Wednesday, Jun 22nd 2022

Three Things (6/22)

Commentary

Luck is where opportunity meets preparation.”– Denzel Washington.

1) Kellogg to spin off business units: The food manufacturer will split its cereal, plant-based foods, and snack units into three separate businesses. For the Cap’n crunch producer, the move reflects a growing focus on the snacking vertical, where global sales reached $11.4 billion last year. The transition comes as the food industry battles persistently high food and labor costs.

Titan’s Takeaway: With global snack sales rising 2-5 times faster than the food industry average over the past decade, isolating its snacking unit from its lower-growth cereal and plant-based lines could be the just needed boon for the Pringles brand.

2) Uber to reinstate carpool: Uber announced that they are restarting their shared ride programs in nine cities, including New York City and Los Angeles. The COVID pandemic forced Uber to pause the program in March of 2020. The new program will allow customers to reserve one seat instead of the previous two.

Titan’s Takeaway: While the profitability of UberX Share wasn’t strong in the past, management has suggested that unit economics have improved in V2. Additionally, with a tight labor market, the new program could relieve some supply-demand constraints in the marketplace.

3) Meta announces new monetization tools: CEO Mark Zuckerberg announced a new tool that allows creators another way to monetize on Facebook and Instagram. The social media giant will postpone plans to paywall certain content from creators until 2024 and also include a designated place on Instagram where creators can find brand partnerships.

Titan’s Takeaway: The new capabilities are similar to TikTok’s creator marketplace, where brands can find influencers and creators for marketing campaigns. With influencer marketing soaring to a $13.8 billion industry in 2021, for social media companies who rely on advertising, catering to content creators and celebrities has become paramount to their success.

As of this writing, UBER was a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.
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