The Best One Yet - Apple & Qualcomm sign peace treaty, Stitch Fix hit by Walmart, and Ro becomes a semi-corn with new menopausal brand

Episode Date: April 17, 2019

Qualcomm shares surged after settling a major court battle with Apple that’ll give it plenty of iPhone $$$. Walmart’s launching a kids clothing subscription box that’s straight out of Stitch Fix’s playbook. And men’s erectile dysfunction startup Ro hit a $500M valuation as it launches a women’s menopausal medicine brand.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. April 17th. And this is the best one yet. Best Snacks Daily we've ever created. Markets edged up.

Very nice. The NASDAQ hit a clean 8,000 points for the first time in six months. Now, you're wondering why that's significant? It's a round number. Round numbers are good. We love round number. Now, we got three stories to cover. First, Apple and Qualcomm have announced an end of legal hostilities.

Peace be with you. This is like a law and order episode. had its best day possibly ever. It was insane. Second story is Walmart. It's launching a kids' subscription box, fashion style. Great news for babies, terrible news for stitch fix. Great news for lazy parents, too, who don't want to shop for that kid.

Wonderful, just a few clips. Third and final story is Roe. This company used to be called Roman. It's now an online pharmacy. It hit a $500 million valuation. We're calling that a... What do you think? A semicorn?

A semicorn. Half the unicorn. By the way, they are now targeting menopausal women. Huge change. But before you... into that, some disturbing news about the airline industry. This is terrible for your back. It is fantastic for your knees, though.

Delta has announced, in coach class, it is reducing the amount that your seat reclines from four inches to two inches. In half. And if you think you can escape and go to like first class, no, no safety there. Five and a half inches to three and a half inches. This is brutal. Now, they're saying this is actually a good thing. What was this man?

Yeah. If you think Delta is a monster for doing this, I agree with you. But the company claims that they're helping multitask. Delta thinks they're making you more productive and arguably helping the U.S. economy. And in fairness, they're not adding any new rows of seats to just squeeze us in. True. So your knees, best trip of their lives potential. So technically, it's a net break-even, but I want to lean back, man. I want to sleep. Some people just want to lean, Jack.

Now, before we get into the rest of our stories, listen to these keywords. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about to hear rain food. It's air candy. They don't reflect the views. of the robberhood family. It's all informational just so. We're not recommending any securities. Nope. 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, Bump-Bong, Apple and Qualcomm had a legal fight going on, and it is now suddenly over. It's over.

There has been a legal settlement announced yesterday. A peace treaty. Legal hostilities are over. Can we call this the Treaty of California? The Treaty of California has been signed by Apple and Qualcomm. Let's roll with that. Now, if you're wondering, yes, it's about a patent dispute, which may not be the most exciting thing. But the players involved and what they were talking about is a big deal.

A lot of money was on the line. So basically, the technology that runs iPhones, Qualcomm says that's our technology. and Apple is not paying us for it. So they've been suing each other for two years. The trial started technically yesterday. Both CEOs were like ready to testify, got, you know, set up, haircuts, the whole thing. We did not get the OJ Simpson style guilty or not guilty verdict that we're all hoping for. No, what we got was like, quote unquote, financial terms not disclosed.

But we did hear about some of the terms and that shot Qualcomm's share price up 22% yesterday. Apple shares were a little flat, but that Qualcomm surge was insane. Unprecedented. Now, here is the key to this story. It's that Apple entered this lawsuit, just wanting to end the whole thing. Apple really needed to end this thing. Qualcomm has shown that it is willing to take a fight to Apple. And let us say you, if there is one company you want to pick a fight with in this situation, it was Apple. No company in the world, probably, has deeper pockets than Apple. They made $60 billion of profits last year.

So here's what we know. It's that what Qualcomm is, getting to kick things off is six years of business with Apple. Not too shatter. Apple said to Qualcomm, look, if you drop these lawsuits, I'll give you iPhone business for six years, starting this month. Now, we whipped out the Ti-83 calculators, did some calculations. Jack, get the avocas ready for us. And it turns out this could, by our calculations, boost Qualcomm's revenue by about $3 billion a year. Yeah. iPhone is a pretty good contract to get, and they're going to be providing modems for six years. That is a 15% raise from the amount that Qualcomm was getting per year right now. Yeah.

It could boost sales by 15%. Also, there's a one-time payment we don't know about yet, but Apple's paying something. A little, I'm sorry, check as well. So, Jack, what's the takeaway for our buddies just making up over at Qualcomm and Apple? Qualcomm is truly the only company right now that has leverage on Apple. Get this. iPhone sales are literally getting banned in some countries because of this issue with Apple. using Qualcomm's tech. Judges have banned exports of iPhone 7 to China, the U.S., and Germany so far,

and that could go to other phones too. And here is the other kicker. Qualcomm, you've heard about 5G, Qualcomm's chips are the top 5G tips on the market right now. Qualcomm is the master of 5G, and they're going to be powering the smartphones that work for 5G first. Intel, Apple's other provider, they're not going to be ready until 2020. And then Huawei, the Chinese firm, its chips are banned It's basically blacklisted because it's connected to the Chinese government. So when you hear about this lawsuit, you just got a picture of this. Apple has swallowed its pride and it's finally shaking hands with its biggest enemy, and that paid a lot of money to its biggest enemy. Did what it had to do so that it could get you a 5G iPhone fast.

For a second story, Jack Thrawn a onesie because Walmart is getting into kids subscription clothing boxes. You got me all wrong. Did I? 12-year-old Jack Kramer in Vermont was wearing a gap sweatsher and those snap off Adidas. pants. Coolest clothes ever. I know the sweats you're talking about. It's like size 58 font in GAP. Now, here's what Walmart's doing. It's partnering up with a company called KidBox on Creative Name, similar to the company you know named Stitch Fix. And Stitch Fix uses human stylists and computer algorithms who tag team up and design a box of clothing for you so you don't have to shop

yourself. Exactly. It's personalized styling. Now, this new Walmart product, they're pitching really hard. It's a really good deal, actually. For $48, you get a box full of $4,000. to five clothing items, and they say it's worth double $48. So you effectively get 50% off with this box. And then we looked into this and we're like, okay, the brands they're selling, it turns out the clothing you get from seven for all mankind, Joe's jeans, bomb his socks, like my wife wears those jeans. Yeah, and if your kid doesn't love Gucci, you can also get limited to Disney or like

the children's place, classic children brands as well. And now, classic snack style. Jack and I went in to test out this new service. We created a fake child named Tommy for us. And Tommy went in and went through the kids quiz. Snacks, son number one. We had to first label Tommy, one of like five different kid personas. Now, by the way, Walmart's using this information to design the wardrobe for our child.

Right. So it's like a buzzfeed listicle. Exactly. Quiz. But with a human. And at the end, you get a box of clothes. And they want to figure out your style. You have to label the kid.

You have like, City Cool is one look. Oh, my God. Another is sporty athletic. He got like a baseball bat or a lacrosse. True. My favorite modern casual, this little 12-year-old has Birkenstock shoes on. He did. The City Cool Kid kind of intimidated. And then you tell them the colors that you just don't like and you don't want. Kids are picky, you know, yellow. They won't wear yellow. So you can choose that. Finally, they want to make you as a parent feel special. So they ask, what is your child's like special

unique thing? Now, this was wild. Literally, they have a bunch of boxes you can pick from and you can say, all right, what makes your child special? I don't know. They're silly. One of the boxes says they're a bookworm. One of them says shy. Tommy was a bookworm. My gut is that they ignore those and they just want to make you feel like it's unique. But they're using that data to build out the unique wardrobe. So, pause for a second.

There is a big opportunity in kids clothing right now. This is why Walmart is going into it hard. First is a couple of big bankruptcies. Jimbrey and Toys R Us are out and all their clothes and all their stores are gone. Now, with this opportunity in kids clothing, Target jumped in last year, launched a kids line and it sold $2 billion worth a tiny stock. stuff last year. So there's a big opportunity. Companies are chasing it. So Jack, what's the takeaway

for our buddies not over at Walmart, maybe over at Stitch Fix? Subscription boxes alone are not a competitive advantage. Exactly. When we read this story from Walmart, the first thing we thought of was Stitch Fix because they pioneered the exact same thing. Humans Plus Algorithms designing your clothes every month. Walmart entering your business, this feels like a blow to Stitch Fix. And guess what? Just earlier this week, turns out Amazon's pioneering something. thing called Prime Stylist, really similar to, and Stitch Fix shares found. The reason Stitch Fix is vulnerable is because anybody can come into this business. It's easy to make a box and put some clothing in it.

So like on one side from our previous story, Qualcomm, they got to build like a whole factory. And that's why it's hard for them to get competitors. It's expensive to compete with Qualcomm. And on the other side, you got Stitch Fix. Make a box, put some clothes in it. That's a Stitch Fix business. Lots of competition. For our third and final story, Men's Health Startup Road just became a,

a semicorn. 500 million, halfway to a unicorn. Almost there. Looking good, and it's finally focusing on women as well as men. Now,

this company is just like another you may have heard of hymns, which is full unicorn status. Yes. Now, they both capitalized on a trend with two key elements. All right. First is a law that legalized

telemedicine. This means basically getting a prescription for medicine. Yeah, without physically seeing a union. You could be texting or you could be on the phone. It doesn't matter.

And the other was Viagra's patent ending. and opening up the floodgates to competitors for erectile dysfunction drugs. So both Roe and him started out with like erectile dysfunction drugs and hair loss drugs, sensitive men's medicines. Right. In 2017, Roe came, it was actually called Roman at the time. Exactly.

Came out with its first product, $15 online consultation and right away, boom, Viagra subscription. At your door. And then last year, they kind of kicked things up a notch. They launched Zero, which was an $129 kit to help you quit smoking with like pharmaceutical, prescription anti-smoking stuff. Right. And sorry, Roman wasn't a Viagra description. It was just the same thing called something else. Just generic, not a little blue pill. So it changed its name, though, to Roe, no longer Roman, which is somehow less masculine. Yeah, it means it's a little more general, I guess. Right. Perfect timing, because now as Roe, they aren't just focusing on guys, a brand new initiative

that they're using all this money for. Rory. This is the third personalized health brand. So at the top, you got Roe, that's the parent company. You got Roman focused on. men, you got Rory focused on women. And Rory is fascinating because it's unveiled just a couple weeks ago and it's targeting menopausal women. We haven't confirmed this, but we assume Rory is named after Rory Gilmore, the main character in Gilmore, which we would love for Roman to let us know if that's true. So Rory makes six products and these are all products for, you know, subjects that don't get much airtime in conversation. Right, and should get more airtime. We're talking about hot flashes, vaginal cream, lubricants, and even eyelash extensions. All right. It's focusing on

men and palsy women, there's a market there, but everyone else has been kind of afraid to go there. Not Roe. In fact, they're using this money to grow Rory big. It actually wants to become an online pharmacy, big ambitions. I like that. They also described as like a cloud pharmacy, which is very technical, but kind of sounds cool, too. Same as online, just better word. Exactly. So Jack, what's the takeaway for our buddies over at Roe, Roman, and now Roe? Roe started aggressively niche. I'm talking really niche. But now it's aggressing to be everything. Now, Amazon started the same way. It was deeply focused in books, and now it covers everything. Another successor in this category, but nobos. Put them on. Started with chinos,

Chinos only, and now it has guys everything. Roe did the same thing by focusing niche on erectile issues, and now it's covering a lot of stuff for men and women. It's a great game plan. You start by building loyalty with one super committed set of customers, and then with this one product, you prove your business model. It's an easy PR win and, companies like snacks daily love to cover it. Jack, can you whip up the takeaways for us? I'm on it. First, Qualcomm was the only company that had leverage on Apple. And call Detective Olivia Benson because they're walking away from the courtroom with

$3 billion, basically. $3 billion-ish per year in new orders from Apple. All right, number two. Second story, subscription boxes alone are not a competitive advantage. Honestly, the worst part of those snap-off pants you mentioned was re-snapping them. One and done. You don't snap them back together. I hated that.

Third and final story. aggressively niche and then go aggressively broad. And congrats to Roe for becoming a semicorn. Yeah, get them a semi pint of beer. There we go. Now, snack fact of the day, obviously we were thinking about Notre Dame and we were looking at some interesting facts. In particular, stood out to us.

The hunchback of Notre Dame sales surged yesterday in France. Quasimoto, one of my favorite Disney characters, but we're so excited to hear from Emmanuel Macron yesterday that they're going to rebuild the cathedral Notre Dame in five years. Hopefully it's better than ever. Unreal, and the book is number one on Amazon. A couple other big stories happened yesterday. You need to check out the Snacks Daily Newsletter for. First, Netflix earnings, the stock didn't pop, although they beat on subscriber numbers.

The stock went way down, then it went way up, and then the conference call happened. Classic Netflix. And our second story is going to be about health insurance companies. They tanked badly on some words about Medicare for all that are pretty important. We loved having you on the podcast with us. Can't wait. Catch you tomorrow. Let's do it.

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.