Motley Fool Hidden Gems Investing - The Business of Baby Yoda

Episode Date: February 21, 2020

Walmart reports strong e-commerce growth but has problems with fun and games. Dropbox surprises investors and aims for profitability by the end of 2020. Domino’s delivers again. And McDonald’s introduces Quarter Pounder-scented candles. Motley Fool senior analysts Ron Gross and Jason Moser, and Jeff Fischer of 1623 Capital, discuss those stories and weigh in on the latest from Amazon, Boston Beer, Stamps.com, Texas Roadhouse, and Virgin Galactic. Plus, the guys share three stocks on their radar: Pinterest, Synaptics, and Hasbro. And toy expert Chris Byrne analyzes the current state of the industry and the business of Baby Yoda.   Click here to take our brief listener survey, and thanks for helping us out! Learn more about your ad choices. Visit megaphone.fm/adchoices

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Because we have your number. everybody needs money that's why they call it money from fool global headquarters this is motley fool money it's the motley fool money radio show i'm chris hill joining me in studio this week senior analyst jason moser and ron gross and from 1623 Capital, Jeff Fischer. Good to see you, as always, gentlemen! How are you doing? We've got the latest headlines from Wall Street. We will dip into the Fool mailbag. And as always, we've got a few stocks on our radar, but we begin with big retail. Walmart's fourth quarter profits and revenue

came in a little bit lower than expected this week. Holiday quarter, I don't know, Jeff, this is what we saw with Target's holiday quarter, in that, bizarrely, the video games and the toys, they didn't do that well. Big retail, not big excitement, though. Yeah, Chris, same-store sales were only up about 2% in the fourth quarter, and basically for the whole year, 2.8% same-store sales, Walmart U.S. So, you're seeing this business, which is giant. I mean, Walmart has $520 billion in annual revenue. They're able to grow revenue by low single digits year over year. That's their goal now, that's their hope. But as As you said, Chris, retail toys didn't do that well over the holidays. We can talk about

why that might be. But groceries did well, e-commerce did well. Overall, as long as same-store sales are in the green, Walmart is still a relevant business. I think it was neat to see the performance in grocery, because we talked before about how Walmart, I don't think a lot of people really make that immediate connection, right? It really is. Grocery is responsible for more than half of all U.S. sales. And then, On top of that, when you see Warren Buffett's recent big investment in Kroger, a lot of interest in the grocery space there as well. When you've got Walmart and Kroger, which are really the two leaders, I think, in our domestic space here, grocery-wise anyway,

for all the weakness games and toys may have displayed over the holiday season, at least they've got grocery, right? Exactly. I've been very impressed with what Walmart has done over the last few years, but also very impressed with what Target has done to turn their business. I'm wondering, do I want to own Walmart at 23X or do I want to own Target at 17X? I might lean towards Target in this environment. I would agree with you, Ron, I think. As you just said, Walmart trades at 22.9X, so you round it up to 23X. I did round. Or maybe the price changed while we're talking.

No, I rounded purposely. 23X forward estimates. And its 10-year average is 15.9X, so it's well above its 10-year average. Shares of Dropbox, the online storage company, up more than 20% on Friday. Fourth quarter revenue came in a little higher than expected. Jason, Dropbox says they're aiming to be profitable by the end of this year. What do you think? Well, if you ever want to get the market's attention, you do what management did in this call. The reaction to the stock today really is all about promises made, which is fine, but that means that they're going to have to keep them. The biggest question I have in regard to Dropbox remains how many

people they're going to get to actually pay to use the service. I'm not saying it's a bad service. I think a lot of users out there are conditioned to just be able to use it for free, which is kind of nice. But to your point in regard to profitability, they did on the call say that they now aim to be GAAP profitable by the end of this year. And that means just straight up profitability, like a lot of these mature businesses that we love so much. They also raised their long-term operating margin target to a range of 28% to 30%. That's up from 20% to 22%. So, that's a pretty significant boost there as well. And they see hitting that by 2024. Again, a promise made. It's a promise they're going

to have to keep. Going back to the paid users, though, paying users of 14.3 million up from 12.7 million years ago. But they have 600 million-plus registered users, which is a lot. Now, that sounds like it could be a great opportunity. I mean, the flip side of that coin, though, is, that's a lot of people, and I'm wondering why that growth to paid user is still so slow. I think part of it is, they're still trying to figure out their product landscape and pricing, and that's played out a little bit on the business model thus far. Top-line growth of 20% is OK, but I don't know that there's anything to really write home about. So, I'm kind of on the fence with these guys. Tim Beyers, he likes this company a lot.

And whenever Tim talks, I definitely listen. Just still not quite sold on the future here, though. They also announced a $600 million share buyback plan. That surprised me, because this is not a profitable company. It is not the biggest company. It's like $9 billion, $10 billion in market cap. I'm just wondering, why allocate the money towards share buybacks, when for an unprofitable growth company, maybe they could spend the money elsewhere. Yeah, but to that point, being such a young company new to the public markets, I think a lot of times they'll set that money aside in order to more or less be able to help offset dilution that comes from stock-based compensation and whatnot. So, I don't think

we would see any material impact to the shares outstanding, so to speak, other than to offset compensation. Yeah. It's just an authorization. It doesn't mean they'll actually execute, and they could do it over long periods of time, as well. I don't think you'll go in and see a $600 million open market purchase anytime soon. It is interesting to watch. You have 600 million active users, and you're only monetizing a fraction of them. It indicates you gave away something free of charge that has decent value, and now you're trying to unlock it with actual revenue per customer. That's the tricky part. Yeah, it is. To that point,

they're adding a new key metric for investors to follow going forward in annual recurring revenue, which is great. I mean, a lot of these companies do base their models on this recurring revenue. It's nice to get that clarity. I think that probably helped steer that conversation a little bit further away from the actual number of paying users and more towards just their ability to monetize, maybe upsell, maybe exercise in pricing power. So, we'll follow that metric going forward, and that'll certainly give us a better idea as to the health of the business and how much they're actually able to grow. Another strong report from Texas Roadhouse. fourth quarter profits came in higher than expected. And just for you, Ron,

Texas Roadhouse raised the dividend 20%. Yeah, I was going to mention that. It was just for me. This is a strong report. Comp sales up 4.4% at company restaurants, up 3.4% at domestic franchise restaurants. You saw margins widening on a restaurant basis. And that's despite labor and food cost pressures, which all restaurants are seeing. Earnings per share up 45%. But, important to mention, it doesn't include an extra week. There are 53 weeks in that year. They continue to open stores, opened up 11 company restaurants, including two Bubba's 33, which we keep saying we've got to make a road trip to one of these days. We will. And also, they mentioned a strong start

to 2020 with comp restaurant sales growth of 6.4% for the first seven weeks of the year. That's a really strong number, actually, and they're targeting another 30 stores to open during the course of this year. As you mentioned, increased the dividend, the seventh consecutive year of double-digit growth in that dividend, which now stands at 1.9%. So, Texas Roadhouse is a restaurant chain that we've followed for a bunch of years. Among other things, I think Ken Taylor and his team have done a really good job with the restaurant count. They never really seem to get out ahead of themselves. They just methodically open a couple dozen new locations every year.

Yeah, it's measured growth, and it's consistent comp store sales growth, too. That's how you generate revenue growth, right there, and they do it well. So, you brought some math to the equation on Walmart and Target, and how relatively pricey both of those stocks are. What about Texas Roadhouse? This is a company that's performed really well for a long time. Yeah. The last year, not as strong as really in the past, maybe up only about 13% over the last year. Stock trade is about 24X forward earnings. If you look at the average of restaurants, it's about 25X, so in line. But folks like Domino's and Chipotle actually increased that average. If you look at the median,

it's more like 21X, indicating maybe a little bit pricey. Coming up, we've got pizza and beer. So, what more could you possibly want? Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, Jeff Fischer, and Ron Gross. Before we get back to the news, quick request. I'd like to ask a small favor of the dozens of listeners. We have a brief listener survey. It would be great if you could take a couple of minutes and help us out. It'll help us learn a little bit more about you. It's anonymous. It is quick. And whether you just started listening or you've been one of the

dozens for years, we'd really appreciate if you could help us out. You can find the listener survey link right in the description of this episode. So, just click on that and help us out. We'd really appreciate it. Fourth quarter results for Stamps.com were better than expected. How much better? So good that shares of Stamps.com were up 65% on Thursday. What? What is this, Jeff? Stamps.com has been one of the most volatile stocks in the past 12 months. Exactly 12 months ago, they announced that they were ending their exclusive partnership with the U.S. Postal Service, which sounds great, but it actually...

No, it didn't! It sounds great that, hey, we have an exclusive partnership, but what that meant is that they couldn't form partnerships with Amazon or FedEx or so forth. So, they knew, thinking long-term, we can't be just working with one partner, we need others. So, they shut that down. The stock lost about three-quarters of its value last year. and now it fell all the way to the $30s, and now it's jumped all the way back up to $160. If that doesn't hurt everyone listening who hasn't bought it, that hurts. So, what a great recovery, but it's still just getting back to where it was prior.

So, short story is, results are better than we're feared, and they still have a relationship with the U.S. Postal Service, it's just no longer exclusive. How much of this pop was short sellers sort of covering their short? I have to assume it was some percentage. I know that one of my thoughts last year when they announced, hey, we're breaking up with the U.S. Postal Service, one of my thoughts was, there's a chance, I'm not betting on it, but there's a chance they completely go out of business. There was a chance. I think that's why the stock was so volatile, and that's why it's responding so much to the upside now.

They signed a new partnership with UPS in November. The reason I think the stock popped so much, 65%, is the earnings per share they reported for the quarter was $2.12. That was against a $0.93 estimate, so more than double the estimate. So, everyone has to adjust their models going forward. They also said they expect revenue to grow this year a little bit, but that's so much better than was feared. So, that all said, Chris, now that the stock has run back up, it's at 36X expected earnings, so it's no longer cheap-looking. Boston Beer sold $1.25 billion worth of liquid in the fourth quarter, but earnings came in lower than expected. Shares of Boston Beer down a little bit. Jason, maybe struggle is

too strong a word, but I'm going to use it anyway. We've seen the struggles with Sam Adams, the best-known brand that Boston Beer has. But over the past year or so, they've really done well with hard seltzer. Yeah. This really does feel like Boston Beer is becoming less and less a beer company. And maybe that's not such a bad thing, because this quarter's results was not thanks to Boston Beer. I mean, it was not thanks to Samuel Adams. It was thanks to Seltzer primarily. And that's OK. But if you look at depletions, that represents the sales from distributors to retailers. I mean, you remember just a few years ago, we were talking about these depletions of negative 8%. I mean, they couldn't get out of

their own way. Depletions this quarter were up 25%. If you exclude the Dogfish Head acquisition that they just closed, they were still up 19%. Now, the reason is because of seltzer. It was not because of Samuel Adams beer. And that could be a problem. Gross margin took a big hit down to 47.4% from almost 52% a year ago. And the main reason for that is because of seltzer. They're essentially having to completely reshape their supply chain to account for this massive pivot in what the business really is. The good thing for investors and for this company, it is a very long-term oriented business. Jim Cook, the founder, is still helping lead the way here. He does have that long-term

focus mentality. But they still need to figure out a way to rekindle that Samuel Adams brand. It is really losing share quickly. I think part of that was because he was so slow to the draw on developing a good IPA catalog, and IPAs really have taken over the craft beer market. The upside is, he was very quick to make those investments in seltzer. You've got earnings growth here. You've got earnings for the full year targeted at $11.20 at the mid-range. That puts shares today at around 35X full-year estimates. I don't know that it's necessarily what I would call cheap, but I think it's also for a reason, because the company has shown the ability to pivot and adjust in times of challenging times.

I don't know that I would look at this as an ideal opportunity today. Most of that comes from a weakness in beer. But kudos to them for the performance in seltzer, because it's making a big difference. Shares of Domino's Pizza hitting an all-time high this week after strong fourth quarter results. Ron, Domino's has grown their same-store sales every quarter for nearly nine years. Yeah, it's pretty impressive. U.S. comp sales up 3.4%, and international up 1.7%. That was a little bit light, but it's 104th consecutive quarter of international same-store sales growth. I was used to 35 consecutive quarters for U.S. store same-store sales growth.

So, really impressive. And they continue to open stores, 141 U.S. stores, 351 international during the quarter. The big story here is that companies like Domino's have to compete nowadays with folks like Uber Eats and Grubhub. And they're actually doing a better job now. They're adding new menu items, they're being promotional when appropriate, they're focusing on faster delivery to more locations, they've now got a loyalty program with more than 40 million people enrolled. So, things are going quite well. As I said, with Texas Roadhouse, pressure from higher food and labor costs, that's just the way it is. But you saw earnings per share up 19%. That's partly because of a $2 million share buyback as part of a recapitalization.

but still, very strong results. So, we were talking in our production meeting, one of the companies we expect to see go public later this year is DoorDash. I look at results like this from Domino's, and it makes me think that companies like DoorDash that are just competing against Domino's, I don't know, it makes me scared for them. It makes me scared for them and the shareholders who buy into the IPO. So, Domino's has been doing delivery for a long, long time, and DoorDash is new to it, and the model is more fragmented, and they don't control it as much as Domino's controls it, and they can make adjustments and pivots.

And so, it's going to be tough, but it is interesting, because as we've said before, it's not just Chinese and pizza that you can get delivered anymore, and that's got to take a bite out of the business. Well, I mean, it's just a matter of financials. If Domino's can get the right contracts with DoorDash and Uber Eats and so forth, why not just go multi-channel? And then, when people are checking out Uber Eats and they see this brand they obviously know well, they're like, oh, we'll get Domino's tonight. Right, yeah. They've resisted going to the other folks. They want to retain that control.

They think it's best for the franchisees to retain that control. We'll see what the future brings. The landscape is definitely changing. Bath & Body Works has put up good quarterly sales numbers fueled in part by their line of scented candles. And you know who's been paying attention? McDonald's. Because this week, McDonald's unveiled some limited edition swag for their Quarter Pounder fan club, which is a club that apparently exists. Included in the swag, a t-shirt, a bumper sticker, and a set of scented candles that smell like the ingredients of a Quarter Pounder. So, Ron, you've got a little scented pickle candle, one for onions, ketchup, sesame seeds, and yes, a little candle that is supposed

to smell like 100% fresh beef. As long as it's not a Filet-O-Fish candle, I could maybe deal with the burger, but that's pretty disgusting. Give Kempchinski and his team some credit. There's not a Filet-O-Fish fan club, there's a Quarter Pounder fan club. I haven't had a Quarter Pounder 20 years, it's got to be. So, does McDonald's now qualify as a lifestyle. I mean, I know last week we were talking about this, and Emily had a pretty hot take in the difference between maybe, what was it, Taco Bell and KFC. KFC was clearly a lifestyle, whereas maybe Taco Bell was not. I mean, what is McDonald's?

I mean, is White Castle a lifestyle? It's something. I don't know if I call it a lifestyle. They've been selling hamburger-scented candles for at least a decade at White Castle. And, you know, the cult classic movie, Harold and Kumar, go to White Castle. I mean, McDonald's, for all their success, they can't claim that. Let's go to our man behind the glass, Dan Boyd. Dan, I'm not saying you're a member of the Quarter Pounder fan club, but if these candles were given to you as a gift, which one are you lighting first? OK, so here's the issue with that. Two things.

One, the McDonald's Quarter Pounder, and I try not to eat McDonald's that much, but it is one of the most delicious things on the planet. I absolutely love it. two, I would put all of them up going at the same time to get that full QPC experience, and then my wife would leave me. All right, guys, we'll see you later in the show. Up next, a look at the current state of the toy industry with expert Chris Byrne.

Stay right here. You're listening to Motley Fool Money. Goodbye, Norma Jean Oh, I never knew you would all you had Chris Hill. Welcome back to Motley Fool Money. I'm Chris Hill. We talked earlier in the show about Walmart and Target and their respective toy sales being less than robust. This weekend, the American International Toy Fair is being held in New York City. So earlier this week, producer Mac Greer checked in with Chris Byrne. He's been following the toy industry for more

than 30 years. Mac kicked off the conversation by asking Chris Byrne about the big event in New York. What is your headline? Help. No, my headline is, there's a lot of uncertainty. People are optimistic, but there's a lot of uncertainty going into the year. And where does that uncertainty come from? Is it the coronavirus? Is it just the weakness in toy sales in general? Where is that uncertainty coming from? It's coming from a lot of places. Last year, of course, the threat of tariffs was causing all kinds of havoc in the fourth quarter with the early orders for spring 2020. That seems to be resolved for now. But then the coronavirus is having a significant impact on production. I've

heard stories that people can't even get their samples for Toy Fair out of China. We're going to be delaying manufacturing for at least three weeks, which isn't the end of the world. But when you consider all the manufacturing and then all the shipping and everything that has to happen, it's going to push tight deadlines even further. So there's a lot of concern about that. I've also heard about toys that were slated for 2020, but simply cannot be produced now and are now on the docket for 2021. So there's a lot of uncertainty about that. The Chinese delegation that's been a mainstay at Toy Fair here in New York for years is not coming. There's a lot of uncertainty. And do we expect any Baby Yoda sightings?

Well, Baby Yoda is one of those phenomena that came along. And yes, Funko has already got the Baby Yoda out on the market. It's their best-selling figure ever. We've got stuff coming from both Hasbro and Mattel with Baby Yoda. Those people who've been clamoring for it will find themselves satisfied mid-year, probably. And Chris, were you surprised that Baby Yoda wasn't ready to go for the holidays? I actually was. And I think it really speaks to a change in how people consume entertainment. We are all eager to know about whatever rumors we hear about the iPhone a year in advance, and people are leaking stuff. And to Disney's credit, they do a great job of keeping the surprises together,

keeping the surprises under wraps. But I think in this changing market that somebody might have said, hey, maybe we should tease Baby Yoda and be ready to go. But again, it's a fad and no one can predict a fad. So it's just one of those things that happened. And I think it'll keep going so that by mid-year, people will really have their Baby Yodas. A big picture question here. Are toys dying? Oh, no. Now, hold on, because the reason I ask that is obviously electronics and video games are becoming more and more popular. So it seems like that window where a kid is playing with a traditional or a physical toy is getting shorter and shorter. So yeah, are toys dying? No, toys are definitely not dying. Fortunately, the species does not evolve as quickly

as technology does. Kids still love the tactile play. You look at the success of things like slime and other compounds. You look at Lego's continued success. You look at the ways in which kids are playing games with one another. So, there's still room for traditional toys. The challenge is that people are buying less stuff overall and not just in the toy industry. So, there is somewhat of a decline. The other trend we're seeing is that there's been a big boom in less expensive toys, whether it's collectibles from companies like MGA or Yulu or Moose or any of those people. who are making great, low-priced collectible toys, people are spending actually less money. And we saw that with a 4% decline in the U.S. and a 3% decline overall globally in the toy

industry last year. And let's talk about that, because you mentioned that decline. Target and Walmart, a couple of retailers that cited weak toy sales over the holiday quarter. When you look at the retail landscape in toys, what jumps out at you? Well, I think even though it's been over a year since Toys R Us left the marketplace, I think we are just now beginning to feel the full effect of that. Toys R Us was a phenomenal place for people to go and encounter toys and buy things they might not have seen otherwise. Walmart and Target, just by the nature of their companies and their structures, cannot carry as many products as a Toys R Us did. So, there are fewer products in those high-traffic

retailers. And the challenge is also one of marketing, is getting kids to want the toys and ask for them. And secondarily, with the rise of online sales, we're losing those incremental sales. Mom and dad are not walking through Target and saying, hey, we love that game. Let's throw that in the cart as well. So you're really seeing a confluence of factors that are causing overall sales to decline. And Chris, I want to talk more about trends in the big picture. At what age do kids shift to playing with electronics as their primary mode of play versus traditional physical tactile toys? Typically, the sweet spot for mass market or highly promoted toys is about four to eight. We are seeing some trends in what

we call fandom, which are older kids buying things. That's really what made Funko do so well, certainly Hasbro with their action figures. These are toys that are sold to an older consumer who is staying connected to the entertainment properties they love and using them as part of being part of a community. We see it in cosplay, we see it in Comic-Con, we see this engagement with these characters and the related toys. Let's talk classic toys. In terms of the classic toys, what's holding up well? We see a lot of classic toys doing very well. Etch-A-Sketch is still around. games. Monopoly still does very well. Stuffed Animals do very well. Barbie, of course, had a

great year last year. So did Hot Wheels. Barbie just celebrated 60 years. Hot Wheels is something like 53 this year. So those classic play patterns are still things that kids love and gravitate to. Chris, you mentioned Barbie, and I was struck by just the varieties of different Barbies these days? Well, I think one of the things that Barbie has always done has been to move with the times. You can't be a toy and not move with the times and be around for 60 years. And I think one of the cool things about Barbie now is that she reflects the diversity of the culture more than ever before. And we see body styles, hairstyles, skin tones, all of these things that make Barbie look like the world children see around them. It was one thing in 1959 when everybody dreamed of

being a blonde Malibu beach girl. But today we want something a little bit more reflective of the world kids see. And along those lines, how about giving Ken a bit of a beer gut? Are we going to get there? Really, that would be what the kids are seeing, right? A little more. But I think that, you know, Ken is still kind of in the background. You know, I don't know, 60 years with no commitment, I'd be a little concerned too. Yeah, very commitment-averse. Let's talk about the two big toy makers. When you look at Hasbro and you look at Mattel, who do you think is better positioned going forward? Well, I think they're both in a good position. Mattel is coming off a better-than-expected year

and is well-positioned with some great new products going into 2020. Hasbro has done very well in diversifying into a children's entertainment company. The acquisition of E1 has been very good for them with properties like Peppa Pig. If you don't know Peppa Pig, she's a wonderful character and generates, from what I've heard, approximately $1 billion a year in merchandise sales. That's a huge international property. They've got other entertainment brands out there through E1. I think it's something Hasbro does really well. Their ability to diversify into experiential marketing as well. There was a Nerf event that toured around last year. It was very popular. So, kids got to come in and play actively with Nerf products. Not

necessarily buy them, but you're good when you're leaving if you wanted to. As we wrap up here, the New York Toy Fair playing out this weekend. It's only February, but is this when we start to see what the next hot holiday toys might be? Well, certainly, that's what the manufacturers hope for. And I'll tell you one that I've seen that I think is going to be huge. And it's one that I saw in Hong Kong, and it had tons of people around all the time. It's called Go-Go Bird. It's a remote-control flying bird. It looks like a parrot. It's going to be under $40. It's got artificial intelligence. And it really is sort of the perfect marriage of electronics, technology, and classic play. And I think it's coming out.

A company called Zing has acquired it for distribution. And I think it's going to be the ones you're going to be seeing a lot of this year. Chris, we're a show for investors. So, what are a few names that investors should be looking at as they look at the toy industry here? I definitely think you should be looking at Hasbro and Mattel and how they are able to diversify into entertainment to continue to grow their businesses, whether through acquisition or new initiatives. I think that's definitely important to look for. I think it's important to look for some of the smaller companies that might be acquisition targets as

they grow. Small companies like PlayMonster, which is doing some really great stuff, and they're fairly quiet. So, it's sort of looking at what's selling, looking at what kids are interested in, and looking for the products that go against those and seem fairly forward-looking and at the same time being classic. And of course, you've got huge companies like MGA, which is a private company, but they are really leading the charge with a lot of the creativity. Looking for the creativity, looking for the innovation, and how to expand beyond just basic play. If you want to shake up your workplace a little, check out Chris Byrne's book. It's entitled Funny Business, Harnessing the Power of Play to Give Your Company a Competitive

Advantage. Up next, we'll dip into the Fool mailbag and we'll give you three stocks for your watch list. Stay right here. You're listening to Motley Fool Money. As always, people on the program may have interests 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 in studio once again with Jason Moser, Jeff Fischer, and Ron Gross. Our email address is radio at fool.com. You can also hit us up on Twitter, at Motley Fool Money. Question from Ted, who asks, what do you think of Virgin Galactic and the wild ride the stock has taken

lately? Yeah, I mean, for all the talk, and it is warranted, about Tesla and the rise of Tesla, you look at shares, Jason, of Virgin Galactic, I think that's up five times since last December. It has moved very quickly in a short period of time. For a space company that isn't really, you know... That doesn't have anything yet? Yeah. That's kind of the thing here. For me personally, Virgin Galactic, I love the concept. I hope to go to space one day. Seriously, I'm not kidding. But let's separate personal aspirations from reality here. And the reality is that this is a brand-new company,

The Public Markets. They, for all intents and purposes, make no money at all. I'm talking about Dropbox and promises made or promises that need to be kept. That's essentially what this company is right now, is promises that have been made in the form of space flights. And so, middle of last year, as they were getting ready to go public, they had talked about having booked more than 600 tourist customers backed by over $80 million in deposits. And that's all fine and dandy. I mean, that's wonderful. But we have to remember, they need to deliver on that promise. And then furthermore, you have to wonder, OK, what is it beyond space tourism? I mean, Space tourism is cool, but that's going to be a very limited swath of the population.

I don't know how many repeat purchases that's going to garner. For me, when I think about this business, I think about, what are they going to do beyond that? For me, the question is, what do they do with this technology and this capability? That's where I think it could get really interesting, because the competitive advantage here is in the form of barriers to entry. The know-how and the finances involved with building up this business and the capability. I think it's a fascinating business. It's one that I'm going to continue to follow. But I see no reason to rush into this. If you're a stockholder today and you're loving these gains, please remember that these gains

are the product of speculation and not business performance. Yeah. Speaking to your question, Jason, I think what has some investors excited is a report out of Morgan Stanley that they see the commercial space-based travel industry as potentially being worth $800 billion, and not just from rich people taking trips into space, but because it could disrupt the airline business. That would be something. That's years off. It is! And I like that. I like that thinking in the market. We'll go back to that interview that we had with Christian Davenport here a little while back. Remember, he wrote that book, The Space Barons. I asked him that question. I said,

hey, listen, I'm 47 years old. Am I going to be able to go to space in my lifetime? Will I be able to go to the moon?" And he wasn't 100%. He thinks it probably could happen. But I say this just to give people an idea of what kind of timeline we're talking about here. This is something that's going to take a lot of years to play out. I think it's OK to be patient with this one. Sure, Jason. But if you go to VirginGalactic.com, it's a really cool website. The rockets look amazing and terrifying, too. but amazing technology. But what they do have going for this business, what it has going for it is, it's the only pure-play stock out there. So, like, Beyond Meat for a long time,

Tesla, if people want to invest in the space, this is how they can do it. And invest is maybe too strong of a word, but if you want to speculate in this space, this is your one way to. But like you said, it's complete speculation. Got SpaceX and Blue Origin out there doing the same kind of thing. But you're right, this is the only real investable option today, I'm sure that attracts a lot of interest. Question from Cameron Howe in New York City, who asks, would you be comfortable holding Amazon if Jeff Bezos suddenly stopped running the company for some reason with no transition? I feel great with Amazon making up 15% of my portfolio because of the businesses and Jeff Bezos. Is there a Tim Cook equivalent

waiting in the wings? Obviously, a reference to Steve Jobs and his passing, and Tim Cook, long-time operator waiting in the wings. I own Amazon, I don't know who's waiting in the wings. There's been no name successor, and the stock would certainly get smacked if all of a sudden Bezos left suddenly. So, that would be bad. There are some very talented people at Amazon, obviously. There are CEOs that are head of the Amazon Web Service business and the worldwide consumer business, respectively. You could see, potentially, if there's a day where Bezos left, where the company would be broken into two pieces and each of those CEOs would run their respective business unit. I think that would be a perfectly fine solution

to what would be a pretty big deal. I think that you want to own businesses that are so simple that almost anyone could run them. Amazon, I don't know that it is so simple, $280 billion in revenue all around the world with different AWS and all their different retail arms, advertising now, etc. I agree with Ron, you need to have the different heads of the current departments stay in their places, and then try to find someone who can tie it all together and be what Bezos is. But Bezos is, what is he, one in a, well, let's not even go there. What an Italian. Yeah, to find someone that driven and who has some sort of vision that you can't

really put your finger on it, but he's got it, and he seems to still have it. Yeah, it would be rocky for the stock for a while, I'm sure. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week? I'm going to circle back around to Hasbro, H-A-S. I'm doing some work on Hasbro to understand how the coronavirus will impact 2020 results and how big a deal this will be, since they do source a significant percentage of toys from China. The stock has underperformed recently, both on tariff concerns and coronavirus concerns. Interesting news, on Friday, they did announce

that they'll retain the master toy licenses for Disney's Star Wars and Marvel brands. Disney relationship is a really important one for them. Partner brand revenue rose 24% in the last year. Frozen 2, Avengers, Spider-Man, Star Wars, all getting it done for them. Dan, question about Hasbro? Certainly, Chris. So, I was born in the mid-'80s, and the Hasbro IP that is the biggest to me is Transformers. So, Ron, quick question for you.

What's your favorite Transformer? Oh, that is mean to do to me! I've neither seen the movies nor owned a Transformer. They have interesting Cornelius-type names, don't they? Investor of Time. That's one of the apes, I think. Ron, you could have said 240 volts. Jason Moser, what are you looking at? Yeah, digging more into Synaptics, ticker S-Y-N-A for augmented reality service. Synaptics makes its money by selling their technology and chips and firmware and software

to some of the world's largest OEMs, or original equipment manufacturers, for things like mobile products, PCs, and even those voice-controlled products that we speak to every day. But they also make technology for those head-mounted displays that are taking up more and more shares, augmented and virtual reality, pick up steam. And they're a big question to me as far as some revenue decline from a year ago, trying to figure out exactly how big a problem that's going to be, but definitely an interesting business. Dan, question about Synaptics? Certainly. So, AR, VR, that's all cool. But what I'm interested in is bionics.

And Jason, if there's one part of you that you're going to improve through the use of bionic technology, what are we talking? Man, that's a good one. Maybe, probably go with my eyes. I think it's just really nice to be able to see and my vision's leaving me. Jeff Fischer, what do you got? Pinterest, ticker PINS, social media site with 320 million monthly users, up 9% in 2019. $1.1 billion in revenue compared to Facebook at $70 billion. They're just starting to monetize their traffic. Dan? Jeff, how do I make Pinterest show my wife less expensive things?

Pinterest is very good at getting users to buy products there. People go there to find ideas to then purchase, which makes it part of its power. What do you got, Dan? I'm actually with Rod on this one. I'm breaking my streak with the Disney and Marvel thing for Hasbro. All right, we're out of time. Thanks for being here, guys. Thanks, everyone, for listening.

We'll see you next week. I'm going to make pizza tonight for dinner. I'm going to have a couple of beers with that pizza. That sounds delicious. Homemade pizza? Oh, yeah. On the grill? I am at home as well.

Yeah, I'm not. I don't do it on the grill. I actually do it in the oven because I've got a pizza stone, and I can get really, really hot. And I've got just a really good dough recipe that just has worked out well. Do you put the pizza on the stone, right? Yeah. You throw the stone in the oven. You preheat it as high as you can.

Yep. And then you let it sit for like an hour, let the stone warm up, and then you throw the pizza on the stone, right? That is the key. I've never done it, but that's... You hit the nail on the head. You've got to throw that stone in there, preheat the oven as hot as it'll go, and then let that stone heat for 30 minutes. Okay. And then once it gets to that...

One little tip, to help with the dough not sticking, take a little bit of cornmeal flour. Yeah, sprinkle that bad boy in. I still sometimes screw it up, the little flip with the thing. You all get it on smooth each time? Well, I don't skimp on the semolina, so it just slides right off. The other thing I do is, once the pizza's been in for a couple of minutes, the longest kitchen knife I have, just go run that along the bottom. So, the other thing I do that I found actually really helpful for me is, I slide the dough on the stone and then top the pizza off the stone.

All it takes is one time. If you have it all made and then you try to get the weight of the pizza to the screen, do that once and you'll never do it again. I started making grandma pizzas in a pan, so I don't have to deal with that. But the crust is so much better your way. Whose grandma are we talking about? It's called the grandma pizza. Like a Sicilian grandma.

Just don't skimp on the semolina, and that really is the deal. And then I think top the pizza once it gets on the stone. Yeah, no, don't make the pie on the stone. Come for the stocks, stay for the pizza. My goodness. All right.