Oh yeah, there's competition, too. These days, when we look at the landscape, we are often struck by how much we love franchises that appear to be unassailable. There's nothing like owning a market, plain and simple, where we just don't see a lot of companies nipping at the ankles.
Hey, why do you really think we love FANG? Its because as troubled as Facebook (FB) is, there's still no one about to leapfrog past them or even be in their leg. Amazon (AMZN) dominates not just retail but the cloud. Netflix (NFLX) ? No one close. Alphabet (GOOGL) ? Incredibly, its share just keeps getting larger and larger.
Apple's (AAPL) knocking on the trillion-dollar door for market cap because it's all you see when people whip out their phones... worldwide. Even as it is only the number three in the game, it has pricing power. The trillion dollar price tag happens because the $1000 price tag stuck.
And then there are the companies that are at war, duking it out each day. They cause us to soul search and remind us of why we have been willing to pay so much for FANG, Apple and their high-priced friends.
Last night, we saw competition writ large -- and it's an ugly thing to behold. Let me tick off the monsters and demons we saw -- not nipping, but munching down on others, which makes it so they are more treacherous to own than all but the F in FANG.
Last night, Wynn Resorts (WYNN) reported a subpar quarter. Those of us who remember the work Steve Wynn did to stay ahead of the competition blanched at this quarter. The competition, particularly in the multi-billion-dollar, high-roller, VIP Macau market, has become intense. That's why there was a shortfall. When things got tougher in this segment, Steve put on the gas and took share. Now that things are better, the share gains are waning, and so are the numbers.
Or how about Yum China Holdings (YUMC) and Starbucks (SBUX) ? When Yum! Brands (YUM) broke in two, you were supposed to go for the growth -- YumChina -- or the income -- Yum. It looks like the latter has both now -- and the former? Ugly.
KFC, the once-darling of China, the place couples loved so much they got married there, had flat numbers. That's competition for you.
Starbucks announced a huge tie-up with Alibaba (BABA) to have delivery perfected for 2,000 stores, as well as all sorts of novel ways to get your coffee without standing in line. What can I say? By their own admission on the previous conference call, these moves were necessary in part because the competition has caught up with Starbucks. You never want to hear that -- but unlike Yum China, they have a plan to address it.
A little outfit called Red Robin Gourmet Burger (RRGB) pre-announced to the downside last night. We don't have a lot of information other than the company having -3.6% same-store sales. We don't need a weatherman to know which way the wind blows: This is about the burger wars that are now cutting into the entire segment's profits, including those of McDonald's (MCD) .
Occasionally, you will get a company that can rise above the fray. T-Mobile (TMUS) just keeps winning and winning. It wrangled 1.6 million new post-paid customers which, according to CEO John Legere, is 2x faster growth than ATT (T) , Verizon (VZ) , Sprint (S) and Comcast (CMCSA) , combined. But even here, T-mobile feels the need to merge with Sprint to be competitive with AT&T and Verizon on the coming 5G tsunami of spend. He may be right that merging with Sprint is the only real way to viably compete against the behemoths. He's awfully persuasive.
So, if you want to know why you may gravitate to certain companies over others, remember, it's the unassailable franchises, the ones rising above the competition, that matter if you are going to be able to make money during the day AND sleep at night.