Motley Fool Hidden Gems Investing - Hot Jobs, Square Deals, and Hot IPOs

Episode Date: August 6, 2021

The stock market hits a record high on a stronger-than-expected jobs report. Square buys Australian fintech company AfterPay for $29 billion in stock. Etsy tumbles on earnings. And Weber Grill makes its public markets debut. Motley Fool analysts Ron Gross and Jason Moser discuss those stories and weigh in on the latest from Cloudflare, CVS Health, Mercadolibre, Wayfair, and Draftkings. Our analysts share two stocks on their radar: Synaptics and 10x Genomics. Plus, we revisit our July interview with Fiverr CEO Micha Kaufman and talk about the future of work.   Learn more about your ad choices. Visit megaphone.fm/adchoices

When WestJet first took flight in 1996, the vibes were a bit different. People thought denim on denim was peak fashion, inline skates were everywhere, and two out of three women rocked the Rachel. While those things stayed in the 90s, one thing that hasn't is that fuzzy feeling you get when WestJet welcomes you on board. Here's to WestJetting since 96. Travel back in time with us, and actually travel with us, at westjet.com slash 30 years. everybody needs money that's why they call it money

from fool global headquarters this is motley fool money it's a motley fool money radio show i'm joining me this week senior analyst jason moser and ron gross good to see you as always gentlemen How are you doing, Chris? We got the latest headlines from Wall Street. We've got a conversation with Fiverr CEO Mika Kaufman. As always, we've got a couple of stocks on our radar, but we begin this week with the big macro. The U.S. economy added 943,000 new jobs in July. The reports for May and June were revised to add an additional 119,000 jobs, and the Unemployment rate, Ron, falls from 5.9% to 5.4%. That is a big drop for a single month.

Not too shabby. Two strong months in a row. I think this is really positive. Job gains, perhaps not surprisingly, were strongest in leisure and hospitality as people get back to work. Added 380,000 positions. 253,000 of those came in bars and restaurants. again, people coming back to work where they're badly needed. Those industries have been really

labor-constrained for a while. Next was government jobs, then professional and business services. The wider unemployment metric that we sometimes talk about, known as U6, that fell pretty sharply to 9.2% from 9.8%. Fed is targeting 4.5% for the general unemployment rate. As you said, we're at 5.4% now. I think the Fed believes we're on target for something in the mid-4s next year, that would be pretty exciting and approaching full employment. I think it's likely the Fed will start to taper their bond buying program later this year if things stay on course. Ten-year interest rates ticked up on this news. The tech-heavy Nasdaq was down on Friday, probably as a result of a concern over higher interest rates. And I'll just add that the stock

market's a funny thing. Everyone wants a strong economy, but strong economic data will cause the Fed to ease up on its stimulus policies. And that will hurt stocks and people don't like that. So it's hard to know what people are actually rooting for. I hope it's a strong economy. Yeah, there absolutely is that situation where people are like, oh, we want the economy to come back. And then you get news like this and stocks. It's like, no, not like that. Not when it affects my stocks. Exactly. And, you know, Delta obviously is the wild card here. I am concerned, but not panicked. I think our economy is going to get through that. The war on cash just got more interesting. Square is buying Afterpay, the Australian payments company, for $29 billion

in stock. And despite that dilution, Jason, shares of Square up 12% this week. That's a nice big jump considering how much they paid for Afterpay. Yeah. And I mean, you said the D word their dilution. It is something that's going to impact that share count by close to 25%. I think the skeptic probably looks at this deal and thinks that Square is overpaying for what really just amounts to a feature. The optimist, the glass half-full investor probably looks at this and says, well, sometimes it's easier to buy it as opposed to building it. Maybe in this case, that makes more sense for Square. I think for Square, this is a combination of buying it being easier than building it, and ultimately, time being of the essence. I feel like they felt

like they needed to get this deal done sooner rather than later, hence the inflated offer. $29 billion, that puts Afterpay at around 60 times gross profit. That obviously is not a cheap multiple. But I will say, at least the business is showing signs of success. This is a business it's grown revenue from $189 million in 2019 to $693 million in 2021. Gross merchandise volume went from $3.7 billion to $15.8 billion in the same period. Very similar cultures, very similar purposes. So yes, I think you would succeed in arguing that maybe Square overpaid for this, but by the same token, I think it's understandable why they did. And ultimately, I think this could be a nice added feature to the Cash App. That's ultimately what this really is all about,

is building out that Cash App capability so that consumers and merchants alike have as many decisions and options as possible. Somewhat overlooked in all this news is that Square also came out with their second quarter report. Anything in particular stand out to you? Nothing in particular. It does feel like it's just steady as she goes here with this business, and that's a good thing. It really all about sellers and the Cash App. But if you look at numbers, total net revenue was $4.68 billion. That was up 143% from a year ago. Now, clearly, we're coming from a tough time a year ago, so there is a rebound factor there. If you exclude Bitcoin, which

I think we always should do in this case, with Square, net revenue for the quarter was $1.96 billion. That was still up 87% from a year ago. Cash App continues to deliver strong growth that generated $3.33 billion of revenue and $546 million of gross profit, gross payment volume for Square this quarter, up 88% to $42.8 billion. Nearly 4.5 million customers. This was an interesting stat I saw. Nearly 4.5 million customers held a stock or an ETF in the second quarter alone via the Cash App. That was up more than three times from a year ago. again, going back to the capability that they're introducing to the Cash App, which is now reaching over 40 million monthly transacting customers. There are just a lot of things going on with this

business, but they all really come back to building out the capability and the functionality of the Cash App. Again, that merchants and consumers have as many options as possible. Shares of Etsy fell 10% after its second quarter report showed profits higher than expected and revenue growth of 23%. There's a lot going right for Etsy, Ron, but this is another one of those times when the guidance outweighed the results. Yes, agreed. They definitely beat expectations, but investors are focused on the less than expected number of active buyers and what may be on the horizon in the future. I think it's essential to remember that Etsy benefited from a huge pull forward of buyers during the pandemic. In 2020, they acquired 38 million new

buyers. That's nearly two times the number of new buyers acquired in 2019. So I don't think it should be a surprise to investors that these numbers are slowing down. Overall, it was a solid quarter. Consolidated gross merchandise sales, GMS, up 13%. If we remove the impact of lower demand for masks, the Etsy standalone business actually grew 31% year over year. On a two-year basis, 153%. So these are strong numbers. Consolidated revenue up 23%. As I said, new buyer growth slowing post-pandemic, but they did add 8 million new buyers. Again, I think investors wanted to see more than 8 million there. Net income up fractionally up about 2%. But as you said, the guidance a little bit troubling. The management said

the comps get tougher as they progress through 2021. Again, I don't think that necessarily should be a surprise, especially considering the anniversary of strong pandemic results, including the absence of really strong demand for masks and stimulus checks, which helped the business. But they're doing what they need to do. They're focusing on improving customer service, buying experiences. They made two strategic acquisitions in July. I think the business is on track and investors just need to make sure their expectations fit with reality. Cloudflare hit an all-time high this week, but second quarter results for the cybersecurity company had the stock falling a bit on Friday. Jason, Cloudflare is not profitable yet,

but CEO Matthew Prince appears to be doing a nice job of making it clear to Wall Street analysts that he is taking a long-term approach to profitability. You are absolutely right, and to that point, I mean, to me, this company feels more and more like a must-own, given leadership's drive and focus on innovation and creation and its very Amazon-esque approach in that regard when it comes to profitability. CEO Matthew Prince, interestingly, he can be very critical of Amazon and its strategies when it comes to Amazon Web Services, but all in all, he still takes that very long-term approach. I think that's going to work out very well for this business and investors. In regard to the numbers, revenue up 53% from a year ago to just

over $152 million. Dollar-based net retention, 124%, that was up 900 basis points. Again, that tells us that not only are they keeping their customers, but they're growing the services that they're selling those customers. Speaking of customers, they continue to bring more of them through the door. They added roughly 140 large customers for the quarter, bringing that total to 1,088. Remember, those are customers who spend at least $100,000 or more with the business. business. It accounts for more than half of total revenue now, so they're important. But even more interesting is their $1 million large customer cohort remains the fastest growing of those large customer cohorts. Again, speaking to growing those customer

relationships over time, margins continue to improve. They're seeing operating leverage playing out in the business there. They landed a pretty sweet deal with the federal government, which is going to use Cloudflare Zero Trust solutions. Just back to your point in regard to patience and profitability. CEO founder Matthew Prince said on the call that they have a long-term operating margin of 20%. When they get to that breakeven status next year, they set that expectation this quarter that they are going to continue to reinvest in this business. They are not focused on just getting as profitable as quickly as possible. They have a lot of ideas and things they want to continue to build. This is going to be

a business where they continue to use those profits to reinvest and grow. And we've seen plenty of examples out there through the years where that works pretty well. Coming up, we've got more from retail, healthcare, and just to mix it up, sports betting. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Ron Gross. shares of CVS Health basically flat this week, despite the fact that second quarter profits were higher than expected, and they raised guidance for the full fiscal year. Jason, CVS is planning to increase wages and invest more in their stores and digital platforms.

And let's face it, in the short term, that's the kind of thing that can weigh a stock down a little bit. Yeah, there's no doubt about it. And I mean, this hasn't been the greatest investment over the past several years. But it is a business that's been somewhat in transition, so we have to give a little bit of credit there. It made a big acquisition, obviously, recently with that. I do feel like there are a couple of catalysts on the horizon that could help them. I think there will be some goodwill and some brand equity that comes from their role during the pandemic. They've certainly been seen as a part of the solution in that regard. Further, I do think, to your point about the investments in digital, I think those are going

to continue to pay off. And just to put a little context around that, management noted in the call that the digital retail customers spend two and a half times more in their store and also manage one and a half times more prescriptions than non-digital, and they remain customers longer than non-digital patients. And so, I think that we're seeing a tangible impact of those investments in digital, which should work well for them further out. To your point, they will be raising the minimum wage. That is something that will impact their cost structure here. $600 million is the estimate labor cost over the next three years. All in all, it was a good quarter. Revenue was up 11.1% versus the prior year. Strength in all three major

business segments, but the retail business segment grew the most, 14.2% growth there, driven primarily by prescription volume and COVID testing. So, it's a bit of a sleeper there, but I feel like they're making the right investments. It could be some better days ahead for CVS. Big week for MercadoLibre, the leading e-commerce and fintech platform in Latin America. Second quarter profits and revenue came in higher than expected. And Ron, the stock is still down from its high for the year, but up 12% this week. Yeah, the stock was a little bit lackluster, two years up over 150%, so really strong there. They beat expectations on the top and the bottom lines. Unique active

users grew by 47%, reaching almost 76 million. Gross merchandise volume up 46%, total payment volume up 50%, and total payment transactions increased 80%. These are obviously very, very strong numbers. The logistics business shipped 231 million items during the second quarter, that's up 46%. This all translated into net revenue growth of 103% on a currency-neutral basis. That's really strong results. The three main areas all putting in pretty good results, Brazil the weakest at 37% growth, Argentina the best at 110%, and then Mexico at 96%. Gross margins took a bit of a hit, down 4.3% due to some costs associated with the expansion of logistics fulfillment centers, which is a good way to spend money. I think that's necessary.

They did improve sequentially. That's great. Operating expenses, well-controlled. This all boils down to a 67% increase in operating income. Very, very strong results, stocks reacting appropriately. Jason Moser. Wayfair's second quarter profits came in higher than expected. Shares of the online home furnishings retail are up nearly 10% this week. Jason, Wayfair got a lot of people trying them for the first time during the pandemic. You look at this quarter, it seems like they have done a nice job of keeping those new customers. Jason Moser. Amen to that. They've got a long track right now of doing just that. It feels like this quarter, it was really a statement quarter. Economy open, economy closed, pandemic,

whatever is going on, this business should keep on doing well. I think that's what this quarter really proved. Management's quite convinced that even with some short-term normalization regarding brick-and-mortar retail, as the economy reopens and people get back out, e-commerce share is doing nothing but gaining steam. I think based on the numbers they lobbed up here this quarter, that's proving out. CEO Niraj Shah noted on the call, consumer balance sheets are strong, interest in the home is not going away, even if there is some of the shorter-term normalization towards bricks and mortar. And to those numbers, net revenue $3.9 billion. It was actually down 10.4% from a year ago, but it's worth noting too, this is the toughest comp they've ever faced

based on what happened a year ago. And so those sales numbers were dragged down a little bit by the U.S. there. Those sales numbers in the U.S. were down 15.2% from a year ago. But it's worth noting that revenue was up 11% sequentially. Gross margin, very strong, 29.3%. That's versus 30.7% a year ago, and management's longer-term target's still in the 27% to 28% range. But when you look at just the customer numbers, the retention numbers, active customers reached 31.1 million. That's up 19.6% from a year ago. Trailing 12-month revenue per active customer, $478. That was up 8.6% from a year ago. And then, yeah, that repeat customer business. I mean, now repeat customers play 75.6% of total orders in the quarter versus 67.4% a year ago. Those

are customers they don't have to keep paying to acquire. It really has a big impact on this company's financials as we're seeing. And it's really interesting, too, to see them in this new stage. They're actually buying back stock. Maybe we're seeing this company entering a new stage of its life cycle, so to speak, where they have a little bit more confidence in how they invest those incremental dollars. Shares of DraftKings up a bit this week after second quarter profits and revenue for the sports betting company came in higher than expected. DraftKings also raising guidance for the full fiscal year. Maybe not a surprise, Ron, when you consider we're just a month away from the start of the NFL season.

Everyone excited for football season? Go Bucs. This is going to be a great season for sure. Strong quarter, beat expectations, still not profitable. They're building something here. As you said, they did raise revenue guidance. Some volatility in the stock, investors may be wondering why. On Friday, they disclosed an investigation by the SEC concerning allegations over, quote, black market gaming and money laundering made by short seller Hindenburg research. Again, short sellers, so take that with a grain of salt. We need to learn a little bit more as the SEC investigates. But the court are very strong, revenue up almost 300%, positively impacted by the return to a more normal sports schedule. They're migrating to

their proprietary in-house online sports betting technology. They expanded ties with Major League Baseball, with the NFL. They joined rival FanDuel and Caesars recently to become an official sports betting partner of the NFL. They are live in 12 states that collectively represents about 25% of the U.S. population. I expect that will increase over time, as will this business and the results they put forth. Feeling good about the bucks repeating? They're top two. All right. Jason Moser, Ron Gross, guys, we'll see you later in the show. On Thursday, shares of Fiverr fell 24%. The freelance Services Marketplace posted nice growth in the second quarter, but guidance was not what Wall

Street was hoping for. Last month, our colleague Andy Cross talked with Fiverr CEO Mika Kaufman. That conversation is next. Stay right here. You're listening to Motley Fool Money. Chris Hill. Welcome back to Motley Fool Money. I'm Chris Hill. For people starting a small business, finding reliable freelance help has been a long-time challenge, one that Mika Kaufman wanted to solve when he helped start Fiverr, an online marketplace for freelance services. Founded in Israel in 2010, Fiverr now operates in over 160 countries around the world. In addition to co-founder, Kauffman is also the CEO and chairman of the board. Motley Fool Chief Investment Officer Andy Cross talked with Kauffman recently

about Fiverr's platform, the company's culture, and the aim of starting the business in the first place. Andy Cross The idea behind the company was really to make the experience of buying a digital service as easy as buying on Amazon. So we really wanted to create an e-commerce experience. Now it's easier said than done because when you think about services, digital services, they're very nuanced. There is no SKU system for digital services, right? So we had to create that system. We needed to create a technology that allows freelancers and agencies to productize their services so that they can be offered in a simple manner. And the experience would be

going to a catalog. You either browse by categories or you do a search. You see everything. You see who's offering the service and what's the rating and their customer reviews. You see exactly what they're offering. You know exactly when it's going to be delivered. And you know the exact price. We don't do hourly rates. It's the exact price. So whatever prices you see on Fiverr are the prices you should expect to get the service for. And all you have to do is just click order and you're done. And this is a huge revolution for both sides of the transaction because before Fiverr, the average time that it took for anyone to find and engage with freelancers is about 30 days. It takes a lot of time. It's really very similar to dating. And it's very hard

to do this matching. The average time that it takes a visitor that lands on Fiverr.com to take their credit card and place an order is 15 minutes. And it's going down. So once you replace 30 days by 15 minutes, you're not going back. That's the beauty. That's the magic that comes with it, it really removed the majority of the friction and the inefficiency that existed in the freelancing space. And Mika, so there's lots of different freelancing around the world. It's a massive just market, right? So there's just lots and lots of different kinds of freelance projects. So describe a little bit about who are the buyers, who are the sellers on Fiverr in general and what types of projects, uh, or are, are posted or required or asked for on the Fiverr

platform? Sure. So, so many, many years ago, when we started the company, we decided that the go-to market strategy for us is going to be to start at the very bottom of the market and allow freelancers to offer micro services and focus on micro businesses, the solopreneurs, the, the, the, the startups that are just starting. And over the years we have gone upmarket. So as a horizontal market, it started with about six categories, which are now well over 500 categories in nine large verticals. So you can basically find any digital service you can imagine and a few you can't imagine, right? So, and over the years, you know, we've added, if you look, you know, we took the company public slightly more than two years ago. Ever since then, every quarter,

we report the addition of about 30 new categories every quarter. So it's a fast-growing catalog and the number of SKUs are just infinite, right? Give us some examples, Mika. Give us some examples of some of the digital. I know there's so many in so many different categories, but maybe just some examples for some... It could be from the basic services of someone helping you find a name for your business, and then maybe helping you design a logo for your business, and then maybe creating a website for you, and maybe writing the content for that website, and maybe developing an app for your service. Or maybe that could be a spokesman service to present your product, Or that could be video editing, or that could be search engine optimization, or that could

be someone providing a voiceover for something you produce. So from very basic services to very advanced services, and actually some of the services are being offered, as I've said, not just by individual freelancers, but by agencies and studios that can actually tackle much more complex types of product. But keep the simplicity for the customer. So if you need an app and that app requires scripting and content and design and the actual development, and then to promote that app, you can find all of that as one service in the convenience of our marketplace.

So from the customer side, it really provides tremendous amount of access for small businesses, but also for multinational companies that require more advanced services. And this is why we've created Fiverr Business, to allow teams and groups within companies to interact on the marketplace together and define projects, define budgets, and have convenient management for all of that. So it really started, if I'm hearing you right, started serving lots of small and medium-sized businesses. And still, that's still a big part of your story.

I mean, SMBs are 99.9% of businesses in the U.S. It's a huge market. Yeah, and U.S. is your largest market that you serve, although you're a global company. You serve lots of different providers over the world. So, yes, so SMBs are such a key component, but you're also moving upscale a little bit. You mentioned Fiverr Business. We can get in a little bit to that. You talk about solutions and milestones.

Some other new, as you continue to offer and enhance your subscription. can you just kind of your offering, sorry. And, and, and also building a subscription business, which I want to talk more about, but talk a little bit about how, how the platform works. So let's say I am, I'm a, I'm, I'm looking for a service and, and make a Kaufman's out there and has a great service. And he and I connect through the Fiverr platform. Um, and let's just say the, the, the fee is a hundred dollars. For example, I know you've talked about this in some of your presentations. Can you just walk through how it might, how the process works for you to actually get paid by me. Absolutely. So, so, so the magic here for freelancers is the fact that Fiverr is

probably the first platform since the beginning of freelancing, whenever that was, that doesn't require freelancers to do anything to win a project. And this is, this is huge for them. Remember before Fiverr freelancers, if you're just starting as a freelancer, you spend exactly 100% of your time chasing customers because you have none, right? This is your business, your business is to be your own marketeer, right? And over time that decreases, but we found by, by speaking freelancers that it doesn't matter how successful they are. They continue investing about 30 to 40% of their time trying to find the next customer for the next week or month or a quarter. And on Fiverr, they don't need to do any of that. They just show

up. They create a profile. They use our technology to productize their offerings. And then they sit back and relax. Next time they're going to hear from us is handy. You have a new customer. They already paid, right? Get to it. Just do the things that you love doing, which is not being a marketeer, right? Maybe you're a graphic designer, maybe you're a content writer. And so the way the fee is structured is very simple the transactional portion of our business is 25 and a half percent 20 percent comes out of the seller but they know that so they can price their prices whatever they want to get on a net basis right so 20 and then there's a transactional fee of five and a half percent that comes from the buyer that's it it's as simple as that but the convenience up again

since they don't need to spend so much time marketing themselves, 20% is actually not very high. This is what we're not getting pushback from our community. Fiverr doesn't just connect people. It is a platform on top of which the transactions are being conducted. And so we don't just solve access to talent. We solve all the secondary issues like contracting, invoicing, NDAs, secure communication, secure exchange of files and storage of files, and obviously all of our rating system and so forth. By having that, by tracking, by having the transaction happen on our platform, that provides us tremendous amount of data points that allow us to improve the service.

We're always a partner to every transaction. If the system thinks that a freelancer might be late to deliver an order, the system automatically would ping that seller and remind them that they have their delivery date due. If, and these are very rare cases, they don't meet that, the system could replace that freelancer with the consent of the customer while keeping everything streamlined. So it makes everything simple. Beyond that, it provides us with those data points that allow us to understand how to do liquidity management in a smart way.

And we have our own rating and reputation system that allows us to track all of these, I mean, hundreds of different data points. And every transaction is being used, that data is being fed to machine learning and AI to make sure that the next match is even better. And since we have, you know, tens of millions of transactions on our history, you know, the system keeps improving itself. Let's talk about the Fiverr culture. I know it's something you all spend a lot of time on thinking through different factors that go in a culture. What makes the Fiverr culture unique?

You know, the first thing maybe is the diversity of our team, our thinking. You know, it's, it's, um, you know, Fiverr as a company is called Fiverr international. And the reason is that we didn't want to make this a, um, a specific country, uh, company. We really want to enjoy the fact that talent is global and, and so should our team be. And we think that that diversity that comes from different, you know, background and ethnicity and, and, and, and, and, and countries and languages add so much color into everything we do. It provides, it creates a lot of innovative ideas, um, in the company. So I think that this is, this is one of the drivers. The second is the fact that people are extremely passionate

about the mission. You know, I've been an entrepreneur for almost 20 years. The likelihood of creating a successful company is some small number after the decimal point, right? But the likelihood of creating a successful company that is actually doing good is, is almost zero, right? It's so, it's so slim. And we've been so fortunate to be in a position where we, we change the lives of millions of people, you know, in a great way. And this is, this is a huge driver. You know, we never forget who we work for. You know, it's, it's, it's in our DNA. It's probably the largest, you know, freelancing community in the world. And this is how we treat it.

So, so that connection, I mean, even, you know, maybe you remember this, but when we took the company public, the people that were up there ringing the bell or our community members, not us. Yeah. So, so this is how we think. And this is, this is how our team thinks. And then there's things that are, you know, within our operating principles. And I've mentioned some, which is, you know, thinking about simplifying everything, how to create simple, beautiful to use products that compress tremendous amount of friction and inefficiency into something that would be super simple to use. And again, it's easier said than

done. It's the toughest thing ever, but you have a team that, that obsesses about that, that it obsesses about the customer experience. So I think that these are just, you know, some of the attributes that, that you have, um, within, within the team, which makes the culture, um, really amazing. And I think you sense this when you, when you, people tell, tell me this, but when they come to one of our offices or they hang up with us on zoom, there's a, there's a sense of something really unique in the air. I love this thing. It's just incredible. Are you looking for stock ideas? Good news. After the break, Ron Gross and Jason Moser return armed with a couple of stocks on their radar. Don't touch that button. You're listening to

to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. Welcome back Motley Fool Money. Chris Hill here once again with Jason Moser and Ron Gross. Guys, we got another hot IPO. Weber Grill went public on Thursday. Yes, technically, the stock was flat on its first trading day, so the IPO itself was not the thing that was hot, but the grills themselves, Ron. We're fans of the Weber Grill products, aren't we? Ron Gross A lifelong customer,

and I will remain one for a very long time. Love my Weber. Although we were talking during the break, Jason, it sounds like it for Ron, it's definitely it for me, more of a fan of the business than the stock, at this point anyway. Yeah, I feel like that's a safe assumption there. Based on the S-1, it does feel like the use of proceeds was really just a bit of a cash out there and an organizational structure that is, it looks like you're three minutes into a Tetris game, Chris, it just doesn't quite make sense. but I guess as time goes on, we'll figure more out about this business, but no question, a very, very high-quality product. Ron, I think that's the problem.

I have a Weber grill, it's 15 years old. If they want repeat customers, they got to start making these things not quite as good. They last for a while. I do replace my grates and my flavorizer bars from time to time. There's a little bit of accessories here to purchase, $9 billion market cap for this company. The IPO itself wasn't in high demand, but they priced it right because of that, and now you have the stock up a bit. So the bankers did well. Pretty sure that's the first time Flavorizer has ever been used on this show, Ron. We talk a lot. I'm not even sure it's the right word. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Jason Moser, you're up first.

What are you looking at this week? Yeah, taking a look at Synaptics, ticker is S-Y-N-A. Synaptics makes its hay selling its technology to large original equipment manufacturers, companies that make mobile products, PCs, other voice and video items. This technology covers a broad spectrum. Chips, firmware, software, artificial intelligence, touch sensing, image, voice. Synaptics has a role in a lot of this stuff. Last year, We've talked about this. It was a business in transition, a company that is really focused now on the opportunity and the Internet of Things. Management made a conscious decision to focus more on getting that profitability back. I'll tell you what, this week, the company announced results

that shows it's working. Revenue grew 18%, earnings were up 75% as they continue to pursue that IoT opportunity, which is now the largest part of the business. Stock had a terrific week. This is one that I've recommended in both services that I run here. Been a tremendous performer so far and looking for that to continue. Dan, question about Synaptics? Absolutely, Chris. Now, Jason, there are a lot of companies in this space. Can you say anything about Synaptics market share? Yeah. Well, I mean, Synaptics market share is one of the leaders in the space. It's got customers like Alphabet, Samsung, Sony, Lenovo, to mention a few. And so, while this is a very crowded space with a lot of options, Synaptics certainly does a good job of

maintaining their share. Because once you get into these devices and establish these long-lasting relationships with these big providers, they tend to want to keep you around. Ron Gross, what are you looking at this week? I'm looking at 10X Genomics, TXG, to see if I should add it to my personal biotech basket. 10X Genomics products allow scientists to look at the expression of genes inside individual cells. And Dan, you will have to take my word for that that is new and exciting. But I do absolutely need to learn more about it. Their flagship franchise called Chromium uses razor and blade model. It provides recurring revenue from consumables used to run experiments. Their Visium platforms allows researchers to look

at expressions throughout a tissue sample. These are important things for genomics. 10X has also moved beyond research into clinical diagnostics with two acquisitions earlier this year. Management is guiding for about $500 million in revenue. They also think this is a $15 billion industry, so it leaves substantial room for them to grow from the $500 million where they are today. 10X Genomics, Dan, got a question? Yeah. Yeah. So, Ron, 10X is in the name. Are we going to see 10X on the stock price too? Well, that remains to be seen. That's a tall order, but this is the space to do it. If you are a biotech company or anywhere in this sector and you hit it, you've got the potential to grow

significantly. We'll have to wait and see. Only time will tell. Would you consider Weber to be a 10X opportunity? I would not. No. Okay. Just wanted to confirm. What do you want to add to your watch list, Dan? As much as I want it to be Weber, I think I'm going to go with Synaptics on this one because Jason convinced me. Well, we love to hear that, Dan. Jason Moser, Ron Gross. Guys, thanks for being here.

Thanks, Chris. Thank you. That's going to do it for this week's show. It's mixed by Dan Boyd, produced by Matt Greer. I'm Chris Hill. We'll see you next week.