The Best One Yet - Fortnite acquires Houseparty, Restoration Hardware’s rebel upscale strategy, and our “Unsexy Industry of the Day” is Crowdstrike’s IPO

Episode Date: June 13, 2019

Restoration Hardware (aka RH) surged 20% after its earnings for its new magazine strategy (the opposite of everyone else). Gaming legend Fortnite acquires Houseparty in a move that may redefine the future of social media. And Crowdstrike surged 71% on its IPO day, so we made cybersecurity sexy as our “Unsexy Industry of the Day.”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. This is snacks daily. It is Thursday. June 13th. This is the best one yet. Straight up. T-boy.

T-B-O-I. T-B-O-I. We got one more before the weekend. How did markets do? Markets dipped, but so slightly, we don't even have to talk about it. You know what? Let's move on. Let's get on with our lives.

First story of the day is restoration hardware. The stock jumped 20% after its earnings report, but we're focused on one detail. The ridiculous, the ridiculous-ish-ish-upskalish of this company. Two terms for you. R-H Beach and R-H-Ski. Our second story is an acquisition you might not have noticed. The Hangout app House Party just got acquired by Fortnite. Says a lot about the future of social media.

We're going to jump into that one. Third and final story is our unsexy company of the day. We got to throw this in. We did one last month. We're talking crowd strike. It just IPOed, and I got to say, strutting its way down. It was pretty sexy on its first day. Very cool.

Up 71% and this thing to cybersecurity well. But before you get into that, apparently kids aren't eating their vegetables. Story of everyone's lives, apparently. Pretty timeless. The thing Kraft just came out with like an option. Craft is throwing parents a bone. It's rebranding ranch salad dressing. That's all it needed apparently.

Salad frosting. A little bit of a market switch. So the label actually says frosting. And now it comes in a tube that looks very frosting-ish. Straight to your mouth. This is like a capri-sunnish kind of thing. So basically, if you're a parent struggling to get your kids to have broccoli and carrots, apparently stole a thing.

It might help if you tell the kids, hey kids, look, frosting. It's like dessert. Craft came out and said literally in the press release, kids will eat anything with frosting. The thing is, ranch dressing is horribly unhealthy. Very ironic. It's not a great American invention. This is literally the American cheese of dressings.

So parents, instead of, you know, vegetables, plush ranch frosting, might just want to give them real frosting. In fact, it might even taste better. It might be a net health positive. I'm going to go out here and say they should probably just do frosting. All right, now let's hit our first story. Let's do it. 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 them. 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. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, Restoration Hardware just jumped 20% after its earnings report. Yeah, but we're focusing on one thing, not in its earnings report. Nope. And do we, are we saying Restoration Hardware?

They prefer if you call it R-H. Yeah, like your friend Bill who wants to be called William. Ted, I'm calling you Teddy. You're just going with it. We're going to run with it. So restoration hardware stock jumped for two big reasons. First, in the earnings report, sales jumped by 7% compared to last year. And then second to mention that it's going to move some of its production out of China.

It's playing tariff dodge ball. Boom. Dodge, duck dive, dodge. And then jump across the border. But we're fascinated by something else. It's fancy new furniture category. Really, we got to talk about this. thing. All right, can I hit you with a fun one here? Please. R.H. Beach House.

R.H. Beach House is a new catalog coming out from Restoration Hardware. Can I hit you with another one? Please. R.H. Ski House. That's another catalog coming out this fall just in time for ski season. Must be nice. Now, if you have a beach house or if you have a ski house, if you have a house, I'm renting. No, if you have a second house, there's room for you at Restoration Hardware. And why not throw in a third one there? Get this. I got Beach House in the mail. Aspirational? What's going on in there? my fiance was impressed. The actual magazine here, this thing is thick.

It's like a weapon. It's 130-some pages. It's basically an old-school catalog. You could wrap this thing up and give it as a gift to someone, and they would appreciate it. Interestingly, this thing has chapters. So it feels more like... Jack, I got one. Here, I got this thing open right now.

You ready? All right, here we go. Here are the chapters in the R.H. Beach House. St. Bart's on page 4. Sydney on page 28. Malibu on 52. Miami on 76. Cabo on 90.

And then, to end this all, final chapter, Meakinos. So wherever you're dropping real estate dollar, there is a taste for you in this beach house. We're talking, you know, let's say you're more of the Cabo type. You may be interested in the solid teak all-weather chairs. Jack is more of the like oak bruley. I got New England taste. Let's say that. So that's what's actually in it.

Gary Friedman. Legend. He is a legend. He says, we refuse to follow the herd in self-promotion on social media. Basically, restoration hardware, is it going into digital? the way every other retail brand goes into digital. They're not signing up a herd of influencers to post on Instagram. They're going old school catalog.

They're literally doing the opposite of digital. They dropped $50 million last year to open a giant store in New York's meatpacking district. We've talked about it before. And that store, which they call a gallery, it's working. It's on pace for $100 million in annual sales. So, Jack, what's the takeaway for our RH buddies over at Restoration Hardware? RH reflects the extremification of American retail. Just a couple weeks ago, here on Snacks Daily, we were talking to guys about how, like,

Dollar stores are living their best lives. Yeah, that was dollar general and dollar tree. Their stocks are close to record highs. And the other stocks close to record highs are luxury stocks like LVMH, Louis Vuitton Mouet and a C. You got high end and low end doing very well as this economy kind of divides with greater inequality. And restoration hardware is going even more upscale, focusing on second home. So upscale that it's also launching four more of these giant galleries just to fit in. Again, great first date spot, the RH gallery in New York.

For our second story, Fortnite was just acquired by a video chat app. Yes. The video chat app is called House Party. Very nice name. Which is pretty much

group FaceTime before group FaceTime existed on iPhone. It's like the OG. You got your phone up. It's got like a bunch of different quadrants and everyone's face up. Yeah, you got like eight

different video screens on your screen. We've only house partied with an even number of people. Yeah, fitting five people split up on your iPhone would just be awkward. If anyone's pulled off the seven,

let us know and send us a screenshot. So you can talk to up to seven people at the same time with the video chat. Now, Fortnite. The Acquirer is Fortnite. Actually, the Acquirer is epic games, which owns Fortnite. Now, this is the multiplayer video game that's like so big now. They're like entire conventions and religions

dedicated to it. It's a global sensation. Now, life seemed to have been a little tough for House Party. Yeah, I don't know if you've heard of House Party Snackers, but I used it the first time in 2016. It hasn't reported the number of users using the app in a while. And that tends to suggest that maybe they didn't really want to report the number

of users. Yeah, maybe numbers haven't been growing. But Fortnite wants it. Exactly. Now, each side is getting something here. So let's just talk about the deal a little bit. All right. So Fortnite gets access to the women who are using House Party. That's pretty big because it's mainly dudes playing Fortnite. It's about three quarters dudes playing Fortnite. And they want to diversify that and access the female market, which is about half of the world. Pretty key there. I think 51%. I think that's right. That 1% matters. So Fortnite is also getting the mobile gaming developers at House Party. Because House Party, it's, it's an app. It's doing its thing. And it's pretty amazing that it can put eight video screens from eight people's phones onto one screen.

And even in Silicon Valley, engineers are an extremely high demand. They are a scarce resource. So they are a big value there. All right. So what is House Party getting from this? Well, it gets some money. That's key. Yeah.

Always a good thing. It's an acquisition. So the owners of House Party probably are getting some money. We don't know the price, but we know there was a price. And they're also getting access to Fortnite's giant potential customer base. Get this. The number. 250 million humans play Fortnite.

Yeah. A quarter of a billion. Maybe Fortnite will push House Party service into their consciousness. And if you are the founders of House Party, you probably from the start want it to reach as many people as possible. Quick way to do it. So, Jack, what's the takeaway here for our buddies over at House Party, now part of Fortnite? Gaming is social media. Now, back in my day, we'd whip out the wiffle ball, head outside, call up Tommy and Jill, and get a pickup game going.

A pickup game of wiffleball? Whatever we wanted. That's not what. That was what I was doing. You were probably at piano cap, Nick. Nothing wrong with the New York City summer. In Manhattan. Today, kids are doing the same thing, but they're doing it online.

This is wild. Netflix actually said that its biggest competition is Fortnite. The game. Netflix's biggest competition. Yeah, he famously said it wasn't HBO, it's Fortnite. And here's one anecdote to show how Fortnite. This is wild, and it sums it all off. Is where people are hanging out.

11 million people were logged into Fortnite just to watch somebody else playing a game. Observe and interact. talk about it, nothing to do with actually playing the game. Online video games are where people are hanging out, and so social media, like house party at Fortnite, makes sense. Gaming is social media now. For our third and final story, we got our unsexy industry of the day here. Cybersecurity. Yeah, specifically, we're talking about one company, CrowdStrike. We've been curious to talk about CrowdStrike. It's a cybersecurity company that just IPO yesterday. IPO Pellusa continues. What a big jump. 71% on day number one of trading. It was a very successful first day of trading.

The company is now worth $12 billion, but Jack, how much is that equivalent to over here? It's almost a Lyft. Like, we're talking the company lift, the car share. Lyft is worth $17 billion, and CrowdStrike is worth $12 billion overall, according to their market caps. Hit me with the crowdsource, like, pitch right now. So if I'm a crowd source salesperson, I walk into a room and I say, hey, Mr. CEO, put down your bag. Loose up that tie a little bit. Mr. CEO, these scary hackers, they're trying to hack your computers every day.

If it's plugged in, it could get hacked. I walked by that IT department. They cannot protect you. You need to hire CrowdStrike. We will protect you from getting hacked. And then CrowdStrike's going to probably like put down a piece of paper on the desk and like push it forward with its hands. And that piece of paper has on it a list of some pretty big breaches. Yahoo, Target, Equifax.

CrowdStrike is like, you don't want to be these guys. They all got hacked. They all had to pay millions, if not billions because of it. So if you're the CEO of a company, you're thinking I use computers, we use the internet. I'm going to spend on crowdsource and not. now, so I don't have to deal with paying with a breach later. Or get, like, a customer boycott because your private data wasn't protected well enough. Now, CrowdStrike had a pretty big moment in 2016.

Oh, yeah. This is, like, what defined the company. You could say that again. The CrowdStrike software was able to tell when Russians hacked the DNC discovered it, and then they told the FBI. Yeah. So put them on the map. CrowdStrike made, like, world news because every article about that story had CrowdStrike

mentioned in it. Now, that makes them legit. Because this is our unsexy industry of the day, we decided to jump a little further snacks dial into security. Yeah, we're going to step back, not just cybersecurity, but look at the whole industry of fear, which is security. Because it's interesting because it's a packed playground of stocks out there. Okay, in personal cybersecurity, you got to protect your password, right?

Right, your home computer. There's a whole industry about protecting your password, and one company called LastPass, guess what? It's a publicly traded stock. Someone goes crazy with my J-Crew password, end of my Chino. You got to protect it. It's owned by LogMe. On the home side, your golden doodle can't be like your guard dog all day.

So there's a bunch of public stocks that make home security system, like physical security. We're talking ADT, Brinks, alarm.com. There's a bunch of others as well. And then you've got these giant tech companies that are side hustling as security first. And they're just doing it, you know, they got like a team over there who's taking care of it. Yeah, like one floor of Amazon's like 300 floors of offices. Yeah. Has ring, which is a home security camera slash doorbell thing that connects with your phone.

And then Google has got a similar thing. It's got Nest, which also covers home security. Nest is the smart home thing of Google. So you can invest in Amazon and Google, but you're not really investing in security. You're investing in giant tech companies that have one security thing. So that's all on the home side where you're taking care of back at your place. But cybersecurity protecting corporations is also packed. So you got CrowdStrike, first of all.

Palo Alto Securities. Then you got Firefly. And then a lot of other smaller ones. There's basically like a ton of competition here across the industry. it's kind of some dedicated to your home and it's kind of some dedicated to your office. A ton and ton of competition. So, Jack, what's the takeaway

for our buddies over at CrowdStrike and, like, the whole cybersecurity industry? Growth in one industry can fuel growth in another. The internet is still growing, and that means data's growing along with. The internet's growing pretty fast. That shouldn't be a shocker to you. Every click you got is another piece of data.

But did you realize that with growth in the internet comes growth in the cybersecurity industry? Because each little data point that's created every time you click, that needs to be protected. All that data is vulnerable, So growth in one industry fuels growth in another. Bikes are taken off.

The people are going to need helmets. CrowdStrike is the helmet. Jack, can you whip up the takeaways for us over there? Restoration hardware is making fancy special new catalogs for people with fancy special second homes. If your ski home doesn't have a marble desk lamp, is it even a ski home? Fortnite owner, Epic Games, just acquired social media video company house party. Yeah, social media is basically the same as video games now. Cybersecurity is our unsexy industry of the day.

And congrats. strike on a big IPO. Now, time for our snack fact of the day. This one we got from Kendall Baker, a writer over at Axios. Game seven of the NHL finals was last night. And Boston was going for the first city in 83 years to simultaneously hold championships in the NHL, NFL, and Major League Baseball. All in one year, it's a natural hat trick. Last time it happened? Talk to me. 1935 slash 1936 when the city of Detroit held that title. And guess what? The state of Michigan has a holiday called Champions Day. When did they celebrate? April 18. You got to commemorate a good hat trick of championships. Now, a couple of other things from yesterday's pod. We got a tweet from

Derek Ziegler, who told us that the Code Conference, not in San Francisco. It's actually in Scottsdale, Arizona. And then we just want to thank Rob Arias, who sent us an Amazon restaurant's promo code that we can use before they shut down Amazon restaurant. Yeah, everybody, $7 off your first delivery. Eat seven. Do it before June 24. You want to jump on that. Now, a couple other great stories. We're covering in the Snacks newsletter today. Lulu Lemon just announced its second quarterly earnings. And then Bird, the scooter company we told you about the other day, just officially acquired Scoot, a scooter company in San Francisco.

Snackers, that was a hell of a pot. We loved being with you. I had a great time. You guys sounded great. I'll be back tomorrow. Can't wait. This is Jack, FYI. I own shares of Amazon and Lulu Lemon, which we both mentioned in the pod.

The Robin Hood Snacks podcast you just heard reflects the opinions of only the hosts who are associated persons of Robin Hood Financial Eleanor. 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, 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.