Motley Fool Hidden Gems Investing - Streaming Wars, Curious Acquisitions

Episode Date: July 9, 2021

Google is sued over its app store. Wells Fargo cuts its personal lines of credit. The Chinese government slows down ride-hailing app Didi. Stamps.com gets taken private. Levi Strauss expands its bottom line. Philip Morris buys a pharmaceutical company. And college students have food delivery robots to look forward to this fall. Jason Moser and Emily Flippen analyze those stories and share two stocks on their radar: Itron and Chewy. Plus, Motley Fool analyst Tim Beyers discusses the current state of the streaming wars with Netflix, Disney+, Peacock, etc., and what to expect from Apple’s event this fall.   Interested in stock research delivered right to your email? Get 50% off our Stock Advisor service just by going to http://RadarStocks.fool.com. Learn more about your ad choices. Visit megaphone.fm/adchoices

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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 Emily Flippen and Jason Moser.

Good to see you both. Hey, Chris. We've got the latest headlines from Wall Street. we'll take stock of the streaming entertainment landscape. As always, we've got a couple of stocks on our radar, but we begin with big tech under the microscope. This week, the attorneys general from 36 states and the District of Columbia filed an antitrust lawsuit targeting Google's App Store. The suit argues that Google maintains a monopoly for distributing apps in the Android operating system. Emily, how worried should Alphabet shareholders be about this lawsuit?

Well, it'll be interesting to see where this lawsuit goes because lawsuits like this in recent history haven't amounted to much. However, I think it's fair to say there is mounting pressure both within the U.S. government, but also across the world, the EU in particular, against big monopolistic companies, Alphabet being one of them. In addition to the claims that you've mentioned, Chris, they actually include these crazy assertions that Google bought off developers that dissuade them from distributing apps outside of Google's own store, that they're collecting extravagant commissions and even paying Samsung not to develop a competing app store. So if any of those come to light, especially paying off a competitor like Samsung,

Alphabet could certainly be in trouble. And what's even more interesting and what gave me probably the biggest chuckle reading about this story was that Google's only real defense was to really just point their finger at Apple and say, well, have you seen what they're doing? Why are you mad at us? It's really not the most compelling argument. Yeah. I mean, I guess I don't blame them for reminding regulators and attorneys general that Apple exists with its own app store, but that doesn't seem like the greatest defense. Well, it's not, again, a compelling argument, but it does highlight the duopoly that exists in mobile operating systems today. If I was a shareholder in Alphabet, and I am somebody who owns an index fund,

so I am effectively a shareholder in Alphabet, I wouldn't be sweating too much. This is a big business. If they have to change their policies, if they have to spin off different divisions long-term, I'm not sure it makes a big difference, especially for index fund holders. Wells Fargo announced it is shutting down personal lines of credit, which is one of the bank's most popular consumer lending products. The credit lines had been pitched as a way for customers to consolidate higher interest credit card debt or pay for home renovations. Jason, Wells Fargo is not saying how many customers this move will affect, but it's clear already that some of them are not happy about this. Yeah. I mean, I think that's probably

the biggest risk here. Honestly, it's the headline and the messaging risk. And it is something they need to message this the right way. And unfortunately, it feels like they're already failing. Given where Wells Fargo has been over the past several years, that's not good, Chris. To your point, this is part of the consumer banking and lending division now. If you look at all of the different facets of Wells Fargo's business, the personal lending represented $594 million in revenue in 2020. That was actually down from $652 million in 2019. and this is all in the context of a company that generated a little bit more than $58 billion in revenue in 2020. The bottom line is, this really isn't a big part of the business. It's like 1%

of the business. But it is something where they feel like perhaps they can get their customers into a better product while maybe eliminating some of the excess risk that Wells Fargo continues to take on as they try to reshape this business and get their lending portfolio back in order here. It does feel like regulators are going to give them a little bit more room to work with the business and that's good. But I think the biggest risk here, again, is headline risk. Ultimately, it is this credit score problem. They talk about the fact that customers may witness a ding to their credit score because of this. If you're a customer of Wells Fargo and you're getting this message and they're saying, through no fault of your own, your credit score may be

hurt through this move, as a customer, that really seems very unfair. It seems like it could be done a little bit differently. I think they may need to backtrack and figure out exactly how to communicate this and figure out a way to get around this credit score thing, because certainly, if I were an account holder and I'm not, I would be very frustrated with that, because we're taught to protect our credit scores as one of the most valuable assets when we become adults. They open up a lot of windows of opportunity. So, for me, I understand the move, but they really need to focus on messaging this the right way. Last week, Didi, the Chinese ride-hailing app, went public. And this week, shares of Didi fell more than 25% after the Chinese government

announced that new users would not be able to download the app while the government conducts a cybersecurity review of Didi. Emily, how should investors feel about this? Because part of me looks at this story and thinks, you know what? That's kind of the cost of doing business in China. It's actually multifaceted. There's an aspect of this that you're exactly right on, Chris. It's the cost of doing business in China. If you're a Chinese company raising money abroad, there's always been a power struggle between the Chinese government and it's increasingly important and independent and powerful businesses and entrepreneurs that doesn't just apply to Didi. We've seen that happen with numerous businesses, not

only over the course of last year, but looking back five years, one comes to mind is Ants failed IPO. Jack Ma, and even recently, a merger blocking between two live streaming platforms. But in Didi's case though, and part of the reason why I think Didi was damaged so much by the news, is that it's actually a bit more complicated than just this power struggle. Didi is a transportation and data business company at heart, and the Chinese government has always outlined transportation as critical public infrastructure. Before Didi's IPO, the government actually suggested that they delayed the public offering because they were afraid that listing in the United States would give U.S. regulators, and thus the U.S. government, access to sensitive information that the business

has on Chinese citizens. And it's only after Didi didn't take that advice, listed themselves on the U.S. markets, that the government decided to conduct this security review. So it's important to think about that both with all of the Chinese holdings that listeners may have, but also with Didi in particular and the critical infrastructure that the Chinese government sees in some of these businesses. Also seems like a lesson for other Chinese companies that are thinking about going public over the next few years that maybe when the government comes knocking on your door and says, you might want to delay your IPO, maybe take that advice. No kidding. You don't want to be in a power struggle with the Chinese government. That's

for sure. Christmas came early for shareholders of Stamps.com. On Friday, private equity firm Toma Bravo announced it is buying Stamps.com for about $6 billion in cash. The buyout price is $330 a share, Jason, which is nearly 70% higher than where Stamps.com closed the day before. Was anyone else, I mean, I'm happy for the shareholders of Stamps.com, but was anyone else bidding against this private equity firm? That is a massive, massive premium. And it is worth noting, there is a 40-day go-shop period that would expire a little bit past the middle of August. I have a hard time believing they're going to find a better offer than this. We rarely mention companies like FedEx and UPS in the same conversation as Stamps.com. But

ultimately, that is the market opportunity this business is a part of. They're not even generating a billion dollars in revenue annually. There is plenty of room for this company to grow. Now, with that said, I mean, it has been a very bumpy ride. I'd imagine that shareholders of Stamps.com, and I'm not one, but I'd imagine they are feeling like this is a big win. But if you remember, just go back to 2019 when we were talking about that breakup with the USPS, right? I mean, that postal service relationship, at the time, it made perfect sense. But management felt that, hey, listen, if we're going to grow, if we're going to become something bigger, we've got to expand our network here, so to speak. And so that news, remember that headline,

I mean, the shares fell like more than 50% that one day just based on that headline. But it was kind of like ripping off that Band-Aid, right? They knew they had to take that short-term hit in order to give this business a chance in the long run. And that's kind of what we were discussing at the time when that move was made. And I think this acquisition, this is a tacit statement on the part of Tom Abravo that they know they can unlock value and make this an even better business. This is right in their wheelhouse. They have a very strong reputation in acquiring these types of businesses. Remember, they acquire Ellie Mae, thanks a lot, RealPage, Click, Instructure. A lot of these software businesses that are playing all these different

vital roles in our economy today, this is going to be another one, I think. They've grown revenue at 26% annualized over the last five years. There have been plenty of criticisms for stamps.com along the way, but all in all, it's been a pretty good business and shareholders have done okay. I'll tell you, if you saw that drop back in 2019 when that postal service agreement was severed, if you saw that as an opportunity, well, good for you because shares have just taken off ever since then. I mean, it's been almost a Wayfair-like story in that regard. So, I think this is probably all's well that ends well here, but it's certainly been a fun one to follow along the way. If your waistline changed at all during the pandemic, you are not alone.

And One Apparel Company has the proof. Details right after the break, so stay right here. You're listening to Motley Fool Money. Chris Hill. Welcome back to Motley Fool Money. Chris Hill here with Emily Flippen and Jason Moser. Shares of Levi Strauss up on Friday after second quarter profits and revenue came in higher than expected. The denim company also raised guidance for the full fiscal year. Levi Strauss CEO Chip Berg said the increased demand was due in part to the fact that more than one-third of consumers have different waistlines than they had before the pandemic. Although, Emily, Berg stressed that some waistlines have gotten smaller while others have gotten larger.

Well, I'm not one of those collection of people for which mine has gotten smaller and I'm not quite ready to be putting jeans back on again, but it seems like a lot of people out there are. In addition to those 35% of consumers who have changed, let's say, waist size over the last year. They're also selling totally different styles of jeans. As a millennial myself, who is in fact married to her skinny jeans, I was very surprised to find that over 50% of their jeans sales were actually baggier jeans styles. These are loose, wide leg, or flare jeans. There's been a change in style over the past year, two years, three years as well, that's now showing up in Levi's results. But even with this, revenue is still 3% lower

than it was over the same time in 2019. They still haven't quite picked up the momentum they had heading into the pandemic, but the good news is that 92% of their retail stores are now back opened across the world and they're able to sell higher-margin, full-priced items in those stores more than they are online. Do you get the sense that they are doing an effective job of balancing something that every retailer struggles with, which is the in-store experience versus building up that digital sales? What's interesting is they've actually focused more, I'd say, on their wholesale business in particular, partnering with the third parties like Nordstrom that don't discount as much,

but they have made a concerted effort on their digital sales. Their app had a 20% increase in downloads over the last year, and they're actually doing stuff like having a TikTok channel and taking PayPal and Venmo in stores. They're trying to reach that younger demographic. Philip Morris announced it's buying Vectura Group for $1.2 billion in cash. What makes the acquisition noteworthy is the fact that Vectura Group is a pharmaceutical company specializing in inhaled medicines, and Philip Morris specializes in inhaling tobacco smoke. Jason, I think I understand what Philip Morris is trying to do in terms of broadening its product offerings, and certainly they've got the cash, but you tell me, is

this a move they can pull off? I just find this utterly fascinating from so many different angles. It feels like it would be something straight out of The Simpsons, a commercial on The Simpsons, Philip Morris, we're a healthcare company. But that is really the angle they're taking here. You've got Philip Morris, this company that is just basically focused on selling its Marlboro brand cigarettes and the other cigarettes it has in its portfolio. They're selling these brands internationally. They're the ones that are selling internationally and they're capitalizing on really what is an interesting situation in Asia Pacific where cigarette use is still growing versus the rest of the world where

it's declining. It is pretty interesting to see volumes globally. It's a very steady trend downward, but retail value continues to tread water. That's just thanks to pricing. I think it's like that whole movie theater, the box office tickets thing we've seen. They're selling fewer tickets, but they're able to maintain a little bit on the pricing that maintains the value of the market. You can only maintain that for so long. There's clearly an overall trend towards decline in tobacco use. I think that much is clear. You see a company with Philip Morris focusing on what it knows best, inhaling things, but now just maybe working on inhaling things that are perhaps good for you as opposed to bad for you. The stock, it's been stuck in a rut for

obvious reasons. Shares are up just 25% over the last five years, getting pounced by the market. But again, earlier this year, they had stated plans in order to generate more than half of its revenue from smokeless products by 2025. Now, that half of its revenue, that's up from 24% in 2020. So, they really are making a concerted effort to pivot this business and rely less and less on tobacco and more and more on things like smokeless. And now, what we're seeing inhaled medicines. I feel like there's something there. Now, whether they can pull this off, I don't know. It really does seem like it's difficult to do both, though. And I think that's going to be where they have to make a decision at some point, right? I mean, it's kind of like saying we're

ExxonMobil, we develop electric vehicles, right? I mean, you're going to have to make a decision one way or another, and then really make the effort towards going full throttle in that direction. Maybe this is a clue, maybe this is one sign that this is where they'll be going. I certainly don't begrudge them. It's an easy acquisition for the company to make. Listen, healthcare is a large and growing market opportunity, whereas Philip Morris is right now, they're stuck in a market opportunity and a long-term secular decline. Yeah, Emily, just going beyond Philip Morris, we talk all the time about companies that are looking for different optionalities. And certainly, they're big enough to at least attempt

this. But I don't know. What do you think when you look at this story? Well, I think it's an interesting move because I also follow the cannabis space. And there's always been this big question about the move for tobacco companies in particular to move from what's perceived, to your point, Jason, as an industry that's in secular decline to something that they also could possibly have experience in, inhaled products, let's say, and to something that's growing. And when you look at what Senate Majority Leader Schumer has put forward or is attempting to put forward in the Senate in terms of federal movement on the front of legalization, they're actually taking actions to keep big alcohol and tobacco companies out of the industry

potentially. So I think it's a move that is probably forward-looking, admittedly a little confusing. This fall, college students on 250 campuses across America will have something new to look forward to, robots that deliver food. Grubhub is teaming up with Yandex, the Russian startup focused on self-driving technology. Yandex will operate the robots. Grubhub will be the platform for the transactions. Jason, I cannot wait for the videos, because I just have to believe those are coming this fall, college students taking videos of these robots. It's entirely possible some of them might be

messing with the robots a little bit. We'll see that to your point there. That's where mine went immediately when I read this. I know you remember your college days, I certainly remember mine, Emily. You got to figure that these things are going to get messed with to the nth degree. It would be just too much fun not to do that. This is probably going to be a massive viral success for TikTok, but it does make sense. These delivery companies, the economics really are going to make more sense as they get towards automated delivery. Slow-moving lunchboxes with hot food inside, I'm sold. All right, Emily, Jason, we'll see you later in the show. Up next, we'll get the latest on Netflix,

Disney+, and the rest of the streaming video landscape from our man, Tim Beyers. Stay right here, this is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Tim Beyers is a senior analyst covering media entertainment and a host of other industries for The Motley Fool. He joins me now from Colorado. Thanks for being here. Thanks for having me, man. Good to see you. Good to see you. Let's start with the streaming landscape, because it certainly has been one of the biggest stories of the pandemic. And it sort of feels like collectively the streaming landscape is taking a breath. So I figured it was a good chance to sort of step back and see where we are.

And where we are is where I think we probably thought we would be in that Netflix is overwhelmingly at the top with more than 200 million subscribers. Disney, second place with over 100 million. And And then, you know, then it sort of gets, I don't want to say murky, but it's almost like after that, you sort of pick the horse you want to bet on, whether it's Peacock or HBO Max or something like that. But before we get into sort of the weeds on the streaming landscape, where do you think we are right now? What stands out to you? Well, I mean, we're on the couch, right? Like we're all on the couch. We're on the couch and we're watching. I mean, we are post-pandemic in some parts of the world, not all parts of the

world. And hopefully we get on the other side of this really soon. But increasingly, I think we've seen there was a big pandemic bump. And that has not gone away. I think what we have found, like in other industries that, Hey, we kind of like this streaming thing. This is the way we want it. And this is the way we want to consume entertainment. And that has become a thing. And so of course, as Hollywood and tech companies are kind of want to do, they sort of get behind it and say, okay, this is what you want. We'll give you more than you want and more than you can handle. Like you said, Chris, there are some stragglers here. It's too early to say which stragglers actually become real competitors and which ones go away. But there are some stragglers

and this industry looks like it's shaping up to favor the top two, and those top two are Netflix and Disney. I think those are the ones that have the clearest advantages right now. I'm going to get into the weeds just a little bit, but one of the things that comes up whenever you're talking about these businesses is, how much money are they making per user, the average revenue per user? When you look at Netflix compared to Disney, it's roughly three times the amount. Right now, Disney is making about, let's just call it $4 dollars per user. Netflix in the U.S. and Canada, it's north of $14. How do you think about that? Because one way to look at that is, boy, Disney has a lot of room to bump

up that price incrementally on a more frequent basis than Netflix does. The other way to look at it is to take it at face value and say, boy, hats off to Netflix for making so much more money per user. Not to answer a question with a question, but this is a little bit rhetorical here. What do you want to bet that that ARPU would be a lot lower if Netflix was still doing a fairly big DVD-by-mail business? The reason I use that piece of data there is because Netflix has done the work to invest in the transition to a full. Streaming is its business, and it didn't used to be, but it made that transition. It invested heavily to get to that point. Now it yields the benefits of a high ARPU. The reason

I use that is to set the stage for Disney. What Disney is doing and what it has to do is effectively disrupt its broadcast business model that still has a lot of legs. The cable business model still generates a lot of cash, and they have to strategically disrupt that to get to the point where Disney Plus can be a global brand with account control where they are dealing with customers around the globe, and their primary earn is through that Disney Plus subscription, but they can't get there until they use the funds that they get from broadcast and cable to get there. So you're essentially using cable and broadcast to get scale in Disney+. And in order to get scale, you got to keep the cost really, really low. So it doesn't surprise

me. You're definitely right. You can see the scale up that's going to come, but it's probably not for like, let's just call it three to five years. Comcast owns NBC. They own the Peacock streaming service. They also own Universal Pictures. Starting next year, theatrical releases from Universal are going to make their television debut on Peacock. And some of them are tentpole franchise type movies like Jurassic World and the next Halloween movie, that sort of thing. What do you think of this strategy? Because it seems like, and I'm not knocking the movie studios, I'm not knocking Universal and Comcast and Disney for this, but it almost seems like they don't have enough data yet to realize what is the best strategy when they have a history of

making so much money at the box office, but they also have streaming services that they fully control. And it seems like they're still in the process of figuring it all out of what's the best way to make the most money possible. I think you're right. I think they are testing this. I also think they're cognizant of history here. And the history I'm thinking of specifically is with Disney and Fox. Probably the most famous distribution deal in the history of all movie making is when George Lucas decided in order to get Star Wars made and to strike a distribution deal where he could get Star Wars into theaters is to give Paramount Pictures perpetual rights forever. And that is true, forever to distribute Star Wars Episode 4. Can you imagine what a

feather in the cap that is for Paramount Pictures? That they just like, nope, anytime you are showing Star Wars Episode IV, we get our little piece of it. That is amazing. And so, I think these deals, Chris, are essentially designed to say, what can we do to basically verticalize the business of entertainment production? Because it really hadn't been. That is a huge lift. Just imagine that. This has been a very horizontal business where you have different pieces that get you all the way finally to production and distribution at the end theater. And there were lots and lots of different parties involved in that. When you verticalize it, that's what these streaming platforms can do. They can allow you to say, okay, there's a piece of this that I

control because I have a streaming platform now. And so I can control a fair amount of the distribution here, which means I can dictate terms on a maybe a more favorable basis to me as a studio. So I kind of applaud Universal for doing this. There's also this weird way that distribution happens where you can have a distribution agreement. And this is actually quite common. It could be like, well, we're going to go to Netflix and we're going to go to Netflix for six months. And then after that, it's wide open for the next year. And then after that year, it goes back to Netflix. And these windows are negotiated and they have different sets of fees and they're complicated, but ultimately they favor the producer. So I think what we're seeing

is the center of gravity move back to the producer here. It's still hard to see how this is going to have any kind of impact on something like Peacock, which let's be honest here, this is a minor league streaming service, but really the point is to control distribution. And if it achieves that for Universal and Comcast, then it might be a win. When I was ticking off how many subscribers different services had, I didn't mention Apple Plus for the very basic reason that Apple has not shared how many people are using Apple Plus. I'm assuming that the number is not as high as they would like because if it was a huge number, I'm pretty sure they'd tell everyone. Now that we are a year or so into Apple+. Am I the only one who thinks they need another Ted Lasso? Because

that is an unqualified smash hit for them. And that's great. I mean, it's the reason I got Apple+. But they're kind of like the early stages of Netflix when Netflix got into original program and they had a couple of hits. And it's like, yeah, House of Cards is great. Orange is the Black is great. But just like investors are all about the future, so are streaming consumers. So am I wrong that they need more hits? They absolutely need more hits. And let me tell you, is anyone more excited other than the Lasso fans or what we we, I have learned now, Chris, apparently we are Ted heads. That's what, that's what we're called now. If we're a, a, a fan of Ted Lasso, that makes you a Ted head. And you know what? I'm all about

it. I'm in granted. If that's the cost of, of watching the show and being a fan of the show, that's fine. I'll go with that. I'm with it too. But is there anybody more excited at Apple for July 23rd than the producers at Apple TV, because that's when season two of Ted Lasso goes live. And you're right, it is an unqualified hit. It's an amazing show. It's got tons of fans. There's tons of buzz about it. It's something that Apple TV has not experienced with any other show that it's had. It's the closest thing to a Netflix-style hit that Apple has been able to muster up to this point. So you do have to wonder what Apple is going to do in terms of funding its future slate and how it gets a considerable amount of programming into its funnel. Because

what Apple's not done that others have, the major difference between, say, like a Netflix and an Apple TV is Apple tends to make tentpole programming or what they proclaim as tentpole programming instead of lots of programming, instead of lots of little bets. They've made some very big bets and some very big bets that have flopped. So yeah, I wonder if this signals a little bit of a strategy change for Apple TV because you just need to increase the numbers. If you want another Ted Lasso, you've got to go out and fund 30 more morning show-like things in order to get another Ted Lasso. You just can't do it without the law of large numbers.

So in that regard, do they need, in the same way that Disney has Kevin Feige overseeing the Marvel Universe, and for so long, before he was co-CEO, Ted Sarandos was the head of content at Netflix. Does Apple need to go out and get their version of that person? They do. And they need somebody who knows how to build an entertainment portfolio and knows how to go out and find talent, not just buy scripts, because any studio can buy scripts. In fact, there are whole shops that all they do is they just go out and buy scripts and then they get very cheap talent, usually college students who want to be writers and just to read scripts and either say, this one is good, pass it along. This one's terrible, throw it away.

And there are just people who go through slush piles. That's not the same thing as building a portfolio. You need somebody with executive producer type credentials who makes Apple TV or Apple Studios a place where you want to go make programming. Because the thing that really got Netflix its sea legs in streaming, Chris, I think more than anything else, was the buzz around creators saying, hey man, if you want to make programming, go see these guys. They do it differently. And that just changed the game. As soon as that buzz started hitting, Netflix started getting some really interesting talent that was interested in making programming with them. It's a war for talent, and I don't think Apple TV has done what it takes to win that yet.

Last thing, and then I'll let you go. Sticking with Apple, their next event is probably going to come in September. What are the expectations for this event? Because it seems like there are events that Apple has where there are great expectations and there are ones where they're more modest. And this one seems like the latter, but I could be wrong. No, you're probably right because it tends to be the fall or earlier in the year when Apple historically would do big events at, say, like what we used to have as Macworld. Now, during the summer. We have the Worldwide Developer Conference. So I wonder if it will be something around hardware and the M1 chip. That would be very interesting. But from the entertainment

perspective, just sticking with the Apple TV theme here, it wouldn't surprise me at all if we start to see a bigger wider slate of of programming and maybe even just a program to say hey bring us your best stuff like a almost an apple like fund say like we're buying we're in the market we want you to come make your stuff here because the strategy of just unleashing the next big tent pole thing for Apple has not worked. What you need to do is just get a wider array of creators coming through the door. So it wouldn't surprise me to see some kind of Apple Entertainment Fund and maybe some partnerships with other studios to bring in content that is pre-existing. I would find that to be very interesting too. Right now, Apple TV is very much in its infancy.

it needs more support. I mean, we need more Ted Lasso, but we also need more from Apple TV overall. Tim Beyers, great talking to you. Thanks so much for being here. Thanks, Chris. Up next, Emily Flippen and Jason Moser return with a couple of stocks on their radar. Stay right here. This is 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 Emily Flippen. Time to get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Moser, you're up first. What are you looking at this week? Well, Chris, as populations grow and resource consumption continues to stress our aging global infrastructure, companies like ITRON, ticker I-T-I-R, are helping municipalities, cities, states efficiently manage their resources within energy, water, things like that. Their core focus is to help their customers safely, securely, and reliably operate their critical infrastructure in these areas. The business itself focuses primarily on device solutions and network solutions. The devices, that's the hardware, represents about 32% of revenue there. The

network solutions, which is essentially, that's the software. That's the stickier part of the business that helps these devices all communicate with one another in central locations within these cities and municipalities that represents about 58% of overall revenue. There are a couple of, I think, big long-term trends in play here. No. 1, just the rollout of 5G and the advent of industrial Internet of Things. This plays right into that movement. Also, let's not forget, we're watching a lot of back and forth on this infrastructure bill. There are going to be a lot of dollars here invested in our domestic infrastructure over the next several years. regardless of what the politicians ultimately come up with. I think that this is a company

that stands to benefit from both long-term trends there, one I'll be keeping an eye on. Dan, question about Itron? Absolutely, Chris. Do we know how they came up with their name? Because the word Itron does not scream to me at all, municipal water management. No, I don't know that history, and I agree with you, Dan, because the first time I ever saw this company and the name, it immediately made me think of just like an Atari game from when I was growing up. But I can look into that for you. Emily, we've got a minute left. What are you looking at this week? I'm looking at Chewy. And actually, Aaron from Vermont emailed us and mentioned his great experience with Chewy, unfortunately,

after he lost his dog. And it reminded me what a great company this is. Their 2020 cohort is maturing nicely. Great customer acquisition. Overall, wonderful company for both investors and consumers. Dan, question about Chewy? Yeah. I actually love Chewy. I use it to get cat food delivered automatically to my house. I love that feature. Chewy, it's a large company. It's got a lot of stuff going on, but it seems ripe to be the kind of company that's going to get purchased, Emily. Is that going to happen anytime soon? It is never going to happen. If this company is purchased, my heart will break. They have carved out their own niche. They have so much optionality is still left in their platform. So I hope that never happens.

What do you want to add to your watch list, Dan? I mean, I'm already using it, Chris. I'm going with Chewy. All right. We're out of time. Thanks, everyone, for listening. We'll see you next week.