Tuesday Feb.23, 2021

🖼 LinkedIn does freelance

_Ready for the Royal Tire Wedding_

Hey Snackers,

Yesterday, the US hit a grim milestone: 500K Covid deaths, out of nearly 2.5M worldwide. Our hearts go out to anyone who has lost a loved one during the pandemic.

Markets dropped yesterday, dragged down by Big Tech stocks. With stimulus round #3 coming up and vaccines rolling out, investors boosted "reopening stocks" like Delta, Marriott, and Carnival.

Connection

LinkedIn is reportedly launching a gig-work marketplace (it’s so mature)

The LinkedIn of gig work... might actually be LinkedIn? Microsoft-owned LinkedIn is launching a gig marketplace called "Marketplaces" (#creative), according to The Information's PFWTM. "Gig" elicits thoughts of delivery drivers, but Marketplaces is targeted to white-collar pros (like: app developers, marketers, and designers). Users will be able to book freelancers straight through LinkedIn.

Marketplaces is slated to launch this fall, and is expected to replace LinkedIn's $60/month ProFinder service (a skeletal version of Marketplaces).

"I just came across your profile"... The pickup line of professional networking. It's a good time for LinkedIn to beef up its gig offering: ~10M Americans are unemployed, and many are WFH freelancers looking for gigs. Part-time is the new full-time: the number of gig/contract/freelance workers is expected to triple to 42M this year from 2017.

With its massive network of ~740M users, LinkedIn has a leg up over freelance sites like Upwork and Fiverr, which generated a combined ~$550M in sales last year. They take a cut when people get hired. BTW: both stocks plunged yesterday on the Microsoft report.
Marketplaces could be a triple whammy sales puppy: More ad sales + more subscription sales + a cut of hiring transactions. LinkedIn's huge reach poises it to capitalize on the hot gig market.

LinkedIn is the most mature social network... because it's the most diversified. Facebook, Snapchat, Twitter, and Pinterest each make more than 90% of their sales from pure ads. LinkedIn makes $$$ from business subscription services (like Sales Navigator), ads for job postings, and LinkedIn Premium (for shameless stalking in private mode). In 2020, it made ~$8.8B in revenue. For reference: that's more than double Twitter's yearly sales, but it's a small fraction of Microsoft's $143B 2020 total. Marketplaces could help it level up.

Tired

The Royal Tire Wedding: America’s largest tire companies tie the rubber knot

Blimp-worthy news... Yesterday, investors received an invite to the biggest tire wedding in America: Goodyear Tire & Rubber has agreed to buy Cooper Tire & Rubber for $2.8B (conveniently, they have the same last name). It's like the Royal Wedding, but for tires: Goodyear is the largest tire manufacturer in the US, and Cooper is #2. Investors celebrated the power couple:

Cooper stock soared 29%, since Goodyear will pay Cooper shareholders a cash and stock premium (worth 24% more than Cooper's closing stock price on February 19th).
Goodyear stock jumped 21%, since investors think the merger will boost sales and cut costs (#synergy). The deal also strengthens Goodyear's position as #1 in the US, and nearly doubles its presence in China (where car sales are surging again).

Strength in unity... and in cost synergy. The happy couple will shave spend by combining corporate functions, R&D, and procurement. Goodyear expects to save $165M over two years from the merger. No manufacturing jobs or plants are being scrapped... for now. But the couple sees an opportunity to combine production in the future. If approved by Cooper shareholders and regulators, the marriage will be finalized later this year.

Scale is key... to succeed in a commodities-heavy business. Tires are basic products made of basic commodities: rubber and steel. While you might have a preference between iPhone 12 and Samsung Galaxy S21, tires don't have as many differentiating features/components. So companies compete on price. With this marriage, Cooper and Goodyear can join forces to scale production — instead of trying to beat each other. But we don't yet know how/if this will affect prices for consumers.

What else we’re Snackin’

Fancy: Louis Vuitton and Moët owner LVMH is buying 50% of Jay-Z's luxury champagne brand as a bet on the post-pandemic ultra luxury market.
Sank: Royal Caribbean lost ~$1.4B last quarter while most of its cruises were suspended, but the stock jumped on upbeat future bookings.
Vax: Pfizer's vaccine is 85% effective after the first shot, according to a study from Israel, which has vaccinated nearly half its population.
Oh: Dozens of Boeing's 777 jets were grounded after a terrifying emergency engine failure on a United flight.
Popcorn: Movie theaters in NYC will be allowed to reopen in March at 25% capacity, after nearly a year of closures.
Cryptout: Crypto exchange Coinbase has reportedly been valued at $100B+ ahead of its direct listing on the Nasdaq.

Tuesday

Earnings expected from Square and Home Depot

Authors of this Snacks own shares of: Microsoft and Delta

ID: 1535855

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Since then the company, famous for its “car vending machines”, has seen its fortunes reverse, as the used-car market has stabilized and sales have returned to growth (up 17% in Q1 2024). Most importantly, however, Carvana seems to have gotten a handle on its massive $5B+ debt load — which was a major factor in why the equity in the company was so volatile — after swinging into profitable territory in Q1.

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Pop Quiz!

Whose market cap is bigger than the economy of the country it’s HQ’d in?

Don't be a sucka

$110B

Apple announced a massive $110B boost in share buybacks — the biggest of all time. That’s even higher than the $90 billion analysts expected. For context in the last 12 years Apple spent a total of $650 billion buying back its own stock. The entire S&P 500 did $795 billion last year. That certainly softens the blow from a 4% decrease in revenue.

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Ozempic, Wegovy drive Novo Nordisk profits up

Shares of Danish drugmaker Novo Nordisk fell on Thursday, as investors digested the latest hard numbers from the maker of heavily-hyped drugs Ozempic and Wegovy.

For the record, sales of both continue to explode, though sales of Wegovy, which more than doubled to kr. 9.8B, came in about 10% below analyst expectations. Ozempic sales, which slowed, actually were better than expectations.

In Danish currency terms, Q1 profit jumped 28% for the company, which is based in suburban Copenhagen. Novo Nordisk’s market value of roughly $570 billion is now larger than the entire Danish economy.

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Short sellers are getting squeezed on Carvana, Wayfair, and Enovix

Shares of Carvana, Wayfair, and Enovix were ripping Thursday morning.

These companies don’t have too much in common from a business operations standpoint — one makes batteries, another needs batteries, and one sells furniture and rugs that really tie the room together.

What they do have in common right now though: traders were betting on their shares to fall, and each released quarterly earnings reports either after the market closed on Wednesday or on Thursday morning that weren’t as bad as feared, in one way or another.

As of mid-April, short interest as a percentage of equity float for these stocks ranged from 26% (Wayfair) to 31% (Enovix), according to exchange data.

Betting against two of these companies had paid off so far this year, with Carvana being the exception. Shares of the used-car retailer were up 78% heading into Thursday’s session versus Wayfair (-14%), and Enovix (-47%). For comparison, the S&P 500 Index is up 5.8 percent year-to-date.

Hat tip to Tom Hearden, senior trader at Skylands Capital, for bringing this to our attention.