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Market Pulse
Monday, July 3, 2023

Concert economics, a pharma pivot and the digital town square is under siege

Welcome to this week’s Market Pulse, your 5 minute update on key market news and events, with takeaways and insights from the Sidekick Investment Team. 

In this week’s edition we have:

  1. Concert economics: The ‘TSwift lift’ 
  2. Pharma pivot: Covid vaccines to obesity drugs
  3. Digital town square under siege

Cyril (CIO), and the rest of the Sidekick team.

It’s important to note that the content of this Market Pulse is based on current public information which we consider to be reliable and accurate. It represents Sidekick’s view only and does not represent investment advice - investors should not take decisions to trade based on this information.

1) Concert economics: The ‘TSwift lift’ 

During covid, the live music industry ground to a standstill but this year it's back with a bang. It’s going so well, in fact, that it’s making life harder for central bankers trying to get inflation under control. 

In May, Swedish inflation came in higher than expected. A key contributor was a surge in Stockholm hotel prices as devoted fans flew in from all over the world to see the opening of Beyonce’s Renaissance World Tour[1]

Another singer just started her world tour and the economic impact could be even bigger. Taylor Swift started The Era’s Tour in March and, so far, it looks like this might be the highest grossing music tour of all time. When Taylor Swift last toured, her Reputation Tour back in 2018, the average ticket price was close to $120. The average ticket price for The Era’s Tour is more than double that at $250. This puts The Era’s Tour on track to make more than $1bn in revenue and could see Taylor Swift taking the top tour spot from Elton John. [2].

Taylor Swift fans, or Swifties, are clearly willing to pay up for tickets, hotel rooms and restaurant tables. Researchers in the US can already see the impact of Taylor Swift's tour in economic data. They’re calling it the ‘TSwift Lift’. One report estimates that The Era’s tour could boost local US economies by close to $5bn as the average concert goer spends more than $1,000 on tickets, hotels, restaurants and clothes[3]

Taylor Swift is coming to Europe next year (including a rumoured headline spot at Glastonbury). We expect a similar economic boost, and overbooked hotels, this side of the Atlantic. 

2) Pharma pivot: Covid vaccines to obesity drugs

Back in 2020 and 2021, two pharma stocks (Pfizer and Moderna) were getting a lot of investor attention. And rightly so, as they were taking the lead in developing vaccines for covid-19. But with the worst of covid behind us, demand for vaccines have fallen and so have the share prices of the covid darlings[4]. Investors are looking for the next big thing. 

A theme that has caught investor attention in 2023 is weight loss therapies. A recent report estimated that by 2035 more than half of the world's population will suffer from obesity. The treatment cost of obesity related illness could exceed $4trn per year, about the same as the global covid healthcare bill in 2020[5]

Two companies are emerging as early leaders in the race to effective weight loss therapies. Novo Nordisk and Eli Lilly. As a result, both companies have seen their share prices increase by more than 20% so far in 2023. 

Medical trial results on the new weight loss therapies give reason to be optimistic. Wegovy, a weight loss injection from Novo Nordisk, has helped patients lose up to 15% of their body weight[6]. The company is now working towards a weight loss pill that might be more preferable than injections. Another promising drug, Mounjaro from Eli Lilly, is expected to be approved by the end of the year[7].  

It’s still early days for effective weight loss treatments and there is little data on potential long-term side-effects but according to Morgan Stanley, the global market for obesity drugs could surpass $50bn by 2030[8]. Although the revenue surge from COVID-19 vaccines was fleeting, the potential positive influence on the quality of life for billions could ensure sustained growth in revenue from weight loss therapies for many years to come.

3) Digital town square under siege

Elon Musk refers to Twitter as a ‘digital town square’[9]. As de facto mayor of this ‘digital town’ Elon Musk has been setting some ground rules. First users had to pay for blue tick verification and, just last week, a new set of rules limit how much Twitter users can read each day. At first glance it appears petty, but a deeper look shows a storm on the horizon. 

Going forward verified users can only read 6,000 posts per day while unverified users get 600. Elon Musk said the new rules are an effort to fight companies trying to use Twitter data to develop or improve their AI programs for free[10]. The creation of ChatGPT has unleashed a tsunami of investment into new AI startups and many of those companies need vast amounts of data to train their models. Elon Musk said that AI companies were aggressively scraping Twitter data and it was degrading the experience for other users.[11]

Twitter isn’t the only company that seems unwilling to give away valuable data for free. Reddit has been caught in a storm since it decided to charge some third-party developers to use its data.[12] Questions regarding data collection have put OpenAI, the creator of ChatGPT, in the spotlight. OpenAI is currently facing a class action lawsuit in California alleging that they used private and personally identifiable information from hundreds of millions of internet users without their knowledge or consent[13]

Recent events will likely fuel a debate over who actually owns the conversations in the digital town square. Do the companies providing the digital infrastructure get to keep all the spoils or do the people having the conversations also deserve a cut? 

It’s still too early to predict how this plays out but one thing seems clear. The real value of AI systems lies in the data and those who have it, companies like Twitter and Reddit, are not going to give it away for free. Taylor Swift said it best - valuable things should be paid for[14].


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[1] https://www.ft.com/content/abc431c4-426d-4a9f-9674-f437ed504eb7 

[2] https://www.bloomberg.com/news/articles/2023-06-30/how-much-money-is-taylor-swift-making-from-eras-tour 

[3] https://fortune.com/2023/06/07/taylor-swift-eras-tour-chicago-hotel-booking/ 

[4] https://www.barrons.com/articles/pfizer-moderna-stock-price-covid-deal-spending-spree-51660065154 

[5] https://time.com/6264865/global-obesity-rates-increasing/  

[6] https://www.reuters.com/business/healthcare-pharmaceuticals/novo-nordisk-says-obesity-pill-leads-15-weight-loss-availability-be-determined-2023-06-26/ 

[7] https://www.reuters.com/business/healthcare-pharmaceuticals/experimental-lilly-pill-leads-147-weight-loss-mid-stage-trial-2023-06-23/ 

[8] https://www.ft.com/content/cb26c3df-29be-437f-b98a-d2511b212083 

[9] https://www.ft.com/content/f7721046-b339-49be-977c-7cc9f657a002 

[10] https://www.ft.com/content/1789b1bd-ff60-4608-a62b-890c1c8409d5 

[11] https://www.wsj.com/articles/twitter-limits-number-of-posts-users-can-read-prompting-disruptions-for-some-15bc01cc?mod=Searchresults_pos2&page=1 

[12] https://www.wsj.com/articles/reddit-community-protest-private-ea65253?mod=Searchresults_pos1&page=1 

[13] https://clarksonlawfirm.com/wp-content/uploads/2023/06/0001.-2023.06.28-OpenAI-Complaint.pdf 

[14] https://www.rollingstone.com/music/music-country/taylor-swift-music-is-art-and-art-should-be-paid-for-244144/

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