The Best One Yet - “Congrats, you now own part of an airline” — Apple’s $399 iPhone shocker. Aaptiv is “the Spotify of Sweat.” Our $25B airline bailout.

Episode Date: April 16, 2020

Apple decided to announce a new iPhone, but the surprise is in the pricing strategy. The airlines finally got their $25B government bailout, and that means you’ll own part of Delta, United, JetBlue, and the whole flying gang. And our “Maybe Unicorn of the Day” is Aaptiv, which claims to be “the Netflix of Fitness,” but we think it’s really “the Spotify of Fitness.” 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, April 16th. We have such an interesting treat of a pod for you. But first of all, stocks dropped big on some not fun data. No, it wasn't fun at all. Retail sales plummeted in March by like their most, you know, ever.

But we whipped up a Snacks Daily like a Sesame Street episode. Jack, today's episode of Snacks Day is brought to you by the letter A. We got Apple, we got active, and we got the airlines. I'm seeing a theme here. Maybe that's why Today's Snacks Daily is the best one yet. This is definitely a T-boy. Our first story, Apple is devoted to making its

iPhones a little bit better each time, but a lot more expensive each time. We got premium premiumer and then premium S iPhone. Always a nice combo. But then Apple shockingly just resurrected the old iPhone S-E, aka the discount iPhone. Gutsy and dramatic roof

cotton, let's see if it works out for him. We're focused on the price. For our second story, the maybe unicorn of the day is active. We actually don't know. They wouldn't tell us the valuation or the fundraise amount. We have no idea. This could be a unicorn. It could not be a unicorn.

It could be nowhere close. It could be way more. But it's a workout app that claims it is the Netflix of training. We think, though, it's really the Spotify of sweat. Can't outweigh Jack third and final story. It doesn't matter if you love airlines or if you hate airlines. Congratulations. You are now a part owner of an American airline.

We are looking at the finally official $25 billion bailout deal for the airline industry. The baggage fees are marginally less infuriating when it's your airline. And it's all of our airlines now. It's kind of a weird situation. Now, before we jump into all that goodness, Snacks Madness is happening, and Jack and I have a Snacks Madness update for you. The Snacks Madness brackets are getting broken. This is March Madness style with March Madness style drama.

Yesterday, we had the matchup of Costco's, annual membership versus Nike's Air Jordan brand. Well, the snackers have spoken, the people have voted, and by 60% to 40% Costco won. It was a bulk-sized victory for Costco, which is now going to make the final four contestants of Snacks Madness. This thing got ugly. It was like camel-sized Cheerios bags versus like overly priced sneakers. You can buy one pair of Nike Jordans or an entire aisle at Costco. Seriously, ILA could be all yours. Just give up the shoes. Now today, we got another matchup to see who can get into the final four condestants. It's our industrials and finance division. This one pits J.P. Morgan Chase's Sapphire card versus the Tesla Model 3. Now, we all know the

Sapphire card is basically a modern religion. You got a friend who told you a 10, what are you naming your first one? We're going with Sapphire. It's an incredible product. We've got to name the baby that. But any Tesla Nista knows that the Model 3 has a similar function in today's society. You don't buy a Model 3 car to use the Model 3 car. You buy it so you can tell people you bought a Model 3 car. Nick the bear of California actually makes one car apartments. No bedrooms, no bathrooms, just space for a Model 3. Tesla loves doing that kind of thing.

Snackers, let us know who you think should win the Chase Sapphire card or the Model 3 on Robin Hood Snacks on Twitter. Vote Snacks Madness at Robin Hood Snacks. Jack, let's hear 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 are about to hear rain food. It's air candy. They don't reflect the views of the rocks. Babahood 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, Jack, whip out your side ponytail and get yourself a tomogachi. Apple is having a throwback moment. I don't know to go after the Tomogacchi or the ponytail. It's relaunching a low-cost iPhone SE out of nowhere. This feels kind of like a Backstreet Boys comeback album. Some people will love it. Others will rip on anybody who loves it.

Did you see the full house reunion? Absolutely. Absolutely not. You're getting both sides. You're getting one or the other. Before we talk about the new iPhone SE, let's remember the old one, which was the only iPhone you could actually handle with one hand. Yeah, it sounds like you're giving a funeral speech. That thing was 4.0 inches long.

But the screens these days for iPhones, they're like six and a half inches. They're borderline computer monitor. The iPhone 11 Pro Max, which is the top, top, top of the line iPhone. It basically requires either a full team or a wingspan of a California condor to hold on to it. You try to open up an app on this thing.

You need a spotter. Someone needs to literally get behind you. Also, the old iPhone SE, which we all loved, it was the only iPhone that comfortably fit in the front pocket of my phone. most women's jeans. Rumor has it that like the American Eagle designer team, literally created jeans for the iPhone SE.

Yes, we made that up. All right, that was Nostalgia 101. Let's pivot to the new iPhone SE, which Apple announced yesterday. What we got? It's a little bit bigger than the old SE, but it's still small. It's 4.7 inches long versus the old 4.0 inch screen of the old SC.

Here's the best part. It's just as cheap. Get this number. Snackers, this new iPhone, $399. $3,000. $3.99. The first thing you see on Apple's website about this phone, we put the brains of an iPhone 11 pro in the body of an iPhone SE. They're making themselves sound like a modern day Frankenstein slash Bon Jovi over there. That iPhone 11 pro though, Nick, is $1,000. And this one, $3.99. Oh, by the way, this new iPhone SE, it's got the same A3 chip as the best quality iPhone, but it's $200 cheaper than the

X-cheapest iPhone. If you're wondering what this looks like, it looks exactly like the current iPhone 8. I can attest because I have an iPhone 8, which I was already being ripped on for, and now I'm going to be ripped on even more because there's a 399 version. We like to call Jack's iPhone 8 the iPod 16. I've constantly been like two versions behind in the iPhone department. Now Apple is aggressively nudging you to upgrade if you have the old SE 6, 7, or 8, and all the pluses of each of us. So Jack, what's the takeaway for our buddies over at Apple? Serious question here.

Did Apple just cannibalize itself? Snackers, cannibalization. It's when you offer products so good, it actually steals sales from your other critical products. Our favorite example is the Tesla Model 3, which we've already mentioned. That definitely stole sales from people who are thinking about buying the Model S. So true. But then they're like, wow, the Model 3 is cheaper and like just as cool, if not cooler.

So if you take into account cannibalization, that means there are two ways this whole. new product launch could go for Apple. One's good and one's bad. Good if this new phone convinces existing iPhone users to upgrade when they weren't planning to upgrade for like another year or two. Or because it's now affordable and may convince a lot of Android users to maybe buy an iPhone for the first time. Because remember, iPhone has like 50% of the market share in America, but only 20% of earthlings are using iPhones. Now, this product launch could go bad for Apple if people buy this product instead of price your iPhones, they had intended to buy. Apple would be super bummed if somebody about to buy the iPhone 11 Pro Max XL buys an iPhone SE instead. Now, this is a big risk. And that means Apple, which knows what it's doing,

has probably tested this with lots and lots of focus groups. All right, we're going to put John Q potential iPhone buyer into a room. We're going to have a two-way mirror. Great guy. We're going to lay an iPhone 10 and we're going to lay an iPhone SE, see which one he goes for. And then we're going to give him a nice $20.R.B.'s gift card on the way out, because, you know, We appreciate its time. So Apple doesn't want to eat its own arm off with this iPhone SE. It's too smart a company to do that. And iPhone, the product is too important to Apple to make a mistake like cannibalization.

For our second story, airlines finally got their $25 billion bailout. Congratulations American Snackers. You're now the proud owner of a little bit of 10 different airlines. Part of the $2.2 trillion economic survival bill recently passed. by Congress, that was specifically for airlines. Because without a bailout, several or maybe even all of the American Airlines could have gone bankrupt. And then like 555,000 workers would have lost jobs and you'd have to drive to Nashville to make that bachelorette part. Oh, the horror. Lauren would kill you, Julie would be pissed and the whole thing would fall apart from there.

Now, the reason airlines find themselves in such a pickle besides the COVID-19 crisis is because they don't have any money and they gave it away to all their shareholders. Get this Snackers. percent of the cash that airlines have generated from profits over the last decade? We're talking tickets, baggage fees, extra legroom upgrade fees. Ninety-six percent of that was gifted back to the people who owned the stock. We're talking dividends or share buybacks, both of which benefit people who own like Delta, American, or United Airlines stock. That's one of the benefits of being a shareholder. But here's the funny thing about airlines. If they'd only given like half as much of that cash to shareholders, they probably would have enough cash right now to not need a bailout. It's so true.

But let's talk about the bailout because the bailout's happening and what the bailout actually looks like. So 70% of the bailout money is like free money from you, Jack, me, all of us. 30% is loans. And then taxpayers get 3% of that money back as stock. 10 American Airlines are going to split up the $25 billion to pay for bills, especially wages for workers until things return to normal. Now the New York Times did a fantastic breakdown of this, specifically looking at what happened with Delta. Jack, can we deep dive Snacks Island to Delta a little bit? Delta is taking $5.4 billion from the U.S. government as part of this bailout deal. And $3.8 billion of that is a grant. That means like they don't have to pay it back. Boom, upgraded

first class, no worries. One point six billion of that you do need to pay back because it's a loan and it's due within 10 years. And in return, the United States government gets, a 1% ownership stake of Delta the airline. That's right. The U.S. government owns 1% of Delta now, which means we own 1% of Delta now, which is kind of weird. It's kind of great. But it means we own the stock and we're probably eventually going to sell that stock either for a gain, which the Treasury would use to pay back our national debt, or if the stock price falls, we'll sell the stock for a loss. Which means that we'll probably have more national debt as a country. Now, there are strings attached to the balance. This is not.

entirely free. These airlines cannot lay off or cut pay of any employees until September of this year. And they can't hook up shareholders with more share of buybacks until September of next year, 2021. So Jack, what's the takeaway for our buddies nicely upgraded over at the airline? This wasn't the only way to save airline jobs. Bankruptcy could have potentially worked too. Snackers get this. Airlines, they go bankrupt like all the time. Apparently 66 times the year 2000, there have been airline bankrupt. Let's imagine if we let the airlines go bankrupt. First of all, the stock price of all these airlines, they probably would have headed towards $0. Which would be a pain for the airline investors, the stockholders. And people who lent money

to these airlines, they probably would have lost some, if not all of that money. Also a pain to investors. Now, also what would have happened in a bankruptcy is employees, a whole bunch of them would have got laid off. A lot. But here's the thing. Another airline probably would have like a Phoenix from the ashes, replacing the bankrupt airlines like what has happened 66 times from the year 2000. Jack, you're a poet. I love that imagery. Now, on the flip side for people who are pro bailout, by bailing out the airlines, workers who would have become unemployed and taken out unemployment insurance now don't have to take out unemployment insurance because they got to keep their jobs. Right. So we either bail out the airlines now with $25 billion or pay the airline workers

extra unemployment insurance, we're kind of paying either way. By not letting the airlines go bankrupt, US taxpayers are protecting airline investors and minimizing disruption to airline jobs. Leslie, we know you're running snacks challenge laps in your Murray Hill apartment in New York City since you can't run outside. Leslie, we're a huge fan that you're a huge fan of this pod. If you've been jogging clockwise around the kitchen island, start jogging counterclockwise because we're halfway done with today's pot. I love how you said that, Jack. and final story. We've got our maybe kind of roundup unicorn of the day. It's active, the audio-only fitness app that just raised a new fundraise. This is pretty much a bunch of fitness

podcasts in one app, but you have to pay for them. You can't discount them, though, because they're most recently worth a cool $200 million. And a couple of their investors include Amazon and Disney, not too shabby. Snackers, in-home workout hardware and software are in the best. And shape of their lives. It looks fantastic. Those apps have too many apps. You got to give us a hint. Tell us all about it. Nike has been given away its train club workout classes with instructors who are wearing like a thousand dollars worth of Nike gear. The pad, Nixon, my favorite yoga studio in San Francisco, has been filling up the digital floor with yoga mats in Zoom workout classes because the studio is closed. Oh, and by the way, 25 pound weights, if you're looking for dumbbells, stop looking. They're sold out. everywhere until like June. There are no dumbbells. You could probably sell your dumbbells for like $1,000 per pound. Actually, it's a great opportunity. Put those on the real real. Enter the active app. Traffic is up 100%. Engagement's up 200%. Boom. They have 2.5,000 classes on the app with 200,000 users. They can water break after that one. Now what they're providing in the app is curated personal trainers

who upload their critical specific workouts and then the app determines which ones are best for you. They'll take your two-mile run you had planned to go like down the end of the road and back, and they'll turn it into a two-mile boot camp death march by interrupting like every 200 yards with some burpees, some push-ups, some air squats. Last year, Aptiv was actually trying to sell itself. They were trying to sell the company. Today, they're like, no, we're all good. We got this.

This is fantastic. We got this. In fact, we're going to do three more reps. We got it. If your glutes aren't feeling it right now, you're not doing it right. Compared to all the other at-home fitness options we have right now, Aptive has a surprising and unique advantage. It's single media in a world of multimedia.

The CEO of Aptiv calls his company the Netflix of app-based workouts, but that's completely wrong. It's so incorrect. Jack and I are looking at this. This company is the Spotify of Sweat. If this was the Netflix of App-based workouts, you'd be able to look at the gorgeous trainers and get distracted from your workout. but this isn't that.

They're only in your ears telling you how to do your workout. They're basically living in your imagination, and when you go to sleep at night, they're probably in your dreams. Active is audio only. You need your AirPods for this thing, and that's a huge advantage right now. Get this, Peloton bikes, that basically have like an 18-year wait list right now

because everyone's stuck at home. And the studio in New York City, where they actually record the instructors on the bikes, that shut down. So there's no new classes, no live class. You are dying to get outdoors, and that's where the Aptive app thrives best as it like guides you on a random run through the middle of nowhere. A third advantage during an economic recession, Aptive has lower production costs.

So instead of like a Globo Gym Hollywood studio that's needed for like a P90X or insanity workout filming, it's a different situation with Aptive. Active traders just need to upload an audio recording into this thing. Do this for you. This is your time. You got this. Put all your thoughts and worries behind you with every step. You've got this. You have got this.

This is like actual recorded lines from the Aptive app. It's highly motivational. So Jack, what's the takeaway for our buddies who are just working hard over at Aptive? Fitness Tech is training you, but it's really obsessed with your boss. Snackers, keeping your blood pressure under 120 over 75, that's healthy for you. But it's really lucrative for wherever it is that you work. Here's what companies are thinking. Better health for the worker bees means lower health care costs for the whole hive.

So, Aptiv is actually most excited right now, not about its consumer product that you're using, but about its business product that it's selling to the company you work for. Employees at Snapple, Starbucks, and University of Washington, they all get free subscriptions provided by their employers to Aptive. Boom, you get a fun little workout perk, and your job gets to pay lower insurance premiums because you're in better shape. And we're seeing this strategy across the whole fitness tech industry. Case and point, Fitbit, they've partnered up with a health insurer to make sure they're

wristbands are on 60 million health insurers' risks. Fitness apps are part of your 9 to 5. Jack, can you whip up the takeaways for us over there in the same flannel we wore yesterday? Apple is bringing back the legendary, low-cost, lightweight iPhone S.E. They hope it boost sales, but it could backfire and hurt them, aka cannibalize. Second story, airlines finally got the $25 billion bell out they've been waiting for. But if they'd save more cash instead of giving it all away to shareholders, they may not have needed one in the first place. Our third and final story.

Active is tossing away the screen. It's the audio-only fitness instructor for your ears. They want you as a customer. They want your company more. Now, time for our snack fact of the day. This one sent in from a legendary snacker, Reggie Ford in Nashville, Tennessee. Jack, and he gives some background on this guy.

Yeah, it's not just Bachelorette Party's Nashville. It's also Reggie Ford, who's been listening since March 25th, 2019, happens to be Reggie's birthday, and the day that we launched Snacks Daily at Robin Hood, aka the Snacks Daily Birthday. So Jack, let's go into this one. It's pretty good. All right, Planters Peanuts, the peanut company,

killed Mr. Peanut this past year. He was 104 years old. You may have seen it. They aired a funeral of Mr. Peanut during a commercial for the Super Bowl. That cost like $5.6 million. That's because Super Bowl commercials are really expensive. But that also makes Mr. Peanuts funeral,

technically the seventh most expensive funeral ever in the world. The most expensive funeral ever was Alexander the Great at $600 million. Then you had Ronald Reagan at $400 million. Reggie, happy, belated birthday, by the way. That was a great pod. Snackers, remember to vote in Snacks Madness. You got J.P. Morgan Chase Sapphire card. Yep.

Tesla Model 3 at Robin Hood Snacks on Twitter. Snacks Madness Showdown at Robin Hood Snacks. We'll see you on. This is Jack. I own stock of Spotify and Amazon. 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.