Motley Fool Hidden Gems Investing - Rising Unemployment, Rising Investor Optimism

Episode Date: April 17, 2020

More than 5 million more Americans file for unemployment as the monthly total surpasses 22 million. Abbott Labs gets a boost on optimism over its coronavirus testing. Gilead Sciences gets a boost on optimism over its coronavirus treatment. Procter & Gamble reports its biggest U.S. sales gain in decades. Amazon hits an all-time high. Comcast launches a preview of its Peacock streaming service. And Verizon buys BlueJeans Network, a videoconferencing company. Motley Fool analysts Jason Moser and Ron Gross discuss those stories, take stock in the banking and airline industries, and weigh in on some dividend hikes. Plus, the guys share a few stocks on their radar: Spotify and CRISPR Therapeutics. And Okta co-founder and COO Frederic Kerrest talks cloud-based security software, password protection, and misconceptions about entrepreneurs. Learn more about your ad choices. Visit megaphone.fm/adchoices

Don't you wish you could just hit skip on the worst parts of your life? You know, the same way you can skip an ad? I get it. I'm Siaya and I live in Ice Cove. I've made some questionable decisions that didn't end up the way I planned. And today I'm still figuring it out. Somehow things usually get worse before they get better. Apparently, that's how I roll.

So bundle up and come along for the bumpy ride. Stream a new episode of North of North Tuesdays on CBC Gem. 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 chris hill joining me this week jason moser and ron gross good to see you on my screen gentlemen Jason Moser. You as well. How are you doing? Jason Moser. We've got the latest headlines from Wall Street. Okta co-founder, Frederick Karest is our guest. As always, we've got some stocks on our radar, but we begin

with the big macro. An additional 5.2 million Americans filed for unemployment this week. That brings the total over the last four weeks to 22 million Americans unemployed. Yet, gentlemen, the Dow, S&P 500, and Nasdaq all up this week. And Jason, I know there are some bright spots out there and we're going to get to them, but just the unemployment number and a rising stock market really seems like a disconnect. Jason Moser. I mean, it definitely does. And I think this portends what is going to be really a tale of two recoveries, right? I mean, we're going to see the recovery for Wall Street and we're going to see the recovery for Main Street. And I think it's fair to assume we always talk about the market being forward-looking. I

I mean, the market is going to get ahead of the actual recovery, right? And so, I mean, at least we're seeing, we came out of a really bad stretch in March where it seemed like every day there was nothing but bad news. And now here in April, we're starting to see some glimmers of better news. And it does seem like the curve is flattening, maybe there's a finish line here. And I think that's ultimately what the market is taking into consideration, at least partly, is that there is a finish line here. At some point, we're talking about opening the country back up here, step-by-step, little-by-little. And that's encouraging, but it is going to be,

I think, the tale of two recoveries. And Jamie Dimon, CEO of JPMorgan, noted in his most recent JPMorgan shareholder letter, around 100 million Americans own stock. And that's an impressive number from one perspective, but from the other perspective, it also shows that most Americans don't actually own stock. I think that's where that other side of the recovery is going to be a bit of a bigger question mark. We sit here, we talk about these market conditions and enjoy the fact that the market's maybe recovering a little bit, but we can't ignore the fact that most people out there aren't participating in this, and there are some real ramifications of this shutdown that are going to play out for a while to come. But there is a finish line. This isn't something

that's going to last forever. It's not going to be a lost decade, and perhaps that's something that's playing into these numbers today yeah i agree and i agree it's all about the market being forward-looking i think what the market is telling us is that they see the stimulus package packages as a bridge to what will one day be a new normal um and the new normal will include antivirals and vaccines which were also at the same time we're getting good news about these coming out so a flattening curve a stimulus program as a bridge antivirals and vaccines kind of gets you back to we're at least somewhere closer to where you want to be and the market is showing us that right now. Yeah, I mean, we definitely saw some encouraging news, let's call it. You look at Abbott Labs

and the COVID-19 tests that they're working on. Gilead Sciences, that stock was up about 10% this week on reports of a clinical trial of Gilead's antiviral drug that could be promising in terms of treating COVID-19. So, yeah, I think that there are definitely some bright spots that investors are excited about. I think it's fair also to look a little bit more forward. I mean, we're getting into this earnings season now, which I think is going to be pretty interesting. And all we know going into this earnings season, it's going to be bad, right? But it's going to be really bad. And that's all we can really say, right? It's very difficult to quantify this, because we haven't been through something of this nature before. I mean, those unemployment

claims are phenomenally large. And I think you have to go all the way back to 1982, I believe, to see the last stretch of time where it was something of this magnitude. But for me, I mean, I am actually looking to next earnings season, because I think that's actually going to be a bit more telling. It's going to help put this earnings season more into context. So while the market is reacting pretty positively today, I certainly wouldn't read into that and think, oh, we're out of the woods now, because it's very, very possible that in the next three months as the next earning season starts to hit. We're going to get a little bit more context as to how bad things either are or were. And we, I think, will know a whole heck of a lot more three months from

now. And unfortunately, I don't think we're going to flip a switch and get back to somewhere close to normal. There's too many people unemployed and there are too many small businesses that unfortunately, I think, are going to go out, even though there's a paycheck protection program and other stimulus programs for small businesses out there. So not everyone is going to go back to work quickly. Some folks are going to have to switch careers, I think. They're going to have to find other places to work. This is going to take a while. So while the economy will look better, probably six to 12 months from now than it does today, it's not going to go back to where we were six months ago. Not anytime soon, I don't think. Well, let's move on to retail because we got the

monthly report for March and sales fell nearly 9%. That was the worst drop in history. although groceries were a bright spot, consumer goods as well. And Ron, we saw that on Friday with Procter & Gamble's third quarter sales up 10% because among the brands in the Procter & Gamble empire, you've got Charmin toilet paper and Bounty paper towels. Yeah. So two things. Don't extrapolate that March retail sales as something that looks not that bad at eight or nine percent down because it's a short period of time and things are actually much worse than that, I think, if you broaden out the lens. And I think we'll see actually numbers come in that except for grocery and beverages will just continue to be really,

really weak. On the other side, I wouldn't extrapolate too much out of Procter & Gamble because that strength is more of a one-time, perhaps a two-time hit because people were stocking up on consumer staples. Theoretically, that's not going to continue into the future, at least not at this pace. So while P&G had a real strong report, raised their dividends and kudos to them and what they're doing, I would be careful not to extrapolate those results into the future. And Jason, Amazon shares hitting another all-time high this week. Well, I mean, that does make a lot of sense, right? We're seeing, I mean, clearly a lot of businesses struggle in this in this market. But as we note, in times of trouble, this is when the leaders typically

gain more share and come out on the other side of the recovery even stronger. So, whether it's an established business like Amazon, and that makes a lot of sense there, look at some of these other businesses that are participating in the digital economy and it's understandable why they're performing well. DocuSign hitting 52-week highs here. Well, makes a lot of sense. We don't have to sign papers in person anymore, we can do it digitally. Teladoc Health, obviously, telemedicine gaining traction. Look at Shopify. I saw a data point here now where Shopify's network is essentially handling Black Friday-level sales or Black Friday-level traffic every day, which is just amazing to think about. But the fact of the

matter is that Shopify is a business that helps people set up their e-commerce presence. That makes a lot of sense there. Then you couple that with what we saw at news this week where Stripe, the payments company, just raised some more money at about a $36 billion valuation. Now, understanding that private valuations are a bit more nebulous than the public valuations, but that puts Stripe at a 44% premium to Square, and Square has done an awful good job as well. Now, the reason why Stripe matters is because Stripe is the payments provider for Shopify. Shopify's success, to a degree, begets some of Stripe's success. we do see a point in time where Stripe does go public, there's going to be a lot of interested

parties there as well. So, there is an opportunity here for a lot of companies, and we're seeing some really capitalize. Yeah, I think the crisis exacerbates the opportunities for the market leaders, right? Amazon's, the Costco's of the world, they're going to be the winners here. There will be a retail shakeout, there will be a restaurant shakeout. We're not going to be left with the same amount of retail and restaurants out there after this is over. We saw earlier in the week JCPenney finally perhaps talking about some kind of bankruptcy, although I think it should be a liquidation, not a reorganization. How long can we drag this one out? But that's just one example. Yes, companies are furloughing

workers and yes, they will bring them back online at some point, but they're not all going to come back online and not all these businesses will survive. Let me tie two things together that we've been talking about here. One is market leaders, and the other is the earnings season that we are entering into right now. Because Facebook and Alphabet make a ton of money off of advertising. And we're starting to see more and more data come out about advertising spends being slashed. Barry Diller, the chairman of Expedia, came out this week and said, Expedia normally spends around $5 billion in advertising. This year, they're not even going to spend $1 billion. Now, I get that they're in the business of travel,

not every business out there is necessarily going to slash their ad budget by 85%. But that's going to be interesting to see what color we get from Facebook and Alphabet. Yeah, I think that's exactly right. I think when you look at these platforms, whether it's Facebook or Google, I'll throw Twitter in there as well, these are platforms that are all seeing tremendous boosts in engagement. The dilemma is that that engagement really is more about what's going on with the coronavirus and COVID-19. I mean, that is really what is covering these networks wall to wall. And advertising partners don't really want to be advertising in the midst of that news cycle, right? I mean, you don't want

to be throwing your advertising dollars towards a platform that's really focused on probably the worst news we've been dealing with, you know, maybe in our lifetimes. But I mean, it is something that will pass. Another interesting point, Pinterest recently updated their numbers, I think withdrew guidance, but they noted even despite the weakness across the entire advertising market, their exposure to some of the more affected segments like travel and automotive and restaurants, that their exposure is a little bit lower in those segments. And those segments have been hit a little bit harder as well. So, it is interesting to see how some networks like Pinterest, which cater to a little bit more of a specific audience, are a little bit more

protected in a time like this. But you're looking at Google and Facebook, they're going to come out of this just fine. Yeah, but I will add, you would expect to see companies pull back on marketing and advertising, because those are variable expenses versus fixed expenses. And that's a lever they can pull to rein in expenses and costs as they need to wait this out. So that is one place, the revenue's not gonna be there anyway. So to pull back on marketing and advertising

is almost a no-brainer. Bring those costs down, buy yourself some time. Before we go to the break, Jason, the big banks kicked off earnings season this week. As an industry, the big banks typically go first. Goldman Sachs, Bank of America, JPMorgan Chase, Morgan Stanley. What stood out to you when you look at them as a group this week?

Yeah, I mean, to me, the headline really, the headline can be summed up in two words, and that's lost reserves. And, you know, I've been thinking about this. I think one of the byproducts of the Great Recession, it could be argued, is that it did put our major financial institutions on firmer footing from a capital perspective. It certainly gave them the mindset to come into something like this a little bit more prepared. But they're doing the things that they need to do. They're going to continue to pay dividends until that becomes something that is more concerning. Buybacks are suspended. But back to the reserves. I mean, we look through these calls here. JPMorgan built their reserves up by $6.8 billion this quarter.

Bank of America built theirs up by $3.6 billion. And since year-end, their reserves are now built up by $6.9 billion. Wells Fargo built theirs up by $3.1 billion. And Chris, you know, I love to go through these earnings calls and just sort of search for some language there. We talk about that word reserve. This quarter, JP Morgan mentioned the word reserve in their call 31 times. That was six times a year ago. Bank of America used that word 46 times this quarter versus 10 times a year ago. So there's a clear trend there. And these banks are very focused on making sure that they are in good capital positions. And that's what we want to see. Agreed. Now, that's interesting research. Counting the number of times. I love that.

Hey, data's king, Ron. You've got to go where the data tells you. The other trend I saw pretty much across the board, the only bright spots for all of these companies were their trading divisions, whether it's Bank of America up 33 percent, J.P. Morgan up 32 percent, Goldman Sachs up 28 percent. We're relatively large numbers, only bright spot pretty much across the division. Citibank, more focused on consumer, not getting it done pretty much anywhere yet at this point. But trading strong, everything else weak. Coming up, if you're a fan of the Fast and Furious movies, we've got some good news. 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. The airline industry getting a little bit of good news this week. Delta, American, JetBlue, and Southwest all coming out saying they've reached agreements with the Treasury Department on that $25 billion plan for payroll grants. So, Ron, we were talking earlier in the show about companies getting a bridge. This is certainly a bridge for the airline industry. A badly needed bridge. And it's interesting, from a stock perspective, it looks like analysts were hoping for more. I'm not sure what more they were looking for, because the stocks didn't react as one perhaps would have expected. But this is very important.

$25 billion, as you said, in payroll grants, no furloughing until September 30th, limits on dividends, share repurchase, executive comp. One of the interesting parts of this is it gives the government warrants to acquire stocks. So it's likely that when this all shakes out, we're going to end up with some government ownership of the majors here. And, you know, folks like American Delta, United JetBlue Southeast participating in this program. So that will be interesting to see. I don't know if this is going to be enough, quite frankly. I think the airline industry is going to get back to some kind of new normal very slowly. $25 billion, and there's another $25 billion on the other side and stimulus as well. We may have to go back to the well here, depending on how long

this takes. Yeah. And the more you hear from the CEOs in the airline industry, the more you get a clear picture of just how they are cutting capacity to the bone. Yeah. United came out and said demand won't come back quickly. Expect demand to remain repressed for the remainder of 2020 and into 2021. one, that's sobering, but it's realistic. Even when we do get back to travel, planes will be nowhere near capacity. Maybe they'll be at half capacity if we social distance. International travel will certainly take a while to come back. So, you know, this will take a while. Prices obviously are very, very low, as they should be. And if we can get back, let's call it a year or two from now or even three, gains from a stock perspective could be strong enough to make up

for the time it will take to get us back on our feet here. This week, Comcast started a soft launch of its new Peacock video streaming service. Comcast is the parent company of NBC and Universal. So, Jason, there's obviously a lot of content there with The Office and Parks and Rec and the Fast and the Furious movies and the Despicable Me movies. Interesting though that they're doing this soft launch. This is not what Disney did with Disney+, where they delayed the launch and did everything at once. This is starting now just for sort of the high-end subscribers of the Xfinity services, and then into 2021, it's going to get the full push. Yeah. I mean, I guess I'm on the fence about this service. I mean, I understand

what they're doing. I wonder what their end goal is here with this. I mean, is it to have a presence in the streaming space? Is it to build a streaming empire, so to speak? This is one of the first bricks that they lay in the foundation. I think it really does boil down to, are they going to have that arsenal of content that ultimately will attract viewers, that keeps them around, and then maybe affords Comcast the ability to raise prices on that service as time goes on? It really does boil down to having content that people want to watch. One of the comparables there. I see what Disney has done with FX on Hulu, for example. And as a Hulu live subscriber, you know, that's essentially kind of your skinny bundle, right? It's cable, but it's

not cable. But they've rolled FX into that Hulu family, and it gives them the opportunity to continue monetizing on the advertising front while also monetizing on the subscriber front in the context of a bigger offering. And so, it feels to me like consumers are starting to become a little bit exhausted with all of the streaming services that are out there. Peacock is definitely late to the game. I just don't know how many eyeballs it's ultimately going to attract. The goal is obviously 24-7 law and order. So what else is there? No, but they're all reasonably priced in a vacuum. With ads, $5. No ads, $10. That's great. But how many of these are going to show up on my credit card statement every month? I've already got four, five, six. There's too

many. We have to, we're going to go back at some point to some kind of bundling, some kind of partnerships, or there's going to be just big winners and lots of losers. And that'll be interesting to watch. All right, guys, we'll see you later in the show. Up next, a conversation with Okta co-founder, Frederick Karest. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. It was three years ago this month that Okta went public. Okta is a software business that helps companies manage identity and access. The stock's risen more than 500% since the IPO. Earlier this week, Motley Fool CEO Tom Gardner and senior analyst Bill Mann talked with Frederick Karest, Okta's chief operating officer and one of

the company's co-founders. They discussed cybersecurity and tips for setting up a good password. Frederick Karest kicked things off by sharing Okta's origin story. So we started the company just over 11 years ago. It was me and another guy, Todd McKinnon. We still work together after 11 plus years. I've spent more time with him than I have with my wife. So I know all of his little pet peeves. Today, the company's got about 2,400 employees, about 8,000 enterprise customers. We've been public for three years on NASDAQ. So that's 12 quarters, not that I'm counting, but if I were, it would be 12 quarters. And I think it's about a $600 million revenue run rate business grown in the high 40 percentage. So look, if you

give me all those stats, when we started the company 10, 11 years ago, I would have taken in the heartbeat based on where I am sitting today and what I think is ahead, obviously, the COVID crisis notwithstanding. I think the opportunity is great in the next three, five, 10 years, and I'm excited to talk with you guys about it today. So, Frederick, I'm pretty good at math, and so if I go backwards 11 years, yeah, you are founding your company. You're at Salesforce in 2008 and 2009 when you were talking about this, which was really the last real financial crisis, obviously very different from today. It was a real leap of faith, I think, for you all to go out during that time.

Are there some things that you feel like you got right from the outset by virtue of being forged in steel, so to speak? Yeah, well, certainly, I think that, so a couple things The first one is, if you look back historically over the last 20, 30 years, large technology companies have successfully been founded, oftentimes in these moments of crises. So whether it's Google that happened on the previous one, you look at our whole generation of cloud technology infrastructure companies that were built in 2009, 2010. Why is that? Well, first of all, when you're building a company like ours, it's infrastructure, it's identity, it's security. it takes a couple of years just to get the core of the platform up and running. So there's nothing going on in those first couple of years, other than building the software,

trying to put the first team together, spending a lot of time with potential customers or not even customers, you don't have any customers, but just talking to people about what kinds of problems you would help them solve. And so by the time you've actually built up that first base of product and feel like you're good enough to get out there and get going, people are actually starting to buy again. So I wouldn't be surprised if we see that happen again this time around. I think entrepreneurs are a very resilient bunch. Certainly, I think there's a lot more focus put by venture capitalists on the types of businesses that they're going to fund without a doubt in the coming times here. But I think for those who really find the right product

market fit or opportunities, you're going to see a whole new host of companies that are built that way. Now, for us, we also kind of lucked on the timing, right? Because if you just look at the data on what's happened in enterprise IT spend over the last 10 years, yeah, you would say, well, you guys are geniuses. It's not like I could have foretold that in my crystal ball when we were building the company in 2009, right? Software as a service, cloud security was a very small business. We kind of took this leap of faith that it was going to go to where it was going to go. You know, I could have never, never hoped for these kinds of results. So we've been, we've been very fortunate that way. So can you just describe, define for somebody who's now

encountering Okta for the first time. What is the Okta Identity Cloud? What does that mean? Yeah, absolutely. So what we do today very practically is we help with two main things. We help in what we call workforce identity management, which is for employees, contractors, consultants. If you're a new employee, you come to the company, a very easy way for you to access all of your applications, whether they're cloud, whether they're on-premise, it's a very simple dashboard. It's a very easy way to go. Could be two-factor authentication, which is a one-time SMS on your smartphone so that you get that quick code to put in. So the idea is to improve the end user experience while also enhancing security, something that's never been done in the past.

It was always like you jacked one up, the other one went down or you flipped them around, but you can never get them both right. So we like to think because of course we're perfect that we got them both right and that you can do both things. What does that mean for IT? It means there's one central place they can manage all these things. So if I work for you, you let me go. There's one place you can take away access to all these publicly available internet services. So I can't go home and log into Salesforce and take the forecast across the street to the other guy. Okay. So that's the first business workforce identity management. It's at scale. It's in large deployments, you know, large insurance companies, large parts of the government,

fortune 500 companies are deploying it to their employees and their contractors and their partners. It's on any device since it's basically, since it's on the web, it's on any device. Of course, the second part of the business is customer identity management so if you fly on jet blue you have a true blue number or if you go to uh mlb.com you're one of 60 million consumers every year who logs in to watch their baseball games or you have one of the 27 different properties at albertson's the retail chain that you go and shop at we run the identity infrastructure for all of those so that when you go to albertson's if you have three different uh parts of the Albertsons business that you actually buy from, you actually have one username, one password,

one number, make it very easy for you. And on the back end, Albertsons can actually track Tom and say, oh, Tom shops at these three places. Let's make it really easy for him to shop at this fourth one. Let's give him a bunch of coupons and things like that. So those are the parts of the business. Some of them, in a lot of cases, very transparent. People don't even know that they're using the service. Millions, tens of millions of users authenticating every day on the service now. so it's really starting to become a big part of the of the uh of the economy as we're out there and we're fortunate things have gone well and when you think about the single point of failure for any security situation it is always the individual so having leaving the individual off the table for

you in some ways creates different vulnerabilities for whatever systems you all are working with yeah that's totally right i mean if you look at these you know it's not like when people you know when you get one of these unfortunate articles that are on the top of the wall street journal you open it it's above the fold so and so just got breached it's not like hackers cracked aes 256 bit encryption what happened is one of the system administrators was using a weak password on some basic travel website got compromised they reused the password and got into a bunch of administrative credentials and then bingo they were in now that's not what happens all the time but that's actually what happens a majority of the time. So you're totally right. And that's why

just like basic password hygiene is just something that I cannot emphasize enough to all of your listeners. Just do the basic things. Don't reuse passwords. Use complex ones. Use passphrases, just all those little tips and tricks. And then multi-factor authentication. I mean, multi-factor authentication should be everywhere. It should be seamless. It's a very, very easy thing for people to do. And it really gets rid of all of these types of problems. For somebody who has no idea what multi-factor authentication means so uh so multi obviously more than one uh factors for authentication very simple when you go to the atm machine you have two factors you have your card and you have your pin so it's usually something you know and something you have so in this case

it's like when you go to your bank website something you know your bank password and something you have your telephone where it sends you an sms with six digits that's a version of multi-factor authentication i i i want to know about uh your podcast yes zero to ipo yes so you were just when we talked to you last podcaster yes now when we talked to you last time you were just getting ready to start it and i i love it thank you what are some of the things that you have learned from you've had you you've had amazing guests on and i mean not just necessarily from a profile perspective, but you've had incredibly interesting entrepreneurs come through. What are some of the main things that you are learning from them that you are reapplying

to your work at Okta? Yeah, there's a lot of layers in that. I love the question, Bill. So first thing is zero to IPO. I started getting a lot of when we were fortunate when the company went, when Okta went public, you know, we were helped a lot by entrepreneurs who were ahead of us in the journey as we built Okta. So I want to make sure I was giving back. I'm on the executive advisory board of the MIT Entrepreneurship Center. So I want to make sure that we're helping entrepreneurs. And I started getting the same question over and over as entrepreneurs would come ask me. And so finally I said, hey, you know what? Maybe I should just write a number of articles about this. And then people said, well, will you interview some folks? So I became an

accidental podcaster. We did season one last year. We actually just kicked off season two with Eric Yuan from Zoom a couple of weeks ago. Season two is going to be rolling out through April, May, and June. So there's more coming there. The idea is just to help everyone else debunk the myth of what happens in building these companies. And it feels like a lot of the information, first of all, I understand why, but the media tends to hype up massive success stories like Elon Musk or Jeff Bezos, or the ones that are complete failures. And we don't have to go through the names, but where they lose hundreds of millions of dollars and there's fraud and all these other kinds of things. And I understand why they're trying to sell viewers. But what

happens to 99% of the people right in the middle, no one ever talks about. And it's just day-to-day hard work, going to work, trying to get all these things going. And some of my favorite podcast episodes were when you hear from these people like Carl Eschenbach, the famous guy who built VMware from 200 people to 20,000, who's known as being a go-to-market magician. And he tells you the story of when in 2004, before they even had iPhones or anything, he's sitting there with his rep trying to close one big deal at a big pharmaceutical company. And he has to just sit there all day and he can't get the deal done. And he's like, the rep's starting to cry. I got to go back to my wife. And you're like, what do you mean? Like, this is the legend. And so what we

just wanted to translate to everyone. And so what I took back to Bill, which is a little bit comforting is that it's hard for everyone all the time. And anyone who thinks that you can just read the press and it's up and to the right and everyone's a hero, you're just being misled. And so half of the thing was the folks who came on and it was Patty McCord, who built a culture deck at Netflix, or Ben Horowitz talking about how he's trying to go public with three weeks of cash left, or Andre Iguodala talking about how he practices for hitting the big shot. Because once in a while, you're going to have that big shot and you've got to hit the big shot. It's true for me now. Right when we go into earnings that morning, when we're about to get on the earnings call,

Todd and I look at each other with Bill, our CFO and our head of IR. And we say, this is a big shot. You've got to hit the big shots. You've got to get locked in. You've got to get focused in. And, you know, I'm just trying to, I'm just trying to help. I think entrepreneurship is great. It's not a perfect equalizer, but it's a lot better than going and working at large companies. You have a lot of people who have the opportunity to start new companies and all sorts of different industries. And especially in today's, it's the driver of the economy. So the more that we can simplify and debunk the myth of entrepreneurship and just share it, I think it behooves us all to do that. Coming up, we've got a couple of stocks for your

watch list. 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 Jason Moser and Ron Gross. Verizon has entered the video conferencing fray, gentlemen. Verizon this week bought BlueJeans Network for less than $500 million. BlueJeans, unlike Zoom, Jason, they focus much more on the enterprise side

of things. They've got 15,000 customers, including some pretty big companies out there. It really is going to be interesting to see how this all shakes out. Yeah. Verizon CEO Hans Vestberg noted that they've been looking at this company, they've been looking at BlueJeans for about a year, and that he believes that Verizon's distribution will be a big advantage in helping grow that platform. Now, in theory, I agree. I think Verizon has phenomenal distribution and that there's a lot of potential there. Again, we talk about Comcast and Peacock and maybe being a little bit late to the game. Granted, a lot of this happened very quickly with coronavirus concerns and

Zoom has taken off because of it. I honestly think there is going to be a real branding problem here though with BlueJeans. I just don't know that people are going to work that into the conversation very, very well, like, hey, I'll BlueJeans you, or hey, I'll see you on BlueJeans. There is potential there, but when we look at all of the progress Zoom has made thus far, privacy concerns notwithstanding, they're digging into fixing that problem a now. But what they did early on was just, they took this market by storm. And it's really become one of the phrases that pays here during this time. It's become a verb, right? I'll Zoom you. So, I do understand the sentiment there. I think that competing on the commercial side

makes more sense. But they have to figure out a way to propose a better value proposition, right? They need to come up with a better value proposition and convince a lot of those customers out there that are using Zoom today, why they should be using BlueJeans instead. I'm not certain that Verizon's distribution network cuts it, but we will see. It seems like a relatively modest bet on the part of Verizon. I wouldn't be surprised to see this thing get written down in a significant fashion over the course of the next year or two. It is interesting for a company most of us haven't heard of and that is less than $500 million value. They do seem to have some real serious customers, whether it's

Facebook or LinkedIn or Viacom and large banks, a lot of them the ones we just mentioned earlier in the show, appear to be customers as well. So it will be interesting if we get some user data at some point to see kind of how much penetration they have here. Verizon also said they have kind of some kind of a future in their 5G offering. I don't necessarily know what that will be. That will be interesting to watch as well. But just on a step back kind of a note, it's interesting to see one of these tuck-in acquisitions starting to happen. And we've been wondering if M&A activity will pick up. I think we were largely talking about if that will happen among public companies and that BlueJeans is obviously private.

But it's interesting to see Verizon putting some money to work here during a time where maybe BlueJeans valuation was down because the competition is heating up, hard to say. But I think we're going to continue to see lots of these little tuck-in acquisitions. Well, I think that's a good point you make there, Ron, too, is this acquisition happening now. they can say they've been looking at it for the past year. But this may have been about as attractive an opportunity for blue jeans as they were going to come across. I mean, you got to figure that at this point, they're selling it, you know, a lower valuation than maybe they would have been a year ago. Or perhaps higher because the space is hot. That's the other side of the trade. That's true. Hey, real quick, before we get to the stocks on our radar, Ron, this week,

Johnson & Johnson, Costco, Procter & Gamble, they all raised their quarterly dividend, and not a huge amount, sort of in the range of 6% to 8%. But in this environment, when all these big companies are either keeping their dividends in place or cutting them back, I feel like this is going to be a badge of honor down the line. It's a really strong signal to the market. It's showing not only is business strong right now and cash flow generation is strong right now, but our balance sheets are strong and we can continue to do this and not only continue, but increase them. Very strong signal to the market and to investors.

Alright, let's get to the stocks on our radar. Our man zooming in, Steve Broido, we'll hit you with a question. Jason Moser, you're up first. What are you looking at? Yes. As the world's largest music streaming platform, I'm taking a look at Spotify, ticker is SPOT. They have earnings coming out on April 29th, and this is a stock we continue to follow here at The Fool and many of our services. Monthly active users is one of the key metrics for Spotify. They recorded $271 million last quarter, that was 31% growth from the year ago. But the The more important metric is actually the premium subscribers. Last quarter, they chalked up $124 million there, and that was 29% growth. I want to see how they're growing that premium

subscriber base, particularly in the face of this stay-at-home economy, so to speak. This is a time when they should be shining, but they make their money a couple of different ways, advertising and subscriber fees. Subscriber fees make up the overwhelming majority of their revenue. And then finally, I just want to get a little bit more insight as to how they view their acquisition of the ringer family of podcasts, because they continue to tout this exponential growth in the podcast market, the opportunity there. And I tend to agree. I just want to see how they're exploiting it. Steve, question about Spotify? Sure. What makes them different than all the other streaming providers?

Well, I think they really, when they were competing against Pandora back in the day, it was more of a bespoke offering, which gave them the leg up. You could go in there and listen to anything you wanted on demand. And that ultimately is what gave them a leg up. And now as users continue to listen, the technology there recognizes what you're listening to. They have a very good recommendation engine and they've incorporated a lot more into the offering as well. So it's become more of an entertainment platform. Ron Gross, what are you looking at? Going back to CRISPR Therapeutics CRSP, down 32% from its December 2019 high. Gene Therapy Company focusing on the CRISPR-Cas9 technology to edit genes.

Main partnership is with Vertex, a $69 billion pharmaceutical company, a good partner to have. Importantly, their balance sheet is solid, $943 million in cash, only $52 million in debt. And they've had some really promising early-stage data that they actually can cure a sickle cell disease. So looking forward to seeing more of that. Steve? I'm a CRISPR shareholder. Ron, do you see them playing a part in the COVID-19 solution? Not in the near term, no.

They would have to ramp up and start from scratch. So I think there are other folks who are much further along, and we should look to those folks for the next six-month, three-year innovations. What do you want to add, Steve? I think I'll go with Spotify. Hey, now. All right, Ron Gross, Jason Moser. Guys, thanks for being here.

That's going to do it for this week's show. I'm Chris Hill. Thanks for listening. We'll see you next week.