November 29, 2023

Today's Topics

Hello! We were saddened to read of Charlie Munger’s passing at the age of 99 — here’s a great collection of quotes from the always-wise, always-witty Berkshire behemoth, on everything from Costco to crypto. Today our charts explore:

  • R u ok: Roku's stock is soaring.
  • Cyber Thursday: Tesla's delivering its first Cybertrucks tomorrow.
  • Shrimpact: America's taste for shellfish cost Red Lobster.
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Shares in Roku have been on an upward march, climbing nearly 90% in the last month, making the company — known for its smart TVs and streaming devices — the best-performing stock in the communication services industry… by some distance.

ROKU, R U OK?

In its earnings report a month ago, Roku told a compelling narrative to investors: sales were up 20%; video advertising was looking healthy; and cost-cutting measures, including laying off 300 employees in September, were lowering the company’s future expenses.

Since its founding in 2002, Roku’s main business for many years was in selling streaming boxes and physical hardware, which accounted for almost 85% of the company's revenue in 2015. But, over the best part of a decade, Roku has steadily built an enormous platform business, selling ads and services to its users. Although every shipment of a box or smart device may not make the company much money initially, distributing advertising and content to the 75 million active users on those devices is proving lucrative.

Of course, being in the ad business at that scale means competing with giants like Google and Meta, and dealing with the volatility that naturally follows. The company also remains in an awkward position when negotiating content deals with major players like Disney, YouTube, Netflix, and Amazon — all of which have the means to distribute their content through alternative routes. And, even with the surge last month, Roku stock is still down ~78% compared to its summer 2021 high.

Cyber Thursday

Tesla is set to roll out the first batch of its long-awaited, futuristic-looking Cybertrucks at an event tomorrow — though the exact specifications of the model, as well as how much they’ll actually cost, are still unknown. The “Blade Runner pickup trucks”, as Elon Musk once described them, were first touted at a now-infamous event back in 2019. However, the pandemic and ongoing production problems have proved to be substantial bumps in the road.

The 10 trucks set to be delivered this week mark the first of what many analysts expect will be sales that quickly run into the tens — if not hundreds — of thousands, with Musk citing “off the charts” demand back in October.

Keep on truckin’

While the Cybertruck’s Joe-Rogan-certified security features and distinctive metallic, angular body may not look much like the Chevrolet Silverado or Ford F-Series pickups you’re used to seeing on the road, Tesla’s decision to enter the truck market makes a lot of sense, as trucks have come to dominate America's highways in every state. Indeed, data from the EPA revealed that the overall “truck category” (which includes SUVs, pickups, vans, and minivans) accounted for 63% of vehicle production in the US in 2021, having overtaken cars 3 years earlier.

And, although enthusiasm to “go electric” seems to have waned somewhat recently, deliveries for EVs are still expected to top 1 million in America this year.

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Shellfishness

It seems that Red Lobster has learned the true value of all-you-can-eat.

Thai Union Group, owner of the 670-location-strong chain, reported an operating loss of $11.3 million for the seafood restaurant’s latest quarter, in part due to customers taking advantage of its Ultimate Endless Shrimp deal — where $20 (now $25) bought you as much shrimp as you could stomach in one sitting.

Sea change

Clearly, Red Lobster somewhat underestimated America’s jumbo appetite for shrimp, which has been generally on the rise for decades.

Indeed, the availability of shellfish to the average American skyrocketed in the ‘90s, increasing by 80% in 8 years, before peaking at 6.3 lbs per capita in 2004. However, huge influxes of cheap shrimp into US ports in that year from countries such as China, Vietnam, Thailand, and India sparked accusations of dumping — leading to the US Commerce Department imposing steep import tariffs… and going down in history as the “shrimp wars” of 2004.

Despite the restaurant chain's promotion succeeding in contributing to traffic, which increased 4% year-over-year, the deal turned out to be a tad too generous: Red Lobster’s yearly outlook worsened to a $20m loss, after briefly clawing into profitable territory back in Q1.

More Data

• Social media platform Reddit is reportedly once again considering an IPO — its previous flirtation with listing in Jan. 2022 valued the company at ~$15 billion.

• Uber and London’s iconic black cabs might finally be reaching a truce in the decade-long taxi wars, as the app plans to open up the platform to the fleet in 2024.

• When a Virgin Atlantic flight from London to New York touched down yesterday, it became the first to make a transatlantic trip using 100% sustainable aviation fuel.

• Rapper André 3000 has just broken a Billboard Hot 100 record for the longest song to enter the charts, with his track clocking in at 12 minutes and 20 seconds.

Hi-Viz

• Mapping the latest in the ongoing Israel-Gaza conflict.

• Test how your tipping compares to the average American.

Off the charts: Despite being the group's eponymous and best-selling brand, which car maker is undergoing staff cuts as it's "no longer competitive"? [Answer below].

Answer here.

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