Motley Fool Money - Uber Goes Public

Episode Date: May 10, 2019

  Uber makes it stock market debut. Should investors take a ride on the ride-sharing giant? Analysts Andy Cross, Ron Gross, and Jason Moser tackle that question and discuss the latest from Boston Beer, Disney, Booking Holdings, Match Group, Stamps.com, The Trade Desk, and Zillow. Plus, NYU professor and best-selling author Scott Galloway makes the case for breaking up big tech.   Thanks Clear. Get your first two months of Clear for free by going to clearme.com/fool2019 and using promo code fool2019.   Thanks to Grammarly for supporting The Motley Fool. For 20% off a Grammarly premium account, go to http://www.Grammarly.com/Fool.           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 finalies of any episode we've ever done. We are going to play Truth or Daredevil.

What? Oh boy. Fantastic. You guys go hard. Daredevil Born Again official podcast Tuesdays. And stream Season 2 of Marvel Television's Daredevil Born Again on Disney Plus. Thanks to Grammarly for supporting this week's Motley Fool Money. Grammarly is a communication tool that helps people improve their writing to be mistake-free, clear, and effective.

Start writing confidently by going to Gramerly.com slash Fool and get 20% off a Gramerly premium account today. Thanks also to Clear. Instead of traditional ID documents, Clear uses your eyes and fingertips to get you through security faster at airports and stadiums. Get your first two months of Clear for free by going to Clearme.com slash Fool, 2019 and use the promo code Fool 2019. Everybody needs money. That's why they call it money. The best thing they'll lie for, but you can get them to the best.

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, senior analyst Jason Moser, Andy Cross, and Ron Gross. Good to see you, as always, gentlemen. Hey, Chris. We've got the latest headlines from Wall Street. Scott Galloway is our guest, and as always, we'll give you an inside look at the stocks on our radar. The U.S.-China trade talks continued to be in flux, gentlemen. So we're going to start

with the most hotly anticipated IPO of 2019. Uber, going public Friday morning. They set their price at $45 a share. That was the low end of the range, Ron. And when shares began trading shortly before noon, the stock opened at 42. This one is interesting to me. So the lower end of the range, as you say, was set. But the subscription was oversubscribed. The IPO was oversubscribed, indicating that there was demand. But what I think happened is that the bankers and the company decided to be conservative for a couple of reasons. One, they didn't want what happened to Lyft, to happen to them, where Lyft went public and then shortly thereafter, really within a day or so, broke through the IPO price and kind of never looked back and

this continued to go down. Plus, as you mentioned, we have the China-U.S. trade negotiations going on. The market is rattled. The market is weak. It's actually a bad week to go public as a result. So we saw some conservatism in there. Now you see the company actually start to trade. It trades weak. I think, again, building on the fact that the market is just not having it this week. Yeah, and I just don't think they want to delay it any further. I mean, I was thinking, maybe they'll push it back again. But it's been out there so much in the media, you know. So they just don't want to push that off. And while it was a bad time, you know, at least the stock is kind of hovering around that price right now, so the bankers and the day-to-day traders trying to find that price.

So at least it hasn't collapsed, which I think was potentially some risk out there right now. And I think there's a chance that people are fatiguing on the phrase path to profitability. There may become a time where people want to see profits once again to take a company public in an $82 billion valuation that is not public and probably won't be public for five years plus. Oh, sorry, profitable for five years plus. is daunting. And up until now, you can get away with that and certain there will be periods of time throughout the stock market where you could get away with it right up until you can't, and investors want to see good old profits once again.

I think it's a pretty fair assumption, too, that both companies' cost structures are going to be nothing but going up in the near future, and even the farther out future. The drivers are going to want more money. I mean, I think that right now it seems like the difference between contractor and employees really playing out in the press. So, I mean, these are just two good examples of companies where I think it really pays to be patient. There is no reason to rush in buy shares in these businesses because they're probably going to still be around in five years. But I think the business models themselves, the economics are going to change significantly. And I think that's going to be something to keep in mind.

Yeah, the take rate, which is the amount that Uber keeps after paying the drivers, has been declining. You do not want to see that because you need this business to really get profitable based on scale. While 91 million active monthly users is impressive, you need to continue to grow that, but you need to continue to grow the profitability on a per-customer basis if this is ever going to turn into a profitable venture. Well, and Ron, you mentioned the macro environment contributing to it not being a great week for Uber. Also not helping probably is the fact that this week Lyft issued their first report, quarterly

report as a public company. They lost over a billion dollars in 90 days. That's amazing. That's amazing. And not the good kind. Perhaps we shouldn't have be too surprised, as we knew, they were not profitable either. They're more of a pure play, right? Uber has Uber Eats, which is actually going to be probably a big deal in relation to it turning

profitable. But Lyft is more of a pure play. 20 million active users in the corridor. So obviously much smaller than Uber, a more focused play on the rideshare industry. But you know what? We're going to autonomous vehicles at some point, five years. 10 years, 20 years. Is Uber going to be profitable before that? And if they are, then the whole thing changes again. Shares of Disney down a bit this week, despite a strong second quarter report, Jason,

particularly the Parks Division. Yeah, I mean, it was a strong quarter. I like to call this the Goldilocks quarter. I mean, it was nothing too terribly great, nothing terribly bad. I mean, it was really just kind of right up the middle. And with a company that has just finished pulling off a major acquisition as Disney has, that's really all you want to see is that they just completely at least screw something up. But the nice part about Disney is they have the model that can make up for shortcomings in other segments. But revenue of $15 billion was up 3% from a year ago. As you mentioned, the parks continued to get it done. The media division continues to get it done. The parks, they saw 5% revenue growth, but 15% operating profit growth. I think that really demonstrates

that operating leverage we talk about in that model. The headline, of course, is the Avengers in-game $2.3 billion plus dollars. box office receipts, that number will just grow. We always talk about the fact that those movies really aren't the biggest part of the business to begin with, but it doesn't hurt the cause. I think the real story for the coming quarters and years is going to be the burgeoning over-the-top department, the direct-to-consumer business that they're developing. That brought in revenue of $955 million. Operating a loss as they build out these services, but ESPN Plus now has 2 million-plus subscribers. Hulu has 25 million plus. They're forecasting Disney Plus to have somewhere in the

neighborhood of 60 to 90 million by 2024. And given the value in all of the IP that they have, I don't think those are too lofty a goal either. I mean, I can see a lot of different ways they could go with these services. And then, you know, we also saw over the past couple of days Netflix made the acquisition of some little children's, entertainment provider. And I think the fact that I can't really remember the name of it speaks to the value in the IP that we always talk about with Disney anyway, it's going to be a very interesting race here as we see Netflix and Disney build out these direct-to-consumer businesses. But I think Disney definitely has the leg up on the IP side. Booking Holdings, first quarter profits and revenue

came in a bit light, but shares of Priceline's parent company still up a bit on Friday despite that. You tell me, Andy, what do you think of their core? Well, the hyper-growth days of booking.com price line are over. And it's okay as long as investors understand that sales were up 6%. If you back out the real strong dollar and the timing impact of Easter, gross travel bookings up about 2%. That was down from up 14% of all of last year. So the real high growth days of booking.com and price line are down. Interesting, they now have 217 million worldwide rooms that were booked across their platform. That was up 10% ahead of their own. guidance. And they now have almost 6 million alternative accommodations listed. That's up 13% as they

go after the likes of Airbnb market as well, too. So profits a little bit on the light side. You know, it just, it was a nice quarter as long as you understand that the real heyday of high growth in booking.com and priceline and their other businesses really isn't quite there. And they bought back a lot of stock. They generate $4 to $5 billion of free cash flow per year. They're going to continue to buy back stock. It only sells it 16 or 17 times free cash flow. So for a kind of steady business, very profitable, it can be a nice investment for investors, as long as you understand it's not going to be the huge growth story that it once was. Although this does come in the same week where TripAdvisor shares sold off in the wake of their latest quarter,

it does make me wonder if we're seeing a little bit of cooling off, not just with priceline and booking.com, but maybe with travel in general. Yeah, I think that might be true, Chris, when you just think about some of the wider macro concerns. You mentioned China at the top of the show, and that just probably is playing a part. And, you know, people are probably more careful with the dollars and how they spend it these days. Zillow shares up 10% on Friday after first quarter profits came in higher than expected. They raised guidance to, Jason. It's kind of been a rough stretch lately for Zillow, and I'm wondering if you think they've turned a corner.

Maybe. Is that good enough answer for you? No, it's not. I mean, the action in the share price after the earnings announcement has been pretty amazing to see. I mean, it was up 20 percent at one point after hours. I think the real story for this business going forward is homes. And I mean in the homes business that they're trying to grow, the buying and the selling of homes, that's the driver that investors want to follow closely in the coming quarters in years to get a gauge of whether or not Zillow, the company, the business is growing. The home segment brought in revenue of about $130 million for the

quarter, it's still operating at a loss, of course, to put that in the context, they sold 414 homes while purchasing 898. The interesting thing I noted here, if you back out the homes revenue, then you get around $325 million in revenue there. And that's only 8% growth from the same quarter a year ago, which is pretty meager. And looking at their guidance, that number actually is probably going to shrink even more in the second quarter. The Premier Agent business is really just hitting a brick wall. is they're trying to figure out how to change that, how to make it a little bit more valuable for the agents they have. So it does feel like the more things change, the more they stay the same

with Zillow. But I do like the new CEO. I think that Rich Barton is the guy to get this done. If anybody's going to be able to pull it off, it's going to be him. But it really is going to hinge on that home segment. That's just going to take a lot of work and time. So that's what we'll want to pay attention to. That doesn't sound like they've turned the corner. Sounds like the answer was no. Well, they see the corner that they're trying to turn. How about that? That's progress. There we go. Up next, a friendly reminder that just because a stock price has been cut in half, doesn't mean it can't be cut in half again.

Stay right here. You're listening to Motley Fool Money. All right, quick shout out to Gramerly. Gramerly is a communication tool that helps people improve their writing to be mistake-free, clear, and effective. They encourage everyone, even the best students and the top professionals, to use Gramerly to do their best work and accomplish even more. more of their goals. They help people show their best self through writing, and it's available across platforms, including online browser extension, desktop editor, and mobile keyboard checker. You can find it on multiple browsers like Chrome, Firefox, Safari. You can find it on platforms like iOS,

Android, Windows, Mac. They've got a free product that reviews critical spelling and grammar, but Grammarly Premium looks out for all of that. Plus, structure, style within context, Reaceness, readability for different occasions. So maybe you're writing a business proposal or an essay for school or a blog post, whatever. It's so easy to use, I've been using it. The free version is easy. The premium just gives you a lot more. And I need all the help I can get when it comes to things like advanced punctuation. So whether you're looking to polish up your resume or just look smarter in your emails at work, do yourself a favor. Check out Gramerly. Go to Gramerly.com slash fool and get 20% off your Gramerly premium account today. That's grammarly.com slash fool for 20% off your Grammarly premium account. Welcome back to Motley Fool Money, Chris Hill here in studio with Jason Moser, Andy Cross, and Ron Gross. In late February, shares of Stamps.com were cut in half in a single day. That happened again this Thursday when the company cut its earnings guidance for 2019, as well as 2020 and 2021, and Ron, in less than three months.

this stock has gone from $200 to $38. Brutal. And perhaps not getting any better anytime soon. You know, they're claiming that a non-negotiable item for them was to no longer be the exclusive partner of the United States Postal Service because they wanted ability to tap Amazon, FedEx, UPS, but that's just destroyed this business. Now, they're claiming that that's a short-term pain. And once they can get into deals with those folks, they'll be able to offer

multi-different shipping arrangements to their customers, especially some of the smaller customers that use SAMS.com, and that they'll be fine in the mid-to-longer term. That remains to be seen, and the pain they're seeing now is due to the renegotiations with all these different customers, and I think it's going to be painful for quite some time, and I think perhaps they might never turn. And from a negotiating standpoint, shouldn't we be betting on all these other huge companies like FedEx and Amazon, now that Stamps.com is much smaller than it was three months ago? It's a formidably competitive area. I think that's a reasonable bet.

I mean, you know that Overstock.com commercial where they spend the first 30 seconds trying to explain to you why their name is Overstock.com, even though they don't really sell overstock goods. I mean, I feel like Stamps.com is running into that brickwall as well. I mean, I don't know why the company is called Stance.com at this point, because they're not really in the business of selling you stamps. I mean, they're trying to figure out where to take this business. It's going to be a big branding problem, I think, going forward.

Rough week for the Trade Desk. First quarter revenue for the programmatic ad platform was not what analysts had come to expect, and shares of the Trade Desk down 18% this weekend. Oh, the challenge of high expectations, Chris. I mean, the Trade Desk is a programmatic company that serves up ads through algorithm and computers, mostly through online, although they're pushing more into connected TV with the likes of Hulu and Roku as those businesses continue to do really well. Revenues were up 41%. That was a slowdown from 56% last quarter and 60% in the first quarter of 2018. At 121 million in revenues, that was

a little better than their management's guidance. But again, it wasn't just lights out as people had come to expect with the trade desk. Again, adjusted at operating profits up 31%. A head of management's own guidance as well, too. The guidance was just a little bit kind of, hey, great, but it's not super great. And with those expectations, with a stock price that sells at more than 20 times sales, Chris, if you don't continuing to really destroy your expectations game, it's just not going to do it for investors. And so the stock on that day is sold off about 15%. But overall, the trade desk story and why I like this business very much is it continues to do very well, take market share in an exciting, growing space as we think about consuming

media in lots of different ways, on lots of different devices. And that's going to be driven by advertising over the next five, ten years, and they're going to play right into that. Yeah. Even with the drop this week, this is a stock that has more than tripled over the past year. So, it's the proverbial good problem to have when you get into that range of your earnings report needs to be perfect and your guidance needs to blow away Wall Street. But maybe this makes the stock a little bit more reasonable. I think it does, Chris. I think for long-term owners of the The trade desk or people who are interested in buying, this is a good opportunity now. It's

only an $8 billion company competing in a very large market space. And they're profitable and they're growing. So I expect that to continue. And I think ultimately the trade desk stock will do well for investors who will hold on for five years. Shares of Match Group hitting an all-time high this week. The parent company of Match.com, Tinder, and other relationship sites posted a really great first quarter report, Jason. Basically, everything was up. Yeah. Yeah. I like it in what this company is doing in its space to what companies like Wayfair and Etsy have done in theirs. Emily and I were talking about this on Market

Fullery this week, where you look at companies like this, you don't worry too much about the future because they've already faced their real tests. When we think about Wayfair and Etsy, I mean, the real test was, how are they going to exist in an Amazon world? They've passed that test, clearly. Match.com, I think the big question was Facebook saying they wanted to get into this line of work. Match.com has passed that test, I think, pretty well there as well. I mean, we saw the dynamic play out with LinkedIn and Facebook as well. It's just that people do actually want some separation in their lives when it comes to things like this. And Match has been very good to build out that family of apps that center around that premise of meeting someone. It's

a very singular focus. So it's a very powerful business model. It's a subscription business model, which is nice. Tinder is the crown jewel there with about four and a half million subscribers now. And it just pays, it plays into a big market opportunity where this is always going to be something in demand, right? People are always going to want to meet that someone in their life. And now they're able to pull back and ad spend is becoming a smaller percentage of revenue, which means that business is scaling very nicely. That's going to work out really well for investors for a company that already makes a lot of money and a ton of cash. In the competitive risks section of their SEC documents, do they list marriage as one of them?

Because if you think about it, someone who's going on to Match.com, presumably, they meet someone, they get married, they're leaving Match.com. The churn on that has got to be much higher than something like Tinder. Then they go on Tinder. That's the sword that cuts both ways, right? It's the risk, yet it's also the competitive advantage. You're going to find that person that you want to marry. In all seriousness, though, Match Group is one of those businesses. I mean, you mentioned Facebook, but I suppose E-Harmony is a direct competitor, but they really don't have competition in the way that other businesses do. No, it is a very fragmented industry otherwise, and that I think just speaks to how smart management was to really roll up a lot of these valuable properties quickly, because ultimately

the biggest networks do win. Does anyone know how much a Tinder subscription costs? I'm asking for a friend. No idea. I'm not even going to venture a guess because there's zero upside. Zero. Boston Beer is buying rival dogfish head brewery in a deal worth $300 million. Most of that is in stock, Andy.

And back in the envelope math, it looks like this probably increased. increases Boston Beer's annual sales by 10 to 15%. Yeah, it's not. The beer business, Chris, has really been struggling. I mean, most of Boston beers, recent growth has been in their alternatives, things like Angry Orchard, Hard Sider, Twisted Tea, the Hard Seltzer business as well. I mean, it's nice because it combines two kind of legendary U.S. craft brewers. So I think it's a nice deal.

It's at $300 million versus a $3.8 billion market cap for Boston beer, it's not a, it's not huge for them. But Sam Caljone will join the board. He will be, he and his wife will be the second largest individual share owner behind Jim Koch with $127 million worth of Sam Adams stock. So you get a person who's a lot of passion into that market. Hopefully, he sticks around. Often, when you join a larger company, when you're an entrepreneur, you don't really feel like sticking around a larger business. Yeah, I don't know that it makes the business all that much more compelling. I mean, it's the consolidation that we expected. There's not a lot of overlap. They're two very different.

brands. But to Andy's point, I mean, the beer market itself has just been really challenging. Ron Gross, Andy Cross, Jason Moser, guys. We'll see you later in the show. Two years ago, Scott Galloway wrote a bestselling book about Amazon, Apple, Facebook, and Google. So what does he think of the tech landscape now? That conversation is next, so don't go anywhere. You're listening to Motley Fool Money. Welcome back to Motley Full Money. I'm Chris Hill. Scott Galloway is Professor of Marketing at NYU Stern, the founder of L2, the co-house. host of Pivot with Recodes Kara Swisher and the author of The New York Times bestseller, The Four, The Hidden DNA of Amazon, Apple, Facebook, and Google. Earlier this week, I caught up with Scott

Galloway and began the conversation by asking about the future of big tech. So let's start with the four, because you've called for breaking up big tech, not because you think that they're evil or they destroy jobs or anything like that. You've specifically said, let's break them up because we're capitalists. Can you explain what you mean by that? Sure. So a normal part of the economic cycle here in the U.S. is we realize that through lock timing, incredible execution,

occasionally a firm becomes an invasive species, and that is it becomes so dominant that it's able to, perform infanticide on small companies and prematurely euthanize larger companies, which tend to be good employers and good taxpayers. And we've done this on a regular basis since we broke up the railroads, AT&T, aluminum companies. And it seems as if we've lost the script. And basically, the FTC and the DOJ have decided to go dormant the last three years. I think the number of actual antitrust actions filed is literally a fraction or a shadow of itself. And it's largely because of the Bork, Chicago viewpoint of the test is consumer harm. And it's difficult to decide to break up a

company whose products are free oftentimes. But yeah, we're well beyond that point. When Amazon can take the value of a stock down 30% by announcing an acquisition in the same category, or Google and Facebook are responsible for two-thirds of all digital marketing growth, or Amazon controls 50% of the most valuable channel in the world, which is e-commerce, or can use a highly profitable group, AWS, to subsidize retail platform at below cost, similar to what the Chinese did in the steel market or tried to do in the 80s. We called it dumping when the Chinese were pricing steel below costs. When Amazon does it, we call it innovation. So the great companies, love them, own their stocks, they hire my kids out of school, tremendous respect for them. Great. Congratulations.

It's time for you to be broken up. Well, in terms of regulatory actions, Facebook with their most recent earnings report, it came out that they've essentially set aside three to five billion dollars to pay for a fine from the FTC. I get the strong sense that you think that that number should be doubled and then possibly doubled again. Well, look, there's an algebra of deterrence, and it's simple. It's that you take the likelihood of getting caught doing something wrong times the potential penalty, and that amount is a deterrent such that that amount is greater than the upside of continuing to engage in that behavior. And what we've done with big tech is we've put a parking meter in front of your house

that costs $100 an hour. But if you get a parking ticket, you break the law, the ticket is $0.25. So when Facebook does the math, and they have, and they can continue to violate privacy or not put in place to safeguards such that their platform isn't weaponized by bad actors, they get fined $3 to $5 billion, which is seven days of income or seven weeks of cash flow. So any calculus, any algebra is the smart thing, the shareholder-driven thing for these terms to do, is to continue to break the law. So it's not their fault.

They're doing the smart thing. It's our fault for not electing leaders that hold these terms to the same scrutiny and standards as we've held every other company for the past century. I was with the CEO of Macy's last night and we were talking about big tech. Let's talk about Elon Musk. Can you imagine the CEO of Macy's referring to somebody of upstanding, you know, and saying, oh, this person's a peddle? Or what if the CEO of Macy said, you know, we're taking Macy's stock public at not, you know,

at 50 bucks a share and it's a 30-something right now and funding secured, he would have been out the next day. But we have decided not only with the companies, but with the individuals, we sort of no longer worship at the altar of character and kindness in this country. We worship at the altar of innovators and billionaires. And I really think we've lost the script here that we need to hold these companies to the same standards. We need to realize these companies are totally shareholder.

driven. They're not going to take care of us when we get older. They're not going to comfort us when we're sick. And we need to apply the same standards we've applied to every other firm. And we are not doing that right now. When you and I talked in the fall of 2017, one of the things we talked about was the potential for the Big Four Apple, Alphabet, Facebook, Amazon, spinning off parts of their business to just get the political and regulatory heat off of them. Do you think, now that we're two years hence, the likelihood is even greater that that's going to happen? I do.

And I think the first one, so I think Jeff Bezos is arguably the brightest mind in business. And I think he'll prophylactically spin AWS, because that will be the way to stave off the woves of the door around regulation and antitrust. And also on the spin, AWS would be one of the ten most values. companies in the world. It would also open up a whole vein of customers that right now don't

consider AWS because it's owned by Amazon. So Walmart or Macy's or L brands are never going to work with AWS because they see them as a competitor. So I think it's not only would be a prophylact against antitrust, it would be a smart business move or accretive to the shareholders. I also think that Instagram or WhatsApp will be spun, but I think it'll be done under DOJ or FTC instruction. I think allowing Facebook to acquire Instagram is one of the greatest regulatory failures of the

last 20 years. They should have never been allowed to acquire Instagram, much less WhatsApp. I know that for your first book, one of the reasons Microsoft didn't really enter the equation is because Microsoft's really more of a B-to-B company and the four that you chose

are much more business-to-consumer companies. That being said, Microsoft recently crossed the trillion dollar mark in terms of its market cap. It doesn't really get the adulation from the media that the other four do. But I'm curious what you've observed in the last couple of years with the rise of Microsoft. So my excuse that they're a B2B firm is mostly a way of covering up the fact that I just don't understand Microsoft that well. I feel as if I can talk a pretty good game about Amazon, Apple, Facebook, and Google, start talking Microsoft, and I just don't. It's

pretty clear I'm out of my depth pretty soon. So I came up with a rubric or a construct to just make it these four firms. And quite frankly, I probably should have written about Alibaba and Tencent, but I don't understand those companies either. So I was comfortable writing about those four. But Microsoft, the best way to build economic value in a household is through a monogamous relationship. Single people usually don't build that economic value. And the marketplace has discovered the same thing with companies, and that is it loves companies that are a monogamous relationship with their client set. And that is, they've kind of gone all in with this partner, this software company, the syndicated research company, Netflix, Prime,

whatever. And I'm going all in. I'm going to commit to you and I'm going to pay you this amount of money every year and trust that the relationship works for both of us. And the marketplace values recurring revenue companies at a multiple of revenues and non-recurring revenue companies, so just general retailer or consulting at a multiple of EBITDA. So with Microsoft, you have the ultimate monogamous relationship in the history of the business world, and that is the relationship between Microsoft Office and the corporate world. And the markets just love that. Also, you have a CEO who came in, and to Bomber's credit, who gets probably an unfair share of the blame, he did set the company up for success in a lot of ways, and he actually groomed and picked Satya.

But Satya killed a lot of their mobile stuff, got out of things that weren't working, and said, we're going to focus on what we're really good at. But the Renaissance there is just literally nothing short of remarkable. The only thing that probably rivals is, is that. It is the Renaissance of Apple, and maybe you could argue IBM's, Renaissance in the 80s. But Microsoft is just, it's an incredible firm in Sauna Della, would be on any short list for CEO of the decade. Last time we talked, you mentioned Netflix and Amazon being on a collision course with one another.

Since then, Disney has come out and announced that later this fall, they're going to be launching Disney Plus, which is their video streaming service. Do you see that as more disruptive to Netflix than it is to Amazon simply because of all the other things Amazon has going for it? That's a really interesting question. So, first of all, as far as I can tell, the only two legacy firms that are really landing counterblows on the big tech guys are one Walmart and two Disney. I think the only retailer than Amazon ever talks about in a board meeting is Walmart.

And they've done it with grocery and they're doing pretty well online and been pretty aggressive about acquisitions, but mostly click and collect grocery. And then Disney is one of the few content firms that has the leadership with Bob Eager, the capital, and the brands to legitimately take on Netflix. Is it more disruptive to Netflix than Amazon? 100%. Because Amazon's retail platform could go away, and they'd still be one of the most valuable companies in the world. Their cloud business could go away, and it could be one of the most valuable companies in the world. Because Amazon isn't a retailer, they're really kind of a disruption platform, and that is they find an industry where they say, our skills, our data set, our access to cheap capital, our incredible consumer trust,

mean we could go after this category and be a player overnight. So cloud originally developed for their own storage capacity, and now they're adding that amount every day, and they're in an amazing business, and the leader in what is arguably the most profitable fastest-growing part of technology. The second largest spender now on original scripted television, Amazon. Probably the most innovative hardware manufacturer in the world right now is no longer Apple. it's Amazon. I would argue the Echo is more transformative than the, you know, AirPods or the Apple Watch.

So, yeah, Amazon, Disney is an existential threat to Netflix could cut its market cap in half. If Disney Flix is a huge hit and Amazon media never really takes off, it hurts Amazon, but it doesn't cut its market cap and half. So absolutely, Disney bigger threat to Netflix than to Amazon. I'm curious what you think about the current state of the ride-sharing industry, because now that Lyft is a public company and has already had a rough ride in its relatively short time as a public company, and by the time this interview gets published, Uber will join Lyft in the public markets, what do you see when you look at the ride-sharing industry? So I think ride-sharing is the tobacco of the gig economy. We figured out a way for the lords to take revenge on the serve. and that is we have actually figured out a way and we blessed it that we can sequester the 20,000, mostly white, mostly college educated professionals at headquarters for Uber, and they get to split the value of, I don't know, Airbus, or I don't know what's a Home Depot,

a $90 billion company with their investors. And meanwhile, the four and a half million driver partners, which is Latin for someone who doesn't have health insurance, minimum wage protection, and also doesn't get to share in the spoils of the IPO, Those mostly non-white, mostly non-college-educated people, literally get a dime a ride. That's what Uber has decided to give and lift the drivers as spoils for their loyalty and benefit from the IPO. They're getting a bonus of anywhere between 10 cents and a dollar per ride. Now, look, a lot of people say, I talk to Uber drivers and to be blunt, they like their job. There's a lot of flexibility.

But offering someone flexibility isn't an excuse for not giving them health insurance. It is an excuse for not sharing more of this, I mean, just absolutely torrential windfall of capital. And so the notion that we have legally and culturally figured out a way to separate the workers from the nice people at HQ is, in my view, obscene. It is literally the 3 million lords in the United States taking revenge on the 350 million serfs. And if you want to look at income inequality in our economy, look at ride hailing. And lift, let's talk about the companies. Lift full stop is just a shabre business. Ride hailing is a difficult, unprofitable business.

They'll talk about autonomous. They'll talk about network effects. Autonomous is not coming anytime soon in my view. It's a vastly overrated technology. Ride hailing is a difficult, unprofitable business. Lyft makes no sense. In my opinion, it's going, you know, I predict. addicted that it would touch $100 on the day of the IPO and be at 50 within six months. I was wrong.

It touched 90. It's almost a 50. I think it's going to $10. I think it's literally just a ridiculously overvalued company in a shi business. Uber is a shi business ride hailing, but it's got a global brand. And it's demonstrated that kind of all elusive, all important flywheel effect. And that is it brings people into the franchise through ride hailing, which is nothing but a transfer of wealth from drivers and investors to the rider. If you take a $20 ride, it cost them $25. But they have managed to get some legitimacy around this flywheel effect. So Uber Eats is a really good business. And it's a profitable business. They do have the assets to get into some sort of freight and logistics. So this is a company that is kind of the first and last brand you

touch or the global affluent touch, whether they're in Kuala Lumpur, London, or Cincinnati. So but there is a lot of opportunity there in terms of marketing. So Uber is no Lyft. Uber is a real business that will survive and be worth tens of billions of dollars. I think Lyft could feasibly go to zero. Whereas Uber is different now. Is it worth $90 billion? Originally, we're talking about 120.

They've lowered expectations to 90. I think it's such an incredible global brand. It'll probably get a pop on the first day and kind of flatline to go down. But ride hailing is, you know, Darikasasari is, I think, a great, great CEO. But he's effectively Cheryl Sandberg. He's lipstick on cancer, and that is he's trying, he's the fabric softener around some dynamics in a business that is really, really obscene and disturbing.

A worker who started, and I'll wrap up here because I know I'm joining on, but at General Motors, a floor shop worker who just started their job in the 70s made $28 bucks an hour plus health care. An Uber driver makes between $8 and $15 an hour. So while we have unbelievable prosperity at Uber and Lillard, it's been sequestered for a few, and we have almost no progress as a society. These firms are the tobacco of the gig economy. Scott Galloway returns next week to talk about his brand new book, The Algebra of Happiness.

Coming up, we've got a few stocks on our radar, so stay right here. You're listening to Motley Fool Money. All right, before we get to the stocks on our radar, I want to say thanks to clear, Instead of traditional ID documents, Clear uses your eyes and fingertips to get you through security faster at airports and stadiums. It's going to reduce your stress. Clear gets you through security with the tap of your fingers so you can get to your gate faster and just relax. It's easy to sign up. You just create your account online before you go to the airport.

And once you get to the airport, a Clear ambassador helps you finish the process. And then you can immediately use Clear. I saw this in action the last time I was at the airport because I was standing in the regular line and I had plenty of time to wait because the line wasn't moving quickly. And just off to the side, I saw a clear ambassador helping this family just breeze right through security. Speaking of families, if you're traveling with your family, you can add up to three adult family members at a discounted rate. And kids under the age of 18 are free. Right now, our dozens of listeners can get their first two months of clear for free.

by going to Clearme.com slash Fool 2019 and use the promo code Fool 2019. That's C-L-E-R-M-E dot com slash Fool 2019. Use the promo code Fool 2019 for your free two months of Clear. 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 no buyer sell stocks based solely on what you're here. Welcome back to Motley Fool Money. Chris Hill here in studio once again with Jason Moser, Andy Cross,

and Ron Gross. Time to get to the stocks on our radar. Our man behind the glass, Steve Broido, is going to hit you with a question. Ron Gross, you're up first. What are you looking at? This one's a little different for me. I have Xilinks. XLNX. Reprogramable, semi-conductor chips known as field programmable gate arrays. Selling into the artificial intelligence market is huge. The cloud data center market is huge. The company has been 150 batches. since it went public in 1990, raised their dividend every year for the past 14 years, currently around 1.2% yield, so not knocking it out of the park, but pretty good. Plus, I think you've got some nice appreciation potential. And I think this would be a good total return play. Give me the ticker one more time.

XLNX. Steve, question about Xilinx? When will I have a robot in my home? That's a serious question. I'm not kidding. I want a robot. Do you have the I robot vacuum system? about a robot?

An actual robot? Tweaky from Buck Rogers. I think in your lifetime, you will. Bid-Bid-D-D-D-D-D. Ooh, nice. Jason Moser, what are you looking at? Yeah, well, I've told you before I'm working on this augmented reality report. A lot of different companies I've been looking through.

And Integra Life Science is one of them. Ticker is I-A-R-T. I'm finding a lot of data to support the notion that AR is going to be a big part of the future of surgery. And Integra is a diversified medical technology company. supporting a lot of verticals that utilize that AR, including neurosurgery and orthopedics, among others. So this is a smaller company, $4.5 billion market cap, but that could also be seen as an opportunity really to grow. That's one I'm digging into for the report. Steve, question about Integral Life Sciences? How important is the FDA to all these businesses

that are doing medical kind of stuff? It seems critical. It is utterly critical, and the FDA does wield a lot of power in those relationships. I don't know about any of our listeners, but I'm really hoping after those two high-tech companies, Andy comes up with potbellies. Just something like, yep, I've got a stock on my radar. They make sandwiches. Andy Cross, what are you looking at? Not quite, but Steve, if you're looking to build your website, look at Wix.

They report earnings next week. It provides services for individuals more than 140 million registered users to create websites. They have an ad business, and they also have a subscription. business as well. Registered users were up 19% last quarter, and premium subscribers grew 24%. So I'm looking for that to continue to drive their revenue growth more than 25% in the quarter. Steve, question about Wix? Who is their biggest competitor right now? Well, what's really interesting is so they're kind of more on the low end side, like if you want to create a website to kind of showcase maybe some art. My son used it last week for a project.

There we go, Ron. Yes. Whereas like Shopify and Shopify Plus are much higher end with a little bit higher tools that shop owners can use to provide commerce services. Wix is starting to play more and more into that business, but they're a little bit more on the lower end with their ad business and their subscription business. Steve,

three very different businesses. Wix, Zylinks, Integral Life Sciences. You've got one you want to add to your watch list? The only one I actually understand is Wix. That's fair. Is your son looking to sell stuff through his website, or is it just for a school project? It was a school project we needed to rebrand. I say we. You can see I helped it. We needed to rebrand something, so he rebranded the Washington Redskins and had to create a new website around that.

Nice. He should expect a call from Tribune Media Services so that they don't have a redux of what happened with Trump. Understood. All right, Ryan Gross, Jason Knowser, Andy Cross, guys. Thanks for being here. Thanks, Chris. That's going to do it for this week's edition of Motley Full Money. Our engineer is Steve Broido. Our producer is Mack Greer. I'm Chris Hill. Thanks for listening. We'll see you next week.