# 650 – 🥤 Wall Street’s energy drink obsession – The Average Joe
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    # 650 – 🥤 Wall Street’s energy drink obsession

    victorlei

    March 12, 2024

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    Good morning. The price of asthma meds in the US is out of control, with inhalers rising by ~$10 to ~$100 in some cases over the last decade and a half. This trend isn’t unique to asthma meds — many healthcare costs are soaring, hitting Americans hard in the wallet:

    • Pharma company Teva ($TEVA) sells their QVAR RediHaler inhaler for $286 in the US — and $9 in Germany.

    • Some people with asthma living near the borders are heading to Mexico or Canada for cheaper options — and new FDA measures might soon make it easier to bring those affordable meds back home.

    There’s talk of capping prices, too. Just like the recent $35 cap on insulin — a similar move for asthma meds would be a breath of fresh air for the 27M+ Americans living with asthma.

    🚨 We’re looking to add a part-time copywriter to the team. If you’re the last wordbender destined to keep peace in our newsletter, apply here.


    CONSUMER

    America’s Energy Drink Obsession is Supercharging Celsius, the Country’s Third-Largest Beverage Company

    Dunkin’ in the morning, energy drink in the afternoon. That’s the formula many Americans use to power themselves through the day. But for some, it’s straight energy drinks through the day — a love affair that churns out $21.1B annually in the US. However, health concerns are leading people to seek out healthier options, which has given birth to a rising king of energy drinks.

    Energy gauge: After years of clawing market share from beverage giants like Coca-Cola ($KO) and PepsiCo ($PEP), Celsius Holdings ($CELH) has become America’s third-largest beverage company by sales, fueled by demand for its energy drinks. In a highly competitive market, the brand positioned itself as a healthier energy drink in contrast to its sugary competitors.

    • Its meteoric rise made it one of the greatest stories in US market history — with its stock returning over 7,100% over the past five years.

    • Since then, the company has gone from just $1.7M in quarterly revenue to $347.4M, a 20,400% increase over 21 quarters — with sales doubling for three years straight.

    Drink to the duopoly

    Celsius’ growth still pales in comparison to Monster Energy’s ($MNST) 73,850% run since 1985 — making Monster one of the best-performing stocks of all time. Celsius is also caught in the middle of a long-time rivalry between Coca-Cola, who has a minority stake in Monster, and PepsiCo — who decided to back Celsius.

    • In 2022, PepsiCo invested $550M in Celsius, becoming its distributor and largest shareholder, which could help it pick up market share in the low-sugar, high-energy drink market.

    • For brands, getting prime shelf space can make or break a brand, and PepsiCo’s investment gave Celsius a massive distribution network of retailers.

    Forward-looking: The price tag is high for investors eyeing Celsius, with a steep 80x price-to-earnings ratio — significantly higher than the S&P 500’s 23.2x. Nevertheless, analysts foresee another year of banner growth for Celsius. Stifel analysts upgraded the stock to $95 (11% upside) yesterday, citing the company’s fast-growing market share and expectations for Celsius to capture 14% of the beverage market by June.


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    LARGECAP RECAP

    🚗 Fisker is collapsing after smoldering review

    Back in 2020, electric vehicle maker Fisker ($FSR) went public at a $2.9B valuation, with eyes set on outselling Tesla. Fast forward four years, and the company is teetering on the edge of bankruptcy — having sold just 4.7K vehicles. And making matters worse, one of YouTube’s biggest tech reviewers, Marques Brownlee (known as MKBHD), sent its stock plummeting after calling its flagship vehicle “the worst car” he’s ever tested.

    • Brownlee’s review has garnered over 4M views, coinciding with a more than 50% drop in the stock price since its release.

    • The negative review has caused upheaval at Fisker, with the company promising to push a new software update to make the vehicle “markedly better.”

    History repeats itself: Fisker Automotive was one of America’s first plug-in hybrid and EV companies, but it went bankrupt in 2014 after failing to sell its first hybrid car, the Fisker Karma. Despite a restart by Henrik Fisker in 2016, the company is once again in troubled waters, given the exodus of executives and going concern warning. We may already know how this story ends — after all, it already happened a decade ago.

    📊 Automakers are selling your driving data to insurers

    While you’ve got your eyes on the road, your car’s got eyes on you. Automakers like GM ($GM), Kia ($KIMTF), and Subaru ($FUJHY) are collecting more data on drivers than ever — from time of departure/arrival to how hard you accelerate. And this rich data is finding its way into the hands of auto insurers, who use the information from third-party data brokers like LexisNexis or Verisk to set their rates.

    • Drivers are often “stealth enrolled” in these data collection programs, with consent buried deep in the fine print of user agreements.

    • You can request a free copy of your report from LexisNexis — and, in certain cases, apply to have your information removed if you’re a victim of identity theft.

    Insurance costs soar: With repair expenses and claim severity on the rise, insurers have been struggling with profitability since the pandemic. Data collection enables profit-starved insurance companies to pinpoint risky drivers more accurately, potentially leading to higher premiums for those engaging in risky behaviors. As a result, car insurance costs have skyrocketed this year — climbing by 26% compared to 2023.


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    Markets & Economy

    TSMC ($TSM) is once again a top-10 most valuable company: Last week’s 14% rally pushed the chipmaker’s market cap to ~$634B and into the top ten for the first time since 2020. Analysts expect the arrow to keep pointing up as breathless AI hype continues. [Read]

    Toll evasion costs governments millions: From mechanical devices that obscure your driver tag to covering license plates with facemasks, drivers are getting creative as they duck highway cameras to avoid fares — to the tune of $20M+ lost in toll revenue for New York’s MTA in 2023 due to obscured plates. [Read]

    Smaller stocks are powering this year’s hot market: Don’t just thank the Magnificent Seven for your pretty portfolio. A wider range of stocks, including promising small-caps like chipmaker Super Micro Computer ($SMCI) and even meme stocks like Carvana ($CVNA), are helping the good times roll. [Read]

    Business & Wealth

    Oppenheimer dominates Oscar night: Christopher Nolan’s opus snagged seven statues, while quirky steampunk epic Poor Things earned four awards. Martin Scorsese’s 3.5-hour (!) historical drama Killers of the Flower Moon went home empty-handed despite ten nominations. [Read]

    More Americans are using their 401(k) as an emergency fund: While it’s technically meant for long-term saving, a record 3.6% of plan participants withdrew funds early in 2023 — a sign of the strange economic crossroads we’re at. Retirement plans are flush thanks to an impressive stock market, but housing and grocery costs are sky-high in the present. [Read]

    The internet’s hottest passive income scheme is… vending machines? All you need to do is buy a used vending machine for ~$1.5K, load it up with snacks, and then count your millions. (Well, not really: the average vending machine makes ~$525/month, so you may need to get creative.) [Read]

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    CHART


    DIGIT OF THE DAY

    One Dose of LSD Shows Significant Improvements In Anxiety — And Wall Street Wants In

    Every year, nearly 10% of US adults are impacted by depressive illnesses, while 18% of those aged 18-54 wrestle with anxiety disorders. This mental health burden cost the US economy an estimated $236B in 2018, up 35% from 2010. In response, states like Oregon and California have weighed how to decriminalize psychedelics. But even without clear regulations, research continues to advance.

    • Last week, Mind Medicine ($MNMD) received FDA breakthrough status for MM120, an LSD treatment for generalized anxiety disorder.

    • The study found that a single dose of MM120 improved generalized anxiety disorder for 65% of patients within 12 weeks — and phase three trials are expected to begin in the second half of 2024.

    Business of microdosing: Millions of people already microdose psychedelics to expand their minds and open themselves up to new ideas — and that’s caught the attention of Wall Street. Psilocybin use has become increasingly popular among executive coaches, who use it to optimize financial sector employees’ performance. Last year, billionaire investor Steve Cohen bought an 8.1% stake in psychedelics company Cybin ($CYBN). However, there are some drawbacks: psychedelic use came with a surge in hospital visits — increasing by 54% between 2016 and 2022.


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