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🍋 Brick & Meta-r

🍋 Brick & Meta-r

Short Squeez
May 09, 2022

Together With

"Business is usually a team sport. There isn't one great person sitting there directing things. You can't run an effective business like that." — Stephen A. Schwarzman

Good Morning! Hope everyone had an action-packed weekend with the Kentucky Derby, Miami Grand Prix, and Mother's Day! Chelsea FC has agreed to terms to get acquired by a new ownership group, led by Todd Boehly, that will pay £2.5 billion for the shares, plus invest £1.75 billion for the future of the club. The latest Marvel movie, "Doctor Strange in the Multiverse of Madness," had a blockbuster opening weekend, bringing in $185m in domestic ticket sales ($450m globally), the highest of any movie in 2022. PwC is sick of losing employees to competitors and plans to shut down the company for two separate weeks a year. (@Moelis thoughts?)

With the great VC pullback of 2022, lay offs are increasing by the day. We want to help everyone who's lost a job find a new role asap. You can post a job for free on our job board. Use code: "getmeajob"

1. Story of the Day: Brick & Meta-r

Meta is opening its first physical location to focus on sales of items like the Oculus Quest 2 headset. Teenagers are the target demographic for these devices and everything else VR-related, so the hope is the stores will get them to buy more.

26% of teens say they own a VR headset, but only 5% say they use them on a regular basis. That engagement level is "uncompelling" according to a Piper Sandler research report. Meta wants to see kids using their headsets as much as they use their iPhones.

The low usage is due to a combination of circumstances. Cost and a small range of applications top that list. Meta is hoping to take on the second challenge, and provide tons of stuff for you to do in their Metaverse.

The gaming industry which has $200 billion in annual revenue, is a natural space for Gen Z and the Metaverse to grow. With an estimated 3 billion players globally, this industry is a big target for tech companies. For example, Meta's rival Microsoft is spending ~$70 billion to acquire Activision Blizzard.

Meta has devoted $10 billion to Reality Labs, their hardware division for the Metaverse, and is prepared for the long J curve from investment to "meaningful enough revenue growth" and profitability. Mark Zuckerberg said, "I think it's going to be longer for Reality Labs than for a lot of the traditional software that we've built."

Short Squeez Takeaway: Zuck really out here trying to turn us all into robots. It's kind of scary to think about this goal to get teens as addicted to the Metaverse as they are to their phones. I may be old-fashioned, but in-person interaction is important for our development, mental and physical health. Then again, teens are already used to virtually hanging thanks to the pandemic, so maybe they'll adjust just fine.

Source: CNBC

2. Markets Rundown

The S&P 500 had its fifth straight week of losses (longest streak since 2011) as inflation concerns and worries of a Fed policy mistake penetrate markets.

Movers & Shakers

(+) Cigna ($CI) +6% thanks to a beat on quarterly earnings expectations.
(+) NRG Energy ($NRG) +10% on news of great Q1 profits per share and revenue of $7.9 billion.
(–) Under Armour ($UAA) -24% because they reported an unexpected loss and reported revenue that fell below estimates.

Private Dealmaking

Zora, an NFT marketplace, raised $50 million at a $600 million valuation led by Haun Ventures
Anthropic, an SF based AI company, raised $580 million in Series B funding led by Sam Bankman-Fried
LootRush, an NFT rental gaming startup, raised $12 million in seed funding with Paradigm leading and a16z involved as well.
Carlyle is looking to sell their stake in Luxembourg based metal commodities trader Traxys.
Bally's rejected a takeover offer from Standard General, who offered to pay $38 per share.
TA Associates invested in iCIMS, a hiring platform backed by Vista Equity Partners.

3. Top Reads

Africa forced to find alternatives to wheat as prices soar (BB)
Self-driving cars that can smell (Axios)
Fake marina steals the show at inaugural Miami Grand Prix (BB)
Hot Movie Summer (Axios)
Apple holding on to tap-to-pay feature to protect revenue (BB)
Hedge funds and asset managers split of fate of Australian Dollar (BB)
Jared Kushner's new fund wants to invest Saudi money in Israel (WSJ)
Korean battery recycler may IPO as EV demand surges (BB)
Shanghai covid cases drop to six week low in lockdown (BB)

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4. Book of the Day: Heads I Win, Tails I Win: Why Smart Investors Fail and How to Tilt the Odds in Your Favor

According to Wall Street Journal investing columnist Spencer Jakab, most of us have no idea how much money we’re leaving on the table—or that the average saver doesn’t come anywhere close to earning the “average” returns touted in those glossy brochures. We’re handicapped not only by psychological biases and a fear of missing out, but by an industry with multimillion-dollar marketing budgets and an eye on its own bottom line, not yours.

Unless you’re very handy, you probably don’t know how to fix your own car or give a family member a decent haircut. But most Americans are expected to be part-time fund managers. With a steady, livable pension check becoming a rarity, we’ve been entrusted with our own finances and, for the most part, failed miserably.

Since leaving his job as a top-rated stock analyst to become an investing columnist, Jakab has watched his readers—and his family, friends, and colleagues—make the same mistakes again and again. He set out to evaluate the typical advice people get, from the clearly risky to the seemingly safe, to figure out where it all goes wrong and how they could do much better.

He also explains why you should never trust a World Cup–predicting octopus, why you shouldn’t invest in companies with an X or a Z in their names, and what to do if a time traveler offers you economic news from the future.

"How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case."

5. Short Squeez Picks

Sick of biased news stories? 1440’s got you covered. Check out 1440 — the fastest way to an impartial point of view on the news. Their team scours 100+ news sources, ranging from culture and science to sports and politics, to get you caught up on the day’s events in a single 5 minute email. Join for free today!
Reimagining corporate finance (Podcast | 61 mins)
Betting on longshots