The Best One Yet - EBay sells off StubHub for $4B — Uber gets cancelled from London — Charles Schwab’s Lannister-style acquisition of TD Ameritrade

Episode Date: November 26, 2019

Ebay snagged StubHub for itself in 2007 for $300M, but it just sold the ticket company for a cool $4B. Uber has officially been rejected from London because policy risk is a real thing. And Charles Schwab treated itself to an early gift by buying up rival TD Ameritrade for $26B — and the strategy was straight out of Game of Thrones.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 Tuesday, November 26. Happy day before Thanksgiving Eve. It turns out this is the best snacks daily we've ever done before Thanksgiving. I got my first turns in at Sugarbush Ski Resort in Vermont. Nick is kicking it in New York City. And we're bringing you three great stories. Jack, I jumped over six cobblestones to get to this studio. Can we start it off? Story number one. What have you got? eBay bought a company called Stubhubhub back in 2007 for $300 million. And yesterday, yes, Yesterday, it sold the company for $4 billion. That's a nice flip right there.

The company they sold it to, Europe's Villagogo, aka basically the same thing as ticketmaster and stubb up, but it's in Europe and does the same kind of thing. Yeah, they all charge annoying delivery fees for like 40% when you buy tickets online. Yeah, you're like, I'm accessing the concert on my phone. Why is Taylor Swift not getting this money? Where's that $12 going, oh, wait, it's because I bought this tickets. Second story is Charles Schwab. It cut trading commissions to $0 last month. Now it is dropping $26 billion to officially acquire its rival TD Ameritrade.

Interesting strategy here because it cut those commission fees as part of a master plan to wound TD Ameritrade before it acquired the company. This is like Jamie Lannister stuff right there. Third and final story. Uber got itself a new CEO. It got new swagger. It went on kind of a global apology tour the last couple years. Now it's been banned in London, aka its fourth biggest market in the world. world. That's the second, like, ban we've heard of for Uber and London, and it proves that public

policy is the biggest threat for Uber. Before we jump into all that, Snackers, we got to talk a little bit about driving etiquette. That work for you, Jack? Safe driving. I love talking about this. Drinking while driving? Of course not. That's banned. Never do that ever. Texting while driving? I tell my wife every day, please don't text and drive, like, I love you. Just don't text her that, Jack. Third and final one here, shopping while driving? Shopping while driving? Shopping while driving? Shopping while driving? driving, we read a headline that this has become a thing. I didn't believe it for a second, and I want to dig deeper into this survey that Nick's about to tell you about. I told Jack, hold on one second. I just got to finish buying this microwave, and then I'll put the car in park.

But before we could cover all this, we did a little more research. Turns out 40% of Americans are shopping on their phones while they're driving. Okay, this was a poll conducted by Harris Research funded by a car insurance company, which immediately makes me question the results of this survey. There were asterics all over this thing. But what we did notice, but there was apparently a rise in Americans doing this from last year to this year. Yeah, 37% to 39% of Americans had admitted that they have done some sort of online shopping from their phone while behind the wheel driving the car. That sounds terribly unsafe. Now, this can include like purchasing the product, researching, maybe even just checking the order status because you're really frustrated outdoor voices,

took you five days to get something that was supposed to be two-day delivery. Snackers, honestly, there is one thing you should be doing while driving. Driving while driving is the best thing you can be doing while driving. The second best thing you can be doing while driving. Snacks daily. Snacking while driving. It's a wonderful thing. It rolls off the tongue.

Let's hit our 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 the hearing 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 FINRA slash SIPC. For our first story, eBay just sold off Stubhub for a cool $4 billion.

Not a bad day. It got acquired by Viagogo, Nick. Not to be confused with Livongo, Go-Go Wireless, Or Travago. We actually dug into this deeper. Via Gogo. Via in travel speak means layover. I'm going to New York via Cleveland.

And Gogo means no layover, like direct. Now, we tend to use Ticketmaster or Stubh up here in the U.S. If you're in Europe, you're going to buy the tickets to the A.C. Milan match, probably over via Gogo. The one thing that unites them all is you're paying gigantic ticket delivery fees that they only tell you about right at the end when you finish paying. Oh, it's going to be $12 extra because I down. I downloaded this. That makes absolutely no sense, but I guess I have to do it. Now, wildly, Viagogo, the company that's acquiring Stubhub from eBay, its co-founder, also co-founded Stub Hub while he was in business school. No joke. Let that say again. The Stubhub

co-founder was the co-founder of Viagogo. It makes no sense. It kind of messes with your mind. Here's the shocking stat of this story, though. eBay got a 13x return. That means it paid $310 million back in 2007 to acquire stub. Hub, and now it's selling it for $4 billion 13 times as much. The sexiest part of eBay, though, was probably Stubhub, because the company only made up 11% of revenues, but it was Stubhub, which you probably hung out with more than eBay. Now, let's give this some context. eBay has fallen way behind in e-commerce from like 25 years ago when my mom was listing

instead of a garage sale and eBay sale. Now, Jack and I have like a board we need to have up at our snack studios here. It's the non-stop e-commerce rankings of what's going on. in the land of e-commerce. And here's who we've got on top right now. Number one you've probably heard of. It's Amazon who has 47% of America's e-commerce market. Then if you go down a little further to see who number two is,

you're going to have to drop really far because the number two is really far behind. 6.1% is number two, and that's eBay. But it's almost getting passed by Walmart and Apple, which are like really, really close behind in the e-commerce rankings. Maybe now that eBay has got rid of Stubhubhub, it can focus on its core business, e-commerce. So, Jack, what's the takeaway for our buddies who just got $4 billion in cash over at eBay? eBay is basically dropping off StubHub at college, shedding some tears and saying goodbye.

Yeah, Stubhub was like living a home, not doing that much, kind of like asking Mom to make it cereal every morning. Sales barely rose from last year as it kind of did nothing with its life. And that is unacceptable because Stubhubhub has a duopoly. There's only two companies in the online tickets world. It's Ticketmaster and Stubbub. And yet, Stubhubhubs sales barely rose from last year. That's not cool. Stubhubhub needed to be free and needed to live life.

It needed to be independent. It needs to figure itself out. We have seen before that letting a young growing company go free can result in boosting sales and more profitability. Even if you look at eBay's old companies. Great case example here. 2002, eBay buys a little company called PayPal and then ends up spinning it off in 2015. PayPal is a separate publicly traded company now, and it has tripled in size since that spin-off in 2015. It's gone from $40 billion to now worth $120 billion since eBay dropped it off of college and let PayPal do its own thing.

That's exactly what could happen with StubHub. Once it gets independent, it can focus on itself, focus on growth, invest, and blossom. Just like you blossom by taking that creative nonfiction writing class sophomore year that totally changed your life. This is Jack. I own stock of Amazon. For our second story, Charles Schwab just acquired TD Ameritrade for $26 billion. One of the most rumored deals I've ever experienced as a host of Snacks Daily. Turned out the rumor was true. Jack and I had to sit down because this was giving us straight up a Lannister vibes.

The strategy of Charles Schwab was brilliant, and it's akin to Game of Thrones House Lannister. This is a Game of Thrones kill scene. If there were going to be like a season 12 or whatever we were on at that point, I lost track, this would be episode one ending finale freaking out. Spoiler, no dragons in this story. But quick historic context, Charles Schwab created the discount brokerage concept in 1975 when the typical stock trade cost $49. That's just the fee to buy or sell a stock.

Now there's like all this competition. You got E-Trade. You got TD Ameritrade. You've also got Robin Hood, which Disclosure owns this podcast Snacks Daily. Yes, Robin Hood brought the first zero commission trade we see. saw. Now, when it comes to Schwab, Charles Schwab noticed there was an Achilles heel that all of his rivals tended to have. Charles Schwab's rivals were more dependent on trading revenue than Charles Schwab was. So over this last year, Charles Schwab's trading commission, so like the money it makes

when you place a trade on Charles Schwab and have to pay them a commission, that was 7% of their business. That's it. For e-trade, it was 16% of their business, bigger than Charles Schwab. And for TD Amerit trade, it was like 32% of their business. So commissions were a a big thing for TD Ameritrade. So then Charles Schwab sees that its competitors are more reliant on trade commissions than it is. So it makes a pretty epic move. It weakened everybody. This is like showing up to some castle in Game of Thrones.

Poisoning everyone's drinks, including your own. And then everyone takes a sip trusting you because you're drinking the wine too. Everybody drank a little bit of the poison that Charles Schwab poured into everybody's glasses, including Charles Schwab. and it's a brilliant strategy. That poisoned wine was actually when Charles Schwab eliminated trading commissions and dropped them to zero dollars itself. Charles Schwab finally matched Robin Hood and gave customers the opportunity to buy and sell stocks without paying any fee. As a result, its core rivals, E-Trade and TD Ameritrade, they had to drop their commissions to $0 too just a month ago.

Now here's what happened. All of these retail brokerages are just losing one of their revenue sources. So Charles Schwab stock fell 15%, but TD Ameritrade stock fell double that because the hit was twice as painful. All right. So now Charles Schwab has got TD Ameritrade on its knees. It's incredibly weak, but it's so weak that even a weakened Charles Schwab could finally end it. And that's what Charles Schwab did yesterday. It bent TD Ameritrade over the executioner's block. It brought out a massive sword and it acquired it for $26 billion. So what Charles Schwab gets is 12 million TD Ameritrade customer accounts which are worth $5 billion in annual revenue. And here's the best part. Those annual revenues from the TD Ameritrade counts, it's more than enough to compensate for the lost trading commissions since it cut trading commissions to zero. As a result, Charles Schwab stock is now up 18% since it actually cut commissions just a month ago.

So Wall Street freaked out when Charles Schwab cut one of its revenues. sources, but now the stock is even higher. Wall Street is returning this brilliant Lannister situation. Forget consulting firms. It's like they had Searcy on the board this entire time. So, Jack, what's the takeaway for our buddies over Charles Schwab? There's only one word you need to know about this acquisition, synergies. Synergies. It's a scary word and was mentioned seven times in this press release about the whole deal. In the press release, Charles Schwab bragged that they're going to eliminate overlapping and duplicative roles at the two companies. That's what synergies basically do.

Now, to some degree, every acquisition has synergies. And this is why they're pretty important. When you can do things better together and profit more efficiently as one company instead of two. Synergies are like about making revenue or cutting costs. Like you don't need two accounting departments you can have just one. Or you don't need two holiday parties. You have just one. Either way, you profit more together.

It's a one plus one. equals three situation. For our third and final story, Uber just got punished for its misdeeds in London. And now it's losing its license to operate in London again. Again. This is a big deal, by the way, because London is number four global market for Uber. The three cities in front of London are New York, Los Angeles, and the Bay Area, which, not a city, just an area. Well, that's why shares of Uber dropped 6% yesterday is because this is kind of

a big deal. Here's the deal. Historically, taxis have been regulated in the city of London. If you have taken a ride to London taxi, first of all, they're huge. You could hang out with like six people in there. It's like a Disney ride. I did a downward dog and child's post the last time I took a London taxi. Next time Jack and I are in London Snackers, we're doing this pod from a London taxi. So when Uber came along and started disrupting the historically

hilarious-looking London taxi cabs, the city of London was like, sure Uber you can operate but you have to follow the rules now jack what was the claim that the city of london is now making against uber they said uber has a pattern of failures and has put drivers and riders at risk of danger and the city of london was specific here's what they did nick they knew they weren't authorized to drive uber and they were driving their buddies uber accounts so they uploaded their profile a pick so that when you pick up your buddy at westminster yard or whatever you wouldn't be surprised by the the face of the driver's uber accounts and they were driving You're like, hey, Devin, is that you? They're like, no, it's not me. It's Toby. I mean, yeah, it's Devin. I'm right here. That's me.

Get in. Get in. We're going to have a great time. So the result of this false identity scheme that's going on in London for Uber drivers, it has resulted in 14,000 rides happening with an unauthorized driver and therefore, no proper insurance for the ride. Some of these even happened with banned drivers. So, like, London's acknowledged that Uber is trying, but the mistakes can.

to happen. Throughout London's announcement, they kept on playing this safety first car. They said the decision is about safety of the drivers and safety of the passengers. The old S word. But Uber's response, oh, unshocking. They said this was both extraordinary and wrong, which extraordinary is kind of a positive word, but wrong, definitely a negative word. Yeah, yeah. So Uber, classic Uber is appealing this ruling. And they will continue to operate in London while the appeal is going through the courts. For all the history majors out there, yes, this is the same exact thing that happened the last time Uber got banned in London, which was about two years ago. The truth is, it's very hard to actually ban something because appeals and lawyers delay the process for

like two or three years. It's also hard to ban something when it's got 3.5 million paying customers and 45,000 licensed drivers making the whole Uber thing happen. And all of those Uber's in London, they're going to keep Ubering while it goes through the appeals court. So Jack, what's the takeaway for our buddies over at Uber? Uber's number one threat is public policy. And the best way to combat that threat is to have a good brand. Snackers, you've been following Uber stack with us since it went public. And you know that investors aren't quite sure about what the future of Uber is. Now, that's a problem. But the bigger problem? Politicians are unsure about Uber. They don't like it. They just straight up don't like it. There's no question about

that among politicians. And that's why brand is so important. Because right now, Uber's It's kind of in a villain situation. It's got a villain role. And so new laws and regulations, aka public policy, are the biggest threat to Uber. Politicians love bashing Uber and speeches, and a more positive brand could change that.

Jack, can you whip up the takeaways for us over there? eBay is selling Stubhub for $4 billion to a Swiss-based competitor. And Stubhubb is probably worth more away from eBay's NASDAQ and grow and thrive and all those fun things. Charles Schwab saw that its competitors needed trading commissions more than it needed trading commissions. So it poured a little poison for TD Ameritrade and itself, and then it bought the company for $26 billion.

Brilliant Machiavellian Game of Thrones move. Third and final story, Uber is losing its license to operate in London again. And it's appealing the deal, but a better brand could have helped with this situation. Now Snackers, time for our snack back to the day. This one sent in by a longtime snacker, Amelia Garland, from the UK, raised in Westport. Connecticut. Westport, Connecticut, home of Staples High School. I love this snack fact. If you're in Eastport, Connecticut, just back up. You've got a little too far. Westport's a little further west. All right, Snackers, before kale became like something you bought on a parody

t-shirt and were obsessively eating. Bathe in it. You can use it as a sponge half the time, right? It's great. Pizza Hut. Pizza Hut has been a kale supporter through and through. It was the top buyer of kale before it became crazy in 2012. By the way, in case you're wondering how they used it, not on the pies, was actually just like a garnish on the side to make the salad bars look rich and intense. Pizza Hut hasn't verified that fact, but I can say from personal experience, the Pizza Hut buffet was decked out in a bed of kale. They had no idea what they were sitting on.

Snackers, we loved having you with us. Tomorrow is our last Snacks Daily podcast before Nick and I are going to take a little bit of time off. It's not that much. We're taking like two days off. I'm going to be in New York City at home. Jack's going to be up north in Vermont. We hope you guys are going to have a fantastic Thanksgiving, but we've got one more snacks for this week.

Yes, tomorrow, part two of our live event at Spotify. You're going to want to tune in. Snackers, we're going to miss you. Can't wait to catch you tomorrow, though. Talk to you then. 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 information. national 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.