The Best One Yet - Facebook’s new “FB5” redesign (and dating feature), Apple’s past-dependent business model, and Merck’s profits quadruple

Episode Date: May 1, 2019

Apple’s earnings report was critical for what it didn’t say, just as much as what it did — And it reveals that Apple’s transformation. Facebook’s F8 event revealed new features (dating and crushes), but the big focus was its app redesign. And Merck’s profits quadrupled because a measles vaccine and a new cancer drug have become its profit puppies.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 is Wednesday, May 1st. And yesterday was pretty good. But this is T-B-O-Y, the best one yet. Honestly, this one's better than we did yesterday. Markets rose just a tad a little bit.

But that was enough to get a new record high for the S&P 5. Fresh record eye. It's kind of like markets get a participation trophy. I like it. We got three stories to cover for it. Wonderful mix. Big companies. Facebook unveiled a new look.

It calls it FB-5. It is a new app redesign. Still no poke button. sucks getting on it. Second story is Apple. Its earnings reports were exciting for not being excited. Exactly. We know what kind of company you are right now, Apple. It has an emptiness syndrome and has no new products. Nothing fresh. It is out there. Third and final story is a German-American phenop. Pharmaceutical company, Mark, its profits surge by quadruple last quarter. It is a big company, but we think it's the perfect case study for the pharmaceutical industry. So we're going to jump into it.

But before we hit all that, can we talk about some 80s babies for? for a second. I'm an 80s baby, and I have to tell you that Sonic the Hedgehog during my childhood, it stole a lot of my mindshare. Jack, you, me, and Taylor Swift, all of us were in the Sonic the Hedgehog camp. And Sonic the Hedgehog just dropped a trailer for a new movie. And just to add a little star power to it. Jim Carrey decides to come out of nowhere, and I don't know, be the bad guy in the whole thing. This movie is candy for 80s babies. Because when, if you're born in the 80s, you were a prime age for gaming in the mid-90s. Exactly. And we have some treats here. We got Gangsters Paradise as the trailer music. That is running through the entire trailer. It's worth just listening to the trail. We got Jim Carrey, who is our favorite from Dumb and Dumber in the midnight. He's got like a must-ass situation going on. It's borderline creepy, but it's kind of respectable. The new Sonic the Hedgehog, he looks like kind of cyborgish. It's a little weird. But I'm open to this movie. We're totally cool with it because it's nostalgic. Now we're just waiting for the Tomogachi movie to come out. Or a movie just about those weird checkered shorts that were the rage when I was seven. Or could someone just bring back Dunkeroo's for God's sake.

All of the above would work for us, but before we get to our stories, listen to these important words. You're tuned in to snacks daily. We spoke to the lawyers and we got... 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, 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. Robahood Financial, LLC, member Fenra. For our first story, Facebook just went on a Facebook rant at its developers' comments. To announce the biggest redesign of Facebook ever, ever. We jumped into the App Store, by way, because we're like, we got to check this thing out.

Well, I noticed Nick had the redesigned app already today. I didn't. It was very awkward. So when I tried to upload it, I noticed there are just as many one-star ratings in the app store as five-star for Facebook. In case you're wondering, it's still awkward that I have it in Jack, does it? I still, I couldn't find it. It's kind of weird.

But Jack did notice this. It's fascinating. It reflects the polarizing nature. Facebook. Right. So F8 started yesterday. It's the big event. Facebook hosts. It's in San Jose. Plenty of like finger food. And Zuck took the stage for the opening keynote speech. Jumped on in the T-shirt. Where did you go with it? Now, before we get into the app redesign, let's talk about a couple key features. Dating. Dating is coming to Facebook. It's getting big. It's already available in five countries. It's coming to 14 more now in the U.S. by the end of the year.

Now, this is like a Tinder kicked up six notches because instead of just seeing who shows up on your Tinder screen, you've like access to all of humanity. You can try. Track people down in order to swipe them right. It's actually highly concerning, potentially predatory. But like Tinder, if they swipe right back at you, it makes a connection. Now, just in case you just want to throw yourself out there like that, there's another way you can kind of get sneaky with dating on Facebook. It's called secret crush. Basically, you see someone, maybe you do a little thing where you click and say you have a crush on them.

And it's for like friends of friends. So you get to do it to people who aren't just within your network. Now, you don't hear anything unless they maybe do the same thing to you, at which point, boom, it's a match, beautiful, kids, family, the whole thing. That's going to be a big deal when it comes out later this year. Now, we know what you're thinking, shut up and just tell us what this thing looks like. All right, we got you. So, FB5, that is the name of Facebook's big redesign. I guess that's the fifth redesign.

I couldn't tell you for sure. I have no idea. Let's just go with it. It's available on the app right now and available on the desktop version in two weeks. Now, the key here is that Facebook's pivoting to not caring about you. It's caring about your crew. Right on the big screen when Zuckerberg opened things up. It said, the future is private.

basically because the past was like anti-private. The past was hacked or privacy breached or violated. It's a highly concerning situation. So Zuckerberg recognizes that most users, they really love posting in groups. Because there's more privacy in these groups, not throwing yourself out there. We're all members of certain Facebook groups, right? You want to run through the Jack Kramer groups here? This is my top three.

Sports Trivia Group. Vermonters in the Bay Group. Maple Syrup Anonymous Group. Probably. Vermonters not in the Bay Group. These are the groups that I'm a part of. and I actually feel comfortable posting that. So Jack gets to stay in his echo chamber of Vermonters in and out of the state of Vermont,

who may or may not still have an affiliation with the state of Vermont. But Zuck thinks that groups are more private than just posting on the Wild West news feed where anyone will do everything and the Russians will see it, so on and so forth. And then Zuck says, you know what, we're going to just go all in on this thing. They're making groups like front and center on the homepage in the app. In the new app. And they also have discovery tools to help you join groups of people probably just like you. So, Jack, what's the takeaway for our buddies over at Facebook?

Nobody wants to post on the newsfeed. No, not at all. When I post something on the newsfeed, I'm assuming that it's going to somehow end up packing my DNA through my 23 and me account. I haven't posted on the newsfeed in like three years. I'm terrified on it. I've deleted all my pictures from Facebook. Everyone's deleted like an error in their lives from Facebook. It's afraid because what you post on Facebook, the whole world sees and can manipulate.

So Facebook's finally recognized this, and it knows its users are defecting to other social media platforms where... Where they're more private. Exactly. And so it's creating a more private version of itself now before somebody else does. It does. Not about you. Zuck just cares about your group.

For our second story, pharmaceutical giant Merck just saw its profits. Get this. Are you sitting down? Quadruple. Wow. We're talking 4X. Wow. And this reveals a bunch about the pharmaceutical business model.

It was the greatest quota in Alzeval. Those are the words of the Merck CEO yesterday. He literally said that. Great German accent there, Nick. what I can. On point, because this has a fascinating German history. Can you, you know, I was a history major. I would love a little history lesson. Merck, please. Founded in Germany in the 1600s. Like a human Wikipedia over here. They were rubbing herbs on themselves as medical treatments. I have a newt, a little witchcraft. What were they doing? It was like medieval status, but they started early. Eventually,

they expanded to the United States, but during World War II, the U.S. government expropriated the U.S. division of Merck. And now it's a American company. Now, here's the story of last quarter. had a fascinating two-parter to it. The first part is the measles. The measles outbreak in the United States has been powering profits for Merck. Now, it turns out measles was declared eradicated back in 2000. But with this new outbreak, like, it's back with a force. It's like aggressive.

This summer, if you're traveling, the CDC actually recommends, like, you make sure you're vaccinated. Yeah, seriously, because that's when travel interaction, all this stuff happens and then it gets bad. It's pretty good news for Merck because it is the only American supplier of the measles vaccine. So get this. the measles vaccine sales for Merck searched 27% and it's like running out of the stuff. It's got to ramp up production over there. Congratulations, Merck. This is a good moment for you.

Now, the second fascinating element of Merck was this new drug that suddenly makes up a quarter of its profits. Out of nowhere. It's called Ketruda and it is a special treatment for kidney and lung cancer. Now, sales of this drug jumps 55% to hit over like $2 billion last quarter in one quarter. That is fast growth. Also, it is approved in the United States for 10 different cancer types. And they just got approval over in China for this particular drug to treat cancer. It's helping a lot of people.

This is a great drug, apparently. They just did like their 1,000th patient study, which shows that, you know, they're focused. If you're not sure about this treatment, you can see 1,000 people in how they're doing with it. And then get this. Merck's team says, this is, quote, unquote, going to be the primary growth driver for their next several years. Believe it. They are banking on this thing. So, Jack, what's the takeaway for our buddies?

where we're in Germany, now we're in the United States, and are a bit of everywhere, Merck. This new cancer drug, Ketruda, this is Merck's iPhone. The pharmaceutical industry, and I love that analogy, by the way, is based on, like, huge, ridiculous expensive bets. Just last quarter, Merck spent $2 billion on research and development. That's like a third of its cost. That's a lot. They got a whole lot of labs that are making giant bets about a drug that might work in like 10 years. Now, that particular cancer drug, we told you about, Ketruda, its other name is, I can't even pronounce it. I feel like I wish we could text every listener. I'm going to go with Pembro-Lizumabad. Let's go with that and run with it.

That's what it's called. It was created in 2006. Bought by Merck in 2009. And only just recently, like 13 years after its invention, was it available for human use? And now it's going to be everywhere. It's going to be the profit puppy for Merck for a long time. For our third and final story, Apple stock just jumped 5% even though its profits in sales fell. The bright side, though, was nostalgia. A lot of nostalgia at Apple right now. Bringing us back, kind of like when you're seeing like an S&L video and you're like, oh, wait, those Will Ferrell takes.

Best of Will Ferrell gives you a lot of good laughs about stuff that happened in the past. I miss Cowbell. I need more Cowbell. So let's jump into Apple's first quarter earnings report. What matters is both what it said and what it didn't say. We were fascinated about what it didn't say. But let's start with what it said. It opened up the first sentence.

Our March quarter results show the continued strength of our installed base over 1.4 billion active devices. Yeah, that's kind of a run-on sentence and it's not exactly inspiring. Very soft. I don't like that opener. Now, interestingly, in the whole first paragraph, what they didn't mention was iPhones. Apple is still an iPhone company. Didn't even mention the iPhone. That's because sales dropped 17% last quarter. But Apple knows it still wants to get some street cred, so it decided to do a few humble brags. Desperately was reaching for brags on this. Yeah. And it had to settle for Apple Watch and iPad. Yeah, it said sales of those rows. Unfortunately, when you look closer to the earnings, you notice, those were actually just a tiny part. When Apple is bragging about watch and iPad,

that's not a good sign. No, but the excitement was on all the unexciting stuff. Dividends, share buybacks, just like good old fashion reliability. Not the kind of stuff you're going to show off, stick in your pocket, or like TSA is going to steal from you. Apple's at the point of its life, that it's got a good job, it's settled down, it's got a house, it can put bread on the table. You're like, hey, Apple, you want to hang out and like, I don't know, do late night pizza. Apple's like, you know what, I'm going to get to bed early and make some cold oatmeal. There's still a market for that, and that's still attractive to certain investors. So let's talk about the two ways it focused on these unexciting but valuable things.

First is dividends. It increased its dividend by 5%. That means each quarter, how much money is going to be shipped out? $4 billion of its previous profits will be sent out literally as cash to shareholders. Okay. And then the second way that they're going to make shareholders happier. Share buyback. So it's taking $75 billion of profits it's made over the past. and it's going to buy its own shares. That will reduce the number of shares out there. And that's going to increase the price of the stock.

Everyone is going to be worth more. This is the new Apple. Not as many fancy new products, but some fancy new dividends. So Jack, what's the takeaway for our buddies over at Apple? Apple's strength is in its past, not its future. The stock jumped 5% because investors, they've changed their expectations of Apple. They were expecting the new Apple. They weren't expecting any new products.

They're expecting dividends and share buybacks. are based on past profits. Right. Its services that it has now are mooching off of its past in a nostalgia move. There are 900 million people who have active iPhones right now. And that means they can get access to those Apple services like Apple Music, Apple Pay, Apple News, ICloud, Apple TV. That's a lot of money Apple can still make. It's living off its legacy. Like it's scrolling through old family albums. Jack, can you whip up the takeaways for us? Facebook's making Facebook more private because no one wants to post on the news feed. Be sure to update your relationship status, by the way, this dating thing.

Dating thing is coming. It's happening. And then Merck's new cancer drug is Merck's iPhone. Can we call this a profit puppy? We should. Let's dub it. For the next 10 years, is my guess. Merck, we have dubbed you a profit puppy.

And then Apple, its greatest strength is its past, not its future. You never want to have to open with an iPad line. Goes for groom speeches and goes for iPhone. Erdings reports. All right, time for our snack fact of the day. Jack, wonderful little insight we got. The New York Times announced this week that two million people listen to its podcast every day. The daily.

The daily. That's the name of the podcast. Yeah, it's a good one. Perfect name on that. We're big fans of it, 25 minutes long. Now, some perspective. It has 4 million total subscribers to the newspaper and to the online version. So the New York Times has 2 million listening to the podcast and then 4 million

dived into the paper. But the podcast is 25 minutes long every day. Yeah. And the newspaper, I don't know how long people I read the news. So if you do some estimation here, it looks very likely that New York Times is getting more engagement on the podcast than the newspaper. The podcast might be delivering more news for the New York Times than the news. So I like this fact today because it's definitely part fact, but definitely like a little speculation here. That is a shocking and crazy story. I like that we grounded it. About podcasts. Now, a couple other awesome

stories we're covering in our Robin Hood Snacks newsletter. You gotta know. McDonald's, it announced its first quarter earnings yesterday and it shot shares to a record high. And the burger company. I want to talk about continuing this food theme. Mandelaise, owner of Oreo and Toblerone and Cadbury, announced full sustainable. fully sustainable cocoa by 2025, and it released earnings. Good for you, Mondalais. Good for you. Now, we loved having everyone here on the podcast with us. If you want to engage with us a bit further, which we'd like.

Check us out on Twitter at Robin Hood Snacks and send us a fact of the day. Please, you think these facts just make themselves up. Today, we actually kind of added part of it. We did. We made up half of that one. So, send us your fact of the day. Send us your hometown. And we'll get you featured on the pod.

Thank you for potting with us today. Can't wait to talk to tomorrow. 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.