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Robinhood Snacks - 🧻 Toilet Paper hoarding drama

Big stimulus vibes
March 18th
 Disclosures
 

When you forget you have an Uncle named Sam
 
 
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Hey Snackers,

French restaurants are giving away free cheese, pâté, and other delicacies that will eventually spoil, as businesses shut for France's nationwide lockdown. The EU closed its borders, and Canada is banning entry to all non-citizens, except for Americans.

Stocks rallied on word the White House is proposing a $1T stimulus package — the Dow jumped over 1K points from its brutal Monday drop. More stimulating news below.

Stimulate

Stimulus checks are likely heading to American mailboxes

The trifecta is nearly complete... to fight COVID-19 and all its very real, negative fallouts. The Fed came in hard with the monetary policy, state/local governments are going big on public health policy, and now the White House might come through with a big fiscal policy boon — a $1T stimulus plan. The goal = Get cash into Americans' pockets when many really need it.

  • The $1T Proposal: The Trump admin pitched a plan to Congress to send checks directly to Americans (like a birthday check from Nana). Also included in the plan is up to $500B to help small businesses and $50B to boost struggling airlines.
  • The Checks: The administration anticipates dropping as much as $500B on two waves of direct payments (that's around $1,520 per American, if divided evenly — but probably more, since babies don't cash checks).

You probably want to hear more about the checks... The direct payments will be means-tested to make sure they don't advantage wealthier citizens. They don't include tax cut savings (also on the table). Treasury Secretary Mnuchin says the gov hopes to send the first batch out by the end of April. Also, the proposal still needs to pass Congress.

THE TAKEAWAY

'Flattening the virus curve' means hurting the economy... More states/cities are shutting down businesses and forcing people to stay home (aka, spend less money) — then add in the social distancing. All these spread-stopping steps are crucial to avoiding an even greater crisis – but the economy is still suffering right now. That's why it's up to government and business leaders to help it survive until the crisis passes — hopefully this stimulus can help.

Wipe

Toilet paper hoarding: not as good for TP companies as you'd think

Hands off the rolls... In this coronavirus-buying panic, we've focused plenty on sanitizing products like Clorox (now being held safely behind the CVS sales counter along with pricey whiskey and cigarettes). While hand sanitizer sales have surged 470%, the surprise star of panic-buying is... toilet paper. From convenience stores to grocery aisles, not a roll in sight.

  • US TP sales last week surged 60% from the same time last year. Fear of not having any wipe-products is so bad that Americans are even getting on the bidet bandwagon.
  • So Kimberly-Clark (maker of Scott and Cottonelle) and Procter & Gamble (Charmin) ramped up production to meet demand.
  • Kim will "reallocate inventory" (aka, use paper pulp to make more toilet paper, fewer paper towels). TP > PT.
  • Georgia Pacific has managed to ship out 20% more of its Angel Soft and Quilted Northern TP than its regular capacity. But the crazy demand is causing unnecessary strain on supply chains...

TP-makers are asking whyyy?... Drugs stores and groceries aren't shutting down. Toilet paper will always continue to be produced/shipped. Many TP-creating mills were already operating 24/7 before the pandemic — their capacity is fixed at "max." Producing TP is pretty easy, but it takes time to get it shipped to warehouses/retailers and then onto shelves.
THE TAKEAWAY

A surge in demand isn't necessarily good... The TP-pocalypse may raise sales in the short-term, but:

  • No one is suddenly using/needing all that much more toilet paper — unlike with sanitizing products. Long-term demand for TP is unchanged.
  • Hoarders probably won't be restocking for another 4 months (if not more) — so TP companies might lose sales later on because of front-loaded buying now.

What else we're Snackin'
  • Prioritize: Amazon limits shipments to certain products on coronavirus shortages — it's prioritizing things like households staples and medical supplies
  • Off-Air: Disney's ESPN might air mini-marathons of past big games as it improvises on how to move forward without live sports ('94 Rangers and throwback Tebow FTW)
  • Give Back: Facebook announces a $100M grant program to help small businesses struggling from coronavirus slowdowns and closures
  • Empty: Macy's is closing all its stores nationwide (including Bloomingdale's) through March 31 — it has 130K employees, and will offer benefits/comp to affected workers
The Snacks Daily Podcast

Lyft just sunk to a new low...

Now someone may buy the dip — not of the stock — but of the company as a whole.

Check it out on our 15-minute pod to hear our straight-forward, stretch, and crazy ideas for who might want to acquire Lyft.
Wednesday

Disclosure: Authors of this Snacks own shares of Amazon and Disney

ID: 1122906
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