April 1, 2022

Today's Topics

Hi there, we've got 3 charts for you:

  • The pandemic pet boom. Many turned to pets for company in the last 2 years.
  • Chewy. Pet-stuff-as-a-service has worked well, but growth is slowing.
  • Biden digs deep. Into the Strategic Petroleum Reserve.
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The pandemic pet boom

Greater isolation, less time outside and the general stress of the pandemic took its toll over the last 2+ years. For many of us, we found comfort in the company of pets.

Indeed, data from Google shows how searches for "puppies for sale", "adopt a dog" and "kittens" all spiked dramatically in March 2020, and stayed elevated for much of 2021, as America searched for its next family pet — to the benefit of the pet industry.

Pet-food-as-a-service

It may not have quite "done a Zoom", but for Chewy the pandemic was a boom time. The online pet food and pet supply company was already growing quickly, but it found itself on the right side of two trends at the same time: e-commerce and pets.

That translated into an acceleration in sales growth, with revenue jumping almost 50% in a year (2020 vs. 2019), and the company's share price more than tripling. At its peak that gave Chewy a cool $49 billion valuation, more than adidas, Honda, Lululemon or Chipotle are worth today.

As with many "pandemic winners", investors got a bit ahead of themselves, as $49 billion turned out to be a huge valuation for a company that, at its simplest, just sells pet stuff online.

Sticky sales

Investors weren't just feeling fuzzy about their pets. They really liked Chewy's business model because it doesn't look like a lot of other e-commerce businesses for one simple reason: pets need to eat (and do other things) every day... and unlike us they are usually happy to eat the same thing over and over. That means repeat, predictable, purchases — which investors love.

Indeed, as of its latest quarter, over 70% of Chewy's sales were from "Autoship subscriptions" — repeat subscription purchases for food, treats, cat litter, medicines or other pet supplies.

But despite its attractive model, the company still isn't consistently profitable, per its latest results this week. Supply chain issues and rising costs meant another quarterly loss, which was okay when sales were roaring ahead, but with a more muted outlook for growth (more like 13% growth rather than 30%) the company's shares shed almost one-fifth of their value on Wednesday... taking them right back to where they were roughly 2 years ago.

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President Biden is set to release almost one-third of the United States' Strategic Petroleum Reserve (SPR), in an effort to curb rising oil and energy prices, which are feeding inflation throughout the US economy.

This is a big deal

This is the biggest drawdown from the SPR in history... and it's not even close.

There have been only a few emergency withdrawals from the SPR since it was established in the 1970s, the biggest of which have been closer to 30 million barrels. This latest withdrawal is set to be 180 million barrels of oil, almost one-third of the 570 million barrels that were available at the last count.

Where is this stuff?

The oil is stored in 60 enormous underground salt caverns across 4 sites in Louisiana and Texas one of which is large enough for Chicago's Willis Tower to fit inside (with room to spare).

Will this work?

Depends who you ask. Some think it's a big enough withdrawal to cover the supply shortage and get prices back to more "normal" levels. Others argue that it's pointless, offering a short-term solution to a more structural problem.

More Data

1) The Institute of International Finance expects the Russian economy to contract by 15%+ this year, essentially wiping out all of Russia's economic progress since around 2007.

2) GameStop mania is... back? Shares in the gaming company are up 96% in the last 2 weeks, and the company has approved a stock split that should make it easier for retail traders to invest.

3) Powerful visualization of the ~4 million people that have now fled Ukraine.

4) Scientists are finally done mapping the human genome, completing the 8% of material that had been impossible to map with previous technology.

5)YouSolar has built the PowerBloc® — a solar nano-grid designed as a utility replacement. Now the company is back raising money in a Reg CF financing to build the distributed power architecture of the future.**

6) We don't usually love spiral charts or animated data visualizations, but this climate change one from NASA is an exception to both.

**This is sponsored content

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