- There are 487m music streaming subscribers globally at Q1 2021.
- Emerging markets are now central to this market accounting for 60% of all 2020 subscriber growth.
- Spotify is still the leader with 32% but has lost two points of market share since Q1 2020.
- Google’s Youtube Music has been the standout story – “The early signs are that YouTube Music is becoming to Gen Z what Spotify was to Millennials half a decade ago.“
- Source.
Stocks
Interesting, and often contrarian, Snippets on individual companies and the stock market.
Grocery Delivery Sales
- Grocery delivery did extremely well during the pandemic.
- Walmart dominated pre-pandemic but the first few months of lockdowns its market share was eclipsed by Instacart.
- As of June 2021 it is back in the lead with 48% share while Instacart has 45%.
- Overall online grocery sales peaked in January 2021 and volumes are down 24% to June 2021 (which is -3% YoY).
- NB Amazon is excluded.
- Source.
Aducanumab Approval
CPU Competition
- The world of CPUs is heating up with new competition.
- In his first interview the new CEO of Qualcomm signalled they plan to design their own SoC with their own CPU.
- This will be based on their acquisition of Nuvia ($1.4bn) which was founded by Apple employees who worked on the M1 chip design.
Bounce Backs
- The time it takes for the stock market (S&P 500) to recover from a 2-sigma one day decline is at a historic low.
EV Maintenance Costs
- The US government estimate of fleet maintenance costs found that battery-electric vehicles (BEV) have about 40% lower cost when compared to internal combustion engine vehicles (ICEV).
- Hybrids (HEV) and plug-in hybrids (PHEV) also save money.
- NB this 4c per mile difference across the nearly 2 billion miles federal government vehicles covered in 2019 equates to $78 million a year in savings, and that doesn’t account for fuel costs.
Growth Scarcity
- Back in the early 2000s half of the stock market would be classified as a growth stock.
- Today only 67 companies have a top line 5-year growth rate of >15%.
- Growth is scarce.
- Source.
Peer to Peer Car Sharing
- Turo, part owned by IAC, is the leading peer to peer car sharing company (think Airbnb for cars).
- Turo has been gaining share – it has tripled from 2% in June 2019 to 6% in June 2021.
- Still miles away from the top three rental firms (Enterprise 37%, Avis 31%, Hertz 26%).
- Competition in the space is heating up with Uber unveiling their own rent-a-car service and Lyft partnering with SIXT for care rental.
- Source.
Hotel Occupancy Rate
- The occupancy rates of hotels has recovered nicely and is almost at the median level (’00 – ’20, blue line).
- Leisure demand is “doing the heavy lifting” (as seen in weekend occupancy rates), meaning a solid picture through the summer.
- Source: Calculated Risk.
Newsletters
GSK
- GlaxoSmithKline has been the subject of an activist attack by Elliott, who built up a significant stake in the company in April.
- GSK then hosted their long awaited investor day in June – laying out a plan for a future after spinning off their consumer health division.
- Elliott then released a letter which was quickly rebutted by the board of GSK who called for the usual “stability”.
- This was a good write up of the whole interaction.
- One interesting element that has not entered the discussion is the balance sheet.
- NewGSK will have 2x ND/EBITDA, even after gearing up consumer health to 4x and paying a dividend back. It also has a pension (£2bn deficit) and minority payments to ViiV partner Shionogi. All of this constrains the firm.
Stripe
- A lot has been written about this remarkable company and its even more remarkable founders.
- This was a really great, long piece covering everything from history to strategy.
- “In 2006, using an SAT score from a test he’d taken at the age of 13 (an infuriating anecdote), Patrick matriculated to Lisp’s birthplace: the Massachusetts Institute of Technology. He’d sped through the final two years of his high school curriculum in just twenty days.”
S&P H1 Return Decomposition
- Interesting to see that more than 100% of the 14% H1 2021 return of the S&P 500 index is earnings growth.
- Source.
UK Valuation
- UK stocks are very cheap relative to the world (Source).
- This compares valuation at index level and hence index sector composition has a big impact.
Amazon Prime
- JPM think Amazon Prime, which costs $119 per year, offers over $1,000 of customer value.
Banks – a Contrast
- These are two very contrasting views on the future of banking.
- The first is a very neat newsletter from Hosking Partners that presents banking in as simple light as possible.
- Banks are trusted to hold deposits, to transform their maturity and take diversified credit risk. As a result they have high earning power. The latter is tough to beat and large banks will beat challengers on customer facing technology reaping the cost savings.
- Contrasting this are two pieces from Net Interest, chronicling his journey through the evolving world of decentralised finance (DeFi – for those interested this is a good background on the topic).
- First he tries to start his own decentralised bank and then writes about Maker DAO, an existing one.
UK Bank Branches
Capital Intensive
- Staggering chart on how much non-capital intensive industries have outperformed.
- Explains why corporate language has also changed.
InPost
- Poland’s InPost, that recently listed, has an interesting story and strategy.
- It almost went bust but now handles 36% of Poland’s eCommerce volumes and is aiming for 50% margins.
- They believe “slipper distance” lockers are the future of eCommerce parcel delivery – they are greener, more convenient than convenience stores, and safer than leaving parcels on a porch.
- It will be interesting to see if this strategy is indeed the future.
Car Software
- Fascinating article on the ballooning software requirement in cars.
- “Even low-end vehicles are quickly approaching 100 ECUs and 100 million of lines of code as more features that were once considered luxury options, such adaptive cruise control and automatic emergency breaking, are becoming standard“.