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Why Blue Apron’s Stock Is Down Over 40% Since June, Plus LEGO Gets A New CEO

#Morning Brew
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“We have to stay with our heritage and our heritage is around the brick.” Lego’s former-CEO Bali Padda. Be the brick. See the brick. YOU ARE the brick.

Market Snapshot

  • Major U.S. indexes finished lower for the third straight day.
  • The Dow experienced its worst drop (205 points) since May.
  • Gold hit a two-month high as investors flocked to safe haven assets.
  • Corn and soybean prices rose on expectations of stronger U.S. harvests.

A Tale of Two IPOs

When your stock is down 17% in pre-market trading, seek comfort food. Luckily for Blue Apron, that Chilled Hiyashi Ramen is already packaged and on its way.

Blue Apron’s first go at earnings did little to satisfy investors who have watched shares fall over 40% since the company’s late-June IPO. And if you’re wondering whether the culprit was quarterly marketing costs rising 18% to $65.7 million, operating costs growing faster than revenues or increased market competition from Chef Gordon Bezos, it’s all of the above

…and more. Much…much more.

But here’s the real fly in Blue Apron’s French Onion Soup: among IPO stock performances in the past decade—of $300 million or more—Blue Apron is now sitting dead last.

Make that Chilled Hiyashi Ramen for two

And maybe throw in a carton of Breyers ice cream while you’re at it. Investors waited all day to hear better news from Snap, 2017’s other big IPO that has just as impressively failed to live up to expectations.

Over the last three months, shares have fallen 41% with even Morgan Stanley—the company that set Snap’s initial market value—losing faith. And with shares falling 17% after-hours, it’s clear today was no different.

Spiegel’s ghostchild has been haunted by Instagram Stories ever since its rival sprinted past 250 million daily active users—the metric of all social media metrics.

This quarter, however, Snap only grew to 173 million DAU’s, below expectations of 175 million and extended its trend of slowing user growth…among other cringe-worthy numbers.

That’s not to suggest Snap isn’t growing, just that it’s not growing enough. Like, nearly enough. Because if it can’t, there’s not much that will turn around this quarter’s $443 million loss.

We might not know much, but we do know that’s a whole lot of money.

A Little Dough From the ICO

If you’re looking for a new cryptocurrency to invest in, don’t sweat it. From the ever-popular Bitcoin to the not-so-well-known Potato Coin (every investor’s cornerstone of digital dietary fiber), there’s over 900 potential options to pick from.

Yesterday, that pool expanded with Filecoin’s Initial Coin Offering (ICO)—an increasingly popular form of raising capital for a new digital currency in this day and age. But Filecoin isn’t your dime-a-dozen cryptocurrency.

With heavyweight backers like Sequoia Capital, Andreessen Horowitz, Winklevoss Capital and a unique ecosystem of the industry’s best engineers, researchers and designers, Filecoin is positioning itself to be the next-best digital coin in the market.

Of course, if your eyes just lit up wondering how you can get in on the action, you might have to wait. Demand is so high for the new coin, its listing agent, CoinList, is only accepting investors with a net worth of $1M+ over the next six months.

After that, it’s anyone’s ballgame.

It’s Time to Lego

We firmly believe you’re never too old to play with Legos, but apparently CEO Bali Padda is.

He’s being replaced by the baby-faced Niels Christiansen (at age 51, ten years Padda’s junior) in a move that symbolizes the toymaker’s struggle for position in an increasingly digital world.

With a tenure lasting only eight months, Padda was never going to be the long-term solution…and he’s not going to win many awards for his service. Lego’s aggressive marketing in the U.S. didn’t result in any sales growth, which stalled its push to catch Mattel as the world’s largest toy company.

But with a reputation for leading his previous company (industrial group Danfoss) through a digital transformation, Niels could be the whiz-kid to piece Lego back together.

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China Did What?

For the first time ever, China used quantum cryptography to beam “hack-proof” messages from a satellite to two receiving stations here on Earth.

But, hey, we wrote a newsletter.

The main achievement here is the first *space-to-groun*d use of quantum key distribution (QKD) technology, a type of encryption that transfers data on photons, or light particles. Put broadly, whenever these photons are interfered with (say, a hacker wanted to take over your Tinder profile), the users will be notified and the data will “self-destruct.” Because quantum physics.

Are there any immediate real-world applications? This breakthrough is cause for optimism, but it’s going to be a while before the technology becomes commercialized and large amounts of data can safely be transmitted long distances.

Then, you’ll be able to swipe with security.

What Else Is Happening…

  • Buzzfeed will host a live morning news show on Twitter starting September 25th.
  • DineEquity, the parent company of Applebees and IHOP, plans to close over 100 stores.
  • Facebook introduced its own video platform, called “Watch.”
  • Benchmark Capital is suing Uber’s former CEO Travis Kalanick for fraud.
  • Coinbase raises $100 million at a valuation of $1.6 billion.

Economic Calendar

Water Cooler

Buy/Sell/Hold

Buy

Driverless Buses

The Great Estonian Driverless Bus Experiment is upon us, and so far…we’re still alive! The €100,000 project is operated by unmanned vehicle developer Milrem, and will ferry passengers (for free) between two major political and economic hubs in the capital city of Tallinn. Spectators have reported some “near misses,” like when one bus unknowingly plowed through a crosswalk. Pedestrians were especially disheartened they couldn’t find a driver to curse at.

Sell

Enterprising Firefighters

Entrepreneurs in the tech industry get all the press, but they’re no less innovative or resourceful in other sectors as well. Like firefighting. When a band of volunteer Sicilian firefighters felt they weren’t taking home enough cash putting out fires that other people had started, they went ahead and started some of their own. Of course, this fraudulent scheme to earn an extra €10/hour got them arrested…

Hold

Gluten Free Pizza

Papa John’s is introducing a gluten-free pizza…but wait to reach for that slice, celiacs. Papa John’s can’t actually guarantee the pizza will not come into contact with any gluten, so it’s advising people who actually care about eating gluten-free pizza, not to eat it’s gluten-free pizza. ¯_(ツ)_/¯

The Breakroom

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Question of the Day

There are five empty chairs in a row. If six men and four women are waiting to be seated, what is the probability that the seats will be occupied by two men and three women?

(Give Up?)

Who Am I?

  1. I am an Australian billionaire and co-founder of a popular energy drink company.
  2. Last year, we sold over six billion cans of our caffeinated energy drink.
  3. My company is known for sponsoring extreme sports.
  4. We contribute an estimated half-a-billion dollars to Formula 1 each year.

(Any guesses?)

Stat of the Day

941,000

The number of Americans who cut the cord in Q2 as viewing habits continue to shift from cable and satellite TV to video streaming platforms. This is the worst quarter on record for traditional cable networks.