The Best One Yet - “Does this tie make my hoodie look fat?” — The Big Tech 4 hit DC. Blue Apron’s shocker profit. AMC’s movie truce.

Episode Date: July 30, 2020

Amazon. Apple. Facebook. Google. CEOs of the Big Tech 4 hit up Capitol Hill for their biggest Congressional grilling, maybe ever. Blue Apron whipped up its 1st profit since IPO’ing, but then the stock plummeted 15%. And AMC Movie Theaters just snagged the most important deal in streaming history — it shortens the infamous “75-day window.”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, July 30th. Stocks rose a tad, but Nick and I have some fantastic news for all the Snaggers. We're looking at the numbers here. Turns out today's podcast is the best one yet. For our first story, Blue Apron just served up its first profit ever. Congrats on the suveet Hallibate. J.K. Wall Street was disappointed, so they sank the stock 15%. For our second story, AMC Theaters almost gave universal pictures that Tom Hanks tree. from Castaway. Wilson, don't leave me. Instead, AMC and Universal just signed the most important truce in movie history. For our third and final story, there was more money in Washington, D.C. yesterday than probably since when the British invaded. Go back to 1812, Bezos, Cook, Pachai, Zuckerberg all hit up Capitol Hill for the biggest big tech grilling of 2020. Ironically, they all videoed in from like their homes in Silicon Valley using Cisco's WebEx feature. Buffering. Buffering. You got to do what you got to do. Now, before we jump into all that wonderful stuff, New York State has been hit hard by COVID.

It's been painful. It was the first state to have a bunch of breakouts, but it is still legal today to hold non-essential gatherings of more than 50 people anywhere in the Empire State. So it wasn't a good look when last weekend, the music group, the chain smokers, decided to host a concert in the Hamptons. They were raising money for charity, but they're also really pushing the limits of what constitutes essential. Yeah, and Jack and I were thinking that.

any group with a song titled hashtag selfie probably is not essential. Get this, Nick. The opening act was even more interesting because it was a guy named DJD Saul that let the beat drop. Now, Snackers, you may know him by his real name sound familiar, David Solomon. Or perhaps his LinkedIn name, which is CEO of Goldman Sachs. Which means we got to endorse this guy for multitasking ASAP. Because the CEO of Goldman Sachs is also a DJ named DJD Saul. And also, Goldman's PR team generally loves this story. It's all in the all the time. Except for right now because Governor Cuomo of New York is saying this guy isn't following social distancing guidelines. Yes, DJD. Saul's shenanigans out in the Hamptons is not

winning any shareholder love right now. So we're thinking that for the next CEO of Goldman Sachs, the old HR team at Goldman is going to be asking some much more particular specific questions. So before we turn it over to you for your questions, there's one more thing we're required to ask you. Will you ever embarrass the firm by flagrantly disregarding public health guidelines by DJing a concert for the Hampton's crowd? Oh, forgot to mention, will you do all that in the middle of a brutal economic recession and global crisis? A simple yes or a simple no will suffice. Let's hit 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 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. It's not a research report or investment advice. Not an offer or sale of a security. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member Fenbra slash SIPC. For our first story, Blue Apron just snagged its first profitable quarter ever. But then the stock fell by 15% as I congratulate.

Jack, are we talking ever, ever, ever? Forever, ever. Ever, ever. This is like the rudy moment for meal kits right now, Snackers. Nick, Blue Apron's 5 foot nothing. A hundred and nothing. But it's ready to go if sheltered. in place ever happens. You, Blue Apron, put on a helmet you're getting in. Coach, you want me at

noseguard? I'm five feet tall. Shut up and get in the game, Blue Apron. Snackers, Blue Apron, I pored in 2017 at a valuation of $2 billion. And now it's worth a cool $160 million with an M dollars. That means it's worth one 50th of a lift. You need 50 blue aprons to equal the value of the company lift. And you need like 50 lifts to equal one Bezos day. Now, Snackers. When it comes to Blue Apron's journey, it has not been a fun journey, Jack, the background. It IPOed on Meal Kit hype, but then it almost went bankrupt. True. Then it's a facility in New Jersey where they actually prepare the food, had a lot of problems.

They're a little awkward. And despite promo codes on every podcast, not enough people are signing up for Blue Apron. Just put in 1, 2, 3, 4, 5, and you'll get 14 months free this entire year. So Blue Apron has been trying like every partnership that's available to get new customers. Yeah, they're like Weight Watchers. people want prepared meals, why don't we work with Weight Watchers? Beyond Meat, people seem to be into Beyond Meat. Let's put Beyond Meat in our meals. Kids are into TikTok these days. Why don't we make TikTok a side dish? All of those struggles explain our hero stat, which is that last year in the

second quarter, Blue Apron lost $8 million on its continued struggles. But this year in that same quarter, it made a little $1 million profit. That is the first quarterly profit ever for Blue Apron, but it's just a tiny little hors d'clock. It's kind of like a pig in a blanket. You're happy and you got like one, but it's not that big. Investors were impatient. They've been sitting at the table for four years, like waiting for some food. They got a little, but they want more. So Jack and I got the earnings report, jumped in snack style and focused on one statistic, the Arpoo. Average revenue per user, aka Arpoo. The question is, how much is the average customer paying Blue Apron per quarter? And Arpoo basically tells us the real story behind how Blue Apron got its

ever profit. It surged 25% last quarter. For the first time in five years, the average customer paid Blue Apron $300 per quarter. It's like your average customer is saying, you know what, instead of the farmed salmon, I'm going to go with the line caught Arctic char this week. But, and investors only cared about this but statistic, Blue Apron only added 20,000 new customers during the Corona Economy quarter. That's 5% higher than the previous quarter. That means it's not really adding new people. it's just that existing customers are splurging on a lot fancier stuff a lot more frequently. Right, like they're getting three meal kits per week instead of two, or they're opting for the halibut instead of the leg of turkey. Investors want new people, not existing hardcores who have a thing for exotic wild salmon.

So Jack, what's the takeaway for our buddies over at Blue Apron? Blue Apron still can't kick the same problem it's had for years. Customers try out Blue Apron, but then ditch once they actually have to pay. Classic. Remember back in 2016 when you tried Blue Aprons like Free Apron. pomo code and then you canceled. It's perfect for like the first date, but not any other future dates. You're like, I'm glad there are three portions of the Himalayan pink sea salt, but this was too much of a pain to deal with all the package. Well, Blue Apron still faces that problem. As evidenced by the

CEO's comment, we only expect to keep a portion of the current demand going forward. Translation, we got a bump in the business during this crisis, but we think it'll go away once things return to normal. So Blue Apron set expectations for investors and said, we're probably going to lose $18 million this quarter because we're that unconfident in our core business. They're going from the pig in blanket profit to the $18 million loss. That's why the stock fell 15%. Because even in COVID, the seemingly perfect moment for Blue Apron, it doesn't think it can sustain profits. For our second story, Big Tech is arguing why monopolies are good for society. While Congress argues that they're

bad for society, which means that the big tech CEOs went to Washington, D.C., and did the one thing that they absolutely hate and refuse to do any other time a year. They put on suits and they put on ties. It's the worst. They don't even know how to do it. Now, the CEOs of Apple, Facebook, Alphabet, and Amazon got grilled for like six hours yesterday by Congress about two things. Yeah, it's basically just two things. The first is that their companies have too much power. The second is, and I'll quote the leading Republican on the panel, big tech is out to get conservatives. Now, we should point out there is no data to support number two here. And in fact, nine out of the top 10 highest engaging Facebook posts yesterday were conservative political posts.

Number one is the snack story. Does big tech have too much power? Which means Jack and I dusted off the old monopoly textbook. And if you turn to page 46 in this thing, you're going to see that traditionally monopolies are bad because they jack up prices on everyone. So when you're looking at Facebook, Google, Apple, and Amazon, it's strange because we don't pay high prices to them. In fact, you could argue we're like saving money because of them. Yeah, we're actually getting great services, we're paying less, we're kind of living the free Gmail lifestyle. But still, many Congress people are arguing that we pay in different ways that are equally bad for society. Time is money kind of a thing. So like we pay for Facebook with our personal data. We pay Google by letting one company decide

what information people can find online. We pay Amazon by not having any stores on Main Street's anymore. And we pay Apple by seeing more ads and higher fees in the app store that it controls. It's like we're basically paying a digital rent and we just don't always realize. that we're paying this rent. We hate paying rent, but we have to because big tech is the landlord of the internet that we all live in. Early takeaway here, everybody hates rent. Now, the other side of the argument comes from the four CEOs that got grilled yesterday, again, on Cisco's WebEx service, which is fantastic, buffering, buffering, buffering. Zuckerberg said basically, our WhatsApp service has made messaging free, while phone companies were charging like 10 cents a text or a

message. And thanks to us, we can all message people for free now. It's like standard. Nobody charges per text message thanks to big tech. So that was Zuck. But then Jeff Bezos was also there and he got asked a question like this. Do you use data on best selling products on Amazon and then create your own Amazon basics version of that product? Because that would be pretty shady, wouldn't it, Jeff? The top of his head literally turned red. And he responded, we have a policy against that, but I can't guarantee it's never been violated. cough, Albert's, cough. All right, let's move east to Mountain View, California, where Sundar Pichai was Ciscoing into the meeting, and he was asked this question, why does Google steal

content from honest businesses? To which you replied, Congressman, we don't steal. Stealing is illegal, and Cisco will never become a verb. Now, that gives you the sense of the kind of questioning. People were kind of grandstanding yesterday. Now, the fourth and final CEO in this panel was Tim Cook from Apple. And I got to say, he didn't really get asked any questions. He basically had his invisibility cloak on the whole time. We looked at the numbers. He got to ask 12 questions the least. Sundar got asked the most at 33, so there just wasn't much to say on Apple. So Jack, what's the takeaway for our buddies over in big tech? Does anything ever result from these kinds of congressional TV dramas? Yes, Snackers, a couple things could happen that would harm these companies. First, the CEOs could slip up and say

something that's untrue. And that would be embarrassing to the brand and potentially perjury, which is a crime. They have to do an oath thing with the right hand in the air before they talk to Congress. The other thing that could happen is the CEO could say something that catalyzes a whole policy change. Imagine if Mark Zuckerberg said, suck everybody, we're going to keep owning the information of the internet and do it our way. That's the kind of thing that could kickstart a movement to break up Facebook through legislation. Honestly, though, these CEOs are ridiculously well-trained and they don't say anything off script, so these things rarely have much impact. And politicians then just get great soundbites they can use for fundraising emails. And the real

really good for 24-hour news channels. But today, we get all those big tech company earnings, which means we'll cover them tomorrow on Snacks Daily. But this podcast is not over. We've got our third and final story. AMC Theaters hates Universal Pictures for cutting out theaters from trolls too. But the two just reached a truce. That might mean the end of movie theaters.

Which sounds like the beginning of a movie jack. So AMC and Universal's truce is basically going to shorten the in-theater exclusivity and this is key, from 75 days to 17 days. Think about it, Snackers. If you want to watch A Quiet Place 2 with John Krasinski and Emily Blunt, you can splurge and watch it now or you can wait and save money.

And if you splurge and watch now, you're doing like 30 bucks a ticket, 10 bucks for the popcorn, 10 bucks for the soda, and then the seat situation, Jack. Or if you're not comfortable sitting on a foreign seat, you can wait 75 days and then rent the movie online for $4,

or who knows. Maybe it's free on Netflix. Yeah, and if you're in your living room, there's nothing strange and sticky on your seat. By the way, Snackers, justwatch.com will tell you if the movie that you want to watch is free on one of the streamers. Highly recommend it. Jack, this feels like a Napster moment that our lawyers are going to tell us was a big mistake. JustWatch.com. Use promo code, Jack. Just kidding. Now, Snackers, this new deal is fascinating because it shortens the waiting period to only 17 days. You just have to wait 17 days and then your living room, which has a 60-inch 4K screen,

in like a smart speaker in every corner, is waiting for you to watch that movie. Yeah, the average living room these days basically has more tech gadgets than IMAX did in 2012. And the average living room doesn't require you to arrive an hour early to get a seat,

and then watch another hour of previews of other movies sequels. Yeah, spoiler alert, Ed Norton, is in nothing this year. Now, Snackers, this negotiation had huge power imbalances. So, unshackingly, the movie studios ended up winning. AMC Theatres is on the verge of bankruptcy. Its stock is down 90% and it hasn't made a dollar of revenue since March. Not a dollar. Meanwhile, Universal has never been in higher demand.

So unsurprisingly, it seems like Universal Pictures basically dictated the terms of this truth. So even though AMC is going to get like a cut of digital sales, it's losing its most precious resource. Exclusive monopoly rights to showing new movies in theaters. Yeah, AMC's power people. period just got shortened from two and a half months to just two and a half weeks in this case nick for amc literally time is money literally time just got cut by like three quarters what is the takeaway for our buddies over in the movie biz this could be the beginning of the end of movie theater two megatrends make consumers hungry to stop going to movie theaters first megatrend we like saving time and doing things at our home instead second inequality is growing COVID will accelerate tight budgets and that means

not splurging on a movie outing. Both of these trends make watching movies at home more appealing than even before. The biggest reason we still go to movies is the 75-day exclusivity period. It's a pain. We can't wait 75 days to watch that movie. But we can wait 17 days. 17 days is like two weeks. It's nothing. We expect all movie theaters and all movie studios to adopt this policy, which is why it could be the beginning of the end of movie theaters. Jack, can you whip up the slam and salmon? Take takeaways force over there, please. Despite having a captive audience of hungry American sheltering in place at home. Blue Apron doesn't think it can maintain profits. Wall Street was disappointed. For our second story, Big Tech thinks Monopoly's lower price. But Congress thinks

they make us pay rent in other ways like privacy choice or ads. For our third and final story, AMC and Universal just shortened the exclusivity period for movies to be in theaters from 75 days to 17 days. Now, time for our snack fact today. This one's sent in by Matt Greenberg in lovely New York City. Former lacrosse teammate, he's got great calves. Now, as you know, Snackers, our preferred unit of measurement for market capitalization on this podcast is how many lifts is that? Classic. But for brewers, the preferred unit of beer production measurement is in barrels. I appreciate this clarification because we were asking in last week's pod for Boston Brew Company. Like, is it kegs or is it barrels? Well, it turns out most people don't know that the keg is actually half a barrel. We confirmed this by asking our buddies at SIGA.

Now, Matt also happens to be the brewer behind Nicaragua Craft Beer, so he knows his beer math, and he set us in the right direction. And the majority of bars and restaurants actually purchase their beer in quarter barrel increments, aka eighths of a keghe because of storage space in like the kegator fridge. We love this snack fact because the first one where both of us needed a pencil to get through this thing. Now, before we get out of here, quick happy birthday to Henry, who turns one today, because Henry and his mom, Leon Wallet, have been listening to snacks every day since Henry was born.

And happy birthday to Jazz, Maray, Denny, an epic snacker from the Woodlands in Texas. And happy birthday to Josiah Oriah from San Francisco, California. G.I.D. Zuckings in her spare time. And happy birthday to Iella, Flanagan turning 35. And happy birthday to her two twins who just turned two. Also, 30th goes out to Solvang and Luke, and happy birthday to Ernest from Zena.

Snackers, last thing we'll ask of you. This sounds emotional. Can you ask your buddies for us, HY HYSD? Have you had your snacks daily? Great question. We'll see you tomorrow. If you know, you know. This is Jack.

I own stock of Amazon, nickel and stock of Apple. 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.