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Ascending in the elevator industry
Good morning, vertical voyagers. This is your Stock Market Rundown for February 21st, 2024. Thanks for joining me. Let’s dig in:
TODAY’S TOP STORY: ASCENDING TO THE PENTHOUSE
The iconic skyline of Manhattan, and the skyscrapers of downtown Chicago, wouldn’t be a thing without one mundane invention: the elevator. Before elevators existed, urban buildings were limited to six stories, and the upper floors were reserved for the servants who had to break a sweat hoofing up a few flights.
Elisha Graves Otis introduced the modern elevator in 1853 when he invented a safety brake to prevent them from crashing to the ground if the hoisting rope broke. (Kind of a key feature.) Thanks to his innovation, the rich now aspire to lofty penthouses, and a corner office on an upper floor is a status symbol coveted by every social-climbing VP.
Today, Otis is the world’s leading manufacturer of elevators, escalators, and moving sidewalks. Two billion people a day move up, down, and sideways thanks to their products.
In 1861, Elisha’s son, Charles Otis, made what might have been an even more significant innovation: the first service contract. To this day, the elevator industry doesn’t actually make much money selling elevators—they make it from services, like maintenance and repairs.
In fact, Otis generates more than half of its revenue from services. And the profit margin on services is more than double the margin earned on selling elevators. So the next time you see an elevator technician, just picture him as a walking stack of cash.
Lately, elevators aren’t the only thing going up in Otis’ business. Thanks to market share gains, management forecast double-digit earnings growth in their 2024 outlook.
SO WHAT ELSE IS GOING ON?
The Body Shop, makers of the Dewberry perfume that millennials wore in high school, is bankrupt. Sad to see the end of the only store in the mall you could smell from ten yards away.
Much as the wildebeests battle for supremacy on the savanna, the makers of stuffed animals are battling in court over intellectual property. Squishmallows is suing Build-A-Bear for knocking off their plush toys. OK, the products look similar, but can you really patent something that’s basically a pillow with a happy face on it?
A typo in a press release sent Lyft’s stock shooting up 67% before the CFO did some frantic backpedaling. Proofread your work, kids.
The war business is booming, and to meet demand, defense company Lockheed Martin is ramping up production of weapons systems, including shoulder-fired anti tank missiles. I’m thinking of getting one for the glove compartment of my Lexus.
That's today's scoop, friends; see you at our usual morning slot tomorrow for another round. Yours in capitalism, The Axe