This newsletter was published on August 16, 2019

Some questions that we often hear from our community of investors are, “How do I know which sectors to invest in?” and “How do I validate a company’s valuation?”

These are essential questions that can determine the potential upside of any investment. So every week, we’ll be uncovering the latest industry news to give you the insights you need — minus all the jargon.

Here’s what should be on your radar this week:

Take-out is expected to be king in America

For the first time in history, over 50% of restaurant spending is projected to be on deliveries, drive-throughs and takeaway meals in 2020 — instead of dining in. Venture capitalists have already spent billions of dollars subsidizing delivery companies, such as DoorDash, Uber Eats, and Postmates.

Why is this happening?

  • Online commerce has reduced foot traffic in brick-and-mortar stores, which are closing at a record-setting pace.
  • The “munch-and-crunch economy” is rising where more gyms and cafes and fast-casual chains are opening up.
  • Millennials are spending more time working and commuting, leaving less time to cook at home or sit in restaurants.

What’s the takeaway?

Take-out has become big business in America, and convenience is fueling the trend among consumers and investors. 

Why company valuations are skyrocketing 

Management or third-parties arbitrarily decide company valuations, but that doesn’t mean investors shouldn’t take a closer look at their approaches while conducting due diligence. In fact, investors should be doing it more than ever now that valuations are swinging up and down — fluctuating by billions in dollars — at a moment’s notice. 

Why is this happening?

  • A company’s valuation can only be validated by what price investors are willing to pay for once they’re public.
  • Some investors are eager to own a piece of a company that’s given unicorn status or part of a “hot” new industry (e.g., blockchain).

What’s the takeaway?

When considering an investment in a company, consider whether or not their valuation is valid by factoring the fundamentals (e.g. projections), rather than investor sentiment.