Robintrack Newsletter (7/6/2020)
Uber orders Postmates for pickup and tech companies continue to be a ray of sunshine on a cloudy day.
Good afternoon, team! Today would be 7/6/2020, if not for us pushing the newsletter back at the last minute due to some big news.
Instead, today is 7/7/2020—and today, we’re talking yesterday (and last week’s) news. This week we tackle the craze with food delivery apps and how tech companies (and new ‘digital innovation companies) continue to offer value to investors amidst the pandemic.
Food delivery sees surge
Throughout the coronavirus pandemic, there has been a renewed interest in food delivery apps. Obvious players in this space included Uber, which owns UberEats. However, other (perhaps unanticipated) delivery players such as Domino’s ($DPZ), Papa John’s ($PZZA), and Blue Apron ($APRN) all saw increased inflows from Robinhood users. Last month, Grubhub ($GRUB) was acquired for a steep $7.3bn by Dutch food delivery company Just Eat Takeaway.
Grubhub ($GRUB) began to pick up steam after the beginning of the coronavirus quarantine in the United States. The first major jump in the graph above represented a growth of nearly 5,000 accounts. The second jump (from 11,800 to over 14,000) came after a surprise earnings beat. The third, exactly a month later, came as news emerged about the acquisition. However, it was no secret that Uber ($UBER) also placed a bid on the delivery app. So, in typical loser fashion, they went and acquired an alternative—Postmates.
However, that isn’t necessarily a losing move. Uber’s proposed acquisition of Grubhub would have made them own nearly half of the food delivery market. This would have yielded regulatory concerns, no doubt. Postmates, which accounts for just 8 percent of food delivery sales according to Second Measure, is a far more amicable purchase. It also makes Eats into an even more enticing segment of Uber’s business. However, Eats—like its parent company—is still a segment which yields no profits.
This didn’t stop investors, however. Uber stock bounced off year-long lows in March with news about UberEat’s growth. After news of the acquisition broke, Uber jumped 5 percent on Monday. The renewed interest in Uber made it the 3rd most ‘picked up’ stock on Monday. Since then, over 23,000 people have added it to their portfolio—making it the 20th most-held stock on Robinhood.
Despite all its renewed interest, it’s hard telling if the food delivery sector will ever pan out profits like their growth suggests. One columnist in Bloomberg notes that food delivery looks like “another gig-economy dead end” and suggested that the business of delivering anything from point A to point B is extremely high cost/low reward. It is possible that investors in food delivery apps just have the munchies (much like they did for weed and cannabis stocks), but only time will be a tell.
Tech, a sector that screams ‘sauce in the rough’
Unsurprisingly, some of the biggest gainers of this year have been tech firms like Google, Apple, Microsoft, and Amazon. However, some other innovators in the space such as Tesla and Square have had an absolutely insane week. These also happen to be some of the most-held stocks on Robinhood.
Arguably, the biggest winner of this month is electric vehicle company Tesla ($TSLA). Tesla reported record deliveries, which extended a rally which has added nearly 234% to the stock since the start of 2020. In the last month, Tesla has surged 46%, largely because the automaker has kept demand even amidst the backdrop of the pandemic.
Another huge tech winner this month is payment processor, Square ($SQ). The midcap financial company, owned by Twitter founder Jack Dorsey, has apart of a new wave of companies advancing society towards a ‘cashless future.’ Square has surged 40% over the last month, due in-part because more POS payments are being made on debit and credit cards.
Throughout 2020, holdings in Square increased as the stock dipped in March—now, the stock is skyrocketing to new heights in price and holdings. Over the last week, the stock has been on a run because—like many tech stocks—it is seeing renewed upgrades from analysts.
If tech and digital innovations ETFs are any indication of success in the tech sector, ARKW and FTEC might be telling. The former, which is filled with ‘digital-emphasis millennial companies’, is up 58% YTD. The latter, which is filled with more value tech buys, is up 13% YTD. Altogether, though these ETFs are not held by many Robinhood users—their valuations tell the story of a sector which is continuing to grow amidst recession and uncertainty. Expectant upon continued uncertainty, it is likely that the information technology and software sector will continue to see growth in both holdings and price alike. However, next week, we might touch on potential points for concern.
That’s a wrap for this week! If you enjoyed the content of this newsletter, we’d greatly appreciate if you share it or subscribe ($5/mo or $50/yr) to help support Robintrack. Supporting Robintrack will also enable us to move towards our goal of producing a podcast version of the podcast, producing a daily newsletter, or tackling more niche topics like venture and private equity!
In the meantime, best of luck this week. Next week will be a week off .. so take care — see you soon!
The Robintrack newsletter is a weekly digest produced for informational purposes only. It is not intended to serve as investment advice. The digest is produced with the intent to provide a data-centric analysis of how digital communities, millennials, and Gen Zers are trading stocks. Robintrack is not affiliated with Robinhood in any way, but all popularity data is sourced from Robinhood directly via a public API.