The Best One Yet - Amazon’s record profit streak ends, Hershey’s “peanut butter” strategy, and the secret car meeting in California

Episode Date: July 26, 2019

Snackers, we love you. And we would love to learn more about you — fill out this 2-minute survey to share more about yourself and thoughts on the pod (plus, you could win a $100 Amazon gift card): http://listenerq.com/snacks/In today's episode, for the past 4 quarters, Amazon set record profits. But not this time — we noticed it has 42 highlights in its report, so we picked highlights of those highlights. Hershey stock rose 2%, but its new strategy is simply repackaging Reese’s. And major car companies got together to chat emissions standards with California in a secret meeting that could affect the entire industry.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 Friday, July 26. This is the best one yet before the weekend. This is the best snacks daily we've ever put together. Market's dipped a tag. It just a little bit wasn't the best one for this. But it was another huge day for earnings report. It was ridiculous amount of earnings. We're still telling these things up. Jack, what do we got? We got three on deck for you. First, are they? Amazon, it's four quarter streak of record profits just ended. Now, we jumped into the earnings report snacks now. Get this. They had 42 highlights. We got a problem. They really brought into question the definition of the word highlight. Bullets need a whole new like situation. Second story is Hershey's based out of Hershey's Pennsylvania. The stock jumped 2% we jumped into the earnings and found one theme. It's really really trying to squeeze innovations out of a single brand. This third story is really freaky. It's kind of wild. Four car companies and the state of California got together for a high-stake secret meeting teamed up. We don't know where, how it happened to go over regulations, totally just ignoring Washington, D.C. Now those, those

companies are competitors, but they're playing together on this one. Now, Snackers, before we jump into that, we were thinking about something the other day. Well, you know that scene in Zoolander when he says, Who am I? I know that scene really well. This is not like that. Not at all. We actually want to know about you. We're dying to know about you.

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We spoke to the lawyers and we got to get something legal out the way. The snacks are about to hear rain food. It's air candy. They don't reflect the views of the Robin Hood family. It's all informational just so. You know, we're not recommending any securities. Nope. It's not a research report or investment advice.

Not an offer or sale of a security. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, we're going big. Amazon streak of record profits is over. The stock fell 2% because for four straight quarters,

Amazon was setting record profits. Best ever before. It was quite a streak going on there. But this fifth quarter, not so much. Four quarters in a full year. Profits rose. I mean, look, things are going well at Amazon, but they didn't rise to a record because of two big reasons. Now, shipping costs were higher, 36% higher. We just talked about this yesterday when we covered UPS. You got it. They're together. It's like a mixed story. It's because they're switching from two-day free prime shipping to one-day free time. Shocker, that one day of free prime shipping is a little more expensive. And the second reason is that AWS, it's profit puppy. Very true. The growth and revenues slowed down. So that's what's happening on the financial side. But then we noticed something when we jumped into the earnings report, snack style.

We noticed that Amazon is basically 20 companies within one company. And apparently when you're 20 companies, you decide you need to have 42 highlights to show off. I mean, think about it. They have like Amazon Prime Video. They have Amazon e-commerce. They have Amazon Web Services. Just use it. It's an adjective with everything. Forty-two highlights, though, is absurd. We had to count it. It was bullet points. It was not fun. Someone had to do it. Now, it isn't the kind of thing most companies do. They usually have, like, a few bullet points.

But Amazon does things its own way. So we're going to show you what those, you know, some of those 42 highlights are because you probably didn't even know they were working on. I actually really like this first highlight. Hit me with it. It is testing unpacked delivery in India. So if you buy, like, you know, a beard trimmer, it just shows up at your door in the beard trimmer box, not a box within a box.

Yeah, that box within a box. It's confusing. The goal is eliminate boxes because boxes contribute to, you know, unsustainability. It's like a rush. and nesting doll situation in most Amazon packaging places. And the second one we noticed was it hosted an artificial intelligence conference called RE Mars. Now, since it hosted an artificial intelligence conference with a weird name, it's getting ready for the future when its workers get displaced by robots. So it announced spending $700 million to retrain 100,000 workers who are

probably going to get pushed aside by artificial intelligence. Amazon's literally come out with like three different types of courses to retrain people. Now, another big highlight we noticed is, Amazon's big initiative in fashion. They're doing a custom Levi's jeans designed by Sterling Shepard, who is an NFL receiver on the New York Giants. And then supermodel Chanel Mine. That's pretty cool, though. Levi's jeans you can only get on Amazon.

Plus, they got that Lady Gaga partnership they just announced. That's a big deal. So that's what they got going. Finally, Alexa devices, hey Alexa, 60,000 home-like devices, like appliances, like appliances, electronics, are Alexa compatible? To double check this, we could just say right now. Hey, Alexa, how many devices are you compatible with? Hopefully the Alexa in your backro audience hates us now.

Tells you what's happening. Now, because there were 42 highlights, that's a little too many. We're going to show you the highlights. That shouldn't have been highlights. It's absurd. Hey, Amazon, you need to edit these out of your highlights. No one's mom sticking these up on a fridge. So first of all, it's bragging that it donated $8 million to combat homelessness in its two

headquarters regions, Seattle and Virginia. Google just did how much? A billion. A billion dollars. So you can brag about a billion if you're Google. Amazon is worth more than Google. did a tiny, tiny fraction, not bragworth. The other thing that Amazon bragged about,

it won the cloud computing business of NASCAR. A NASCAR. Act like you've been there, Amazon. Come on, NASCAR. NASCAR, anyone wins NASCAR. How much cloud computing do they have? We'll probably doing a podcast of NASCAR. So, Jack, what's the takeaway for our buddies at Amazon?

Anything Amazon does is guided by its four principles. At the very bottom of the earnings report. In small, actually, it's the same size print. Amazon says about Amazon, and then all it says, we are guided by four principles. Now, the four principles. First is customer obsession. Don't even bother about your competitors. Just focus on the customer. The second is passion for invention. The third is a commitment to operational excellence.

And the fourth is long-term thinking. Now, don't be confused with Amazon's 14 leadership principles, which are different. And if you're applying for a job at Amazon, make sure you know those principles. But the people in Amazon are really into memos because they've also got a day one mentality. Jeff Bezos in his famous letter to shareholders in 1997 talked about the day one mentality. Right. It means always be hungry and never get complacent. Because according to Jeff Bezos, on day two, if you're not having a day one mentality, you're followed by, quote, unquote, excruciating painful decline.

And then, like, eventual bankruptcy. So Amazon, it ended its streak of record profits, despite its day one mentality of always being hungry. This is Jack, and I own stock of Amazon. For our second story, this one's wild. Hershey's the company. It stock just rose 2% because it's become a master of repurposed. Yeah. All of it.

repackaging. Well, when you're limited to chocolate, that's your business. Hershey's chocolate. Repurposing and repackaging is all you can do. That's all you can do. That's innovation. By the way, fun fact, you can maybe share at a dinner party. It's not Hershey's. It's actually the Hershey's company. Drop the S. No possessive. Drop the S. Again, a minor fact. It gets you a lot of attention. We jumped into the earnings report and we noticed one thing about Hershey's. It has incredibly seasonal sales. It is wildly seasonal. Q1 the first quarter. It's pretty low sales. You get a minor bump on Super Bowl. A little bit. People like the Spursle but.

Q2. There's a little more happening at Q2. Peeps. You got Easter. Beaps. You got Cadbury cream eggs. People are in a mood for chocolate. And then in Q3, you're not doing anything.

No, Q3, though, is all about prepping. Q3 is right now, right? July and August. Q3 is all about prepping for Q4. Q4 is the holiday quarter. Halloween. It's like the elves are going crazy. You got the stuff with Thanksgiving.

You got Christmas. Everyone's trying to get a little bigger. That's what we're talking at Q4 is big. The only company with a more wildly seasonal business model is Party City. Very true. Which has a very similar schedule. Now, when it came to the numbers, Hershey's did fine, 1.8 billion in quarterly revenues, that beat expectations. Congratulations. We also saw something scary. The CEO said that they're currently raising candy prices. And we should all expect an adjustment period at stores. So yes, it's going to be a little more

expensive for your indulgence. That's corporate speak for higher prices. Now, there was one highlight we noticed that we decided to make the story all about. And that's that growth was led by, quote, unquote, the powerful Reesies franchise. I can attest to this. The Reesies franchise is powerful. We're personally responsible for a fraction. Peanut butter cups, Reesies pieces, and it's what I do. These are all wins.

So, when it comes to Reesis', apparently Rees' has been innovating in a couple key ways recently. The innovations are pretty hilarious. These are actually two brand new Reesies products that just came out. The first one is Recy's Thins. That is just a Rees Peanut Butter Cup that's a little thinner. It's 40% small. It's 40% small.

The thing we loved about this is, if you don't want to eat the Thins because it's too thin. They suggest you put two together. And then you just have the old original peanut butter, so that's the first one. I feel like thinner would be crispier. Is it crispier? I feel like it would be better on the palette. And then you have Resey's lovers, which gives you a 75-25 option. Right. So it could go either way.

Let's say you're more of a peanut butter person. You can get one version that's 75% peanut butter in the cup, 25% chocolate. Or you get the chocket lovers, which is 75% chocolate, 25% peanut butter. Solving that problem we all have, which is when you eat your Reese's and you have to have a bowl of peanut butter on the And then they have this wild variety pack. This thing is insane.

You can buy a 24 piece variety pack, which is full of Recy's goodness. And they have all new interventions I've never even seen. Within it. This is kind of like that movie Inception, I think. It's like a dream within a dream within the Reesis. You're wondering why I just merged the words invention and innovation. And there's a reason. Here's why.

They have Recy's peanut butter cups that are jam packed, like inserted with Recy's pieces inside them. Is this marketing team just throwing Rees on the board? saying, how can we divvy this up? Just give me a knife, some paper, and a piece of crayon. So, Jack, what's the takeaway for our buddies at Hershey's? Repurposing and repackaging like Hershey's is doing. It'll only get you so far. That's why Hershey's decided to buy Pirates Booty, the like Smart Puffs kind of thing that my mom loves in the fall. And the CEO has informed investors that acquisitions will play a major role in the future. In the meantime, they're going to keep whipping up like Reese's version.

We don't know what's happening. What do you think? I'm liking the idea of a... chocolate spoon with a little dish of peanut butter. I think we could get some almond butter in there, some cashew butter. There are a lot of butters these days they could go with. I'm convinced. For our third and final story, get a whip the Reese's right out of your mouth. I am so excited about this one. The Ford, VW and BMW car brands, oh, plus Honda, they just signed a car deal with California. On fuel efficiency. That's actually a really big deal. Yeah. Let's go back to Ecom 101. Please. Cars pollute. Pollution causes damage to people. I'm following you.

So when that happens, governments respond with either regulations or taxes. Now, for car tailpipe emissions, fuel efficiency minimums are critical. Yes. Every, like the United States has it, Europe has it. Every car. What's your minimum fuel economy? MPG. MPG.

Yeah, for some reason. City highway. City highway. City highway. Still confused about the EPA. I don't know what suburbs do, but that's a whole different policy. So here's the thing. President Trump is undoing and reducing planned increases on U.S. fuel economy standards.

Basically because he denies global warming. California, though, disagrees. California believes strongly in global warming and is taking a leadership role in reducing fuel efficiency emissions. Basically, the state has a waiver in which they're allowed to set different standards on this. We don't know how California got a waiver,

but it was allowed to, like, not do what the federal government has. Now, California fairly influential. One of the biggest economies in the world if we're its own country. Yes. Now, it could be like number six, right? 13, I believe so.

13 states are uniting with California and saying, hey, we could use higher fuel efficiency standards. Let's make this happen. Whatever stricter rules you do, we're going to follow you, California. That's what 13 states are saying. So what we're seeing here is a division where there could end up being a split in the market, and this is a big deal.

Yeah, the split is important because there's going to be one looser standard for 36 states led by President Trump. That looser standard is 37 miles per gallon by 2025. But then the other side, you got a stricter standard for 14 states that are hanging out with California. and throw in some t-shirts. And that standard is 54 miles per gallon by 2025. So you got 54, but with 14 states, and 37 miles per gallon with the other 36. So if you're a car company,

you don't look at this and say, oh, cute, here's another thing to argue about. You look at this and you think, I'm going to have to have two sets of factories. I'm going to have to hire two more, an additional person to, like, make these cars because I have to have two different versions. That's going to be wildly expensive

and very bad for profit. So the car companies that get together like, hey, this isn't going to work. Let's set up a secret meeting with our buddies over in California, get the Tivas, get the flip-flops, let's get the shades. Burk and Stocks too.

Heading to Sacramento. Yes, and the governor of California went public yesterday with this deal with the four companies and more car companies are expected to side with California. So basically what they've discussed is this. The car companies are saying,

California, look, you want 54 miles for a gallon as a minimum. President Trump wants 37 miles per gallon as a minimum. Now, I hear you on the 54. Can you come down to 50s? Can you meet me at 51? If you meet me at 51, we will do it for the whole country, not just for those 14 states. What do I have to do to get you in this vehicle, California? So, Jack, what's the takeaway for our buddies who are all these car companies hanging out of California? This is why business loves trade deals. That two lineups scenario where we'd have two different types of cars from companies to deal with all these different emissions standards, that's a nightmare scenario.

And that is what currently exists with the United States and Europe. You need a different car for the U.S. and a different car for Europe. But with trade deals between countries, these standards end up becoming unified with a single standard. Great example is the TPP, the Trans-Pacific Partnership. This was a trade deal that would have gone down between the United States and a bunch of Asian countries, including Japan. And if it had gone down, car companies could sell one car to U.S. and the same car to Japan, and that would have been fine. But the deal was broken up, and so we don't have the same standards. And so now you have two lineups. Jack, can you whip up the takeaways for us before the weekend?

Amazon stock dipped a few percentage points because, higher shipping costs and competition for AWS. The real takeaway here is that some intern named Derek got like way too bullet point happy. Second story, Hershey's is aggressively repackaging Reese's to boost sales. Nutella. Your move, waiting on the hazelnut options. True. That's a great idea.

I love it. Third and final story, the automotive industry is reaching a deal with the state of California on minimum fuel efficiency. And the implications could be big if you're commuting right now, unless you're on the subway, in which case, say hi to the 456 for Jack and I. And on that case, good for you. Yeah. Snack fact of the day, this one's kind of wild, very pertinent to right now.

There's one thing that Europeans are united about. It is too damn hot. It's extremely hot in Europe right now. And it turns out Europeans don't have air conditioners like Americans. Five percent of Europeans have air conditioners compared to 90 percent of Americans who do. It's a whopping difference. Yeah. Europeans, good luck finding a way to stay cool, stay in the shade.

So, Snackers, a couple other key stories you got to listen to today. Google. It's parent company Alphabet announced earnings yesterday. They were awesome. And it's buying back $25 billion of its own stock. But it's basically an ad company focused on ad sales. Pretty much an ad company. Snackers, love to being with you this week. Everyone wants to know how can you grow the snacks podcast. A great way is to drop down, give us five stars ratings. That's how more people can discover us. And if you want to go the extra mile, drop a tweet or drop an Instagram post about how much you love snacks. Or go two miles. You'll be exhausted, but have a great weekend. We'll talk to you Monday. Can't wait. 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, or any of its subsidiaries or affiliates. The podcast is for informational purposes only, 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.