Motley Fool Money - Activist Investors are Acting Up

Episode Date: January 12, 2024

Twilio’s co-founder and CEO steps down due to activist pressure, and Elliot Management’s $1B stake in Match means changes might be coming. (00:21) Ron Gross and Emily Flippen discuss: - The latest inflation numbers and why we shouldn’t bank on rate cuts yet - Activist investor activity at Twilio and Match Group, and potential plans to take Docusign private. - Big bank updates, a surprising pop from WD40, and things to watch heading into earnings season. (19:11) Documentarian Chris Temple talks about his new movie This is Not Financial Advice and how parasocial relationships are impacting what people do with their money and the causes of growing financial nihilism among younger Americans. (32:46) Ron and Emily break down two stocks on their radar: Despegar and On Holdings. Stocks discussed: TWLO, MTCH, DOCU, BAC, WFC, JPM, C, WDFC, ONON, DESP Host: Dylan Lewis Guests: Ron Gross, Emily Flippen, Mary Long, Chris Temple Engineers: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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We've got three different pandemic darlings in the throes of corporate drama. Motley Fool Money starts now. That's why they call it money. The best thing. Cool global headquarters. This is Motley Fool Money. It's the Motley Fool Money Radio show. I'm Dylan Lewis.

Joining me in the studio, Motley Fool's senior analysts, Emily Flippen, and Ron Gross. Great to have you both here. How you doing, Dylan? Hey. We've got the latest updates from the big banks, a look at the forces affecting what younger Americans are doing with their money. And, of course, we've got stocks on our... radar. But Ron, we're going to kick things off looking at the big picture and the big macro.

Fresh batch of inflation data out. What do we got? Always love a fresh batch of data. You can smell it right out of the oven. It's a smell it in the morning. You know, it's actually a little bit of a mixed message between Thursday's consumer-focused, consumer price index, and Friday's wholesale-based producer price index. So let's hit consumer first. That came in a bit hot, a bit higher, increasing 0.3% in December and 3.4% a year ago. For context, the annual CPI gain in December 2020 was about 6.4%. So we've come a long way despite the fact that this report is a little bit hotter than expected. Housing and rental costs seem to be the culprit here, rising a 0.05% for the month, accounting for half of the core CPI increase.

So as most people know out there, housing markets remains pretty strong. It's hard to rent an apartment or buy a house. Now, if we turn to the PPI, the wholesale number, those prices unexpectedly declined in December, kind of the opposite of what happened with the consumer number, and that index fell 0.1%. So we've got a little bit of a mixed message, but PPI, the wholesale number, is generally considered to be a better leading indicator. So that's where the markets, that's where the traders are likely to be focused over the CPI. We've got a strong job market unemployment remains under 4%. Recent jobless claims are unchanged.

So the question is, this all boils down, Dylan, to the question, what does this mean for future interest rate cuts? Future traders still assign a 69% probability that the Fed will start cutting interest rates in March. I think that that is quite aggressive. I don't think that's going to happen. It probably will now that I said that, and you'll see what I know. But I think we're looking at the second half of the year, June or later, March just seems awfully aggressive for me. The Fed does want to make sure we don't fall into a recession, but they also have their eye continuing to be on inflation. So based on what you're seeing, cuts are in the future, but maybe not the near-term future.

Maybe we have to be a little bit patient for those cuts. I think that is fair. All right. We have three stories of stocks down big from the pandemic, facing slightly different fates, but all kind of falling into the same theme here and some heavily followed full stocks at that. Emily, the first two focus on activist investors, and there's been quite a bit of interest this week from the activists. Twilio CEO and co-founder Jeff Lawson announced he was stepping down this week from the executive

chair in his board position, owing largely to pressure from activist investors that have stakes in the business. At Twilio is such an interesting case because the business is sound in terms of demand and servicing for its products. It's had its up and downs. But as we've seen in the past year, what Lawson and Twilio's management team has failed to do is really get costs under control. So coming out of the pandemic when he's seen incredible growth, really sky-high evaluations for Twilio that have since come down to earth, it's really ripe for activists to come in and say, hey, we need to change here. And in activist's defense, Twilio's had the better part of the last year to make those changes, to get

rid of underperforming segments to decrease their cost, improve profitability. And while they've made strides in that area, it has been slow going. And many investors and shareholders have lost out on a lot of the potential that I think Twilio has moving forward. So if you're an activist investor, you're looking at this company and you're kind of seeing the turnaround that's just waiting to happen. So it's not overly surprising to see loss in step down, especially with all the activist interest. It is disheartening whenever you have, not just a CEO, but a co-founder or founder in this case, somebody who has fearlessly led the company through so many different changes choosing to leave. I'm hopeful that the new management team will be able to accelerate the pace

of change that Twilio has already set up. The business is trading at record low valuation. So it is ripe for a turnaround. So at issue here, as I understand it, is the company's data and applications business. That is one segment in particular that Anson Funds and Leach Partners, the activists have really honed in on. Do you feel like we may be looking at a slimmer Twilio at some point down the the road? There's no doubt that Twilio has become a bloated company. And these investments, these divisions made sense, again, during the pandemic when they were experiencing really high levels of growth, but a lot of these segments have come back down to earth. So what these

businesses are trying to do is look at what's the fastest growing segment, which ones are producing the highest levels of possibility versus which ones are producing a lot of costs. And so I think it's fair to look at the state and application segment and say, okay, in general, and in some segments within the segment itself have underperformed. What can we cut here? And that includes, unfortunately, workforce as part of that to retain growth while also improve profitability. We have a kind of similar story over at Match Group. I feel like we could probably borrow some of what we just discussed talking about Twilio. Match was a pandemic darling that has not quite found its footing yet. Elliot Management has reportedly built out a $1 billion stake in the company.

We don't know exactly what the plans are, but Emily, I'm curious, if you're Elliott Management looking at Match right now, what do you have on your checklist for things you'd like? to see as part of the plan. As you mentioned, we don't know what their plans are, but I know what I would do if I came into the company. And I'll say this. You mentioned that Match Group was a pandemic darling. I'd push back on that. A match group, in my opinion, is the type of company that has benefited dramatically from the expansion of Tinder. And yes, the pandemic, people were searching for connections. And so more people were probably willing to pay for those subscriptions on Tinder. But what has happened is they have this kind of aging app, right, where people are increasingly

using different forms of communication. It's an increasingly older demographic on Tinder. So they're having to make up for a rate of slowing growth and what is their largest revenue driver for the business. So what I imagine Elliott is doing is coming in and looking at the company and saying, what can we do to reinvigorate Tinder? And what's interesting about the management team that Match has had, and granted, they did not have a CEO of the Tinder brand up until very recently. So I'm sure bringing in some actual management for that app is very critical. But what I imagine they're doing is looking at the strategy match has taken over the past year and evaluating whether or not that's been successful. And I'd actually venture to say that I think it has been successful. And if I'm Elliott, I'm almost looking at match.

It's incredibly low valuations, low as it's been in a long time. And I'm just saying, I'm kind of here for the ride, right? Come in, let's just keep doing what you're doing. And what have they been doing? So what is that change? They're trying to better monetize the users that do pay for Tinder. So they've had declining rate of paying users. And instead of trying to lower prices attract more paying users, they've actually raised prices.

That has accelerated the decline of paying users. but it's actually improved monetization. So this isn't a company that has seen a declining top line. They're not losing revenue. They're losing payers, but average revenue per payer has continued to increase. And I actually think that's the right strategy, especially as they increase monetization for more popular apps that are growing faster, like Hinge.

So if I'm Elliott, I'm looking at this and I'm like, just keep at it, right? Let's keep that change. Maybe accelerate the pace of change, but let's just keep going here. Ron, you have experience in the activist investor world with these stories and just generally when you know that a customer, company is taking a very hard look at a business. What do you think some of the conversations might be? Well, Paul Singer is a legend in the activist world over at Elliott, and he's done AT&T, PayPal, Juniper, Samsung. He's got a large stick right now in Salesforce, along with Starboard Value.

He's done many, many things over the year, including recently delving into private equity more and more. In general, I like to see when activists are in this, listen, we're all capitalists. I'm not naive. I get it. We want stocks to go up. We want to make money. I prefer when activists are in it for the benefit of all shareholders to improve a company for the long term, meaning they will stick around. If they have board seats, they will stay on the board for at least many years to come. They will continue to support the company. They will give guidance where needed. Many times, boards of directors need a little kick in the pants to make tough decisions.

So those are the activists that I think are the most effective and that are more foolish, if you will, versus those that just want to get us pop in the stock and are happy to flip. So I think Singer-Ra over at Elliott does a pretty good job there. All right, before we go to break, we've got one more story of corporate intrigue. Shares of DocuSign up 10% after a report that the e-signature company has bids to take it private. Emily, it has been a tough two years to be a docian shareholder. I know because it's sitting in my portfolio. I am a shareholder.

and I know exactly what those declines feel like. It seems like the story for this business has shifted pretty dramatically. From being a growth story to being kind of more of a cash flow story and a profitability story. Is that why we're starting to see some interest in maybe taking it private? I think there's a couple of things that DocuShine shareholders can take from this. The first one being that we don't know, these are still rumors, right? So we don't know what the price of any potential deal could be. But the fact that the stock is up on this news says to the market, hey, we assume the price, is going to be higher than where DocuSign is trading now. So as you mentioned, if you're a

docian shareholder, hopefully you know, this is a business that has consistently produced a fair amount of cash. So it's not like Twilio in the sense that it has not been burning hundreds of millions of dollars and is trying to keep itself afloat. But you're right that the growth story has changed. And that's not necessarily what every investor signed up for when they bought shares of DocuSign, which have declined pretty substantially from its pandemic peaks. But the other thing you take from this is the fact that there are two private equity firms reportedly fighting over DocuSine, which is really interesting, because if you actually look at private equity activity over the course of 2023, it was pretty low in comparison to what it has been in the past.

And this is, as you can assume, largely result of rising interest rates, higher inflation, more concerned about the economy. But now, you know, people are saying, hey, look, we're having this soft landing, this thing nobody thought possible. Maybe it's happening right now. Maybe interest rates to Ron's earlier point. Maybe they'll come down at some point over the course of the year. I don't know if I agree with that, but I do think it's telling that there's a, ton of private equity cash sitting on the sidelines. It's actually up pretty substantially in

comparison to where it was, even back in 2018. So there's a lot of money to be had for private equity firms that are looking to make a buck. And with a business like DocuSign, which does produce a fair amount of cash flow, has a lot of room for improvement. It makes sense that there'd be two companies fighting over it. All right. Coming up after the break, we've got a rundown on earnings from the big banks. Stay right here. This is Motleyful Money. Some of the best lessons don't come from a classroom. They come from experience. On The Power of Advice, a new podcast series from Capital Group, you'll hear from CEOs, investors, and founders about how they built careers, took risks, and reinvented themselves. If you're starting your own journey, this is the kind of advice you won't

want to miss. Available wherever you get your podcast, published by Capital Client Group, Inc. Welcome back to Motley Full Money. I'm Dylan Lewis, joined in the studio by Emily Flippen and Ron Gross. earning season is rolling along. We've got quarterly updates from the big banks, J.P. Morgan, City, Bank of America, and Wells Fargo, all reporting this week. Ron, looking at the banks as a whole, what stood out to you? A few themes. There was certainly a wide disparity in net interest income results. Across the board, there were fees related to the 2023 regional banking crisis. Not a surprise there. All the banks continue to increase loan-loss reserves to protect against future defaults, and there was a fair amount of expense,

cutting, and layoffs, mostly at City. But to hit the highlights of East, I guess J.P. Morgan made the most news on Friday because it posted its most profitable year ever, and that's despite a 15 percent declining quarterly earnings, which was caused by those $2.9 billion in fees relating to the banking crisis. But they had strengthened net interest income to the tune of 24, billion dollars. That's really strong, and it's really strong relative to the other players here. And that's a big part of the story. And they also had the inclusion of First Republic, which they acquired. Bank of America earnings were down more than 50% for the quarter. Again, $2.1 billion of charges for the banking crisis, a lot of other one-time charges. Interestingly, net income,

net district interest income, easy for me to say fail 5% in contrast to JP. Then you go to Citibank, plans to cut 22,000 jobs to get its expense structure right. Revenue is down 3%. We've got to keep an eye on City. And then we turned to Wells Fargo. Earnings were actually up 9% for the quarter, thanks to cost cuts. Net interest income was down. Again, in contrast to J.P. Morgan's really strong results, and guidance was weak for Wells Fargo. So a bit of a mixed bag with J.P. Morgan, I think, standing out. People are used to hearing us do the bank earnings rundown, Ron. We have a surprise name for our earnings discussion today. And that's WD40. Shares up 13% after the company reported first quarter results. And in production, we were talking a little bit about this

company and whether it was going to make the cut for the show. And then we saw the earnings press release. Steve Brass, the company's CEO, we have started fiscal 2024 firing on all cylinders. Do you think I should sue? Oh, no. I mean, I think it's an homage. I think you have to take the props that you're getting there. This is a company we don't discuss a ton, but it was a market beater last year, up 50%, nearly doubling the S&P 500's returns. Does this look like an outperformer going forward? Well, this quarter's results were good, but the stock really popped. 13, 15%, something like that. They weren't that good. And the stock's not that cheap, so it was pretty surprising. Now, they do kind of have a monopoly in oil in a can.

Yeah, they're in every household. Which is kind of interesting. But there's a lot of alternatives that one could do. It's mostly a brand play here. Oil and a can is not proprietary in that sense. But the quarter was good. Sales were up 12%. All regions of the world produced strong results.

Most of the growth was due to sales volume rather than price increases. Gross margins really up, 53.8% from 51.4%. net income up 25%. They did not raise guidance. Another reason I was surprised that the stock really popped. Shares now up trading 50 times, 51 times forward guidance. I don't know. The company produces $65 to $70 million of net income a year. That sounds like it's a little rich oil and can. I'd be a little bit careful here. All right. We'll get off the oil and a can beat and take a broader look at earnings. Banks get things rolling, but we're going to be seeing much more results in late January and in early February. Emily, when we start really getting into the flood of earnings and we see more companies report, what's something you're going to be paying attention to?

Well, mine's a company in particular. And thinking about late January, my eyes are going to be on Tesla because we've seen a lot of, there's always a lot of news about Tesla, always a lot of news around Musk. But one of the more interesting stories that I saw coming out of 2020, was that very recently, B-YD, which is a Chinese-based competitor who got their start in battery development, who now is producing electric vehicles for worldwide consumption, recently overtook Tesla in terms of the number of cars that they're shipping and delivering. They're larger than Tesla now in terms of deliveries. And that's really notable because Tesla's had that spot, basically, since its inception. VYD is able to produce and sell its cars at lower cost than Tesla. Tesla continues

to cut costs. Some investors like it, some don't, but the idea is to make it more accessible. I'm really interested to see if this earning season management provides any commentary around how they're perceiving, not just competition within China, but globally, because that could potentially eat into deliveries. Yeah, that B-YD story might be a little surprising, kind of a sneaky one for people that have been following EVs in the U.S., because we don't see any B-YD vehicles on the roads here in the U.S. We have really high tariffs on Chinese-made vehicles, which is part of the reason why you don't see them on the roads, is because the cost of getting them here is more expensive than, you know,

what they make up for in terms of their lower price. But internationally, they're a lot cheaper, and there are ways to get around tariffs as well. So I wouldn't be surprised if you do continue to see a rise in these vehicles. And not that Tesla needs to be. be the only electric vehicle maker, but it does need to have a plan for how it's going to handle competition. Ron, what about you? As earnings season ramps up, what are you looking at? Yeah, I took a more general take. In general, the market's not so cheap. I mean, it's not screamingly expensive, but it's not cheap either. So we really do need some decent earnings growth to feel good about current valuations and for those earnings to support current valuations.

And I worry a bit about the consumer being overextended as they continue to spend, but at the expense of lower savings accounts, higher credit card balances. The key to everything is really the consumer. It just rates in the consumer at the end of the day. So let's watch what the consumer does, how earnings come in, and maybe even more importantly, what future guidance looks like. Management is notorious for not being necessarily great at future guidance, but certainly they have better insights into their business than any of us. So I'm very curious to see what they say about the rest of this year. If we're lucky to get some insight into next year, probably not yet. It's a little early for that, but certainly for the rest of this year.

So is that then a focus on retail, e-commerce, and maybe some of the signs we're getting from the credit card companies? For sure. All of those things on the retail side, definitely I want to see how everyone is inventoried. If that shapes up, Target is notoriously been improperly inventoried for quite some time. The merchandise mix was incorrect. I want to see if companies are starting to get that right and how much promotional activity there's been. Is discounting necessary to get things out the door? Gotcha. I think there's a couple other stories we can watch. We've been talking about the buy now pay later movement. Interested to see how that manifests and what that does for that stretch consumer as you've been talking about. But we'll see as those results come in.

Emily Flippin, Ron Gross, we're going to catch you guys a little bit later in the show. Up next, we've got the inside scoop on the documentary. This is not financial advice and how people are getting their financial news. Stay right here. You're listening to Motley Full Money. Welcome back to Motley Full Money. I'm Dylan Lewis. We're past the fever pitch of meme stocks and meme coins from the past couple of years, but still very much sorting through the whirlwind and what it is meant to our financial system. One person that's looking to make sense of it is documentarian Chris Temple. His new film, This Is Not Financial Advice, profiles one doge coin millionaire and the growing shift to get rich quick. Motleyful money's Mary Long caught up with Temple to dig into how parasycial relationships

are impacting what people do with their money, the difference between looking for a financial ladder and a financial trampoline, and the causes of growing financial nihilism among younger Americans. So the film most closely follows the story of Glauber Contasoto. But he goes by another alias online. Who is pro the doge, the man, the myth, the legend, the person? So pro the doge has nicknamed himself the Dogecoin millionaire because in early 2021, he made a really big bet of selling all his stocks, maxing out his credit cards, taking out cash advances, and throwing it all into Dogecoin. We began following this story as he was making this bet and going through this moment in his life. About two months later, he turns it into a million dollars, right? And

out of nowhere, this thing starts skyrocketing, he refuses to sell. The next thing you know, a month later, it's $2 million. And now he feels like a genius that it was $2 million, everyone just told him to sell it one. And then a couple months later, he hits $3 million, and he feels on top of the world. And it's really, that's where his brand of the Dogecoin millionaire came from. He started doing a lot of podcasts and was featured on the front page of the New York Times. And I think really showed a potentially a dangerous story around risk-taking until you watch the second half of the film. Pro is such a character,

and he's very affable as the word that the New York Times uses to describe him. And that's certainly true. He's very lovable, too, throughout the whole film. He loves celery juice, and that feels like such an important character trait to me. Yeah, I mean, pro, I love pro. I mean, I've spent the last three years with him really embedded into his life as we've

to make this film. And that's what it takes sometimes in these documentaries to embed with your characters in that way. And, you know, I understand why Pro made the decisions that he did. And I think so many of them were systemic. And so, you know, on one hand, he's a, he's an undocumented immigrant who has had very little access to traditional financial markets. There's been a lot of frustration throughout his life of not being.

being able to go to college, getting fired from a number of jobs because of his lack of status. For him, he felt like there wasn't a ladder to climb to the middle class. So he looked for a trampoline. And I think he isn't alone in that kind of behavior that you've got millions of Americans who are very frustrated about wealth inequality in this country where 90% of stocks are owned by 10% of people. And I think that frustration is driving a lot of the behavior that we're seeing. It's also being coupled by low interest rates, as we all know, and was being coupled as well by really this lack of trust in traditional institutions, I think, was a big element.

Yeah, and the film features like a number of different characters, right? So you have pro and you have another character, Sinai, who has, they both have this interest in wealth building, but they have very different approaches to that. Can you tell us a little bit about Sinai and how he views the stock market differently than, say, pro? Yeah, so Sanai is pro's foil character, the exact opposite in every way you can imagine. Yet, still coming from the same systemic challenges. He's in air train, you know, some of air trained immigrants living in Long Beach in a, you know, in a more marginalized community that hasn't had much access to financial opportunities or financial education.

And his approach is, you know, really the tried and true. He tries to be as boring as possible in everything that he invests in. He tries to look as long-term as possible in everything that he invests in and avoids any sort of emotional attachment to the things that he's participating in. And so, you know, they provide this really funny balance throughout the film of seeing from the same origins how their paths and approach to money differ. And we hope that, you know, this film has a lot of. little bit of everything for someone to watch and understand, well, what is my own relationship

to money? How do I feel about risk taking? And what decisions do I want to make? And I think the film asks a really important question about motivation, too. Like, Proence and I have similar backgrounds, totally different approaches to wealth building. But I came to find that they're motivated actually by similar drivers. They like both want to, it's not just dollar signs. It's like building something bigger than them. And that's really cool to watch Playout too. Absolutely. I mean, I think they're both incredibly entrepreneurial. And I think, again, a lot of entrepreneurs are often not looking for ladders.

They're looking for trampolines. They're looking to try to build something that can be bigger than themselves and often want it overnight. And I think we've seen, you know, something that the film really explores is culturally how social media and our access to. seeing people like Elon Musk or seeing wealth and comparing ourselves to others around us has affected

how quickly we want to be rich or how we feel about our own status in society at any given time. And so, you know, the film really talks a lot about how we need to be careful about the role that social media is playing and amplifying this get-rich-quick culture or making it feel like, you know,

someone like pro is out there every day getting really rich. I'll tell you a little story from set one day where Pro went to Costco to buy celery juice because he's a big celery juice fan. He bought pounds and pounds of celery to make himself. And in the one hour we were at Costco, Pro had made $180,000 in Dogecoin

just passively in his investments going up. In the one hour we were filming. Wow. Here I am, you know, sweating, holding a camera as a broke documentary filmmaker, and it triggers your fomo. I couldn't help, but I knew better that this was not the path to long-term wealth and happiness for me. But in the moment, of course I was going to feel that fomo and that desire to try to get rich quick overnight.

And so that's why the film, I think, really strikes this balance. I don't judge pro for his decisions. I've made a lot of mistakes myself as I've tried to be a part of these markets when it feels like the markets are going crazy. and it's hard to know how to navigate them. I think that that slow, boring, Sinai approach is probably one that's a bit more familiar to our listeners. But the psychology of pro, like you said, the film makes it very understandable.

But still, you know, I'm watching it, this film, and I'm like, why? Why not like cash out, sell? And what hits me is Doge Queen starts as a joke, right? You've got scenes where even pro is like saying this. It's funny. It's a bit. It's fun. But then there's also this really poignant scene near the end of the film where Pro's mom is asking him the question that I'm asking myself all throughout the film. Why?

And Pro goes because very seriously, almost exasperatedly, is like because Dogecoin is the future. What sparks that shift? When does Dogecoin go from being funny to being the future? Yeah. I mean, I think, again, it's this complete for Pro, it was this complete of, absorption into the community in the world of crypto and dogecoin. So for him, all day, every day, the only people he's talking to are true believers. The only, you know, becomes a real echo chamber of conversation and perpetuating each other's decisions. So if the people you know are also going all in believing this is going to be the future, it feels like there's momentum. And it's all momentum trading in that way, right?

It feels like there's this energy coming towards it. You know, the surprise thing for pro, and I think he was smart about, was he realized that by branding himself as the doge coin guy, there was this really unexpected turn for him where he started being able to monetize that. So a big part of why the crypto boom was happening to me throughout 2021 was the amount of ad money

that was being pushed in marketing spend that was happening from crypto companies and crypto coins. A lot of it VC funded, just pushing and hitting us with the word crypto over and over again, right? I mean, you talk about the Crypto Super Bowl where you've got Larry David telling us, don't worry, you don't even need to understand what this is, just invest in it or else you'll miss out. And I think that marketing spend was all over the place throughout 2021 and 2022,

and still is, to be honest. And so for pro, when he became the Dogecoin guy, he started getting sponsorships from a Dogecoin credit card company. company, other Doge-related coins that were launching, like Baby Doge and Doge chain and all these things. And the next thing you know, he's making hundreds of thousands of dollars, real dollars, off of the back of pushing videos and tweets and conversations about these coins. So to me, that's where there was actually a really dark underbelly to this, that the decision isn't just pro made a bad financial. decision and is doing what he wants with his own money, he now has half a million followers online and is telling other people to buy Dogecoin or to make similar bets. And I think it can be

very, very difficult for the average investor to understand how to navigate this new world when, again, FOMO is really, really powerful. A lot of the people that you follow in this film, you know, they're the little guys, right? So in kind of preparing for this, I was digging around, I stumbled upon this Bank of America study that found that 75% of Yucon, young investors, and in this case, that was people between 21 and 42, believe it is impossible to achieve above average returns solely with traditional stocks and bonds. Your film obviously touches a lot on this disbelief, this nihilism in regards to traditional markets as a wealth building, like a wealth building tool for the little guy. Based on your conversations with

people while making this film, how did we get here to this period of seemingly, this, this very deep and broad nihilism. Yeah. I mean, again, there's, a lot of it is rooted in very real struggles that especially young people are facing a lot of college debt or were unable to buy homes or who are feeling, you know, the squeeze in a, you know, in a current world where regular income

has stagnated. Wages have stagnated. And the people who are making money are those who already had wealth. And so I think there is a lot of this frustration that I do understand and really empathize with, I was an economics major originally. That was sort of the world that I was coming into for this film. And we did hundreds of interviews throughout the process of this film. Obviously, you see a few key stories of these four regular individuals.

And then we have a few great experts who provide context throughout the film, folks like Josh Brown and Morgan Houssel and others. I think the frustration is real. But I think to me, again, it comes back to this conversation around how social media and the expectations of what a return is are changing. Right? And if you're looking on your phone and you're getting ads about how you can get a thousand percent return and it's don't wait, get rich overnight,

all of that stuff is continuing to really like embed into the brains of young people. And, you know, I saw a stat recently that 79% of young people that use TikTok and YouTube is their primary sources of financial information. So you're looking then, yeah, about 80% of young people are turning to social media. They're not reading, you know, a Bank of America reports, and they're not checking FINRA's website. They are going through and learning from their friends and others. And so that's where to me, I think the pro story was so important

of looking at the role that sponsorship and sponsored financial education plays in, in really damaging the education of young people. Listeners, you can catch this is not financial advice on Apple TV. Coming up after the break, Emily Flippin and Ron Gross return with a couple stocks on their radar. 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 anything based solely on what you hear. I'm Dylan Lewis, joined again by Emily Flippen and Ron Gross. The flavor might not last long, but the gum had a pretty good run. After over 50 years, fruit striped gum will be discontinued by its maker Ferrara. Ron, you put this story on my radar. Do you have fond memories of what I would call zebra striped gum? I'm getting that feeling of salivation in the corners of my mouth now

because it had such intense flavor for like two seconds and then nothing after that. But the cherry was unbelievable. Yes, it was great. I'm sorry to see it go. It's nostalgic. Don't sleep on the wet and wild melon flavor either. That was pretty good. I love all their brands.

I'm a candy person rather than a chocolate person, so it's the fun dip in gobstoppers and juji fruits and atomic fireballs. Chuckles. I don't think we need chuckles. But pixie sticks, nerds, give me all of it. Love it. Wow. Might have to check for cavities over at the gross household.

Emily, do you have any fond memories of the zebra shop gum? Are you kidding me? I was more upset when Taco Bell canceled Mexican pizza for that period there. I was more upset when I stubbed my toe it this morning. I have never heard of this product before, although I will say, learning that this company does indeed own a fair number of brands, I am just so thankful. It was not Fun Dip.

They're canceling because a world about Fun Dip is not one I want to live in. Wow. I didn't know Fun Dip had such a large adult audience. It's pretty good. Those liquor sticks, the vanilla stick it comes with? Yeah, pretty good. Just amazing. I think those in the Pixie sticks.

Just like, this is pure sugar. Pure sugar. There's no masking what is going into this thing. Yeah, for me, I do remember running to the convenience store in town, buying a pack of zebra gum, and I think in the 15-minute walk back to my mom's house, all of the pack, all of the flavor, gone. Should we blame Wagovi? All the late-lost drugs?

This is the first victim. That's right, yeah. Well, apparently gum sales are down 30% from 2018. So, I don't know, maybe it's consumer tastes. Maybe it's that the flavor just didn't last. We won't ever know. Let's get over to stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Ron, you're up first. What are you looking at this week?

Just started looking at Despergard.com, D-E-S-P, leading online travel agency, OTA to you and me, in Latin America, operations in 20 countries covering 98% of the region's population. Biggest markets are in Brazil and Mexico. Generates revenue primarily by charging commissions to travel service providers and collecting volume incentives from airlines and other global distribution systems. They also charge a fee to consumers, which U.S. consumers would likely not put up with, but they can actually get away with it in Latin America. They're tiny compared to folks like booking holdings and Expedia, only a 428 million market cap, but they're very strong in their markets.

My friends over at the Value Hunter Service think it could be worth $18 or more. Stock's only at $9 now. so it looks interesting to me, but I've got to dig in a bit. So, Dan, this is a familiar model, but a new name. A question about Despegar? Sure. Ron, you're going on vacation in South America. Where are you going? Oh, my God, really.

Argentina. All right. Ron Gross will be taking a break from Motleyful money to be vacationing in Argentina. Emily, what's on your radar this week? So this talk was brought to me to my attention by Sam Aido on our blast off team, and that's on holdings. The tickers O-N-O-N. I still don't like the ticker, but the company is certainly interesting. So this is a footwear business. It's actually been around for more than a decade, but really recently took off since its IPO in 2019 in terms of both popularity and attention

from shareholders. If you look at the stock price, that will certainly reflect it. And I have to admit, this is one of skeptical on it first, because I find footwear to be very trendy, right? I go back to the kind of crox hype that we're now re-experiencing. Things are in, then they're out, And these running shoes are particularly expensive, particularly trendy. But I've also had a bad habit of riding off brands in the past, and much to my detriment, Celsius being a good example of that, the energy drink business. So I don't want to write off this company. And what really is kind of getting me sold on it is the increasing amount of sales that are associated,

not just with footwear, but athletic wear as well. At a $9 billion valuation, I mean, this is a huge company for a footwear business. I think they need to have something beyond running shoes. So I do like the fact that they're pushing into premium athletic apparel as well. I own three pairs if that matters. No, you don't. I consider myself somewhat of a runner, and I don't know if you could pay me to buy a pair. I consider myself somewhat of a sitter, but I own three pairs on the perfect shoes to sit down.

Dan, a question about on holdings. Super saturated market. What separates on from the rest of the premium running shoes? Celebrity endorsements? Any sort of moat? What's going on? They claim to have proprietary technology associated that makes it feel like for the day, I think it's called cloud tech technology that makes it feel a little bit more bouncy like you're

running on clouds to help runners run faster, which is the type of sales tactics that we saw with like the Celsius holdings to help you lose weight. I kind of hate those things, but I'll tell you what, I might hate it, but I am the exception, not the rule, because if consumers have spoken here, right, with both Celsius and on holdings, they are selling a ton of shoes. Yeah, I'd never heard of the name, but as soon as, you know, mentioned it, I googled it, immediately recognized the shoes. Exactly. And if you go into, say, an REI, you will recognize it there, too. Dan, which one's going on your watch list? Well, I want to visit a Montevideo in Uruguayde, and then I like to despegare.

Hey, I love that. Impressive. All right, Emily Flippin, Ron Gross, appreciate you bringing your radar stocks. Dan, appreciate you weighing in. That's going to do it for this week's Mottleyful Money Radio Show. The show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll catch you next time.