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App Store Results Support Services Growth Independent From iPhone
Source: Apple

App Store Results Support Services Growth Independent From iPhone

Apple released its annual holiday app store numbers. The most important takeaway, despite declines in iPhone unit sales, is that App Store revenue growth continues at 16% driven by an active Apple device installed base which is now likely above 1.5B (1.4B reported end of Jun-19). We believe these results, given the context of the iPhone softness in 2018 and 2019, is further evidence that Services growth is not directly linked to iPhone units. We believe this stability is incremental evidence that Apple shares should trade in-line with other FAANG names that currently trade at a multiple of 26x next year’s earnings, ahead of Apple’s current 20x multiple.

Other Takeaways:

• We believe the App Store accounted for 39% of Services revenue in 2019.
• The 16% holiday period App Store growth in 2019 is below 37% growth in 2018 and 32% in 2017.
• Despite the decline in growth, we remain comfortable with Street Services estimates for 17% growth in Dec-19, given other segments including Apple Pay and, to a lesser extent, Arcade and News are growing faster than the App Store.
• We believe in the past three years, Services growth has outpaced iPhone unit growth by an average of 28%, confirmation that Services growth is benefiting from Apple’s existing users increasing their spend within the Apple ecosystem as well as the company acquiring new Services customers through secondary iPhone. See table below.


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Investing in Levels Health
Source: Levels Health

Investing in Levels Health

Health is an important theme at Loup Ventures — it’s the cornerstone for quality of life.

We all approach health differently, but we face the same problem of measuring what we do. How our bodies react to exercise and diet is opaque. Our bodies react individually even to the same stimuli. One person may have a large insulin spike when they eat a banana. Another may have no reaction.

Without knowing how our bodies react, we’re just guessing at our health.

That’s why we’re excited to invest in Levels.

Levels is making metabolic health mainstream by expanding access to real-time biometric monitoring paired with actionable insights backed by rigorous science. The Levels Metabolic Fitness Beta Program provides the first means of accessing your metabolic data to see the effects of diet and lifestyle decisions as they happen.

If you would like to experience the beta program, you’re invited to add your details to the early access list (more details after the link). Seeing your body’s unique response to a meal or activity is an empowering experience, leading to a better understanding and higher level of control over your health and wellness – Levels calls it Metabolic Awareness.

We think Metabolic Awareness can help users avoid future health problems through early awareness and preventive medicine just as it can help them optimize their current health to achieve immediate goals. Metabolic Awareness has multi-billion dollar market potential as a core piece of a cohesive health program.

We couldn’t be more excited to back Sam, Josh, and the Levels team in their journey to bring Metabolic Awareness to everyone.

Feel free to reach out to the Levels team at if you have any questions about their beta program.


Health, Portfolio Company
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Tesla Takes Another Measurable Step Forward

Tesla Takes Another Measurable Step Forward

Tesla takes another measurable step forward with 112k deliveries, ahead of Street expectations of 106k. This is the 3rd consecutive quarter of sequential delivery growth despite declining tax credits and trade headwinds, further evidence that consumer demand for EVs is sustainable and growing. In Mar-19 the company delivered 51k vehicles, 95k in Jun-19, 97k in Sep-19, and 112k in Dec-19.

The delivery outperformance came from Model 3 with 92k vs the Street at 88k. We believe the average selling price of Model 3 in Dec-19 will be around $50k, suggesting the $35k average US car buyer is willing to spend more on electrification.

We Expect Tesla Will Exceed 2020 Street Deliveries Estimate of 463k

With the addition of China Gigafactory, which will begin customer deliveries of Model 3 next week, along with the release of Model Y in the fall, we believe the company can grow deliveries by 28% in 2020 compared to the overall auto industry that will likely be flat. We expect Tesla to increase deliveries quarter-over-quarter, giving credibility to the belief that the electric car theme is here today and is opening up a vast addressable market — 97% of cars sold today are internal combustion. If our prediction is correct, Tesla shares will continue to move higher. Tesla is a pure-play investment in the undeniable truth that the future of the automotive industry is both electric and autonomous. We expect Tesla to exit next year with above 60% US EV market share, compared to about 75% today. As a point of reference, in 2018 GM lead the overall US auto market with 17% share.

The Bull Case for Long-Term Tesla Investors

Outside of today’s 4% move, we attribute the surge in Tesla shares in December 2019 (up 30%) to short sellers covering positions based on the emerging consensus that Tesla will stay in business long-term. That said, Tesla has not won over many long-term investors. While the story still has material risks related to demand, production expansion, talent retention, and Elon’s behavior, we believe that, over the next two years, Tesla will slowly win over long-term investors. If we are correct that the company will sequentially increase deliveries in each quarter of 2020, shares will likely continue to rise, as the company that has a pole position in the future of vehicle electrification and autonomy and should be valued more than its current $81B market cap.


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