Motley Fool Hidden Gems Investing - Inflation and Investing

Episode Date: November 12, 2021

Consumer prices rise by more than 6% in October, the biggest increase in inflation in more than 30 years. Johnson & Johnson announces plans to split into two companies. Rivian Automotive records one of biggest IPOs of all time. And Disney slips on slowing streaming growth. Motley Fool analysts Andy Cross and Jason Moser discuss those stories and weigh in on the latest from Roblox, The Trade Desk, Upstart Holdings, and PayPal. Plus, our analysts debate the merits of Arby’s Vodka and share two stocks on their radar: Sea Limited and Unity. And Motley Fool analyst Maria Gallagher talks with bestselling author Ben Mezrich about his new book, The Antisocial Network: The GameStop Short Squeeze and the Ragtag Group of Amateur Traders That Brought Wall Street to Its Knees. Learn more about your ad choices. Visit megaphone.fm/adchoices

Everybody needs money. That's why they call it money. The best things in life are free. But you can give them to the birds and bees. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Fool Money radio show. I'm Chris Hill. Joining me this week, senior analysts Andy Cross and Jason Moser. Good to see you as always, gentlemen. Hey, Chris. We've got the latest headlines from Wall Street. We've got a conversation with bestselling author Ben Mesrick. And as always, we've got a couple of stocks on our radar. But for the second week

in a row, we begin with the big macro. Consumer prices in the U.S. rose more than 6% in October. This is the biggest surge in inflation in more than 30 years. Andy, inflation obviously affects us as consumers. How should we think about this news as investors? Yeah, Chris, you got to go back to my Ann Arbor days and see inflation numbers like this back in the early 90s. I think this is one reason, again, why we continue to see stocks doing so well over the last few months, not just because of the unlocking from the COVID pandemic, but I think really when investors are looking at places to put money and looking for returns, the fixed income market just continues to look less and less attractive to so many investors who are trying

to save for retirement, build a nest egg. I think that's just driven a lot of capital into the markets. You just think about now, if you're trying to buy a bond, a fixed instrument, even going out years and years, considering where inflation is today, you're just not going to make any money on that. You're not going to make a good return on that instrument. Whether it's five-year or 30 years, long-term, short-term, I think investors are just saying, that's just not the place I want to be. And so, they're piling monies into stocks. We've seen stocks just continue. They're going to pull back a little bit. They pulled back a little bit this week, Chris, but for the past five weeks, they continue to march higher and higher. You still see

the forward earnings, the price-to-earnings ratio on the S&P 500 is still less than 20, right around 20. So, it's not unrealistic, and it's still a place to put your money and to hopefully have a return of maybe mid-to-high single digits over the next few years. Probably not going to see the 12% to 15% per year we've seen over the last few years. But again, thinking about inflation and thinking about ways to be able to protect against that, the risk of inflation, not just this year, but maybe higher than what we've seen over the last 10 years. Companies and stocks continue to be the most attractive opportunity for investors. Stocks and companies have pricing power, Chris, so they can fight off that inflation, but certainly better than

fixed instruments can. Jason, I'm assuming this doesn't change your feeling about stocks in general, but does the inflation news maybe affect how you look at certain industries or certain classes of stocks? Yeah. I think that's a good question. You're right. Generally speaking, it doesn't change the way I view investing, particularly in stocks. I've said before, the correct response to inflation for investors is not to just stop investing. You want to keep investing, but I do think it's worth being a little bit pickier, looking for those markets where you feel like companies are either selling those goods and services that people either need

or really want. Companies with proven track records of pricing power over time, those are the companies where I think investors should probably focus more attention during stretches like this. We'll get into Disney later on in the show here, but I think Disney is a very good example there of a business that's suffering right now in the near-term because of expenses, because of some inflationary pressures, but you could also argue that over time Disney does have some pricing power that they've been able to exercise. You start looking for some of those ideas where the market may be a little bit out of favor in the near-term, but that could represent some long-term opportunity. It's interesting, Chris, you think

about, as Jason mentioned, different parts of the market, and the concern a lot with increasing inflation, which leads to eventually increasing interest rates as the Fed at some point will start to increase interest rates and do their tapering probably quicker than what I think they originally had thought. But that increase in interest rate is bad news for tech and for companies that are unprofitable, because looking out years and years ahead, the interest rates are going to be much higher and that's going to hurt them. Yet, I think those businesses are the ones that truly have much more flexibility because their cost structure is a little bit more variable, and they might be able to show that profit increasing faster

than what the market long-term expects. So, I continue to be excited about some of these innovative tech companies because of not just the markets they're serving, but the flexibility around their business models. From the big macro to the big split, on Friday, Johnson & Johnson announced plans to separate its consumer products business from the medical device and pharmaceutical divisions. This will happen in the next 18 to 24 months, with a number of big decisions still to be made, including who's going to run the consumer products business, what it will be called, and how the transaction will affect current J&J shareholders. But on the surface, Jason, separating the regulated parts of J&J's

business from the over-the-counter products looks like a smart move. Yeah, I tend to agree. I certainly understand why they're doing this. I mean, when you look at the three main drivers of this business in pharmaceuticals, medical devices, and consumer goods, the consumer goods side of the business doesn't seem to be quite as complimentary, kind of seems to be a little bit on its own there. And when you look at the numbers, I mean, the pharmaceutical and medical device companies, parts of the company together, when you put those together, they're close to $20 billion of the company's $23.3 billion in sales they just reported. If you look at it

on an annual basis, we go back to 2019, just because I think 2020 isn't as helpful, consumer goods represented 17% of total revenue for the company, but only 11.3% of operating profit. It's not like it's growing at breakneck speeds either. A lot of questions still to be answered here. You mentioned a few there, what are they going to call these companies or what are they going to call this new company? Who's going to be running the show? It does sound Like, in regard to the transaction, it's going to be done in a tax-efficient way for shareholders. And they were very quick to state that the dividend policy will remain intact as well. I think that when you look at Johnson & Johnson as a whole, I mean, this is a really strong business.

At the end of fiscal 2020, they reported 28 platforms or products with over $1 billion in annual sales. and of those 28, 12 of those were $2 billion-plus. And a lot of that does come from the medical devices and the pharmaceutical side, but there are some really powerful brands in that family, Listerine, Johnson's Baby, Tylenol. I mean, those are some of the really strong brands that I think the business can continue to capitalize on and splitting up might help them allocate resources and dictate strategy a little bit more efficiently. This week, Rivian Automotive went public in the biggest IPO since 2014. The maker of electric vehicles, none of which can be found

on actual roads at the moment, priced its stock at $78, ended the week with the stock closing in on $130 a share with a market cap bigger than every automaker not named Tesla. Andy, I know they have some big investors, including Amazon and Ford Motor, but come on. It was a big number, Chris. They raised $12 billion to $13 billion with about 153 million shares they issued. Certainly, as we've seen with Tesla, you need a lot of capital for this business, so they need the capital. Ford owns about 12% of the business, and I think Amazon owns maybe 18% or 19% of the business as well. Ford, the stock has actually been performing quite well over the last few months. I think it's up like 45% or so, and

I think a lot of that is because of the ownership of Rivian. As you mentioned, it has yet to sell a car, focuses on really the pickup. That's their big push with the R1T all-electric pickup that comes with a 400 miles of range on a single charge. Also, a whole host of other things you can add into it, like tents and flashlights and all kinds of fun things. about $10.5 billion of funding over the last few years from Amazon. Certainly, a lot of excitement that Rivian is really the next Tesla. Like you mentioned, Chris, you can't find cars yet on the road or trucks yet in the road. They also have an SUV out there. They do have a pre-order of about 55,000 of the R1Ss, which is the SUV and the R1T. Certainly,

Amazon has been talking about committing with them and looking to be able to buy 100,000 electric delivery vans from Rivian over the next nine or 10 years. A lot of excitement around this. It certainly puts the spotlight on Rivian to deliver. It's pretty admirable what they're trying to do as they are trying to build these cars in a very eco-friendly way and run this business. But like you say, Chris, at $100 billion market cap without really any revenue yet, there's a lot of expectations baked into the Rivian stock price. Shares of Disney down nearly 10% this week after a third quarter report that was highlighted by slowing growth for Disney Plus subscribers. Jason, to be fair, it wasn't

just streaming video, profits and revenue also came in lower than expected. Well, first and foremost, Chris, it's Friday, it's November 12th, so happy Disney Plus Day, everybody. And to you and all who celebrate. I mean, I think, hey, listen, we've seen how powerful Amazon Prime Day can be. Let's see if Disney can pull the same type of lever with Disney Plus Day. We talk often, I think, about how great this business is. It's wonderful qualities, the assets, the intellectual property, an ongoing presence in so many lives, but it's not bulletproof. I think for Bob Chapek, the honeymoon is over and he's going to really need to start showing his metal here. They're suffering from

a bit of a one-two punch here with signs of the subscription business slowing a little bit, and costs weighing down on the parts and experiences side. I certainly understand the near-term concerns there. Subscribers, those still look good. Disney+, 118 million now. ESPN Plus, it's treading water there. Hulu now 43.8 million subscribers, they have a total of 179 million and they're still on track, they believe, for that 230-260 million Disney Plus subscriber target by the end of 2024 and getting that streaming business to profitability. But when you look at what really makes up this business today, parks and experiences for the most part, you've got the entertainment side as well.

Attendance looks good. Attendance continues to grow. You look at Walt Disney World, quarter four attendance was up double digits versus the quarter ago, so good sequential growth there, and Disneyland continues to come back online as that reopening continues, and per capita spending up almost 30% versus 2019. Not 2020, but 2019. I think that's very encouraging, but there are a lot of questions today regarding the margin pressures. There are inflationary concerns, as well as general investments in the business. We're seeing, of course, supply chain constraints, difficulties there. I mean, the consumer might be a little bit hesitant. These are things that are weighing on the business in the near term, and they need to make sure they

get that traffic going, because that really helps them realize that operating leverage that they're so good with. You've got those fixed costs that it takes to keep those parks operating. the more guests, the better. It's understandable the market's trepidation today, but I wouldn't count Disney out. It was a big week for two stocks in particular. Details right after the break, so don't go anywhere. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Andy Cross. Third quarter revenue doubled for Roblox, daily active users for the online game platform were also up, and shares of Roblox rose more than 30% this week. Andy, you tell me, what stood out to you?

Well, the bookings, Chris, which is like the cash of the transactions across our platform in any given quarter was up 20%, a little ahead of, I think, estimates. There's some nice growth there. Active use, daily active users, as you mentioned, up 31%. So again, I think both those numbers combined showed that Roblox is not just going away as kids start to get outside and do other things. Some nice growth there. Highest in Asia and Pacific with 75% growth on the user side. Asia Pacific now 20% of all their users, which is nice. Hours Engaged was up 28%. Again, right in that high 20s, 30s growth rates, which I think are pretty attractive. 50% of users now, Chris, are over the age of 13, that's up from 45% a year ago. They talk a

lot about this, expanding their opportunities to move just from kids much more into tweens. Their developers and creators earned $130 million during the quarter, that was up 50%, and they really spent a lot of time focused on their developers. Overall, when I look at Roblox, I own stock myself. They continue to make these investments, which hurts the profitability, although there's also nice growth this year on the gross profits. But overall, they continue to make the investments, they're building out the network, expanding their brand opportunities, and I like what they're doing. Dave Bazzucchi, who is a very large shareholder, founder, CEO, I like the direction he's taking the company.

Shares of The Trade Desk up more than 40% this week after third quarter profits revenue came in higher than expected. Jason, the Trade Desk was not exactly a cheap stock before, and now, my goodness. Jason Moser. No, it was a big week, big week for sure, but very understandable given the results. Stellar customer retention, which remained over 95% during the quarter as it has for the previous seven years. Then you look at the connected TV opportunity, particularly as ad-supported video-on-demand continues to take off. I mean, that's just a big market opportunity there. Moffat & Nathanson recently pegged that market, growing from $4.4 billion in 2020 to $18 billion

by 2025. Remember, the Trade Desk provides a demand-side platform that its customers use to purchase advertising space. It really is one of the businesses capitalizing on this opportunity in the biggest way. I think one of the most powerful quotes in the call was when CEO Jeff Green said, as we predicted, the most recent iOS changes have had no material impact on our business and we expect that to remain the case. If you're an advertising supported business and you can say that, that's really, really big because it's clearly been an issue for a lot of other businesses out there. Continue to grow support for that Unified ID 2.0, focused on protecting privacy while using data in the most efficient way possible. All things considered,

Yeah, it's not a cheap-looking stock, but it's a good business that is chasing a massive market opportunity, good leadership. I'm a shareholder myself, I feel very good about it. Not everyone had a great week. Shares of Upstart Holdings fell more than 25%, despite the fact that third quarter revenue for the AI lending platform was higher than analysts were expecting. Andy, Upstart Holdings is a growth company. Isn't this the type of quarter we want to see from a growth company? Well, it is nice, Chris. Their guidance for the fourth quarter at $255 million to $265 million in revenue was ahead of estimates, but it's a growth of 200%. I think they're starting to see a little bit of that taper

down, which I think is natural. I think they're starting to see some of the new clients they're bringing into their platform, and they're bringing a lot of clients onto the platform. There's some expense to that. What they call the contribution profit is a little bit less than it was the previous quarter and also over last year. They continue to make these investments in the business. They continue to sign more and more banking partners on. Banking partners expanded very rapidly this quarter. Overall, they're making the right investments. They're bringing a lot of people onto the platform. There is a cost to that. I think some of the investors were looking at the operating expenses growing 275% year-over-year and saying,

oh, wow, they are making those investments, the profitability may not be there. I still like a lot of what they are doing, what Upstart is building, and the business they're creating long-term, I think it looks still very attractive. PayPal's revenue in the third quarter was lower than expected, and guidance for Q4 was not exactly what Wall Street was hoping for, shares down nearly 10% this week. Jason, 2021 has not been great for PayPal shareholders, Is 2022 going to be better? I think so. Someone asked me about this on Twitter the other day and I said, look, they're going to push $1.25 trillion through their networks this year while finally putting eBay in the rear view mirror. If you can see the forest

for the trees, I think the market is offering you a gift today. The shares now around 45 times full year earnings. You're right, they guided down. That earnings per share number, they guided down slightly, revenue slightly as well. But I think most of that is due to headwinds from weaning themselves off of that eBay relationship there. We've been talking about that for the past year, knew that this was something that was going to be playing out for 2021. But when you look at the numbers themselves, total payment volume up 24%. If you exclude eBay, revenue grew 25%. They added 13.3 million new accounts. They now have 416 million active accounts using their services. Venmo now with more than 80 million customers in a $240 billion run rate in total

payment volume. Oh, and they inked a nice little relationship there with an up-and-comer. Chris, you may have heard of a little company called Amazon. Listen, I understand the market reacts the way it does when you pull back on guidance like that, but this remains a very good business, obviously leading the way in this fast-developing fintech space. To me, this is one you have to own. All right, guys, we'll see you later in the show. Up next, a conversation with bestselling author Ben Mesrick. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. There's no question that one of the biggest investing headlines of 2021 is the story of GameStop and Reddit. It's a tale wonderfully

captured in Ben Mesrick's new book, The Antisocial Network, the GameStop squeeze and the ragtag group of amateur traders that brought Wall Street to its knees. Mesrick has written multiple bestsellers, including The Accidental Billionaires, which was adapted into the Oscar-winning film, The Social Network. Recently, Motley Fool analyst Maria Gallagher talked with Ben Mesrick about the rise of meme stocks, and how he decided to write this book through the lens of multiple investors. For the GameStop story, you know, I know we were all familiar with the main characters, which is Roaring Kitty, which was, you know, the Melvin Capital people. And I wanted to get inside the story from the perspective of people on Reddit who were buying GameStop. So I wanted to

tell it through the eyes of people that we would recognize, but also who did something interesting. There's a college kid who ended up, you know, turning a few thousand dollar investment into a quarter million dollars playing GameStop. And then there's, you know, a single mother of two who's just trying to make enough money to pay for her kid's braces. It was a matter of just trying to find people who we might identify with who got caught up in this craziness. Yeah.

So in that vein, what would you say, you know, kind of the biggest misconception the general public has about GameStop, WallStreetBets, what happened during this time? Sure. i think that people don't recognize how much of a movement it is and it was um the idea was it wasn't just people trying to make a few bucks on a short squeeze it was people who were very angry about wall street and about being treated poorly um going all the way back to 2008 but you know occupy wall street with the the banking crisis of of that time um and so it was really sentiment driven um but i also think another misconception is we have this image in our head of what the

reddit uh buyer looks like you know we're picturing you know a nerdy white guy in a corner of a basement somewhere and the reality is it was a very diverse group of people um on that reddit board it was people from all walks of life um who really got involved in this um so that's why i like to call it a revolution um because i think it was much bigger than just you know a bunch of dudes in their basements trying to make a little bit of money yeah and i think it's really interesting too, you really highlight the sense of community that a lot of people found in this Reddit, in this WallStreetBets crowd, especially at a time during the pandemic when everyone was so physically isolated. Do you think that that played into the factor, that sense of there was no real world that

you could actually physically be in? So people found this kind of heightened sense of community online? Absolutely. I don't think this movement could have gotten to this point without the pandemic. It was really people trapped at home, sitting on their couches. They had a little bit of money because of the stimulus checks. And no one had anything to do. You couldn't go out with friends. You couldn't do anything else. And so as a society, people were turning to things like Reddit, but also the stock market. The stock market was already being gamified and turned into a casino. But suddenly, there were millions and millions of people just kind of trapped and angry, not just at Wall Street, but at their lives. Everybody's lives got screwed up in such

a big way. And this was one way of sort of making noise, of having a voice. So yeah, I absolutely think it was pandemic driven. And with the book, I definitely tried to capture this moment in time. Yeah. And so something else that I thought was really interesting that you highlight too, is that kind of interconnectedness, not only of the people on Wall Street, but within the structure of this, the backend. So you talk about the connections between Citadel, Melvin Capital, Robinhood. So can you explain a little bit for people who maybe aren't familiar about those relationships and how they impact us as retail investors, since we're now all used to no commission trade? So can you explain a little bit about those dynamics? Sure, absolutely. And it

gets very complex, but I'm a layman. And so if I can understand it, I think anybody can understand it. But the reality is these brokers like Robinhood that appear more and more and are getting bigger and bigger and bigger. And really, most retail traders use something like Robinhood. They don't charge you any fees, right? And you don't have any minimum balances, but they don't actually make their money off of you. You're not actually their customer. You're their product. They make their money off of the money, the market makers, people like Citadel, who sit at the center of the U.S. economy. So when you buy a stock through Robinhood, It doesn't happen instantly, although it looks like it happens instantly, like you buy some GameStop and it appears in your account.

What's really happening is a two-day process where you put up a certain amount of money to buy GameStop. Robinhood takes your trades and then essentially sells them to Citadel. Citadel makes the trade happen. This happens over a two-day period, which is called T plus two clearing. and then they get you the best deal possible and then they essentially pay Robinhood for all of these different trades. It's called payment for order flow.

And in the end, everyone's happy when it works well because you get a good deal. You don't actually have to pay any commissions. Robinhood makes money on the trade but doesn't have to charge you anything. And Citadel makes tons of money because they are running all the trades and they can see what's going to happen.

They can make money off of the trades and they make money by placing the trades. they get a little bit in between. So that's essentially how the process works. But it's actually very ugly when you look at it from the perspective of who's making money off of who and who has incentives to do what. And that's where it gets very murky when something like a giant short squeeze happens. And that's where kind of all the drama comes from. But that's the sort of connection. Citadel sits at the center of it. Robinhood is between us and them in a way. And then regular retail traders all use these brokerages to move their trades back and forth.

Yeah, I feel like that internet connection is so fascinating because you feel like you have, well, you have Melvin Capital and you highlighted a lot in the book that people are saying, specifically, we're going to take this hedge fund down, but then you also have in the back end Citadel who's going to come in and help or Citadel is making money from the fact that you're doing all of this. So I think that just that interconnection is something that people don't understand as well because it's so confusing. And when it works, you don't really have to think about it. But then when something like this happens, it really highlights that kind of relationship that happens on the back end. And so I'd be curious to think, where do you think we are in terms of Wall Street's bets versus Wall Street in this story?

Do you think hedge funds are prepared for this? Do you think this is going to really change anything as life turns back to normal? where do you think we are in this story? Yeah, I think this is the beginning of the story. And I really think that that what happened with GameStop is just sort of the forerunner for a massive shift in how Wall Street works. You know, you have hedge funds and they're kind of the enemy to the retail trader in some ways. And then you have the retail trader, which previous to this moment in time was very weak. It was lots of disparate people who are all doing their own sorts of things. The idea that they can move as one is something very new. The idea that

social media allows millions and millions of retail traders to work together as if they're one giant hedge fund, they really can take down Wall Street. The idea is this Melvin Capital, which was this multi-billion dollar fund, got sideswiped, got forced into this horrible squeeze situation and lost half of the value of their firm because a whole bunch of people sitting on their couches were communicating with each other. And what this does is it changes everything. The idea of the mean stock is really here to stay. The idea that a whole big group of people can decide that a stock is going to go up. And once they decide that, it will go up as long as they all hold together, you know, and don't sell it. The fundamentals of a company don't actually matter

if there's a large group of people who decide the stock should go up. It doesn't really matter what GameStop does. What matters is what we feel about GME. And this is similar to what's happening in crypto with Dogecoin, which is a ridiculous thing, right? There's no actual value to Dogecoin. But if we all decide it's worth something, then it's worth something. So I do think we're going to see this again and again and again. And I do think the Wall Street on the whole is still not accepting or understanding the movement that's happening here. They are now employing people who are going to scour the Reddit boards and try and figure out which direction things are going. And they're definitely not going to announce short positions anymore. And they're going to be as quiet as they

can about things like that. But on the whole, that's just sort of a bandaid over what's going on. You're going to see giant swings like this again and again and again. I think it's going to be very hard to be careful in a market that can swing so rapidly. In a day, 9 million people on WallStreetBets can decide to move a stock. And it's going to be very hard to react to that in Yeah. That's really interesting. And so what do you think about that kind of break from fundamentals? We have this kind of prevailing method that the market is mostly rational. There are places where you can get gains because people aren't looking at what you are looking at. But in general, I think most investors would say, for the most part, the market acts rationally.

There are times when you can exploit that irrationality, but for the most part, if you put your money in an index fund, you will do okay. So where do you think that that kind of disconnect between the fundamentals of a business and the fundamental value of the stock market. And then this idea that, well, it doesn't have a, we, we care about GME. And if we're all going to do it, we're all going to raise it up. Do you think that they should maybe focus on companies with better fundamentals? Or do you think the whole point is that they're doing it for companies that are, you know, forgotten like AMC and GameStop? Yeah. I mean, I think that, that the, that the rationality of the market is now in question. I think it's very hard to say

that people are going to act rationally when you're talking about millions and millions of 22-year-olds, each with $1,000 in the bank and each one wanting to make 10 times. Nobody is trying to make 10% on their money. Everyone's trying to get 10x on their money. And when you have a market full of people shooting for the moon, it's not going to be a rational market. And so I totally think that over time, it's going to get worse and worse and worse from one perspective, it's going to be more and more people taking moonshots and trying to work together to make massive fortunes. I mean, you look at what happens, you know, again, I go back to crypto and Bitcoin. And this is something that goes from a few thousand dollars to fifty thousand dollars

in a year. And people are still unhappy. They're saying, when's it going to get to one hundred thousand? And that's not acting rationally. Right. That's, you know, a need to make these giant YOLO trades, which is what we're going to see again and again. So I don't think that Wall Street is going to be safe. It's not going to be a safe place to invest. I think the fundamentals are more and more going to be less and less important. And more and more important is going to be sentiment, nostalgia, you know, the idea that AMC, we love movie theaters. So we're all going to, you know, grab AMC and hold on to it. And the idea that someone would short AMC is almost offensive, even though it might make financial sense to short AMC. People are going to be very

have said at that maneuver. And so I think sentiment is really going to guide markets. Interesting. Yeah. I wonder where that's going to, where there is going to be ever maybe some balance between you have like this small fringe and then, you know, mainstream. And so what it would be your opinion on, you know, the gamification of investing. When we think about Robinhood, we, you highlighted in the book as well, you know, that rush when people got confetti on their first trade and like the rush of dopamine when you make a trade and really having it resemble gambling, right? The slot machines and the fun colors and like kind of that interest. Do you think that that's a good thing because, you know, you're getting people more interested

and more excited about investing? Or do you think it's actually ending up doing more harm because people are not thinking, let me try and get 10% because I can build up a nest egg for the rest of my life. They're looking like, let me get 10X in the next five minutes. Yeah. I mean, I think Robinhood is sort of, you know, it's a wonderful app. I like it. Everyone likes it, but it really is pushing us towards turning it all to a giant casino with sort of a video game kind of console to it. Everyone's becoming a gambler. I mean, college kids that used to gamble on sports are gambling on the stock market now. And average people are now looking at their portfolio as a gambler looks at a portfolio, not as someone who's trying to make a few percentage points.

So I do think the gamification of Wall Street, let's be fair, it was always a game. But now everyone gets to play suddenly it's not just people in suits and ties on wall street playing it's everyone can join in on this game but it is a game um and it is gambling to some extent and i think overall this may be negative um the idea of democratizing finance is very good and you want more and more people to be in the market but people aren't coming with a level of education they're not coming with knowledge of of how the market works they're coming with you know i'm to hit a home run i'm going to buy gamestop it's going to go to 500. um and so that's where it starts to get dangerous i think it's great that more and more people are trading and and i think

what what robin hood represents is something great the ability to be a trader without actually having to spend years learning how to do it um but there's no warnings you know there's not enough warnings and i think that it's it's dangerous without certain level of education um and understanding. I've always sort of been intrigued by the idea of risk and what people's personal risk is. And the reality is someone with very little money and no real nest egg or anything like that is risking a whole lot more than some Wall Street trader. A Wall Street trader loses on a trade and they get up the next morning and they start again. But if you lose your rent money, you don't get up and start again the next day. So I think there's not an equitable amount of risk.

So when you democratize finance to everyone, there's a lot of people who are taking enormous risks with their lives and not really realizing it. The book is The Antisocial Network, the GameStop squeeze and the ragtag group of amateur traders that brought Wall Street to its knees. You can find it wherever you find books. But up next, Jason Moser and Andy Cross are coming back with a couple of stocks on their radar. Stay right here. You're listening 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

to Motley Fool Money. Chris Hill here once again with Andy Cross and Jason Moser. Before we get to radar stocks, guys, Arby's may have the meats, but now they also have the vodka. Starting next week for a limited time, Arby's vodka will be available for $60 a bottle. It will come in two flavors, curly fry and crinkle fry. Jason Moser, if you want a little spice in your vodka, good news. Well, I don't really drink a whole lot of vodka and I don't know that this makes me want to really start. But I understand we are in a day and age where brands, particularly these quick service brands, need to branch out and capitalize on their brand to whatever extent that they can. I love that Mac has

a great phrase for this, the brand permission. Mac, I agree with you, I just don't think that Arby's has the brand permission here to pull this off, but I guess we'll see. I do like myself a little Bloody Mary, Chris. Maybe a little spice in a Bloody Mary with some vodka, that might do it. I feel like it's better with the Jamocha Shake. To me, that's what Arby's does so well. The fries are good, don't get me wrong, but it feels like the Jamocha Shake vodka combo makes more sense than the fries. But the fries thing is definitely an attention-getter. Let's get to the stocks on our radar. Our man behind the glass, Rick Engdahl, is going to hit you with a question. Andy, you're

up first. What are you looking at this week? Rick, Chris, I'm looking at Sea Limited symbol SE, $184 billion e-commerce gaming entertainment company that focuses mostly on emerging markets, including Asia and Latin America. Its gaming business is really the driver of a lot of the growth. It's one of the largest gaming developers and publishers across 130 countries. Free Fire is the biggest game. It's a mobile battle royale game that was the most downloaded game of the last year. Half its revenues come from gaming, but it's also really growing out its e-commerce business called Shopee, and also its payments business, which is really exciting as they merge those two together. When you look at the e-commerce

market overall, Rick, and I look at the growth picture, growing north of 100%, continuing to grow very, very attractive in those markets, it's going to do about 9 billion in sales, about a 15 times multiple. I don't think that's too expensive. Still not making money, but a lot of growth baked into the price, and I think it could be worth it. Rick, question about Sea Limited? Yeah, I've heard Sea Limited referred to as the Amazon of Asia, and I'm just wondering the obvious question. Do they have a space program? Are they sending celebrities to space? I don't think so, Rick. It is like that Amazon, MercadoLibre, Activision, Blizzard all kind of merge together. I don't yet see the space picture yet.

Jason Moser, what are you looking at? Yeah, taking a look at Unity Software, ticker is U. Unity reported earnings earlier this week. It was interesting to see how the stock was selling off after hours, only to finish up strongly the next day. It's actually had a great week with shares up better than 20%, but I understand why. They grew revenue by 43%, beat their internal guidance handily. Now with 973 customers each generating more than $100,000 in revenue over the last year versus 739 a year ago. And I think the big news, they are acquiring visual effects company Weta Digital, best known, I think, for a lot of the stuff that you've seen in movies in

the Lord of the Rings franchise. But that's going to bring a lot of talent, tools, and assets under their umbrella that will enable creators around the world to continue building using Unity well beyond just games. I think they're doing a very good job of continuing to build out to other verticals, which is really the encouraging part of the story. Rick, question about Unity Software? Sure. Jason, you're a parent, I'm a parent. Is there a way to get our kids off of playing games and into creating games with this? Is there a masterclass for Unity or something? I like that mindset there. Thankfully, we're not a big gaming household, and so consequently, my girls aren't big gamers,

but you're thinking of it the right way. Maybe it's just a matter of getting them invested earlier and teaching them about how these businesses work. It's like give a man a fish versus teaching him how to fish, right? Let's teach him how to fish. What do you want to add, Rick? Well, full disclosure, I actually own a little bit of both of these, but I have to say Unity is more fun right now.

Data. We're out of time. We'll see everybody next week.