#96 - Canadian Housing Bubble, FIGS IPO, Invisalign Printers, and Carvana's Used Car Vending Machines
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 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:
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.
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.
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🔮
Youtube paid $4 billion to the music industry - Over the last 12 months Youtube paid 4b for music rights. The IFPI estimates total 2020 streaming revenue to labels as $13.4bn.
Why do people feel like their academic fields are at a dead end? - In recent years, I’ve noticed a lot of thinkpieces in which people talk about their academic fields hitting an impasse
Is America Ready to Move Again? - A Look into The Most Famous Orange Truck Company from Sleepwell.
Apple Electric Vehicle Rumors Drive China Battery Makers Higher - China Last Night
The FBI Secretly Ran the Anom Messaging Platform, Yielding Hundreds of Arrests in Global Sting - The FBI Trojan Horsed 21st century style
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