__Gone quicker than a 24-pack of TP...__ Remember that $349B in forgivable loans to small businesses from the [$2T stimulus](https://snacks.robinhood.com/newsletters/CLl0evxvaKPwXSPACmU6C/) package? That ran out *quickly* — especially since [not-so-small](https://www.nbcnews.com/business/business-news/facing-furor-ruth-s-chris-high-end-steak-chain-returns-n1190606) businesses got multi-million loans. Now Congress has approved an extra [$321B](https://www.cnbc.com/2020/04/25/coronavirus-ppp-small-business-loans-could-run-out-in-days.html) for Paycheck Protection Program loans (PPP), which become "free money" for businesses if they keep their workers employed. All that free money though is adding up...

- __[$3.7T](https://qz.com/1839264/heres-why-the-us-can-afford-its-high-priced-coronavirus-rescue/)__: That's how much the government expects to add to the national debt this year, aka its [budget deficit](https://learn.robinhood.com/articles/4OPLC0LlkQmzDj4HAse8nM/what-is-a-budget-deficit/). The previous record deficit? $1.5T in 2010. 
- __[110%](https://qz.com/1839264/heres-why-the-us-can-afford-its-high-priced-coronavirus-rescue/):__ That's America's current __debt-to-GDP ratio__ (like your personal debt amount vs. your annual salary, but for the country). US [Gross Domestic Product](https://learn.robinhood.com/articles/29d9WQgPq119raQYS1Wm6H/what-is-gross-domestic-product-gdp/) is around __$21.7T__ — the national debt is almost __[$25T](https://www.usdebtclock.org/)__. 

__The US borrows $$$ by offering IOUs to investors...__ They're called "Treasury securities", aka US government bonds. Most of that debt is held by regular Americans through pension and mutual funds and a large part is owned by foreign governments (think China). 

- __US  debt is typically seen as a relatively safe investment__ — buyers are confident that America will pay them back, given the country's world-leading wealth, income, and economic resources. That low riskiness is reflected by the US' AA+ credit rating and helps explain why America pays barely any interest on its debt. But...
- __Higher debt usually means higher interest rates__. If investors think they might not get paid back, they might start demanding higher interest (higher risk, higher demanded reward). 
- __Tomorrow's generations will have to repay today's debts__. But debt-financed government spending seems necessary to save the economy from the giant economic hole caused by the COVID-19 shutdown.

_Trying to manage the national debt_

Borrow

__There are 2 ways to pay down national debt...__ and they both have consequences.  

- __Cut Spending:__ The government can divert spending on social services to repay bond investors instead. The more debt there is, the less money is left to pay for things like healthcare, education, and national defense. 
- __Raise Taxes:__ The government could tax businesses and citizens more in order to repay debt. But higher taxes can slow down economic growth, and potentially be counter-productive to debt repayment (if too-high taxes cause a recession). 

$321B in new PPP small biz loans adds to $3.7T estimated government deficit

- __Like your paranoid, can-hoarding neighbor...__ __[Netflix](https://robinhood.com/stocks/NFLX)__ has been obsessively stocking its basement with movies and shows, aka "content-hoarding". No one's laughing now: Netflix added __[15.8M](https://snacks.robinhood.com/newsletters/3VYgq4XRGydXCiWCpJd3rW/articles/1hRrTGpsrWf1HFMQNZopbk/)__ paying (aka, non-moocher) subscribers last quarter — *more than double* the 7.2M expected. Video production across the industry has grinded to a halt, but Netflix has 2 years worth of already-produced shows/movies to release — a massive advantage over streamers and cable.

- __When the going gets tough, the pizza gets cheesier...__ __[Domino's](https://robinhood.com/stocks/DPZ)__ is living in a rosier alternate reality. Sales at its US locations actually *jumped* __[7%](https://www.cnbc.com/2020/04/22/dominos-pizza-dpz-q1-2020-earnings.html)__ during the 4-week height of the economic lockdown in March/April. While others lay off employees, Domino's is hiring 10K more pizza whizzes. And forget ad-pocalypse — Dom's CEO [said](https://www.cnbc.com/2020/04/23/dominos-plans-to-keep-spending-money-on-advertising-amid-coronavirus-crisis.html) "we're not slowing down at all" re: advertising. As a delivery/takeout OG with a [DIY attitude](https://snacks.robinhood.com/newsletters/4dQzmfcL6V8Dtknj3cmAs4/articles/7t7MNxjGP1Bmx1DtzDt9BN), Domino's is eating the corona-conomy.

Highs

Who's up...

- __Just call it the "Zoom Killer"...__  __[Zoom](https://robinhood.com/stocks/ZM)__'s got a new problem (and it's not privacy-related). __[Facebook](https://robinhood.com/stocks/FB)__ just  [unveiled](https://www.cnn.com/2020/04/24/tech/facebook-video-calling-upgrades/index.html) a video-conference service: Messenger Rooms. FB's Zoom bomb is free and allows meetings of up to 50 people with no time limit — Zoom's free version has a 40 min max. Oh, and Messenger Rooms also features AI-enabled 360-degree virtual backgrounds. Zoom stock has plunged nearly 12% since the announcement Friday. 


- __So many Ts, so little time...__ __[AT&T](https://robinhood.com/stocks/T)__ has a lot going on: it's juggling CNN, HBO, TBS, Warner Bros, DirecTV, and AT&T wireless. It's also dealing with a [triple](https://snacks.robinhood.com/newsletters/3VYgq4XRGydXCiWCpJd3rW/articles/5XPdRwH7GPf2fZGiyykxV5/) corona-conomy whammy that soured its latest earnings (not pretty). AT&T's cable biz lost 1M customers just last quarter thanks to cord-cutting (cough, no live sports). It's also losing money on ad sales and cancelled TV/movie production. Oh, and its CEO just announced he's [stepping](https://www.theverge.com/2020/4/24/21234433/att-ceo-randall-stephenson-retire-replacement-john-stankey-coo) down. 

Lows

...and who's down

Dow Jones

S&P 500

Nasdaq

Bitcoin

10-Yr US Treasury

💵 Mo' Money Mo' Debt

__Check the armpits...__ Odds are, a __[Unilever](https://robinhood.com/stocks/UN)__ product is on (or in) your body. The giant Anglo-Dutch conglomerate makes everything from Dove soap to Lipton tea to Axe body spray. It also boasts the world's largest ice cream biz, with brands like Ben & Jerry's, Breyers, and the Magnum-making swirly [red heart](https://www.unilever.com/brands/food-and-drink/heartbrand.html) brand whose name inexplicably changes in every European country. 

- __Unilever is  a mirror into the world's consumer habits —__ its wide variety of everyday products sell in Asia, Africa, the Middle East, Europe, and the Americas. [70%](https://www.unilever.com/Images/ir-q1-2020-full-announcement_tcm244-550281_en.pdf) of its sales come from outside the Americas.
- __Unilever brought in $13.4B__ in sales for the last quarter (nearly [$2B](https://www.ft.com/content/0a6c8c14-ca31-47f4-87cd-0c8b841baeb4) for ice cream sales alone), with flat overall growth compared to last year. More interestingly, its latest earnings report reveals the world's shifting buying *and* using habits.

__“Less hair washing”...__  An actual line from Unilever’s earnings [presentation](https://www.unilever.com/Images/ir-q1-2020-presentation_tcm244-550288_en.pdf) — it knows you're using less of its big TRESemmé bottles. As the WFH and Zoom-in-your-undies life takes over, people are doing less shaving, hair washing, and deodorizing — 11 fewer "personal care" usages every week.

- __Personal care products__ like deodorant and shampoo were hoarded at the beginning of lockdown — now they're being used (and bought) way less. 
- __In-home food products__ like Ben & Jerry's pints and Hellman's mayo saw a sales surge, but out-of-home food sales plummeted as most restaurants, movie theaters, and public venues closed. Classic see-saw effect.

_They haven't used a single Unilever product in 2 months_

Clean

__Move over middleman — big Retail can go D2C alone...__ We're used to young, sexy startups living the direct-to-consumer life. Old consumer brands usually rely on the likes of __[Walmart](https://robinhood.com/stocks/WMT)__, __[Costco](https://robinhood.com/stocks/COST)__ and __[Target](https://robinhood.com/stocks/TGT)__ to hawk their goods. But in the lockdown crisis, 91-year-old Unilever is making a digital push and ramping up its D2C investments. Unilever's __online sales grew [36%](https://www.wsj.com/articles/coronavirus-melts-demand-for-unilevers-ice-cream-11587633932)__ this quarter — ecommerce now makes up around 7% of its biz. 




Unilever reveals the world's consumer habits — FYI, your hygiene routine has changed 

__Big Defense Energy...__ __[Raytheon](https://robinhood.com/stocks/RTX)__'s feeling it. It's the world's largest missile-builder and one of the biggest US defense contractors, along with military-vehicle-producing, big-weapon-pumping companies like __[Lockheed Martin](https://robinhood.com/stocks/LMT)__, __[Boeing](https://robinhood.com/stocks/BA)__, and __[Northrop Grumman](https://robinhood.com/stocks/NOC)__. The US Air Force just tapped Raytheon to build its new nuclear-tipped cruise missile. 

- __Raytheon's military biz is doing pretty well —__ it's the only prime contractor on this missile project, so it doesn't have to share much weapon-making $$$ with its peers. Lockheed snagged a "[supporting role](https://www.thedrive.com/the-war-zone/33080/air-force-has-picked-raytheon-to-build-its-new-stealthy-nuclear-tipped-cruise-missile)," but Raytheon gets the nuclear defense Oscar.   
- __But Raytheon's commercial biz is struggling —__ All those civilian flights that need Raytheon-made interiors aren't flying. That's an LDE ("low defense energy") feeling for Raytheon — the stock is down 60% since February, despite the Air Force deal.

__A big defense ego...__ Lockheed Martin's rocking it. While everyone is withdrawing their yearly economic forecasts, Lockheed went ahead and [confirmed](https://www.wsj.com/articles/lockheed-martin-keeps-2020-guidance-11587470543) its revenue goals for 2020. Bold, confident move in these corona-times — but Lockheed can swing it:

- __The US gov is Lockheed's biggest client__, accounting for around [70%](https://www.investopedia.com/articles/markets/102715/how-lockheed-martin-makes-its-money-lmt.asp) of its revenue. 
- __Unlike Raytheon,__ which has some commercial divisions, Lockheed almost exclusively sells to governments, whose purchasing hasn't stopped like many businesses have. That's why its stock is down only 12% since February. 
- __It even hired [1.7K](https://www.foxbusiness.com/markets/coronavirus-lockheed-martin-earnings-hiring-stock) people__ in the past month and is looking to hire 5K more. 


_When you snag that nuclear-tipped missile contract_

Defend

__Less commercially exposed = less pain exposed...__ At least for Defense companies in the corona-conomy. Raytheon lies somewhere in the middle between highly-commercial Boeing (which is *destroyed* by the travel lockdowns) and extra military-focused Lockheed (which is cruising). While missile tech is Raytheon's bread-and-butter, it also makes electronic systems for commercial aircraft. And right now, its commercial biz is hurting. 

Raytheon wins the Air Force's nuclear-tipped missile contract (but Lockheed's still laughing)

 🚿 Unilever wants you to shower more

__So like, did Carole do it?...__ Asked the [34M](https://www.cnn.com/2020/04/08/media/netflix-tiger-king-ratings/index.html) people who streamed “Tiger King” in its first 10 days. We know __[Netflix](https://robinhood.com/stocks/NFLX)__ has been benefitting from the lockdown economy — it’s practically the epitome of a “stay-at-home” stock. But its quarterly numbers shocked even the biggest optimists: 

- __[15.8M](https://www.theverge.com/2020/4/21/21229587/netflix-earnings-coronavirus-pandemic-streaming-entertainment):__ The number of new *paying* subscribers that Netflix added this quarter — over double the 7.2M expected.  
- __182M:__ Netflix's total paying subscribers worldwide — that fresh Flix user base is 22% larger now than it was a year ago. Oh, and it doesn’t include moochers or password sharers.

__“I just finished Netflix”…__ *Highly unlikely*. Those new shows  “magically” appearing on Netflix during quarantine?… That warm feeling that Netflix will continue releasing thrilling Spanish-language series even when the world ends? All part of the plan...

- __Netflix is like that paranoid neighbor__ hoarding 10K cans of corn in the basement — except *Netflix hoards content*, throwing anything it can get its hands on into the cart. No one is laughing at these hoarders now. 
- __While  film/TV production is paused__, Netflix has a fat pile of already-produced content so it can premier fresh shows/movies for the next __2 years__, [according](https://s22.q4cdn.com/959853165/files/doc_financials/2020/q1/updated/FINAL-Q1-20-Shareholder-Letter.pdf) to the CEO. Netflix gets to keep launching new shows, while actually producing zero.


_Netflix execs, hoarding for the content dry spell_

Stream

__The more you grow now, the slower you grow later...__ Just like the growth spurt you had as a kid, Netflix is having a major growth spurt in the lockdown economy — but it's not likely to last at this crazy pace. Netflix already takes up [72%](https://www.theverge.com/2020/4/21/21229587/netflix-earnings-coronavirus-pandemic-streaming-entertainment) of home streaming time. The new subs it's gaining now will likely take away from its future growth. Plus, people who aren't getting on the Netflix bandwagon during lockdown will probably never get on at all. 

Netflix’s obsessive content-hoarding ways help it slay the subscriber game

__Guac is virtual...__  __[Chipotle](https://robinhood.com/stocks/CMG)__ was feeling the pain of the corona-crisis: after two months of double-digit growth, its sales [dropped](https://www.cnbc.com/2020/04/21/chipotle-mexican-grill-cmg-q1-2020-earnings.html) 35% during the last week of March. But the burrito legend stuck to its guns and saw the bowl half full — it even bumped hourly employee pay by 10% and doled out bonuses. Most importantly, though... *it went extra digital this quarter*: 

- __[3%](https://www.cnbc.com/2020/04/21/chipotle-mexican-grill-cmg-q1-2020-earnings.html):__ How much Chipotle’s same-store sales increased. 
- __81%:__ How much *digital sales* jumped for the quarter. 
- __100%:__ How much digital sales jumped *in March alone* — online orders 2X’d.

__A techy burrito factory…__ Chipotle has been turning into one, and the transformation has accelerated while its tables are closed:

- __App Game:__ Chipotle upgraded its app and promoted its Rewards program, which now has [11.5M](https://www.fool.com/earnings/call-transcripts/2020/04/21/chipotle-mexican-grill-inc-cmg-q1-2020-earnings-ca.aspx) members. Daily sign-ups 4X'd in April — 65% of those new loyalists are first-time Chipotleans.
- __Delivery Game:__ Chipotle partnered with __DoorDash__, so you can get your tortilla-wrapped barbacoa delivered. In March, it added __Uber Eats__ as a partner and began offering free delivery. 
- __Takeout Game:__ Over a year ago, Chipotle created drive-thru "Chipotlanes" for fast pickup post-mobile order. Nuff said. 


_Chipotle's new product unveil: the e-rrito plus_

__A new leader can completely change a company's direction...__ CEO Brian Niccol (formerly Taco Bell's leader) took Chipotle down a completely different Chipotlane. In the 2 years before he became CEO, Chipotle's stock fell 60%. In the 2 years since, Chipotle is up 246% thanks to Niccol's forward-looking biz moves (shoutout Chipotlanes). Niccol may not be a gourmet foodie, but his digital strategy is coming in clutch. 

Chipotle is now an ecommerce burrito company — so the stock jumped 12% 

__Not just a phone network…__ __[AT&T](https://robinhood.com/stocks/T)__ is a jack of all media and communications trades. It owns pretty much everything, except for your spirit: CNN, HBO, TBS, Warner Bros, DirecTV, and (of course)  AT&T wireless are just a few of its many possessions. There's a lot going on. And you know what they say about jacks of all trades...

__Master of none?...__ AT&T's earnings this quarter were not pretty, with sales and profits both [declining](https://www.cnbc.com/2020/04/22/att-t-q1-2020-earnings.html). The corona-conomy has dealt a triple whammy blow to AT&T's prized media possessions:

- __Cord-cutting:__ With a bunch of new streaming services coming out + no live sports on cable networks, many are ending their relationship with cable. AT&T's cable biz lost 4M in the past year, and *1M just this quarter*.
- __Lost Ad Sales:__ [Ad-pocalypse](https://snacks.robinhood.com/newsletters/CLl0evxvaKPwXSPACmU6C/articles/16IZahTcAJMOMYem1znFJB/) is hitting all the TV channels, which are losing out on big commercial $$$ as advertisers save instead. 
- __No Production:__ With video production grinding to a halt, AT&T's future TV and movie lineups will have big COVID-19-caused voids.


_AT&T trying to juggle all its business lines_

Watch

__It's official: cord-cutting has accelerated...__ Last month, we summarized “[accelerating trends](https://snacks.robinhood.com/newsletters/2dDcWrkDfxUfj7ViqK7X8G/articles/2tRXQUNfgdfPADD36fBgKt)” that we predicted would happen in the corona-conomy. AT&T's earnings provide the data confirming that cord cutting is taking off. AT&T has lost 19% of its cable and DirecTV subscribers in the past year. HBO Max, which launches on May 27 for $14.99/month, is AT&T's big streaming hope to offset cable losses.

AT&T’s cable triple whammy: the cord-cutting has (officially) accelerated

🌯 Chipotle is an ecommerce company now

__*They're soooo alternative...*__ __[Starbucks](https://robinhood.com/stocks/SBUX)__' thought process when it picked __Oatly__ and __[Beyond Meat](https://robinhood.com/stocks/BYND)__ from the "influencer friends to bring on China trip" list. Now that 95% of Starbucks' China locations are re-opened, Starbucks decided to lure customers back in with some plant-based menu surprises. Enter Starbucks’ alt-crew: alt-milk superstar Oatly and alt-meat icon Beyond Meat...


- __4.3K Chinese Starbucks locations__ are now serving Oatly vegan-friendly matcha oat milk lattes and Beyond beef lasagna.
- __Starbucks wants to capitalize__ on [shifting](https://www.cnn.com/2020/04/21/business/starbucks-china-oatly-beyond-meat/index.html) nutritional preferences in China's giant consumer market, which has increasingly been moving toward "healthier" options.

__The trip of a lifetime...__ China is the world's 2nd largest economy, and Beyond Meat and Oatly have been wanting to roll up for while:

- __Oatly:__ It's the Swedish, pleasingly-packaged oat milk brand that artisanal coffee shops run on. But almost all its sales come from Europe and the US — Asia is a big opportunity. 
- __Beyond:__ Meat is a major staple of the Chinese diet — Beyond wants to be the major alt-staple. And its CEO committed to being there [this year](https://finance.yahoo.com/news/coronavirus-wont-stop-beyond-meat-from-entering-china-in-2020-ceo-ethan-brown-210532877.html).

_Starbucks' alternative milk friend_

Expand

__This is middleman marketing...__ Beyond could've made its big China debut in grocery stores. That would've given them better control of their profit margins and China marketing — but it would also have meant *massive spend* to get noticed in a new market. Starbucks already boasts 4,300 stores in China — now it's Beyond and Oatly's chaperone that can weave new behaviors into existing habits of its Chinese customers.

Starbucks brings its alt-milk and alt-meat stars on China tour: To Oatly and Beyond 

__Sounds like the love interest from an 18th century French novel...__ __[DuPont de Nemours](https://robinhood.com/stocks/DD)__ is actually a massive materials, ingredients, and electronic company. Founded in 1802 to make gunpowder, DuPont now produces everything from industrial enzymes to military vehicle armor. DuPont probably made the protein in your snack bar and the gelatin in your soft capsule pill. But now it's winning in one timely area: masks.

- __DuPont makes the materials used to produce masks__ and other Personal Protective Equipment. It [repurposed](https://www.dupont.com/news/dupont-mobilizes-covid-19-response.html) its engine-protecting tech to be used as a filter in N95 respirator masks, and has been pumping out [9M](https://www.dupont.com/news/dupont-mobilizes-covid-19-response.html) PPE garments/month.
- __Demand for masks and other PPE equipment has skyrocketed to fight COVID-19__, boosting DuPont's sales. The materials/chemical giant brought in an estimated __[$5.2B](https://www.thestreet.com/investing/dupont-sees-strong-first-quarter-earnings-n95-mask-coronavirus)__ total sales for the quarter, higher than what was expected pre-corona.

__But it's not all sales and sunshine...__ DuPont's auto and industrial materials division isn't doing too hot. Car makers aren't buying DuPont's auto materials since demand has seriously slumped. So DuPont shut down some of its transportation/industrial manufacturing plants and asked banks for billions more in credit lines.

_Welcome to DuPont, the Everything Factory_

Produce

__Diversification is key to survival...__ DuPont is a golden example of product/sector variety — its full name might as well be DuPont di Versification. It might take you years to comb through its entire "[Brands & Products](https://www.dupont.com/about.html)" offering.

- __This diversity__ is helping DuPont survive while its auto/industrials sector is being pummeled by coronavirus. When one division struggles, the other thrives.
- __Conversely__, "one-product" companies are in *big trouble* if they're adversely virus-affected — __Carnival Cruises__ has no N95 masks to fall back on. 

Materials giant DuPont surges on mask sales — diversification is its middle name

__This time hits different...__ Ad-pocalpyse 2020 is hitting every ad-reliant business, from Big Tech to Instagram influencers. Stores, restaurants, and travel are shut and over 22M are newly unemployed = *people are spending way less*. When companies know you're not spending, they're not going to waste their precious marketing dollars trying to sell you a lobster dinner or the new Spring lip gloss with an ad.   

- __Less ad spending means less money coming in__ for ad-reliant media companies like news agencies.
- __2020 is a year of big, national news.__ That's partly why big, national newspapers are more protected than small, local papers. 
- __Local news has been hit much harder__ — now that many local businesses are closed, the small newsrooms which run on ads for these businesses are getting $0.

__Hitting the breaking point...__ The situation has gotten so bad that 240 Congress members [drafted](https://www.axios.com/congress-coronavirus-bailout-local-news-a0b3b77b-91f1-425c-a57a-69c885fe2746.html) a letter to President Trump urging the White House to save local newsrooms. Some of their requests:

- __Prioritization of local outlets:__ Federal agencies spend around [$1B](https://www.axios.com/congress-coronavirus-bailout-local-news-a0b3b77b-91f1-425c-a57a-69c885fe2746.html)/year on advertising — Congress wants these ad dollars to go to local news outlets, first and foremost.
- __Additional relief__ for local papers which were already struggling pre-corona, but are now near collapse. The $2T package passed last month partly covers local newsrooms, but some are saying it won't be enough to save them. 


Read

__This could be a re-defining moment for the news biz...__ Between the ad dominance of Google and Facebook and the prevalence of "free news," we see two options to save local news destruction:

- A) __Government subsidies:__ NPR gets some in the US, BBC gets them in the UK, and some in Congress are proposing that local news get some too. 
- B) __Big Tech:__ Australia is now [forcing](https://techcrunch.com/2020/04/20/google-and-facebook-must-pay-media-for-content-reuse-says-australia/) __[Google](https://robinhood.com/stocks/GOOGL)__ and __[Facebook](https://robinhood.com/stocks/FB)__ to pay news agencies when their posts create ad revenue for them. Since [45%](https://marketingland.com/pew-research-center-says-45-americans-get-news-facebook-228001) of Americans get their news from Facebook, Big Tech sharing ad profits with news outlets could be a game-changer. 

Local news is in (serious) need of a bailout — 2 options can save it

🍔 Starbucks' alt-influencers

__When opposite day is the new reality...__ There is so ridiculously little demand for oil right now that we could theoretically be getting paid to fill up our own tanks. The world's economic engine was switched off almost overnight — planes aren't flying, people aren't driving, factories aren't operating. That means oil demand has taken a massive nosedive. And things just got (literally) even more [negative](https://www.nytimes.com/2020/04/20/business/stock-market-live-trading-coronavirus.html) for oil. 

- __In 2008, oil hit a record high of [$140](https://money.cnn.com/2008/06/27/markets/oil/) a barrel__ — it has hovered not too far from an average of $70 ever since. That is, until the corona-conomy came for its head. 
- __Yesterday__, the price of a barrel plunged from about $17 to less than $1. Oil officially gained 99 Cents Store status. Then... things got worse. 
- __Oil plunged below zero__ and went negative for the [first time](https://www.bloomberg.com/news/articles/2020-04-19/oil-drops-to-18-year-low-on-global-demand-crunch-storage-woes) ever. The price of the futures contract for West Texas Crude fell to *negative* $38 a barrel. 

__A crude awakening....__ We've got so much unused and unwanted oil around that US energy companies have nowhere to store it. Even with the recent OPEC production [cuts](https://www.nytimes.com/2020/04/09/business/energy-environment/opec-saudiarabia-russia-oil-coronavirus.html), it's still way too much (it'll always be too much if no one wants it). That's why sellers are literally *paying buyers* to take their oil inventories off their hands.

"_How much would you pay me to fill my own tank?_"

Pump

__Eye on the futures (contracts)...__ If the price of oil goes up, airlines will lose since they have to pay more for oil — if the price  goes down, oil companies lose, since their product's worth less. Both airlines and oil companies want to protect themselves from price fluctuations, so they can "hedge" their costs/revenues using [futures contracts](https://learn.robinhood.com/articles/uy95VdC54AqPWCRpT0ksn/what-are-futures/), which *hand off the risk (and potential reward) to investors*.

- __Investors agree to buy or sell__ oil in the future *at a set price*. Buyers hope the price will go up because they would get to buy oil for less than it's worth (vice versa with sellers).
- __Right now, oil contract buyers are scrambling__ to sell before they are forced to pay way more than oil is actually worth. 


Oil drops a shocking 200% in 1 day — and prices goes negative for the 1st time ever 

__Extremely Quiet & Incredibly Vague...__ While casually perusing the US General Services Administration [website](https://beta.sam.gov/opp/3357aead065f4f11966a87233077f099/view#attachments-links) (as we often do for fun), we noticed an interesting update: __[Uber](https://robinhood.com/stocks/UBER)__ just got the greenlight to sell its services to the US government, allowing it to compete for $810M  worth of gov spending over the next 5 years. 

- __Back in November,__  Uncle Sam was looking to find the best vendor for its future "*Governmentwide Rideshare/Ride-hail Passenger Services to meet the on-demand passenger transportation needs of Federal employees while carrying out official duties*." TLDR: Expensed rides for gov-employees.
- __Uber responded__ to this Request for Proposal, outlining how it can be the best gov-employee transporting service thanks to its massive fleet, emailed receipts, safety, etc. Must have been convincing, __since Uber won approval__ to serve as a vendor. 

__Pass the red tape...__  Since these projects are funded by taxpayer money, vendors have to jump through hoops for approval. The gov needs to ensure contracts are awarded fairly, to the most deserving company at the best price. No bribery, corruption, or waste. Uber will have to do more red tape dancing if it wants the full $810M to cruise Nancy or Mitch from marble building to marble building.


_"CIA doesn't want Uber X"_

Ride

__This could be a game changer for Uber...__ This almost uni-contract ("unicorn contract") would be a huge boost to Uber's ride-hail biz, which has been [struggling](https://snacks.robinhood.com/newsletters/6jMYrs8xXmNhuDOMY3gXEt/articles/40E1C9qy3jrGwR1iAtJ7A0/) during the corona-crisis on near-zero demand. 

- __Spending on Uber rides has dropped over [80%](https://www.nytimes.com/2020/04/17/technology/uber-lift-coronavirus.html) in March__ — Uber just yanked its 2020 forecast and wrote down [$2B](https://www.bloomberg.com/news/articles/2020-04-16/uber-withdraws-forecast-and-will-write-down-about-2-billion?sref=q3KSFp38) in losses for its investments. 
- __If Uber gets the whole $810M__, that would equal 6% of its total annual revenue. The US government has 2.1M full-time employees, meaning lots of steady long-term business. 



Uber's (very) low-key $810M government contract win could be a game-changer

__Get'cha head in the game...__ Looks like Zuck got some inspo from High School Musical. In case __[Facebook](https://robinhood.com/stocks/FB)__ didn't already control enough of our social lives, it just [launched](https://www.cnbc.com/2020/04/20/facebook-launching-dedicated-gaming-app-to-take-on-twitch-and-youtube.html) a social gaming app to take on Amazon's Twitch and YouTube Gaming. The creatively-named __Facebook Gaming__ app just launched on the Google Play Store:

- __Play & watch:__ Users will be able to watch friends and famous gamers play in real-time, and send their gaming idols "Stars" (digital tokens that cost/can be redeemed for money) for their virtual escapades.
- __Want to game with friends?:__ Challenge any FB friend to a tournament (anybody can create one — not just the pros).
- __"Go Live":__ This feature lets users livestream games directly from their phones/computers to FB (without needing to install 3rd party software), giving it a leg up on competitors like Twitch.

__Couldn't not do it...__ Gaming is thriving in the lockdown era: entertainment + social + virtual = quarantine success story. That's why FB decided to launch its app months earlier than scheduled (the iOS version isn't even ready to roll yet). But this FOMO-driven gaming push goes way back...

- __Messenger Games:__ In May 2017, FB [intro'd](https://www.digitalspy.com/tech/a788495/hidden-facebook-games-how-to-find-play-facebook-messengers-secret-games-basketball-chess/) casual/innocuous games on Messenger — Words with Friends, Angry Birds, and Tetris with your FB pals right through the app.
- __Gaming Tab:__ In May 2019, FB [added](https://www.theverge.com/2019/3/15/18267254/facebook-app-gaming-tab-mobile) a dedicated gaming tab to its mobile app. It even signed deals with famous gamers to stream exclusively on FB — a direct jab at Twitch and YouTube.
- __Gaming App:__ FB has been [testing](https://www.cnbc.com/2020/04/20/facebook-launching-dedicated-gaming-app-to-take-on-twitch-and-youtube.html) it in Southeast Asia and Latin America since Fall 2018. Now it's launching worldwide.


_First-time Facebook gamers_

Play

__Facebook isn't a gaming phenom, but it has numbers on its side...__ In the first 3 months of 2020, FB’s game streaming platform racked up [554M](https://www.cnbc.com/2020/04/20/facebook-launching-dedicated-gaming-app-to-take-on-twitch-and-youtube.html) hours of views, compared to 1.1B hours for YouTube and 3.1B hours for Twitch.  But...

- __FB has an active user base of [2.5B](https://fortune.com/2020/04/20/facebook-gaming-twitch-youtube-competitor/) people__ (over half of the 4.5B people on earth with internet access). __[700M](https://www.cnbc.com/2020/04/20/facebook-launching-dedicated-gaming-app-to-take-on-twitch-and-youtube.html) of those users__ already interact with FB gaming content. Gaming leader Twitch has [140M](https://www.businessofapps.com/data/twitch-statistics/) users. 
- __Facebook has an existing network__ on a widely adopted platform — friends don't have to switch between services to interact via messaging, gaming, or streaming.


Facebook launches its FOMO-driven gaming app to take on Twitch and YouTube

🎮 Facebook gets its head in the game(ing) 

__Pronounced how it sounds...__ Remdesivir. __[Gilead](https://robinhood.com/stocks/GILD)__'s antiviral drug was tested to treat Ebola patients — now it's the most promising potential COVID-19 treatment. A juicy [report](https://www.statnews.com/2020/04/16/early-peek-at-data-on-gilead-coronavirus-drug-suggests-patients-are-responding-to-treatment/) in STAT details its (apparent) effectiveness. More rigorous studies/trials/science are needed before we can celebrate a victory — but markets soared anyway as investors celebrated the chance this drug could work and help reopen the economy faster. How it went down read like a screenplay:

- __The setting:__ University of Chicago Medicine Hospital, where patients are participating in Gilead-sponsored remdesivir trials. 
- __The plot:__ Out of 125 coronavirus-infected patients who participated, 113 had severe symptoms. *Will remdesivir help them recover?*
- __The result:__ Most patients recovered in less than a week and 2 died. That's a 1.6% death rate compared to the 4.9% overall US rate — even more impressive considering cases in the trial were over 90% severe. But there was no control group to compare with. 

__Opening up America (Again?)...__ Not sure what the [again](https://www.whitehouse.gov/openingamerica/) is about, but there might be one if the economy reopens too soon. Last week, the White House recommended a [3-phase plan](https://www.nbcnews.com/politics/donald-trump/trump-announce-guidelines-reopening-u-s-amid-coronavirus-pandemic-n1185666) for states to reopen (when safe). Approval for a COVID-19 treatment could speed up this reopening, but it's not the only consideration...




_Some at Gilead are calling this new drug "Neo"_

Treat

__There are 3 parts to this medical solution...__ All 3 will be necessary to (completely) end the corona-crisis:

- __Testing:__ We've got tests, but not enough. Widespread testing is crucial to curbing the spread and give non-infected people the green light.
- __Treatment:__ We don't have an approved one yet — if remdesivir gets FDA approval, this would be a game-changer.
- __Vaccine:__ We don't have one yet, but companies are racing for it — __Johnson & Johnson__ has a lead [candidate](https://snacks.robinhood.com/newsletters/5OkPR1QEqQP8p5Av1YLpnB/articles/6arBR8BHx2mhZTzCNHDdK/) for trials and is (very ambitiously) aiming to get 1B doses of a vaccine out by the end of 2021. 

Gilead’s COVID-19 treatment shows early signs of effectiveness — could mean a faster reopening

- __Pass the dongle...__ __[Roku](https://robinhood.com/stocks/ROKU)__ couldn't help but tune us into a [sneak-preview](https://snacks.robinhood.com/newsletters/7AbTHa6Ld095hkHZCRzEaL/articles/3Mm4IvKL4dtN28sLMc8ykm) of its performance: the streamer expects it added 3M new accounts in the last 3 months to hit a total of 40M. Roku's devices streamed 13.2B hours of content over the period — a 49% rise from last year. We're calling it "The People's Dongle" — its low-priced devices power 44% of all streaming hours in the US.

- __Coke ICEEs with Red Vine straws...__ America's largest movie theater chain, __[AMC](https://robinhood.com/stocks/AMC)__, is [struggling](https://www.latimes.com/entertainment-arts/business/story/2020-04-16/amc-raise-500-million-coronavirus-crisis-theaters-reopen) hard since 100% of its global locations are closed. It's making $0, owes $4.8B in debt, and has [furloughed](https://www.reuters.com/article/us-health-coronavirus-theaters/amc-theatres-furloughs-ceo-corporate-employees-due-to-virus-idUSKBN21C3MM) all employees (including the CEO). Now it's raising $500M through a private debt offering to help it survive through Thanksgiving. Doubly lucky: movie theaters are (shockingly) included under "Phase 1" of the new federal [guidelines](https://www.whitehouse.gov/openingamerica/#criteria) for national reopening — AMC stock has jumped 32% since Thursday, after falling nearly 90% in the previous 12 months.

__Less Bitcoin-y, more Venmo-y...__ __[Facebook](https://robinhood.com/stocks/FB)__ wanted to change the world with its big, sexy crypto project Libra: a single, global cryptocurrency that would empower billions to save, earn, and spend via their phones. But Congress didn't like all that power with 1 company. Facebook announced Friday that Libra's ambitions got a massive [downgrade](https://www.ft.com/content/79376464-72b5-41fa-8f14-9f308acaf83b): instead of a global currency independent of all others, Libra 2.0 will be digital money tied to a local currency in your FB account. Sounds more like Venmo. And TBD when/if it'll actually launch. 

__The defaults are coming...__ With 22M Americans unemployed, big banks are preparing to *not* receive repayment on many of their loans. So they're [setting aside](https://snacks.robinhood.com/newsletters/7AbTHa6Ld095hkHZCRzEaL/articles/6MiIgW9CSp3vQEIYRasNPN/) cash in advance to cover *expected* future loan losses. __[JPMorgan](https://robinhood.com/stocks/JPM)__'s profit fell 70% as it set aside an extra $6.8B for losses (it had only expected to need $1.5B pre-corona). __[Goldman Sachs](https://robinhood.com/stocks/GS)__' profit plunged 49% after it held an extra [$1B](https://finance.yahoo.com/news/goldman-sachs-profit-plummets-49-064950141.html) to cover future loan fails and   __[Wells Fargo](https://robinhood.com/stocks/WFC)__ evaporated $3B of profit on its own loss expectations.

💊  Gilead's drug pop 

__Clear eyes, full carts, can't lose...__ __[Amazon](https://robinhood.com/stocks/AMZN)__ begs to differ. Its stock just hit a record high as it enjoys record online shopping demand, but it's not all rainbows and smiles in Bezosland. Amazon is struggling to manage the insane lockdown order surge, which has led to late shipments, unavailable items, and frustrated Prime members. 

- __Unlike a predictable holiday surge,__ the COVID-19 surge came out of the blue and escalated quickly — Amazon had no time to prep its forces for the flood.
- __Even with the 175K new employees it's hiring__ and the $500M it spent  on extra pay for warehouse workers, Amazon can't handle the heat. It could take over 2 months for Amazon to regain its pre-pandemic reliability. So...

__Don't even think about adding the jade roller...__ Amazon is doing something unheard of: it's re-working its website to make you buy *less*. It *doesn't* want your business so badly, that it even limited advertising on Google.

- __Goodbye Recommendations:__ You went to Amazon to buy one yoga mat, but the "you might also like" algorithm was so powerful that you ended up with a full gym in your cart. Amazon is removing these "others also bought" recommendations.
- __Goodbye Promotions:__ Prime Day is postponed indefinitely, and you can say bye to Mother's and Father's Day deals too. Promotions get you to throw stuff you don't need into your cart — *Amazon's new worst nightmare.*

_Amazon's (new) worst nightmare_

Deliver

__The recommended upsell is Amazon's greatest trick...__ Recommendations have the same effect as the new episode that auto-plays after you promised it was "the last one" — they're key to boosting sales/consumption. [35%](https://www.mckinsey.com/industries/retail/our-insights/how-retailers-can-keep-up-with-consumers) of Amazon sales and 75% of __Netflix__ views come from personalized recommendations. Personal preference data is marketing gold, and it's the secret to Amazon's retail profits. Removing these recs only highlights their effectiveness. 



Amazon wants you to stop filling your shopping cart — the rare anti-upsell strategy 

__Check your 401(k) or brokerage account...__ There's a high likelihood you've got some money in a __[BlackRock](https://robinhood.com/stocks/BLK)__ fund, since it's the world's largest money manager. 

- __But the investment giant's profits fell__ [23%](https://www.wsj.com/articles/blackrocks-first-quarter-profit-fell-23-11587033254) as its individual and institutional customers panic-sold stocks for liquid cash. Less money to manage = less profit for BlackRock. 
- __Assets under management shrank__ from __$7.4T__ at the end of 2019 to __$6.5T__ at the end of March. Still not too shabby, considering America's GDP was $21T in 2018.

__Not Apple's social media arm...__ iShares is BlackRock's [exchange-traded funds](https://learn.robinhood.com/articles/QkpPOCYYd2fMe76837dvG/what-is-an-exchange-traded-fund/) unit, and also one of its profit puppies. In addition to the $$$ BlackRock makes from investment advising and lending, it also charges tiny management fees for its ETFs.

- __ETFs are like investment smoothies__ which track multiple stocks, a sector, or an index. For example, with just one share of an S&P ETF, you can own a part of all 500 S&P companies. You get to track the index without individually purchasing each stock.
- __BlackRock customers poured *only* [$14B](https://www.wsj.com/articles/blackrocks-first-quarter-profit-fell-23-11587033254)__ into iShares ETFs this quarter (their worst performance since 2018). __Vanguard__, the world's 2nd largest money manager, took in 3X the amount of ETF investments. 

Little + Little to the power of 6T = Big

Invest

__Tiny fees (on a large scale) = billions in profit...__ Big investment firms like Blackrock and Vanguard sell their own ETFs across various brokerages in high volumes. If they charge a 0.03% fee on an ETF, they make only 3 cents off every $100 you invest. But because they operate at such a large scale, those tiny fees can add up to big profits. Blackrock made [$800M](https://www.wsj.com/articles/blackrocks-first-quarter-profit-fell-23-11587033254) in profit last quarter on the $6.4T it managed (annualize that, and it's only 0.05% of $6.4T).

BlackRock's adorably small fees lead to ridiculously big money (even in a downturn)

__Should've called it "Khakis"...__ __BlueJeans__ is a videoconference service like Zoom, except it only services businesses, it has no free version, and it's way less popular than __[Zoom](https://robinhood.com/stocks/ZM)__. But __[Verizon](https://robinhood.com/stocks/VZ)__ noticed BlueJeans from across the room  — now it's [acquiring](https://www.wsj.com/articles/verizon-to-buy-zoom-conferencing-rival-bluejeans-11587041218) it for less than $500M. 

- __ICYMI,__ videoconferencing has been having a moment. Zoom jumped from 10M customers in December to [200M](https://techcrunch.com/2020/04/16/verizon-is-buying-b2b-videoconferencing-firm-bluejeans/) customers in March — an unbelievable boost driven by virus lockdowns and office closures. 
- __BlueJeans is only used by businesses,__ unlike Zoom. It has 15K companies signed up for its service. Forget about the Middle School Reunion happy hour — BlueJeans is strictly 'bout that office life. And Verizon's into it.


__Blue Jeans, White Collar...__ Verizon is obsessed with rolling out its faster 5G network. The biggest adopters of this 5G tech will be Verizon's *corporate* customers — aka, the ones who pay for Verizon WiFi for their offices and Verizon data for employee cell phones. 

- __Verizon can offer its corporate customers__ BlueJeans' video conference tech to build telemedicine, virtual learning, and remote training services. 
- __Verizon also digs__ BlueJeans' encryption, which could shield it from Zoom-style [privacy issues ](https://www.npr.org/2020/04/03/826129520/a-must-for-millions-zoom-has-a-dark-side-and-an-fbi-warning) (never heard of [BlueJeans-bombing](https://fortune.com/2020/04/02/zoom-bombing-what-is-meeting-hacked-how-to-prevent-vulnerability-is-zoom-safe-video-chats/)).

"_Do these jeans make me look khaki?_"

Conference

__BlueJeans will no longer be a "One & Only" company...__ once it's part of Verizon. "One & Only" companies only do one thing — but they do it really well, and are successful because of that. __Zoom__ and __Netflix__ are successful O&O companies. Skype *used* to be an O&O company, until it got acquired by __Microsoft__ in 2011. It went from being super popular to being barely used. "One of Many" companies can get neglected post-acquisition — TBD if BlueJeans is next. 

Verizon snags Zoom's (smaller) video rival BlueJeans — goodbye "One & Only"

🛒 Amazon pulls a 180 

__Don't judge an iPhone by its cover...__ Remember iPhone SE? It's that little rectangle which you could actually operate one-handedly without spraining a finger. __[Apple](https://robinhood.com/stocks/AAPL)__ released it in 2016, then stopped selling it in 2018. Now, it's shockingly resurrecting iPhone SE for 2020, starting at the (relatively) lower price of __$399__. 

- __Looks:__ Pretty much the same as the iPhone 8 —  a 4.7-inch screen with a frame around it and a home button with Touch ID. *The real change lies on the inside...*
- __Specs:__ Better camera equipped with 4K video and portrait mode. Also boasts a more powerful processor with the new A13 Bionic chip (sounds legit). Apple [says](https://www.apple.com/iphone-se/) it put "the brains" of iPhone 11 Pro in the body of SE.


__What interested us most was the *timing* of this launch...__ Given the COVID-19 crisis, this might not seem like the best time to ship a new product. Apple thinks it's a great time:

- __With the economy in shambles,__ it makes sense to introduce a lower-cost phone. The new SE is $200 cheaper than the next "cheapest" iPhone (and many Android models). A low-cost, high-performance phone could thrive right now. 
- __With most Apple stores closed,__ people can't try before they buy. Buying iPhones online becomes more attractive with a lower price and newer product — Apple's trying to drive excitement for online orders with this launch (people get hyped on pre-orders). 


"_Look, I can type with one hand_"

Release

__Is Apple cannibalizing itself?...__ Cannibalization occurs when a new product is so irresistible it steals sales from your other (often higher-priced) products. Tesla's Model 3 stole sales from its Model S. But Apple probably did *a lot* of research on this risk and decided that:

- __More Upgrades:__ iPhone users might be more likely to upgrade from their old phones after the launch of SE, with that volume covering lost sales from pricier models.
- __More Market Share:__ With this lower-priced option, Apple might convert some Androiders — __[Google](https://robinhood.com/stocks/GOOGL)__'s Android still controls [70%](https://gs.statcounter.com/os-market-share/mobile/worldwide) of the world's cell phones.
- __But__ if fancy new iPhone users change to the lower-priced SE instead, that's a problem for Apple.

Welcome (back) iPhone SE — but did Apple just cannibalize itself?

__The "B" word has been thrown around a lot...__ But now airlines are finally getting their Big B: *a $25B bailout from the US government*. 10 airlines — including __[Delta](https://robinhood.com/stocks/DAL)__, __[United](https://robinhood.com/stocks/UAL)__, and __[JetBlue](https://robinhood.com/stocks/JBLU)__ — will share the $25B to pay their hundreds of thousands of employees. Here's what this bailout looks like:

- __70% grants (aka, free money):__ The airlines *won't* have to repay this. By taking the money, airlines are agreeing not to layoff workers until at least September, which means the gov doesn't have to spend taxpayer money on unemployment checks for them — instead it gets to continue collecting income tax on those paychecks. 
- __30% loans:__ 30% of the package will have to be repaid  over 10 years. Airlines wanted *only* grants (duh) and the gov wanted loans, so this is a compromise. 
- __The Treasury also gets stock in the airlines,__ so Americans collectively (kind of) own around 1% of those companies. 


__Many (or all) airlines would likely go bankrupt...__ Without this bailout, that is. That's why it was a key part of the [$2.2T stimulus](https://snacks.robinhood.com/newsletters/CLl0evxvaKPwXSPACmU6C/articles/jtOWtkujqwVzIeEa8NYkj) package. With near-zero travel demand and  high fixed expenses, airlines are quickly burning through the small cash cushions they have:

- __[96%](https://www.bloomberg.com/news/articles/2020-03-16/u-s-airlines-spent-96-of-free-cash-flow-on-buybacks-chart?sref=q3KSFp38) of the cash generated from airlines' profits__ over the last decade was returned back to shareholders through dividends and stock-boosting [buybacks](https://snacks.robinhood.com/newsletters/3RZmA5EnTQS6bHZZtNhsuN/articles/6VASbcZT1I1au5mw9OXEl7/) — now airlines won't be allowed to do buybacks until September 2021. 
- __In February, Delta generously dished out [$1.6B](https://snacks.robinhood.com/newsletters/6wRGgx7QknYZXmDyA2zTy9/articles/4mOiuwQwp60nQ7F33CMMXz/)__ (or 33% of its 2019 profit) in bonuses to employees. But now, passenger volume for airlines in the US is down __[95%](https://www.nytimes.com/2020/04/14/business/coronavirus-airlines-bailout-treasury-department.html)__ from a year ago — airlines are expected to lose $314B this year in global sales.

"_Let's get this bailout_"

Bailout

__It's not necessarily *bailout or bust*...__ Even when airlines go bankrupt (no bailout), they can bounce back — [66](https://www.airlines.org/dataset/u-s-bankruptcies-and-services-cessations/) American airlines have gone bankrupt since 2000, including United Airlines in 2002 and Delta in 2005. But bankruptcy is a big hit to investors, since the stocks usually go to zero. If airline employees lost their jobs, the government would have to pay unemployment benefits — so it's shelling out $$$ either way. 

Airlines finally get their $25B bailout — now you (kind of) own 10 airlines 

📱 Return of iPhone SE

__Like that $50 you spotted Tracy for dinner...__ you know you'll never get it back. __[JPMorgan](https://robinhood.com/stocks/JPM)__ is in the same spot — except its loans are in the billions. America's largest bank saw its profit fall a stunning [70%](https://www.wsj.com/articles/jpmorgan-chase-reports-profit-falls-69-amid-u-s-coronavirus-outbreak-11586862723) in the quarter, as it set aside an extra __$6.8B__ to cover looming losses from defaulted loans. __[Wells Fargo](https://robinhood.com/stocks/WFC)__ also evaporated __$3B__ of its profits to cover expected loan fails. 

- __Banks make loans__ to individuals, companies, and government entities, then collect  interest on the loans — think mortgages, credit cards, biz loans, and bonds. That's all fine and dandy when most people are able (and expected) to pay those loans back...
-  __But with [17M](https://www.politico.com/news/2020/04/09/coronavirus-unemployment-claims-numbers-176794) newly unemployed Americans__ and businesses closed across the country, banks are shifting their expectations (big time). Many IOUs will turn into "sorry, I literally cannot pay you back," as sources of income disappear. 

__Enter "Loan Loss Provisions"...__ That's money set aside by companies in advance to cover expected *future* losses. Most earnings reports are backward-looking, but the 1st two big banks to report had more *forward-looking* reports to share:

- __[$1.5B](https://www.wsj.com/articles/jpmorgan-wells-fargo-profits-tumble-as-they-brace-for-a-recession-11586881571):__  How much JPM had set aside for Loan Loss Provisions *before* the corona-crisis — now it's setting aside a total of __$8.3B__, with possibly more to come. 
- __[$800M](https://www.wsj.com/articles/jpmorgan-wells-fargo-profits-tumble-as-they-brace-for-a-recession-11586881571):__ How much Wells Fargo had planned to spend  on loss coverage — now it's losing a total of __$3.8B__, taking an 80% bigger L than expected.



_Loading up on Loan Loss Provisions_

Save

__Planning for losses is crucial (so is hedging them)...__ While the banks' consumer units are being pummeled by the economic crisis, it wasn't all bad news. The volatile stock market boosted JPM's trading revenues by [32%](https://www.wsj.com/articles/jpmorgan-chase-reports-profit-falls-69-amid-u-s-coronavirus-outbreak-11586862723), while interest-earning deposits jumped [23%](https://www.wsj.com/articles/jpmorgan-chase-reports-profit-falls-69-amid-u-s-coronavirus-outbreak-11586862723) as people stashed cash in checking accounts. While these gains offset *some* losses, planning ahead for worst-case default scenarios is crucial to the banks' survival.

JPMorgan and Wells Fargo lose big on expected loan losses — the defaults are coming

__Like that excited friend who can't keep a secret...__ streaming player __[Roku](https://robinhood.com/stocks/ROKU)__ is so giddy with its recent success that it couldn't help but share a little sneak-preview into its earnings ahead of their May 7 release. 

- __[3M](https://ir.roku.com/news-releases/news-release-details/roku-provides-estimated-q1-results):__ The number of new accounts Roku estimates it added in the last 3 months. Its total active accounts are estimated to be around 40M. 
- __[49%](https://ir.roku.com/news-releases/news-release-details/roku-provides-estimated-q1-results):__ How much Roku expects streaming hours have risen over the same period compared to last year — that's __13.2B__ hours of streaming through Roku (or how you feel after finishing all of Netflix). 
- __10%:__ How much Roku's stock popped after the preview victory.


__Roku is kind of like the People's Streaming Device...__ It accounts for [44%](https://www.fool.com/investing/2019/12/19/roku-dominance-connected-tv-advertising-growing.aspx) of all streaming hours in the US. Its dongles start at $29.99/month, compared to Apple TV's $140+ shiny black boxes. It's not as sleek as Apple TV or as Alexa-integrated as Amazon Fire Stick — but it's cheap, it works, and is compatible with most TVs. Most Americans can swing that.

"_Hello? I think my Roku stick is broken..._"

__Tailwinds are great for business...__ When economic trends align with your biz model, it's like a strong wind pushing you further in your desired direction. Roku's got 3 at its back:

- __Lockdown Life:__ Quarantine boredom + the launch of exciting  streamers like Disney+ and HBO Max are likely to get people hooked on streaming devices.
- __Live sports is cancelled:__ Just another reason to cut the cord. 
- __Saving Mindset:__ With the economic crisis, people may opt for Roku's low-cost streaming device over pricier ones. But this is also a headwind  — [63%](https://videoadnews.com/2020/02/14/the-wir-rokus-doubles-its-video-ad-impressions-in-2019-the-bbcs-chairman-warns-against-a-subscription-model-for-the-broadcaster-and-igtv-trials-video-ads/) of Roku's revenue comes from ads, which marketers aren't splurging on since your spending is way down. 

Roku surfs the quarantine streaming waves with 3 tailwinds at its back

__Not a heavy metal band or a violent rash...__ __Thrasio__ is an unfortunately-named (yet [profitable](https://news.crunchbase.com/news/meet-thrasio-a-profitable-startup-that-just-raised-110m-at-a-780m-valuation/)) startup that just got a little closer to becoming a unicorn. It raised a fresh $110M, bumping it to a $780M valuation. And its whole business revolves around being __[Amazon](https://robinhood.com/stocks/AMZN)__'s most aggro customer — its [slogan](https://www.thras.io/) is *literally* "We Buy Amazon Businesses:"

- __Scout:__ Thrasio tracks down the best-selling, most highly-reviewed everyday essentials on Amazon — think: *best foam roller*, *excellent cotton socks*, *world's #1 can-opener*. Then...
- __Acquire:__ Thrasio buys the generic brands from the small biz owners who are making bank on Amazon (but who may not have the resources to scale). Thrasio drops over $1M in cash to snag these seven-figure brands from their owners. Then...
- __Integrate:__ Thrasio integrates these fast-growing brands into its platform, and scales them more effectively.


__Fast times at Thrasio High...__ Thrasio has been profitable since Day 1 of its founding in mid-2018,  [according](https://news.crunchbase.com/news/meet-thrasio-a-profitable-startup-that-just-raised-110m-at-a-780m-valuation/) to its founders. Now it's the [fastest-growing](https://www.thras.io/) acquirer of Amazon-trepreneurs, with some impressive stats to boot:

- __In just a year of fundraising,__ Thrasio raised a total of __$250M__ in three investment rounds.
- __Its current valuation is 32X larger__ than its seed valuation a year ago, and this latest investment is $90M bigger than its last.
- __In just a year and a half,__ it has acquired over __43 businesses__ — its sales have grown from 0 to more than $200M.   

Raise

__Sometimes, you really *can* buy success...__ That's exactly what Thrasio is doing: it's buying up already hot, successful businesses that are clearly in demand, adding them in a pile with other successful businesses, and coming out with an even bigger, fatter pile of success. With the investment cash and operational scalability that Thrasio brings to the table, it can do what successful Amazon sellers do on a much larger scale.

Almost-unicorn Thrasio hits a $780M valuation — it's obsessed with your Amazon purchases

 🌊 Roku surfs the wave

__America runs on Dunkin'...__ but __[Dunkin'](https://robinhood.com/stocks/DNKN)__ runs on a 100% franchised biz model — that's coming in pretty sweet during the corona-conomy. Dunkin's 21K stores are 100% owned by independent people. Dunkin' sells the rights to use its brand and open up shop — as long as the Boston Kremes are kremy and the Caramel Iced Coffees are extra-syrupy, no one will care who owns it. Dunkin' cashes in on franchises in 3 way:

-  __Selling rights to operate the brand:__ Dunkin' gets to expand its empire, while the owner gets to cash in on Dunkin's brand fame, recipes and loyal customers (for a "franchise fee"). 
- __Selling stuff to operate the brand:__ The franchise owner is obligated to purchase Dunkies essentials — like ingredients, uniforms, and plastic furniture — straight from corporate. 
- __Share of sales:__ Owners must pay Dunkin a percentage of the franchise's sales and an upfront fee for the privilege.

__Franchising is the democratization of fast-food fortunes...__ By paying regular fees to franchisors like __[Domino's](https://robinhood.com/stocks/DPZ)__ or __[McDonald's](https://robinhood.com/stocks/MCD)__, entrepreneurial *franchisees* get a share of Big Fast Food's profits. You've heard of landlords — Dunkin' is the franchisee's *brand*-lord.

_When you realize that McDowell's is not a McDonald's franchise_

Dunk

__Franchising means lower risk, but also lower potential reward...__ for corporate. The franchise owner (not Dunkin') pays for the building, the employees, and all the biz expenses — so it's this franchisee who loses out most when the biz is closed. Dunkin' has limited investment, so the only thing it's losing when sales are down is a cut of those sales. But franchise owners reap a greater percentage of profits when business booms.

Dunkin' doesn't own a single one of its own locations — and that's good right now

__Where'd that state tax go?...__ The virus economy has plunged spending, caused major layoffs, and stuck a knife in travel. The economic pain felt by individuals and businesses is catching up to states, which are losing their most important sources of revenue:

- __Sales Tax:__ Your cold brew costs $4, but your state slaps on a nice 7% tax on top. Rates vary state by state (some, like New Hampshire, don't charge it). But highly sales [tax-dependent](https://www.axios.com/coronavirus-states-cities-economic-crisis-519d28b2-2126-4749-b94b-a3dcbdcf0feb.html) states like Florida and Nevada are struggling as spending plummets (aka, nothing to tax). 
-  __Income Tax:__ Just when you thought you were done filing taxes, there comes the state section. Income tax revenue is plunging as 17M have been laid off across the country — plus the filing deadline was extended by 3 months to July 15, meaning delayed cash flow.  
- __Tourism Tax:__ That reason your hotel bill is higher than list price (even when you didn't raid the minibar). Can be collected by states or cities/counties. Las Vegas is missing out on 12% resort fees thanks to shuttered hotel/casinos.   


__States use that money for key resources...__ Like public schools, roads, and unemployment benefits. Now, at the same time that revenue is down, states are spending *more* on unemployment and medical expenses — a double-whammy for the piggy bank. Even states with a lot of cash saved up (like Arizona) will likely be running [deficits](https://www.axios.com/coronavirus-states-cities-economic-crisis-519d28b2-2126-4749-b94b-a3dcbdcf0feb.html) by 2021. 

Lose

__States and cities rely on *your* earning/spending...__ Since that's significantly down, we can expect some big budget cuts ahead — and maybe even some bankruptcies. The state's piggy banks will recover *after* its people and businesses do. Just like individuals and businesses, states can: 

- __Get credit ratings__ based on ability to pay back loans. 
- __Take on debt__ by issuing bonds.
- __File for bankruptcy__ when they can't pay back debt. 
- __Get bailed out__ by the federal government in billions of aid.