🥕 Instacart's Delayed Delivery

Hello! In today's newsletter: 1) Instacart's IPO Is Back, 2) J.M. Smucker Buys Hostess, 3) Innovation Costs Money

Author

Carbon Finance
September 12, 2023

Hi there!

We received a lot of great feedback in our last newsletter, and so we are revamping it to focus more on visuals, and make it more digestible. We will continue to iterate and see what you love best, so always feel free to provide feedback at the end of the newsletter to let us know your thoughts!

We’ll be sending out newsletters on Tuesday and Friday moving forward!

In today’s newsletter:

  • 🥕 Instacart’s IPO Is Back

  • 🍭 J.M. Smucker Buys Hostess

  • 💸 Innovation Costs Money

Let’s dive right in!

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🥕 Instacart’s IPO Is Back

Instacart is aiming for a valuation between $8.6B to $9.3B in its upcoming IPO, significantly lower than its previous valuation of around $39B in 2021.

This decrease reflects waning investor interest in private firms, influenced by rising interest rates which make riskier investments less appealing.

Founded in 2012, Instacart's business boomed in 2020 due to the pandemic, and while its core delivery business growth has slowed, it has diversified into areas like advertising and tech services under CEO Fidji Simo.

The IPO will largely involve sales by early stakeholders rather than raising capital for the company itself.

🥜 J.M. Smucker Buys Hostess

J.M. Smucker has agreed to acquire Hostess Brands, known for Twinkies and other snacks, in a deal valued at $5.6B. The deal, which includes Smucker taking on Hostess's $900M debt, is set to close by the end of April 2024.

However, analysts from JPMorgan Chase see the deal as more favorable for Hostess due to the high acquisition price. They also express concerns about how the brands of the two companies will integrate, given the differences in their product lines.

Despite these concerns, Smucker expects to cut costs by $100M in the combined company within two years.

💸 Innovation Costs Money

Research and development, commonly known as R&D, refers to the amount a company spends to investigate, learn, and build new products, services, or technologies.

Over the last twelve months, Amazon led in R&D spending, investing over $81B. The top 5 is comprised of big tech which has been heavily investing into AI.

While the companies have been been operating more efficiently and cutting costs across the board, AI offers the tech firms an opportunity to automate different workflows and be the potential solution to aging product lines.

🤝 Qualcomm & Apple Deal. Qualcomm $QCOM will supply Apple $AAPL with 5G modems for smartphones until 2026, a move that strengthens Qualcomm's handset business and suggests challenges for Apple in transitioning away from Qualcomm's complex chips. [CNBC]

🏈 Monday Night Football Is Saved. Disney $DIS and Charter Communications $CHTR resolved their dispute, restoring ESPN to 15M cable customers, with the deal ensuring Disney receives approximately $2.2B in fees from Charter. [AP]

🤖 Meta vs OpenAI. Meta $META is developing a new AI system, with plans to release a model more powerful than its recent Llama 2 by next year, and intends to open-source it for companies to freely build AI-powered tools. [WSJ]

🏎️ Tesla’s Supercomputer. Tesla's $TSLA stock surged after Morgan Stanley predicted the Dojo supercomputer could boost the company's market value ~$600B through advancements in robotaxi and software ventures. [R]

👵🏻 Yellen Is Confident. Treasury Secretary Janet Yellen expressed confidence that the US can manage inflation without significantly harming the job market, citing data indicating a decline in inflation and an increase in job seekers. [BB]

Oracle ($ORCL) announced lower-than-expected revenue and guidance. Despite surpassing some analyst expectations, challenges like the transition of Cerner to the cloud and varying segment performances impacted the company's overall financial results. [CNBC]

  • 🟢 EPS $1.19 Beats $1.15 Estimate

  • 🔴 Sales $12.45B Misses $12.47B Estimate

Other Notable Companies Reporting Earnings This Week:

  • Thursday:

    • Adobe ($ADBE), CoPart ($CPRT)

All of the companies that are reporting earnings this week can be viewed here.

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