The Best One Yet - Canada’s shocking cannabis oversupply, Tesla’s 1st-mover e-advantage, and 1Password’s one password rules them all

Episode Date: November 15, 2019

Canopy Growth is the most valuable cannabis company, but the price of cannabis it sold last quarter dropped by 27% because Canada’s got an oversupply problem. Daimler and Ford just announced big investments in electric cars, while Tesla’s won awards. And our “Maybe-Unicorn of the Day” 1Password knows you don’t want to remember 243 usernames and passwords — it’s service makes you remember just 1. 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, November 15. I'm going to get right into the three stories. Can you whip at the mix first, Jack? I am an electric boy. It's an electric world.

Daimler, Ford, and Tesla all shared some seriously electric car news. We took all the currents. We put them together into one outlet. It's got a single story for you guys. Now, lots of pot companies are making cannabis announcements right now. Is this the second story? This is the second story. Let's just say the price on the street is way down.

We're looking at why canopy growth, one of the biggest in the biz. Its stock fell 14% yesterday. The third story is the unicorn of the day. One password has been around for 14 years bootstrapping with its own money, but just accepted $200 million of venture capital cash. And we're concerned about what one password's $200 million in fresh VC money means for the company. Now, Snackers, before we jump into anything, we need to talk because there's been some concern. Yeah.

Three of you on Twitter expressed. some serious concern about yesterday's podcast. Right. The concern was that it was not the best snacks daily pod we've ever done. It wasn't the best one yet, or at least we didn't say. If you were paying attention, we didn't mention in the beginning in the intro that this was a TBOI, the best one yet. Nick and I love this podcast. We love producing it every day. Being in the studio is the best part of the day.

And we truly believe yesterday's podcast was the best one yet. We actually wanted to wait and evaluate to make sure yesterday's podcast hit our high standards for snacks podcast before we said it was the best one yet we got our first opinion we got a second opinion it was the best one yet yesterday's podcast was the best snacks daily yet but then things changed dramatically yesterday evening well they changed dramatically right now because today's podcast t b o why the best one yet t boy this is actually the best snacks daily yet let's do this let's do you're tuned in the snacks daily we spoke to the lawyers and we got to get something legal out of the way For 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 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. Snacks is digestible. Business news for you. Robohood Financial, LLC, member FINRA slash SIPC.

For our first story, electric cars just got a trio of news, but it all comes back. to Tesla. Let's start at Daimler. Let me get in the old time machine. Dimler is the owner of Mercedes-Benz, and Carl Benz, great guy. Invented the engine. If you were still alive, he'd be a snacker. In 1880, Monheim, Germany, this thing was so heavy. How heavy was it? It had to go to, like, the Way Station. This was aggressive. Jack and I actually looked at one of the original versions of this thing. It looks like a Disney character. It's adorable. It's tiny, and it kind of barely gets going. It's actually a three-wheeler.

Now, it's OG invention, the gas powered engine. It's kind of going out of style. Mercedes-Benz announced on Thursday that they're laying off 10% of their workers because they're struggling to transform to the new electric world. Plus, it's third profit downgrade this year. Not a good time for Daimler. So it's been making luxury cars mainly for older people who aren't interested in electric. They're interested in getting a holiday car with a big bow on it in like the next car.

Old people don't necessarily want electric. But here's the thing. Europe kind of has some regulations that require electric cars to make the environment. So Mercedes-Benz is adding 20 new hybrids and electric cards by 2022, and they still may get fined by the EU. Yeah, it's a little, too little, too late for Daimler situation. The stock fell 4% yesterday. It's down 40% in the last two years. Let's bring it back across the ocean to the United States. Ford is just as historic as Daimler.

Very historic. But not nearly as much leather interior in no six-disc CD. Everyone knows and respects the old six-disc CD. Hey, you want to listen to a bill? Joel album. Don't worry. I got five other albums. None of them are Billy Joel. They're all in there. But the Mustang Mock E is for its latest creation. It was just named officially yesterday. It's not going to be born until this weekend when it's unveiled in Los Angeles. You got a preview. But this is a Mustang-inspired electric SUV. So the Mock E, that E doesn't just stand for every

car that you think you've seen before. Well, it's not Mock 3. No, it's subtle. Mock E. So Ford is a little late to the electric party, but this big unveil this weekend is symbolic of its electric ambitious. So, Jack, what's the takeaway for our buddies in the electric car industry, not just Mercedes-Benz and Ford? Tesla's huge first mover advantage, like 10 years ahead of the game, still exists. You're noticing a lot of ease these days. A lot of ease in front of that little thing on the back of cars that says its name. This trend isn't even trendy anymore. Electric cars are everywhere. You're seeing every car company pretty much has come out with a version. of an electric car, it's a question of how many of them they're going to end up doing.

With so much competition, you might think Tesla's first mover advantage is gone. And you'd be completely 100%, maybe. Actually, we shouldn't say 100%, but you'd probably be wrong on this. Consumer Reports magazine announced yesterday that the Model 3 and the Model S of Tesla get the coveted recommendation status back again. Jack, can you back the car up, put it into the garage, and explain to us why that's a big deal? It's a big deal because that means the quality of the cars that Tesla's making are high quality. Good enough that you're getting that gold stock. So if you're looking at the electric car market and there's a lot of noise out there and a lot of options,

the differentiator is going to be the ones that are the quality electric cars, not just having an electric car. Clearly, anybody can make an electric car now, but can you make a good one? By the way, this is Nick and both Jack and I own shares of Tesla. We should say that. Yeah, we should say that. Definitely. For our second story, canopy growth just dropped 14% because it's dependent on cannabis 2.0. This is Canada's largest by market value cannabis company.

And because they couldn't wait for the earnings report, they also announced like a couple weeks ago, they decided to partner up with fellow Canadian Drake. Fellow Toronton. Tarantanese. Taranosaurus Rex. The Taransians and Drake, Drake's launching a cannabis wellness brand with canopy growth. The company's called More Life. And Nick, what's the legal structure of this company?

I'm pretty sure you have to wear a puffer jacket and have a beard. No, it's a joint venture. perfectly done by the lawyers. So let's talk about Cannabis 1.0. This was October of 2018 when Canada became just the second country in the world to legalize recreational marijuana use. This phase was called Cannabis 1.0 because what they legalized was the marijuana leaves and the oils. Just that. Exactly.

Keep it simple. And that's still the regulatory landscape that Canopy is working. So over the last year, Canopy's been selling these things out of their stores. And how were the sales jack? Last quarter, they sold 57 million in product. And that was less than what anyone ever unexpected. Yes. Now, there is a major over-inventory situation across all the Canadian provinces.

And just to clarify, when we say over-inventory means they have too much pot in the stores. There's over-cantapy growth. There's closets and warehouses overflowing with too much cannabis. Jeff, I'm trapped in the room. Get me out of here. Now, let's go to Economics 101. Please. What happens when there's an oversupply?

Well, then you've got a situation where the prices would drop. The price falls. That's correct. It's called the invisible hand. So, we are looking at the average price of cannabis per kilo. Last year, canopy sold for $8,000 per kilo or $8 per gram. This year, because of that oversupply and Jeff stock in the closet because he's got too much cushion on his hands, $5,963 per kilo per kilo or just about $6 per gram. That's a 27% drop in the price of car. cannabis per gram over at canopy growth. Over supply for any type of industry is a bad sign, but it's hilarious that like the old drug dealer, he could probably get a job as an accountant

calculating like the dollar per gram. Pretty much canopy growth expected a lot more pot to be sold than actually was. Okay, that brings us to the future. Cannabis 2.0 is the second phase of legalization of cannabis in Canada. It's going down like right now. Cannabis 2.0, it's a thing. You're living in the cannabis 2.0 era. Yeah, Canadians are patient, so they waited one year to expand legalization to derivatives of cannabis, like edibles. Exactly, like the gateway products, the stuff that, like, would get your mom more comfortable into starting to use a cannabis product. Right, like the cannabis infused kombucha kind of thing.

Exactly what I was thinking, Jack. Now, canopy in its earnings yesterday said that cannabis 2.0 will be the driver of the next leg of growth for the company. It has submitted 30 products for approval from the Canadian regulators and is just waiting for that approval to come through. Like, come on, this stuff is so cool. Once it does, it's going to sell chocolate. So chocolates with cannabis.

Drinks. With cannabis. Cannabis. With cannabis. So, Jack, what's the takeaway for our buddies over at canopy growth? Cannabis 2.0 is Canopies strategic differentiated. All right. So let's take a quick look at the rest of the cannabis industry up north right now.

You got Aurora, which is a publicly traded company just pretty much focused on production and harvest of cannabis. You got Tullary, another publicly traded company really focused on medical marijuana and spreading it international. And then MedMen is focused on retail. And they have like a recognizable store brand, kind of Apple store-ish. You've always got that friend who's like, come on, join me. Let's go to the Medman Place.

It's like the Apple of Cannabis. But that is still a private company. Exactly. But one thing that Canopy's got that none of the others have is a $4 billion investment in itself by a liquor company called Constellation brand. Constellation is the liquor company that owns Corona. It still has $2 billion of cash on hand. And it's focused on these cannabis 2.0 derivative products of cannabis, not just a pack of green leaf.

No, they're thinking cannabis-infused rosé, cannabis-infused sparkling seltzer, and cannabis-infused sparkling rosé. Investors are hungry to see some of these sales because the plain old green stuff just ain't working. For our third and final story, we got our maybe unicorn of the day. One password just raised a hefty $200 million, pretty much out of nowhere. This company is also based in Toronto. We actually fact-checked it. Yeah. Canopy growth is not based in Toronto.

It's like near Toronto. Drake is definitely a Toronto guy now. Toronto through and through. He's aggressive. about this. Now, the shocker here, this company has been around for 14 years and just raised its first big batch of venture capital. We repeat, this is the first time they've done an outside fundraise. They've been like bootstrapping aggressively this thing for last decade. And then suddenly accepted a giant check. And we're going to discuss the implications of this. I hope they went

with like the golf style human size check. Happy Gilmore. Gilmore happy. So charming thing about this company founded by two couples. This is adorable. Imagine the date night scene. You're like, God, yeah. You go to the bathroom, you go to a couple, and you're like, is this a couple for us? Are they our style? Do they like our things? Do they like to go to the same dinner places as us? Should we start a billion-dollar company? Let's go with that one. Let's go with that one. So they recognized three trends. One, we all have like 243 usernames and passwords we have to worry about. Totally. Is it my email? Is it the username with like the first letter from my first name, my full last name, and then my favorite number? What's going on here? Membership number? What's a membership number? Does an exclamation point count as a special character?

I didn't even know I was a member of this name. Right. Trend number two, data breaches are commonplace. Snackers throwing out three words here. Target, Yahoo, Equifax. There's probably one snacker who is involved in all three breaches. Yeah, it probably was. If you were that one snacker, let us know. Trend number three, we are lazy when it comes to writing our passwords. What are you doing with? Are you doing like the one? I'm doing favorite sports team with number. I'm going full-on favorite appetizer birthday, enchilada 22. Happy to admit it. I'm going to change it today. All right. So one password, looked at those three trends and decided one password to rule them all.

Which is critical because everyone's going home for Thanksgiving right now. You're going to get home. You're going to ask for the password. Your mom's going to have no idea what you're talking about. Here's how one password works. You get an account, it's like $3 or $5 a month. I can't remember. But you type in your one password and that unlocks all 243 of your other usernames and passwords. And it auto fills them with like one click. Totally ironic here that it was founded by a couple. because access to like a single password is like the ultimate sign of commitment. You got to put that in your pre-nup. Like who's going to get the one-password master password?

This is an aggressive new. Now, the company actually went through a couple phases in these 14 years. The first one was focused on consumers like you and us. Right. We call that B2C, business to consumer. One password to you and me. The problem they were solving, you can't remember the password known as any idea. You forget the numbers.

Phase two is when they really started ramping things up. It went to businesses B2B. Right. They started getting Dropbox, Slack, IBM as clients, and the problem they were solving, hacking. Right. They didn't want one person who's sloppy with their password to get hacked and then, you know, reveal passwords and user access to everybody else at the company. If you're IBM, you're going to make every single one of your employees use this, which is a big deal for one password. A lot of companies are doing this now. They're requiring password managers for employees. You got to add an exclamation point. You got to have a question mark and a number. So, Jack, what's the takeaway for our buddies over one password? Raising venture capital isn't just new money, it's new pressure.

For 14 years, one password ran itself, and it was profitable from day number one. It bootstrapped forever, and now it's getting a $200 million check, and it will be expected to efficiently invest that money in growth. But now it's like a star is born. It's Lady Gaga was great in the drag bars. Now she's got to turn it on Britney Spear style and go on tour to perform. That's the situation. One password has to super commercialize itself.

it's going to be under immense pressure to grow and become like the next Facebook or something because accepting outside money means accepting outside pressure. Jack, can you whip up the takeaways for us over there? There were electric car announcements from Daimler and Ford this week, but Tesla's first mover advantage is still intact and strong. Canopy growth is suffering from a bad oversupply situation of cannabis up north. It's banking on edibles, cannabis infused drinks, and all the other fun stuff from Cannabis 2.0. Third and final story, one password just got a 200.

billion dollar check. Nice. And now it's expected to grow like a VC-backed rocket share. And in case you're wondering, yes, they do the exact same thing as last pass. Now snackers. Time for our snack fact of the day. This one's sent in by Ishaun, who's from Mumbai, India. Born and raised. Born and raised there, but he's been jumping around the streets in New York, uh, where he enjoys Numpang, just like we did, get the coconut shrimp sandwich. Ishawn crunched some numbers, sent us a screenshot of the Excel. This was like extra credit snacker stuff. He calculated that Chick-fil-A, the fried chicken sandwich spot makes $4.7 million in revenue per year per store. McDonald's brings in $2.8 million.

And Starbucks and Subway make way less than that. Chookfilets or profit puppies? It's extremely profitable to have a chicken sandwich. It's also closed on Sunday, Chick-fil-A's. It's a cultural phenomenon. All the more damning. So snackers, send us your snack facts at Robin and Snacks. But for the weekend, what do you have to?

Friendsgiving. I'm trying to do surfing again. I'm going to see if my arms are not. Friendsgiving with a plant-based turkey. I'm still surviving. I'm there. I need the protein carboload. The Robin Hood Snacks podcast you just heard reflects the opinions of only the host 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 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.