“Welcome to the tres comma club, Weiner” – Jason

 

Hey there carnivores,

Markets dropped again on Wednesday. It’s a jungle out there.

Today we’re talking about Pepsi getting energized.

Keep raging,

Jeff & Jason

Party like a Rockstar 

“Ugh, another news story about competition in the energy sector… we get it already.”

*rereads article* 

“Oops, nevermind.”

Pepsi is expanding its energy drink offerings, snatching up Rockstar for a refreshing $3.85B. The deal, which is expected to close later this year, will put it ahead of Coke in the battle to diversify its non-soda drink options.

The war between the top producers of diabetes in a can has gone on since the mid-2000s. Pepsi already peddles a few E.Ds of its own under the Mountain Dew brand, and has partnered with Starbucks to sell coffee… also in a can. 

Coke, however, has a significant stake in Monster, and even partnered with Kobe to create its own line of energy drinks… much to the dismay of Monster, which lost an arbitration claim last year for the development of the new product. Its board members proceeded to punch through the conference room’s drywall. 

There is stiff competition in the space, though, as the two sovereigns of the soda space are also competing in a market saturated with more than sugar. The OGs, Monster and Red Bull, have a firm grip on the industry, and newcomers like Bang are making noise.

 

#Synergy

Pepsi has already been slinging the 16oz Rockstar cans as a part of a distribution agreement the two sides have had since 2009. Through that agreement, Pepsi was limited in what it could do with its Mountain Dew energy drink line and faced restrictions on collaborations with other energy drink companies. This deal nixes that contract language, allowing Pepsi to do, essentially, whatever tf it wants.

 

And speaking of doing whatever he wants… 

Russel Weiner, Rockstar’s founder, has long been the bad boy of the energy drink space. He got his start at Skyy Vodka, and when Skyy didn’t want to run with his energy drink proposal, he mortgaged his condo for $50k and set sail on his own. 

Nowadays, he notably owns mansions in Cali and Florida and has a big a** yacht, which was nearly sunk by a bridge in Miami. Don’t worry, no weiners were hurt. 

Weiner and his mother owned Rockstar entirely, with momma Weiner holding down a quarter of equity and a cushy CFO gig. The official press release did not specify whether Russ and his mother would remain on the job once the deal closes.

 

The bottom line…

This is the first big move for Pepsi’s new head honcho Ramon Laguarta, who took the reins as CEO in 2018, And it’s a good one (at least on paper) since the energy drink market is set to expand 5.9% annually through 2024, compared to just 1.4% for soft drinks. Yep, the numbers check out.

It’s worth noting that even being a household name and the number three player in the space, Rockstar is still a relatively small fish compared to the two titans of the energy drink game. To put things into perspective, Monster’s market value is 10 times what Pepsi just paid at $35.5B, and Redbull just sold a record 7.5B cans worldwide last year. For what it’s worth Redbull also holds a monopoly over the competitive plane racing and Flugtag circuits.

☑️ Savagery at its finest.

Some people just want to watch the world burn. Meet Carl Icahn. 

Icahn, an activist investor, is taking full advantage of the recent market volatility. You see, Carl is doubling down on his takeover bid for Occidental Petroleum. He has continued to purchase shares as the oil giant’s stock price plummets.

Icahn now owns roughly 10% of Occidental after the company’s market value dropped from $46B to $11B. Who are they, WeWork?!

If Icahn gets his way, the entire Occidental board will be removed, along with CEO Vicki Hollub. Can’t this guy just take his pills and have some Jell-O like the rest of the people his age?

 

☑️ You gotta go. 

Modell’s is declaring bankruptcy after the NY-area sporting goods retailer succumbed to the effects of the changing times. *Pours one out*

4th-generation CEO Mitchell Modell conceded that, despite negotiations with landlords and vendors, liquidation is the best way for creditors to get their money. The company has always been able to bank on the New York franchises to keep sales afloat but things got bad in 2019 as competition from Amazon and Walmart.com cut into the business. Selling Mets jerseys isn’t sustainable? Who’d have guessed? 

 

☑️ I’m a motherf*ckin Starboard.

Speaking of activist investors… Starboard has officially nominated a number of directors to eBay’s board. The investment group has been openly criticizing the online marketplace for not selling off its classified business fast enough. They’re not into missed connections?

eBay has said it is in talks with suitors, including Blackstone, for the business which is worth around $10B. After recently selling StubHub for $4B, eBay is looking to finish its selloff and get back to its core business (read: selling weird stuff to weird people online). Someone’s going to buy those jarred celebrity farts. 

Author: Jeff Bishop

One of the best traders anywhere, over the past 20 years Jeff’s made multi-millions trading stocks, ETFs, and options. He is renowned as an incredible trader with a deep insight and a sensitive pulse on the markets and the economy. Jeff Bishop is CEO and Co-Founder of RagingBull.com.

Even greater than his prowess as a trader is his skill and passion in teaching others how to trade and rake in profits while managing risk.

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