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Sony slays, OKLO shares react. And can a Swiss company beat Nike in the sneakers race? Our take on earnings? Pfizer just nuked it out with Novo Nordisk to buy mit. Sarah. So for our CEO of the week, we take a look at the man at the top of the $10 billion target. And beyond Meat goes beyond a meme stock. Why? It represents the fall of an entire sector. We break it down for Wednesday, November 12th. It's Blue Markets Daily and I'm Ann Ber. More market details to come. But first, Beyond Meat is Beyond Hope. Once the star of the plant based food movement, Beyond Meat went public in 2019 and shortly afterwards hit a peak market cap of over $10 billion. Now this was the start of a wave of highly valued plant based raises. Rival meatless burger company Impossible was privately valued at $7 billion. Two years later and and milk alternative OG Oatly went public at $10 billion in 2021. Now Beyond Meat stock has had a stark fall since then with its market cap today sitting at around $485 million. That's a 97% decline which has been in lockstep with lackluster demand, including fast food outlets like McDonald's who dropped Beyond Meat from its US locations just over one year into a three year partnership. And this week's earnings continued the run of bad news from Beyond Meat after missing expectations every quarter so far this year. Well, to start with, Beyond Meat delayed release of its results, which is by the way, never a good sign because it needed more time to figure out how to size a quote material, write down in assets. Well, once out last night I ran over to take a look. The company's report showed revenues down 13% year over year plus a massive loss. And here's what caught my eye. Burning over $100 million of cash for the quarter. Hold that thought because I'm going to come back to that in just a moment. So stick with me. Well, while CEO and founder Ethan Brown tried to focus on positives in his call with the street today, a new Beyond Steak product, increased presence at 2,000 Walmart stores and cutting costs with the help of a restructuring firm, he still has a fundamental problem. And that's the perception that meat alternatives are just not as nutritious or as healthy as the real deal. Let's hear what he had to say about that.
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We continue to address misinformation surrounding our plant based meats. As many of you are aware, as industrial, livestock and pharmaceutical interests rally around scare tactics and misinformation to confuse Consumers, we are driving the health profile of our products to greater heights so as to reduce the disingenuous to the absurd.
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Now, Wall street has essentially abandoned this stock. Over 80% of shares are now held by retail investors and coverage is down to just three analysts. Very little. And last month the stock dropped below that critical $1 threshold, putting it at risk of delisting from the NASDAQ. Now with volatility like we saw today, when I got up this morning, I saw the stock price swing up over 5%. Looking at it now, down over 8 and a half percent. That's just today. This really does demonstrate that Beyond Meat has the hallmarks of a meme stock. But that's not why I find it interesting. It's the fall from grace of the entire sector. Impossible. Food is still private. Its IPO has been endlessly postponed and oatly that milk alternative down 97% since that high flying debut. And as for hope for Beyond Meat, well, my personal view is nope. The company did just cut its debt level by $900 million. But it's on borrowed time. When asked in the earnings call how much cash it really has on after its October refinancing, management would not answer the question. That is not a good look. And it took going into the earnings call to listen to it and to read the transcript to catch it. Well, we're going to keep watching. And coming up, their shoe just set a new record at the New York City Marathon. We look at on the company that's giving Nike a run for its money. And our CEO of the week, the man behind Metzera, target of an extraordinary bidding war between Pfizer and Novo Nordisk. But First Brew Markets Daily is sponsored by Public, the platform for folks ready to take investing seriously. Our producer John was telling us this morning how his grandfather used to check his stocks in the business section of the newspaper.
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That's right. I'd be sitting there eating my cereal and he'd have those pages of tiny print circling ticker symbols. It was a whole thing.
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I've got to admit I'm pretty nostalgic for print newspapers. That's my luxury on the weekends with a good cup of coffee. But times have changed and for the serious business of investing, we have Public the investing platform made for this century. We with a clean, intuitive modern design, Public combines a wide range of asset classes with the tools you need to build and manage your wealth, whether it's with stocks, options, bonds or crypto. So find your account in minutes or less. Get started@public.com BrewMarkets that's public.com BrewMarkets paid.
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For by Public Investing Full Disclosures and.
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Podcast Description well, we are in the thick of earnings season though we had a little bit of a break yesterday because it was Veterans Day. But we thought we'd take a look at some companies that recently reported reported starting with on holding, the Swiss sneaker and sports apparel company Ticker On On. John, give us a little context beyond that. Double clicker.
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That's right. It's got a market cap of $14 billion and the company IPO'd in September 2021. Shares were up nearly 25% this morning. They're down 20% for the year. But let's just set the stage for On. I'm not a sneaker head and I've seen the logo on these shoes all around the city in it looks like a Q and an N or a Q and a U. Before the show, Uchena was saying he also doesn't know what on is. It turns out that the logo is saying On. I had to look it up and the O has a little line on it that's supposed to be a light switch.
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Yeah, totally like a light switch, but.
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Also looks like a Q.
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It does look like a cue. It was. It was not completely. I had to look pretty closely to actually sort of get the joke on this. Well, net sales were up 25% year over year and the one thing that the company did do which was music to the market's ears was raise its full year guidance. So both earnings and revenue beat analysts predictions. But this is the moment that competitors have been fearing. If we take a look at some of the others out there, both Nike and HOKA recently trimmed their revenue guidance Deckers Outdoor Ticker deck maker of Hoka down 58% year to date Nike's down 15% year to date brought back Elliot Hill to be CEO last year and he pointed out in his assessment Nike had gotten complacent. Folks like on have been turning up and really taking share from some of the OGs in this space. So it was great. Sort of get validation for those who've believed in ON over time. I've got to admit I did not buy. I've not held this stock, to be totally honest with you.
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Last year the company on introduced cloud boom Strike LS shoes which I had never seen. It uses light spray technology. I looked it up on YouTube today. The idea is that the shoe is actually sprayed onto a form which makes it incredibly light. And just this last month in the New York City Marathon. The women's winner, Helen Orbiri set a record. She shaved three minutes off. The time wearing those on shoes and so on is getting the word out. And they also pointed out on the call today the partnership with tennis star Roger Federer.
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This is a really big one. There's also sort of a foil to all this. Do you Remember? So on IPO'd in, I think it was 2021 and it was September 15, 2021. And this was sort of the halcyon days of these cool consumer brands going public. Do you remember this?
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Yeah.
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And it seemed like a new one was coming out every moment very Shortly afterwards on November 3rd, All Birds IPO'd.
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Right.
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Do you remember Allbirds? And you just really could not get two different sort of outcomes here when it comes to these kinds of disruptive consumer brands going out and going public. Allbirds in comparison, ticker B I R D stock is down 99%. Right. On and on. On the other hand, you know, up since that period, since its IPO in double digits percentage has actually done decently well, particularly in an environment when folks have been worried about tariffs and the like. This year, just to look at the numbers a bit more, let's talk about apparel for a moment. Because on made its name sort of in footwear, Net apparel sales were up 87%. It was starting from a small base, but now it's about 8% of total business. And on the earnings call, the said quote, that's a new record. We're well on track pun may be intended. Hopefully getting quickly into the double digits here. And the co founder and executive co chairman Casper Capetti also went to talk about how he wants on to be really a luxury play. Did you see that? Right.
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The quote was this quarter was a pivotal test of our premium Strategy. As our U.S. price increases came into effect. The results confirmed our view. Demand remained incredibly strong for our premium offerings. And he went on to say that the the company does not expect to be offering any Black Friday discounts. So what does that mean to you? And when they're saying in this space we're raising prices, people are buying this luxury item. How does that work in fashion?
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And it's really the power move, isn't it? When you've got a brand saying we are not going to discount, we don't need to. We have such belief in our premium positioning that it justifies our price. And discounting isn't something that's going to be a path that we pursue. It's a really strong statement of Self confidence. And the other thing I would say is one of the complexities around discounting strategy is once as a consumer you've seen a brand cut its price and you have been signaled to that discounting is something that this brand does. There's always the danger that the consumer, that the customer is going to pause in its purchase decision, just waiting to see if there's another deal around the corner. So it's kind of this path that you really want to be sure you, you're going to get gains from it, if you're going to go down it just something else related to this here, we said a little bit earlier that on when you look at its share price, it's had a really strong set of performances for a while now, but up until today its share price was down 20%. And this is such an interesting lesson in how concerns have been that the valuation here has been too rich prior to today. And so the fact that we're seeing the stock price reaction, this massive rocket jump up, it's reversing the vast majority, if not all of that decline. Just goes to show that if brands are able to deliver completely outsized results, there is still some reward left for them in the market. Difficult to see that in tech. However, let's switch gears and talk about Sony, the Japanese conglomerate. I always forget, John, how massive this company is. Massive, massive. $181 billion market cap shares up today, 5 1/2% after its earnings call. And it's just had a great run so far this year. Up 40% year to date.
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That's right. And the company raised its earnings forecast.
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There it is again, exactly the forecast.
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Citing lower tariff impact. So I think these companies are looking back and what was on Liberation Day, this concern, what's it going to look like now? A little bit of it in the rear view saying, well, we're not as impacted as we were concerned. Sony announced that it is spinning off its financial group and focusing on games and other entertainment Because, Anne, it's all about Demon Slayer.
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Yes, tell me about Demon Slayer.
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That's the manga series that came out and it's not just a movie. It's turned into game titles and the soundtrack is doing great. So it was highlighted on the earnings call that as of October 13th, 77 and a half million people worldwide had seen Demon Slayer.
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There was so much buzz around this. I remember actually you and I had filmed here. John and I saw a member of our team wanting to race out the door. I think it was a Friday recording. What are you doing for this weekend. And literally as he was whizzing through the door, he goes, I'm on my way to Demon Slayer. I'm so excited. I'll tell you about it. And apparently just a fantastic movie going experience. Well, the blockbuster film also featured Sony music artists and these titles can be both movies and soundtracks and also games. It just goes to show that there's something going on here, John, that we've seen before and we've seen it at Disney and we're seeing it too with Netflix properties, which is where when you're onto a good thing, the best companies are going to find multiple ways to milk the brand. So in this case it's different kinds of entertainment from the audio to the visual to the games. And you know, from the call there, the team said, quote, building on this recent progress, we aim to strengthen our studio business and expand our IP franchises. This is definitely a playbook.
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And over the summer I had missed this one. Sony bought into, took a $460 million stake in bandy Namco, the company behind Pac man, which is a 40 year old title. But you figure, you know, maybe there'll be a Chris Pratt Pac man movie coming out. You know, you never know. But here's the thing with ip, it can go well. And also maybe it just isn't well received. The company Sony said that they had to write down Based on Destiny 2, a flop of a video game they had and it really cut into the profits for the games division. And also they pointed out they own Spider Man. Sony does. It's been five years since the last Spider man movie. It's been seven years since the last Jumanji movie. And so these are titles that they're looking forward to releasing. They own the IP for. But you have to wonder, will audiences keep showing up over and over.
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There's also this question too about nostalgia and this question around, are there fresh ideas anymore? When you think about the Spider man movie, five years since the first one. But that's a franchise that's been around for decades, decades, much longer history here. Seven years since the last Jumanji movie. But there was one before that, right? You go back in the day. So there's this question too around placing lots of bets so that if you have a Destiny 2 type flop, you can absorb it. But there is this question around portfolio mix to sequence sequels. Excuse me, to for prior franchises versus what is completely fresh and new. Well, we can't talk about Sony with, without also talking about the PlayStation. Sony did sell 3.9 million PlayStation fives in the recent quarter, an increase of just under 4% versus the same quarter last year. The most interesting piece here to me is managed to get that growth despite the price going up 50%. Just going to show consumers are going to pay up when they're really, really attached to the product.
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Up $50.
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Up $50. Excuse me, up $50. The company also raised its operating profit forecast for its image sensor business, and that's after strong sales of image sensors for mobile products and digital cameras. So a little bit more around the consumer tech.
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So many things that Sony's up there.
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So we forget how diverse does diversified Sony is. At some point we do need to sort of do a deep dive into that one, unpack all the different tentacles it's got. Well, let's wrap up the earnings Sprint with Oklo, which is the company trying to commercialize nuclear fission by building small modular reactors, or SMRs.
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That's right. Shares were up 8% today after last night's earnings report. Shares are up 429% year to date. The company has a market cap of 17 billion. Went public by SPAC last year and it's been making a lot of headlines. Sam Altman was the chairman of the board through that spac, and he stepped down from the company in April and the company has yet to generate revenue. Yeah, Oklahoma's loss was $29.7 million in this quarter and it was more than analysts had predicted.
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So this one's fascinating. Right. This went public via SPAC last year in an environment where SPACs just were not really happening. This was the exception. One person's view, I think this is the halo of Sam Altman around it and the thesis behind energy. So the losses were worse than expected. Shares nevertheless were up today. So just to look at why, word did actually come this week that the Energy Department had approved the nuclear safety design agreement for oklo's planned fuel fabrication facility. Lots of alliteration here in Idaho. And that's the fuel for the reactor, the reactor itself, the design selected by the DOE in August already to be part of a pilot program which aims to have at least three test reactors up and running by July 2026. The other thing I would say about Oklo developing fuel recycling technologies, which is actually a big deal in collaboration with the doe.
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And this is pointed out in all of the articles. The US Secretary of Energy, Chris Wright, was formerly on the board of oklo.
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Right. So there's the whole connectivity there with the administration is sort of what people are pointing at. Just one sort of footnote here. Sam Altman did come off the board of this company in April of this year. I did take a look though at who owns the stock. It looks as though Sam Altman still owns about two and a half percent of this business. Again, this has got $17 billion of market cap. I've got to hand it to Altman. He's got many investments in many different places. This particular position worth at this point, more than $400 million for him personally. Well, let's take a quick break and when we come back, we ask who is the CEO of Matsera, target of the most extraordinary bidding war? And now a word from our sponsor, Vanguard. This one's for the financial advisors out there. Hear me when I say stop falling for flash. A few flashy funds aren't enough to give a firm credibility when it comes to bond markets. Something with more substance. Look to Vanguard.
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- [17:36]
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Met Sarah being bought by drug giant Pfizer at a whopping $10 billion price tag after an intense and fury fueled burst of bidding competition from Danish rival Novo Nordisk. Well, for our CEO of the week, we want to look at the man at the helm of the biotech target, which itself, by the way, has an extraordinary story. Metsera is only three years old. It was founded just recently in 2022 in New York City. Its backers, including Arch Venture Partners and Population Health Partners, and with the vision of developing next generation therapies for obesity and related diseases. Well, shortly after founding, Metcera raised hundreds of millions of dollars to support its product pipeline with a focus of going beyond the Ex GLP1 weekly injections to aim for monthly dosing and oral formats. Well, to accelerate development, Matsera acquired a UK biotech firm and licensed technology from Korea. It is extraordinary to think this now, but Metsera only went public in January of this year, debuting with a market cap of under $2 billion with, by the way, zero revenue. And it still had zero revenue as of its latest quarter, reported in July. So who is the man who sold this as a $10 billion story to Pfizer? And I say that because when it comes to attracting strategic bids, the job of the CEO is to sell. Well, Whit Bernard is the man in the spotlight. He's one of four co founders of Metcera, and before becoming CEO in 2024, he served as the company's chief operating officer, helping with early growth and research direction. Before founding Metcera, Bernard was a co founder and managing partner at Population Health Partners for several years, senior investor at that very same firm that provided Meera's early funding. Before that, he spent a year and a half at the Medicines company, which developed cardiovascular disease treatments and was acquired by Novartis in 2019 for just under $10 billion. Well, the curious thing here, and what I found so interesting, is if you look at Wit's earlier years, the path through pharmaceuticals may not have been obvious. Before spending about five years in consulting with McKinsey, and that's where he really dug into life sciences. And before getting his mb, he was director of development for a music organization in Brooklyn. That's according to his LinkedIn profile. And he had graduated from university with a degree in music, which he also focused on as a Fulbright scholar while studying in Latvia. Now, his co founders have backgrounds that are more conventionally associated with biotech. There's Clive Meanwell, also executive chair, who trained as a doctor in the UK and was a cancer research scientist at Roche before founding the Medicines Company in 1997. Together they raised over $500 million for Metsera before Pfizer's offer, including from blue chip investors like Wellington Management, Venrock Healthcare Capital Partners, Fidelity, T Rowe Price and Softbank's Vision Fund, too. While this acquisition is an extraordinary outcome for this young company and for its relatively young CEO, you've got to wonder what he would tell his young self knowing that he was going for music to a deal like this one. And Pfizer investors seem to be pretty happy with the outcome. Pfizer stock was up slightly after the deal was announced, and that's been sustained. Novo Nordisk, though, looks like it may have dodged a bullet, though Its stock price has struggled year to date for lots of reasons. Pricing pressure, GLP1, competition board turmoil, a new CEO. The share price is up since it announced that it's bowing out of that Matsera bidding war. Well, there's the Closing bell, folks. 4:00pm on the east Coast. The markets are wrapping up for the day and we don't have a ticker tape, but we're going to throw it over to our human ticker, our producer, John that's right.
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The S&P 500 finished flat. The Nasdaq finished down a quarter of a percent and the Dow set a record closing above 48,000 for the first time, finishing at 48,225, up almost 7.10of a percent on the day. Quick market headline shares in AMD rose over 10%. On highlights coming out of the company's financial analyst day. AMD CEO Lisa Su said the company sees the total addressable market for AI data centers increasing to $1 trillion over the next five years and that AMD expects to see its data center revenue increase 60% over the next three to five years.
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Well, just as a final thought, we can't close out without commenting on the government shutdown, now the longest in history. So we did see that the Senate did pass a negotiated deal that the House is going to vote on anticipated at 7 o' clock this evening. This is right as nearly 900 flights in the United States were canceled today as a part of the ongoing shutdown in federal, in federal spending, fewer air traffic control staffing problems than we'd seen previously. Nevertheless, we are really seeing the catch up effects here of this shutdown on the economy, on activity not though ultimately on the markets. Looking hopeful that there is going to be some resolution here. That's it for today's Brew Markets Daily.
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Brew Markets Daily is hosted by Anne Barry and produced by John Couteau, Tarka, Della Teeth and Emily Millar. Technical direction by Uchena Waugh. Brittany De Taco is our audio engineer and the president of Morning Brew Inc. Is Devin Emery.
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Wake up tomorrow with the Morning Brew newsletter and tune in to Toby and me because I'm filling on for Neil as he's on vacation on the Daily show tomorrow morning. We'll see you back here. Nevertheless, tomorrow afternoon, same time, same place.
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