Morning Brew Daily - Cava Crushes In IPO, Has Pixar Lost It's Fastball? & Ticketmaster Gets Honest

Episode Date: June 16, 2023

Episode 83: Not Toby set his alarm extra early and has made his return. Welcome back Kyle Hagge! He and Neal get into Cava's monstrous IPO debut after their stock doubled on Thursday. Plus, with Pixar's newest movie "Elemental" coming out, can the studio recover from some of their recent struggles? And President Biden makes Ticketmaster get honest with fees and the guys share their stock and dog of the week. Finally, why Vegas is trying to become the new sports mecca and a manager at the Harvard Morgue was selling... body parts? Listen Here: https://link.chtbl.com/MBD Watch Here: https://www.youtube.com/@MorningBrewDailyShow Learn more about your ad choices. Visit megaphone.fm/adchoices

Consider this comparison. PWC data found the percentage of CEOs who report revenue gains or cost reductions from AI is almost equal to the percentage who say they're still stuck. What separates these two groups? PWC points to a clarity issue. Even for CEOs, it's hard to tell what's AI hype, what's reality, and where this tech can make a tangible difference. Learn where AI can actually make an impact and what successful adoption looks like at

pwc.c.com slash U.S. slash brew AI. That's pwc.com slash us slash brewaI. Good morning brew daily show. I'm Neil Freyman. And I'm back as not Toby. Let's go. It's a summer Friday and we got a great show for you.

There finally was a big IPO on Wall Street. We'll discuss whether more are coming. And did Ticketmaster do something not horrible? We have a phenomenal show today. We're also going to talk about is Pixar washed up and why you shouldn't go to the Harvard

more. Today is Friday. June 16th, Neil, let's ride. He's back. Not Toby. Not Toby. The artist formerly known as Kyle Haggy is filling in for the real Toby who is hanging out with his bros at a bachelor party in Big Sky, Montana. Kyle, always great to have you back here. Super pumped to be here and Toby kind of stole my spot. I love Big Sky, Montana. You're such a big Sky, guy. Yeah. If you were to plan his itinerary. What would you do? You got to go to Uzel Falls for a hike. It's a beautiful waterfall hike. You got to go golfing on their course. You got to go to Beehive Basin Brewery for a beer. And then you have to randomly see Tom Brady just roaming around the streets. All right, Toby. If you're listening to this, which you better be. Definitely follow Kyle's advice, but I'm sure you have some awesome stuff planned. I'm not concerned about the golf. I'm sure that many rounds are booked. Yeah, I'm sure he's got that covered. Toby and not Toby can never be in the same spot. We'll see because I'm planning actually on taking. a day off. This is the craziest thing next month. So we're going to see whether Toby and not Toby. Does Morning Brew know

this? I don't think you're allowed to take a day off. We'll figure it out. All right. Let's go to our first story. Wall Street was just drowning in Saziki and hot honey chicken yesterday as Kava, the Mediterranean fast casual chain, went public. This IPO is seen

as a milestone for an IPO market that had been as dry as the Atacama and Kava did not disappoint. Shares popped 99% in its first day of trading, reminding us of those IPO golden days just a few years ago. This successful IPO could really open the floodgates for a bunch of companies that had been waiting in the wings, but we're too afraid to go public because of tough market conditions. But after seeing Kava double its value on the first day, get ready because I think there could be

a parade of IPOs hitting Wall Street over the remainder of the year. Kyle, you spent the entire night reading Kava's public filing. What are your main takeaways about this company? That's probably the saddest thing I've ever heard is actually having fun reading an S1. But if you've never read an S1 before, definitely check it out. The S1 is the... You have to file it to go public with the SEC. It's about 1,000 pages, but the first 100 are really all you need to pay attention to.

Before I go into some fun stuff in the S1, I've got to say I've never had a good Kava meal. I'll be honest. So if the audience wants to tell me what I need to order to get on the Kava train, like please let me know, because I've been a bit of a kava hater, but shout out to them for their IPO. But five interesting things from the S-1, Neil. The first is how every business, not just a restaurant,

but they have CPG. They're selling stuff in store, and their app. They had the third fastest growing restaurant app year over year. So much of the restaurant experience is now moving to apps for delivery or for pickup.

The second is them talking about the threats of social media. TikTok might be banned. They have an active presence there. And they're like, if we partner with celebrity influencers and then they do something bad, this could hurt our brand.

It's like anybody who partners with influencers, though. Maybe the funniest thing they said was we have a history of losses, and especially if we continue to grow at an accelerator rate, we may not achieve or maintain profitability in the future. So one of the risks is they don't make money. And then it really talked about just how hard running a business is. Labor shortage, cybersecurity tax, pandemics,

and they even mentioned a failure of a bank that they banked with is a threat. But the last thing I want to, a shout out is their marketing department. They spun having 38 ingredients as meaning they have 17.4 billion combinations of food. Give it up to the marketing department there. That is incredible. And of those 17.4 billion combos, you can't find one you like. Yeah, I've only tried three. So I have a 17.3999 billion left to go. So yeah, so this is a very interesting IPO because it's in the restaurant sector. And you can look at some various comps to see whether to see how

Kava may go in the future. On the top end of the spectrum is obviously Chipotle. This is the industry standard. It went public back in 2006, and its stock has grown 4,700 percent since then. So if you invested $1,000 in Chipotle's IPO, you'd have almost $50,000 now. Its market value is $57 billion. This is a behemoth. On the other hand, you have Sweet Green, which went public in 2021, and has been kind

of treading water. I mean, I think it's only worth 1.2 billion right now. Its stock is up 25% this year, but it's still just like hasn't seen much growth on the public markets. Where do you see Kaba fitting in on this spectrum from Chipotle to Sweet Green? I got to say, I'm going to call it now closer to a sweet green stock. Why? I just, because you don't like it. I don't like it.

I don't know enough about it. So I'm going with Sweet Green here. And Chipotle is just, it's hard to throw in Chipotle. They're a classic. So you hope that this, so I talked about this at the beginning, but this is kind of seen as a milestone event for an IPO market that had been so dry. Last year, there were only 71 U.S. IPOs that raised $7.7 billion. Go back to 2021, the SPAC heyday. There were 397 listings that raised $142.4 billion.

So we'll see whether there are other restaurant chains like Panera and Fogo de Chow that are, thinking about going public. And then you have other tech companies like Reddit, Instacart, and Stripe that have also been putting off IPOs as, you know, the Fed raised interest rates. Right. And the market kind of tumbled, but the market is raging right now. So we'll see whether they come forward. Yeah, it'll be cool to see if we have more IPOs. And I think I'm going to spack my local pizza place, Gotham pizza. They need to go public. They're crushing it. Neil, let's move on to an interesting story here, which is the quote unquote Pixar slump. So Pixar owned by Disney is the world-renowned animation studio that has brought us all the hits, Toy Story, Incredibles, Coco,

and the often slept on Bugs Life. Hashtag Bug's Life Nation, that is a great film. But recently, Pixar and Disney kind of in general have been perceived as having a slump. Their new film, Elemental, is hitting the box office this weekend, projected to just take in $31 to $41 million. That would actually be among the lowest debuts ever for the animation studio, and it costs $200 million to make and tens of millions more to market. And then zooming out, it's kind of like their last four films have been duds in terms of monetization.

They had onwards, which was actually hit by the pandemic. Probably my least favorite movie ever. Yeah, we'll talk. Well, maybe we'll talk about that. Soul, Luca, turning red. We're all on Disney Plus. And then Lightyear, it did 226.7 million in international box office, but it also made us look at a semi-human Buzz Light Year.

So that was just a big no. To top it all off, they're delaying major releases like Star Wars and Avengers. So Bob Eiger, the Return as CEO, it's not going super smooth. Neil, can they turn it around and is the Pixar Slump real? Well, I googled Pixar slump because this is honestly the first I've heard of, you know, Pixar kind of losing its fastball a little bit. Turns out people have been writing off Pixar for 10 years. If you Google Pixar Slump, you will see articles going back to 2011 saying, you know, as Pixar lost its mojo, Cars 2 was the worst thing I've ever seen.

And then there are an equal amount of articles rebutting those claims being like, Pixar's doing just fine. Like don't believe the narrative of a Pixar slump. Toy Story 4 released in 2019 brought in $1.1 billion. That's like the second highest grossing Pixar movie ever. So it's been shown, it's shown a lot of resilience. Like you mentioned, I think the pandemic was really, really bad for it. those movies that were released did not do well on Disney Plus. They weren't, they weren't widely

viewed, even if they were critically acclaimed. So, I don't know, it feels like Pixar's a little bit in its Instant Pot era. I don't think, and what did the Instant Pot CEO say? He was like, you can't be a phenom forever. It just doesn't happen. Like, that's not the way the world works. So, you know, Pixar may just be now just one of a stable of really good animation studios. It just won't be what it was in the late 90s and early 2000s with finding Nemo wali monsters it's heyday i i think i agree like i think they're just like to quote j cow it's suffering from success like we're comparing them to post pixar they're the lebron james of this industry like you keep saying they're they're going to be washed up it never actually happens and there's some incredible stats from from

uh pixar the studios 11th film toy story three first film animated film to make over a billion dollars In 2011, Pixar revealed it sold over $10 billion of cars merchandise. So this isn't just films. They have incredible IP that can go to different sectors. It's won 11 of the past 18 awards when it comes to Best Animated Film. At the Oscars. And at the Oscars, correct. No other studio has claimed more than three victories.

And then this is a mic drop. Pixar director Pete Doctor has personally won the award three times. No other animated studio has more than three victories. I think he did Elemento. They're incredible. All right. Before we go leave Pixar, we both, so both of us are not writing off Pixar. I think that is the takeaway here.

What is your favorite Pixar movie? And you kind of hinted at it, but. I think the most underrated is Bugs Life. My favorite, Ratatooie. Yeah. I was going to say the, I mean, I was going to say the same thing. Yeah. I would say the best movie is Toy Story.

Just the best movie. Yeah. Just judging it as a movie. My favorite is definitely Rattitatitude. I mean, a rat, they're in Paris. You got to love that. Okay. I could talk about Pixar for the whole show, but we have to move on.

Kyle, buying concert tickets is going to suck just a little bit less now. Yesterday, executives from Live Nation, Airbnb, Seek, and other companies were at the White House meeting with President Biden, and they announced a big change for consumers. They're going to make the fees you pay way more transparent. They're not dropping the fees. Don't get that idea. But at least you'll know them ahead of time, which I guess takes the sting off. a bit. So what does this mean in practice? So no more buying a concert ticket only to find out that the

price jumped by $75 as you're about to check out. The price will just be $75 higher when you first look at the ticket, which is great. Let's talk Ticketmaster, public enemy number one, because it botched the Taylor Swift ticket roll out last November. So starting in September a few months from now, Ticket Master's parent Live Nation will display all in pricing up front at its more than 200 venues in the U.S. Of course, this transparency push is not because these companies are feeling sorry that they misled us for the past couple years to get on the good side of the president who's made getting rid of junk fees a main part of his agenda. He even brought up junk fees at a state of the union address in February and pushed for legislation curbing this super

sketchy practice of tacking on extra costs every time you try to buy something online. So this is a win for his war on junk fees. Yeah, I think this is a great, honestly, regulation. Breaking news, people just want to know what the actual cost is. I know Airbnb has also rolled out some tools where you see the actual cost, you know, including the cleaning fees, service fees, take out the trash fee, et cetera, et cetera. So this is great. And I think it's because also so many people are going back to events now that we're all seeing it. The Wall Street Journal dubbed 2023, the year of the $1,000 concert ticket. I know you were wearing your Taylor Swift sweatshirt earlier. An event attendance has been up 24% in 2022 compared to 2019.

So there's more eyeballs on these practices now, and they're finally turning the corner. I didn't think, yeah, like in the past, we weren't talking about concert tickets as much as we are now. Every other news story is like, yeah, what's going on with concert tickets, this stadium, this tour, blah, blah, blah. It's just like, it's kind of all new. Yeah. Something that's just become at the forefront of the consciousness. Started liking art more or something like that, or maybe this all comes back to Taylor Swift. You know, Ticketmaster is not out of the doghouse, though.

It's got investigations into it, not over transparency fees, but over its monopoly status. And new analysis shows that 64% of the top 100 amphitheaters in the U.S. are operated by Live Nation and 77% use Ticketmaster as their sole ticket provider. So this is a little PR win for them, but, I mean, they're still getting probed by many different regulators and we'll see whether any antitrust action is leveled against them. Yeah, they're definitely not in the clear yet. All right, after this, we'll take a quick break. Hannity presents in the red corner, the undisputed, undefeated weed whacker guys. Champion of hurling grass and pollen everywhere. And in the blue corner, the challenger, extra strength, Hannity.

Eye drops and work all day to prevent the release of histamines that cause itchy allergy eyes. And the winner, by knockout, is Padaday. Saturday, bring it on. All right, Neil, let's move on to our famous segment, Stock of the Week and Dog of the Week. But before we do that, let me preface so we don't get sued. We are not financial advisors. This is not financial advice.

In fact, this is not even general advice. Don't listen to me. I have a philosophy major. I'm about to talk about money. I don't know what I'm talking about. With that being said, let's get into it. Breaking news, Toyotathon is back, baby. Toyotathon, maybe it's always been here,

but Toyota's stock is absolutely ripping. It's having its best week since 2009, following the company disclosing plans for its next generation electric vehicles and shareholders voting in favor of new leadership. Shares of Toyota on the New York Stock Exchange hit a new 52-week high Thursday of just about $169 per share. Part of the excitement about this

is the company getting more aggressive with its EVs coming out with some solid state batteries, which I don't know what they are. But they're like just better than, lithium ion batteries, which EVs use now and they're prone to like blow up and stuff. So this is seen as the next gen battery for EVs and the fact that Toyota is going to release cars with it is hype. This is why we have Neil around.

He knows everything. So they got better batteries coming out. And I also think this is great because like the Toyota Prius was like the OG. I feel like they should be leading this. And so that's my winner of the week. It's also quite interesting looking at how much stocks have been up. This year, Tesla is still by far the best. They're up 108%.

Toyota's up 23%. So they have some catching up to do, but they're ripping right now. Toyota's seen as a very boring stock. You're not like, oh, I need to go buy some Toyota shares right now. And no one's like trading Toyota stock. Very calm. So the fact that we're even talking about Toyota stock means that they're doing something relatively exciting. Yeah, they kind of, you know, they release the Prius, which is this hybrid and super

obviously the model for all hybrids. And then they did not push aggressively into electric vehicles like virtually every other automaker Their investors were saying what are you guys doing like this is the way the this is the way the industry is moving and you're kind of just sitting on your hands So the fact that they are investing all this money and R&D into producing new batteries and new vehicles is super exciting for investors And I also read that they are making like fake gear shifts and in their new EVs trying to make it feel like a manual transmission and that got a lot of blowback actually because they're saying people were like just embrace an EV like EV doesn't have gears it's a completely different car than an internal combustion engine and you're trying to you know try to tow the line between pushing forward and still having

people feel like it was a manual transmission or it's a it's an old car and they even what else did they do they're blasting in the sound of engines right sound of engines and more used to that and I think they're trying to make consumers comfortable with, you know, what they've come to expect from a car, even though it is an EV. And they even, what I was going to say is you can even pretend to stall out in these companies or in these EVs. Oh, it's on Toyota. I love it. I don't know. That was a little cringy. Let's go to our dog of the week, which is Twitter. Even though it's not a public company, you'd have to think its stock would be down. After the week it just had, here are just a couple things that happened. Twitter is refusing to pay its office rents. And finally, that's

catching up with it. It's going to be evicted from its Boulder Colorado office because it's behind on rent for three months. First of all, I did not know that Twitter had a Boulder office to begin with. Apparently, there were 300 people working there, probably a lot less now with remote work and layoffs, but still, it is not going to be having its office there. And it's still not paying rents on a bunch of other offices in San Francisco and New York. So we'll see what happens with that. The other piece of rough news is that Twitter is getting sued for more than $250 million by major music publishers who are accusing it of fostering massive copyright infringement. According to the publishers, Twitter is allowing unlicensed music to spread freely

on its platform, citing specific songs such as hey, yaw, Uptown Funk, and all I want for Christmas is you. This is not legal, and other social media companies don't allow unlicensed music to be posted on their platforms. That's the reason that we can't play. you know, hey, yeah, on this podcast right now. We would love to, but we would love to, but YouTube would take it down and Twitter has not been taking it down. So new CEO, Linda Yaccarino has been on this job for less than two weeks and just her job just keeps getting tougher every, every day.

Yeah, I'm also going to have to sue Twitter, mainly Elon Moss for plagiarism because he said on a meeting, he would only pay rent, quote, over his dead body. And that's also what I just texted my landlord the other day. I don't know. How do you get away with not paying rent? guess you don't. Like literally you have to pay this. Real estate isn't free.

So they're going to have to evict this whole office. Like practically, I'm very interested to see how that goes down. I mean, there's going to come in, like, take a bunch of computers out. Just like a normal eviction process. I don't think anyone's working there anyway. Yeah. All right. Let's move on to baseball.

There's been a lot of momentum for the Oakland A's to relocate to Las Vegas. That move just got a major boost this week. Nevada's governor signed a package that tees up 380 million. million dollars of public funding to help build the new stadium for the athletics on the Vegas strip. A's fans are not happy about their team leaving and mounted a last-ditch attempt to keep the team in Oakland on Tuesday. This was super interesting. They staged what's called a reverse boycott. They packed their usually empty stadium in Oakland with more than 27,000 people. The point was to pressure the team's owner John Fisher to sell the team and keep it in the East Bay. From what I understand,

though, the forces pushing the A's to Las Vegas are just, too powerful. There's too much money at stake. So it appears this train has left the station now that Vegas has the public money to spend on the stadium. That's what I want to focus here, actually. Taxpayer money used for sports stadium is a raging debate in cities across the country. There's a lot of division about whether this is a good investment. Is it smart economically to invest public funds into sports stadiums? Do you actually see a return on your investment from all the activity generated during game day or is instead just like a vanity play? You see your city's name on TV and you do the whole raw raw thing. But actually those funds could be spent

better elsewhere than subsidizing billionaire sports owners. Right. Yeah, I do. The research I have seen, it's like kind, it's not super, it's not a big boom economically. It is a bit of a vanity play. Totally. I do feel for these like smaller market teams, though, that have all of this pressure of like, hey, we'll leave unless you fund this stadium. So I do feel for the Oakland A's, the Vegas market, though, is so interesting. There was a stat in this article where they expect to bring an average of 27,000 fans per game for the new A stadium in Las Vegas, with 30% of those tickets going to out of towners. Right. And so Vegas has this unbelievable ability to bring people from all over and then funneled them into stadiums. Obviously, they've gotten a WMBA team. They've gotten the NHL team. That just won the championship.

So this Vegas sports play is really booming. And I think it's maybe working out for Vegas, but that's a particularly interesting market because it's known for gambling. Yeah, the economic literature on using public funds to subsidize stadiums is pretty, there's a consensus in that it is not worth it. You do not see a boost in local incomes. And one of the analysis was saying that for Vegas, for this to work out, they would have to bring in people from out of town to come to a Las Vegas athletics game to spend money there.

And only in that situation where you're bringing people from out of the area. Does this make economic sense? And then, you know, when you look at all of the other entertainment options in Las Vegas, should I go to Cirque de Salaire or the, or the athletics game? Does going to a baseball game kind of win out versus all the stuff you can only do in Las Vegas, like Cirque Disillet or lose all your money at Cesar's. Right. So that's the only way it'll work out.

But they paid, you know, they have, there's a precedent here. They spent $750 million in taxpayer funds on the new. Las Vegas Raiders Stadium, and then in Tennessee, Tennessee Titans and Buffalo Bills, also just are, they are building new stadiums with taxpayer funds. The one stadium recently that did not use any taxpayer money, SoFi Stadium in Las Vegas. The owner of the L.A. Rams, Stan Cronkey, paid for himself, cost more than $5 billion. And he's having himself also a hell of a year. So interest, let's move on to the last story here, Neil.

Okay. I want to end the show on a light note. It's just some good vibes to get going into the weekend. So let's talk about the Harvard morgue manager that was selling body parts that had been donated to science. So a former manager at the Harvard Medical School morgue, his wife and three other people were indicted in the theft and sale of human body parts. Federal prosecutors in Pennsylvania announced Wednesday. This guy has basically been taking some body parts, heads, brain, skin, and bones, back to his home where he's. home where he lived, selling them to people, also letting buyers come to the morgue to check

out. So we had some multi-channel distribution. You got to have a brick and mortar. Yeah. So, you know, good entrepreneur, I suppose. But one of the people buying the body parts owns this place called Kat's creepy creation. So in terms of like who saw this coming, okay, red flag number one, red flag number two is while they were making these transactions, they were paying for it over PayPal with memos like head number

seven and brains. So they were like running a criminal enterprise and conducting business with Venmo captions like they just got done with brunch. So what's your take here? Well, I was going to donate my body for science. I am fully prepared to do that. If I'm being sold like this, I may have a few questions and a few doubts. But I guess my first question was, what is this market for?

Like, what is the end use? I can see if you want to like flip a body part or something, you might make a little bit of money. But what is the, what are you using these for? And I think my hypothesis, all the brew writers were talking about this yesterday, is that store in Peabody, mass is right next to Salem, Massachusetts, which is, you know, where the witch trials happened and is known for going all out on Halloween, like all out. So I'm not going to, you know, I'm just going to leave it there and you can. I'm going to stick to Halloween in New York. Yeah, I'm not going to venture up to Salem this year. It is his wild.

But I have to say, I was wondering what, how much my face would go for. Oh, I would say easily 10 million. Thanks, Kyle. On that note, that is our show. Because it's a long weekend, we're going to have a special episode for you on Monday. Yes, it's that interview with money with Katie that we've been talking about. So we'll be back to our regular format on Tuesday, but definitely give Monday's episode a listen, some really incredible personal finance tips.

As always, if you're feeling bored this weekend, feel free to write to us at the email address Morning Brew Daily at MorningBrew.com. We can't do this without our amazing crew in the control room. Emily Milliron is our editor and producer. Macy Gilliam and Raymond Liu are the associate producers. You killed it Macy. Euchenna Wa Ogu is our technical director.

Billy Menino is on audio. Hair and makeup took the day off to binge all 27 Pixar movies. I want some reviews. Devin Emery's are. chief content officer and our show is a production of Morning Brew. Have a great weekend, everyone. Thanks for filling in, Kyle. Of course, this is a blast.