The Best One Yet - “Barstool’s t-shirts follow a simple formula” — Barstool Sports becomes a half-icorn. SAP’s FOMO Marketing. Apple’s iRecord quarter.

Episode Date: January 30, 2020

Apple’s 4 divisions are as big as 4 other super companies. Barstool Sports hits a $450M valuation after an investment from a casino company. And SAP is the most valuable company in Germany, but no one really knows what it does — good thing it just announced earnings, and it’s all about FOMO Marketing.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 Thursday, January 30. This Nick is the best one yet. It's a T-boy. I'm feeling the Snacks love. Big reason why, yesterday, instead of just talking to microphones,

Jack and I got to talk to real human beings. We were live in the UK. It was a really special experience. We met Snackers face-to-face. In real life, actual Snackers. But Jack, three wonderful stories today. Thanks to the Snackers for coming out to meet us. First story, Apple has never been stronger.

So many records, they set a record number of records. We are going to contextualize the hugeness and the profitabilityness of Apple. We're talking a lot of things, particularly AirPods. AirPods are listening well. Our second story, Barstool Sports took a break, worshipping the ground that Tom Brady walks on to become a half a corn. It's now worth $450 million, or that's like six Tom Brady's. It's a half unicorn, and the money came from a casino. I don't know.

I didn't see this coming. No one would have bet on this, I promise you. Our third and final story, I have a trivia question for Nick. Nick, what is the most valuable, publicly traded German company? Jack, I want to buy a vowel and say, what is Volkswagen? It's pronounced Volkswagen. What is Birkenstock? No, that's also incorrect.

Then you always go with the third and final answer, which is Yeagermeister. No, it is not Yeagermeister based in Brounschwegg, Germany, where my roots come from. It's actually SAP. Three letters, no one knows what it actually does. Here's the problem. No one knows what SAP is. So we are going to jump into its earnings reports. and break down for you, Germany's most valuable company.

We discovered what SAP is. But before we jump into all that, Megan and Harry are leaving, Jack and Nick are leaving, and Britain is leaving. Hold on. Today we are leaving the UK and flying back to California. Megan and Harry are leaving like later this year. They're going to British Columbia?

Where are they going? It's TBD, probably Toronto. I think they're like ice skating. And the UK is also leaving. This is the last day that England is in the European Union. It's 11 p.m. UK time Friday night. They're officially exiting the European Union. This is when Brexit happens.

We were in Britain on the last day before Brexit. They actually thought about ringing the bells on Big Ben to celebrate the occasion. But this is wild. Big Ben's under construction. So it would cost like 600,000 quid per like dong of the ban. So instead they're not doing that. They're just going to slowly exit. It's very quiet.

No one's talking about it. We actually don't expect any real sudden consequences of the exit. Everything's the same. Because there's an 11-month transition period. So come December 31st, 2020, that's when, like, the consequential deadlines. In the meantime, cars are still going to drive on, like, the wrong side of the road. Right, but the British MPs better start signing some treaties. Bottom line, it's good to be the queen.

Queen Elizabeth, who I think was alive and, like, well, during World War II. Yeah, World War I didn't. She turns out has immunity from arrest because she's a monarch. Snacker, Eric Anderson pointed out to us that she has something called sovereign immunity, which basically means she can commit any crime whether or not breaks it happened. Queen Elizabeth also doesn't have a passport. Yes.

Because British passports are officially issued in the queen's name and she's not going to issue herself a passport. No, it'd be weird. It'd be like if you were giving yourself a promotion, it doesn't really happen. She gets a freebie in the customs even though she's probably importing like Crown Jules. And then no big deal?

She doesn't even need a driver's license. She never had to take the test. But does she drive? It's weird. I don't know why she would. I bet you she drives a land run. She seems like the kind who would like do her own plane. She liked a big gas.

I think she's a drone person. I think she's a drone person. Let's hit 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. The 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. 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. Robahood Financial, LLC. member FINRA slash SIPC

For our first story, Cortland, Wine Snapp, Mildly Sweet Delicious, Fuji, Apple. Oh! Yes. Apple just had its best quarterly profit ever. No Granny Smith in there? We got to contextualize this, Jack.

We're going to contextualize Apple's hugeness, but first, it's earnings were announced yesterday. We're going to talk about the three Cs. The three Cs. Christmas, content, and China. Yeah, China feels like, I feel like the H throws that whole thing off. Let's start with Christmas.

Christmas quarter is always the biggest quarter for Apple. Apple looks forward to it every year. It's not just because of Christmas and Hanukkah gifts, but also because that's the first quarter where the newest iPhone is available for sale. Apple is the most profitable company on earth, and that was the best quarter ever for any company ever as a reminder. I think the transit of rule dictates that A equals B, B, C, that means that was the most profitable quarter for any company ever. Ever. In history? In history. The Egyptians are not happy about this. $22 billion of profits in one quarter for Apple.

Now, Snackers, we know what you're thinking. What about Saudi Aramco? Saudi Aramcoe, oil company from Saudi Arabia. It's the most probable company ever. It's huge. Yeah, they just IPOed. So this is going to be the last time we can say this. Apple's quarter was the best quarter ever.

At Apple, they're like doing like a celebratory party and kind of a sad party too. Now, the second C of last quarter was content. Apple actually didn't tell us about Apple TV Plus. This is the first quarter Apple TV Plus has been around. Steve Carell and Jennifer Aniston are like, come on, tell us how we did. They really want to know how we did. We don't know how many subscribers. The third C, though, is China.

There's major uncertainty, not for last quarter that they just reported on, but for this coming quarter from January to March. Right. That's because coronavirus is affecting Apple. It's got 71 facilities in zones that have been quarantined from the virus. All right. Best quarter ever. But now we want to contextualize.

We said 22 billion profits. But like, what does that mean? Snackers, sit down, get some popcorn. Put on like glasses and get comfortable because this is going to be, this is just going to be changed. All right. In the last 12 months, Apple's iPhone division, just the iPhone. Just the iPhones.

Had 146 billion of sales. That is as much sales as the entire General Motors company. All right. Let's talk about wearables. That includes like AirPods or Apple Watch. The wearables division of $27 billion in sales is more than Starbucks's sales. The giant of coffee. Can we talk about services?

Services is Apple TV Plus, Apple News Plus, ICloud, Apple Music. Am I missing anything? I'm missing anything? $48 billion of sales in the last 12 months. That is almost as much as Morgan Stanley, the giant investment bank. And then what about iPad and MacBooks? It's the only division that's actually slowing down. They only did $46 billion in sales.

That's more than Delta. Take General Motors. Yeah. Morgan Stanley. Got it. Starbucks. Throw them in. And Delta.

Yes. And stack them in or breed them together to some of the United. kind of corporate super species. It's a freaky image. Then you have Apple. This is just like when we used to watch Power Rangers, Jack, and they would do like all the Rangers would get together into one giant Power Ranger. Oh, yeah, to fight against that, like, Godzilla who shows up.

They would turn into Megazard in order to take down Alien Godzilla. Megazore. Yes. That is the giant super creature. You'd always wonder, why didn't they just do this at the beginning of the episode? They could have avoided a lot of conflict. It's on Green Ranger. So, Jack, what is the takeaway for our buddies over at out?

Apple. Apple's $1.4 trillion dollar valuation actually makes sense with today's profits, but Netflix's valuation doesn't make sense with today's profits. So Snackers, when you're judging how expensive a stock is, the price of the actual stock, it's kind of arbitrary. That just depends on how many shares there are and then simple division. And that's how the stock price ends up fluctuating with supply and demand to an arbitrary number. But to judge how expensive a stock is, instead you should compare the stock price to the profits that the company makes. So, for example, Apple made $57 billion over the last year. We're going to compare that to its stock price. It's worth $1.4 trillion. So $1.4 trillion is the value of all of its stock. Yep. And $57 billion is its profits. Divide the two. Its valuation is

24 times as much as its profits. That's its PE ratio. Its price to earnings ratio. We've compared the stock price to how much money it actually earns. Apple's P.E. ratio is 24. That's not that. much bigger than like the average U.S. stock. On the opposite end of the spectrum, let's look at something like Netflix that has a P.E. A price to earnings ratio of 85. That means Netflix is really expensive stock that doesn't have that much profits. That's a really high P.E. ratio, especially compared to Apple. Netflix's stock price is about its future. But Apple's already justified its value with today's profits. For our second story, Bastille Sports just got acquired for $450 million.

New Englandness loves you drop in the Arnick, but we're going to round $450 up to $500 million. Yes. And label this thing a half a corn, aka half unicorn. I have a feeling that the Barstool forts people are going to appreciate that we did that. Now, the big investment comes from a huge casino company. Awful name here, Penn National Gaming, publicly traded ticker symbol P-E-N-N. Nice ticker symbol. It's kind of cute.

But they are the proud new owners of 36% of Barstall's bars. And they've got this funky little option in the contract where they can acquire. acquire up to 50% of the company in three years. And then if they own 50% of the company, they could tie with the rest of Boxcool Sports's owners. I think what they're going to want to do is round up like we just did in that situation. Oh, in case you're wondering, the founder Jeff Portnoy and a bunch of other key employees, they get to keep their 28% stake in the company.

So 36% will be a casino. 28% will be the OG barstoolers. And then the rest, I'm not good at math, will be the private equity company. No. The venture capital company that acquired it? Pretty much. Yeah, they're getting a nice little exit. No one's in like the nosebleeds here.

Here we go. Barstool was founded in 2003 by a guy who hated the Yankees and loved the socks. Boston sports fan Dave Portney went to University of Michigan, was obsessed with Tom Brady because, you know, Brady, Michigan Patriots. Yeah, Brady's a Michigan Patriots guy. He basically is the target audience of who Barstall Sports. He's also a hustler. He launched a newspaper when he was probably in his early 20s for guys who like to bet on

sports. And he handed them out on the street corner to, like, boost his audio. And he noticed that, you know, like they say, sex sells, when he wasn't selling as many, he would put in inappropriate pictures, which would then sell more commies. Barely dressed women still exist all over Barstool Sports. True. But now it has moved online and become a huge digital media success. It's got a valuable audience that has now expanded to events, to podcast, to merchandise, some controversy, and a bunch of stuff. The company's creative. They have this pizza review thing, one bite, everyone knows the rules.

Yeah. He founder, aka Al Prez, he takes a bunch of bites of pizza, rates the pizza place, and then invites his fans to rate it themselves. It's a very simple way. You got like his rating. You got the fans rating. Cheesy, saucy. Pretty interactive. Light, heavy is the whole thing going on. But here's what we thought was so fascinating about this story. Media companies come down to one single word. Audience. Audience. And the audience over at Barstool Sports is 66 million people checking it out. And the casino company, Penn National Gaming, looks at these 66 million stoolies is what they call. Mous watering.

They see this as a garden of potential online sports betting. They've sprinkled it with anti-Rogadale fertilizer, and then they will reap in the spoils of this garden, getting those 66 million to one day start online sports betting. But today, Barstool Sports is an independent revenue-generating company, making about 90 to 100 million, according to the Wall Street Journal each year, with a simple, personality-driven media model. Now, full disclosure, we did not get to see what the revenue models or the business of Barstow Sports actually looks like on a number by number basis. We're going to do some estimation. Yeah. In fact, we made up completely the ratios here. But we're going to do one-third, one-third, one-third, one-third, one-third, one-third rule. And this is our sense of where they make their money. One-third of the revenues for Barstool are probably podcast ads. Barstool has a ton of podcasts. A lot of them

are really highly ranked. One-third of the revenues are probably online ads. BarstoolSports.com has a blog for like every single city for your city sports. Yeah, your buddy Timmy spends the whole day Saturday just scrolling through watching Barstool Sports. And then a third is Gronk Gear. Gronk Gear. Gronk Gear. Tell me what is Gronk gear.

Gronk gear is the insane amount of merchandise that is being sold by Barstool Sports. But what kind of gear? Are you going with Rob Grankowski? You've all seen this kind of gear. It's actually very formulaic barstool gear. What they do is they have an insider fan joke on the T-shirt. And then you add in a silhouette. of an athlete, and that is the shirt. Is that it? Is there an upcharge? I think they charge more if they're

able to get in like a brazen sex joke that's completely unsubtle. All the merch on barstoolsports.com glorify sports fandom. It's city specific, and there are more items in this inventory than Zara. It's insane. So Jack, what's the takeaway for our buddies over at barstool sports? Communities used to be about geography. It depended on where you live, but today in this internet world, they're based on your interests. Barstool's 66 million person audience goes to Barstool for certain styles of sports and culture. And these like-minded groups can hang out online, listen to the same podcast, follow the same social media, and laugh at the same jokes on Barstow. Now, here's the thing about these online communities. They will be the defining feature of the next decade. Look at what Facebook's doing. They're focusing on private groups where you can hang out and nobody can see who's hanging out in that group.

You throw on some virtual reality goggles. You don't even go outside. You're in your group digitally. It's not where you live that's going to define who you hang out with. It's who you're connected with online. Barstool sports shows that online media is community driven. For our third and final story, SAP just announced earnings. So we're trying to figure out what they do. SAP is the biggest correction. The only German tech company. We actually went to the about page because we thought that'd be a good place to find out about SAP. And all we saw was like a picture of a guy wakeboarding. Yeah, also, it's not the only German tech company, but it's surprising that the biggest German company is not Volkswagen or something industrial. It's surprising they know

what wakeboarding is. Now, the earnings showed yesterday that SAP is transitioning to the cloud like every tech company. Yeah, because if you're in tech, if you're not transitioning to the cloud, what are you doing your through software? And cloud's transition drove profits 22% higher. There's a lot of German happy shareholders. Now, we know what you're thinking. You want to name your firstborn SAP. So where did those letters come from? Systems, applications, products. That's what it stands for.

That's what SAP is. Not that creator. Yeah, you're going to throw that SAP together and you're going to do data processing. Now, this was founded back in the 1970s in a pretty cool way. Yeah, it was interesting story. So five IBM engineers were working on a project at IBM

and their boss was like, hey, Fritz, you got to stop the project. Fritz? Your productivity is lacking. So Fritz and his buddies got together and said, you know what, this is pretty cool. We'll quit IBM and turn this project into its own company.

Now, unless you're working in the finance department of some huge company, your experience with SAP is at an airport. Yes. If you're walking, right now, there is definitely a snacker at an airport, probably a terminal four in New York City at JFK. And you're going to notice a sign for like Porsche or Nike or Nestle or Adidas or Merrill. And you're going to think it's an ad for one of those companies. Nope.

Not them. It's an SAP adobee. Adidas runs SAP. Nestle runs SAP and Porsche runs S&A. So SAP shows you a case study of how they're used because otherwise you have no idea what SAP does. Now, what does SAP do? You haven't even got to it. Right.

Its core product is a little thing called get this, wait for it. Name your second born ERP. Another abbreviation. It stands for Enterprise Resource Planning. Great acronyms. That's actually like a catch-all for just organizing and keeping track of everything in your business. Yeah, it came out of the ADT, the acronym department over there. Now, it tells you what's going on in your business.

What ingredients are coming into your business? What supplies are going out all in real time? It's kind of like a dashboard of your health vitals as a business. The heart rate, the cholesterol, the blood pressure. What's going up? What's going down? Chobani actually agreed to do a case study on SAP's website, so we checked it out. So what Shabani did is they had SAP come in, discover that the old yogurt pumps at their

Idaho plant were pumping out yogurt at different speeds. And of course that caused some sort of yogurt problems. I mean, we all know what you do in that situation. You get yourself a flow transmitter, which is what, SAP did. Thank you for that wonderful case study. Yeah. So Jack, what's the takeaway for our buddies who we now know what they do over at SAP? SAP wants business managers across the whole world to have SAP FOMO or SAPE, as it's called. Now, FOMO, a phrase coined by our buddy Patrick McGinnis who has a great podcast called FOMO sapiens. Very true. Now all the ads at the airports that you've seen involving now you know SAP, they're at the airports because

that's where business executives stroll through like three times a week. And it's just. turns out if you're running a business, most businesses and most major industries, they need ERP. And they want you to see all those wonderful companies using SAP's ERP. And they want it to happen ASAP. Nike uses SAP. Do you want to be as great as Nike? Use SAP. FOMO marketing. It's what S&P does. Jack, can you whip up the takeaways for us over there? Apple's four key divisions are GM, Starbucks, Delta, and Morgan Stanley. And it's insanely high value. is totally justified by its insanely high profits. Our second story, Barstool Sports,

has reached a $450 million valuation and is part owned now by a gaming company. Snackers, remember, when you see a barstool shirt, it's going to have this formula. Insider fan joke plus silhouette of athlete. Now, SAP helps businesses keep track of everything like a no-nonsense German train. They love that we use the word everything right there.

It's engaging in some serious fomo marketing. Now, time for our Snapsule. fact. Brought to us by a man who shall go unnamed. Ishawn's dad? Ishawn is a buddy of ours at Robin Hood. His dad's a huge fan of snacks. We're so pumped to Sean's dad.

He sent this all the way from Potobic, Maryland. Now, we always talk about when markets are super volatile. It's up 3% and found 4%. People are throwing their head. You see those pictures of the Wall Street traders. They're looking concerned. Well, Ishawn's dad wants to point out some tranquility. Like, markets have been stable.

Like, Lake Placid over here. I love that you threw out tranquility there. I feel like I'm in like a cologne act. Before this week, when the coronavirus caused some serious market jitters, the last time that the S&P 500 moved by like more than 1% was on October 15th, 2019. It's been over three months since that happened. It's been three months of tranquillity.

My heart rate has been like, we don't know what's happening. Snackers, we want to get a Super Bowl snack fact in before the Super Bowl. So send us a good football snack fact. Today, we'll get it in the pod tomorrow. know about Jerry Rice's records. We know about Steve Younger's records. Yep. If you got something a little outside the sports box, we really love it.

Good call to action. Snackers, we'll catch tomorrow. This is Jack. I own stock of Volkswagen. 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.