Snap Shares Fall Below Their $17 IPO Price, Plus Brandless Grocery Website Could Save You 40%

by 2 years ago

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Market Corner

Market Snapshot

  • The Nasdaq rallied for its third straight session.
  • Blue Apron dropped 12.29% after an unfortunate analyst report.
  • Gold is hovering near a four-month low.
  • Digital currencies fell—Ethereum is down 50% from a month ago.

A Sad (Snap) Story

Monday, Snap shares fell below their $17 IPO price. Tuesday, Morgan Stanley downgraded Snap’s stock to neutral from outperform. Today? Spiegel became an Uber driver.

Snap shares have slid since reaching a high of $27.09 (…during its second day of trading), and Morgan Stanley’s announcement just dug that hole a little bit deeper.

How come? When an underwriter (aka the bank that decides a stock’s initial market value) downgrades a company, it doesn’t exactly bode well with investors.

And ever since Instagram Stories sailed past Snap’s 166 million daily active users, as Snap also missed ad growth projections, investor faith has waned.

So much so that shorting Snap stock has become an all-out arms race. Investors must now cough up a 70% premium on top of their investment just to place their bet.

But the worst of it may still lie ahead. On July 30th, Snap insiders’ shares “unlock,” giving company fat cats the ability to sell off shares with the little guys, should they choose to do so.

So, does anyone still believe in the Spiegs?

It looks that way. Hedge fund legend George Soros owns 1.6 million shares and Daniel Loeb’s Third Point Management controls 2.4 million.

It might not be much, but it certainly can’t hurt to have that crew in your corner.

Bland Brands

Sometimes to build one brand you have to lose another. At least that’s what one San Francisco startup is banking on.

Brandless is bypassing the traditional grocery retail model and selling brandless (get it?) packaged foods and household staples (like peanut butter and toothpaste) exclusively online.

The best part? Every item is $3.

The average consumer typically pays a 40% “brand tax” on purchased goods. Brandless is eliminating this cost, while undercutting grocery chain prices with its straight-to-consumer business model.

And it may be onto something. Why buy Honeycomb when you could have Octagons with Holes?

Today in Obscure Ways to Get WiFi

Microsoft (+0.01%) officially rolled out a plan to bring TV White Space to millions of consumers.

No, Friends isn’t coming back.

TV White Space (TVWS) actually refers to a technology that can connect people to the internet through unused television frequencies (470 MHz to 790 MHz)—the “white spaces” of the electromagnetic spectrum.

Because these waves can travel further than traditional WiFi, this technology could have massive implications for rural areas and developing countries, where traditional broadband is lacking. Through TVWS, Microsoft hopes to add two million rural Americans to the grid by 2022.

All the Sweeter

PepsiCo (-0.46%) might’ve opened the quarter with a distasteful Kendall Jenner ad, but it closed with North America revenue finishing up 2%.

As American households ditch sugary drinks and snack foods, PepsiCo is compensating with higher prices…and it appears to be working.

Second quarter earnings hit $1.46 per share, topping Wall Street expectations.

If PepsiCo hopes to keep the party going, it’ll need to execute on its plans to sell more premium brand products (like the ever-so-poppable Lay’s Poppables) and ramp up online sales.

That or start selling more kale chips.

What Else Is Happening…

  • German media company Bertelsmann SE is increasing its stake in Penguin Random House to 75%.
  • Time Inc. (-2.12%) is considering renaming itself.
  • Facebook (+1.15%) is releasing ads for it its Messenger app.
  • Electric carmaker Faraday Future is scrapping its plan for a $1 billion production facility in Nevada.

Economic Calendar

  • Monday: No Events Today
  • Tuesday: PepsiCo(+) Earnings
  • Wednesday: No Events Today
  • Thursday: Delta Earnings
  • Friday: Citigroup, Wells Fargo Earnings

Water Cooler

Gimme 5…Unicorns

We all know the Ubers and the Airbnbs of the world, but today we’ve got five unicorns (aka billion dollar startups) you might not know about.

  1. Flipkart (Valuation: $5.5 billion)

Founded by two ex-Amazon employees, Flipkart is (interestingly enough…) the Amazon of India. It’s getting hard to keep track of all these e-commerce giants these days.

  1. Magic Leap (Valuation: $4.5 billion)

Magic Leap is changing the game for augmented reality. Don’t believe us? Watch this whale splash through the floor of a middle school gym.

  1. Ola (Valuation: $3.7 billion)

Ride-hailing is taking off everywhere. For Ola, the market of choice was India. It schedules 150,000 rides a day and controls 60% of the Indian market.

  1. Purple (Valuation: $2.5 billion)

A mattress startup that owns 16 patents to make sure that its product is soft enough to “hug your body.” Not exactly sure what that means, but it does sound comfy.

  1. JetSmarter (Valuation: $1.5 billion)

If you like Uber, you’ll really like JetSmarter. Book a private plane, anytime, anywhere. As long as you can afford it…

Oh yea, investors include Jay-Z and the Royal Saudi Family.

The Breakroom

Question of the Day

In a bicycle race, the man who came two places in front of the last man finished one ahead of the man who came fifth. How many contestants were there?

(Give Up?)

Who Am I?

  1. I once had a $700,000 hotel bill.
  2. I made a $12 million sale with a three-minute pitch.
  3. Forbes referred to me as a twisted version of Robin Hood.
  4. There was a movie made after me.

(Any guesses?)

Stat of the Day

$10 billion

CNBC’s estimate of how much money was lost in productivity due to Prime Day.

…totally worth it to get that Amazon Echo 40% off.

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