The Best One Yet - “A stock surge recipe” — Uber drops Lime’s valuation 79%. NBC vs. Streaming’s Achilles heel. Wayfair’s stay-at-home wins.

Episode Date: May 6, 2020

Uber splurges $170M into Lime — Uber got the better end of the deal as Lime is desperate. Every streaming company is its own species in the Streaming Wars, but NBC may have just solved one of the industry’s Achilles heels. And Wayfair stock has surged (get this) 580% (no joke) in just the last month (seriously), so we’re looking at the signs from back in March that this could have happened.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is Nick. This is Jack. And this is Snacks Daily. It is Wednesday, May 6th. Stocks rose a little bit yesterday. Yep. We don't really know what. Kind of like Hogwarts. Things just happen. Can't explain everything here. But as always, we're bringing the best one yet. This snacks daily. This is 100% pure T-boy. For our first story, Bob's discount furniture. Yes. Raymore and Flanagan. Classic. Ethan Allen, Vermont made furniture. They all hate Wayfair. They're the Boston-based furniture company that calls itself a tech company. And its stock is very techish. It's up 600% in just the past month. Jack and I popped in the old time machine traveling back to mid-March before shares jump 600%. For our second story, it's the ex-unicorn of the day. A company called Lyme, the e-scooter company's valuation

dropped 79% to $510 million. And Uber just treated itself to buy up a big chunk of that company at a very nice discount price. This is a case study in startup valuations. Welcome, Snackers, the founder unfriendly era. For our third and final story, we've told you how the streaming wars features a bunch of different streaming species. Old school NBC Universal? That's one of them. I thought you were just going to do a peacock call right there, Nick. NBC's peacock has healed the Achilles heel of streaming.

Jack, I got a disease, and the only prescription is a live TV. That is a quality, Christopher Wackett impression right there. Snackers, we've practiced frequently, but before we jump in, that we got to talk a little bit about the different cycles of time. You got days, weeks, minutes, months, years. A lot of them. We've got a new one, Jack and I whipped up on snacks daily. Musks. Every four months or so, we notice that Elon tends to really crave some new Twitter followers. So he does a lot of crazy things, and we're in the middle of a Musk cycle right now. Check out your Muskometer. It's Musk time. Here's how we know that Elon Musk is craving attention right now. We are mid-Musk. When we see that

last week, he called the U.S. government fascist. And then right before last weekend, he said that Tesla's stock price was too high. Weird thing to say publicly when it's your company. Oh yeah, and then shares dropped like 10%. Two days ago, he started selling all of his homes and possessions for no particular reason. Yeah, he just said he doesn't want own homes anymore, so apparently he's making that happen. And then just yesterday, he has a new baby boy. Congratulations, Elon. Congratulations. He named his baby boy something peculiar. It's X, A-E, A, D-12. Jack, we repeat that one more time. X, A, E, and the A-E are like merged, like the American Eagle logo.

And then A-12. That's the child's name. That's the name of Elon's new son. You look at this, you look at that, you add them all together. It looks like we're mid-Musk. When it musks, it pours. It lets it our three stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way.

It's snacks about to hear ain't food. It's air candy. They don't reflect the views of the robberhood family. It's all informational just so. You know, we're not recommending any securities. It's not a research report or investment advice. Not an offer or sale of a security. Snacks is digestible.

Business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, Wayfair is a tech company for online furniture, basically. And it's a top performing stock of the coronavirus. But Nick, tell me a little more. What is Wayfair? Snackers, you may have heard of Wayfair. Every third person you know under the age of 40 who lives in Boston.

Austin, they work at Wayfair. Kind of like the Amazon of furniture, but it's deceptively selling furniture under its own brands. Are you trying to buy a bed, but you can't pronounce the name of whatever it is IKEA selling? There's another low-cost option. It's called Wayfair. This company's got five websites and whipped up 90 house brands for its furniture. That's right. It has house brands to make you think these are like different companies that you're buying from. It's all Wayfair. It's insane. They got Paragold. They got three posts. They got Joss and Maine. Honestly, each brand sounds like it's sponsored by Greenwich, Connecticut. They got 87 other brands.

They're all sold on Wayfair's five websites, but they're all Wayfair. They're all the same company, probably made in the same factory in China. The thing we've noticed about Wayfair, though, is that it acts like a tech company. It owns the websites, but it doesn't manufacture or own or deliver the furniture. What Wayfair does is connect 12,000 furniture makers to the customers directly, taking a cut, acting like a marketing middleman. Sounds like one of those tech platforms. we talk about all the time.

Unsurprisingly, Wayfair's low-cost online plus delivery model, it's winning in the coronavirus. Sales rose 20% last quarter and could rise even more this current quarter. Great quote from the CEO pretty much sums up this entire situation over a Wayfair. Home is becoming an area that customers are disproportionately investing into. And let's be honest, your home is your life right now. Home offices, case in point. The stack of books aren't a good long-term standing desk situation.

Jack and I are literally recording this. podcast right now on like six volumes of Tolkien. But it's not just office furniture, Nick. Living Room furniture is big for Wayfair. Snackers honestly tweeted us right now if you're not in a living room. We guarantee it's nobody. It is literally your living room. So check, what's the takeaway for our buddies over a Wayfair? Rewind to mid-March, Wayfair was textbook winning investment thesis. Snackers, investing in individual stocks is two parts. It's having a thesis and then it's taking a risk. If your thesis was right, the investment could pay off. But if you're a few, If your thesis was wrong, you could lose all your money.

Now, if we jumped in our fancy little snacks time machine and go back to mid-March, governors were holding press conferences and basically issuing their first stay-at-home orders. The experts thought these stay-at-home quarters could last for months next. People thought the recession was coming. People were spending more time in their homes. And physical stores were no longer a thing to do on weekends. Check, check, check. Wayfair's business model fits every aspect of the change to life that we just described.

We're talking cheaper. We're talking online and we're talking stuff for your home because that's your life. If you bought Wayfair stock on March 17th, right as all the shutdowns were beginning, it was trading at $31 per share. Now, Snackers, here's the wild part. If you look at where Wayfar stock is today, it's grown by five times. Now, Snackers, any stock could go to $0 and you lose all your money. True story.

But the thesis that Wayfair could thrive in the coronavirus totally made sense. And those who took that risk back in March, it paid off for them. Again, although the stock is up, huge. the past two months, there's no certainty at all that it'll go higher. But having a thesis to begin with an investment, that was the most important part. For our second story, NBC Universal just restructured its streaming business. And they potentially solved the Achilles heel of streaming video services. Snackers, we're talking about Peacock, which is Comcast's NBC powered streaming network.

Best name, lowest expectations. Everyone in truth is like, oh, your cable, cute. We love what you did with you. streaming. Well, now we got one more. It's called Peacock. So true. Now, Jack and I don't often focus on HR moves, but you can find some interesting things when it comes to how companies are structured. Yesterday's Peacock restructuring, announced by Comcast, is the boldest thing in streaming since Quibi, which launched last month. There's basically a lot of stuff happening in streaming basically every month. It's something new and different. Now, here's the change. Here's the HR change Nick was referring to. NBC has three big news divisions. You got NBC, you got MSNBC, and then

creatively, you got CNBC. They take up three channels on your TV guide, but now they're one division in one department at Comcast, Universal. And here's what fascinate. Jack and I. They're merging that news division with their streaming network, which is Peacock. Big implications here. The three things that cord cutters are missing now that they've cut the cord, are in the same division at Comcast as the cord cutting product. We're talking live sports. Like the Olympics. We're talking award shows. Like the Emmys on Sunday night. And we're talking news. NBC Nightly News at 630. Keyword between all these three Think Snackers, live. These are the three holy grails of streaming TV right now. Okay, so you got Peacock, which launches in July for $5 a month with ads. So you get all NBC and all universal TV shows and movies.

Yeah, you get all that stuff. But then there's Peacock Premium, which will be $9.99 a month. And that is going to come with all those live goods we just mentioned. How much of those live goods? That's the big question. TBD. But the live is. is a big problem if you've cut the cord. So, Jack, what's the takeaway for our buddies who are streaming over at Peacock? NBC could cut its own cord. Add all of its news, all of its sports, and all of its events to Peacock Premium. Snackers, take a break after you listen to this episode. Call up your uncle.

They're probably 68 years old, and they probably are still hanging on to cable. They're probably paying $200 for Cablevision a month for the Mets. Ask them why they're still on cable, and they're going to say the Mets, the Oscars, and Lester Holt's chin. That's the issue with streaming services. None of them really offer live events or live anything. When you want to watch something live, you tend to download the app for something random streaming, and then you delete it right afterwards.

But Comcast is sitting on a whole division doing news and live events. That's called NBC. And it's sitting on a streaming site with bingeable shows and movies, and that's called Peacock. If it truly merges the two into Peacock Premium, it'll solve Cord Cutter's live problem.

So we're a little over halfway through Snacks Daily. Best Snacks Challenge we've heard of yet is still John Rochelle, who did 3.1 miles in the course of one podcast. Some say it's not possible. Some say we should get to our third and final story, which is our ex-unicorn of the day. We're talking about Lyme, the scooter startup, whose valuation just plummeted at 79%. This is a case study in what valuations really mean. Which means we got to talk about a little trend jack and I are noticing here. Lime, bird, jump, spin, beam. Rule number one of the scooter club, Don't have more than one syllable in your name. If you're raising money as a scooter startup founder,

just have page number two of your pitch deck a single four-letter word. By the way, what was that last one, Beam? Yeah, Bean. Is that a made-up scooter company? At this point, there is grabbing thesoruses. Lime was a billion-dollar scooter startup that your parents hated

because of all those scooters littering the sidewalks. Incredible claim to fame here, though, Snackers. Get this, second fastest company to become a unicorn. It went from zero to billion in like a year. No joke on this thing. Someone's got to p-test these founders. But now its valuation has fallen, officially, from $2.4 billion to $510 million because of the latest fundraise. And that's because COVID-19, it's a disease that doesn't really enjoy scooters.

No, every scooter should have a big sign that says B-Y-O-Clorox wipes because you want to wipe these handlebars down. In fact, the next scooter startup should just be spun out of the Clorox company. Here's the news from yesterday. Uber is leading a $170 million fundraise in line. So Jack and I jumped into this deal to see what was going on. Basically, Uber hit the venture capital investment grand slam. All right, the first perk, the first score, the first win that Uber gets in this contract. First of four, baby, is dibs.

Uber not only invested in Lyme, they get the option to purchase Lyme after 22 at a price that's now been determined. That's right. If in 2003 Lyme's like the hottest company in town, Uber gets the first claim to buy them if it wants. Not too shabby. The second key of the venture investment grand slam, control. Uber already had invested in Lyme. So I had a few shares of Lyme, but now it has a big chunk of ownership in Lyme.

And if Lyme CEO's like, I want to do this, they're like, uh-uh, uh-uh, you got to listen to me now. Uber can do what your parents used to do and basically say your whole name. John Kellyn Kramer. And then Lyme has to do what they said. That's right. The third win that Uber scores in this deal is expertise. This one's wild. Uber has its own scooter-ish business. It's called Jump Bikes. Yes, it's called Jump Bikes. You may have seen them around San Francisco. They've got like that retina-crushing slam and salmon color. They're ridiculously

bright, these bikes. And it's a horrible business for Uber. It actually loses $3 for every $1 of revenue that these bikes are making. So interesting part of this deal, we noticed, Uber is handing over the operations of its jump bike business to Lyme to manage that for them. Uber's like, I'll give you money on one condition. You do my math homework. I hate my math homework. This is like a micromanaging delegating situation. And the final win for Uber in this deal is growth because 80% of Uber's core business riding in the backseat of an Uber is gone with the COVID-19 crisis. But Uber thinks micromobility could return a lot faster. Think about it. Holding two handlebars seems less risky than riding in the back seat.

with a bunch of strangers and you don't know who's been there last. So that's what Uber benefited here. Now let's look at what Lyme benefited from through this investment deal. Pretty much all that matters. $170 million of cash that it desperately desperately needs. Also, Lyme gets featured in the Uber app, which is like a nice little get. That's pretty good. So if you open up the Uber app and you're near a Lyme scooter, it'll tell you.

But most fundamentally, and best of all for Lyme, it doesn't go out of business. That's always a good thing. So Jack, what's the takeaway for our buddies over at Lyme? and Uber. The pendulum has swung from founder-friendly to investor-friendly deals. Snackers, an interesting concept emerged over the last decade. There was so much venture capital money to invest in startups that founders of these startups actually had leverage in deals like this. Venture capitalists and investors were fighting each other like contestants on the bachelor, fighting to give that bag of money to founders who had a good idea. And they would reward roses to the founders with huge

valuations and a bunch of other technical perks. But the corona con economy, has shifted all that. Think about it. Lyme's alternative to this insulting offer from Uber was bankruptcy. And as a startup, your stock isn't trading on the public market, so your valuation is ultimately determined by simply what else is someone's going to pay for? And the most somebody would pay for Lyme shares was 80% off the last time they sold. So Lyme had to accept that terrible, brutal price because the alternative was no more line. Jack, can you whip up the takeaways for us today? Wayfair's business is online. Yep. It can furnish your home. And it's low cost. Check, check, check. That's the formula for a 600% stock price boost in this

coronavirus. Peacock has access to the holy grail of streaming video. Great named live sports, live events and live news from NBC. All that now in the same division. For our third and final story, Lyme is so desperate, it accepted a terrible deal from Uber. It had no founder-friendly alternative, so it sold its stock for 79% off in the private markets. Seventy-nine percent Snackers, time for the snack fact today. This one kind of walked in. It's from a certain snacker named Molly Martel, formerly known as Molly D. A.K.A. the artist formerly known as originally from Boston. She is technically New Yorker now, but she's living in San Francisco with me. Snackers, I repeat, her last name is Martel. Hint, hint, and she's a quote unquote great gal, according to one host of this

pod. Actually, both hosts of this pod. We're talking about my wife, Molly, who, Jack and I were freshman year roommates, we also met Molly that freshman year. Lived down the hall from Molly. Now, here's Molly's snack fact. Great gal. Job satisfaction increases with each additional hour that people are allowed to work from home. However, Molly points out that according to research, that stopped increasing beyond 15 hours of working remotely. All right, so basically two days is perfect. Three days, a little too much. Can I say it again? The three day weekend. Yes, it should be permanent. Snackers, we've been saying this for years. Go with three-day. By the way, a huge happy birthday to Molly. Now, before we send off, yesterday we mentioned in our Quibi story, the word

turntable about seven times. We should have said turnstile. That's what the feature is actually called. We meant to say that seven times. Also a good birthday for Sarah from our favorite town, Scottsdale, Arizona. Snackers, that was great. Ask your buddies, H-Y-H-Y-S-D. Have you had your snacks daily? This is Jack. I own stock of Amazon. The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial LLC and does not reflect the views of Robin Hood Markets, Inc, or any of its subsidiaries or affiliates. The podcast is for informational purposes only and is not intended to serve as a recommendation to buy or sell any security and is not an offer or sale of a security.

The podcast is also not a research report and is not intended to serve as the basis of any investment decision. Robin Hood Financial LLC, member FINRA, SIPC.