Motley Fool Money - Netflix, Comic-Con, and the Streaming Wars

Episode Date: July 19, 2019

Netflix falls 12% after falling short by a couple million new subscribers. Domino’s same-store sales come in low. Amazon sells more than 175 million items on Prime Day. Blue Apron and eBay both hit a 52-week high. And Wall Street’s big banks post their latest results. Emily Flippen, Ron Gross, and Jason Moser analyze those stories and share why they’re keeping an eye on Chipotle, Hasbro, and Boston Beer.  Plus, media & entertainment industry analyst Tim Beyers gives his headline for this year’s San Diego Comic-Con and weighs in on the increasingly competitive video streaming wars.   Thanks to Molekule for supporting our show.  Get $75 off your 1st order at http://www.molekule.com and use the promo code “fool75”. Learn more about your ad choices. Visit megaphone.fm/adchoices

Hi everyone, I'm Charlie Cox. Join us on Disney Plus as we talk with the cast and crew of Marvel Television's Daredevil Born Again. What haven't you gotten to do as Daredevil? Being the Avengers. Charlie and Vincent came to play. I get emotional when I think about it. One of the great finale of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh, boy. Fantastic. You guys go hard, man. Daredevil Born Again, official podcast Tuesdays, and stream season two of Marvel Television's Daredevil Born Again on Disney Plus. This week's Motley Full Money is brought to you by Molecule. Molecule is reimagining the future of clean air, starting with the air purifier.

You can get $75 off your first order by going to Molecule.com. That's M-O-L-E-K-U-L-E dot com, and use the promo code Ful-7-5. Everybody needs money. That's why they call it money. From Fool Global Headquarters, this is Motley Fool Money. It's the Motley Full Money Radio Show. I'm Chris Hill, joining me in studio this week's senior analyst. Jason Moser, Emily Flippen, and Ron Gross. Good to see you, as always.

Hey. Hey. We're recording this week's show a little early. We've got the latest headlines from Wall Street. We've got a report on this year's San Diego Comic-Con. And as always, we'll give you an inside look at the stocks on our radar. But we begin with the battle for the living room. Shares of Netflix fell more than 12 percent Wednesday evening after the company's second quarter report came out with 2.7 million global subscribers added. That's nice, Jason. That's It's also a couple million short of Netflix's own guidance. Yeah, yeah, that's certainly something that doesn't happen all that often. If you go back to 2016, essentially it happens once a year where they miss their own projections.

To their credit, they typically follow it up with a nice beat the next quarter. I'd say, certainly in this case, they'd better hit that 7 million number here. They're forecasting for quarter three or else there could be perhaps some concerns there as far as how far they can grow the subscriber base. They offered a few different possible reasons for the miss there, possibly pulling forward from a very strong first quarter, possibly some areas where they saw the price increase. There was maybe a little bit of way in demand there, possibly content related too. I mean, I think it makes sense to put all of those together. And ultimately, I think from the investor's perspective, at least goes back to my question now

as how much further can they raise prices. I mean, I'm not looking at Netflix, as a, oh my God, this is the end of Netflix situation. But if you're an investor, you have to ask yourself, how much can they raise prices? Because now we're talking about how far can they actually grow the subscriber base. I mean, sequentially, North America was essentially flat. That's got to be concerning because that's one of their most lucrative markets. International was good, but clearly not good enough. So a lot of questions yet to be answered.

One question that was definitely answered, they will not be incorporating advertising in their business model. sounds like ever. Yeah, I mean, I think the market is relatively negative on Netflix after this report, but we can't forget the landscape at which the second quarter was. Netflix really didn't have any big launches. Meanwhile, the very final season of Game of Thrones, HBO's Game of Thrones was coming out. So it probably wasn't going to be a good quarter for Netflix in general.

The fact that they said it was slightly down in places where they had raised prices was concerning, but the fact that it was not only down in places where they had raised prices is maybe a testament to the fact that it was a macro kind of cause of the poor Q2 as opposed to something bigger within the company. So I think Q3 coming forward, we had a great launch of Stranger Things. I said that was their most watch show ever. So Q3 will be interesting to see that performance. For me, it's not only can they raise prices, but can they raise prices while they're losing some of their most popular programming, some of the most popular shows. I know folks who are like, you know, I'm not in love with the content already.

And if they just take one or two more things away from me, I might not pay the current price, let alone any future increased price. And I think they're in jeopardy with respect to that. Well, I mean, to your point, I mean, I certainly don't extrapolate my behavior to everyone else. Well, you should. We did recently downgrade one price grade with the service because we didn't need to stream four devices at once, because not everybody in my house really uses it all that much. And talking about price increases just with the standard, with the current membership base,

I mean, a $1 or $2 increase in price sounds like it's not much. When you actually multiply it all out, you see it's maybe $5 billion, that isn't really all that much when you compare it to how much money they have to spend annually on content, which is $15 billion and up. That content doesn't live nearly as long a life anymore because it's all released at once. So these are just things you have to keep in mind. In terms of the content this week, the Emmy nominations came out. Netflix coming in second only to HBO in terms of nominations.

So I hear what you're saying, Ron. We do see these reports about the office and friends going to other streaming services in the future. But for the moment anyway, Netflix is one of those companies that is making stuff that is of quality. And paying a lot of money to get it done. Second quarter profits for Domino's Pizza came in higher than expected. But same store sales in the U.S. were the lowest in seven years.

Emily, this is one of those businesses that's been on such a great run for so long. When you look at this quarter, do you think this is a speed bump or is dominoes slowing down? A little bit of both. The issue here is not their earnings, as you said, but the cannibalization. Their strategy of fortressing is inevitably going to have cannibalization. That's where they build a lot of dominoes in areas where they already have a strong presence. That's kind of to force the competition out to be the only and the fastest game in town. So the fact that it has negatively reacted in terms of their same store sales shows analysts

and shows consumers that maybe this strategy is ultimately going to hurt Dominoes more than it's going to help. But I do think it's too early to tell in this case, simply because it takes a lot of time for consumers to change their typical eating habits. So somebody who's accustomed to going to Uber Eats or Postmates, it's going to take a while to figure out that, hey, that domino is right down the street. It can get there 10 times as fast as Uber Eats or Postmates. I think that's right. Even with growth slowing, you still saw a 3% increase in same-store sales,

the 33-3rd consecutive increase in same-store sales in the U.S. So in a vacuum, good numbers, but comparatively, relatively, we're seeing slowing down. And I'm not surprised. It's hard for companies quarter after quarter year after year to keep putting up those impressive numbers that they have. I think competition is on their heels. Typically, the competition in the space, Not very impressive, Papa Johns or Pizza Hut. Starboard values in at Papa Johns. Don't sleep on them. They tend to get it done. Even Pizza Hut is changing their menu, putting in $5 value menus, including beer delivery. So things are happening in this industry that Domino's, you should really be aware of. It's interesting. You mentioned the competition, because Emily, you and I were talking before we started the show.

And one of the things Rich Allison, the CEO at Domino's talked about was the impact of Uber Eats and Grubhubh and those types of services. I always think about competition for them in the way that you mentioned, Ron, like they're growing up against other pizza companies. But to your point, Emily, and to the point Rich Allison made, no, in the era of Grubhub, everything is fair game in terms of competition. Yeah, and that's really threatening to Domino's, which has really only ever competed against, say, Chinese food and other pizza companies. But at the same time, you can either see it as a risk or an opportunity.

People are more accustomed to ordering food and having it delivered now more than they've ever been. So they should really take that as an opportunity and run with it. And Domino's has done what they must do, which is improve their technology platforms, improve digital ordering. Otherwise, they would be in deep trouble compared to those new folks. Shares of eBay hitting a 52-week high this week as second quarter revenue came in at $2.7 billion. Ron, eBay is selling a lot of stuff.

They're also buying back a lot of stock. Yeah, you know, at first glance, it didn't look so exciting, but it actually is pretty good. Revenue was up 2%. And marketplace revenue up 1%. Eh. But you had Stubhubhub up 7%, classifieds up 5%, but you really do have to focus on the marketplace revenue, which is the bigger piece of the pie here. Interestingly, though, operating margins were up, which really helped them translate to growth in the bottom line. Earnings per share up 28%. But, as you mentioned, helped by a lot of share buybacks there. If we want to kind

to adjust for that, net income, adjusted net income, was up only 10%. So you see the effect. of buybacks there, really, flowing to the diluted EPS line. But still, not too bad, up 10 percent with margins widening. Their new payments plan being adopted, you'll recall, they kind of went their separate ways with PayPal pretty much over a year ago, I think, but they're having some success with their payment plan, up 24 percent quarter over quarter. That's nice to see as well. You mentioned how well Stubhub and Classifieds are doing in terms of the eBay portfolio.

Part of this release was eBay saying, we're looking at it. at these two businesses, and they're very clearly for sale at the right price. For sure. As they have been, actually, for quite some time with no takers yet, I think we'll eventually see a deal and they'll divest. Yeah, and those businesses are hard businesses to make profitable. We see even at scale companies like Live Nation struggling to kind of keep their positioning in the market. It's a hard business, so I'm not surprised at all to see that eBay. Maybe wants to get rid of them.

Earning season kicks into high gear next week, which means this week we got the latest result. from Wall Street's big banks, including Citigroup, Wells Fargo, Bank of America, just to name three. Jason Moser, you host the Industry-focused Financials podcast. I do. Anything stand out to you? This better be good. Well, you know, I think you could probably lump all of these big banks into the, I think the overarching theme of this earning season really has been share-buybacks. I mean, on the surface, it was really shaping up to be a challenging quarter due to a couple of reasons.

I mean, the low-interest rate environment makes it a business. difficult for them to make money on their deposits. You look at market volatility, it's been pulling back a little bit on their trade volume. But they've been able to grow their deposit bases a little bit, really, though, it was all about share of buybacks. And it put some numbers behind that. City Group spent $3.5 billion on buybacks. J.P. Morgan spent $5 billion on repurchases. Wells about $5 billion, too. And Bank of America spent $6.5 billion on share repurchases. And remember, they just got the green light to do more. And so I think that's going to be something that we're going to see sort of play out here for the rest of the year.

I mean, honestly, it's not, I don't really fault them for doing that. I mean, that's always been kind of the argument for owning banks as they tend to return cash to shareholders in the form of dividends and share buybacks. But you have to at least keep that in mind. When they're reporting increases in earnings per share or book value per share, you have to understand that that share number oftentimes is coming down because of the buybacks. So, I mean, they're doing well, I think, in what is a tough environment. At some point, we're kind of rooting for interest rates to tick back up a little bit, and I think that'll unlock some profitability in these businesses, but for now, I think they're

doing what they need to do. It seemed that the trend was those with more consumer-facing businesses fared well, since on the interest rate side, it was a little bit tough. So someone like a Wells Fargo checking and consumer lending businesses were up. Real estate credit card, automobile lending were all up. I think Citibank has some good consumer-facing revenue streams as well. Folks like a J.P. Morgan, or even a Goldman, which is focused more on trading and the interest rate environment, didn't fare as well.

I think that's fair. A bank of America, you look at the deposit balances there, up to 6%. That was double of what J.P. Morgan turned in. Coming up, one group of embattled shareholders got a reprieve, if only for one day. Details coming up. You're listening to Motley Fool Money. Welcome back to Motley Full Money. Chris Hill here in studio with Jason Moser, Emily Flippen, and Ron Gross. Eventful week for Ann. Amazon. On Monday and Tuesday, the company held its annual Prime Day event. Yes, this year,

Prime Day was officially two days. The company said it sold more than 175 million items, which is more than Amazon sales last November on Black Friday and Cyber Monday. So, great start to the week. On Wednesday, the European Commission announced it has opened an investigation into potential antitrust violations. Emily, I'll start with you. Which is the bigger deal in a long-term sense of these two things. The Prime Day numbers are a much bigger deal than the EU antitrust investigation. If you have not been investigated by the EU yet, you are not one of the cool kids. Amazon's the last big company to be investigated.

I would not be surprised if they come out of this with a pretty substantial fine from the EU for the way that they handle their third-party small-seller data. That's not to say they're deserving of it. It's not to say they're undeserving of it, but it is to say it's expected. I expect more of these regulations, especially in the EU, to continue. But when push comes to shove, the numbers that we saw Amazon pull in on Monday and Tuesday this week have spoken for themselves. They sold $6 billion worth of goods during their launch.

As you mentioned, they sold 175 million items, which is up 100 million items compared to last year. That tells you anything about not only the number of people they have on their prime platform, but the amount of money that people are willing to spend on the platform. All of this being said, there was a nice little controversy thrown into the mix where they accidentally mispriced some very expensive $13,000 camera equipment for $100. And they honored it. And they honored it.

So Amazon is not a mistake-free. And I think moving forward, we're just going to see continued great prime numbers. Worth pointing out, however, that Alibaba on Singles Day, the most recent Singles Day, I believe it's somewhere in the neighborhood of $30 billion worth of sales. And if you remember correctly, actually, a lot of those Chinese e-commerce companies got killed last Singles Day, because even though the numbers were amazing, they were lower than projected. Although, Jason, you and I were talking the other day. It is interesting to see how in just four short years, Amazon has improved their fulfillment

because the first prime day in 2015, it wasn't just mispricing mistakes. They had significant fulfillment problems. Yeah, and I think part of the reason why they've been able to do that is because they have grown in such quick fashion, their third-party partners, right? I mean, we were looking at Jeff Bezos' letter to shareholders here at the beginning of this year. And in 1999, 3 percent of third-party sales represented the overall share. And now it's 58 percent. They've been building these tools in order to support those third-party partners. And I mean, a lot of that boils down to pricing, shipping, fulfillment. And so it's one thing when you're trying to build

models and processes to support your business. But when you're building models and processes to support customers, you know, that's when you really got to show up. And I think that's why they've taken it so seriously. On Tuesday's shares of Blue Apron rose as much as 70 percent after the company announced it is adding Beyond Meatburgers to Blue Aprons, meal kits. Ron, you're a value investor at heart. And a chef, kind of. A cook, not a chef. Did your head explode when you saw this? Well, Chris, it's about a quarter cup hype and five-cup of short covering.

Adding Beyond Meat is a good idea. There's nothing wrong with it at all. But they have offered vegetarian plans for some time. So this is not a game changer or a change to their business model in any way. And it doesn't save their business by any means. Sales have suffered double-digit percentage to clients in six consecutive quarters. Their 550,000 active accounts as of March is down 30 percent from a year ago. The business continues. used to suffer. I actually don't see that turning. As we've discussed in the past, there are too many of these types of delivery services, food services. The business is too fragmented. Some will go out of business. Some will merge. There probably will be one or possibly two left

standing when it all shakes out. And that might be a fine business. As much as you might question Blue Aprons leadership, this move is a genius move by leadership. If you can get even a penny of the alternative meat hype, it's a good day for Blue Apron. Although, Ron, what you just said sort of reminds me of a few years ago with 3D printing, where there was all this excitement and you could take a step back and say, okay, I see the application, I see the demand, I see this eventually getting somewhere, but it just seems like we're way ahead of ourselves in terms of the alternative meat market. Yes, 3D printing does not have the feel and text.

of meat. So there's the big difference here. But beyond meat's success since going public is unbelievable. And there's certainly, as I often say, 10 or 20 years from now, I think the meat industry, as we know, is going to be significantly different than now. So these folks are on the forefront. I think there's lots of growth ahead. Unfortunately for Blue Apron, it doesn't accrue to them. Back in 1997, Warren Buffett went looking for acquisitions for Berkshire Hathaway, and he found Dairy Queen. You bought Dairy Queen for $585 million, and we're using that fact as a blatant excuse just to talk about this next story.

A woman in Georgia called her local Dairy Queen to request a Moana-themed birthday cake for her daughter. That's Moana from the animated Disney movie of 2016. The employee at Dairy Queen misheard that and thought the woman was asking for a marijuana-themed cake for her daughter. The result was a cake that was green and white, featuring a large marijuana leaf a green, My Little Pony character with Bloodshot Eyes that was smoking. Jason, I'm not really sure where my little pony comes into all of this, but I've got to say, I love this story. Well, yeah, I mean, like, I understand Moana. I can hear that.

And, I mean, it was 25 years old, so age-appropriate. But, I mean, the pictures of this cake, that was a pretty nicely done cake, in all honesty. Yeah, Emily, to Jason's point, the daughter in question, not a child. This makes it a little bit better, but still pretty awesome. It's much less egregious, and I will say as somebody who co-advises our marijuana portfolio, there's a good chance for my 25th birthday coming up soon that I may be getting myself a marijuana cake. Let's bring in our man behind the glass, Dan. Any thoughts on this one? I wanted to ask Jason, since this story took place in Georgia,

like, how much of the accent was it play here from the moana to the marijuana mistake? Let's see here, Moana versus marijuana. I guess the draw could make it a little bit tougher to discern. All right, Jason, Emily Ron. We'll see you later in the show. Stay right here. You're listening to Motley Fool Money. Quick thanks to Molecule, which is reimagining the future of clean air, starting with

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This is an enormous event. They have hundreds of breakout sessions, programs, movie screenings, and obviously a lot of stars from the entertainment industry. What is your headline for this year's Comic-Con? My headline is, this is the year of the woman. There's a lot of empowering, um, there's stories from Comic-Con that we're going to see on the main stage at the show this year. Probably the biggest two will be Batwoman from what was Warner and is now AT&T. That'll be a spinoff show for the CW, which is a joint venture between Warner Brothers and CBS. And then the Black Widow movie for the Marvel Universe.

The Marvel Universe is sort of transitioning. They've had a blockbuster run, but now we're going. we're going to see how the newer third tier or even second tier characters, I guess it depends on your point of view, will carry that universe forward. But there are some very inspiring stories here. And I think by appealing to the female demographic, we're going to see a very interesting show and a lot of new things from the studio that we haven't seen before. This is not the Comic-Con of even a few years ago. And that's a good thing, I think. I want to get to Marvel in a second, but I'm curious because I've seen the preview that the CW put out for the Batwoman

series. It's incredibly well done. I was struck by the fact that this appears to be the latest example of how the people behind the DC universe appear to be very good at creating television shows with the Flash, Green Arrow, etc. This one looks fantastic. And for whatever reason, they're not really able to make that translate to the big screen. Why do you think that is?

First of all, it's a different creative team. The Batwoman series is from the same team that brought us Arrow, that brought us the Flash. It's Greg Berlanti and his varying partners for the CW. So they've created their own universe that lives very, you're right. It lives very, very well on TV. Although, interestingly, over the past year, the viewership of the floor. Flash and Arrow and the rest of that Arrowverse for lack of a better term is down fairly significantly about 20%. So the viewership isn't what it used to be. In fact, it's getting

a little tired. So Batwoman is kind of a sort of a shot in the arm taking a different direction and taking a different character who appeals to an entirely different group. The character of Kate Kane as Batwoman, who is an out lesbian, who is an out lesbian, who is is an heiress and sort of exists outside of the universe of Batman himself. In the comics, she shows up when Batman disappears. So it's a very interesting character. It's a new way to maybe look at the universe, but that hasn't translated to the big screen because DC hasn't taken those kinds of chances.

What's really exciting about the DC universe is on TV. Saturday, Marvel's going to be hosting a 90-minute panel in Hall H, which is the biggest venue at Comic-Con. Yes. Huge anticipation now that the latest phase of the Avengers movies has come to an end. I have to say, I've enjoyed them just as a fan of movies. As a Disney shareholder, I've also enjoyed the impact of these movies. And I'm wondering if now, I don't want to say the bar is too high, but it really seems to

like, if you're a Disney shareholder, it's been a great run for the studios, and the bar is certainly higher for them as a business. Yeah, and we may be entering the phase of Disney where you can't rely on the Marvel Cinematic Universe to carry the ball anymore. Now, that's not necessarily a bad thing. Remember that over 23 movies, the average global hall for a Marvel movie is very close to a billion is roughly 960 million. That's a huge number. So, yes, the bar is very high for Black Widow and the lesser titles like Morbius, which is out of the Spider-Man universe, you know, the Living Vampire. I mean,

these are characters that the mainstream doesn't really know or identify with very well, so they're going to be introduced. Now, the hook on this one is Black Widow because Scarlett-Nuhansson has been through, she's been through the various Avengers movies. She's a known brand. She's a known name. So I think people are genuinely anticipating that movie. And if it's well written, I think it will do extremely well because, again, it's another example of a great female hero stepping into a very interesting role with a really interesting background. And I think it can be a great movie, probably on the Order of Black Panther, which did about $1.3 billion. But that's going to be the exception rather than the rule.

For Disney, really, I think the next phase is the live action of those classic animated movies. movies, The Lion King, Aladdin, you know, the one that looks really good to me is Mulan. I think each of these has an opportunity to be the next stage of Disney where you're going to see those billion dollar box offices. So I don't think the run is over. I just think, you know, Captain America has gotten to the finish line and handed the ball off to Mulan and now we'll see how far she takes it. But I do think it's still a good period for Disney. It's just the the Marvel Cinematic Universe isn't going to be what drives profit from here on. At least not in the short term.

We'll see how well the characters and the universe get its legs underneath for this next phase. It's interesting that you mentioned the live action remakes because it wasn't too long ago that Disney was making these one-off Star Wars stories with Rogue One and then Solo. And Solo was seen as something of a disappointment to the point where the company came out and said, we're pumping the brakes on these. You look at a live-action remake of Dumbo, which didn't really do all that well financially. Lion King opens this weekend. The early buzz is not amazing. I don't know. It almost wouldn't surprise me if after Mulan, Disney decided to also pump the breaks on the live-action remakes.

I think you could be right about that. Although, I will say that if history is any guide here and it usually is the first few in the Marvel Cinematic Universe weren't spectacular hits we had, you know, like Hulk, for example, which wasn't a, first of all, it wasn't a great movie, but it also wasn't a blockbuster financially. There were plenty of movies like that. Folks may or may not remember Nicholas Cage's Ghost Rider. You know, you might, you might like that, but it doesn't really, it didn't really do well in the overall scheme. of Marvel movies. That didn't really happen until 2008 when Iron Man broke out. And Marvel took creative control of its movies. And so this is a relatively new experiment. I expect to see some

failures. I do expect to see some of these stories really catch on and then Disney to figure out the formula. They really did figure it out with the later Marvel films. But, you know, yeah, You're right. We're in the early stages here, so it's going to be hit or miss for a little while. Well, let's get to the streaming businesses, because that's really where all of this content is going to end up. Sure. And when you look at Netflix, Apple TV Plus coming online later this year, same with the launch of Disney Plus. It seems like we're at a really interesting point for streaming businesses. And just to pick two of them, recently you have Ted Sarandos, who's the chief content officer

at Netflix, telling a group of industry executives, Netflix needs to be a little bit more cost-effective with its programming going forward. And then along with that, the Wall Street Journal reporting that Apple is spending somewhere in the neighborhood of $15 million an episode for a new hour-long drama for their Apple TV Plus service. With all of that as background, what is the most interesting thing to you to watch in the streaming services over the next, say, six to 12 months? Because we're going to know a lot more a year from now than we do today.

We are going to know a lot more. And money, this is the thing about it in my point of view. The bigger budgets don't necessarily make the better programming. And we know that, especially on the Netflix scale, because it's a lot of the way. biggest budget for Netflix for a while there was House of Cards. And House of Cards was a success, but it wasn't, you know, it tailed off. It didn't. And some of that is due to controversy around the show, but also it just got a little tired. It got a little long in the tooth. And people weren't willing to stick with it over the long haul, which is a little bit too bad, but that's fairly

typical. So I think Netflix is right to be pumping the brakes and looking at shorter, shorter duration shows, shorter runs, one-offs, and maybe even some shorter programming overall. One of the most interesting experiments that I'm seeing, and it actually happens to be at the main stage at Comic-Con this year, is a program called, Chris, you and I are roughly the same age. So this reference is going to work for you, I think, is Cobra Chi. Remember the Cobra Chi? Absolutely. Okay. So, Cobra Chi is a YouTube series, and it's doing incredibly well. And it's just a throwback to the old karate kid. This is not a large budget series.

We've talked about YouTube before in that shorter form, you know, interesting. Get in, get out, provide, you know, a meaty morsel, and then don't do too much over the top. Just keep it short and sweet and very short seasons. And that's working with Cobra Kai. It has a small audience, but a very loyal audience. And it's really caught on. And so what happens? It gets the main stage at Comic-Con.

This is where we are now. The main stage of Comic-Con doesn't necessarily go to the biggest budget. It goes to the one that has the viral following. And Cobra-Kai is an example of that. So I think Apple's making a mistake here. 15 million per episode doesn't necessarily buy them a viral following. Meanwhile, Sarandos acknowledging that, yes, we have to tighten the belt a little bit, isn't necessarily a bad thing.

What it means is that they're going to laser in on different data and try to find those meaty morsels that carry a long way. I know you've been a fan of YouTube's business for a long time. There's certainly been controversy around inappropriate content on YouTube, finding its way into kids' videos. Yes. Two years from now, do you think we've seen reports of YouTube possibly spinning off a separate service just aimed at kids so that they could have better controls around that? Two years from now, do you think YouTube looks methodically different as a business than

it does today? I do, only because I think it has to. It's growing too fast, and the ways in which artists do business with YouTube is going to have to change. Now, whether or not that leads to a spinoff of a kids channel, I'm not entirely sure. They've tried this before, but it certainly does work. I mean, Nickelodeon has, you know, started as that kind of service just for kids. Nickelodeon is for kids. And then you had Nick at night. And there was an entire universe of shows and content that was built around the Nickelodeon brand. So certainly YouTube could borrow from that in building out its business. But the

The bigger issue, I think, is that the way that YouTube engages with artists has to change. It's going to have to change fundamentally. The revenue model is changing because there are a lot of open questions. What happens in terms of royalties? If a show moves from YouTube onto a network, does that mean that the YouTube creator has to continue to pay YouTube? How do those contracts work? There are things in, you know, is it residuals?

Is there a syndication type of deal? How does that actually work? And how does ownership work in the YouTube era? I think those are the bigger questions that artists and the channel itself are going to have to settle. But I think those are, I mean, those are very good problems to have. So yes, YouTube will look different in two years, but that's a fundamental, that's a change in how business is done around content in the era that we're in today heading into the 2020s. We've talked a lot about media and entertainment.

Let's step aside from that for just a second. What is a business out there outside the media and entertainment industry that you're a big fan of and maybe even from a stock perspective, you're bullish on? It's a good question. I'm tempted to go back to the well on Microsoft, but I'm going instead to say Twilio. Twilio is a fantastic business. I think it's the fourth pillar in the cloud business. this. If the three pillars that exist today are Amazon, Alphabet, and Microsoft, I think Twilio is number

four. And I deliberately leave out Facebook there because I think Facebook has too many regulatory challenges to be considered a cloud tighten over the long term. But Twilio is creating a telecommunications cloud that I think will dominate over the next 10 years because it's developer first. You write software and then that software executes communications apps like you want to be able to put video in a, you know, in Slack or you want to put it in a different app in Salesforce. Twilio tends to execute that. If you want to put the ability to make calls in an app, if you want to be able to send a map from your smartphone to, you know, a loved one about, hey, here's the route I'm taking, see in 20 minutes,

Twilio does a lot of that execution work, and they do it through software that developers really like. When developers are on board, it's usually an indicator that there's a lot of wealth and a lot of enthusiasm to come. Developers usually are the early warning system for the multi-bagger to come. And in the case of Twilio, I think they've waited loud and clear. Last thing before I let you go, I know when you've gone. gone to Comic-Con in the past. You've been working. But the cosplay is always something

that gets attention every year at Comic-Con. If you had to dress up, what are you dressing up as? What's your costume of choice? Oh, my gosh. The best one I ever saw, I would love to be, if I had the skill to replicate this, I would totally do it. But there was somebody who did, I don't know how they did it, skilts, pullies, whatever it was, but I saw it a show one year. Somebody, you know, who built an entire Galactus costume. And Galactus, like the, you know, the world eater in the Marvel universe, and he's, you know, purportedly something like, you know, hundreds upon thousands of feet tall.

And this, you know, giant costume, it must have been like 15 feet tall. And actually walking through the halls, I thought, first of all, that's amazing. How is that person not falling over? And second of all, like, how much work did it take to put that together? I was truly awe-inspired. So, if I could pull that off, I would be very proud of myself. Tim Byers covers media and entertainment for the Motley Fool. Tim, always good talking to you. Same here, Chris. Thanks a lot. Coming up, we'll give you an inside look at the stocks on our radar. This is Motley Fool Money.

Spider-Man! Spider-Man does what it. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy ourselves stocks based solely on what you hear. Welcome back to Motley Full Money. Chris Hill here in studio once again with Chase Mason Mozer, Emily Flippin and Ron Gross. Time to get to the stocks on our radar. Let's keep it quick here, Ron. You're up first. What are you looking at this week? I've got Hasbro, H-A-S, one of the world's largest makers of toys and games. Nice combination

of toys and branded entertainment, performing much better than their largest rival Mattel, especially with the weakness in brick and mortar, the bankruptcy of Toys R Us, successfully expanding into digital offerings, online games, raised their dividend for the past 16 years. Dan, question about Hasbro? Yeah, well, of course, as everybody knows, Hasbro owns the Transformers intellectual property. Ron, do you have a favorite transformer? Oedipus Rex? Let's move on.

Emily Flipping, what are you looking at this week? I am looking at Chipotle, CMG. They're scheduled to report next week on the 23rd, and I'm excited because they're revamping their menu, they're revamping their technological experience, and if Blue Apron tells us anything, There is a huge opportunity if Chipotle just adds beyond meat to the menu. And the ticker symbol? CMG. Dan, question about Chipotle?

Emily, what's your regular Chipotle order? Everything. And a ton of sour cream. The sour cream makes it. I knew I'd hate it. Jason Moser, what do you look at it? You know what goes well with the Chipotle burrito is a Boston beer. And that's what I'm taking a look at, Boston Beer, ticker S-A-M.

These guys really come back from the dead. Full year 2019 depletion numbers. estimated between 8 and 13%. The problem is, that's thanks to a lot of success with the Seltsers and the Angry Orchards and the Twisted Tees. So while they are feeling a lot of headwinds with the Samuel Adams brand, what did they do, Chris? They acquired Dogfish Head Brewery. And that should help fill some of the void they have in their IPA catalog. I'm not sure it's going to be enough, but we'll find out. Dan? What's your favorite Sam Adams brew there, Jason? Well, if I can include Dogfish Head in it now, I'll go with the 120 IPA. That's a killer.

Nice. Nice. Three stocks, Dan. You got one you want to add to your watch list? I'm always got a thirst, Chris, so I'm ready to add Boston beer company to my watch list. Hello. All right, Jason Moser, Ron Gross, Emily Flivin. Thanks for being here. Thanks for having us. That's going to do it for this week's edition of Motleyful Money. Our engineer is Dan Boyd. Our producer is Mac Rear.

I'm Chris Hill. Thanks for listening. We'll see you next week.