterday.
  • Oil sank to a seven-month low on signs of rising crude oil production.

Cash is King

While you were busy agonizing over whether to sit or start Eli Manning in your keeper league, the FTC was making a very real decision about the merger of everyone’s favorite daily fantasy sites—DraftKings and FanDuel.

The verdict: sit ‘em.

The two fantasy powerhouses, which allow millions of sports fanatics to bet on virtual teams in between bites of Cool Ranch Doritos, have cornered 90% of an industry projected to reach $5.3 billion in revenue by 2021.

Unfortunately for them, the FTC’s sounding the antitrust alarm.

And this isn’t their first regulatory rodeo, folks

DraftKings and FanDuel have faced a firestorm of fines and regulations that would make even Antonio Brown’s head spin (the man twerked after scoring a TD).

First, there are questions around state gambling legality.

Second, there was that casual insider trading scandal among execs at both companies.

So…you can bet the fantasy duo have poured millions into lobbying efforts and forked over just as much in state taxes.

Don’t worry, the sh*t sundae gets worse

The push for growth has been an advertising arms race in which both DraftKings and FanDuel were shelling out $149 on average in 2015 just to acquire one new user.

With such high costs of doing business, their $100 million each in revenue felt less real than the fantasy leagues they offer.

Which is why, for them, this marriage is a must

A DraftKings-FanDuel merger doesn’t just grant them over 90% of the market. It also allows them to split all these legal costs under one entity.

It gives them lobbying power, eliminates the need for cutthroat marketing efforts and allows them to raise entry fees to any level they wish. Hey, wait a second…that sounds like a monopoly!

Turns out our friends at the FTC felt the same way.

SnapTV

Snap (+1.94%) might be the most heavily shorted stock of 2017, but today Spiegel’s kickin’ back with a smug “I told you so” grin after landing a $100 million deal with Time Warner.

The two-year agreement includes 10 shows that will run on Snapchat in three five-minute episodes. Just long enough to hold the average millennial’s atte…

It’s all part of Snap’s plan to reshape itself from an ephemeral picture company to a full-blown media brand.

And after Snap’s MTV reboot took us inside la casa del Aoki, we can’t wait to see what Mr. Bewkes has in store.

MasterChef

After a healthy $2 billion valuation at Series D, Blue Apron is now raising $587 million at a $3 billion valuation through an IPO.

But Big Blue isn’t handing over the apron quite yet. A second tier of Class B shares will keep 98% of the voting rights, while CEO Matt Salzberg will hold 30%. It’s no Snap, but it’s not far off.

All eyes (and stomachs) will be on Apron’s ability to grow its customer base while keeping its acquisition cost in check (it’s been about $460 over the last 12 months).

A concerning number considering its growing customer retention issue

Hasbro Bets Big

Toy company Hasbro (+1.51%) has been crushing sales lately, and now it’s taking gaming to the next level.

Yesterday, the company launched Hasbro Gaming Crate, a $49.99 quarterly subscription service exclusively for board games.

As the first subscription service of its kind, Hasbro Gaming Crate will let the company test out unique game ideas in order to get early customer feedback.

This means Hasbro gets an upper hand in game innovation and we get more games. Sounds like a win-win.

What Else Is Happening…

  • IKEA is looking to halve its 43,000 tons of annual food waste by 2020.
  • Vice Media just secured $450 million in funding from TPG at a valuation of $5.7 billion.
  • Dropbox just announced its global growth plan to cut costs and increase network speed.
  • Accenture (+0.13) and Microsoft (+1.24%) are teaming up to build a blockchain-based digital ID network.

Economic Calendar

  • Friday (June 16th): Michigan Consumer Sentiment Index (-)
  • Monday: No events today
  • Tuesday: Adobe Systems, FedEx, La-Z-Boy Earnings
  • Wednesday: Crude Inventories; Existing Home Sales
  • Thursday: Accenture, Barnes & Noble, Bed Bath & Beyond, Carnival, Sonic Earnings; Housing Price Index
  • Friday: BlackBerry, Finish Line Earnings; New Home Sales

Water Cooler

(Mobile Payments/Transactions) By the Numbers

This week, we’re tackling mobile payments and transactions. For most of us, it seems like such a natural thing at this point. Send a Venmo, check out on Amazon, use Apple Pay, etc.

But surprisingly, we’re just scratching the surface of an industry that should grow much MUCH larger. Time for the numbers to do the talking…

Mobile Payments/Transactions:

$82 billion—Total mobile payments/transactions in the U.S. (2016).

$140 billion—Projected mobile payments/transactions in the U.S. (by 2019).

$3.4 trillion—Global mobile payments/transactions (by 2022).

And usage is growing.

25%—U.S. consumers that reported making a mobile payment in the last 30 days. Up from 12% in 2014.

36%—The compounded annual growth rate of global mobile payments (from 2016-2020).

Who uses it the most in the U.S.?

30%—People ages 18-29 use mobile payments the most…BUT that still means 70% don’t.

71%—Percentage of people aged 60 and older that know mobile payments/transactions exist, but have no interest in using them.


The Breakroom

Interview Question of the Day

Four people need to cross a rickety bridge at night. Unfortunately, they have only one torch and the bridge is too dangerous to cross without one. The bridge is only strong enough to support two people at a time. Not all people take the same time to cross the bridge. Times for each person: 1 min, 2 mins, 7 mins and 10 mins. What is the shortest time needed for all four of them to cross the bridge?

(Scroll to view answer)

Who Am I?

  1. My personal fortune accounted for 1.5% of U.S. GDP in 1937.
  2. I’m considered the richest person in U.S. history.
  3. I hired substitute soldiers to fight in my place when the Civil War broke out.
  4. The first oil refinery I invested in was located in Cleveland.

(Who am I?)

Stat of the Day

$664k

That’s how much this one parking spot in Hong Kong costs. Better be one heck of a car.


TAGSBusinessDraftKingsFanDuelFinanceMorning Brew

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