Everything You Need to Know About SnapChat’s IPO, Plus 97 Tech Companies Are Pissed At Trump

Enjoy your February 7th hand-crafted Brew!


“Victim of its own niceness” — Neil Sorahan, finance chief of Irish airline Ryanair (-4.65%), discussing how travelers have abused the company’s free second carry-on bag policy by bringing aboard bags well above the permissible size. When you give an inch…

Market Snapshot

  • U.S. markets fell slightly on Monday, with the major averages finishing just below all-time highs
  • Shares of Advanced Micro Devices rallied 11%, now up 28% since posting earnings last week, as rumors circulate of a potential licensing agreement with Intel once its current Nvidia deal ends in March

Hasbro Lets It Go

…And beats revenue and earnings estimates thanks largely to Disney’s (-0.67%) “Frozen.” No Super Bowl hangover for Hasbro (+14.12%) yesterday, as the toymaker rose to an all-time high after revenue soared 11%. Was Santa just extra generous this year? Well, not exactly. The Rhode Island-based company was buoyed by strong demand for its Disney Princess and “Frozen” dolls. Yes, “Frozen” is still very much a thing. That said, it was overall a dismal holiday season for the toy industry as a whole. Hasbro rival Mattel (+0.39%) was forced to discount items at the eleventh hour in order to clear excess inventory. Dark times indeed.

When You Mix Politics With Business

…You get 97 very angry tech companies. Yesterday, many of our Silicon Valley favorites united by taking a stand against the Trump administration’s recent immigration ban. Inspired by the state of Washington’s federal lawsuit against President Trump in response to the ban, 97 tech companies filed a joint amicus brief (which simply states their strong interest in the suit) reprimanding the ban. According to the cohort of companies, “immigrants make many of the Nation’s greatest discoveries, and create some of the country’s most innovative and iconic companies.” Who exactly signed? Apple, Facebook, Google, Microsoft, Uber, Netflix, Snap, Lyft, Airbnb and Intel, to name just a few. It’s been a rocky relationship between Trump and Silicon Valley from the start, and this development is unlikely to mend the situation.

5th Ave Runs Red with Blood

…As another retail CEO meets his demise. Perhaps a bit dramatic, but it’s definitely a thing: just weeks after Ralph Lauren dropped its CEO over “creative differences,” jewelry giant Tiffany (-2.45%) followed suit and waved adios to CEO Frederic Cumenal after just 22 months. While you can blame a stronger U.S. dollar for a slowdown in international sales or even Trump Tower protests for slowing down foot traffic in Tiffany’s flagship store, the financials say it all. If revenues are flat and same store sales decline for several quarters, heads have got to roll. Tiffany is going to need a carat-sized comeback if it wants to keep customers loyal at a time when brand loyalty is no longer in. The turnaround so far has included featuring Lady Gaga in a Super Bowl commercial and hiring Coach’s creative director as a lead designer—the stock is down nearly 7% since Cumenal took the reins, so let’s hope things can only go up from here.

Chicken’s Ready

…And it’s delicious. Tyson Foods beat estimates and came out with strong earnings yesterday. The food manufacturer (-3.46%) posted impressive profits and increased its 2017 projections. Still, while sales of chicken and pork rose, a decline in beef sales offset the rise. Are consumers becoming eco-friendlier? We don’t know, but we do know there’s a caveat, and it’s a big one: Tyson also disclosed a new SEC investigation alleging price fixing on chicken products. Uh oh. Details are hard to come by, but rivals’ share prices also dipped yesterday as a series of lawsuits have alleged collusion beginning in 2008 across the chicken industry. Who knew food could be this complicated? Well, per-capita chicken consumption has doubled in the past 40 years. Sounds like a market to us.

Other Stories

Economic Calendar

  • Monday: Twenty-First Century Fox (+), Tyson Foods (+/-), Hasbro (+) Earnings
  • Tuesday: Walt Disney, BP, General Motors, Zillow, Panera, Buffalo Wild Wings Earnings; Job Openings and Labor Turnover Survey
  • Wednesday: Sanofi, Allergan, Time Warner, Yum! Brands, Whole Foods, GrubHub,
  • Thursday: Coca-Cola, Twitter, CVS, NVIDIA, Activision Blizzard, Kellogg, Viacom, Dunkin’ Brands, Yelp, Pandora, Zynga Earnings; Weekly Jobless Claims
  • Friday: Import/Export Prices; Consumer Sentiment

Snap(chat)’s IPO: Everything You Need to Know

At the end of last week, Snap (the company behind Snapchat) filed its S-1 paperwork with the SEC to officially start the process of becoming a publicly-traded company. The social networking giant’s IPO has been a heck of a long time in the making, and is sure to be a big one. Before you buy, give this a read:

  • Snap hopes to raise $3 billion in its IPO, and its ticker on the New York Stock Exchange will be SNAP (nice). This equates to a valuation of roughly $20-25 billion. Pretty crazy for a company founded in 2011.
  • As part of its filing, Snap revealed a few key facts about Snapchat. The app has 158 million daily active users with 2.5 billion snaps sent per day. In 2016, the company recorded $404.5 million in revenue—representing an absolutely insane 689% year-over-year increase. If that’s not enough, Millward Brown, a market research firm, found that 88% of Snap ads hit their target demographic.
  • Sounds like a perfect company, right? As Lee Corso would say, “not so fast.” The company posted a net loss of $514.6 million in 2016—significantly larger than the already-sizable $372.9 million loss in 2015. Even scarier: Snapchat’s growth in daily active users slowed 82% at the end of 2016 after the launch of Instagram Stories, a direct competitor of the app. So, when the stock goes public in March, should you buy it? That’s your call.

Interview Question of the Day

In relation to the Federal Reserve’s discussion of needing the central bank to reduce its bond holdings, how do bonds affect mortgage interest rates? (Answer)

History-Making Statistic

Qatar Airlines just flew a 17-hour flight from Doha to Auckland, New Zealand, which makes it the longest nonstop commercial flight you can buy. Taking passengers over 9,000 miles and 10 time zones ain’t cheap, but the airline industry thinks it’s worth it, if only for the alluring “world’s longest flight” title. Next up to bat? Singapore Airlines, with a potential New York to Singapore service across 9,521 miles.

Food for Thought

It wasn’t too long ago when self-driving cars seemed far out of reach. Now, each new day brings a new development in the autonomous car dream. Let’s take a look at the future’s future: flying cars. No, we aren’t kidding. Well, Uber definitely isn’t. The ride-sharing giant hired Mark Moore, NASA veteran and inspiration to Google co-founder Larry Page. Moore will be the lead engineer for the ride-hailing company’s project, dubbed Uber Elevate. Uber wants to be the premier company in a new transportation ecosystem and is taking the risky bet to make vertical takeoff cars a reality.

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