Motley Fool Money - Streaming Wars Heat Up and 1 Stock That Could Define the Next Decade

Episode Date: January 21, 2022

Netflix shares fall more than 20% as increasing competition from Disney, Apple, and HBO Max (among others) cut into subscriber growth. Peloton's stock fell 25% on Thursday on reports of halted production and potential layoffs. United and American Airlines express optimism about increased travel in the spring and summer. And for the second quarter in a row Procter & Gamble flexes its pricing power muscles. Andy Cross and Ron Gross analyze those stories, Amazon's new clothing store, Winnebago's new EV, and share two stocks on their radar: Restoration Hardware and Intellia Therapeutics. Aaron Bush discusses the shifting landscape in the video game industry, the move to create ecosystems (instead of merely publishing games), and shares why he believes Roblox could be one of the defining consumer companies of the 2020s. Want 15 more stock ideas? They're included in our free Investing Starter Kit. Just click over to www.fool.com/StarterKit to get your copy. Stocks: NFLX, T, DIS, AAPL, MSFT, ATVI, META, PTON, AAL, UAL, PG, RBLX, AMZN, WGO, TSLA, RH, NTLA Host: Chris Hill Guests: Andy Cross, Ron Gross, Aaron Bush Engineer: Dan Boyd Learn more about your ad choices. Visit megaphone.fm/adchoices

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Netflix takes a short-term hit as the streaming wars heat up, and our guest this week has a stock he believes could be one of the defining companies of the next decade. All that and a lot more coming up right now. That's why they call it money. The best thing. Fool Global Headquarters. This is Motley Fool Money Radio Show. I'm Chris Hill joined by senior analysts, Andy Cross, and Ron Gross.

Good to see you, as always, gentlemen. Hey, Chris. How are you doing, Chris? We've got the latest headlines from Wall Street. We've got a deep dive into the video game industry. And as always, we've got a couple of stocks on our radar. But we begin with Netflix. Fourth quarter profits and revenue came in higher than expected for the streaming giant. And they added more than 8 million subscribers in the quarter. But that growth is a little bit lower than it was a year ago. And shares of Netflix fell more than 20% on Friday. Andy, a few things to get to here, including the fact that,

Wall Street kind of freaked out over the fact that Netflix made a reference to competing streaming services in their shareholder letter. Yeah, Chris, we've been talking about the competitive landscape was streaming for a while. And clearly Netflix, they're not, I mean, Reed Hastings and Ted Sarandos, they're not idiots, right? So they know the environment. What really got people, I think, essentially freaked out. And it was a very drastic reaction, I got to say, was.

with the guidance, Chris. So the quarter was actually pretty good. As you mentioned, they added almost 8.3 million new paid additions. That was a little bit lighter than the estimate at 8.5 million. Revenue was up 16%. Global paid memberships, total global paid memberships at 221.8 million up almost 9%. Average revenue per member up 7%. They said retention was strong, turn was down, but on the margin, we didn't quite grow the acquisitions as fast as we would have liked to based on the large subscriber base. However, Chris, it was the guidance for the first quarter of this year that really got people, I think, spooked because, like I said, that fourth quarter not so bad.

Operating margin was actually a little bit better than what they expected to on the profit line. But it was that guidance, Chris. Looking at the guidance going forward and looking at the quarter, estimating to add 2.5 million global paid additions for the quarter versus a 5.8 million ad for a forecast. It's below trend compared to 2018 and 2019. Revenue for the quarter expected to be up about 10% versus 13% estimates. That's the weakest growth since 2012. So, Chris, when you add it all together, Netflix is really now, I think, not in this hyper growth cycle. We've seen the COVID period kind of wane its way through a little bit as they've talked about on the call,

and we're starting to see Netflix now in a different environment, and that has really gotten the markets a little bit concerned with what that might mean for the full year, subscription, memberships, revenue growth, and then ultimately the profit picture. They will be cash flow positive this year, or at least they expect to be cash flow positive, which is a good sign, but clearly not nearly as much growth as they've seen in the last couple years. You know, a lot to unpack here. A lot of this boils down to, not just with Netflix, but a lot of the streaming services, price and content. One reason I never really got behind Netflix was because I never thought they'd be able to work out the cost of content. I'm not even sure they have yet, but certainly the stock is up a trillion percent since I passed on it, so it shows you what I know. But you've got to be careful here when you assume you have pricing power and you act on that. Netflix just raised prices last week. They bump their standard plan to 1399 per month from 1399 to 1549. That makes their standard plan more expensive than HBO Max.

You got to be careful here because there's a lot of folks, whether it's Disney Plus, Apple TV, Paramount, Peacock, we can keep on going down the list. At some point, people say the content's not worth it to me. Netflix does have the content still. It's still in high in demand. Six of the top most search globally were on Netflix in 2021. Squid game among them. I don't think I've seen any of the top 10 most search shows. Again, take what I say with a grand assault. But the content is good there, but you've got to be careful on the pricing side.

Yeah, Andy, with respect to the pricing, it really seems for consumers there are two tiers now. You've got HBO Max and Netflix around $15 a month. You've got Apple, Peacock, Disney, Plus. They're all single digits less than $10 a month. Well, let's not forget this is Netflix's game. Squid Game, game, get it, how I did it there, guys. So this is all Netflix does. I mean, Amazon Prime, Disney Plus, even HBO Max, you know, they're all, they have multiple layers to their businesses.

This is all Netflix does, and it's one reason why I think they've been able to spend that amount of capital on their acquisition, acquiring content, and so much on content, including now gaming, Chris. They started their gaming, a little tiny gaming platform in November. So, but if you think about Squid Game, 1.65 billion hours within the first four weeks, Bridgeton, 625 million hours, which are 484 million hours. Red Notice, 363 million hours. So they, as Ron mentioned, they have the content. They spend it. I think they've been very effective with it. I think they do have that little pricing power. Chris, you do mention. Like, it is Netflix and HBO Max are kind of there. and it remains to be seen whether members and subscribers will continue to pay up for it,

but at least the churn number continues to be very impressive. And I think that's a very good sticking point for investors to lock onto as they think about what the growth prospects, and importantly, what the profit and cash flow prospects for Netflix looks like over the next year or so. I think it's also interesting to note that a lot of Netflix's growth seems to be now concentrated overseas. in Asia and Europe, with America and Canada being somewhat more of a mature market. But coming up on the outside is Disney, which has recently formed a new international content group to expand

its pipeline of content across international markets. They're looking to double the number of countries where Disney Plus is available by fiscal 2023. They've already invested in creation of content, 340 titles already in various stages of development. So, you know, and we're going to So as we started this conversation, competition is going to be a big part of Netflix's future. Yeah, and that line that they had in the release and the call, while this added competition may be affecting our marginal growth sum, we continue to grow in every country and region in which these new streaming alternatives have launched. Now, Ron, to your point, there's global competition. 90% of the new additions come from outside the U.S. and Canada for Netflix.

and that marginal growth, Chris, I think, is what many of us are locking on to, because that could be the difference really on the profit curve and the expectation. But also, this was a big analyst kind of game. Like, this was a big miss from them, lots of conversations about how they miss this much. And, you know, when you look at the history of Netflix, yes, in various points they have been able to, they have missed along their estimates this amount. The past year or so, been very volatile with all the COVID announcements. but over time, they can consistently grow and return and provide that content and the experience,

and that experience is very valuable for the members that I think is a winning strategy for Netflix going forward. Microsoft is making its biggest acquisition ever buying Activision Blizzard for just under $70 billion in cash, assuming regulators don't derail the deal. It is expected to close next year and signals, Ron, among other things, Microsoft's ambitions both for gaming and the Metaverse. For sure. Now, I will fully admit that I didn't get the 2016 LinkedIn LinkedIn acquisition.

I'm not even sure I still get it. But this one I get. This one, I think, makes good sense. $69 billion all-cash deal. Activision had been down about 40% from its 52-week high as it dealt with sexual harassment and misconduct allegations. Microsoft clearly taking advantage of that price weakness to, as you said, make its largest acquisition ever. CEO, Bobby Kotick, who has been under pressure to resign,

will remain CEO for the time being. But I wouldn't be surprised if that didn't last much longer after the deal closes. Activision as a company will report to Microsoft Xbox head, Phil Spencer. Interestingly, shares are trading well below the $95 acquisition price due to, as you mentioned, antitrust concerns. I do predict this deal will ultimately go through, though. Interesting to note, Microsoft's current fortunes, I say current, over the last several years, have really been tied to its B2B business. It's business to business, specifically its transformation under Satchinadella into a cloud company, but it's also made investments in its consumer Xbox gaming business, which is

a smaller business as when you look at the whole of their revenue. They bought Minecraft Maker in 2014, the Maker of Minecraft. They bought the parent company of Doom and Fallout in 2021. So this acquisition will be a big help to Microsoft's plan to turn its GamePass subscription service into what they're going to call the Netflix of gaming or what analysts are calling the Netflix of gaming. Once the acquisition closes, Microsoft said it would be the third largest game company by sales with 30 game studios.

It will include powerhouse franchises like Call a Duty, World of Warcraft, and my, I guess, favorite candy crush. I never understood that one either, to be honest. But listen, you want to talk about big battles, big competition out there. This acquisition is also a shot across the bow to Facebook as the Metaverse, which is currently focused largely on gaming, at least right now, that really will start to take shape. So this is an interesting move from that perspective. Shares of Sony also weak as the acquisition is seen as a potential threat to its PlayStation business. Lastly, I'll say 15% upside to the acquisition price. With the main risk being the Justice Department kills the deal, I personally would take

those odds. Fifteen percent upside looks good to me. Yeah, Andy, I don't think Ron was alone in 2016. It's scratching his head on Microsoft buying LinkedIn for 26 billion. But Nadella and his team made that work, and that business is thriving underneath Microsoft. You have to like the prospects for Microsoft's gaming division over the next five, ten years. Well, I think what's really interesting is because gaming is becoming full on cloud. So it's really pushing to the cloud, and Ron kicked it off and teed it up very well with Sotja Nadellas and his teams moved to the cloud and the importance of the cloud.

Even LinkedIn, that acquisition, that is very cloud-based when you just think about distributed intelligence across various different data points that they have and collecting more and more data. So I think the cloud initiative, this does really tie into that. Yes, there certainly will be antitrust concerns, and they're going to maybe have as much as up to 15% of the total market, as Ron alluded to and talked about with when you look at Microsoft's Xbox, the Game Pass subscription service that are tying together. So the cloud push, I think, this continues to strengthen Microsoft's goal to really be distributed

leader in cloud computing in lots of different ways beyond just B2B. On Thursday, shares of Peloton felt 25% on reports the company was halting production of its bikes and treadmills due to lack of demand. The stock regained some of that loss on Friday. After Peloton CEO, John Foley said the company is looking to right size production levels and consider layoffs. Ron, you have to think that between the prospect of layoffs and the way this stock has fallen over the past six months, morale at Peloton has got to be low. Absolutely. I mean, this started as a leaked memo, and supposedly they have found out who the leaker is and they're taking action.

there, but the company was forced to come out and address what were really rumors up until they came out to talk about the second quarter and the business in general. Listen, the business pulled forward so much demand as a result of the pandemic. And it's a miss from their perspective on how much that was going to decline once the pandemic started to fade. So yes, I do believe that a lot of the information released in the memo is likely. to happen. They're going to temporarily halt production, both the bikes and the tread treadmill. And they do probably have thousands of cycles and treadmills sitting in warehouses because the

demand just isn't there. Second quarter results, you know, they were able to reiterate some guidance to kind of, I think, calm the markets down. That's why I think we see a little bit of rebound. But they said they don't expect to be EBITDA positive until fiscal 2023. I think layoffs are on the table. Peloton's working with McKinsey and company to look for opportunities to cut costs. And again, those could include layoffs, store closures, and some pulling back. Price is a big aspect here. Those bikes are pretty expensive. The subscription monthly cost is pretty expensive. So Peloton has some work to do to right size this business. After the break, we've got the latest on airlines, consumer goods and more. Stay right here.

You're listening to Motley Full Money. Welcome back to Motley Full Money. Chris Hill here with Andy Cross and Ron Gross. Two major airlines out with fourth quarter results this week, American and United Airlines both wrapping up their fiscal years with a loss and shares of both down this week. Though Andy, United CEO Scott Kirby says he is optimistic about the spring and summer. And I know airlines historically have not been the greatest investments, but when you think about how they tie into so many different industries like, travel, hotels, restaurants. I really hope Kirby's right. Both United and American are fairly

optimistic about what they're seeing. They're starting to see their capacity, of course, continues to not be where it is. For United specifically, capacity was down 23 percent versus the fourth quarter of 2019. They compare against 2019 because 2020 was all wacky with COVID. Operating revenues down 25 percent. Available seat miles down 3 percent, so a little bit better. Costs. continue to increase. That was up 11% on the seat mile basis versus 2019. Cargo for both companies continues to be a big driver and a big win. The cargo for United is now 10% of the revenues up from 3% in 2019, so very impressive. But like you said, the bookings and cancellation, Kirby said, starting to return back to normal. Biz demand still not so great, but improving. They expect

capacity to be down only 16 to 18%. Operating revenue to be down. and only 20 to 25% in the first quarter, and available seat miles to be attractive, too. So they expect to end 2022 with the available seat miles minus the fuel cost to be about at the run rate of 2019. So you are seeing this optimism from United Airlines. You're seeing the new CEO at American Airlines. Robert Isham is coming in, stepping over, taking over in March from Doug Parker. That's the largest airline they have in the world.

their cargo revenues were up attractive as well, now 30% higher than the previous quarterly record. Capacity was down only 13%. Leisure travel is approaching 100% recovery. So both these companies are starting to see the winds of the COVID challenges starting to dissipate, and they're starting to see that travel come back. Business travel continues to be the one that's still uncertain, but there's some glimmer of hopes in the forecast here. Shares of Procter & Gamble up this week after second quarter profits and revenue came

in higher than expected. More noteworthy than the results is the fact that for the second quarter in the row, P&G is raising prices across a range of items from personal health care products to tie detergent. Ron, we talk about pricing power and look, this is a Staples company. You don't automatically assume they have it, but they're flexing it. Yeah, you nailed it, Chris. That's the story. here. The stock's trading basically at its all-time high, strong business and pricing power, allowing it to deal with higher costs across the board that have really been taking a whack at margins and will continue to, but at least their ability to raise prices mitigates that.

For the quarter, sales up 6%, driven by a 3% increase in shipment volumes, but 3% points increase due to pricing. And again, that helped offset commodity and freight increases. CEO said the company has announced price increases in all of its price. product categories. Effective February 28th, the company will increase prices on the balance of its fabric care portfolio, including tide, gain, downy, bounce, all your favorites. So again, they have the ability to raise prices. It'll remain to be seen if people turn to alternatives once those pricing hikes kick in, but I have a feeling they're going to make it through this. For the quarter, their healthcare segment was the strongest with an 8% sales

increase. Beauty came in the weakest with a 2% increase. They raised their revenue outlook for fiscal 22, but they only confirmed their earnings guidance of a 3 to 6 percent increase. That's because the guidance included 2.8 billion of after-tax headwinds due to these higher costs. But the company is doing what they need to do, and it remains a strong consumer goods company. All right, guys. We'll see you a little bit later in the show.

Up next, Aaron Bush weighs in on the ripple effects in the video game industry after Microsoft's big deal, as well as a couple of smaller companies. Investors should keep their eyes on. Stay right here. This is Motley Fool Money. Welcome back to Motley Fool Money. I'm Chris Hill. Joining me is Aaron Bush, advisor here at the Motley Fool. Thanks for being here. Thanks for having me, Chris. I don't know anyone who studies the video game industry like you do. Earlier in the show, we had talked about Microsoft buying Activision Blizzard. What is this due to the industry landscape? There's been talk this week of smaller players in the industry.

the industry, independent game creators. If you're one of them, are you excited by the growth prospects for the entire industry? Are you terrified by the behemoth that is Microsoft, or is it something in between? Yeah, you're definitely thinking hard about what it means for yourself. But let's zoom out for a moment really quickly. So, 2022 was really destined to accelerate the video game industry's consolidation that we saw pick up and break records last year. A couple weeks ago, take two acquired Zingo for about $12 billion. That was the largest video game acquisition ever. And Microsoft announcing the acquisition of Activision Blizzard for about $70 billion just immediately shatters that record and hyper-accelerates consolidation. And there are a couple big-picture

reasons why that acceleration of consolidation is happening that point toward how deals like this one are changing the industry landscape and are making all of the companies figure out their place and its future. So, first, at a high level, we're seeing the increasing dominance of ecosystems. So basically, instead of game publishers like Activision or EA, being the top dogs like they were over the past couple decades, the big players going forward really are those who own multiple pieces of the value chain in one place. They're owning the hardware, the storefronts, the developer tools, the cloud infrastructure,

lots of content, et cetera. So when it comes to Activision and Microsoft, Activision is really a lot of. helping Xbox bolster a key component of its broader ecosystem that's going to be harder for others to compete against unless they also bolster theirs. The second, you know, bigger and more centralized ecosystems lead to the emergence of new business models, namely subscriptions. And like we've seen in video where there's a flywheel between investing in content and scaling subscribers, I think we're going to see a similar trend happen in gaming. And so when a company like Xbox with its Game Pass subscription or PlayStation, is able to bring loads of IP under a single

subscription or even a couple tiers of subscriptions, you know, it immediately becomes more competitive and that competition really drives even more heightened consolidation. This is something that the big platforms can do much more successfully than independent publishers, which have much smaller libraries. So between emerging multi-pronged ecosystems and shifting business models that lend themselves to consolidation, a deal like Microsoft buying Activision makes sense, and it's a pretty huge deal for the industry. And so I really think it's sort of a shot heard around the world that these ecosystems are stepping up in a huge way, and that consolidation is going to accelerate. If I'm an independent creator or a relatively small business, I'm not necessarily scared. There's

still many ways to win, many ways to sell games, but at minimum, I'd be figuring out how to better interface with these increasingly giant ecosystems, and perhaps. even be thinking about how my business would get consolidated into a larger player as well. So we almost definitely won't see a deal surpass this one. This one was massive. And very, very few gaming companies are even this big. But we definitely will see increased consolidation in the console PC run, but also in mobile too. If it's a shot heard around the world in video gaming, it's also seen as Microsoft increasing their shot at owning a corner of the Metaverse, for lack of a better term. How soon do you see

gaming fitting into the Metaverse? I think anyone who really thinks about it, there are obvious applications there. Is that going to be sort of the first significant business industry within the Metaverse? Well, I think the Metaverse is still a very much a buzzword that if you put someone like Mark Zuckerberg and Sutton Adela in the same room, they're probably not going to agree on what it means or what it's supposed to be. So I think we have to keep that in mind. But really, when I think about the metaverse, it really is about an evolution of a more immersive internet. And based on that oversimplified definition, gaming has been that for a long time. And as it's grown and become more complex and more users are participating

in these worlds. It certainly fits the bill and being a component of what the Metaverse will entail. Gaming is not the Metaverse, but I think it's going to be a subsection of it. And when it comes to where a lot of the innovation is going to be, improving technology, testing new business models, I do think that gaming is going to be a place where that happens. Whether or not Microsoft and Xbox are really going to be pioneers for what the future of the so-called Metaverse is going to be. That's really to be seen. I think it's just going to be something that the entire world, all of these companies together push forward together, and it's not going to be owned by a single company or a handful of companies, but it certainly is an exciting trend.

All right. Let's move away from Microsoft for a minute. What's a business in the gaming industry that particularly excites you at the moment and why? Yeah. So I am regularly impressed with Roblox. It's ticker RBLX, which is a user-generated content platform that has scaled tremendously over the past couple of years. And I think that Roblox could be one of the defining consumer companies of the 2020s. So, Roblox has really taken off with kids, first and foremost, but I'm incredibly impressed with how the company has maintained its top-dog status, how we've seen tremendous growth in developer interests on the platform, how it's been working to age up the platform and expand around the world, how it's been involving big brands, and how it's heavily

reinvesting to improve its platform. There are other UGC platforms out there, other virtual worlds out there, but I think that people underestimate how much of a lead Roblox has. Roblox's scale allows it to reinvest in both creators and R&D in a way that other smaller contenders simply can't match. as these reinvestments build, I think that the lead over others is also going to compound. So I'm really excited to see where a company like Roblox is five to 10 years from now. I imagine it's going to be both much more important as a platform and its effect on culture in the world than it is today. And if it can pull that off, it's almost definitely going to be a much larger business too. Last thing, and then I'll let you go.

And this can be a CEO. This could be a game developer, a trend, a company. company. What is something in the industry right now that you think is not really getting as much attention as it probably deserves? As you indicated, you look at the deals earlier this month. That's taking up a lot of the oxygen. What's something that should be getting more attention? So I have my eye on the emergence of blockchain games. At their core, these games are pioneering a movement where players actually own the assets in the game that they play with. And sometimes

these games have a native cryptocurrency or two that facilitates a more open in-game economy than traditional games do. So, for example, you could play a card game where you actually own and can therefore trade the cards in your collection, you know, for essentially real money. Or you could play a big open world game where your characters, armor and weapons, maybe even the character itself is yours. So if you put 100, hours into a game and went a lot, you might be able to actually benefit financially from playing. There's a lot of skepticism around this trend, I'll admit, especially around how to make games that are both fun and financialized. And many games, most games do not need blockchains at all.

But I also see pretty tremendous experimentation, game design, innovation, and a massive flow of talent and capital to these new studios. And I think it's going to take a couple of years to really get going, but in the same way that mobile gaming brought a whole new group of players and revenue streams to the gaming industry over the past decade and was a tremendous source of growth for the industry. I suspect that this movement will have a similar effect in the next decade. I think that blockchain games, more than any other segment of the gaming industry, are going to push the boundaries of the ecosystem in the coming few years. And this isn't really a stock market play, but a lot of these assets are still going to be traded publicly, and many already are.

So I think, you know, it'll be at minimum a fun movement to watch, but potentially also be a lucrative one. Aaron Bush, always great talking to you. Thanks for being here. Thanks for having me. Coming up after the break, Andy Cross and Ron Gross return with a couple of stocks on their radar. Stay right here. You're listening to Motley Full Money.

Well, every night, never, never mean what they say now. As always, people in 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're here. Welcome back to Motley Fool Money. Chris Hill here once again with Andy Cross and Ron Gross. Our new email address is Podcasts at Fool.com. Drop us a note if you have questions or feedback on the show.

As I have said in the past, if there's something we could be doing better, please. Please tell us, but if you like the show, please tell others. Tell a friend, post a review on your favorite podcast app. You know, if you like the show, please spread the word and help us out. We appreciate that. A couple of stories before we get to radar stocks, guys. Amazon announced it is opening its first ever bricks and mortar clothing store later this year. Named Amazon Style, the store will be located in the greater Los Angeles area and offer fashion brands that the company says customers are familiar with.

Andy, you bullish on this idea? I actually am, Chris. I think it's really interesting, Ron. This is basically the metaverse in person here for your shopping experience. You can use the app to scan a QR code to select clothing that is displayed. So, again, it's all through the Amazon app. So right there, they have you in there. A sales associate will then bring them to your dressing room or robots will bring them,

probably if not now. Maybe at some time in the very near future. What's pretty cool is that inside the private dressing rooms, and there's a bunch of them for what I can tell. Their Amazon provides these customized suggestions for you, tailored to what they know about you, tailored to where your shopping experience is right there in a touchstone, a touchscreen, you can select, you can rate, you can say, I want this, I don't want this, I like this, I don't like this. They have it all there.

So really, it's bringing the physical and the virtual together in a shopping experience. Amazon style is built around personalizations, what they say. our machine learning algorithms produce tailored real-time recommendations for each customer as they shop. So pretty interesting in how Amazon is really infusing their cloud experiences, their distribution, their consumer app, and the shopping experience that many of us are looking for. Yeah, I chuckled at first, but then when I dug in a little bit, I was like, huh, that's kind of neat. One thing I was unclear, it appears to me you don't actually leave with the clothes. order them online once you decide what you want. If I'm right about that, that's a little weird

to me. I don't know. I think it's both. I think you can do both from what I can tell. What I like about it is it makes those dressing rooms that are bland and stale and very lonely, if not intimidating. It actually makes them engaging and fun. If any of our listeners in the Southern California area want to do a little boots on the ground research later this year, drop us in No, let us know how that goes. This week at the RV Super Show in Florida, Winnebago unveiled its electric RV camper. Not only does it provide power to run appliances inside the vehicle, but the battery also enables the vehicle to travel a range of up to wait for it. 125 miles. And Ron, I applaud the effort here, but I think if you're driving the highways

and byways of America, aren't you looking to put more than 125 miles in? in a given day? Clearly, yes. I think this ERV, right now, it's merely a concept. And Winnebago says that as battery technology evolves, there's a potential for additional range. I would certainly hope so, because I don't think 125 miles is getting anyone too excited. If you look at it, it looks like a large minivan to me, not really an RV, but I'm not an RV expert. But it has a bed, a kitchenette, and a wet bath with a shower, which, I don't know. kind of gave me the skeebies a little bit. But I guess if it was bigger, maybe it wouldn't freak me out that much.

It could charge in 45 minutes supposedly using high-speed public charging. We'll see. This is the infancy, I think, of ERVs, and we'll see how they evolve. Look, at least if you're stuck out in the woods someplace, you at least when your battery dies, at least you have the amenities to take care for yourself for a couple days in the RV. So, on that note, do you guys think that charging stations are going to start to be a new amenity that hotels, Airbnbs, et cetera, start to push from a marketing standpoint as more people are going electric with their vehicles, that hotels and motels are saying, hey, we've got charging

stations. You know, it's going to come in handy, particularly if my Winnebago, EV is only going to get me 120 miles. Yeah, and Pilot J too. All those along the highway will be, it's going to be critical. Sorry, Ron. I do think you'll start seeing hotels, for example, start adding that as amenities, but they're not going to take the hit to margins.

Nothing's for free. You're going to see a slight uptick in the cost of your room, and that will include the ability to charge your car. Hey, your Tesla might be nice and stylish and sleek and all that. It doesn't have a bed in it, right? Your Tesla doesn't have a kitchenette in it, does it? Not yet. All right.

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Let's go to our man behind the glass. Boyd, he's going to hit you with a question on your radar stock. Andy Cross, you're up first this week. What are you looking at? Well, I'm looking at RH, symbol RH, is the former restoration hardware store founded in 1979, provides high-end luxury housewares, operates 68 galleries, 14 waterwork stores across the U.S. and sells online through RH.com and a few other different sites. Market cap of 8.7 billion stock at about $400. Is that at a 52-week low? Growth. is very attractive 19% last quarter. It's really redesigned itself over the years. CEO Gary

Friedman is the former CEO of William Sonoma. It's serving this massively large and very fragmented home furnishing businesses. Excellent operating margins north of 20% growing 15 to 20% per year. Bies back a lot of stock at various points, EPS of around $22. That could probably grow, I think, 15% a year or so. So, stock's not very expensive at about 15 times for a pretty high quality business, Dan. Question about RH. How big can the market for RH actually be, Andy? I'm a homeowner. Every time I look in their catalog, I look at those prices and I laugh out loud.

So high. And by the way, those catalogs are massively thick, aren't they? Yes, it's a very large market, especially when you think about the housing market and the evolving home market that we're seeing in the U.S. So it's a pretty large market and people are looking for different expressions to showcase their furniture and RH is serving it, Dan. Brian Gross, what are you looking at? I'm going to start the year off by circling back to the gene therapy space I talk about from time to time on the show. And these stocks have been absolutely crushed alongside other innovative tech stocks that are, let us call pre-profitability.

And today I'm going to focus on Intellia, N-T-L-A, down 56% from its 52-week high. I could easily talk about Editas off 70%, CRISPR therapeutics, off 65%, and many others. First off, I think I should note, I don't think these stocks should have really ever achieved those highs. The stocks got ahead of the actual progress of the companies based on an understandable excitement from investors that gene therapy could potentially change the face. of medicine, but that world-altering change isn't going to happen tomorrow. And we honestly don't even know if the CRISPR Cast 9 technology is going to be the silver bullet. So, buyer beware. But back to Intelia, made history last summer when it became the first biotech company to successfully edit DNA inside the human body. They've got a strong balance sheet, $1.1 billion in

cash. That's essential for an early-stage biotech company that is not profitable. Again, these investments, not for those that are not. or risk averse, buy a bundle, buy an ETF, diversify your risk. Dan, question about Intelia? Maybe not about Intelia, but I just want to congratulate old spin Dr. Ron over here in coining the phrase pre-profitable. But Ron, Ron, you're not fooling me. I know what pre-profitable means. I know it means not profitable. Not profitable. Some of these companies are actually profitable if you look at their income statement because they received big milestone payments from partners. For example, Intelia has regeneron as a partner.

CRISPR has Vertex. But that's not real profitability. That's sustainable, in my opinion. So as analysts, we've got to be honest there. For profits, you got to go to HomeWs. Dan, you got to go to HomeWs. What do you want to add to your watch list, Dan? I think I'm going to RH. Chris. The appeal of a $7,000 couch just won't go away. Andy Cross, Ron Gross. Guys. Thanks for being here. Thanks, Chris. That's going to do it for this week's Motley Full Money Radio show. The show's mixed by

Dan Boyd. I'm Chris Hill. We'll see you next week.