TikTok Takeover

Kellogg is great once again ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

June 22, 2022 Read in Browser TOGETHER WITH Good morning. Uber Pool, the mobility company's feature that allowed strangers to share rides in exchange for lower fares, is back under the less catchy name "UberX Share," the company announced Tuesday. The feature, axed during the pandemic, will first return to a handful of major cities including New York City and San Francisco.   With average rideshare prices up 35% over 2019, it will also ensure once and for all that riding to work at 7 a.m. with someone next to you eating a Dunkin breakfast sandwich is not just for public transit. Morning Brief • TikTok could triple its advertising revenue this year. • Kellogg will soon become not two, but three new companies. • The office-to-apartments conversion trend comes to Wall Street. Please do not delete this text. Please do not delete this text. Digital Advertising TikTok is on Pace to Triple Ad Revenue This Year (Photo by Solen Feyissa)   "Is TikTok destroying civilization? Some people think so," pondered Elon Musk, potential future owner of Twitter, this weekend.   Destruction or not, the wildly popular short-form video app only represents a fraction of the digital ad market. But new data shows its rolling into this week's industry-leading Cannes Lion ad festival as a fast-growing track to Gen Z's hearts and wallets. The 1.9% Google and Facebook-owner Meta are still the kings of the digital ad market — they will earn half of the global digital ad revenues in 2022, according to Insider Intelligence estimates. TikTok will earn just 1.9%. But with more than half of its one billion monthly active users under the age of 25, it's left other social media companies looking like the How Do You Do Fellow Kids meme.   TikTok is drawing a windfall of new advertising clients because of rapid shifts in the digital ad market. Last year, Apple made it more difficult for advertisers to target consumers and measure ad performance, denting the cookie-based business of old that Meta and Google have used to build digital ad empires. As a result, companies have shifted their ad spending to cover more ground, with significant redeployment going to TikTok: • A subsidiary of China-based Bytedance, TikTok is on pace to make up to $12 billion in advertising revenue this year, or three times what it made last year, according to sources who spoke to The Wall Street Journal. Bytedance, which owns other social-media apps in China, is on pace to increase ad revenue by 50% this year, according to Insider Intelligence. • Naturally, with more demand, rates are going through the roof: the cost of a branded Hashtag Challenge, which pairs a feat that viewers are challenged to duplicate with, duh, a hashtag (example: #PlayWithPringles), was $500,000 late last year vs $180,000 in 2019, marketing agency Byte Dept told the WSJ. One Powerful Search Engine: Not to be outdone, Google said last week that 1.5 billion people every month use its two-year-old TikTok copycat YouTube Shorts. A study by Inmar Intelligence found 70% of web users regularly watch short-form video, meaning whatever Mark Zuckerberg does with the metaverse, he probably wants to keep it under two minutes. Please do not delete this text. Please do not delete this text. Food Manufacturing Kellogg Will Split Into Three Businesses to Overcome "Conglomerate Discount" Snack and cereal giant Kellogg is about to snap, crackle, and pop into three pieces.   The Rice Krispies maker said Tuesday that, by the end of next year, it will split its business into a trifecta of independent companies. One clear money maker, focused on snacks, will emerge. Frosted Stakes Kellogg executives were open about being students of other conglomerates Johnson & Johnson and GE, which announced their own breakup plans last year. The reason large companies sometimes do this is to get rid of the conglomerate discount, a term for when markets value them for less than the sum of their parts.   "Competition is fierce. Sometimes you have to break it down to build it back up," Liz Young, head of investment strategy at SoFi, told CNN Business. For Kellogg, it's a chance to shed two lesser performing businesses from its biggest earner: • Of the three new companies, by far the fastest growing and most profitable will be the global snacking business, which will include Pringles, Cheez-It, and Pop-Tarts alongside North America frozen breakfast brands and international cereal and noodle brands. Collectively, these units earned $11.4 billion in sales in 2021, or 80% of Kellogg's revenue — Consumer Edge Research analysts said the move could make rivals Campbell Soup and Kraft Heinz "more aggressive to realize value" with their own potential split deals. • The North American cereals business, which earned $2.4 billion from sales of brands including Froot Loops and Frosted Flakes, would become its own company. Kellogg CEO Steve Cahillanne acknowledged it is "somewhat declining" since cereal sales have ceded market share to (irony alert) snacks and fast food, but he noted the split means the unit won't have to compete with the snacks division for capital. Meat the Parents: Shareholders will get pro-rata stakes of the three new companies and the third firm, a "pure-play plant-based foods company" led by MorningStar Farms with just $340 million in sales last year, may be the least appetizing. Beyond Meat, a major competitor, has failed to make a quarterly profit in almost three years and shares have fallen over 60% in 2022. Kellogg said it may entertain acquisition offers for this business, something shareholders might say sounds "gr-r-reat." Please do not delete this text. Please do not delete this text. SPONSORED BY YIELDSTREET 3 Places Inflation Hits Home Your Wallet Your Savings Your Self-Respect (when checking the price of that morning latté) To outpace today's inflationary environment, you might need what is referred to in the biz as a boatload of yield.   But with stocks receding and bond yields near all-time lows, finding consistent returns in public markets isn't looking pretty. That means, you might want to look into private markets.   That's Yieldstreet's bread and butter. Their platform opens the door to a world of alternative investments, from art to real estate to private equity and plenty more.   This is no fly-by-night operation 一 Yieldstreet investors have already funded over $2.5 billion of projects. And over the past decade and a half, private equity pulverized public markets, returning 14% annually*. That's the kind of return that puts bacon-wrapped filets back on the grocery list.   Access the yield necessary to combat inflation, with liquidity you can trust from Yieldstreet. *McKinsey, "Private Markets Annual Review", March 2022 Please do not delete this text. Please do not delete this text. Real Estate New York Developers Begin Major Office-to-Apartments Conversion Project The housing market has perhaps never been tighter. Meanwhile, with remote work seemingly here to stay, office buildings have perhaps never been emptier.   It doesn't take a genius to see how one industry's problem can turn into another's solution. On Tuesday, New York City developers Metro Loft and Silverstein Properties announced a joint agreement to purchase a mostly-empty Wall Street office building and convert it into a 571-unit apartment complex — making it one of the biggest such projects of its kind. Two Birds, One Stone The New York Times estimates average rents have increased as much as 30% this year in New York City, where some two-thirds of all residents are renters. And the median rental price hit an all-time high of $4,000 in May, according to a monthly report from appraisal firm Miller Samuel. Underlying it all: Manhattan's available rental stock has fallen to just 1.8%. How's that for a lesson in supply and demand, delivered in less than a New York minute?   With Wall Street offices still barely occupied, Silverstein and Metro Loft spotted an opportunity. The move is part of a post-pandemic housing trend, but one that may be catching on slower than expected: • More than 13,000 apartment units were created from office conversions in 2020 and 2021 — mostly in cities like Chicago and Arlington, Virginia — at a time when office spaces were often less than 40% occupied by workers, according to a report from the national apartment search website RentCafe. But newer office buildings constructed with large open floor plans are particularly difficult and costly to convert into suitable living spaces that can meet zoning restrictions, such as having units with windows and yard space. • Metro and Silverstein have agreed to pay $180 million for the 30-story building at 55 Broad Street, which was built in 1967. The building is grandfathered into more lenient pre-1977 zoning laws, and Metro Loft's managing principal Nathan Berman told The Wall Street Journal that converting the property will cost less than one-third of what it would cost to construct an entirely new apartment complex on the site. A True Fix? Still, the conversion trend may not be enough to solve the housing crunch. One analyst at Moody's tells the WSJ office prices still have to drop another 25% to 50% to spark a conversion wave big enough to have a noticeable impact on the housing supply. For remote workers seeking new apartments, there's more reason than ever to resist return-to-office mandates. Please do not delete this text. Please do not delete this text. Extra Upside • Gold for overspending: The Tokyo Olympic Games, which had virtually no spectators due to the pandemic, cost 1.4 trillion yen ($10.5 billion), more than double the original forecast. • You can identify plants and flowers with an iPhone camera. • 1000% return. That should catch any shrewd investor's attention 一 and might even outpace inflation. And since The Motley Fool named Netflix, Amazon, and Apple as "Double Down" stock picks, they've each returned investors well over 1000%. With much of the market in hibernation mode, Tom and his team just dropped 3 fresh "Double Down"' stock picks to equip investors with investments to weather the storm. Sign up for Stock Advisor to immediately unlock these picks and much more.*   Returns as of 6/21/2022* Please do not delete this text. Just For Fun A pro.   Pedestrian-friendly environment. Written by Sean Craig and Brian Boyle. ADVERTISE // CAREERS No longer want to receive these emails? Unsubscribe here. 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