Aug 19, 2021 Sign Up

Together With

"I never thought I would tweet – I thought it was too dangerous." — Lloyd Blankfein

Good morning! The booster shots are here. The Biden administration has called for a 3rd Covid-19 vaccine shot for people who were vaccinated with the two-shot regimen, in light of the threat from the Delta variant. Restaurants also sued New York City, De Blasio for the indoor dining vaccination mandate that went into effect earlier this week.

If you have not subscribed to Short Squeez yet, now is the time and this is the link.

1. Story of the Day: Sad Desk Salad Heads to Suburbs

The sad desk salad is a home desk salad now. Back in the day (pre-Covid), salad chains like Just Salad, Sweetgreen, Chopt and Dig ran lunch hour in cities like NYC, with lines frequently going out the door. These chains were crushing it, with 10.6% growth in 2018 and 12% in 2019, but then Covid hit. Surprisingly, these chains still grew 1.8% in 2020. The reason? The salad chains adapted, offering more deliveries and moving to the suburbs.

Chopt will open 40 more restaurants in the next two years with 80% in the suburbs. Mediterranean chain Cava, announced it had raised $190 million to support its expansion. Just Salad, which closed an approximately $20 million funding round in July, said it will double its location count in the next two years, with an emphasis on the suburbs. Sweetgreen, chain that filed for an IPO in June, is also planning its own suburban expansion.

Salad chains are no longer just selling lunch. Chopt has 60/40 lunch/dinner split in the suburbs. Just Salad’s dinner sales went from about 25% of its bottom line to nearly 40%.

Short Squeez Takeaway: It's good news all round for salad chains, as the masses become more health conscious and more workers come back to the office (Delta permitting). The core customer for a fast-casual salad chain (a finance bro) is not that price-sensitive. A delivered Sweetgreen salad can cost more than $25, yet there are no signs of demand slowing down.

Source:  Bloomberg

2. Markets Rundown

• US stocks declined second day in a row, after the Fed’s July policy meeting minutes showed plans to reduce the central bank’s monetary support late this year.

Movers & Shakers

• (+) Monday.com ($MNDY) +17% on strong Q2 earnings.
• (+) Alcon ($ALC) +12% after reporting better-than-expected quarterly results and raising its full-year guidance.
• (–) Cree ($CREE) -9% after a disappointing earnings report.
  

3. Top Reads

A Message from Polymarket: Harry Kane to Manchester City

The end of the summer transfer market is around the corner. Some of the biggest teams in Europe have already shaken up their rosters and, with only two weeks left, there are still major deals to be completed. Harry Kane’s speculated transfer to Manchester City from Tottenham could be the biggest one yet.

City are set to propose an upgraded offer for the 28-year-old this week after Spurs declined an informal £100 million approach from the Manchester side for Kane in June. Recent reports suggest that the Premier League champions are indeed prepared to offer £150 million to sign the striker. Tottenham chairman, Daniel Levy, is set to play hardball by trying to extract a price in the vicinity of £160 million for his most prized asset.

Will Harry Kane sign for Manchester City on or before August 31, 2021?

This market on Polymarket has been a volatile one with “No” trading higher than 60% for most of July. Now traders are expecting a 60% probability that Harry Kane will be a Manchester City player by the end of the transfer window. Will Kane finally get his desired transfer move, or will Levy’s asking price be too high for City?

Use code “OWS” to get your first trade reimbursed up to $100!

4. Book of the Day: You're Not Listening: What You're Missing and Why It Matters

Despite living in a world where technology allows constant digital communication and opportunities to connect, it seems no one is really listening or even knows how. And it’s making us lonelier, more isolated, and less tolerant than ever before. A listener by trade, New York Times contributor Kate Murphy wanted to know how we got here.

In this always illuminating and often humorous deep dive, Murphy explains why we’re not listening, what it’s doing to us, and how we can reverse the trend. She makes accessible the psychology, neuroscience, and sociology of listening while also introducing us to some of the best listeners out there including a CIA agent, focus group moderator, bartender, radio producer, and top furniture salesman.

5. Daily Visual: Most Expensive Soccer Players of All-Time
Cumulative transfer fees

Source: Statista

6.  Daily Acumen: Antifade Model: Part 3

Over the last two days, we talked about Antifade companies, the ones whose economic rent (the ratio of free cash flow to economic assets) increases over time rather than decreases.

Another one of those Antifade companies is Tesla. Tesla is THE “speculative” stock, with a valuation that “does not make sense”. Based on 2020 data, the company trades on 630x normalized operating free cash flow, 16.2x net economic assets and has an operating rent of 2.6%, 10x less than Microsoft, for an enterprise value that is not far from 30% of the software company. However, when taking into account the simple drivers of the Battery Electric Vehicles replacing Internal Combustion Engine vehicles, the current valuation makes a lot more sense.

It is plausible that Electric vehicles will have at least an 8% share of the market in 2025. With a market share of 21%, Tesla may sell 1.5m to 2m vehicles, up at least threefold from the 500,000 units sold in 2020. Assuming the average selling price continues to fall, Tesla will still turn over $80B by then. 

A leveraging of its asset base (especially its R&D effort) and a modest margin enhancement would propel its rent to high double digits, whilst growing at perhaps twice the auto market. On that basis, Tesla could be trading on a market multiple in 5 years’ time without taking Tesla’s other businesses into account.

Click here for detailed Amazon, Tesla & Nvidia analysis and the Antifade model overview. 

Source: ValuAnalysis

7. Memes of the Day

Love Short Squeez? Share it with your friends!