Motley Fool Money - Software, Home Improvement, and Automotive’s Future

Episode Date: August 23, 2019

Target shares hit an all-time high. 2nd-quarter profits for both Home Depot and Lowe’s were higher than expected. And sports retailers Foot Locker, Dick’s Sporting Goods, and Hibbett Sports continue to struggle. Emily Flippen, Ron Gross, and Jason Moser analyze the retail landscape as they search for market-beating stocks. We discuss the latest with Intuit, Salesforce.com, Nordstrom, Baidu, Hasbro, Entertainment One, American Tower, Lyft, and Bilibili. Plus, a conversation with Dan Albert, author of Are We There Yet? The American Automobile Past, Present, and Driverless.  (To get 50% off our Stock Advisor service, go tohttp://RadarStocks.Fool.com.) Learn more about your ad choices. Visit megaphone.fm/adchoices

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Everybody needs money. That's why they call it money. The best thing in life are free. You can give them to the money. From Fool Global Headquarters, this is Motley Fool Money Radio Show. I'm Chris L joining me in studio this week. Senior analyst Jason Moser, Emily Flippin, and Ron Gross. Good to see you, as always.

Hey, hey. We've got the latest earnings from Wall Street. We will dig into the future of the automotive industry. And as always, we'll give an inside look at the stocks on our radar. But we begin again with retail. And the week belonged to Target. Shares of Target up more than 20% this week and hitting a new all-time high. After second quarter results, Ron, they were great.

Profits? Same store sales? It's what you want to see. Best quarterly performance in years. Total revenue up 3.6%. Comps up 3.4%. Interestingly, same-day fulfillment services accounted for 1.5 percentage points of overall comp growth. Store traffic was up. Adjusted earnings up 24%. Companies done a really great job under Brian Cornell of turning this thing around. I'm not knocking what he's done. He's done an amazing job here. Is this a little bit of an overreaction? This seemed like a great quarter. I just don't know if it was 22% great. Well, Nordstrom's was an overreaction, but we can talk about that later. This was pretty darn good. I mean, you had digital sales up 34%. Online sales now account for more than half of total same store sales. It's what the company needed to do. They needed to spend billions of dollars to compete in this kind of. of ease of delivery world we're in. So whether it's their acquisition of shipped, they're going

to same door or next day delivery, they did what they needed to do. And it took a while, but it really does seem like they've turned the corner now. So, you know, this is a tough industry. And this will ebb and flow. Next quarter will probably say something different. But for now, I say kudos. Yeah. One thing that I noted as a frequent target customer is that they're actually planning on opening 30 small format stores across the country. So if you're familiar with Walmart's neighborhood market stores, which has been relatively successful for Walmart. Essentially, they're just smaller footprint stores with a more streamlined number of skews. So it'll be interesting

to see if that's successful for Target as well. I know that they drive a lot of traffic because they are kind of your one-stop shop. So interested to see how that plays out for them. Last thing, Ron, stock it on an all-time high. Is it expensive or do you think it still has some room to run? They raise guidance, based on that forward guidance, trading around 18 times earnings right now. So compared to like a Costco, not expensive at all, I think if they continue the execution, it's a fine stock to own at these levels. Let's move to Home Depot and Lowe's, both reporting second quarter results this week,

both with profits higher than expected. But Lowe's same store sales were higher than Home Depot's, and so was the stock. Jason, Home Depot up around 5% this week. Shares of Lowe's up more than 12%. Yeah, I mean, it wasn't a bad quarter really for either. I mean, it does show some potential challenges here in the back half of the year. But I think typically these companies, I feel like they get a pass from the markets to a degree based on the markets that they serve.

And the fact that both companies seem to have responded to the Amazon threat so well. I think Home Depot has probably responded a little bit better than lows. But, you know, you can see the results from both companies. We're fairly comparable. You know, these were not knocking out of the park quarters. Both businesses deserve some credit. When you look at Home Depot, approximately 50% of all online U.S. orders were picked up in their stores during the quarter. Second quarter online sales grew 20% from the quarter a year ago. So they're clearly seeing some progress in the online

business. And we've talked a lot about the rental business with Home Depot before as well. And I think that's an area where they continue to make great progress there. They see the pro customer, which again, pro sales outpacing, do-it-yourself sales, all of the home improvement projects that I'm taking on, Chris. But rental there. 25% of the pros out there rent from Home Depot today, but they know that 90% of pros rent tools. So, they see this big opportunity. And that creates a longer-term relationship with that pro customer. With Lowe's, I mean, the big focus really on getting inventory levels back down, which I think is a good long-term view there. You really do see an opportunity with them

to get their margin picture improved over time here. To put it all in a comment. context here. Sales per square foot is the way we look at these retailers today, particularly when they have to maintain that physical infrastructure. With Home Depot sales per square foot, around $460. With lows, it's $344. So you can see the disparity there. You can see the opportunity for lows. But right now, Home Depot still winning. But I like the fact that you use the phrase getting a pass from the market because Home Depot lowered guidance for the full fiscal years. Lumber prices, much lower than the were a year ago. And I looked at what they did this week. This is a great business, but I was

wondering, should shares of Home Depot be up at all this week? Well, probably so. There's an advantage to being as big as they are. So when they pull back on the revenue guidance like they did, they didn't pull back on the earnings guidance. Because they have a number of different levers they could pull to keep that profitability in check. And lows to a degree is the same. So again, I do think it's a matter of, even though the revenue picture may be a little bit lighter than was expected at the beginning of the year. They have ways of still bringing down the savings to the bottom line, so to speak. My guess is that this interest rate environment we're living in now, this lower interest rate

environment that we seem to be moving towards, is probably helpful as well. A robust housing market probably doesn't hurt. Mortgages are at an historic low once again. I don't think that hurts. I think you're right. We just took out a home equity line of credit and we're getting ready to undertake a master bathroom renovation. So I can tell you the company that we're using for that renovation will be using Home Depot. That will be an example of a pro customer for Home Depot. So, you know, hey, listen, I'm glad to be a part of the solution, not part of the problem. You're welcome, shareholder. Ron, you mentioned Nordstrom. We talked about it on last week's show. You said, this is the retailer you're watching over the next six months.

They had a good week. Second quarter report, profits much higher than expected, and the stock moving higher as well? I don't necessarily think that was warranted, to be honest. I'm a fan. I'm a customer fan of Nordstrom. The stock is a little bit challenged. It was a mixed quarter. Sales down 5%. They no longer report comparable store sales, interestingly. They think a net sales number is good enough. Digital sales only up by 4%. It's not great. They were helped by good discipline in their inventory and with their expenses, and that led to a better than expected earnings per share number. So, you'll that, but they also had a cut guidance. So, you know, the stock reacted, but results were not that great. Yeah, and if you look at the results in more detail, you'll see the only segment that's seeing

any growth is their off-price segment. So all of the stuff that they're selling at full price, their traditional retail source, Trunk Club, all of those numbers are declining. And I guess bulls are pointing towards pretty decent digital sales growth as a percentage of total sales, but that's just because total sales is declining so rapidly. So I'm not sure that's that. There's much love left for Nordstroms here. Jason, three years ago, we were talking about sports authority going out of business completely. And at the time, it seemed like an opportunity for other sports retailers. And now I think we can look back and say, no, actually, that was a warning for sports retailers.

Because you look this week at Foot Locker, Dick's Sporting Goods, Hibbitt Sports. They are all reeling. Yeah, and they should be. The results weren't that great. I mean, Dick Sporting Goods, I think, was probably the best of the three. But really, even the earnings for share growth there was manufactured. Net income was down. But we've talked about this for a while with these big brands in Nike and Under Armour and Puma and Adidas,

all creating these relationships with the consumer, that direct-to-consumer relationship. It is becoming very, very important, particularly for a market like sporting goods and equipment and apparel, where there is some loyalty associated with that. So I do wonder for the future of these companies, man, it inhibits obviously in a big problem with just the size. alone. Nothing to say that Dick Sporting could couldn't eventually follow the same path as the Sports Authority either, though. All right. That concludes the retail portion of the show. Shares of Intuit hitting an all-time high on Friday, despite the fact that Intuit reported a loss for the fourth quarter.

But I guess, Emily, when you sell tax software, we shouldn't really expect big numbers in the summer. No, exactly. This is a seasonally slow quarter for Intuit, which makes most of its money from selling accounting and tax software, as you mentioned. So, we should really, we should. while there was a loss, the business actually performed pretty well. Revenue grew 13% year-over-year, which exceeded their guidance. Revenue from small businesses in particular increased 16% year-of-a-year. That's attributable to their QuickBooks online subscribers, so lots of opportunity for them to go after much smaller businesses. Subscribers to this

actually increased 33% year-of-a-year, which is accelerating growth. So lots of good numbers like here. They also have a lot of initiatives that are starting to pan out in terms of people who are self-employed. So beyond just accounting software, they have loan portfolios, Quickbook Capital, which sent out a record over $400 million in loans for small businesses. So there's a lot of opportunity that Intuit still has in front of it. I actually went through their earnings call. They mentioned artificial intelligence, AI, over 20 times in the call. So they see a lot of opportunity for them to improve their software for accounting and tax purposes by integrating AI. I think there's a little bit of AI excitement happening here as well.

Over the past year, the stock's up more than 35%. Do you think it's expensive? I do think it's expensive when you look at it on a forward PE basis, which is about 33 times right now. That's on low single-digit revenue growth. So there's an argument to be made that it's expensive, but at the same time, like I mentioned, they still have a lot of different levers they can pull in terms of increasing that growth rate,

charging customers more expanding a relationship with the customers. So typically, it's hard to find good. good companies at reasonable prices. And I think into it's a good example of that. Coming up, how much is a pig worth? One company just paid $4 billion. Details next. So stay right here. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against. So don't buy yourself stocks based solely on what you're here. Welcome back to Motley Full Money, Chris Hill here in studio with

Jason Moser, Emily Flippen, and Ron Grover. Shares of Salesforce.com up 6% this week. Second quarter revenue for the business software company was higher than expected. Salesforce also giving some nice guidance for the full fiscal year, Jason. Hey, I mean, this business just quarter in and quarter out seems to just keep on getting it done. I mean, it's a great example, I think, of a management team, a leader in Mark Vanityoff, looking at a problem, a big problem there in customer relationship management, coming up with a holistic solution and then just improving on that holistic solution, adding more to it over time. You can really build up switching costs if you offer up a good product. And that's what we're witnessing here.

It's a play on the digital economy by 2022. More than 60% of global GDP is going to be digitized. I mean, it's essentially just everything that we're doing, moving to computers and phones and certainly Salesforce is helping companies get stuff done. Subscription revenue continues to grow. So, when you look at revenue total, second quarter revenue is $4 billion, which was up 23%. Subscription and support revenues makes up the gist of that at $3.75 billion. They have a target here of $26 to $28 billion in a revenue by 2023. And just for context, they're operating on around $15 billion in trailing 12-month revenue today.

So it is a stock that never looks cheap, but there's a reason why it generates a lot of cash. They have this Salesforce Ignite team that's bringing AI and AR into the conversation with all of its customers. Just a lot of cool things they're doing. Yeah, and that's all without even going into the international opportunities here. Earlier this month, we also saw Alibaba became the exclusive seller of Salesforce CRM software in China. Salesforce already has the largest market share in the world for CRM software. That's just under 20%. But only 10% of their total revenue comes from Asia.

So I think there's lots of growth still ahead of it. It kind of goes back to what Jason you were saying about. the fact that good companies never look cheap, and that's why. You know, we talked a lot about the payment space. Every quarter of you and I would be like, oh, did you buy shares of MasterCard? Did you buy shares? And we're like, no, we didn't buy them. And every quarter, we're talking about how awesome these businesses are. Sales Force, I think is another great example. And if I can shut up about it long enough, I think I'd like to add this one. Exactly same with me. For sure.

Bydoo may be the Google of China, but its stock sure isn't acting like it. The shares of Baidu were basically flacked this week after beating expectations when, let's face it, Emily, expectations from by the second quarter were not that high to begin with. Calling it a good quarter is probably an overstatement. That's simply because the expectations were so low here. Yeah, they beat expectations, but they were pretty dismal. They're coming off the back of a terrible quarter last quarter, largely because their core business, which is ad-based revenue from their search software has been declining, and that continued. So core advertising businesses declined 2% year-over-year, and that makes up about 75%

of Bidey's total revenue. So this is a big part of their business. But actually, there are other initiatives. There are improvements into AI. Those are trigger words again. Self-driving, voice recognition. They're subsidiaries, I Chi E, the Netflix of China. Those all offer optionality for the business. So I don't think it's set in the water yet, but it definitely is going to need to make concerted efforts and to improving its app-based search if it's ever going to go back to its glory days. On Thursday, Hasbro announced it's buying a Toronto-based company called Entertainment One for $4 billion in cash. Entertainment One produces and distributes music, movies, and TV series,

including Peppa Pig, a popular animated series. Ron, I know there are a lot of Peppa Pig fans out there. Popular to Who? This is very popular with kids, but this really seems like one heck of a premium for the shareholders of Entertainment One. Yeah, I'm a PJ Masks fan. by the way, also one of their characters, which is a little superhero kids, check it out. I like this, actually. It continues the strategy of combining toys and movies or television shows,

like they've done with Transformers, G.I. Joe, My Little Pony. It turns out kids like when their toys are associated with movies or TV shows, and that makes good sense. Four billion is a pricey amount to pay. It's an all-cash deal. But they get some seasons. executives, they get expanded capabilities in live action and animation, both in television and film. They actually say they're going to be able to kind of draw out $130 million of cost savings in that dreaded word. We hate synergies by 2020, but they probably will be able to take some costs out of this business. I certainly wouldn't be surprised. And it's going to be accretive to earnings in year one, which is nice to see. So, you know,

$4 billion is a lot of money, but maybe a nice deal for them. Shares of Hasbro down on Friday, though, Jason, because of the price. I mean, that's understandable. That's in line with what we usually see when these types of deals go down is the acquirer gets dinged because the burden of proof is on them. I will say, I mean, I think Ron's right. It is expensive, but we also have a blueprint out there of what happens if you let valuable IP slip through your fingers. And remember Mattel, wasn't that long ago where they let all of that Disney content go. And, man, that was one of the death blows for that company. Let's get to the stocks on our radar. Our man behind the glass, Austin Morgan, has decided to go easy on you. So no questions this week, Ron. You're up first. What are you looking at?

Nice. I've got American Tower, AMT, a real estate investment trust, one of the largest owners of multi-tenant communications tower in the world, provide a critical part of the infrastructure power in the digital revolution. Great unit economics, competitive advantages. Coming 5G revolution could spur significant growth for tower companies. They've increased their dividend, which is actually called, a distribution for the past 29 consecutive quarters. Jason Moser, what are you looking at this week? Yeah. Earlier this week, I ran a poll on Twitter, and I said investing is all about keeping

an open mind. And on their most recent earnings call, SNAT mentioned AR 20 times. And Lyft has patents that incorporate AR into driver's roots, pickups, and drop-offs. So if I'm bringing only one of those names to my watch list for the AR service, which one would it be? And close to 300 votes, Lyft won 55% of the votes. So, and after speaking with Emily, I think she very firmly came out on the side of Lyft as well, so I was convinced. I'm bringing Lyft into the world here. I're going to learn more about that business and discover whether I really need to be considering it for the portfolio. And the ticker?

L-Y-F-T. Emily Fli-M, what's on your radar? So not nearly as well-known as Lyft in American Tower. I'm looking at a company called Beely-B-B-L-I. It's tickers B-I-L-I. I've talked about it. bit in the past. It's a Chinese online video streaming and gaming company. They report earnings on the 26th, so next Monday. It's an interesting company. I think they have a really inclusive culture, actually very similar to the Motley Fool. They have Pizza Day, Cake Day for their employees. Employees are loyal fanatics of the content that the company publishes to their site. But as we've

seen with Baidu, which you talked about earlier, ad revenue, which makes up a large percentage of Bile, Bile's revenue, has been hard to come by in China. So it'll be interesting to see how the company does in terms of pulling through that ad revenue. All right, Emily Flippin, Jason Mose, and Ross. Thanks for being here. Thanks, Chris. Dan Albert is the author of Are We There Yet, the American Automobile, Past, Present, and Driverless.

Up next, a conversation with Dan about the future of automotive. Stay right here. You're listening to Motley Fool Money. All right, before we get to Dan Albert, quick shout-out to TD Ameritrade. When it comes to investing, each of us, does it our own unique way. Some of us want to go it alone. Others might prefer some guidance. But regardless of your style, TD Ameritrade is always creating new solutions to help you. From their award-winning technology to personalized guidance, they have everything you need to invest on your terms.

Visit TD Ameritrade.com slash YTDA to learn more and get started today. Member SIPC. Now on to Dan Albert. Welcome back to Motley Full Money. I'm Chris Hill. Recently, my colleague Nick Seiple sat down with author Dan Albert to talk about the future of self-driving cars, the problem with ride sharing, and much more. How has the car evolved as a consumer product over time? The famous Henry Ford line, it comes in every color, except as long as it's black, to today where they're a model and color for every single individual. How has the car evolved over time to become more personal to individuals? individuals? Yeah, it's a very good question because it was very consciously done. So yeah, Ford said that. It was funny.

When he said that, you could actually buy a Ford in different colors. The problem was colored paint took a long time to dry in the order of weeks. Black paint for different reasons dried in a day. So it was a production issue. It was an inventory management issue. And all of the vehicles came in black. except for if you bought a very fancy vehicle and also the colored paints didn't last. His idea was you're going to buy a Henry Ford Model T and you're going to own it,

and that's the last car you'll ever need to buy. And that worked for a while. And it's in a way of surprisingly short amount of time. It was 1909 was the first full year of production. By 1925, certainly, sales had fallen off the cliff. and by 27 he stopped making them. The reason. General Motors, under Alfred Sloan, most important CEO, maybe in American history,

got together with DuPont, and they came up with a new paint. It was called Duco. Wow. Colors. Blue, red over tan. You could get, you know, two tones. And these came out in, I think about 27. Actually, a little earlier was the first ones. and people ate it up.

So his idea was, let's stop selling cars, because there's plenty of used cars. Well, we're not selling transportation. We're selling new. And that was the beginning of planned obsolescence. And he said quite clearly, I want people to come to the showroom and see this year's car

and have them feel like their two-year-old car is perfectly serviceable is old, and they need something. It was fashion, right? also he had this idea of laddering a car for every purse and purpose in other words you start with a Chevrolet if you're lucky you move up to an Oldsmobile and then a Buick and then if you really get into the the C-suite you know if you become an executive then you can get a Cadillac and you've really arrived and so those two things that aspiration to have a better and better

and more luxurious car which signaled your position in the society and also to keep up and to always have a new car. I think is important. And it's funny nowadays, people lease cars. They hold them for three years and they turn them in. So in a lot of ways that even though the cars last much longer, people still do. Yeah, talking about changing of the car, softening folks up to the prospect of driverless cars. You know, we have Matt Greer, one of our producers here, talks about, you know, he loves driving his manual transmission vehicle. We've seen those continually become less and less over time. Is that also part of the softening up drivers to be ready to lose a connection with your car over time?

You see that as a factor in contributing to how things have changed. The relationship with the car is not as direct as it once was. Yeah, I think it's true in all kinds of ways. You can't fix your car very easily. I do car repair. It's more and more difficult. And less and less satisfying in a way. You buy a new box, you take out the old box, you put the new box in.

You don't have to really think it through. You don't have to do all kinds of adjustments. And that's a good thing. The cars run better. They're far more reliable. But it's also one of these ways in which we become disassociated from the automobile. I think it's other things as simple as the Sunday car wash, right? You sit in the driveway.

Your kids come out. You wash the car. It doesn't happen anymore. And even now, the vehicle's taking over everything from something like electronic stability control. You don't have to know how to handle this kid. And obviously GPS is a big one. We tend not to navigate anymore. We tend to follow the voice, right?

And so all of those things are little tiny steps towards being insulated, isolated, from the experience of driving and losing some of the experience of driving. One last thing I'll just mention is young people now sit in the back seat. And that goes back to the 1990s and the dangers of airbags. And if you look on your sun visor, you'll see there's still a warning. Don't put the kids in the front seat. Well, now you've grown up being chauffered. And kids, one of the reasons kids don't get cars as much as they used to.

And I say kids, everybody under 30 is a kid to me, is that they're used to being driven. And they rely on their parents to a much later age. And riding in the back of an Uber makes complete sense at that point. Do you see that shift actually taking place, that's moving away from individual ownership of cars, more toward a sharing economy? Do you think that's a realistic vision of the future? I mean, it's certainly, I like to say I don't predict the future. I predict the past. I'm a historian. But I will say there are a lot of reasons. People talk about peak car now, that we've reached the peak of car purchases and it's going to go away. Two things to think about.

One is, of course, we've reached the peak of car ownership. There are more cars than there are licensed drivers in this country. And you have to stop and think about that. That means even if we all drove all the time, there'd still be cars sitting around parked. I think the other thing, very practical thing you have to think about is young people who have college debt who are struggling to find work that pays as well as maybe it did in the past, find it hard to purchase a car. I think also cars have become more soporific. It's really hard to get excited about a lot of these cars unless you're looking at a real luxury car or a high-end

car. So I do think there is this transition. And I do think there's a lot to say about, particularly when you're traveling or when you're going into a city where you're parking, as you say, 50 bucks an hour or whatever, that mobility as a service makes sense. So I do see that coming on. And the last thing I'll say is that's not a good thing. What we're seeing in places like New York and others is more congestion, pulling people off of mass transit, inducing travel. That's one of the most interesting findings.

About 11% of trips, people say, oh, I wouldn't have taken that if I couldn't have gotten an Uber or a lift to do it. One other point you mentioned about people aren't very excited about the new cars coming out today. I think one area where folks are really excited is a company like Tesla, these new car companies coming on to the scene. You talk about in the book the real trouble that independent car companies have had to succeed against the big three U.S. auto manufacturers. Why have independent auto companies struggled so much in the U.S. since the auto company and since the auto industry has matured? You know, it's a good question. I think it ultimately has to do with access to capital. I'll tell you two quick stories. One is Tucker, which a lot of people might know, Preston Tucker

coming out of World War II. It was going to be a new car company. He did a lot of things that it's interesting. If you look at Tesla, they've done sort of selling acceptance. accessories that didn't exist yet, you know, things that didn't look too good. In the end, he was acquitted of all those concerns, but by then the damage had been done. Also, factories coming out of World War II were assigned. So the federal government assigned factories to auto companies. And those tended to go to the big three. They tended to go to General Motors, Fiat, I'm sorry, not Fiat, Chrysler, Chrysler back in the day and Ford, because those were the big companies, and they had the productive

capacity, and the government wanted a lot of cars built. It was important to build a lot of cars for a variety of reasons. The way you make money today, the way you profit today as an automaker, is to produce 10 million cars a year. If you're not doing that, it's very difficult. Also, you need to produce a lot of different models all on one platform. That is a very hard thing for a new company coming in to do. So it has a lot to do with access to capital and manufacturing scale. Manufacturing scale is so important. The strange thing that's happening now is we have Tesla that may or may not become a major company.

Now, I mean, there have been small companies started. Koniseg is one of my favorite, you know, a $3 million car. So you can start a car company, but you can't start a mainstream. mass-producing car company or so it would seem. Tesla has been able to access billions and billions in capital from people who desire to sign on to the dream and the hope that this company is going to really change the world and is going to build a great car.

And by all accounts, they do build a great car. They don't yet make money. It remains to be seen whether they will and whether they will go from being what is really a niche company to a mainstream automaker. And we don't know. Part of that when it comes to the emergence of these new companies, you have Tesla, you have Rivian as another one, is the idea that the automotive industry is being reshaped by this transition to electric vehicles. We talked about earlier how the electric vehicle company, the electric vehicles have been around since before the beginning of the 20th century.

with EVs emerging onto the market, do you see this as the start of a meaningful shift in the automotive industry away from the internal combustion engine towards a 100% EV future long term? Or why or why not? I certainly do. I certainly, I don't know, 100%, you know, 95% whatever it is. Two things to keep in mind, these things take time. If we're just going to do it on a market-based situation, even with a benefit for the purchase, We sell about 16, 17 million cars a year. There are 240 million cars in the country. And about a third of, I'm sorry, about 20 percent of vehicles are over 18 years old.

So for the entire fleet of automobiles to turn over to become new, that has been growing and growing. We're now up to the average car being 12 years old. That said, certainly governments outside of the United States are pushing on. hard for EVs. And then as that happens, the market does change. And in fact, it goes together with driverless cars. Evs are less complicated, more reliable, to sort out a lot of things with the batteries, but in terms of an electric motor, it'll run forever. Once the vehicle becomes something other than a consumer product, a chrome-covered Buick, once it becomes something that, I don't know,

I might care what color Uber, I guess. into, but that's about it, right? Then by all means, electricity makes more sense. More car talk right after this. Stay right here. This is Motley Full Money. Let's take a ride. Welcome back to Motley Full Money. I'm Chris Hill. Let's get back to Nick Seipel's conversation with author Dan Albert. As we see the rule of the car change and folks continue to push back, you know, getting their driver's license, that's kind of a secular sacrament, if you want to put it that way, that the right of passage folks have, getting your first car, graduating from high school.

As autonomy comes to the fore and our role as drivers shifts, what do we lose as a society as we get rid of that part of being an American? Yeah. Well, being an American, I think, is very important. I took those two elements separately. Just in terms of being an American, I think we see that General Motors has gone from the biggest company in the world and the most profitable to bankrupt. And so that really does change our relationship with the automobile in terms of American pride.

But also the top three selling vehicles in the United States are pickup trucks. So Ford has the number one, GM, and then Fiat Chrysler. That tells me that people still very much care about a vehicle that is used. uniquely American. There is nowhere else in the world where a large country is buying more pickups than sedans, right? It's a ridiculous vehicle. I just watched Jim Gaffigan. These pickups drive around with nothing in the trunk and there are nothing in the bed. The beds are pristine. He said it's like carrying around an empty suitcase. Because an empty suitcase doesn't say, oh, I'm going somewhere. It says, I'm the kind of guy who could go somewhere. So that, you're very much

signaling that. And another little bit of information is that there's been this thing where pickup trucks go and pull Tesla's away from the superchargers and then park in the space. So you've gotten this just like many other elements of life today, real Americans drive pickup trucks. and if you're driving a Tesla, you know, you're the enemy, right? And so that still goes on in terms of being an American. The other element of that in terms of getting a license later, right, and what you lose when you stop driving, to me, the most interesting thing about that is,

you know, we live in a society and I watch it with my kids where, you know, constant social media, which is really social marketing, isn't it? And constant engagement with purchasing and so forth. I always think, you know, I have a thought. I pick up my phone and the next thing I know in Amazon Box is there. It's so frictionless. Consumption is so frictionless now. It just happens almost as soon as you think about it.

When you're in the car, certainly a car that's not self-driving, you're not able to do that. You're also not really able to work. Maybe you have the radio on, maybe you take a phone call, but you're not working. So you're not consuming. You're not working. It's this interstitial space.

It's a third place. And it's a job driving that occupies your mind. You have to pay attention to it. You can do other things, but it is in a sense of meditative state. Now, could we replace that and not spew carbon? in the air? Absolutely. And that would be great. But I do think it is one of the few places where that happens anymore. And all we're going to see with the driverless car is all of that social marketing and all of that work and labor invade the last refuge.

Since we're an investing show, I've got to ask how you invest personally. Do you invest personally? And how do you think about that? So there's a wonderful book called Narratives and Numbers. And right, so the best way to invest is to look at the story, look at the balance sheet, do your free cash flow analysis, and then try to put those together because you can look at Uber and you can say, oh, they're a taxi company, okay, let me run the numbers. Or you can say they're a transportation network company and they're going to take over the world and you can run the numbers again.

So you have to have both of those. I am much better at the story. I have a financial advisor who's excellent. and quick and he runs the numbers. I'm not invested in Tesla. I kind of have to admit I'm a little pissed off because I got in on the IPO. 17 bucks. I think it was a share. Went to 35. My advisor guy said, this is ridiculous. Let's sell it. And I'm like, yeah. And so now where are we we ended up has bothered me? So I invested in a company called Neo. I'm now recommending it, but, you know, it was advertised as the Tesla of China. I did great for a while. It went from,

I think, five or six to 17. I was like, yeah, this is great. It's going. And now I think it's at three. But, you know, you invest a small piece of that. You enjoy it. You enjoy it. So that's really what I do. I do the story. I have somebody else who's better with the numbers. And I tend to follow my gut on a lot of things. I followed my gut on Amazon. And, you know, I'm no genius, though. The bottom line is everything reverts to the mean. Sure. Last question before we go away. When you look at autonomy and this transportation as an industry, it really seems to be evolving so quickly. What are you going to be paying most attention to in the next couple years when it comes to evolving mobility? What are we

be paying most close attention to and looking for? Well, what I'd like to see is really a groundswell of support, and I'm seeing it locally where I live for things like protected bike lanes, things like daylighting intersections so the pedestrians get a lot more privilege. Traffic engineers, planners are very clear on that and politically seem to be moving forward. So I am looking for more and more of that. In terms of autonomy, we are starting to see the bloom go off the rows of autonomy, and that is partly because I believe the bloom's gone off the rows of Facebook and these others. So I really got, I'm looking at how this conversation is going to change and if it will.

I'm a little cynical, so I worry we're going to keep going down the, you know, Silicon Valley. We're here to save the world route. But I am very hopeful that traffic calming, more bicyclers and all of that, more mass transit, if we can ever get around to it will happen. And that's what I'm looking at over the next few years. All right, Dan Albert. Thanks so much for coming on the show with us. For folks that I've been listening, are we there yet?

The American automobile past, present, and driverless. Wow. Thank you so much for reading it. Thank you for having me on. That's it for this week's show. Our engineer is Austin Morgan. Our producer is Matt Greer. I'm Chris Hill.

Thanks for listening. We'll see you next week.