💵 Tesla's 1st full-year profit - RobinHood App

...and the Slack-usation of Microsoft
July 24th
Disclosures
 

Tesla accepts its 1st Oscar for "Best Year in a Profitable Role"

 
 
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Hey Snackers,

Dr. Fauci threw the 1st pitch at a fan-less Nationals Park for baseball's Opening Day (just a bit outside). Maybe the MLB should take a page out of Japan's playbook and fill empty stadiums with creepy yet adorable robot fans. So coordinated.

The Nasdaq took a hit yesterday on big stock drops from Microsoft, Amazon, and Apple — the report that the newly unemployed climbed to 1.4M Americans for the week didn't help.

Earn

Tesla posts a full-year of profit for the 1st time — now it could join the S&P 500 Club

Elon gets his $2B bonus... For the 1st time in its 17-year history, Tesla has posted four straight profitable quarters in a row. The stock surged on the news (surprise), making Tesla the 12th biggest company in the US by market value. Despite corona-conomy slowdowns (like its Fremont factory partially shutting), Tesla hit these numbers:

  • 90K = Tesla's car deliveries from April-June, down just 5% from last year. Meanwhile, car-making peers Ford and GM saw deliveries plunge over 30%.
  • $6B = How much Tesla did in sales. That's actually down 4% from the same quarter last year. And yet...
  • $104M = Tesla's profit, mostly thanks to environmental credit sales. Tesla's clean car production racks up green credits from regulators.
  • $428M = How much Tesla made selling credits to non-electric carmakers who need to offset pollution.

And an invite to the S&P 500 Club... Maybe. The famous S&P 500 index tracks stocks of the 500 most valuable public companies in the US. To be included, companies must post four straight profitable quarters.

  • Tesla just did that, so it's now worthy of the S&P's consideration (but it still needs an invite). Of course, Elon wants the S&P-status bragging right.
  • But more importantly, over $11T is invested in funds that track the S&P 500. If Tesla gets in, fund managers might start buying up the stock, driving the price up even further.
THE TAKEAWAY

Context is king... Tesla stock has nearly 4X'd in value since peak pandemic in mid-March. Now it could become the largest company by market value to ever join the S&P. But Tesla has a tiny market share in the global car market, and has lost hundreds of millions since 2018. Toyota delivered 30X more cars than Tesla last year and is consistently profitable... but it's worth less than Tesla. After this streak, investors are expecting Tesla profits going forward. If that doesn't happen, the stock will likely fall.

Bundle

Microsoft has a strong quarter, but now Slack is accusing it of "bully bundling"

When the Slackbot is annoying AF... Microsoft reported 13% sales growth and an insane $11B+ in profit last quarter. But party pooper Slack hit it with regulatory drama on the same day. Slack thinks Microsoft's being anti-competitive, so it filed an antitrust complaint in the EU.

  • The Slack-usation: Microsoft is trying to reduce competition in the work collab market by bundling Teams with its popular Office 365 Suite. Microsoft forces Office users to install Teams (and blocks them from removing it).
  • The issue: Slack's having a hard time getting companies that use Office to pay for Slack too, since Teams is included free of extra charge. Office = every Slack salesperson's nightmare.
  • The solution: Slack wants Microsoft to sell Teams as a standalone product, instead of bundling it with the omnipresent Office Suite. TBD whether the EU will formally investigate.

Cutting some slack... Microsoft has bundled a bunch of productivity apps with Office for the past 30 years. So naturally, it decided to throw in Teams right after launching it in 2016. But Microsoft isn't the only "bundling bully" in town:

  • Google bundles almost all its work collab tools into GSuite. It started offering its Meet video tool for free this year — Zoom could complain.
  • Amazon bundles Prime Video with your Prime subscription — Netflix could complain. It also throws in Prime Music — Spotify could complain.
  • Apple pre-downloads its Music app on your iPhone — Spotify did complain.
THE TAKEAWAY

The disadvantage of being a “One-and-Only” company... "One & Only" companies like Slack and Netflix are successful for doing one thing really well. Buuut — they run the risk of getting overtaken by Big Tech companies with hundreds of products (that can afford to give away tools for free). Sometimes those freebies are the profit puppies of entire other companies. That could potentially crush them.

What else we're Snackin'
  • Trending: Twitter's daily users grew 12% to 186M, but sales fell 19% for the quarter on corona-depressed ad spending.
  • Cut: AT&T's profit plunged on extreme cord-cutting, overshadowing the launch of its HBO Max streaming service.
  • Popcorn: AMC pushes US theater reopenings to mid-August as studios delay releases of blockbusters like Tenet, Mulan, and Star Wars.
  • Guac: Chipotle's digital sales 3X'd for the quarter — and it's introducing its own organic drinks.
  • Chipper: Intel posted strong earnings as WFH boosted computing demand — but shares tumbled on word its latest chip models are being delayed another 6 months.

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The Snacks Daily Podcast

Requirements for launching any direct-to-consumer service: add a "+" or a "Now" to the name.

Unilever makes everything from Dove soap to Lipton tea. It also boasts Earth's largest ice cream biz, from Ben & Jerry's to Breyers to Klondike.

Enter: “Ice Cream Now,” Unilever's ice cream delivery service (with -110 degree dry-ice deliveries) to offset lockdown losses.

Tune into our extra snackable 15-minute pod to hear why we think this biz could melt.

Friday

Disclosure: Authors of this Snacks own shares of Microsoft, Spotify, Apple, Amazon, and Chipotle

ID: 1256603

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