Dick's holds its fire

MARKETS

  • U.S. equities capped off their worst month in two years.
  • The dollar had a great February, as the ICE U.S. Dollar Index rose 1.7%.



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RETAIL

Dick’s Dives into the Gun Debate, Stops Selling Assault-Style Rifles

Scrolling through Dick’s (+0.69%) Twitter feed yesterday, we saw new Nike sneakers, an (intriguing) pilates workout, and then…this:

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In the wake of the Parkland, FL school shooting, the sports retailer announced it’ll immediately stop selling “assault-style rifles” and high capacity magazines, while ending any firearm sales to customers under the age of 21. (Walmart, which stopped selling these kinds of rifles in 2015, also set its age limit of gun purchases to 21.)

It also encouraged lawmakers to enact “common sense reform” on the issue, listing a few suggestions like universal background checks.

Didn’t Dick’s take similar action following Newtown?

Yes. Following the Sandy Hook shooting in 2012, Dick’s removed assault-style rifles from its ~800 stores…but later added them back to its camping and hunting chain, Field & Stream (35 locations). But after yesterday’s announcement, you won’t be able to buy an AR-15 or another semi-automatic rifle at any store.

Step inside the mind of CEO Ed Stack: A gun owner himself, Ed supports the Second Amendment. But after internal discussions among execs, Stack decided the retailer needed to “do something” to prevent future massacres from happening. He said, “We don’t want to be part of a mass shooting.”

Needless to say, this isn’t something you’d normally expect to come out of a CEO’s mouth.

But these aren’t normal times for corporate America

CEOs are wading into social and political issues like never before, in response to consumers who’ve used social media to demand they pick a side. As Axios’ Dan Primack writes, “Particularly for consumer-facing businesses, there is now great pressure to either be ‘with us or against us.'”

And after the FL shooting, that pressure is becoming a lot to bear for some companies.

FedEx is facing heat for not getting rid of discounts for NRA members (as other companies have), while Delta has come under fire from lawmakers in its home state of Georgia for doing just that.

Bottom line: What’s that motto? “Business and politics don’t mix”? Yeah…toss that one in the trash.

TECH

Music to Its Ears: Spotify Is Officially Going Public

Anyone know a good “Filing for IPO” playlist?

Asking for Spotify, now that the music streaming company, valued at around $20 billion, has officially filed for its (highly unconventional) public offering.

Here’s what we learned from its F-1 form submitted to the SEC:

Ticker name: SPOT.

User base: 71 million paying subscribers (46% YoY growth) and 159 monthly active listeners (29% growth). FYI, Apple Music has 36 million paid subscribers.

What’s different about this IPO: Spotify is side-stepping the usual underwriting process and going with a “direct listing” instead. Which means it’ll avoid massive fees (Snap paid $85 million) but inherit a lot of risk without investment banks buying up initial shares to prop up the stock price.

What’s at stake: A lot. This IPO will be one of the biggest tech offerings in recent years, and we’ll be watching how investors gauge Spotify’s business prospects (it lost $1.5 billion last year).

Set a reminder: This could happen as early as the week of March 26.

MACRO

India Goes for Gold, Topping China’s Quarterly GDP Growth

India may not have won any medals in Pyeongchang (it only sent two athletes, including one long-haired luge hero), but it just lapped China in the race to become the world’s fastest-growing major economy.

India’s GDP jumped 7.2% in December—beating out China’s 6.8% increase and climbing the highest it’s been in five quarters—thanks to private investment surging 12%.

This is a major bounce-back from GDP growth of just 6% last year, a result of Prime Minister Narendra Modi’s drastic corruption-curbing policies like voiding most cash in circulation and a hefty goods and services tax.

Think globally: Modi coached India out of the “fragile five” economies (cc: Turkey, Brazil, South Africa and Indonesia) and into the major league, but can India remain there? A $2 billion bad loan crisis threatens to sideline investors looking to capitalize on rebounding growth.

SPORTS

NFL Teams Up with Pizza Hut after Papa John’s Relations Spoil

Just after Papa John’s (+2.45%) and the NFL parted ways, commissioner Roger Goodell rebounded, locking in a four-year contract with Pizza Hut as its official pizza sponsor. Rolling out around draft day, the partnership will allow Pizza Hut to advertise with all 32 teams on a national and local level.

Why we’re worried for Pizza Hut:

1. Papa John’s blamed declining NFL ratings for a 3.9% drop in YoY North American sales.
2. Papa John’s will still be soliciting sponsorship deals with individual players and 22 teams.

Not to mention, Pizza Hut also has to compete with Domino’s, whose share price is growing faster than some FAANG stocks.

But Pizza Hut has a recipe for success. The company is ramping up innovation and eyeing opportunities from loyalty programs to self-driving delivery. And now it’s got the marketing channels to execute. Declining ratings or not, the NFL still took the top three spots for viewership of primetime telecasts in 2017.

WHAT ELSE IS HAPPENING

  • Bill Ackman has exited his famous $1 billion short of Herbalife (+6.30%).
  • WSJ: the SEC has launched a cryptocurrency probe.
  • New data show U.S. oil output hit an all-time high in November.
  • Google (+1.22%) released its Slack competitor, Hangouts Chat.
  • NBCUniversal is decreasing overall ad time during original primetime programming by 10%.
  • Twitter (+1.72%) is allowing you to “bookmark” your favorite Tweets.
  • Reporting earnings today: Best Buy, Kohl’s, AB InBev, Nordstrom, NRG, TD Bank, Barnes & Noble

BIGGER PICTURE

They say a picture is worth a thousand words….which is nice, because we definitely don’t have room for a thousand words. Instead, we’ll bring you a chart to highlight a bigger idea or trend.

Two days ago, Amazon (+0.03%) bought smart doorbell maker Ring for ~$1 billion. And one day ago we told you the acquisition was all part of Amazon’s master plan: securing Alexa as the home assistant that connects all your in-home IoT devices.

Because here’s the reality: If you’re not the home assistant orchestrating “smart” security systems, washing machines, and thermostats, you’ll find yourself out on the front porch. In Amazon’s case, that means losing (at least) $400 in additional Amazon.com spend per person, per year.

The numbers don’t lie: Amazon Echo owners spend more annually on Amazon.com than Prime members and much more than regular customers.

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BUSINESS CASUAL

WHAT YOU SHOULD BE READING
Bill Gates sat in Reddit’s interrogation room for his sixth “Ask Me Anything” session. And it lived up to its name. Gates answered questions that ranged from, “Do you have a chef make PB&J sandwiches for you?” to “What new tech are you most excited about?”

We won’t spoil it.

MENTAL STRETCH

Trivia
An unfortunately large number of people got this question wrong on HQ Trivia a few weeks ago. Time for some redemption. Can you name the official currency of China?

(Answer located at bottom of newsletter)

Brain Teaser

When you repeat a trick, the point value of the trick decreases by ½. Kickflips are worth 360 points the first time you do them and melons are worth 20% more the first time you do them. Kelly likes to skate. One day she got 1278 points doing only 5 melons and kickflips. How many of each trick did Kelly do?

(Answer located at bottom of newsletter)

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Answers

Trivia
Renminbi

Brain Teaser
3 kickflips and 2 melons. (See explanation)

 

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