🍔 Beyond's juicy mainstream win

Wednesday, September 30, 2020 by Snacks
_A burger so mainstream, it's everyone's Halloween costume_

A burger so mainstream, it's everyone's Halloween costume

Yesterday’s Market Moves
Dow Jones
27,453 (-0.48%)
S&P 500
3,335 (-0.48%)
11,085 (-0.29%)
$10,755 (-1.14%)

Hey Snackers,

Here's an incredible headline to start your Hump Day: "A kitten that looks like Baby Yoda was rescued from a CA wildfire." A kitten that looks like Baby Yoda.

Stocks inched down as global COVID cases appear to be resurging. Understandably, airline stocks got the worst of yesterday's dip.


1. Beyond Meat jumps on a juicy Walmart win: it passed "the mainstream test"

Snagged some prime real estate... next to prime rib. Beyond Meat just secured a whole lot more space for its plant-based patties in the fresh meat aisle. Beyond stock jumped 9% after the company announced it's expanding to 1.6K more Walmart locations. Ever since its Walmart debut in 2015, Beyond has grown its patty and sausage presence in the retailer's fresh and frozen aisles. Now, it's surpassing plant-based rival Impossible:

  • 5,300: The number of Walmart stores in the US, including Sam's Club.
  • 2,100: The number of Walmart stores that sell Impossible meat.
  • 2,400: The number of Walmart stores that will sell Beyond meat, up from just 800 before this deal.

Well done on the price cutting... That's how Beyond likes its goals cooked (don't settle for medium-rare). Beyond wants to “make plant-based meat accessible to all." But then it realized that its plant meat costs 2X as much as regular beef.

  • With the meat shortage we saw early on in COVID, Beyond aggressively tried to narrow the big price gap to get in on the action. Enter...
  • “The Cookout Classic”: Beyond's 1st semi-hoardable, relatively affordable offering. Think: a 10-pack of patties at $6.50/pound vs. a 2-pack at $12/pound.
  • Heating up: If Beyond and Impossible start competing on price at Walmart, we can expect the "real meat" difference to narrow even further.

Beyond is passing the mainstream test... Beyond's real goal is to get most meat-eaters eating its pea protein patties. Early adopters were vegans and vegetarians, but this Walmart deal proves it has expanded beyond that. Walmart is the keystone of accessibility and mainstream-ness in America. Read between the grill lines: Beyond must be performing well with shoppers if Walmart decided to triple the number of stores that offer it.


2. Stitch Fix customers are basically dropping the "Fix"

Pizza fix, wine fix, Netflix, Stitch Fix... One of these does not belong in the corona-conomy. Stitch Fix is the online personal styling service that uses stylists and algorithms to send you curated boxes of outfits each month (are you boho chic or sporty grunge?). Stitch Fix was a rare profitable young techy start-up — now, it's back to unprofitable basics:

  • Stitch Fix lost $44M last quarter, compared to a $7M profit during the same quarter last year. Shares plunged 14% after the update last week.
  • “Undoubtedly not what it was pre-COVID": Stitch's thoughts on the overall demand for clothes. Your personal stylist is whichever sweats came out of the dryer first.

Drop the last name... Like Madonna, but not at all. Stitch Fix's customers have been increasingly dropping the "Fix" (aka: the stylist-curated subscription part that it's known for). Earlier this year Stitch intro'd "direct buy," offering the option to buy individual clothing items. While this makes Stitch Fix way less interesting (and Fix-y), it provides:

  • More price flexibility: People aren't as willing to pay for a box of blazers and floral maxi skirts that they'll probably only wear to the grocery store.
  • More choice specificity: Stitch's women’s activewear sales surged 350% last quarter compared to last year as people traded work fits for workout fits.

The value is in the "Fix" — and Stitch could lose it... While direct buy is helping Stitch coast, the auto-ship Fix subscription is the real money-maker. Monthly recurring revenue is what makes companies like Netflix beloved by investors. Yesterday, Amazon launched a $5/month ‘personal shopper’ Prime service for men (it already has a women's one). Amazon can afford to offer lower prices and better data insights, throwing another wrench into Stitch's "Fix" biz.

What else we’re Snackin’

  • Bevvy: Coke teams up with Molson Coors Beverage (dropped the "Brewing") for the US launch of its Topo Chico Hard Seltzer.
  • Handy: Amazon unveils new biometric tech called "Amazon One" so that you can scan your palm to pay at its Amazon Go stores.
  • Sad: Disney is laying off 28K US employees as the pandemic continues to crush its parks and resorts business.
  • Cashed: Google will no longer allow apps like Netflix and Spotify to circumvent the 30% app store "tax" with their own billing systems.
  • Plush: Bed Bath & Beyond teams up with Instacart and Target-owned Shipt for same-day delivery before the holidays.
  • Truckload: Walmart Canada triples its order of Tesla's upcoming Semi all-electric trucks as part of a big sustainability push.

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  • Palantir's stock expected to begin trading on the New York Stock Exchange
  • Asana prepares for Direct Listing its shares

Disclosure: Authors of this Snacks own shares of Blackstone, Walmart, Amazon, and Beyond Meat

ID: 1348024

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