🍔 Beyond’s big short

1. TPG shares spike in the first major IPO of the year, as private equity goes public

Private equity, public markets… SF-based private-equity firm TPG went public yesterday in this year’s first major initial public offering. PE firms like TPG invest $$ in private companies, just like venture-capital firms. But they have different parenting styles: VCs usually invest in startups and let them run things their way (free-range parenting), while PEs invest in or buy mature companies and try to improve them (more like helicopter parents).

• TPG owns a stake in 280 companies worth $109B, up 81% from five years ago. Fun fact: It bought Petco in 2006.
• TPG stock jumped 15% on its opening day of trading, pushing its market cap to $10B — a good sign for 2022’s IPOs.

Show me the acronyms… In 2021, assets managed by private equity and venture capital funds grew 10%, on average, and TPG’s jumped 21%. VCs invested $675B+ in startups, double 2020′s previous record. But at the end of the year two-thirds of 2021 IPOs were below their listing prices, which wasn’t great for retail investors. Still, many unicorns are expected to IPO this year as antitrust pressure makes mergers difficult and SPACs fall out of favor. PE-backed Chobani and VC-backed Reddit have already filed IPO paperwork.

THE TAKEAWAY

Private equity isn’t private anymore… Historically, TPG’s cash arsenal came from private investors, who were also the ones to benefit from its growth. But now TPG is public, along with other publicly listed PE powerhouses like $144B Blackstone, $61B KKR, and $19B Carlyle. Berkshire Hathaway is also basically a publicly traded PE firm (managed by Warren Buffett). Former Tinder owner IAC operates in a similar way.

2. Beyond Meat becomes the most shorted stock as meatless mania hits a wall

Can’t believe it’s not beef… Beyond Meat was one of the hottest IPOs of 2019, as beef-fatigued consumers jumped into the plant-based craze. From 2018 to 2020, sales of plant-based meat grew 3X as fast as animal meat sales, while Beyond’s sales quadrupled. Beyond has beefed up fast-food partnerships to attract fans. This month, it teamed up with chicken legend KFC to launch Beyond Fried Chicken nuggets.

• But Beyond shares have tanked 70% since its market debut, and now investors are betting money on it falling even more (aka: they’re shorting the stock). Blame falling sales…
• Last quarter, Beyond’s US sales sank nearly 14% as demand for its protein patties cooled and severe weather damaged its primary US production facility.

A plant in meat’s clothing... Climate activism has become a driving force in the meatless movement. But companies like Beyond and rival Impossible have yet to prove they produce fewer emissions than real meat makers. Plus:

• Plant-based meats cost 30-40% more than real meat. Over half of Americans who’ve tried plant-based alternatives come from six-figure households.
• Despite some nutritional advantages (like: fewer saturated fats) Beyond Burgers contain 5X as much sodium as a ground-beef patty.

THE TAKEAWAY

It’s a double-loss whopper… Beyond is losing market share in a shrinking market. Not only is it losing sales to plant-based competitors — it’s losing out to more meat consumption. Last year the plant-based-meat industry saw 10 straight months of decline. Meanwhile, OG meat giants like Tyson have launched cheaper plant-based options. Still, the meatless market is beginning to rebound as New Year’s resolutions and #Veganuary spotlight health.

What else we’re Snackin’

• Climb: Delta reported a loss for the fourth quarter, when Omicron led it to cancel thousands of flights. But the airline swung a profit for the year overall, and CEO Ed Bastian predicts the travel rebound will continue.
• Fall: Virgin Galactic shares fell nearly 20% after the space-tourism company said it’s raising $425M+ in debt to build its fleet, which still hasn’t flown customers. Competitor Blue Origin has launched three flights.
• Electric: Ford’s market cap surpassed $100B for the first time, fueled by the company’s push into EVs. Next: An electric version of its best-selling F-150 pickup is due this spring.
• Rebate: Expecting a tax refund this year? The IRS says it’s best to file early, warning of historic backlogs and staffing shortages ahead of filing season. It’s first come, first served.
• Boozy: Monster is the latest beverage company to expand into booze, snapping up the craft beer and hard-seltzer maker Canarchy for $330M. The energy-drink giant follows Coke and Pepsi in its move into alcohol.

Snack Fact of the Day

Friday

• December retail sales
• Earnings expected from: JPMorgan Chase, Wells Fargo, BlackRock, Citigroup, and First Republic

Authors of this Snacks own shares of: Google, Ford, Delta, Match, and IAC

Correction: In the Snacks newsletter published on Thursday, January 13, we misstated who Floyd Mayweather fought in his high-profile boxing match. It was Logan Paul, not Jake Paul. We’ve updated the online version of the newsletter, and we regret the error.

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