The Best One Yet - Beyond Meat’s sophomore slump, Pfizer’s VIP-only drug cabinet, and The Athletic joins the 500 club

Episode Date: July 30, 2019

A new drug company hath been born — Pfizer is merging its portfolio of off-patent drugs (like Viagra and Lipitor) with epi-pen-maker Mylan. Beyond Meat’s earnings report had a good side and a dark side. And The Athletic’s subscription-only sports news biz model is winning the media industry with a new milestone.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. This is snacks. Daily, it is Tuesday. July 30th. This is the best This is the best snacks today. Tea Boy, Tee, boy, too. He's doing a little hustle thing. Don't hurt yourself. Markets were pretty flat yesterday. Our stories, they're not flat. I think Jack straight had a, what is that, hammy over there? That's some air exercise for my wedding. Now, first story was a good story. A new drug company has been born. Myelin and Pfizer are the proud parents. Now, Viagra, EpiPens, that's what we're talking about here. And other drugs that used to be expensive, but are now cheap. Really cheap.

Second story is beyond meat. It announced earnings, the shares plummeted. This is a plant-based meat cultural phenomenon. This is something we kind of had to look into. Third and final story, The Athletic.

It's a sports news company, digital only. It just hit a key number of subscribers. And this reveals a reality about news that we also had to get into. We do. Now, Snackers. Congrats to the new millionaire,

Kyle Giersdorf from Pennsylvania, PA. This is going to make you feel bad about yourself because he's 16 years old. He's 16 and he's now a millionaire. I think that's the age where you're still saying like in quarters, right? Like I'm 16 and a quarter. He's 16 and a quarter. He's almost 17 basically.

Working his way up. You can round up to half. He just won the Fortnite World Cup from Arthur Ash Stadium in Queens, New York. It happened over the weekend. We're talking about a video game, took place in a tennis stadium. People were sitting, standing, watching him winning. The place was packed and he won Fortnite. We actually want to talk about the number two, though.

And he also brought in more money than Tiger Woods did at the Masters. That's true. But Silver Matters and Jaden Ashman from Britain, he came in second place. He won over a million dollars. Now, his mom wasn't too thrilled at first. No, at first he had his first Xbox when he was six years old. Must be nice. And the mom was complaining that he spent eight hours a day training for this world time.

He's like, mom, one day I'm going to be of an age where I'm bringing in millions. I mean, a number two finish is good, but clearly he could have spent more time training. Cold take on an otherwise very feel-good story. the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about the hair ain't 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. 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. Robahood Financial, LLC, member FINRA

SIPC. For our first story, Pfizer is creating a brand new company for drugs that just aren't that profitable. Just not that profitable. They can't do that. This involves Mylan Pfizer, a merger. Ooh, and one more? And a VIP company of high cost drugs. Yet to be named on that one. Now, the real focus here is a little of something called Upjohn. You've recognized Upjohn if you've paged through Pfizer's earnings reports like we have. It's kind of an awkward name. It's actually just a portfolio of drugs that no longer have patents. So they're not patent protected and they're owned by Pfizer. You've heard of all these drugs.

If you've watched a minute of American television, you know these drugs. CBS, this is all they're pumping out. Is drugs affecting you if you're over the age of 50? Pfizer owns them all. We're talking Xanax. Ooh, for anxiety. Viagra for... For malign.

We're talking Lipitor for cholesterol and celibrex, which all of these are just all over American commercials. If you haven't seen them, you at least know that, like, if you still have whatever it is in 46 hours, you have to see a doctor. Profits felt by 20% for all these drugs because they're no longer patent protected. They still got the fine print, but the patents aren't there to protect. facing generic competition now. That is similar to Mylan, which is a separate company that has the EpiPen, which is also facing generic competition. Right. That happened last year. An EpiPen competitor came out or got approved and now Milon's got a problem. So Pfizer decided we're going to take up, John,

we're going to make it a separate company. We're going to merge it with Milin so that there's one giant company for generic drugs. And Pfizer's just going to be the high profit, high patent VIP stuff. So they're just putting it out to pass your. Perfect ID here if you're trying to picture this thing. Now, this new company, which hasn't been named yet, with the generic drugs. We could probably come up with it. It's like the PGA seniors tour. These drugs used to be really good. They used to work great.

They still work really good. They still play pretty good. They're totally fine. They're old and they're not worth paying money for them. You're not excited to watch these things. It's just out there. It's going to have 20 billion of revenue. Name is to be determined.

Completely off patent and generic groups. Honestly, I feel like it's a lineup of like Yankees Great, too. They bring out for like alumni day at the end of the season. It's called Old Time. Dex. Exactly. Pfizer, you know, Viagra made it $1.4 billion of sales annually, but it's been generified. That's because the patent expired, so a bunch of newbies came in using the same formula

and started marketing. Those newbies, we're talking Romans and Hymns. They have generic drugs like Viagra, but with much cooler brands. These are companies that are, one of them's worth like a billion dollars at this point. Brand new, very fancy, a few eggplant emoji in the ads. You know what we're talking about. You do. So, Jack, what is the takeaway for our buddies over at Pfizer?

Pfizer doesn't want to compete in the brand battles. Now, instead of generics, it's moving on to like the more lucrative cancer-treating drugs. Pfizer says we only want patented drugs that have basically no competition and that we can set super high prices for. They even just bought like an $11 billion company focused on these lucrative cancer fighting drugs. The CEO whose last name is Borla. I didn't write down his first name here. He made a beautiful quote about this strategic decision. Does he moonlight as a poet laureate? I quote Mr. Borla,

a good gardener needs to prune the tree when spring starts. Can I finish this quote for you? Pfizer is in the spring of high growth. He's basically saying these old drugs that don't have patents anymore, they're basically weeds, get them out of my garden, I want tulips on. I'm pretty sure my last yoga class ended with like the same exact sentiment. So Pfizer's going to be kind of a wilder stock.

It doesn't have the old reliable, you know, drugs like Viagra. No. It's only the boomer bust stuff that's either going to be huge or. have like experiment duds and not make it fall apart for our second story beyond meat stock plummeted after announcing a great slash horrible earnings report we're having a cultural moment this is a everyone's talking about this things like beyond meat they're causing laws new laws to be passed in state house we're talking state houses saying hey you can refer to it as me you can't refer to it as meat we're confused we're concerned lobbies are coming into the whole thing so we're covering beyond

me again because it just had its second earnings report as a publicly traded company this is its sophomore quarter now the earnings itself very strong sales quadruples. That was better than expected. And the company boosted its 2019 total year revenue expectations. But the company decided it's going to sell some new stock to raise money, some more stock in itself. And that was bad for today's stock. The stock was already down 5% during the day. It fell another 14% in a double whammy situation. Classic double whammy situation. Now, we got to use the country club analogy to describe what's happening. Must be nice, Jack. Must be nice.

So let's say you're a member of a country club, and suddenly you are a member of the best country club in town. You got to try these shrimp cocktails. You haven't had them unless you had them at the club. Immaculate Fairways. Not a divot to be seen anyway. Again, must be nice. That's Beyond Meat after it's incredibly satiating IPO from a few months ago. We're talking like an entire room of oysters.

The oysters serve themselves to you. So Beyond Meat is a country club. You love it. There's a thousand members. You're having a great time. The tart sauce. Tart sauce. But the Tart.

The country club realizes it is so in high demand that it could sell new memberships and raise a ton of money. Right. So let's say it's got 1,000 members. Now they're like, hey, let's add 200 newbies to this thing. Beyond me, it's got like 1,200 newbies now. And existing members of this country clubs, they're not happy. That shrimp cocktail? They ran out of the shrimp cocktail. The oyster room where the oysters serve themselves. Out of the oyster. The seventh hole, there's divots everywhere. Everywhere. So it's crowded now. Now, the existence. Disting country club members, they're not thrilled, but the bright side is they can replace that Nordic track in the gym with a brand new Peloton with the money they're raised. Or in like Beyond MeatSpeak, they're replacing, you know, the plastic fake meat spoons with metal ones.

There you go. Jack, what is the takeaway for our buddies over Beyond Meat? This is a good problem for Beyond Meat to have. The stock is so valuable. Demand is so high that it actually needs to raise money like right now now. Now, it dilutes the value of today's stock. And that's why the stock was down like 20% total yesterday. But that money is going to be used to help grow the company, which ideally would boost the

stock's value in the long term. It said, right, in the press release, they're going to use the money from this new fundraise to build new factories. Now, eventually they'll want profits and profits will fuel its growth. But right now, it's still pretty unprofitable. It's not profitable. So it's selling, like, its own arm to fuel growth. You got to cut off your arm sometimes.

Snackers, this is Jack. Nick and I both own shares of Beyond Meat. For our third and final story, the athletic, the sports news. media website announced 500,000 paid subscribers. This is impressive. That's a big number. In media, you typically monetized through either ads or through subscriptions. It's the only two options.

And subscriptions are tough. It's really hard out there for subscriptions. Getting people to pay for news is really hard. Now, snacks is, we're free. It's free. It's kind of awkward, actually. Yeah, we're just giving it away. But if we started charging you money, would you stay with us?

I don't know. We love you guys. I don't know. We hope we love you. We're going to stay free. Don't worry about it. We're going to be here. But the athletic is a paid digital news sports site.

It's a private. company. It doesn't have any publicly traded shares. So you can't buy the stock. But it has 500,000 paid subscribers. Now, a little history here. It launched in Chicago the same year the Cubs won the World Series, 1907. No. No, they won in 2016. Technically. Very good year to launch a sports or bar anything in Chicago. Now, this thing has got snack style like podcasts, articles. They cover like 270 teams. If there's a jersey you've yelled at, they probably cover it. And they have a pure play subscription model. No ads. No advertisements. so ever. Don't even see them.

You pay $60 a year or $10 a month to be a member, and then you get the podcast and the news. You can buy like a single round of drinks at like a sports game. Or you can do that. Athletic subscriber for a whole year. It's pretty much the same amount and the drinks are on water. Now, the growth mode of this company is pretty good. They expand by city. So they started in Chicago.

It gets very intimate in a city. They move to other like sports obsessed cities. I'm assuming New York and Boston. Yeah, they like get to know the like local fan base. Philly was up next. In fact, their Philly podcast is called Birds with Friends. Yeah. They want to be able to drop lines like, hey, it feels like 94 when they're in New York.

They want to know before a Yankee game, if you go to Stans or Billy's for a beer, you go to Stans. It's like that, hey, did you see the game last night? How about those Clippers? Except they actually understand what the Clippers are doing. They know their cities, and that's when they expand. So two key favorable trends. We identified snack style that are really like boosting up the athletic, putting them on their shoulders and sprouting the champagne. First one, available workers.

Ooh, very true. Sports used to be all local newspapers. And then the internet happened. And then local newspapers stopped happening. Newspapers started dying and the athletics swooped in and hired sports writers who were getting laid off from newspapers that were sadly going under. So the second key that's right behind them, gambling. It's legal now. The Supreme Court uncriminalized?

Decriminalized sports gambling. Slapped it on the butt and said, go out there. And that's been a boon for anything that thrives when people are watching sports. Right. Because if you got like a hundred bucks on the game and you... I got a hundred bucks on this game. think the, you know, the, you need to know if AJ Green's. It's like your aggressive bookie voice there. If AJ Green's hamstring is nagging, you need to know that first, so you might be more willing

to pay. I want to see the AC, I want to see the MRI of the tendon if that's the case. And if they'll do it, we'll see it. The athletic is in the same ballpark as the New York Times in terms of paid subscribers. Exactly. New York Times has got 3.6 million digital subscribers. And 500,000. It's not New York Times, but it's in the same ballpark. So, Jack, what's the takeaway for our buddies, just in media. Subscriptions are the way to go in news unless you have political ads. Political cable TV is like wildly popular right now in the United States. Yes.

CNN, Fox News, CBS, they're all thriving because of enormous budgets for political ads on TV. But for every other media company out there, all those ad dollars used to get in, all that money is now going to Facebook or Google or Amazon ads. It's not going to media companies. It's tough. So if you like have a digital news company, you got two options. subscriptions, which is tough. Very nice, very nice.

Or struggle immensely for years and years with ads. That sounds hard. Jack, can you whip up the takeaways for us? Pfizer is clearing out its older off-patent drugs into a new company with Mila. It is getting exclusive. Pfizer's going like all VIP drugs right now. Second story, Beyond Meat is creating new shares of itself to finance new growth. If your plant-based burger stood up, split off part of itself and gave it to someone else,

you'd be freaking out too. Another analogy, Martell? Analogies on analogies over here. Third and final story. The Athletic has joined. the 500 club. Very nice. We're talking 500,000 paid subscribers. Subscription is hard in media. Now, time for our snack factor today. This one sent in by a fantastic snacker named Sarah from lovely Englewood, New Jersey. By the way, perched on the beautiful palisades above New York.

Oh, is that right? It's charming, river. I highly suggest a visit. George Washington Bridge? Right nearby. Wow. Keep going. So, I got nothing else. That's all we got. So we covered Reese's last week. And someone's ended in a snack back of the day yesterday about Reese's. Well, she wish we had pointed out that Snickers is already on this almond butter trend. Right. We had said that Recy should branch out and get involved with some other nutbutters over here.

What do they do? And they're three millennia behind. Guess what? Snickers has replaced some of its ingredients with almond butter. Fantastic. Sarah, great find. You should probably be consulting for reasons. Also, I googled almond butter Reese's cups. There's like a bunch of paleo recipes on Google. We're running a podcast here. You're Googling

recipes over there? Another story you should know. Lift CLO, the chief operating officer has left the company. He's gone. And now Lyft, even though the stock fell, its value is still one lift. Snackers, thank you for potting with us. I love being with you guys to start the week. We'll be back tomorrow. I guess it was the second day, whatever. By the way, Snackers, one thing we want to clarify, because a few people asked about it. Yesterday, we mentioned that T-Mobile sold Boost to Dish networks. Technically was the new T-Mobile that sold Boost. Yeah, because it used to belong to Sprint. Boost was a sprint thing. But now they're the same company. 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.