June 11, 2021 Sign Up

By Overheard on Wall Street

"Knowing is not enough; we must apply. Willing is not enough; we must do."

Good morning! Meme stocks continued their turbulent week with GME (-27%), AMC (-13%) and Clover Health (-15%) suffering huge losses from the highs set one day ago. In other news, NFTs are making a comeback, this CryptoPunk sold for $11.8 million, highest amount for a CryptoPunk ever. Yes, anyone can see the NFT but only one person is the rightful owner. The real question is why would anyone pay $11.8 million for that thing? CryptoPunks were created by Larva Labs and there will only ever be 10,000 in existence. This one was highly sought after because of its Alien variety with blue-green skin, and wearing a medical mask.

Intern szn is also in full swing, so if you think a young 'un would benefit from reading Short Squeez, forward them this email or send them this link.

1. Story of the Day: TikTok Wylin'

Gen Z's favorite social media app, TikTok is charging advertisers up to $2 million per day on its top view ad space, which is the first thing users see when they open the app. The prices are a significant increase to what TikTok was charging just a year ago, as TikTok's userbase has grown astronomically as well. The app had 100 million+ monthly active users in the US as of last August, up from 11 million in 2018. Anyone who purchased the top view ad space could generate a staggering 109 million impressions. (that's one way to go viral)

TikTok is still not monetizing its user base to the extent rivals like Facebook, Instagram, YouTube and Snap are, but it's only a matter of time as TikTok builds out its advertising team. The app's Chinese owners, ByteDance have huge pockets, and booked more than $20 billion in revenue from China alone last year, and this year its global ad sales are forecasted to double to $40 billion.

TikTok's greatest strength are its teens. 45% of its user base is under the age of 18. Advertisers are less inclined to advertise to minors but ByteDance is sitting on a gold mine once TikTok's user base grows up.

Short Squeez Takeaway: TikTok was the most downloaded app of 2020 and Q1 2021. It's easy to contrast TikTok's fate to Vine, a similar short-form video app, which was sent to the the gulag by its owners, Twitter in 2016. When Vine faced problems and became a cash-burning machine, Twitter shut it down as it was not its core business. (a classic example of M&A killing a company) Even if TikTok is a fad, ByteDance will probably fight harder to support it than Twitter's half-hearted attempt to save Vine. TikTok's worldwide reach gives it strategic importance to China and even if the app is unprofitable for a long time, it doesn't look like TikTok is going anywhere any time soon.

2. Markets Rundown

• S&P 500 climbed to a new record close, shrugging off the inflation report that showed a bigger than expected increase in the CPI (5% compared to 4.7%)
• Bitcoin rallied slightly following a proposal from regulators that would introduce capital requirements for banks dealing in crypto

Movers & Shakers

• (+) Restoration Hardware ($RH) +15% as it increased sales guidance after another earnings beat.
• (+) Signet Jewelers ($SIG) +14% after first-quarter earnings topped analysts’ projections.
• (–) Celsius Holdings ($CELH) -15% after announcing pricing on a sale of common stock yesterday.

3. Top Reads

4. Book of the Day: What the Dog Saw and Other Adventures

One of our favorite authors (Malcolm Gladwell) has written five New York Times bestsellers and doesn’t disappoint in What the Dog Saw. The book is a compilation of Gladwell’s favorite writings previously published in The New Yorker written in an essay format.

Gladwell takes a stab at solving some of life’s biggest mysteries including why are there dozens of varieties of mustard but only one variety of ketchup, what do job interviews really tell us, how homelessness may be easier to solve than manage and why some people choke and others panic.

An entertaining and thought provoking read.

5. Daily Visual: US Price Changes in the Last Year

Source: Axios

6.  Daily Acumen: Think of Future You

In a recent blog post, Nikki Cox talks about how she introduced her kids to the phrase. "Let's think of future us." After coming in from playing outside in the snow, her kids would fling their wet stuff everywhere, leaving their boots and coats in various places. When they wanted to leave to go somewhere or go play outside again, the kids would be frustrated and unable to find their things.

One day she stopped her kids and said, “let’s think of future us.” Let’s hang up all our wet clothing so it’s dry when we want to go out and play again and not stinky and wet. Let’s put our boots away in their cubby so we know right where to find them later and we don’t get frustrated. From that day on, the phrase let’s think of future us became an integral part of their day and had a huge positive impact on their behavior.

It works for adults too. Watch tv and eat a bag of chips or go out for a walk? Let’s think of future us. Scroll Instagram mindlessly or meditate? Let’s think of future us. Go to bed early and get rest or stay up late? Let’s think of future us. Spend money now on unnecessary stuff to clutter our home or save for intentional purchases or experiences in the future? Let’s think of future us.

7. Memes of the Day

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