Monday, May 16th 2022

Three Things (5/16)

Commentary

“One person can make a difference, and every person should try.” John F. Kennedy

1) Global wheat shortages force countries to prioritize domestic food supply

  • G7 leaders warn of a global hunger crisis as Russian sanctions continue and crops in Ukraine go unharvested.

  • Ukraine was responsible for 6% of total food calories traded in the international market, while Russia provides more than 17% of all wheat sold.

  • Countries around the world are beginning to become more defensive concerning trade as India decides to ban wheat exports in a move to protect local markets.

Titan’s Takeaway: Providing yet another supply shock, reports suggesting a global food shortage cause a moment of pause for international trade. As global supply chains have been under scrutiny, the increased supply-side pressure creates further tumult for stabilization in prices and a reasonable path back to normalization.

2) Elon Musk casts a shadow of doubt on the Twitter deal

  • The Twitter deal is temporarily on hold pending details that confirm spam/fake accounts represent less than 5% of users.

  • Musk tweeted on Friday that he was “still committed to the deal” as shares traded meaningfully below the proposed deal price.

  • Twitter’s share price is down more than 20% since Musk made his bid to buy the company at $54.20.

Titan’s Takeaway: Reports that the number of spam accounts could delay or kill the deal are surprising given that Musk has acknowledged the bots run rampant on Twitter from the start. With Tesla and Twitter share prices facing steep declines, fake accounts may not be the only detail that kills this deal.

3) Investors seek alternatives to plant-based stocks

  • After a decade of consistent sales growth, consumer interest in meat alternatives is plateauing.

  • In 2021, the plant-based protein category saw $1.9 billion in invested capital, which represented nearly a third of dollars invested into the category since 2010.

  • Beyond Meat and Oatly have lost more than 80% of their value since going public.

Titan’s Takeaway: As the arena becomes crowded with new entrants, investors continue to evaluate the total addressable market for alternative food and plant-based products. Flatlining sales and increased competition suggest that food innovation stocks may continue to struggle in this market environment.

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