The Best One Yet - China vs. the NBA, Domino’s focuses on “carryout” pizza, and One Medical preps to IPO

Episode Date: October 9, 2019

Domino’s already fights in the Pizza Wars and Delivery Wars — now it’s focused on takeout (they prefer “carryout”) to win. A Houston Rockets’ tweet has China angry at the NBA, and now companies are getting involved. And One Medical is our Unicorn of the Day: the $1.5B tech-ish doctor chain now wants to IPOLearn 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, October 9th. And this is the best one, yeah. Jack's wearing horizontal stripes. He's feeling good. He's feeling confident. How you feeling today? Not self-conscious about my horizontal stripes until that comment. First story, Jack, what are we got? Domino's is losing the 2019 Pizza Wars. It's also losing the delivery wars, Jack. So we're going to look at its non-delivery business takeout. Exactly. Investors are just annoyed it's like in so many wars right now. Second story is China. A lot of U.S. companies are getting blacklisted in China right now. And vice versa. So we hope you don't get blacklisted for listening to this pod story. Skip ahead if you're worried about some controversial Chinese topics.

Third and final story is the unicorn of the day. Yes, medical. Exactly. It's speaking with bankers about IPOing pretty soon. It's kind of a tech company because it's got an app. But it also has the word medical in its name. So it's also a healthcare company. Before we jump into all that, Jack, Bolt claim.

Democracy is for sale. Is that a reference to our China intro story? Not at all. Don't even go there. Actually, the website, Democracy. It happens to be for sale right now. Turns out democracy.com was a failed social network trying to take on like Facebook back in the day. They're trying to do something else.

They're moving on. In the meantime, the domain, www.docracy.com, it's available. I think democracy.org or democracy. dot us or republic.org would be better for America. No matter what, just take off like your fifth grade English language hat. Forget about the symbolism here. And let's focus on the actual domain. The minimum bid, you have to bid $300,000 even to enter this auction.

A deadline for this thing is like 5 p.m. on October 25th. The only company I can think of with a big enough marketing department and a big enough desire for patriotic things. I know what you're thinking here. This is a big Super Bowl moment. Budweiser. Exactly. It's next can is going to be like democracy. We get it. And I can't. Someone's going to either buy a house, they're going to get this domain or Budweiser's getting it. Good luck. A. B. and Ben. Let's hit our three stories. It's snacks about the hair 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. Nope. 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.

Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, Domino's Pizza jumped 5%. Because of its secret weapon. Domino's based in the capital of pizzas, the state of Michigan. It's got Little Caesars and Domino's based in Michigan. Jack, I don't even want to talk about this trigger weapon yet. Can we talk about what the stock is? dropped at first when they started the earnings report.

The Pizza Wars. Yeah. In particular, a couple of comebacks from Domino's most close rivals. Pizza Hut came out of nowhere deep dish style with an NFL deal. Boom. That's big. Papa John's lost the NFL deal a couple of years ago. Yeah.

But it now has a new CEO. Shack is all over the place opening new stores. Just part of it. He's a board member, right? He's like doing things. He's opening like Shaq's specific Papa John stores. So Pizza Hut and Papa John's are making a comeback. Can we talk about the stocks here?

Yes. Okay. Yum brands. They own Pizza Hut. Their stock is up 24% this year. I kind of call Yum Brands Kintako Hut because they own Kentucky Fried Chicken, Taco Bell, and Pizza Hut. It rolls off the tongue a lot nicer than Yum, I think. Papa John's stock is up 35% this year.

And Domino stock, it's down 1%. The company lowered its projections for pizza sales growth this quarter and for the rest of the year. And that's pretty much because it's got the Pizza Wars going on. And those guys we just mentioned, they're doing the Pizza Wars well. So 930 yesterday when the stock market opened, Domino's stock was down 6% on this news of increased competition. That's because they released the earnings report. But then the CEO, Rich Allison, got on a conference call and said, okay, now we're going to talk about the earnings report. And I've got some things to reassure the people out there.

He actually only had one thing to reassure us about. That's true for the lactose tolerant out there. Carry out. Carry out. He mentioned the word carryout 17 times on this call. Carryout is not like a new age name for your pet. Can we talk about this? Is it care? I mean, I say, I say takeout. I say pickup. I think you can say anything but carryout.

Hey, can I get a pickup order? That means I pick it up. Hey, let's go, honey, and do some takeout because we don't have time to cook. In German, in German they call it Tumitnaman, which means to take with. I'm assuming this is some kind of a British situation here where it's also spelled with like two OUs. So everybody's talking about the delivery wars. You got Uber eats. You got DoorDash. You got postmates. You got caviar. But, but, but carryout, takeout, whatever you call? it's actually a lot more attracted to the business than delivery is. Domino's loves carryout. It's way more profitable because you're not paying a delivery guy to like schlep the box that can burn your hands that gets to your door. Domino's does its own delivery and those delivery people, they cost money. And so do the cars. And so does keeping that pizza hot. You got to insure the car. I'd be shocked if they don't insure the pizza.

Now, Guggenheim, which is an investment bank that likes to do research on the markets, it thinks that the carryout market in the U.S. is two and a half times bigger than the delivery market. I just can't say carryout anymore. The other thing here is that Domino's recognize this because carryout, takeout, it's 45% of Domino's sales. And they have some ways to boost this even further. They're just going to open up a bunch of new stores. Pretty simple. Yeah.

And encourage carryouts by offering more $7.99 carryout deals. They're like reducing the price to pizza, so you'll come in and pick it up instead of like waiting on deliver. They'll reduce the price of pizza only if you come in and pick it up. You better come in. Also, carryouts more reliable for the diner. Like, I've had too many times or two hours later you call and like you're trying to decide, whether you yell at the person on the phone,

or if you just, like, tell him you're through. I'm getting stressed. I think we need to order some pizza together and just have a moment. Check, what's the takeaway for our buddies over at Domino's? Domino's enemy isn't really Pizza Hut or Papa Johns. It's the delivery platforms. Exactly, because Domino's isn't just losing the pizza wars.

It's facing competition in the delivery wars to DoorDash, Uber Eats, Postmates, Grubup, all the delivery apps. So those apps, they're delivering pizza from, like, your local mom and pop pizza shops as well as these big guys. But they're also delivering like chicken teka masala, maybe some falafel, a pocable. Domino's has said no thanks to being on the third-party delivery apps, and it's keeping more of its profit by not giving them a fee every time Uber Eats delivers. But those third-party delivery apps, they are gaining more loyalty because you just get

flexibility and options and a bunch of different food that's not just carboloaded pizza. We said it once before. In the past, your options for delivery were pizza and Chinese food. Now it's pizza, Chinese food, and anything in the world. It's a problem for Domino's. For our second story, this China story is about censorship among U.S. business executives. And it starts with basketball, the Houston Rockets getting banned in China. All right, so this goes back to the general manager of the Houston Rockets who decided to tweet something on Friday, was going to have a nice weekend, ended up causing a geopolitical crisis.

He tweeted a picture. And in that picture was a nice little thing that said, fight for freedom, stand with Hong Kong. Now, Hong Kong is a sensitive topic for China right now. Yes, there is a two systems, one country, policy that's been in place since 1997. And that's the case where Hong Kong is part of China, but they operate with a different political system. It's a city with extremely high rents, democracy, and it's surrounded by communist China. Everything is pretty much expensive there. So it's a democracy, but there's been increasing influence from the Chinese Communist Party. Now, here's the situation with the NBA. The NBA happens to be really popular in China right now. 490 million Chinese viewers watched an NBA game last year. But it's not just the NBA. It's the Houston

Rockets in particular. Because of Yao Ming, the 7-foot-7, 22-year-old phenom with a great nickname, The Great Wall. You can't miss this guy. If you haven't seen him, he's looking at you right now. He played on the Rockets for like all eight of his NBA years. So China has basically said, not only are they frustrated with what the general manager of the Uson Rockets did, they are taking things a step further and like blacklisting the Rockets. Well, first of all, Alibaba, which is like the Amazon of China, it appears to have banned all Rocket stuff from their e-commerce website. And then on the NBA side, the NBA was going to have like a preseason game in China later this week.

China's state TV has decided they're not going to air the game anymore. Nick, that's a lot of economic punishment for one pro-democracy tweet. So here's the deal when it comes to China right now. The old rule of American business was do whatever it takes to join the Chinese market. For decades, companies and American politicians, for that matter, have tolerated Chinese breaking of the rules, human rights abuses because of the economic opportunity. We're talking 1.5.5. billion potential Big Mac buyers. That wasn't something that American executives wanted to pass up.

Even movie producers are routinely editing and altering scenes that might offend China because there's so many people who want to watch movies there. Mark Zuckerberg, legendary snacks listener, he even learned Mandarin, but Facebook is still banned in China. American business people bend over backwards for the Chinese market. So Jack, what's the takeaway for our buddies who are American executives trying to get into the Chinese market? The new rule of business don't even criticize the Chinese government or say anything nice. about what the Chinese government dislikes, because you'll get punished. The NBA, like, jumped on this quickly, and they started apologizing on behalf of the rockets like ASAP as soon as those tweets went out.

Now, China is very sensitive about Hong Kong for historic reasons related to the British imperial reign. But it is kind of surprising how quickly the NBA, like, jumped on this and was apologizing. Yeah, because they were apologizing for free speech among one of their executives. And this isn't like the first thing that's come up this week, because you also last weekend had a situation with a video gamer who got himself in some issues with Hong Kong as well. He won a video gaming tournament and during the celebration made some comments in support of the protesters in Hong Kong. And then guess what happened? The publicly traded company running the tournament, activist blizzard, they decided to take away his prize money and ban him from participating in the video game.

So at this point, China is so sensitive, business execs have a decision. You can either be vocal about the issues you care about or stay in the good graces of the Chinese government. But here's the thing. You probably can't do both. By the way, this is Nick and I own shares of Alibaba. For our third and final story, we've got our unicorn of the day, One Medical. They've been interviewing some banks, they want to do an IPO, and they're targeting 2020. News alert, the weather is not that good for IPOs right now.

Not really. Also, early takeaway here. Very straightforward name. One. One medical. Medical. Very simple, but there are actually a few of them. It's worth $1.5 billion. There are a few of them, Nick. It's a chain of primary care health clinics. It was founded by a doctor in 2007, basically to create like a mom. modern doctor's office experience, but you know what that means. Got to have a little tech in there. Yeah, there's less waiting room, more waiting app. Now, when it comes to one medical, Jack and I are looking at this, and we're seeing this as like

a Goldilocks situation. Not pure tech. No, not too much. It's not pure health care. No, not too much of that either. It's a nice bowl of orange. It's right in the middle there. They got brick and mortar stores.

You can't get any more like old school than just a physical brick. 70 clinics across the country. I don't have great Wi-Fi, because this is kind of a tech company. Someone explains me what a mortar is. I don't know. But they're going to double the number of locations to 140 within two years. Now, they've got a city-deep approach. What we mean by that is like, they're not just going to a city.

They're adding a few locations in the city. They want to, like, get there and make sure they get all your friends, whatever neighborhood they're in. Also, they really want the yuppies. They are really getting into cities. And they want you to think, like, if you get transferred from like J.P. Morgan, New York City to J.P. Morgan Dallas, there's probably going to be a one medical in both cities.

They want to have you there. They want to be coming up in like your brunch conversations kind of a thing. But it's also powered by a mobile app. It's not just Brickmanman. Martin Martin. True. Also, Google's an investor. So there. Now, the trend here is that the health care system is pretty much awful. That is the most reliable trend in American business. Very true, because one medical is like focused on a branded chain that's less terrible and like sprinkled with tech. For a hundred and ninety-nine bucks a year, you get access to the apps and you can access your data through the app and access to all 70 health clinics. But key point here, it's not really just like 200 bucks a year. That's the extra. Because you, you can access to your data through the app. And you can access to all 70 health clinics. But key point here. It's not really just like 200 bucks a year. That's the extra. Because you. Because you. But you can. But you can You also got to have the insurance that's going to pay for this stuff. You're going to have the insurance, and that is really expensive. So this is not just $200 a year.

Jack and I recently moved to the West Coast. Jack, you got out here. You needed to get that checkup. Make sure that you, like, arrived in one piece, I guess. So Jack actually used us. I just needed a primary car physician for an annual checkout. Everyone does. And a referral.

Okay. Let's not talk about that. Is there a referral bonus in here? Well, naturally, I stood on the scale and held my breath. Okay, because that makes you way less, right? You look great, by the way. But then, here's the thing. I lived in San Francisco.

I've recently moved to the South Bay. Okay. There's a one medical right down the road in San Francisco. One medical right down the road in South Bay. I don't know. When I go to the primary care situation, I'm pretty much just flexing my abs the entire time. It's nice, though, because I don't want to, like, call up a hospital and be like, do you have a doctor? Like, who do you even call?

But it's not all perfect for one medical, Jack, because we should get to the takeaway, which is expectations are critical in IPOs. For one medical, here's the problem. Is it a tech company or is it a healthcare company? That's the big question. And the answer will have huge consequences to its valuation and how the stock performs on public markets. So let's say one medical is a tech company. That means investors are expecting fast growth and profits like eventually. And they're also going to be skeptical because loss making tech companies are getting crushed in IPOs right now.

But if one medical is a healthcare company, investors are expecting slower growth but like consistent profits all the time because people are sick all the time. So the next step is sign a bank and then eventually issue the S1, which is the paperwork that officially, officially states that you're going public. And when they do, we'll understand if one medical is really more of a tech company or more a health care company. Jack, can you whip up the takeaways for us over that? China and the U.S. war goes beyond trade. It's cultural and American execs are censoring themselves.

Also, this drama makes it like a lot less likely that a trade deal is going to happen this week. Domino's is fighting pizza and Papa Johns and every other food that can get delivered. But carryout orders are its cheese stuffed profit puppy. Third and final story, one medical is interviewing banks for its eye. IPO. Which is basically the equivalent of like going to the jeweler about an engagement ring. You haven't proposed.

Big moment. But you're getting ready. Big moment. Diverr, snack back to the day. This one said in by Nick Van Dam. Yes, we just said Nick Van Dam. Sounds like you should be famous. That's a great name.

Bold name. Grad schooler in Phoenix, Arizona. Points out that plant-based burgers are made from plants. But they're not necessarily healthier than plants. The nutritional is actually about the same between a quarter-pound beef burger and a quarter-pound Plant Bainsburg. The key here, though, is like the impact on the planet situation. 90% less greenhouse gas emissions.

Boom. 46% less energy consumption. Impressive. 99% less water because it takes a lot of water to feed and raise a cow. Very true. And 93% less land compared to a quarter pounder U.S. beef. Nick, thanks for saying that one in great name. By the way, all of those facts about impact.

Yes. From a University of Michigan study, go blue. Snackers. Love to having you with us today. Let's do this tomorrow. See you man. Let's do it that. 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.