The Best One Yet - 🛥️ “Cool nuclear sub, brah” — Submarine stock-apalooza. Dutch Bros broistas. Microsoft’s $60B treat-yo-self.

Episode Date: September 20, 2021

We just got a peek into the nuclear submarine industry after subs experienced their biggest drama since the periscope. Dutch Bros coffee popped 60% since its IPO because it’s taking on Starbucks and Dunkin’ with broistas (not baristas - you read that right). And Microsoft is splurging a whopping $60B on… itself (that’s 3.5 Lyfts). $BROS $THLLY $MSFT $GD $HIIGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Got a SnackFact for the pod? We got a form for that too:https://docs.google.com/forms/d/e/1FAIpQLSe64VKtvMNDPGSncHDRF07W34cPMDO3N8Y4DpmNP_kweC58tw/viewformLearn 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. Welcome back. It is Monday, September 20th. Last day before the fall. He's the last day before the fall. By the way, Jack, this weekend, I got stung by a bee for the first time in 20 years.

And I forgot what you do. What do you even do? Well, if you need Nepi Pen, I hope you know you need Nepi Pen. My grandma put like cupcake icing on me once, but I don't think that was like a CDC thing. She was just trying to distract you. She sounds like a great grandma. It actually worked really well. Oh, by the way, today's podcast.

is the best one yet. For our first story, Dutch bros just IPO to challenge Starbucks and Dunkin' Donuts at coffee. The secret isn't baristas, it's bro-eistas real thing. For our second story, the nuclear submarine industry just experienced a multi-billion dollar multi-country drama. Yeah, this is the real housewives of 20,000 leagues under the sea. For our third and final story, Microsoft just took a whopping $60 billion of their hard-earned cash and splurged on themselves. and they're not the only one. Snackers, welcome to the age of the great buy back. But Snackers, before we hit those three wonderful stories,

this is how you start a week, Jack. This is, this is good. We're looking at the old hoarder's almanac, and it's actually week 79 of the pandemic. We're getting up there, Jack. Things we're running out of because of the pandemic. Jack and I are keeping track. The old hoarder's almanac.

This week, we found an opposite situation. Yeah, get this, Snackers. this isn't something that's disappearing, we found a product that's expanding. We're talking, of course, about pumpkin spice, not just a basic latte that pairs with leggings and a scarf. No, no, no, no, no, no. Pumpkin spice is infiltrating every inch of society like beyond your apple picking weekends with the significant other. First, it was the pumpkin spice beverages.

Yeah, it came the pumpkin spice hard seltzers, the pumpkin spice vodka, the pumpkin spice apple juice. But then pumpkin spice expanded to food. Yeah, Jack, you know, the shop and stop grocery store? they're doing pumpkin spice salmon filets. CVS is doing pumpkin spice cough drops. That actually sounds good. But then pumpkin spice jumped across species from human beings to animals.

This got freaky. Purina is doing a pumpkin spice cat litter and a pumpkin spice puppy dental bone. We needed that. Sorry, River, you're not getting pumpkin spice dental bones. Who's a good boy, who's your go boy? Then Nick, this happened. Trader Joe's unleashed pumpkin spice face masks for your, cosmetic pleasure. But the most iconic pumpkin spice spinoff of them all. Jack and I jumped in

snack style and discovered Scott's Pumpkin Spice toilet paper. Snackers, that's iconic and ironic because toilet paper was the first item we started running out of at the beginning of the pandemic. Which they're combining with pumpkin spice, the one item we're clearly not running out of during the pandemic. It's no longer pumpkin spice season. Welcome to the Pumpkin Spice era, people. The history books will look back at this era, Jealously. Jack and I are going to hit the Pumpkin Spice Three Stories.

You're tuned in to 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. Right. Snacks is digestible. Business news for you. For our financial, LLC, member FINRA slash SIPC. For our first story, last week, Australia canceled. They nixed a $66 billion order for French submarines. They're getting American and British nuclear subs instead.

And this gave Jack to me like the biggest peek into the submarine industry we've ever had, Jack. It's fascinating. Snackers, let's bring you back to 2016. Please. Australia outperforms in swimming at the Olympics. It does. Water sports, their thing. Their military swimming, though, needs an upgrade.

It does. I think this is econ 201, Jack. Good fences make good neighbors. Good submarines make good geopolitical foes. Okay. So since Australia at neighbors China, they actually ordered back in 2016 12 diesel-powered submarines from France. From France.

Tossing 66 billion dollars of products in the old shopping car. But here's the problem, Snackers. China, they got a new dog recently. A bunch of scary water dogs in Australia needs a bigger fence against those water dogs. Okay. So terrified by China's military strength. Yes. I've been shown off recently.

This is like a tan. Australia called over the waiter and said, excuse me, can I cancel that French submarine order? Just nix it. Do I have time? No, no, no. We don't want it. Oh, I can? Good.

I'd like American and British submarines instead. Boom. And the reason for their aversion over in Australia to these French subs, the French submarines, were diesel-powered submarines. Right. That means the submarines had to fuel up at least every week, like a suburban minivan at a Getty station. On the other hand, they're looking at this U.S. submarine situation

and the U.S. subs, they're nuclear power. They got nuclear reactors on board. They have nuclear reactors on board. Jack, can you break down how insane and powerful this is for a second for us, please? Okay, that means they can be underwater all the time, which means they're harder to detect. It also means I can't believe this.

That they can produce their own electricity and their own oxygen. For how long, Jack? So they can stay underwater. You're getting there. For 50 years if they wanted to. Years. You can have a Gilligan's Island situation.

They're just there underwater for half a century. The only limiting resource is food. So actually, they could only stay out 90 days because that's how much food these subs can handle. Unless he, like, It really like Skippies and Frosted Flakes, which are timeless. They live forever.

Beyond 90 days, they'd have to start eating themselves. Then it's a dangerous Giligan's Island situation. So Australia's upgrading their submarines to the top of the line U.S. nuclear ones, but actually you get an assist from the British. Yeah, this gave us a huge window into the submarine industry because these submarines are actually going to get our British made. Rolls-Royce does the nuclear reactors and their stock was up 4%. But the submarines are actually built and assembled in the United States by two,

companies, either General Dynamics or Huntington Ingalls Industry. And these two American icons of submarines have been pumping out subs since 1899 and 1886. Newport News, Virginia, Groton, Connecticut, iconic hubs of subs. Jackie, when you are driving up I-95 in Connecticut, I've seen a sub, like go under one of the bridges. It's wild. I haven't seen that, but I'm probably going to dangerously look the next time I'm driving 955. If you don't see it, it's just underwater. The thing is, those two submarine icons are actually publicly traded companies. So we could look at the stock price and see what happened. The stocks of those two U.S. submakers chilled because the deal, it's actually under a long review still.

But the French stock fails behind the French submarines. That fell 4%. And France is really angry about this whole thing. So, Jack, what's the takeaway for our buddies over in the nuclear sub industry? It's a digital world, but big, shiny things don't go out of stock. Yes, Knack or cyber attack this digital surveillance. That does the world really need like more tanks and submarines and fighter jets? Apparently, yes, they do, Nick.

Governments are obsessed with buying these big military equipment like more than ever. Yeah, America's military defense stocks are performing shockingly well right now. There is a stock index that tracks 34 of America's defense and aerospace stocks. The old Dow Jones Aerospace and Defense Index, it has grown 13.9% on average over the last 10 years. That is really good growth. And it's virtually the same growth as the S&P 500, which is booming thanks to tech giants like Apple and Amazon and Facebook and Microsoft. So cyber attacks, ransomware, facial recognition tech, those are the buzzwords of war today. But tanks, submarines, and fighter jets, they're still the gear of war.

For our second story, Dutch bros, the coffee chain has jumped up, shocking 60% on its IPO. I was so excited to learn about this company because my nickname was the Dutchman when I was young. And I have three brothers. So like, Bros is all I know. Yeah. This wasn't in the IPO paperwork, but they should have put this in the IPO paperwork, Jack. Our number one question about Dutch bros, how does a coffee startup beat Starbucks and Dunk? Okay, first of all, shocker for the finance industry, apparently the ticker symbol bros was available and these guys snagged them.

I'm shocked Buffalo Wild Wings. Didn't snag bros. By the way, Jack and I jumped in snack style to their eyes. IPO paperwork. It was like an espresso overdose. Okay, the first sentence of them describing themselves is this, and I quote, Dutch Bros is a fun-loving, mind-blowing company making a massive difference one cup at a time. They then said mind-blowing like two more times. This is a 29-year-old company with 471 shops across 11 states. And the snackers have been tweeting at us since the IPO to cover this, so we finally indulge. Yeah, the CEO, by the way, this company, were a rage against the

machine t-shirt at the New York Stock Exchange to celebrate the IPA. And every other coffee shop has baristas who whip up your latte. Dutch bros calls them broistas, for real. No joke. And we're talking, Broistas making these like absurdly insane sounding drinks. Zach, what are you seen on the menu over there? Well, this one sounds like lyrics from Rage Against the Machine. The iced electric berry rebel.

Yeah. Actually, it sounds like pro wrestling. The caramelizer. Deathblower. But Jack and I were fascinating. about this company because we just had the worst year in restaurant history and yet they're IPowing. We just told you on Friday that the city of New York is trying to rescue restaurants by capping commission fees, right? Yeah. So even Starbucks, their sales shrank in 2020. But despite the pandemic

and despite the wildfires out west in Dutch Bros. Territory, they didn't close a single location during the pandemic. In fact, they opened 113 new ones. Sales jumped. 37% for this chain, even though commuting wasn't happening during the pandemic, so people weren't popping in to grab a coffee on the way to work. And Dutch Bros was profitable during all of that. Part of the recipe for their profitability is that every single shop has a drive-thru. It's like part of the rules. But Jack and I discovered it's also success thanks to the broistas. The broistas are actually really pleasant. They're trained to hand out complimentary beverages and giving out free dog treats anytime a dog walks into the store or is in the car for drive-thru.

Jack, you're intrigued? Do you want to open a new Dutch bro's location? Like, you want to open a new Dutch bro's shop, man? I'd be interested, post-pod. Well, you can't because you have to have worked as a broista in order for them to let you open a new shop. So you're saying I could, but I'd have to work minimum wage for like six months and... Yeah. I like this. It means even the top execs knows how to get their hands dirty. It's a right of passage. It's a baptism by the bean is one of this. But any company going public must list the risks that the business faces. And number one for Dutch Bros was intense competition in coffee. Because one third of U.S. at-a-home coffee sales are from Starbucks.

And the other third are from Dunkin' Donuts. And the final third is split up among like a thousand billion coffee shops. How is Dutch Bros going to compete? Well, what's the takeaway for the bros over at Dutch Bros? Dutch Bros is betting that culture beats price and people be. product. Snackers, another shocker, Jack and I noticed in the IPO paperwork, Dutch bros mentioned the word coffee 140 times, but they mentioned the word employee 237 times. They really care about their employees. In fact, they also mentioned broista 93 times. So they kind of said employee

327 times. Yeah, and all that broista focus that we mentioned before, that's actually an investment. Broistas love Dutch bros. Only 40% of broistas quit the company each year. That sounds high, but it's actually half the turnover of a typical restaurant. And that saves Dutch Bros money, which gives customers a better experience. Tyrone, how are the kids? By the way, I'll take the usual. And that better customer experience, that leads to more customer loyalty. Tyrone, you know I'd never cheat on you by getting a large regular over at Dunkin' McDonald's. Snackers, Dutch, they can't compete with Starbucks on price or size, but they can't on

culture. Post-IPO, you could scale a cappuccino, but can't. can Dutch Bros scale that unique culture? For our third and final story, we got a new trend here, the great buyback. Microsoft announced they're splurging, $60 billion of their money to buy Microsoft stock. Oh, there we go. Snackers, a funny situation here in the numbers.

There's $130 billion of cool, hard, sweet cash that Microsoft is like just sitting on. Microsoft is worth about $2 trillion. It is. $130 billion of that is cash in their bank accounts. Yeah, that's nearly seven lives. Now, here's the news. They're taking about half of their cash, $60 billion, to buy their own stock. This is a treat yourself to yourself situation, apparently. It's quite a treat yourself because $60 billion could buy Lulu Lemon, the company. Or if you were curious, you could buy Ferrari, not like Ferrari the car. You could buy the company Ferrari with that money.

$60 billion is also just one. year worth of Microsoft's insane profits. So they're taking one year of profits and using it to buy their own stock. So of course, why is Microsoft doing this? They're buying their own stock to reduce the number of Microsoft shares out there, which makes each remaining Microsoft share worth more, which is a really nice treat to Microsoft share. But Jack and I noticed a funny thing going on here. There are a whole bunch of other companies doing the exact same thing in the last three months. We call it the great buyback. Yeah.

Total vanity move here. Campbell Soup, Tupperware, Serious XM Radio. They're all spending their hard-earned corporate profits on buying their own stock and themselves. Target is buying back $15 billion of Target stock. Very nice. Morgan Stanley is buying back $12 billion of Morgan Stanley stock. Even Macy's Jack, which like doesn't have that much money in the purse right now, is using its spare change to buy more Macy's stock.

stock. Some of these companies are doing this to reward their shareholders to boost the stock price because they turned an insane profit during the pandemic. Others are just kind of freaked out that tax reform could result in new taxes on corporate buybacks like this starting next year. Right. So they're doing it now tax-free while they can. So Jack, what's the takeaway for our buddies over in all these really big companies? Corporate spending is a zero plum game. For every plum you eat, there's a pair you didn't. Yeah, Snackers, interesting result from the surge in companies spending all this money on buying their own stocks. It means all these companies aren't spending all that money on growing their company. Yeah, the Wall Street Journal

pointed out that public companies spent more on share buybacks like these in the first half of this year than they did on capital expenditures. Microsoft buying stock of Microsoft means it didn't spend that money buying new buildings or land or computers or equipment to grow. And in D.C., Democrats don't like that trend because share buybacks benefit mainly the stock owning class. Capital expenditures, on the other hand, tend to benefit the working class. That's why Joe Biden's tax plan might include a tax on share buybacks like what are happening now. Because this is a total zero plum game. For every plum a corporation eats, there's a pair that you didn't. Jack, can you whip up the takeaways for us to start the week?

The U.S. nuclear submarine industry has a new customer, Australia. Everything's going digital except apparently military spending. Dutch bros is basically a mom-and-pop coffee shop in a stock. The secret is their broistas, but can you scale culture? For our third and final story, Microsoft is buying back $60 billion of Microsoft to boost the stock price. Corporate spending, though, it is a zero-plum game. Now, time for our snack fact of the day. This one sent in by Bill Jackson in lovely St. Louis.

The first automated car wash. They're scary. Like not one with sponges and buckets of suds. Right. But they are kind of scary. Opened in Detroit, Michigan, way back in 1914. Great name, by the way, for this first location, automobile laundry. That is great.

That's what's happening. It's very literal. Now, it was near Detroit for obvious reasons. General Motors, Chrysler, the Model T, so on itself. Jack, full disclosure, I actually hadn't done a car wash like this until like this year living in California. My favorite part is when the windshield wipers like come off the windshield because they're being blown so hard. It is like a show. It's more Disney than it is anything else. Snackers, you'll look fantastic to start the week, by the way. And remember,

grandmother's cupcake frosting on a bee sting is not something we fully endorse. This is not a research report and it's not medical advice. But you should still ask your friends Y-H-Y-YS-D. Have you had your snacks deal? If you know, yeah. And before we go, congrats to Snacker Joe Wesley, who's having his three-year anniversary of living in Shojo, China. Happy birthday to Sammy Ray in France. And Ray Brown over in Atlanta, who's working on the Walking Dead TV show. Incredible. And happy birthday to Dr. Darshon in Boston, Massachusetts. And Rich Sturm in lovely Charlotte-V-M-Ack. Is that so? And that is so. Dude, this guy's a master of woodwork. because you know one out of three people in the entire state.

I hope this birthday shoutout gets me a deal on that wood job I just commissioned before. And happy birthday to Leo Tilsen down in Berkeley. And Jess in Berkeley, California. And Zach Cardana in Lubbock, Texas. Congrats to Anna Keene for getting a new job in Illinois. And Haley Redington and Mike Campbell. We know you were supposed to be married this weekend last year and you had to postpone. But hey, huge, happy anniversary anniversary.

Happy asterisk anniversary. This is Jack. I own stock of Amazon and Nick own stock of Apple and Lulu Lemon. Robin Hood Snacks, newsletters, and podcasts reflect the opinions of only the authors who are associated persons of Robin Hood Financial LLC and do not reflect the views of Robin Hood Markets, or any of its subsidiaries or affiliates. They are meant for informational purposes only and are not a recommendation to buy or sell any security, cryptocurrency, or investment strategy in any account. This is not an offer or sale. of security, not a research report, and is not intended to serve as the basis for any investment

decision. Any third-party information provided therein does not reflect the views of Robinood Markets, Inc., Robinto Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk, including loss of principle and past performance, does not guarantee future results. Robin Hood Financial LLC, member FINRA, SIPC.