Motley Fool Hidden Gems Investing - Strong Jobs Report, Travel Stocks, Metaverse 101

Episode Date: November 5, 2021

The Dow, S&P 500, and Nasdaq all hit new highs after October’s robust jobs report sent the unemployment rate down to 4.6%. Booking Holdings hits a new high as Airbnb posts record revenue. Peloton takes a hatchet to their guidance, so investors take a hatchet to the stock price. Mercadolibre bounces back with a strong 3rd-quarter report. Andy Cross and Ron Gross analyze those stories, discuss the latest with Zillow Group, Pinterest, Square, Under Armour, Etsy, PayPal, and share two stocks on their radar: Axon Enterprise and Titan International. Plus, Motley Fool analyst Asit Sharma talks with futurist Cathy Hackl about the business potential of the metaverse. Learn more about your ad choices. Visit megaphone.fm/adchoices

Chris Hill, joining me this week, senior analysts Andy Cross and Ron Gross. Good to see you, as always, gentlemen. How are you doing, Chris? Chris, how are you doing? We got the latest headlines from Wall Street. We will dig into the metaverse with our guest, Kathy Hackle. As always, we've got a couple of stocks on our radar, but we begin with the big macro. The U.S. economy added 531,000 jobs in the month of October. On top of that, the reports from August and September were revised to add another 235,000 jobs, and the unemployment rate dropped

from 4.8% to 4.6%. Ron, we still have labor shortages and supply chain issues, but this was a great report. Oh, yes. The stock market liked this report, as do I. Investors hoping that the labor shortage could be getting better. We're not out of the woods yet, but this is a positive report, as you say, with the unemployment rate falling to 4.6%. That's a new pandemic low. leisure and hospitality, I'm happy to say, led the way, adding 164,000 jobs as Americans got back to restaurants and bars. And we started traveling and taking vacations again. Really great to see. That sector has reclaimed 2.4 million positions that were lost during the pandemic so far. Another bright spot, wages did tick up a bit. Year over year, they're up 4.9%.

That's a pretty big number. That's reflecting those inflationary pressures that I think are causing some concern. We'll keep an eye on inflation. We'll keep an eye on wages. Labor force participation rate held steady 61.6%. That's still 1.7 percentage points below the February 2020 level. So it would be good to see some people re-entering the workforce. And finally, I'll mention that U6 unemployment number we sometimes talk about, which is a broader gauge of unemployment. That includes discouraged workers and those holding part-time jobs for economic reasons. That fell to 8.3% from 8.5%. 7% was the rate prior to the pandemic. So still some work to do there, but moving in the right direction. Yeah. Andy, Ron mentioned the

reaction from the market, the Dow, the S&P 500, the NASDAQ, all hitting new highs on Friday. Yeah, it's been an impressive run here over the past week or so. There's a lot of excitement, a lot of buyers still on the market, a lot of excitement about where to go when you think about the market and where you think about investing. U.S. stocks mostly continue to really be the excitement, especially in the small-cap. We've seen a really nice bounce back in the small-cap market in the Russell 2000. That's really indicative of the cyclical play as people are getting excited about the economy reopening here. I think probably important to mentioned that earlier in the week, the Fed said that job growth was strengthening enough for it

to begin tapering their monthly bond purchases, their quantitative easing program. Chairman Powell also said that he needs to see continued improvement before the Fed starts raising interest rates. Hikes are expected within the coming year. But I think the market kind of that balance. Time to start tapering. Interest rates remain low for the time being. I think the strength in the stock market is kind of reflecting that balance. All right, let's get to earnings, and we'll start with a good week for a couple of big travel stocks. Third quarter profits and revenue for booking holdings came in higher than expected, sending that stock to a new all-time high. And Airbnb's third quarter revenue was not only higher than expected, it was also a record

for the company. They also had record bookings and shares of Airbnb up 17% this week. Andy, let's start with booking holdings. I mean, just another great quarter. Yeah, the gross travel bookings, Chris, as you mentioned, at a really nice rebound, up 77% to almost $24 billion. Room nights booked were up 44%. Seeing some sequential improvement, which is really nice, still down from where they were two years ago, but seeing some nice growth from where they were the past year. September was the strongest month, so they're seeing that momentum continue through the year. Revenues were up about 77% to almost $4.7 billion. That was down from the third quarter two years ago, Chris, but double the quarter growth from the last quarter

of this year. The agency revenues continue to be the big driver, as you would expect, with booking up 66%, merchant revenues up 94%, and ad revenues up 133%, Chris. That really reflected in the strong performance of the operating cash flow and the operating profits with their earnings before depreciation, amortization, and interest in taxes, EBITDA, up to a 45% margin. So really seeing a nice rebound as booking continues to see their consumers come back to the marketplace, especially in booking with the flight business, Chris, which is relatively new, but still seeing some really growth there with 25% of total customers now new to that platform. So booking overall, a really nice quarter as they continue to rebound, especially internationally.

And Airbnb, you know, I mentioned the revenue. The thing that is amazing to me about the business of Airbnb is how little they need to spend on marketing. 90% of their traffic is essentially free traffic. Yeah, Chris. I mean, their gross bookings, as you mentioned, really strong up almost 50%, up 23% from the third quarter two years ago. So they are seeing even better performance now than pre-COVID. That really showed some really nice growth in the revenue line. Their host earnings, something they're very proud of, their host earnings were almost $13 billion in the third quarter of this year. That's up 27% from the third quarter two years ago. So the hosts who are hosting travel stays, their customers at their homes, wherever they are doing,

they are making more money. And that's a real proud point for Airbnb. They're seeing the most growth in stays on Monday and Tuesday nights. Interesting. They're seeing more and more growth from outside of the major markets, as we've talked about before. The top 10 cities are now 6% of revenues versus where they were 11% two years ago. So you're starting to see more and more travel outside of those major markets. They continue to innovate in the platform with their May release, made it easier for hosts to join the platform and get started. So they continue to innovate. It's a $110 billion company now, sells at a price-to-sales multiple of more than 30. So it continues to be one of those elevated multiple stocks.

you think about the rebound, you think about the market saturation and the fragmentation, sorry, in this market. It's owner-led. The CEO and the founder really has a really great purpose for Airbnb. They're starting to show more and more of the profit as they scale out the business and that profit picture improving. So overall, a really nice quarter from Airbnb after obviously a very tough year, but I really liked the direction they're heading and the stock here seems reasonable. After the closing bell on Thursday, Peloton issued its first quarter earnings report. The loss was bigger than expected. Peloton took a hatchet to their full-year revenue guidance, and on Friday, shares of Peloton fell more than 30%.

Ron, a stock falling like this, it is natural to ask if it's a buying opportunity, but in this situation, the company itself is basically saying the next few quarters are not going to be great. Yes, and it's hard to get a handle on where this business model shakes out post-COVID. I bought a Peloton right in the heart of COVID, and my usage has waned, and my decision as to whether to keep paying the subscription price month after month is a real question in my mind. And I think they're seeing a lot of that across the board. Management said, it is clear that we underestimated the reopening impact on our company and the overall industry. Yes, it appears that they did. CEO John Foley also said that Peloton has seen traffic to its website

taper off faster than they were anticipating. Shopper visits to their brick and mortar stores also were relatively weak. So we have weaker demand, we have lower prices due to price cuts on its most popular bike, and we have higher marketing costs. Not a great algorithm and a great equation for profits there. A couple of bright spots, I guess I would have to say. Subscription revenue did increase 94%. That's looking in the rearview mirror. Now we have to see where we go in the future. The end of the quarter with almost 2.5 million subscriptions, but sales were just up 6% on that. Hurt by the recall of their tread product, 17% decline in their connected business segment as a result of fewer bike deliveries. So as I said,

They're cutting the price by $400 on their most popular bike. They're trying to reach younger, less affluent consumers. They're trying to take away the thought that this is a luxury product. It's still quite expensive, however. Operating expenses up 140% year over year as they try to market the heck out of this thing to try to bring business and bring demand back. But they were hurt by the chip crunch and supply disruptions, rising freight costs, as many of our companies that we talk about have been. So they reported a loss of around $300

million. They cut full-year sales forecasts by up to $1 billion. They expect about a $425 million adjusted EBITDA loss going forward. So this is going to take some time to work out and to see where the business normalizes. It's still a business, and they're still going to continue to sell a very strong product with a very strong subscription, but we need to see where it normalizes. After the break, we've got global retail, digital payments, and a lot more. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Ron Gross and Andy Cross. MercadoLibre's third quarter report was highlighted by strong profits and payments volume rising

nearly 60%. Shares of MercadoLibre up 9% this week, Andy. Yeah, really nice quarter for a stock that's been, frankly, really just kind of up and down throughout the year. Active users almost hit 79 million, up almost 3.5%. The gross merchandise volume, Chris, was up 24%, 30% if you just look at the local currencies. It was up $1.4 billion from the third quarter a year ago. And now mobile almost three quarters of all the GMV, the gross merchandise volume across the platform, increased their transactions per buyer. You mentioned the payment volume through their Mercado Pago was up almost 60% in local currency. Their shipments, the MVO shipments business was up 32%. They now shipped almost 250 million products during the quarter. And then shipment and payments

is really starting to be the fuel of the stickiness to the Mercado Libre story. Their Credit portfolio was crossover $1 billion, so now they have $1.1 billion in personal loans and credits for purchases. They reached 36 million people with credit offers up from $27 million earlier this year. Revenue, that all reflected in revenues, Chris, up 66.5%. And the U.S. dollar is up almost 73% ex-foreign currency. Commerce was up almost 70%. FinTech, the Pago business, up almost 62%. And that shows some really nice growth in the gross profit margin up over 43% versus 43% last year. Operating expenses, they continue to invest across the business, but they're having the success. They're building out that network. They're making the acquisitions.

Really like what you're seeing from MercadoLibre. And it's not that expensive of a stock for the leader in the Latin American e-commerce space. Real quick before we move on, you mentioned the stock is basically flat for the year. The investments that they've been making, is that something that maybe pays off down the line, but is a little bit of a hindrance to the stock in 2021? Yeah. Well, Chris, I think it is. I think also just the currency effects and just the Latin American economy is continuing to unlock a little bit more slowly. They acquired Kangoo, which offers 5,000 pickup and drop-off spots across Brazil, Mexico, and Colombia. So they're just making these acquisitions. They're adding planes to their network. Shipping is becoming

more and more of an important part to their business. And I think to make that all work, as we've seen with the likes of Amazon and others, you really got to put the investments behind it. So I think that's a long-term investment, but always with MercadoLibre, it's always been a long-term thinking investment in a forward-thinking business. So as an investor, you really have to invest with that perspective. Zillow Group's third quarter results were completely ignored by Wall Street, and that's because Zillow also announced it is shutting down its home buying business and laying off 25% of its staff. Shares of Zillow down more than 35% this week. And Ron, look, it's still a $16 billion company, so they're not dead, but this was a train wreck.

Oh, boy. This was not good and it wasn't handled well and the communication was poor. They probably had no choice. I mean, you got to do what you got to do, but it just wasn't handled well. Management highlighted the unpredictability in forecasting home prices. They basically blamed a faulty algorithm that caused it to overpay for homes. The wind down is going to take several quarters. They've got lots of homes on the books still. As you said, reduction in the workforce of about 25%. They're going to take more than a $550 million loss on the homes that they bought. I saw that a key bank analyst estimated that two-thirds of the company's homes are currently listed below the purchase price that they paid.

Recently, this is one of the problems that I think was with the communications and the discussion with investors. Management said the business was suffering and would be paused as a result of problems with materials and labor capacity. Now we find out that it really was more broken than that. Lots of class action lawsuits will sort that out. I won't do it here. iBuying was supposed to be the future of Zillow. The company moves forward with its legacy ad business. That business reported a 16% increase in revenue for the third quarter, 130 million pre-tax profits. So we've got a business here. It's just not that exciting of a business from a growth perspective, that profit was down 7% from last year. So not great, very, very

poorly handled on the part of management. The number of people using Pinterest on a monthly basis fell, but third quarter profits and revenue came in higher than expected and shares of Pinterest up a bit this week. It's been a rough 2021 for shareholders, Andy. Is this signs of life? Yeah, Chris, I've watched on one and the stocks down at around 45. It's down about half from its highs earlier this year. Revenue up 43%, which is really nice, ahead of the estimates. Nice growth in the U.S., which is the largest market at 33%. International almost doubled, so that's good. A little bit of a slowdown from, or sorry, a lot of a slowdown from the rapid growth we saw earlier this year. So, like you

said, it is starting to see the normalization a little bit of Pinterest. But we are seeing some growth in the revenue per user. That was up 37%. U.S. was up 44%. International was up 81%. International, much smaller. U.S. is $5.55 per user. International, only $0.38. So, still a lot of work to make that normalized. And the growth rate international off such a smaller base, not too surprising. Ben Silverman, who is a large owner at 6% of the shares and the CEO, talked about the difference between out-of-home and in-home. They're seeing growth in the engagement platform for out-of-home, like fashion and beauty when you're outside your house, obviously, but the growth there has really been held back by the slowdown in-home that has really

driven so much of the Pinterest interest. They don't believe that's a permanent change. They think that will start to return back over time, but that's the big question. They talked about that in the call. They don't know when that might change. So when you look at the innovation Pinterest is making, they started testing out a seamless checkout experience, trying to tie in the commerce part, not just advertising, but commerce to their business. That's a big push. They're forecasting revenues for the coming quarter and the high teens, so a little bit of a slowdown, but probably about where the analysts expected. So I think you're seeing a nice quarter from Pinterest, still a lot to show to be able to turn it back into the growth story that we

really want to see. Square's third quarter revenue was lower than expected due to Bitcoin demand slowing down. Ron, is this a speed bump for Square or cause for ongoing concern? You know, Jack Dorsey, who's a big Bitcoin fan, really has tied a fair amount of Square's fortune to Bitcoin here. And so I think we're going to continue to see volatility. It's hard for me to predict where that shakes out. I think volatility will be the name of the game and we'll just have to wait and see how Bitcoin gets adopted and adapted in various places as time goes on. I would tend to say, as if I had to pick one, I would say it's a speed bump. It's not something that is permanently hurting the business. Even with that weakness in Bitcoin, overall sales are

up 27%, which, yes, it was a bit lower than expected. Gross payment volume for merchant customers up 43%. Gross profit overall, 43%. Now, that was down slightly from the previous quarter, so we have investors a little bit focused on that, as they should be. But adjusted EBITDA of more than $200 million. The company seems to be doing just fine. All right, guys, we'll see you later in the show. Everybody pack your bags. After the break, we're going to the metaverse. This is Motley Fool Money. Welcome back to Motley Fool Money, I'm Chris Hill. If you've listened to the show over the years, you may have noticed, recently we've been talking more about things like virtual reality, augmented

reality, and yes, the metaverse. Cathy Hackel is an expert on these topics. She's worked with everyone from startup AR companies like Magic Leap to tech behemoths like Amazon Web Services. Recently, Motley Fool analyst Asit Sharma sat down to talk with her because with all the talk in the past couple of weeks about the metaverse, figured it'd be helpful to ask someone with her experience and expertise, what is the metaverse? The metaverse, in essence, is the successor to today's mobile internet. It's kind of the future of the internet, kind of where we're going. So for people to understand it beyond just the term and the hype, you have to think about Web 1.0. So Web 1.0 connected information, and we got the internet, that changed a lot of things.

Web 2.0 connected people, and you got social media, that changed a lot of things as well, right? And now we're at the end of this Web 2.0 world going into Web 3.0, which connects people, places, and things. And sometimes these people, places, and things can be in a fully virtual synthetic environment, or it can be in the real world with some level of augmentation. So in this Web 3.0 world that we're getting into, the metaverse is being constructed and enabled. And pretty much the metaverse is convergence of physical and digital. You have

to look at it almost as your, you know, your digital life catching up to your physical life in some ways. It has to do with persistent content. It has to do with a lot of different enabling technologies that allow us to, you know, get to that metaverse. And the metaverse is being built right now. It's not something that necessarily currently exists in that bigger vision of the metaverse. It does come from a sci-fi term. It was coined by Neal Stephenson in a 92 snow crash. I come from having worked, like you said, in a lot of these companies internally. I was the VR evangelist at HTC Vive during the partnership with Spielberg's adaptation of Ready Player One. Then worked at Magic Leap where our chief futurist was Neal Stephenson,

who coined the term. So it's just been really exciting to kind of see the evolution of the term metaverse, right, and what's coming. I don't think people should over-index on the term. They should really think about it as the future of the internet or what comes after social media, mobile phones, et cetera. Wonderful. So can you give us maybe an example or two of a real-world place online that a viewer could go to who's watching today to get an early example of how this space is being built out? Yeah, I mean, there's many different components to it, right? Not at this current state, not one company really has all the infrastructure possible to build that greater vision of the metaverse. You can go to different places.

I mean, it depends on whether you want to go into a centralized platform or a centralized platform. But, for example, you go to Roblox. Roblox is a great example of a, you know, an experience platform that has been using the term that is very community driven. So where people will go and create games. It's a community driven. People go and play games with each other. They've done a lot of advancements when it comes to, you know, avatars, when it comes to social shared experiences, virtual social shared experiences. You know, they had, you know, they're doing a lot of different things with voice.

You know, soon and soon they're going to be doing a lot of things related to limited edition. So not quite non-fungible tokens. And I know we're going to be talking about that, but they are starting to embrace some of that limited quantity scarcity kind of perspective. You can start to see some of the glimpses of this metaverse, let's say, in an activation like Gucci Garden, where, you know, it was created with one of the creators on the platform. There's a special world, let's say, a special virtual world created for that brand where people were able to engage. You could also talk about the concerts that happened on the platform, like Little Nas X, 21 Pilots, where you go in and, you know, I always say my son had his first concert experience in Roblox. It was during the pandemic and it was in a virtual space. And just because it wasn't at a stadium, like you and I probably had our first concert.

For him, it was in a virtual space, but it was just because it was virtual, didn't make it less real. So I think that's one of the platforms that a lot of people, you know, if they want to get a glimpse of kind of what's to come, a good place. I mean, if you look at fashion, the world of fashion is embracing a lot of what I call direct to avatar. Um, you know, in, in some ways direct to consumer, one of the, one of the next phases, not the only one, but one of the next phases of direct to consumer is called direct to avatar, where you're going to be creating, um, you know, products and even services, uh, for your avatar and how they're going to look in some of these virtual spaces. Um, so yeah, look at some of the things that are happening in the fashion space.

Uh, Roth Lauren, for example, launched a, a, a, a, you know, a fully virtual fashion line inside Cepedo, which is a 3D avatar app in-game. It's pretty popular in APAC, but gaining popularity here. And yeah, you know, I think there's glimpses all over, whether it's music or fashion or culture. You know, if you want to get more immersive, you can go into, you know, something like VR chat. You know, if you want to get more decentralized, you can go into somewhere like Decentraland,

for example, where, you know, companies like Republic Realm have bought pieces of land for $900,000 to create a shopping district. So, yeah, it really depends on kind of where you're, you know, where you seek to go and try to see these glimpses of the metaverse. Mark Zuckerberg is hiring 10,000 employees for Facebook's metaverse project. Extremely interesting there. They certainly get it. They understand just what you've said. You need talent acquisition at a strategic level, but also on a subject matter level. And I'm sure you need lots of great engineers if you're going, software engineers, if you're going to go into this space in a really big way. Are there examples besides Facebook, Kathy, of companies that you think

really get it? And hopefully some publicly traded examples would be awesome. Yeah, definitely. I mean, obviously I mentioned Roblox. I think Roblox is one of those companies, you know, a lot of growth, a really good roadmap. You know, they really kind of have their eye on kind of the next 10 years, which I think, you know, they're playing the long game, which is great. Unity, right? Very important in order to enable this future of the internet, those underlying technologies that are able to create these experiences when they're fully virtual or even, you know, augmented. But for example, the game engines, Unity, for example, is a great example of a company that I think is very well positioned. Obviously Epic, but they're obviously

not publicly traded. But yeah, I think there's different companies. I would even look at, you You know, I would even look at even companies that do what's called LiDAR scanning. So you can do, you know, there's LiDAR on your phone and you're able to scan different things to create 3D assets. You know, there's some publicly traded companies that do that. Even starting to look at potentially some of the hardware companies that are creating glasses. I know there's, I think it's Vuzix. There's other companies that are kind of smaller players in the game. But eventually, you know, if things accelerate and we get to that point where we move away from the phone, you know, those are going to be very attractive, you know, potential acquisitions for bigger companies.

You know, Snapchat, I think Snapchat is, to be honest, you know, not necessarily something that a lot of people mention when they think metaverse because they're very focused on using the term augmented reality. But I do see them as a major player because they're setting up not only a very young demographic that's kind of growing up with them and getting used to living on the camera, but I think that they're setting up great teams and great leadership that gets kind of the vision. They don't use the term metaverse. I do have to say that. But in essence, what they are doing is part of the future of the metaverse. So, yeah, those are some of the companies. I think that there's, you know, obviously the big buys, you know, Fang, all of those are obviously all of them are involved in some way, shape or form, you know, whether

it is Facebook or saying that they're going to be a metaverse company, right? That's a big signal for the market or, you know, or Microsoft in their meetings talking about enterprise and metaverse. But yeah, I think all of them in some way, shape or form are trying to figure out what their role is and how they enable the metaverse in the future. Chris Hill If you're interested to learn more, you can hear Cathy Hackel every week on the Metaverse Marketing Podcast. Coming up after the break, Andy Cross and Ron Gross return. And if you're looking for investing

ideas, good news, they're coming back with a couple of stocks on their radar. Don't go anywhere, you're in the right place. 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 with Andy Cross and Ron Gross. You can hear the show every week on your favorite podcast platforms, Apple, Spotify, Stitcher, Amazon Music. You can also catch us on radio stations across America, including our brand new affiliate WKXL in Manchester, New Hampshire. Shout out to the Granite State.

All right. A couple more earning stories before we get to the stocks on our radar. Shares of Under Armour up more than 15% this week after third quarter profits and revenue came in higher than expected. They raised guidance for the full fiscal year. Andy, CEO Patrick Frist's turnaround plan looks like it's starting to bear a little fruit. Yeah, Chris, he started off with higher demand for the Under Armour brand. So that seems to be driving a lot of the growth. The wholesale business was up 10%.

Revenue overall was up 8%. The wholesale business was up 10%. direct-to-consumer was up 12%. I'll note, Chris, that the e-commerce business was actually down a little bit, down 4%. So in their stores, that was really where they saw a lot of the growth. They saw improvement in the average selling price. They didn't have to discount nearly as much. They didn't have promotions as much. So they really saw some growth drive through, and they attribute that to the strength in the Under Armour brand coming back. International was up 18% to $510 million, but North America continues to be the bulk of the drivers of the sales and the growth

story overall. That was up 8% to more than $1 billion. I mentioned reduced markdown, so lower off-price sales. So continuing to drive on the, as you mentioned, Patrick Frist, driving the turnaround in Under Armour. They did talk a little bit about the cost and the supply logistics, but forecasting some nice growth for the next quarter, 25% versus 20% that you were expecting the last quarter. That helps to improve a little bit on the gross margin side as well as the operating profits. So overall, you continue to see some nice growth in Under Armour and across their businesses, but really particularly in North America as a big growth driver for Under Armour. Just like Under Armour, Etsy's third quarter profits and revenue came in higher than expected.

Etsy's revenue guidance for the holiday quarter was a little lower than Wall Street was hoping for. But Ron, this really looks like a business that's only getting stronger. Yep, you nailed it. Strong report, investors keeping an eye on the cautious guidance for the holiday season. That's the headline for sure. For the quarter, gross merchandise sales up 18%. If you exclude face masks, interestingly, which are on the decline, gross merchandise sales are up 24% as the anniversary of a very strong pandemic-fueled quarter. Net income was actually down slightly, but there's some acquisition-related expenses there. So if we strip them out, you see an adjusted EBITDA of $174 million, which was up 15%. Turning to guidance, relatively

tempered for the holiday quarter. Expect $660 to $690 million of sales. That would be about a 10% increase, which is fine, but not amazing. Comparisons to last year's holiday season will be tough, says the CEO. Last time the company saw revenue more than double compared with the pre-pandemic year. We were all locked down. Many of us turned to Etsy probably for the first time. Stimulus checks also boosted spending at that point. So they're being cautious. Also, there were some very strong numbers in October. So there's some concern that maybe some holiday season buying was pulled forward and a lot of people got to it earlier than normal. So I think they're being cautious. I still think it's a very strong business. One quarter, whether it comes in

a little light, a little heavy, they're going in the right direction. And I think they'll continue to be strong for many years to come. So just like every quarter with Costco, when we go through Costco's earnings, and it comes up like, well, you need to strip out the gas. Are we going to be doing this with Etsy every quarter? It's like, well, if you strip out the mask sales, I'm hoping that's just a pandemic thing we're doing. When we stop anniversarying pandemic, I think we'll be done. Yeah, it's not just Etsy. Under Armour also, their accessory business was down 13%, lower sales of sports masks. Real quick, our email address is radio at fool.com. Question from Sean Williams, who asks,

what's going on with PayPal? It's been on the decline since July. I know the possible Pinterest acquisition scared some investors, but that only seemed to exacerbate what was already happening with the stock. He's not wrong. He is not wrong. If I had to point to one major event that's occurred over the last several months, it would be that eBay has decided to transition off of PayPal's payment platform to their own. The loss of eBay is pretty big, resulted in an 8% hit to PayPal's payment volumes for the last quarter. Is the writing on the wall that others could do that? Even if they don't, the loss of eBay is a rather big deal. I would imagine investors shied away from the stock as a result. Still in the fintech space, PayPal is

just one of the leaders on the consumer side more and more across the entire ecosystem. I'm actually glad the Pinterest acquisition didn't quite work out, but I think that is a little sign that they are going to continue to expand both their brand name and their business into lots of different parts of the entire e-commerce platform. To your point, Ron, it's a nice reminder of eBay's size and influence. I know eBay gets short shrift from a lot of investors, but but you look at a move like this, it has an impact. It certainly has an impact. It's a very, very large customer

who's responsible for a fair amount of business there. And they'll be able to shake it off, but it is meaningful. Keep the emails coming, radio at fool.com. It's time to get to the stocks on our radar and the original man behind the glass, Steve Broido with us this week. Steve, hello, friends. Andy Cross, you're up first.

What are you looking at this week? Steve-O, I'm looking at, and Chris, I'm looking at Axon Enterprises developed, makes, and sells conducted energy weapons under the Taser brand. So it's the old Taser company, Taser devices, body-worn cameras, emerging cloud-based evidence management platform is some really nice growth. With more calls for transparency and help for security and police officials who are using weapons for community protection, I think Axon and its Tasers and body cameras will likely be more relevant in the world going forward. They do show that their solutions can help reduce user force, and they've saved more than 250,000 lives over the years from death or

serious injury. It has relationships with 17,000 of the 18,000 U.S. law enforcement offices across the U.S. It's a dominant and best-positioned brand in the space. When I look at the overall business, growing at 40%, 50% serves a very large market, pushing into the international growth. And as I mentioned, that cloud business that they're starting to expand away just from the products, Axon Evidence, Axon Records, Axon Response, I just like the overall business they are serving in a need for more transparency for officials in security and police. And I like Axon's opportunities going forward. I'm still looking at it, still researching it, but overall looks pretty impressive.

And the ticker symbol? A-X-O-N. Steve, question about Axon Enterprise? So I'm a shareholder. I'm a huge fan of this one. So my big question is, is there a next big thing for Axon? I mean, the move from just that Taser model to body-worn cameras, huge. Is there a next act?

Overall, yeah, that cloud, the Axon evidence, which stores and analyzes data from the cameras and the records, which uses AIs to help generate police reports. I think that push outside of just the core Taser and body cams is really the next spot that founder and CEO Patrick Smith is pushing into. Ron Gross, what are you looking at this week? Steve, you know what time it is. It's time to revisit an old friend, Titan International, just for you. No!

TWI, microcap manufacturer of industrial wheels and tires, long-term holding of mine that has admittedly struggled, but shares are up 185% over the last year, but they're down 30% from their 52-week high. Still only a $500 million market cap for Titan. Latest quarter shows some light maybe at the end of the tunnel. The strongest third quarter results since 2013. Net sales up 48%.

Agriculture leading the way with an increase of 59% year over year. Earth moving and construction segment up 36% year over year. Those are strong numbers for those of you who follow Titan out there. You don't see that every day. Gross margins widened 13.4% versus 10.3%. So bringing more money down to the bottom line. adjusted EBITDA of $35 million, expecting full-year adjusted EBITDA of over $130 million. Remember, we only have a $500 million market cap company. Balance sheet's a little concerning,

$95 million in cash, $450 million in debt. Got to keep an eye on it, but selling at $6.5 full-year EBITDA, pretty inexpensive in my eyes. Steve, question about Titan International? Well, the obvious one is, have they reinvented the wheel, Ron? Is this what's going on? What you're telling me, it sounds like a true reinvention of the wheel. This company sells wheels. How are they doing? You explained it, I guess, but I don't understand.

I will say, actually, it's funny you say that. There is improvements in technology with respect to wheels. More roundness? They're more round than they used to be. But they do have technology that helps improve the farmers and the earth moving and construction segment. They're better to do their jobs more efficiently and more economically. And so that is leading the way. What do you want to add to your watch list, Steve?

I'm adding Axon. Definitely. Ryan Gross, Andy Cross, guys, thanks for being here. Thanks, Chris. That's going to do it for this week's show. It's Mixed by Steve Broido, our producer is Matt Greer. I'm Chris Hill. We'll see you next week.