Motley Fool Money - Beauty Stocks, Snap's Stumble, and Adobe's New High

Episode Date: March 16, 2018

Adobe hits a new all-time high. Toys R Us calls it quits. Ulta Beauty wows. And Snap stumbles. Our analysts discuss those stories. Plus, CNBC media and entertainment reporter Julia Boorstin talks South by Southwest, media disruption, VR, and Disney. Learn more about your ad choices. Visit megaphone.fm/adchoices

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From Fool Global Headquarters, this is Motley Fool Money Radio Show. I'm Chris Ellen, joining me in studio this week. From a million-dollar portfolio, Jason Moser, from Hidden Gems Canada, David Kretzman, and from Motleyful Pro and Options, Jeff Fisher. Good to see you, as always, gentlemen. Hey, hey, hey. We've got the latest headlines from Wall Street. We will dig into the entertainment industry with CNBC's Julia Borsden. And as always, we'll give you the inside look at the stocks on our radar. Last week, we started with good news from the world of retail. This week, not so much. Much. Sears reported a profit for the holiday quarter, but guidance for 2018 has the stock

down more than 6% this week. And last week, when we said Toys R Us would be liquidating their U.S. operation soon, we actually didn't realize it would be coming this week. Nearly 900 locations and 33,000 jobs going away at Toys R Us. Jason, nostalgia is really taking it on the chin this week. Well, I think we all knew in our hearts, really, that Toys R Us was going to be announcing that sooner rather than later. And I mean, that's a shame. We certainly don't like to see people losing jobs. I mean, in regard to Sears, however, I mean, listen, anyone who thinks this company has a shot at turning things around is delusional.

I mean, I normally like to try to approach things with a glass-half-full sort of perspective, but there is no way. I mean, every earnings release is like, okay, this is what we're doing this quarter to counter this effect or trying to unlock value or, you know, whatever. it, maybe it feels like they're just throwing good money after bad. And you know, you mentioned profitability, Chris, but really, I mean, that wasn't profitability. And I hate to actually see the headlines even imply this, because when you look at the net income number of $182 million, let's also remember that was thanks to a non-cash tax benefit of $470 million. So really, it was not profitability, but a lack thereof, Chris. Top line is still shrinking. You know, And anecdotally, I took my daughter to the mall last Sunday, just cruise through the local

Sears, just to sort of see how things were going. Because you wanted some quiet time? Not good, Chris. Not good. David? Yeah. I mean, Sears is really in a category of its own as far as being a train wreck in retail. But looking at Toys R Us, it wasn't just this transition to e-commerce that did Toys R Us.

And the company really set itself up for failure 15, 20 years ago when they brought on a lot of debt. relying on debt to finance the business. And when things are good, when business is good, having some debt can really help leverage your results and things look nice and rosy. But the company was taken private about 13 years ago, and they never were able to get over that hurdle and pay down debt. They were so worried about covering those interest payments that they can innovate with the business and build an e-commerce line. So I think any retailer now that's relying on debt either to expand the business or buyback shares, in the case of Bed Bath Beyond, you really have to take a step back as an investor and think,

is that the wisest thing to do? Because I think you're just putting yourself in such a risky position if you're relying on debt. Yeah, David, and that speaks to how quickly the industry is changing right under their feet. As you mentioned, Toys R Us was taken private in 2005 for $6.6 billion and about $5 billion in debt. They were paying hundreds of millions in interest every year. Meanwhile, their thought back then was, well, the toy industry needs to be consolidated so they bought FAA FAA Schwartz and KB Toys and the worst move they could possibly make. Back then, in 2005, Amazon had 4% of the sales that it has right now, so Amazon has grown. I mean, what is that maybe 25-fold? Is that even the right math? I don't think so.

Amazon has grown so much. And they, meanwhile, we're not even moving in the right direction towards e-commerce. So anyone who's getting into the retail industry now trying to save a Sears or a Toys or Us, has to take an account how quickly consumer habits are changing. And Toys R Us wasn't doing that either. And it wasn't just e-commerce either. Target and Walmart were selling more Mattel and Hasbro toys than Toys R Us the past years. So Target and Walmart moving into toys also took a lot of market share. I'm glad you mentioned Target and Walmart because now we've got close to a thousand locations

that are going to be up for grabs. That's not including what is probably going to come in terms. of Sears, who is going to be taking this real estate? Does it make sense for Target or Walmart or, for that matter, Amazon to kick the tires on at least some of these locations? Because I've got to believe they can get a deal, Jason. I mean, that is the question, right? And I think that you're going to see some combination of what you just mentioned there. I think that the bigger players in retail who are still building out e-commerce operations could look at some of these locations and maybe that sort of whittles down the time of getting things from point A to point B.

But I mean, I can't help but believe there is going to be a surplus of commercial real estate out there that really is not quite put to good use for some time to come. Let's move on to specialty retail. Alto Beauty up 7% on Friday after its fourth quarter report. Profit came in a little low, but same store sales, David, up nearly 9%. And even that seemed like Wall Street was looking for an even higher number. I mean, most retailers would kill for 9% cops. Yeah, it's really staggering. Sometimes the market is just weird, Chris.

That's my summary there. But I think Ulta is really laying out the roadmap for retailers in this age of Amazon. They're investing in Omni-Channel, so both the in-store experience and their e-commerce sales, which made up 11% of total sales in 2017, which they got to that hurdle a couple years faster than they anticipated. They thought they'd get there in-2020. They have in-store services like the salon and skincare and hair care. care. And they're doing all of this without a lick of debt. So this past year, even as their opening stores, they still generated over $330 million in free cash flow. They don't have any debt.

They have almost $400 million in cash on the balance sheet. Overall, just in a very solid position. And this is a company that will really benefit from this new tax bill. They're only in the U.S. So they'll see their tax rate drop from about 35 percent to 25 percent. So taking that new tax bill into account, that alone will boost their earnings this year, probably by by, 20%, let alone with all these other initiatives they have. Yeah, the one question I have with Alta, I mean, we've seen where retailers can get into a lot of trouble, maybe building out that physical presence too quickly. And I know Alta recently raised that guidance to add a few more 100 stores to their overall

base. I just can't help but wonder if that might be a little bit too aspirational. Yeah, right now, they're still not at 1,100 stores. I think they're targeting somewhere between maybe 1,500 and 1,500 stores. I think that's a good point. Maybe they focus on boosting those internet sales, which up to this point, they've mentioned that the sales coming through e-commerce haven't really been cannibalizing the store sales. So, yeah, I think that is a good point. With these retailers that maybe are getting a little bit close, that saturation point, you might want to tamper the expectations a bit.

And, David, you mentioned earnings per share may grow more than 20% this year, year over year. The stock right now trades at about 19 times expected earnings for the year. So on that measure, if that growth can continue anywhere near that rate, the shares look pretty reasonable, you might say. Yeah, I think the valuation looks reasonable because that 20% growth will just be from the tax tailwinds of that new tax bill. And the company, as a whole, already, without those tax benefits, is growing around 20% plus. So it should be a good year this year for Ulta.

William Sonoma hitting a 52-week high after fourth quarter profits and revenue came in higher than expected. Jason, you do most of the coach. in your house. Were you buying some upgrading your kitchenware? You know, I do all the cooking in our house, Chris. I'm proud of that. My mom taught me well. For Williams Sonoma, you know, I do not give them much of my business. And when I do, it's usually because of a fire sale. It was not a bad quarter, but there are some concerns investors need to be watching for the next several years. And I think the fall from grace this stock has seen since

mid-2015 is no outlier. I mean, there are good reasons behind it. We talk about sort of opening stores a bit more of a tempered pace. And I think that with William Sonoma, they're not going to be opening really many more stores. And so e-commerce on the good side is now more than half of sales. The bad news is it's also more than half of sales, which you kind of wonder how much farther can that really go. And so they're fighting sort of this battle on two fronts with Amazon and Wayfair. And I actually think there is a dynamic, at least to the meal delivery kits as well. I mean, people are using their kitchens. just differently. So, I mean, I think those reasons put together why the stock is trading for

around 13, 14 times 2018 estimates. It is retail, after all. And retail has had some sort of challenges here. Williamson seems to be doing okay, but I'd be cautious. Well, they've done better than average in terms of specialty retail when it comes to the Omni Channel approach. So the idea that e-commerce is now more than 50%. They've demonstrated in the last five to 10 years that if any specialty retailer is going to make the leap to maybe not 100% e-commerce, but growing that even further, I feel like they can do that, which maybe gives them an edge along with, you know, their stuff has a pretty good reputation in terms of their brand. And thinking about Alta, I mean, it's almost like with specialty retail, you

need like one extra thing going for your business. I think in William Sonoma, it's their track record. I think in Alta, it's the subscriptions. Like, how many people do they have in their membership? Their loyalty program is about 28 million members now. Yeah, I think with Williams Sonoma, the only concern there is that with e-commerce, it's more like they're kind of trading one for the other. The physical sales are going to e-commerce. It's not like they're adding.

And so that's what you're seeing the challenges in the top line growth there, which are ultimately, I think, reflected the value of the stock today. Adobe's systems hitting a new all-time high after strong first quarter profits. Adobe's subscription revenue also grew nearly 30. That's a lot of PDFs, Jeff. If only, well, I'm glad it isn't only PDFs. Adobe Systems. Am I the only one who thinks PDFs when they hear the name Adobe?

No, definitely not. I think many people do, and I think that's maybe why the shares have surprised many people the last few years since 2015 or so. Revenue has jumped from $4 billion-ish to now nearly $8 billion-ish. It's headed towards the company is doing extremely well, Chris, with its Adobe Creative Cloud, which is a subscription service for creating, managing, sharing digital content. And as well as the Adobe digital media branch, which includes the acrobat, the reader, the sign and scan documents.

That's all doing very well. But Adobe also has advertising management cloud software, analytics, and marketing management cloud. So they've moved to the cloud. They're allowing you to manage your whole digital presence from creation. to communication, to collaboration. And so a lot of businesses, a lot of individual students are all using this. And 88% of revenue is of a recurring nature. So it's a powerhouse.

Earnings grew more than 60%. Stock trades at 33 times forward estimates. Margins are exceptional. It's a very strong business. Coming up, Snap and Blue Apron battle it out for the title of Most Questionable Business Decision of the Week. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser, David Kretzman, and Jeff Fisher.

Dropbox, the cloud storage company, is gearing up to go public. Dropbox is pricing their IPO at the low end of the range. Jason Moser, does that get you a little more interested? No. No, it doesn't. I mean, I think this is really where public markets shine. As you see, Dropbox is valued somewhere around $10 million in the private markets. The public market is. are going to put it under more scrutiny, and I think it should. When you look at the company's revenue growth, it's slowing. I mean, paying users represent only 2.2% of their total user base. They have no discernible competitive advantage. They are not profitable. There's a dual-class share structure. They're competing with Amazon, and the valuation is still questionable, Chris. So it's not to say that this can't or won't be a successful company, but I don't think that investors should just give it the benefit of the doubt. Let these guys report a few quarters

and really see if the growth that they're forecasting can come to fruition. So you're saying there's a chance. I am saying there is a chance. That's all it takes. Yeah, I mean, and they're competing not only against Amazon, but Google, Google Cloud, Microsoft, Box, all sorts of cloud storage companies. To me, it's not really clear what differentiates them. And if they do have any differentiation, how sustainable that is. Yeah, and I mean, listeners out there who might be saying, hey, what are you talking about?

I use Box every day. Maybe, but do you pay for it? And my guess is, no, you don't. And that's the biggest problem. And when you're going up against someone like Amazon who just makes a habit of cutting prices, that chance is very small, Chris. There is a chance, but it's a small. Well, yeah, Dropbox started as a consumer-facing product,

and majority of users would use it for free, and some would upsell to a paid subscription and get more storage. Now they're trying to pivot into enterprise storage, which has probably a bigger market opportunity, but also a lot bigger competitors and a lot more competitors, too. Yeah, David. And what's interesting about so many IPOs the last, say, two, three, four years is that's the path they're following. Consumer first, then try to move to enterprise. And so how it all shakes out, as you said, isn't unseen with so many companies that are serving the same sort of markets.

More trouble for the parent company of Snapchat, an ad that was clear to run on the Snapchat platform, promoting a game called Would You Rather Ask People if they would rather slap Rihanna or punch Chris Brown. Not surprisingly, Rihanna, who was the victim. of domestic violence at the hands of Chris Brown, did not take kindly to this. What she did take to was Instagram, where she has more than 60 million followers and announced that she was deleting the Snapchat app. And about half a billion dollars worth of SNAP's market cap got deleted as well. Jason shares down around its IPO price of $17. Although you and I were talking earlier, it's still amazing that it is given the benefit of the doubt.

Would you rather own Snapchat stock or Blue Apron? I mean, that maybe is a bit more of a reasonable game. It does sound like they stepped in it there. I mean, I think that the biggest problem with Snapchat, the reason why you don't see that Snapchat logo in with all the other social logos on any website you visit is because of the core purpose of the platform. It's why you don't see messenger logos and WhatsApp logos. It's a messaging platform. And it's not to say they're bad at what they do. They seem to be pretty good at what they do.

But monetizing it is a bit of a different game, so to speak. The network effect isn't the same. It's the one-on-one communication versus pushing information out there for the world to see. So I'm astounded at the credit the market still gives the stock. I would just steer clear of it. Well, and Google has had their problems here and there with advertising of a questionable nature that has slipped through the cracks, but they fixed it and moved on, and it's Google. But you raise a good point there.

I mean, Facebook, Google, I mean, I would say even Twitter, those are companies that can do something like this and more or less get away with it because of the core purpose the platform serves. Snapchat doesn't have that luxury. Yeah, it's really hard to imagine how you build lasting and kind of compounding value when your platform is vaporware, basically. Nothing sticks. Paperware. I've not heard that. That's a good one. You are not building communities per se. You don't have a following that you're working on building. And meanwhile, the company is just, the financials are incredibly destructive. And that's even after last quarter, which was better.

And the shares gained quite a bit because of last quarter. But ad impressions were up some 500% last quarter, and that is very unlikely to be sustainable over the long term, that sort of growth, let alone maybe even that level that they hit. Meanwhile, so just to run through numbers because it's great radio, So 800 some million in revenue, almost 700 million in cost of that revenue. But then they're spending $3.5 billion. So what is that?

Four times revenue on SG&A and R&D. So just billions that they're losing. I don't think this next conference call is going to be a fun one for Snapchat. Because I just have a hard time believing that this redesign has led to more engagement. And they've done nothing but dig their heels in even with user feedback. And we can make fun of them for going to do that. going on that Spectacles 2 route, but the problem is they have to because they've defined themselves as a camera company. So they've really put themselves in a very difficult position.

Blue Apron, the meal kit company that will ship food right to your home, announced a new strategy this week, selling their meal kits in stores. Blue Apron hasn't announced pricing or partners, just that this is coming later this year. What in the world of I'm doing? I feel like as soon as I read this, there was the Onion article headline that popped into my head. The next step is that Blue Apron is going to resort to giving away free meals in order to boost sales, because I just don't know what lever these guys can pull. There's stocks down another 8% this week, David.

It's ugly. Over the past year, they've burned $270 million in cash. They've had key leadership departures. They've pivoted with their strategy a couple times now. I mean, they're basically admitting here that their core subscription business isn't doing all that well. So we're going to do a completely new business line that has a lot more competition. don't really have any differentiation. A lot more competition and worse margins, right?

Well, you know what really sucks here is that there's investment banks out there push them to go public. And I mean, like, that really, we're not the smartest guys in the world here, but anybody could have seen this was a problem. I mean, they should not have pushed for them to go public like this without really recognizing the business still has many challenges to overcome. Up next, we're heading to Austin, Texas for a sit-down interview with CNBC's Julia Borson. This is Motley Full Money. We're going to boogie back to Texas eight feet to the miles. At night are big and bright, deep in the heart of Texas.

Welcome back to Motley Fool Money. I'm Chris Hill. South by Southwest started as a small music festival in Austin, Texas in the 1980s, but it's expanded to the point where now hundreds of thousands of people attend each year to take in the latest in not just music and film, but also a growing interaction. active festival built around cutting-edge technology and entrepreneurship. Julia Borsden covers media and entertainment for CNBC, and earlier this week I caught up with her in Austin to talk about the scene at this year's South by Southwest, starting with her headline. A lot of experiences, they call them activations, but I don't like that jargon, experiences that brands

and the media industry, traditional media industry is creating for people here to experience. and I think they're bigger and better than ever. And then on the show floor and also woven through those, I would say are the two trends of robots slash AI and then also virtual reality. Yeah, it really does seem like over the last couple of years, virtual reality as a tool has gotten a bigger and bigger presence on the trade show floor because it starts with the obvious,

which is gaming and moves into entertainment and virtually every industry. Everything. And I think that virtual reality is a really good fit with South by because it allows all the people who come here to go experience other things through this VR window. So I was on the trade show floor. We bumped into each other there today. And I saw the country of Peru was sort of marketing the country as a destination for doing technology or even tourism. And they had VR there. So you could just go try on the VR goggles and be transported to Peru.

And then we saw it today even in the experiences. It's a perfect fit for a lot of these experiential. marketing things that companies are doing. We saw, I went to the Ready Player One experience, and there's this new movie that Warner Brothers is launching soon. It's a Steven Spielberg movie, and it's all about video gaming. And the best way to let people experience it and get excited about the movie is put them in the VR experience themselves. So I spent a good 20 minutes playing a bunch of these different video games and feeling like I was in the movie. And it's such a perfect fit for what's happening, both in terms of the gaming trends,

and then also who the people are who are attending here and all the folks here wanting to feel like they're on the cutting edge of technology that I think it makes sense to see VR both on the trade show floor and off of it. Well, this is something you and I talked about last year because I remember asking you about how is VR going to work in movies?

And I was thinking at it from the standpoint of I'm going to sit in a movie theater and I'm going to watch the movie with the headset on. And I remember you saying, no, people can't handle it for that. People can't handle VR for two hours. And we've seen people, a lot of people including myself, would rather see a movie in plain old 2D on a really big IMAX screen

than watch a movie in 3D. I don't like watching movies in 3D, but I like a giant IMAX screen, and then afterwards I would go and pay $20 to go have a VR experience. I think Ready Player 1 is a good example of that, and IMAX and other theater chains are starting to really invest in VR and getting to play those games today gave me a sort of window into how that could work. So the entertainment industry, for those who have never been to South. by Southwest has a really big presence, not just in the breakout sessions, some of which are very

interesting to hear industry leaders talk about what's coming next in the entertainment industry, but simply just walking around the city, walking around downtown Austin. The brands are everywhere. They really are. Now, you would know better than I would how many people are expected to attend South by this year. But the thing with the people who come here is a lot of them work in the media space. they're journalists, their bloggers, their TV reporters like myself, and they are influencers.

These are people who like to be at the cutting edge, and they have huge presences on social media. So the media companies, whether it's the TV broadcasters, cable companies, or movie producers, movie studios, they come here to get people excited about their product. And the thing now, there are more TV shows than ever. They're going to be something like 500 series this year. There's more competition for consumers' time. It's harder than ever to get people to go out and buy a ticket to. a movie theater. So the media giants want to come here, reach the influencers, and get them

excited about their content. So all these influencers here will go out and market the movies or TV shows for them. And it seems to be working because they seem to be investing more every single year. And even within the networks themselves, just to take HBO, for an example, HBO has all kinds of original programming. They're not highlighting all of them. Silicon Valley got its own. house here. The new Bill Hader show has got some promotion as well, Westworld as well. How important is that within the network? How much do people within a given network really fight for these types of opportunities? And to what extent of any other hard feelings where it's like, hey, how come my show is not getting promoted? Well, I think it also depends on the timing of when shows

are going to launch. So Westworld is launching on April 22nd. It's just around the corner. And I just out at the West World land. They literally created a park that's two acres big. It's full of 60 actors. It's this massive experience. And I said, why did HBO want to do this? This seems to be the investment of millions of dollars. Now, they wouldn't tell me how much it cost, but with 60 actors and stuntmen and alcohol and all, I can only imagine what the insurance cost is for that, that kind of experience. They're clearly spending millions of dollars on something like this Westworld land that they created. And they said that these are the people they want to reach. And also HBO is all about premium content, and they're creating a really premium experience, handing

out a $20 Stetson-Style hat to everyone who walks through the gates of this Sweetwater town that they've built. So I think it's really about picking the shows that are the best fit. Obviously, here in Austin, it makes sense to do Westworld, and also the timing of when shows are launching. I just was at the Roseanne House that ABC built because they're trying to relaunch a new Roseanne show. And the fact that that show is coming up, they thought, okay, we can play on the nostalgia, we can let people know that it's coming back, we can hand out some pie and some sandwiches

and get people really excited by letting them take photos on the Roseanne couch, encouraging them to Instagram and tweet and send their photos all around the world. So not just the 4,000 people who walk or 3,000 people who walk through the Roseanne House, know that the show is coming back, but that they tell all their friends and all the people who read their blogs, et cetera. Well, this is something you and I were talking about before, about you look at the traditional broadcast networks and how they have started to come out and talk about their willingness or, in some cases, even eagerness, to cut the amount of ad time in a given hour, NBC coming out and saying, well, we're going to cut about 10%. A Fox executive came out recently and said that by 2020, they want to get the commercial time down to two minutes per hour. But as you were saying, they can do that in part if the economics work out and in part because they've got people, as you said, who are taking their own photos and doing the ads for them.

Yes, I mean, I think there are a couple different pieces of this. And, you know, Turner is another company that has talked about cutting down the ad time. And if they do so, it'll make each minute of advertising that much more valuable. The idea being if they're fewer ads, maybe the ads are shorter, people won't speed through them if they're watching on DVR. And they might just leave them if they know it's only going to be a 30-second ad break. Or if you can make the ads so exciting, people will treat them as content. And what's so amazing about what happens at South Buy is that people who go to the Westworld experience or they go to the Roseanne experience, they eagerly share photos of themselves

or photos of these worlds around them that are basically ads, but with their endorsement and putting your face, you know, next to a brand is a pretty great thing for a marketer. And so you have this multiplier effect and you have a kind of advertising that's more powerful than anything you could buy on TV.

So I think that there are a couple things. I mean, we obviously see a lot of ads on TV for movies and other TV shows, and this is a perhaps, a more compelling way to do that. But you also see the TV, you know, the TV network's trying to figure out how to make their add time as valuable as possible and just make sure it doesn't become irrelevant by people skimming through stuff.

So at the convention center on the trade show floor, there are obviously a lot of individual businesses that have set up. They've got their tech that they're trying to show off. But increasingly over the last couple of years, there are more countries coming, saying, as you were talking about Peru, bring your business to our country. There are more cities and regions in the United States who are playing up their ability to be business-friendly. And I spent- And tech-friendly. And tech-friendly.

And I spent some time talking with them specifically about entertainment. Because it seems to me that there's an opportunity there that some are trying to take advantage of others aren't. One thing I heard constantly was just how the state of Georgia has just sucked up all of these. entertainment dollars to make it really easy and friendly for. Well, they have tax credits, which is one thing they're doing to try to lure some big Hollywood productions over there. And then you have folks like Tyler Perry who've built big studios. But it's interesting because, you know, I was walking through the convention center and you see Japan. And then there's a machine that's doing sushi 3D printing. And you have the France

booth. And they're talking about all the technology that's happening in France and why it's such a great place to build a tech business. And increasing, you have these startups that are wandering around the convention center. And I think the whole point of these booths is to try to say, hey, you might not think of Belgium as a place where you'd want to open your European office, but come have a cookie and open a piece of chocolate and open your European office in Belgium. So it's all about sort of changing the perception and encouraging people to think of these

destinations as a place for technology and for entertainment. Do you think that, whether it's Netflix, Hulu, Amazon, anyone who's doing original programming, do you think they are really in the driver's seat in terms of the economics of the industry? Because it seems like because there are all these different networks, they can afford to choose who they want to work with. And when it comes to the tax breaks, yes, Georgia makes it very compelling. There are other states and cities and countries, for that matter, that are trying to make it compelling. Well, I think you're talking about two different things here, though, because the cities and the states, Georgia saying come, come shoot your movie in Georgia.

They're not competing for the distribution. They just want you to come make your movie there. And frankly, Netflix or Hulu or Amazon, it's oftentimes not up to them where something is shot. It may be up to the producer. But it was interesting. We were just talking to Ashton Coochor, who did a startup pitch competition here in Austin. And we asked him about the fact that he has a TV show with Netflix called The Ranch. And he, of course, has a long history of doing network TV shows.

And we said, what's it like producing a show for Netflix? He said he loves it. They give him a lot of editorial freedom and control, and he really likes working with them. So I think that it's interesting seeing Netflix Hulu Amazon compete for the traditional TV giants, people like Shonda Rhymes, who went over to Netflix. And I think that when it comes to the TV business,

it's a little easier to lure them over. When it comes to movies, companies like Netflix and Amazon are still trying to show that they have the potential, to earn their talent acclaim at places like the Oscars. So Netflix went into the Oscars with nine nominations, and I think they got one award for a documentary. So, you know, they would have liked to get an award for a non-documentary field, but it's nice for them to say,

look, you can bring your feature film to us. We'll still get you Oscars' attention, or Golden Globe's attention. So I think it's, for those digital platforms, their reach is so spectacular. That makes them appealing to a creator like an Ashton Coucher or Shonda Rimes. But it'll be interesting to see how it works with the movie side where it's less about a long-term relationship and more about one-offs.

And there the creators really have usually have power to decide where they want to go. Last year, one of the things you and I talked about was Bob Eiger and his status as CEO at the Walt Disney Company. and you said in the interview, you thought he was going to renew his contract or sort of like extended. And sure enough, a week later, less than a week later. So I'm sort of tempted to ask for another prediction from you. But when you look at the Walt Disney Company a year later,

where do you think the company stands right now specifically with respect to their streaming ambitions? Well, we will see soon enough because since we were here a year ago, Disney announced that it has an ESPN app, which will be launching sometime this spring. I would expect it to be pretty soon, April maybe. So we'll see this direct-to-consumer ESPN app, and we've heard a little bit about it. Now we know the pricing, and we're getting closer to launch. We'll get more details.

But Bob Iger is really hoping this will be the cornerstone of relaunching the way consumers interact with ESPN on their devices, whether that's people who subscribe to TV and want to get ESPN through the internet. that or whether it's people who are just going to pay separately for other sports they're interested in like soccer or cricket or whatever it may be that's not on traditional TV. They've also announced since we were last year ago that in fall or late 2019 they're going to be going head to head with Netflix with their own direct-to-consumer Disney branded app and they have more recently since they originally announced the concept announced they're going to be adding the Marvel and Star Wars movies to that as well. So it's not going to have as much content as Netflix, but the content it has is

going to be very high profile in terms of the quality of the brands. So it's going to be interesting to see how that plays out. I cannot wait to see what these apps look like when they launch. But Iger has talked a lot about how this is a big priority for him and a big reason that he's sticking around. That and the Fox acquisition that they've announced as well. Last thing, and then I'll let you go, because I know it's a busy time for you. You're a fan of Westworld. You've done the immersive experience. It was really fun.

Was there a particular highlight? Was there anything for someone who has not seen Westworld, but it's on my list to watch. Any clues for season two in the experience you went through? Well, I have to say you have to watch the show. As someone who's interested in technology and an artificial intelligence, I think you'll find it fascinating.

It was really cool that it was here in Austin because it is this Western experience. and I was just really impressed by how the creators of this park, 20 minutes outside of Austin, really paid such attention to detail and wanted to make it feel authentic, and the actors in the park didn't break character at all. There were a couple of spoilers, including the fact that there was a samurai, a guy in a big samurai costume who was walking around the park in a kind of intimidating way, indicating that there was a, you know, that we'll hear something about a samurai world

that is perhaps an alternate to the Western world. And so there was some of that. And then there were just some cool Easter eggs hidden in the park. There was a grave for one of the main characters named Dolores. And they got me and some other folks are like digging the grave. And I found a coin in there for the samurai world. So there were lots of fun what you would call Easter eggs hidden in the park out here. All right. I'm in.

You've got to watch it. You'll see. It's fun. Thanks so much for being here. Thank you for having me. It's always fun to check. and I'm glad my predictions last year turned down to be true. For the latest coverage of media and entertainment,

you can follow Julia Borson on Twitter or Catcher on CNBC. Get ready to add a few tickers to your watch list. Radar stocks are next. This ain't your grandpa's financial show. This is Motley Full Money. It's dance time in Texas, and we're striking up the band. Let's go honky talking. Honey, take my hand.

As always, people on the program may have interest in the stock. next day talk about it. The Motley Fool may have formal recommendations for or against. So, don't buy ourselves stocks based solely on what you're here. Welcome back to Motley Full Money, Chris Hill, here in studio with Jason Moser, David Kretzman, and Jeff Fisher. Special guest visiting today. Wade Cherry, we've also got Andy Cook and his son, Matthew, visiting from Pomona College on Spring Break. That's a spring break that I can get behind. I was going to say, we're taking our kids to the Bahamas next weekend, but wow, I mean. Impressive. Watching the sausage

you've made is a lot more fun. All right. Let's get to the stocks on our radar. A man behind the glass. Steve Rydell hit you with a question. David Kretzman, you're up first. What are you looking at? I'm going back to the well with Ollie's Bargain Outlet. This is ticker OLLLI. They now have 271 semi-lovely stores. That's their own words in 20 states. Semi-level. And it's worked out well for them. They're selling good stuff cheap. So we're talking about close-out merchandise and excess inventory. As far as retailers go,

they're doing really well. Growing free cash flow, paying down debt and opening new stores. Stocks almost doubled over the past year. Steve, question about Ollie's? What's the strangest thing I can buy there? Well, they actually don't promote a whole lot, so it's a treasure hunt each time you go in, Steve, so report back once you go. Let me know. Jason Moser, what are you looking at?

Ali, the Weatherman on Family Guy. Every single time he says that. Mack, you inspired me this week. I'm looking at Callaway Golf. Ticker is E-L-L-Y. This is golf equipment provider, Callaway, Big Berth, all that good stuff. This resurgence in golf with Tiger Woods and Phil Mickelson.

can't help but think that that maybe reignites some interest in the game. More players playing more rounds is what these guys need. Healthy balance sheet, top line is growing. I'm compelled to dig in. Steve, question about Calloway Golf? It's more of a question about the sport of golf. Do you watch golf on television? I do occasionally, Steve, but I must admit that I'm losing the patience.

The game simply takes too long. Jeff Fisher, what are you looking at this week? Well, we spoke of it earlier, but I believe it deserves more amplification. So that's Adobe Systems, tickers ADD. BBE. Revenue grew 24% in the quarter just reported. Earnings grew more than twice that rate. They're helping companies create the digital experience start to finish. Strong outlook ahead. Steve, question about Adobe? So I'm a shareholder. Do you think Adobe's opportunities lay more in that for individuals or for professionals?

Professionals, Steve. But a lot of individuals are using it as well, and there's money to be made there as well. Callaway Golf, Adobe Systems, Ollie's. One do you want to add to your watch list, Steve? I might go with Ollie's bargain outlet just because it sounds so strange. It does. Semi-lucky. I like to check it out. I like it.

Should we do a field trip? We should. A semi-lovely field trip. All right. David Kretzman, Jason Moser, Jeff Fisher, guys. Thanks so much for being here. Thank you. That's going to do it for this week's edition of Motley Full Money.

Our engineer is Steve Broido. Our producer is Matt Greer. I'm Chris Lowe. Thanks for listening. We'll see you next week.