Three Things (September 22nd)

Commentarya month ago
"Leverage magnifies outcomes but doesn’t add value." —Howard Marks
1) Uber shares rise 11% after the company pulls forward its profit outlook, reinforcing our thesis
Uber said Tuesday its third quarter adjusted EBITDA will fall between a loss of $25 million and a gain of $25 million.
The company had said on its most recent earnings call that adjusted EBITDA would be “better than a loss of $100 million” in the third quarter. Uber had targeted the fourth quarter of 2021 as the first in which it would recognize adjusted EBITDA profits.
Uber CEO Dara Khosrowshahi told CNBC that last week was the best week ever for volumes on the platform.
Titan’s Takeaway: Uber’s ability to deliver profitable growth amid lower incentives and an ongoing pandemic reinforce our view that the company could sustain profitability and compound top-line growth for years to come. Shares of Uber, a holding in our Flagship portfolio, gained more than 11% on Tuesday following the news.
2) The sports betting boom has DraftKings eyeing a $20 billion deal, as brands continue to compete for users
CNBC’s David Faber reports that DraftKings offered $20 billion in a mix of cash and stock for U.K. online sports betting company Entain, which operates brands including Ladbrokes and PartyPoker.
In a filing with the London Stock Exchange, Entain confirmed it received a proposal from DraftKings but did not disclose any valuation details.
Entain currently has an online sports betting partnership in the U.S. with MGM that operates under BetMGM branding. In a statement, MGM said it will engage with both DraftKings and Entain on the matter.
Titan’s Takeaway: Legalized sports betting in the U.S. continues to fuel competition to acquire users among the industry’s biggest players. Anyone expecting to see fewer gambling ads during football games will likely be disappointed, as the industry continues to consolidate.
3) Titan holdings Roku and Shopify partner to shake up the TV ad business, as consumer behaviors continue to shift online
Roku’s app will enable Shopify merchants of any size to launch, deliver, and measure ad campaigns “within minutes,” ahead of the holiday shopping season.
Roku says streaming spend on its OneView ad platform nearly tripled year-over-year in Q2 2021.
Shopify now offers merchants 7,000 integrations and apps in its app store to help merchants grow their business.
Titan’s Takeaway: Roku is disrupting how people find and consume content; Shopify is disrupting how merchants sell and distribute their goods. We believe Roku and Shopify — current holdings in Titan’s Opportunities and Flagship funds, respectively — are natural complements as retailers and consumers continue to shift more of their behavior online.

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