The Best One Yet - “Avengers” powers AMC movie theater stock, Chuck E. Cheese’s plans to go public again, and GE falls because of “the GE whisperer”

Episode Date: April 9, 2019

Don’t call it a comeback (but it is a comeback). Your childhood Chuck E. Cheese’s has been revamped by private equity and wants to go public again. AMC jumped 9% on word the latest “Avengers” could have the biggest movie opening ever — And this summer is packed with blockbusters. And General Electric shares fell after “the GE whisperer” turned on the conglomerate.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 Tuesday. April 9th. Happy Unicorn Day. And this is, what did you think? I got a strong feeling this is the best one yet.

We love this one. Markets rose yesterday for the eighth straight day. Mark your calendars. We counted it up. If the S&P 500 rises again today, it'll be nine straight. You know what that means. A hat trick of hat tricks. It is a hat trick of hatch.

We have not seen this in a long time. Now, we got three great stories today to cover for you. The first is AMC. The global movie theater chain got a nine. percent share price jump. Thanks to one movie we're all obsessed with. Jack and I, you know, pounded a thousand calories worth of popcorn and jumped right into this. It's a great story.

This second story is great. It's a kindergarten throwback. Chuckie Cheeses. Finally. The parent company is going public again. Yes, we've got one theme we want to talk about. Parents. The third and final story is General Electric.

Shares fell 5% because of one investment banker. You know who you are. You are the GE Whisper. But before you get into those stories, we have to talk about. a modern fast food phenomenon. This is pretty fascinating. You may have noticed this mid-Egg McMuffalo. Everybody, fast food orders are taking longer to get through the drive-thru. So you're going to wait at the drive-thru window about 40 seconds more than just 15 years ago. Now, this is incredibly ironic the reason of why fast food is taking a little bit longer. It's because your fast food is fresher. It's actually

better for you. This is a very positive development. Takes more time at the drive-thru, takes less years off your life. Yeah. This is an event. investment of time you want because, you know, that nuclear ready burger that you had 15 years ago, with the side of preservatives? With extra MSG? Yeah. Not worth the 40 seconds you are saving. Not at all.

Now, before you get into our stories, listen to these important ones. We spoke to the lawyers. It's 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. 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 business. security. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, AMC shares the movie chain.

They jumped 9% yesterday. Yeah, thanks to the new Avengers flick. AMC is a huge Avengers fan. What are we on like installment 489? I think it's like 21. I know. Jack and I are Batman, like OG fans. I remember 08 like it was yesterday when a Joker.

We like how bad. man doesn't kill, he just, like, you know, I have one rule. An investment banking analyst upgraded shares yesterday, and shares jumped by 9%. And the investment banking analyst mentioned one specific thing. It wasn't Jack over the weekend being at a movie theater and watching on a small phone. No, and can I tell you why I went to the movie theater this weekend? Yes. To escape notifications buzzing on my phone. No, Jack traded the small phone screen for the much larger screen in order to distract me. Movie theaters are the one place where phones are socially unacceptable, and I like that. Now, this analyst said that Avengers Endgame, which

comes out on April 26th, was so critical because it has destroyed pre-sales records when it comes to tickets. This weekend, you could book tickets to Avengers, and it sold three times as many tickets as the previous Avengers, Infinity Wars, in six hours. And that was like installment 342. This was a bananas pre-sale situation for Avengers, so much so that an investment bank noticed. Now, AMC, the movie theater chain, its stock is up 16% this year. And when we jumped into the story, Jack and I found really three key growth drivers. Yeah, for what's up. We like lists that are small enough. You can count them on one hand, on half a hand. And have two extra backup fingers. First was international. China is expected to surpass the United States as the biggest

movie market in just like the next couple of years. And then get this, Saudi Arabia is opening its movie theaters. For the first time, which is big. To that society. Meanwhile, While AMC has been like acquiring movie chains throughout the world. Yes. Second thing is blockbusters. We now have this Trilogies of Trilogies. It's like our hat tricks, hat trick. I like this theme to that.

Situation. And those movies are ATM machines for the movie theaters. Let me hit you with what's coming in this summer. I'm not sure of everyone seeing these trailers, but first, ready? Hit me. Lion King. Wow. Another version of it.

We have Toy Story 4 coming out this summer. We have like probably a dozen more Avengers movies. We have a lot. Aladdin, another remake. So the common theme of these four movies, none of them are original, but movie theaters are just loving these ATM machines. People like them. Now, the third and kind of key growth driver here, movie theaters are adapting to changing ways. So movie pass shook up the movie industry last year, even though it's almost bankrupt. It's almost bankrupt, but AMC is taking its idea and running with it. So it's actually maturing and adapting.

Now, AMC's equivalent of movie pass is called Stubbs A-list, and it has not. 19 million users now, which is a big jump from last year. And Regal Cinemas, AMC's big competitor, doesn't have a movie pass kind of thing, and AMC has grown market share. So, Jack, what's the takeaway for our buddies over at AMC? If International wasn't a thing, movie theaters would be in trouble. I can think of like a dozen reasons off the top of my two hands. Why don't you give me three? Why I wouldn't go to movies right now. Expensive, unhealthy, brutal, and I can never find the bathroom. So true. Box office sales in the U.S. in Canada for movies have grown only 12% in the past 10 years. That's practically like no growth

over that span. Now here's the key here is that going to the movies and enjoying them typically takes two things that you have in developed countries. You know, income and time. And in developed economies, there isn't as much of that. But Chinese consumers finally have access to these two things and are seeing movies for the first time. And that's happening in other countries. No growth in the U.S. box office, but they're getting it abroad. And that's, big for AMC. Nick, this remake situation is getting out of control. Do you think Disney is making too many remakes?

Wall Street doesn't. I'd love to know what the Snackers out there think. Yeah, Snackers hit us up at our Twitter handle, Robin Hood Snacks. For our second story, I love this one, Jack. Chuckie Cheeses is planning to go public. Again. Again, double dipping over here. Now, by the way, I'm more of a DZ Discovery Zone kind of guy.

I got invited to one DZ party, but went to a bunch of Chuckie Cheeses. The theme here is if you got to, the Chuck E.Z invite, you knew you were getting three things. Pizza, soda, and some kind of a stamp on your wrist to let you into the ball pit. True. The ball pits were key, though. I used to lay down in the ball pits and just let everyone play around me until I sank to the bottom of the ballpick. These days, I wouldn't touch that unless I had a shower of Purorelle afterwards. So the background for Chuckie Cheese is actually quite complicated. It's incredible. Five years ago, a private equity firm came in and basically bought the chain for a little under a billion dollars. It bought all of the

restaurants, all of the ballpits, lactose-tolerant, for $1 billion. Since then, it's fixed up the company, it's done a bunch of financial things, and now it's ready to go public again. True. And it hopes to sell it for $1.4 billion, so make a nice little return there. They've even updated the mouse. He now, like, wears vans and that mouse. That mouse was so scary. It's freaking me out. More rat than mouse. More rat and questionable teeth situation. Very poor costume job. This is effectively going to be an IPO for Chuck E Cheeses, but not technically. We're not going to bore you with the detail. So snack style, we jumped into the strategy here, and it turns out that Chucky Cheese has made one big strategy shift over the last couple years. Parents are the customers, not kids.

Chuckie Cheese made a big mistake in the past. It thought that kids were the customers. And here's the thing about a three to eight-year-old child. Chuckie Cheese is amazing. No matter what. You don't need to change Chucky. You're great. So Chucky Cheese got complacent.

They got comfortable, and they didn't innovate. And parents noticed. And parents are the ones who were paying for the whole thing. So now they have a menu that is just much more parent-friendly. It's not just pizza. No, they've got... They've got adult beverages. They've got an endless salad bar.

Not just a salad bar. They went endless with this. They have a veggie platter. How much kale can you handle while the kids in the ballpen? And they have parent-friendly game. So parents can actually go there, and it's not just babysitting. They can have fun. They're even being, like, super strategic with what is on the menu week to week.

This is like a, you know, a fancy restaurant over here. Yeah. This week, for example, unicorn churros on the menu. Nice. Because it is National Unicorn Day today, and they're using these churros not just to taste amazing, but to appeal to the growing Hispanic market that they want to connect with. There you go. And kids like sparkling things. Kids love sparkling things and sugar.

It's a wonderful combination. So Jack, what's the takeaway for our buddies over at Chuck E? So fixing the business was only half the battle. Now it's time to scale. And private equity was so important for this because they didn't just fix the business. They created a blueprint for growth to bring Chucky across the world. Nick calls it a blueprint. I call it a playbook.

And they're going to execute that playbook on all 515 U.S. Chucky Cheeses. Now, the changes they've already made, they've seen sales grow 8% in the last year. Yeah. So they're showing results. And now it's time to scale not just in the U.S. Oh, now. But also abroad. They have their eyes on Mexico, India, and Saudi Arabia.

For our third and final story, the GE Whisper hath spoken. Yes. he hath said that GE shares hath be worse than we all think. Now, this is a story of one man who has a lot of power turned out yesterday. His words caused shares to fall six percent. We're talking and we're going to name him here, Stephen Touss. He works at J.P. Morgan Chase in New York City. He covers a bunch of stocks.

He does research on them and he says GE shares should be less than they are today. And his reason for this is because the turnaround general electric is going through is going to take a lot longer. He says we're being way too optimistic about the progress GE has made. He's like, everybody just chill out. He's like, let's not get ahead of ourselves. Get a drink, go to the bathroom. GE has a lot of work to do. Just get comfortable and wait.

Now, quick history lesson. Okay, for the last 100 years, GE has been a titan of industry and, full disclosure, my grandfather made wind turbines there in Schenectady, New York. Schenectady, New York, great American town. An amazing city. Now, GE was like a business school slash suit factory, awesome. They produced some of the best corporate titans you've ever seen. Meanwhile, while they're pumping out the fancy blazers, they also were making trains,

planes, engines, and everything else. Light bulbs, they were like the Disney or the Amazon, but for like metal, clunky things. But really cool, big things. Yeah, so Tusa, let's go back to May 2016 now, just a couple years ago. He said that GE has some serious problems. He basically said most of its businesses should just be sold. Nobody wanted to hear what Tusa was saying. He was the first person to call.

out GE's problems. And since then, shares are down 68%. So it looks like Tusa was correct. And he was the first to call this out. So now when he's talking, people listen. Now it doesn't mean he's right, but clearly some people are listening based on GE's share price drop yesterday. So Jack, what's the takeaway for our buddies over GE, even though they're no longer in Schenectady? General Electric is so big that it takes a long time to turn it around. Geez, jeez turnaround has had like the blinker on in Florida, like Jerry Seinfeld, you say, it's just been on for hours. It's an eventual right.

It's exactly what it is. It's been turning around for two years already. During that time, it's gone through three different CEOs. It sold off like entire business divisions, not small things here, but like entire business. Yeah, it decided back in like 2015, it was going to move HQ to Boston. It canceled that move. Not happening anymore. It's been trying really hard to turn around, but there's no software.

update to turn around GE. No, there is not. It just takes a lot of time and a lot of memos and meetings. Nick, G's like the Titanic. You know what they say about the Titanic? Takes a lot of time to turn that boat around. Jack, can you whip up the takeaways for us? I got you. AMC. If International wasn't a thing, movie theaters would be in trouble. Other takeaway here is that they are going to run out of Avengers movies eventually. Right. And then Chucky Cheeses is fixing the business, but that was only half the battle.

Now it's time to scale. It also may be time to reconsider like the mouse. And our third and final story, General Electric. It takes big things a while to turn around. Patience. Patience. All right. Time for our snack fact of the day.

This one, you know, we're listening to a podcast right now, but this made us think about radio because we were kind of shocked by this number. 92% of adults in the United States listen to the radio on a regular basis. And like 94% of radio listeners listen to network radio every week. week. That's a lot of megahertz. It's like a, I mean, who are the six percent who aren't listening? I'm wondering now. It's, I don't know, commuters. I mean, they just want to push play in the car. It's an insanely high number. You don't push play with the radio. I take that back. We thought our listeners would want to listen to this one. Now, a couple other great stories happened

yesterday. We cover them in our Snacks Daily newsletter. First is Sony. The Japanese electronic powerhouse has been struggling and investors are pumped that it might change its course. And then second, we got New Age beverage whose shares jumped 40%. They're behind a CBD drink, and they just got hooked up with Walmart for a big deal. Snackers, listen to our pod tomorrow. We will decide whether the hat trick of hat tricks happened. We can't wait. Talk to you tomorrow.

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, 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.