šŸ‹ Wordle Cashes Out

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Short Squeez
February 01, 2022

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ā€œGo out there and get rich. Get so obnoxiously rich that when that tax bill comes, your first thought will be to choke on how big a check you have to write.ā€ ā€” Mark Cuban

Good Morning! Melvin Capital is back and planning to raise capital for a long-only fund called Melvin Capital Long Only LP. Gabe Plotkin seems to have learned his shorting lesson after losing 55% of his fund last January shorting stocks especially GameStop. Americans are expected to spend $1.2 billion on their pets this year for Valentine's Day as their love shifts from humans to pets. In 2020, 27% of those celebrating Valentine's Day said they were buying gifts for their pets, a 17% jump over the last 10 years. 70% of American households own a pet. India is going crypto and announced plans to start a digital currency and tax crypto assets.

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For those looking to invest their bonus checks, check out today's sponsor Masterworks, which allows you to invest in blue-chip art.

1. Story of the Day: Wordle Cashes Out

Wordle, the game that went viral recently is being acquired by New York Times for low 7 figures.

Wordle gives players six guesses to figure out a secret five-letter word. 90 people played the game on Nov 1. Today, millions play the puzzle daily.

Wordle is also a one-man show, created by Josh Wardle for his partner that liked word games. It started to spread after Wardle made it easier to share results on social media. Jimmy Fallon would frequently share results to his 52 million Twitter followers.

Wardle tweeted that he would work with New York Times to move the game to its site.

NYT currently has 1 million subscribers for its games offering which includes the famous crossword puzzle, Spelling Bee, Letter Boxed, Tiles and Vertex. It currently charges $5/month for access to these games.

NYT is keeping Wordle free for now for existing and new customers, and didnā€™t elaborate on future plans for Wordle.

NYT recently acquired sports media company, Athletic for $550 million as it tries to attract younger readers and enhance its subscription offering.

Short Squeez Takeaway: This deal seems like a win-win for both parties. NYT gets to add a viral game to its product offering while Josh Wardle cashes out while the game is hot. Wordle reminds me of HQ Trivia, which went viral in 2017/18 with its daily gameplay. HQ Triviaā€™s fame was short-lived and almost shut down in February 2020. The app still exists today but has a much smaller audience compared to its peak days. The hype from these games usually dies down after a few months once people realize they donā€™t really need another time-sucking distraction in their busy lives.

Source: NYT

2. Markets Rundown

  • Stocks came roaring back on Monday ending a terrible month on a positive note. Nasdaq climbed 3.4% but is still down 9% for January.

Movers & Shakers

  • (+) Beyond Meat ($BYND) +15% following a double upgrade from Barclays.

  • (+) Spotify ($SPOT) +14% after Joe Rogan apologized to Spotify amid a boycott over his content.

  • (+) Netflix ($NFLX) +11% after Citi upgraded the stock to buy from neutral.

  • (ā€“) Kellogg ($K) -3% after BMO downgraded the stock to market perform from outperform.

3. Top Reads

  • Why is UBS buying a Robo for $1.4B? (TA)

  • Wage growth may be slowing from ā€˜breakneckā€™ pace (CNBC)

  • UBS resets for growth (WSJ)

  • Australia scraps bond buying, remains patient on cash rate (BB)

  • Is this the summer that travel gets back to normal? (BBC)

  • Federal Reserveā€™s Barkin says businesses would welcome higher interest rates (CNBC)

  • Cyberpunk maker working on new single-player card game (Reuters)

  • What it's like to fly into Beijing's Olympic 'bubble' (CNN)

  • Peloton docs show it slashed 2022 sales goals for apparel unit after segment revenue doubled last year (CNBC)

A Message from Masterworks: Whatā€™s the One Thing in Almost Every Hedge Fund Titanā€™s Portfolio That Youā€™re Not Investing In?

A-R-T. In fact, up to 84% of ultra-high-net-worth individuals collect art according to a Deloitte survey. It makes senseā€”contemporary art appreciated 13.6% annually on average vs. 9.5% for the S&P 500 from 1995-2021. 

And with the wealth in art and collectibles estimated to balloon from $1.7 trillion to $2.6 trillion by 2026, itā€™s no wonder that the price of paintings has skyrocketed. 

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4. Book of the Day: The End of Average

Every day we are measured against the "average person," judged according to how closely we resemble the average--or how far we exceed it. The assumption that average-based yardsticks like academic GPAs, personality tests, and annual performance reviews reveal something meaningful about our ability is so ingrained in our consciousness that we never question it. But this assumption, argues Harvard scientist Todd Rose, is spectacularly wrong.

In The End of Average, Rose, the director of the Mind, Brain, and Education program at Harvard University, uses the new science of the individual to reveal the remarkable fact that no one is average. Not your neighbors, not your co-workers, not your kids, and not you. This isnā€™t hollow sloganeering or ivory tower esotericaā€”itā€™s a frank mathematical fact with enormous practical consequences for your chances for success. Our schools and businesses are all designed to evaluate and promote talent based upon the mythical notion of the average person, a one-size-fits-all model that ignores the true nature of our individuality. But in The End of Average, Rose finally provides the tools to break free.

Weaving science, history, and his own experiences as a high school dropout, Rose offers a powerful alternative to the average--three key principles derived from the science of the individual: The jaggedness principle (talent is never one-dimensional), the context principle (personality traits do not exist), and the pathways principle (we all walk the road less traveled). These "principles of individuality" unveil our true uniqueness, long obscured by an educational system and workplace that relentlessly judges our value by weighing us against the average.

ā€œThe hardest part of learning something new is not embracing new ideas, but letting go of old ones.ā€

5. Short Squeez Picks

6. Daily Visual: Worst Month for Stocks since Pandemic Started

S&P 500 monthly change

Source: Axios

7. Daily Acumen: Shut up and wait

The idea of buying and holding high-quality businesses over a long period of time is simple. Everyone knows that, and even those who donā€™t practice it appreciate that this works with most high-quality businesses as history has proven time and again. But then, itā€™s important to understand that the action of not doing anything over such a long period of time involves hundreds of decisions over months and years that lead to such inaction. The decisions not to sell.

Now, one way is to buy high-quality businesses and forget for 20 years and hope to end up with a fortune. There are quite a few such fairy tales you may have heard of. But the other side of the picture is that countless people have also ended with duds in their portfolios, or vanished companies, when they realized their father or grandfather had bought some stocks and forgot about them for 20 or more years.

So, overall, itā€™s not easy. And itā€™s not supposed to be easy. But if you have done your homework well, and keep your eyes and ears open, ā€˜shut up and waitā€™ remains the best bet in your pursuit of wealth creation from stocks.

8. Crypto Corner

9. Memes of the Day

 

 

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