Tyson raises forecast after earnings beat, Sanderson Farms agrees to buyout deal, DraftKings acquires Golden Nugget

Myles Udland, Brian Sozzi, and Julie Hyman break down some trending tickers in the market, which include: Tyson Foods reporting a Q2 earnings beat that resulted in the company raising its 2021 forecast as strong demand in beef persists, DraftKings reaching an agreement to purchase online gaming business Golden Nugget for $1.56 billion, and Sanderson Farms agreeing to a buyout with Cargill and Continental Grain for $4.5 billion as chicken prices soar.

Video Transcript

JULIE HYMAN: Want to check on a few opening bell movers here. Let's talk chicken, you guys. Why not? We love to talk chicken here. Tyson Foods was out with its earnings this morning. It beat estimates. The company reporting EPS of $2.70, $1.63 was the average analyst estimate. I mean, we know what's going on here, right? Chicken prices are going higher. The expense line for Tyson though, of course, is also going higher. I was telling you guys an anecdote, on my vacation last week that as we were driving through rural Maryland, Virginia, there's a Tyson plant, and they were offering starting salary $20.65 an hour. Big, a big sign outside the plant, by the way.

BRAIN SOZZI: Yeah.

JULIE HYMAN: Trying to get those workers.

BRAIN SOZZI: That's pretty good. And just staying on the cost side of things, Tyson noting inside their chicken business, $410 million of higher feed ingredient costs compared to last year. And they're also highlighting production inefficiencies. Worth noting, despite all that strong demand, in chicken, that business will operate at a loss in the quarter.

JULIE HYMAN: Very interesting.

MYLES UDLAND: You see strong demand for beef, strong demand for pork. Meat, bull market for meat.

JULIE HYMAN: Protein.

MYLES UDLAND: Procyclical.

JULIE HYMAN: Bull market for protein.

MYLES UDLAND: Procyclical protein market. All we talk about on this program is your fake meats over here, Sozzi. Tyson, Tyson letting us know it's still the real thing.

BRAIN SOZZI: I'm a big proponent of Beyond Meat meatballs, I'm sorry. And you know what? Actually, no! I don't apologize. I think they're quite good.

MYLES UDLAND: I think you should apologize.

JULIE HYMAN: You should have to apologize.

BRAIN SOZZI: Brutal, brutal.

JULIE HYMAN: There's also a chicken deal this morning, by the way. Sanderson Farms, which is a big egg producer also, chicken producer number three, chicken producer in the US, Cargill and Continental Grain are buying the company for about $4.5 billion in cash. They're combining it with Wayne Farms, which Continental owns, which is the eighth largest in the US. So obviously, it'll be bigger combined company here.

BRAIN SOZZI: Sanderson getting gobbled up today.

JULIE HYMAN: Oh, no.

BRAIN SOZZI: Yeah.

JULIE HYMAN: You didn't.

BRAIN SOZZI: Oh, yes.

MYLES UDLAND: That doesn't work.

BRAIN SOZZI: It does work.

MYLES UDLAND: No, it doesn't.

JULIE HYMAN: No? Doesn't work?

MYLES UDLAND: Because that's a turkey. They sell chickens.

JULIE HYMAN: I'm sure there are turkeys in there somewhere also, you guys. And then another deal that I know Myles--

MYLES UDLAND: Any kind of poultry.

JULIE HYMAN: Myles is--

MYLES UDLAND: Very fowl, this is fowl behavior.

[LAUGHS]

JULIE HYMAN: Another deal that I know Myles is excited to talk about that has nothing to do with chicken that I can discern.

MYLES UDLAND: You can certainly buy chicken at some of these locations.

JULIE HYMAN: Yes, there you go. DraftKings is going to be buying Golden Nugget Online Gaming. All stock deal, $1.5 billion is the equity, implied equity value here. What did you call it this morning? SPAC on SPAC crime?

MYLES UDLAND: SPAC on SPAC crime, yeah. I mean, this is it. This is, SPAC, you know, DraftKing SPAC buying the Golden Nugget Online Gaming SPAC, which came game to market last year.

BRAIN SOZZI: How hot does the sports betting market continue? We just talked to Gannett's CEO last week. He struck a deal to now get involved with the sports betting space. Bally's, we've talked to this numerous times, they are getting deeper into the sports betting craze. Of course, look, look at us here at Yahoo Sports, we're in the sports betting craze as well. It's amazing just the longevity of this trade. It's going on at least, what, two years, two plus years?

MYLES UDLAND: Yeah, I mean, it has a lot of the same elements as the cannabis trade, where everyone was smoking weed and betting on sports in their free time. Now you can do it legally and you can do it on your phone. And so every state can eventually legalize it. So there's this big regulatory tailwind for the whole sector. But I mean, I don't know, well, I know you're not watching sports. I don't know how much sports you're watching, Soz, but I am now finding the tie-ins more and more intrusive. And they're all around when you sign up, go sign up for this app and then bet on this outcome. This was in the golf yesterday. If you bet on something with-- and it's like you can enter some $10,000 contest.

But I'm sitting there and I'm thinking, who's watching this that wants to bet on golf that hasn't already downloaded and started betting on golf? So I'm asking about the CAC of the marginal consumer from sports betting. And I know that everyone's going to tell me that there's a huge market out there, there's a huge TAM. So the market, in my view though, is like it's 16-year-old boys that are going to turn 18 and then legally be allowed to open an app.

JULIE HYMAN: Or its older betters who maybe haven't adopted yet.

MYLES UDLAND: Maybe.

JULIE HYMAN: Perhaps.

MYLES UDLAND: Maybe. I should have asked my father if he's interested in opening a DraftKings account.

JULIE HYMAN: Yes, the Mr. Udland Indicator. It's an important indicator.

MYLES UDLAND: Only, I mean, if he has his reading glasses, maybe. But otherwise, I don't know if it's going to happen. He actually cut the cord though, so maybe he is, maybe he's millennializing himself the older that he gets.

JULIE HYMAN: I think--

MYLES UDLAND: I have cable and he cut the cord. What do we make of this?

JULIE HYMAN: You have to come back and do some market research, report back.

MYLES UDLAND: You did, you spent your vacation market researching chicken, chicken competition and I unfortunately, did no market research this weekend. Did you do any?

BRAIN SOZZI: Every day.

JULIE HYMAN: Yeah. Sozzi lives to do market research.

MYLES UDLAND: What do you got? You got a read for us?

BRAIN SOZZI: I go down to supermarket, I see inflation in the supermarket running rampant. I mean, I'm at Target, Walmart. Things are out of stock. It's chaos out there, Myles.

JULIE HYMAN: And widespread staff shortages in Outer Banks restaurants is my other vacation report.