#96 - Canadian Housing Bubble, FIGS IPO, Invisalign Printers, and Carvana's Used Car Vending Machines

  
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In this week's episode of Reformed Millennials, Broc and Joel talk Housing Markets, Money Mayweather vs. Logan Paul, fancy scrubs, and Meme Stonks.

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👉 For specific investment questions or advice contact Joel @ Gold Investment Management.


📈📊Market Update💵📉

For a brief moment last week, I thought that the meteoric surge of the so-called meme stocks like AMC, GME, BB, BBBY, DDS, Clov etc. would “break” the market. The last time we saw similar short squeezes in late January of this year, the main indexes had a swift 4-5% pullback.

They have held a lot better this time.

The QQQ bounced near its 20-day EMA.

SPY is close to new all-time highs.

Small caps (IWM) are acting constructively.

We are back in the phase where bad news for the economy is good news for the stock market because it means that the Fed’s injections are not going away. The stock averages had a decent rally last Friday on the back of weaker than expected employment numbers.

Crude oil and oil stocks had one of their best weeks in years. Major breakouts in the entire space. The oil and gas exploration and production ETF – XOP, went up 8%.

🤝Alberta is Back:

Crude #oil is breaking out, but oil & gas is as well.

Attached are some nice-looking charts for an “underinvested” area.

Does anyone else remember when Exxon was kicked out of the Dow (after 92 years) and it was lauded as a 'sign of the times’?

Wouldn't it be quite the sign that the removal actually marked a major change in energy performance and was a near-perfect buy signal?


💸Reformed Millennials - Post of The Week

We’re never going back to markets of the past.

Two things can be true about this market:

  1. It's crazy.

  2. Social media has permanently changed investor behavior in ways many professional investors haven't yet come to terms with.

Of course, there are timeless truths to investing that will never change. But how narratives are created and who creates them changes all the time.

Every investment is a number from today multiplied by a story about tomorrow, and the story aspect is just so much more potent now.

People are interpreting this as suggesting the market will never crash. I think it's the opposite: we've just made it easier and faster for crazy things to happen.

It feels like the @balaji law about the internet demanding extreme outcomes. Social media is the epitome of that reality. Social media + investing extends extremity to market dynamics.

Meme winner takes all.

Great article from Josh Brown at Fortune


FIGS and successful DTC companies

FIGS, a DTC healthcare apparel company, went public a few weeks ago at a ~5B market cap. FIGS exemplifies what a successful “DTC” brand looks like and is worth understanding better.

We branded a previously unbranded industry… Most importantly, we built a community and lifestyle around a profession. As a result, we have become the industry’s category-defining healthcare apparel and lifestyle brand.

Many DTC brands talk about community, but few actually follow through on it. FIGS has been able to create and leverage a passionate community of healthcare professionals to help foster its brand and customer loyalty.

A couple of things they’ve done that are interesting:

  • An ambassador program of 250 passionate customers who help engage with and interact with the broader community. They also serve as testbeds for feedback on new products.

  • Leveraging social media in unique ways to bring healthcare professionals together. FIGS has ~0.5M followers and an engagement rate that is double the industry average. Their use of social media to showcase the daily wins and challenges that healthcare professionals experience has helped keep bring the community together and keep them engaged.

Unit Economics:

Partially driven by the pandemic, and partially driven by increasing marketing efficiency and the growing awareness of the brand, CACs have been continued to decrease. Note that FIGS definition of CAC includes all customers who purchased the denominator as opposed to just new customers, which I believe Is a bit misleading, but this chart below shows that CAC has been improving sequentially.

On a per-customer basis, the number of orders/year/customers has increased from 1.9 to 2.1, while AOV has stayed flat (~$94), and so LTV has been increasing.

As of 2020, FIGS can pay back the cost to acquire a customer immediately, since they make 1.3x of their CAC on a customer’s first purchase contribution profit.

FIGS has seen explosive growth in 2020, in part driven by the pandemic, growing customers, and revenues over 100%.

FIGS today has ~1.5M customers, which grew 118% in 2020. Revenue grew from $110.5M to $263M in 2020, a 138% y/y growth rate.

FIGS has gotten to this revenue figure on just ~$60M of equity raised, highlighting that they have been pretty capital efficient.

In addition, margins have improved over time, and they are now profitable on a GAAP and cash flow basis, with operating margins of ~22% and FCF margins of 7%.


Logan Paul vs. Money Mayweather

Sadly Professional Athletics hasn’t been a thing since pros were Olympians.

Right now we’re just getting more explicit about sports being professional entertainment now.

Conventional Athletics could go the way of stage theater vs film.

Real competition as a constraint may be long-term non-viable for investors at this pace.

The Mayweather vs Paul fight was the 51st time people said they wouldn’t tune in for a boring Mayweather fight. And then they did.

But it will be something else. Because it’s not real sports so they can just make it up based on clicks.

“I won’t fall for this again, that sucked” is the rallying cry of all boxing fans and like 75% of sports teams that never win anything of significance. Yet they always do.


🌊Best Links of The Week🔮


This blog is presented as a general educational, informational, and entertainment resource. While the author of this blog, Joel Shackleton, is registered as an Associate Advising Representative with Gold Investment Management Ltd., a firm registered as a portfolio manager and located in Edmonton, Alberta, this blog does not provide, and should not be construed as providing, individualized investment advice, nor as containing any recommendation to buy or sell any specific securities or otherwise make any other form of investment or investment decision. Joel Shackleton and Gold Investment Management Ltd. specifically disclaim any reader of this blog from relying on any of its contents as investment advice or as an investment recommendation. The views and opinions expressed herein are the personal views and opinions of the author only and do not necessarily reflect the views or opinions of Gold Investment Management Ltd. or any of its other registered individuals or employees.  For a comprehensive legal disclaimer please visit GIM’s website at https://gold-im.com/legal/