The Best One Yet - Free Prime grocery delivery, GrubHub’s stock falls 43%, and Lockheed Martin’s $34B fighter jet order

Episode Date: October 30, 2019

We just realized today’s Snacks has a delivery theme. GrubHub stock lost nearly half its value because the CEO thinks you’ve been “promiscuous” with your late-night food delivery. Amazon goes with the nuclear option by launching free grocery delivery for all prime members. And Lockheed Martin just got an expensive order for F-35 fighter jets from the Defense Department.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 Wednesday, October 30th, Halloween Eve. Stocks rose? Stocks went up. Actually, no, they went down yesterday. Stocks dipped.

They dipped a little bit. But we're looking at three particular companies. This happens to be the best snacks daily we've ever done. This happens to be a Snacks Daily, obsessed with delivery. The first company is Lockheed Martin. It just snagged in order for $34 billion worth of the world's most dangerous fighter jet. And it's going to deliver that to the U.S. Department of Defense. Second story, Grubhub stock.

Just dipped. 43% on one day. We need another verb there. Because of promiscuous customers. You've been a bad, bad food orderer. Third and final story. Yep. Do you feel like you're the only one at Whole Foods who's actually buying their own groceries?

Pretty much. Yeah, pretty much all the time. The Wall Street journalized that yesterday. And it's going to feel even more true because Amazon just added free grocery delivery to all prime members. Because who's even going into the stores to buy their stuff every day? Actually, we kind of do. What is this? The 5th century, Nick?

I don't know what's going on there. Snaggers, before we jump into that, we have a very urgent alert and announcement. The Bay Area is running out of black turtlenex. Gap, H&M, Target, great place. Fascinating. Unique low. They've all run out of black turtlenex.

And the reason why? Halloween costumes. Apparently Elizabeth Holmes is like the 2019 Halloween costume for the Bay Area. Because when you weren't talking about that fire festival documentary on Netflix, you were talking about the Elizabeth Holmes one on something. Elizabeth Holmes dropped out of the movie. of Stanford University, started a company that eventually was worth billions. It's called Theranos.

Turned out the whole thing was a fraud. The company was a fraud. It didn't work out. But Elizabeth Holmes is kind of famous because she tried to look exactly like Steve Jobs. She took things a step further and tried to channel her inner Steve Jobs pretty much in every possible way. Hello, this is Steve Jobs. She changed her voice to sound like Steve Jobs. It was actually kind of aggressive, extremely scary, but she did nail the black turtleneck.

Yeah. And unfortunately, if you want to be dressed up as Elizabeth Holmes, you're going to have to You're going to have to paint your white turtleneck black. That's what you're going to have to do because unfortunately in the Bay Area, this is the costume to wear happy Halloween Eve. But you can always be an unemployed unicorn, which won our T-Boy Tuesday, vote for best Halloween costume. Very true. You're tuned in the snacks daily.

We spoke to the lawyers and we got to get something legal out the way. It's snacks about to hear rain 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.

Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Jack, I got bogeys all around me over here. Lockheed Martin just nailed an FIT. The Megs! 35 fighter jet deal worth a cool $34 billion. The biggest contract like that ever.

This is the most expensive fighter jet program ever. The only thing missing from this announcement, was a topless Tom Cruise and a good amount of beach volleyball, Jack. Nick and I are like kids at an air and space museum. There's already 400. Pick me up. I need to see it. There's already 450 of these F-35s in operation.

Very true. Now, 478 are coming to the Department of Defense of the United States of America. This isn't just some regular old fighter check. They've actually adapted this thing for like each wing of the middle of it. The Air Force, the Marine Corps and the Navy, all of their own separate F-35 versions. Right. It's very, very special. It's a fighter jet.

Pretty cool. And the U.S. is going to basically share. this jet. The only other countries that can access it are like 12 allies. Yeah, these are actually stationed at 19 different bases. Nick, guess where one of the bases are? Talk to me. Vermont. It's actually quite controversial in my home state. But New York doesn't have one. I'm just saying.

We like to, we intimidate enough just by talking. It's a talking thing. The big buildings are intimidating. Now, you're wondering who the customer is, if you're Lockheed Martin, the company that is manufacturing all these big defense weapons and machines, you got one customer, it's governments.

The Undersecretary of Defense for the United States. Great title. She is thrilled about this deal. She says these are the most advanced lethal planes that are nearly invisible to enemy radar. She sounded charming saying it. We were scared. This is freaky stuff. Now, the Lockheed Martin salespeople are bragging that this F-35 wins in 95% of simulated air, like, doggy battles.

They also claim that this thing is near invisible. So, like, if you're in the car right now, look behind you. There could be an F-35 right behind you. So it's stealth. I got to say, though, I was disappointed by the mock. Yeah. Apparently, mock, you know, the speed of, like, going as fast as sound or something. Yeah, speed of sound or something.

The mocks on this thing, Jack and I heard all this, we're like, oh, this has got to be like 12 mocks. Mock 1.6. We're all used to the razors, Mach 43. You're like, mock, you round that thing down. It only goes Mach 1.6. We're like, you could do better F-35. Now, the Department of Defense is bragging about the savings. The price per jet is $71 million if you break down that $34 billion.

That's thinking each of these jets cost $71 million snackers. But the government procurement department did a great job talking down Lockheed Martin because that's 12% than the initial negotiation price. They're like it's basically free. Wall Street, though, basically expected this deal to pass because the stock barely moved. So that was, the deal was baked into the stock price. The Department of Defense is also like, yeah, if we don't buy this, no one else is buying this thing. So Jack, what's the takeaway for our buddies over at Lockheed Martin?

Lockheed Martin is in the business of war and politics. Aeronautics, missiles, mission systems, space. Those are the four specific revenue streams that are making all the money for Lockheed Martin. Yeah, and the buyers of those products, it's not the guy who has the big house on Alpine Drive. Not that guy. It's not Walmart. Nope. It's not the school district.

It's governments. Exactly. And with governments, that means you are subject to any geopolitical conflicts if you're Lockheed Martin. Well, on the bright side, you get like NASA spending $4.6 billion on sustainable moon capsules. That just sounds cool. But on the downside, you have three. Turkey, which makes 1,000 of the parts that go into the F-35, and Turkey's kind of in the geopolitical doghouse right now. Exactly. And because of that, the supply chain for Lockheed Martin could be

affected. So if you're investing in Lockheed Martin, politics, geopolitics, international studies, you might want to research this stuff. For our second story, Jack Fries. Sweet potato. Honey mustard sauce. I like it. Grubhub stock plummeted a whopping 43% yesterday, and it's now down to its lowest level in two and a half years. Snackers, that means, Yes. If you bought Grubhub stock two and a half years ago. Oh, back in 2017. Your return today is zero. It has not gone anywhere.

Nope. We're talking about the Chicago Place Company. Great Town, by the way. They owned Seamless and they pioneered food delivery. I take it back. The stock actually has gone way up over those two and a half years, but now it's way back down. Right. So if you didn't do anything with it, that's where you are today.

Now, an analyst writing about the stock drop yesterday, we loved this title. Jack and I just had a blast with this one. There are just too many cooks in the kitchen when it comes to food delivery. It nails it because think of it. If you're ordering delivery, you got DoorDash, you got Postmates, you got Uber Eats, you got seamless. Oh, by the way, that's owned by Grubhub. Back to Grub's earnings report that was out yesterday. Revenues rose by 30% over the past three months. Which sounds like a nice number. It's round. It's big. It's juicy. Delicious. But the profit plummeted by 94%. Let that sink in. The profit fell by 94%. So the first question. What's going on? Who to blame? Jack and I, look, we got in in the morning. We're ironically eating our oatmeal. which we made ourselves, and we're saying, what happened with Grubhub, it's already down 40% this morning. And the first headline we see is that the CEO of Grubhub blamed promiscuous customers. He called his customers promiscuous.

He's basically saying they're unfaithful and they're only motivated by price. It was kind of mean. It was kind of debilitating. We barely got over this thing. One reality, when you order food to be delivered by an app, there are very low switching costs. Let's say you're Jack and Nick. It's in the East Village. It's 2013. You just got back from your jobs.

And you really want to get that chicken parm from Parm. You can check out that chicken parm on Grubhub and see basically how much of the fees going to be, probably like 30%. Then you're like, maybe I'm more in the mood for like the numb pan coconut tiger shrimp sandwich. That's so good. You check that on DoorDash. And you notice you got a discount code so you switch over to postmates. But then finally you check on Uber Eats. Before you go to Caviar because there's a $2 off special on Tuesdays.

Snackers, this isn't. We're not going to reinvent the textbooks here. This is comparison shop. Exactly. And it's super easy to comparison shop when you're ordering on an app. One app's the same as the other. So if you're Grubhub, and you're looking at the Shoebh, and you're looking at Jack and Nick from the East Village in 2013 or whatever

who are really hungry, you know what you're going to do? You're going to drop prices to get Jack and Nick eating. The only way you're going to win my belly is the lowest price because the sandwich is going to be the sandwich, whatever app I order. I can't talk in third person anymore. But what I can say is that the marketing cost for Grubhubhub skyrocketed at 45. because they've been having to cut their price. And this was kind of a wake-up call for the industry that delivery apps, they're just competing

on price, and this is unsustainable. So, Jack, what's the takeaway for our buddies working hard over at Grubhub. Grub has to focus on brand, not price. Delivery is a commodity. It's just like every other delivery from. You don't care what factory your socks came from, right? But you do care what brand that pullover is, and you'll pay $200 for a Patagonia pullover. That's because brands make people do irrational things.

despite whatever the prices. Patagonia has a brand that allows them to charge irrational prices for used pullovers people, which is insane. So if you're Grubhub, you're looking at these other situations and you're saying, okay, if I can't compete on price, I've got to build up a brand and they have not done that yet.

They need some investments in like opening up cool food festivals. Right. They've got to do something like a point system so you actually feel like you're part of a community. My personal favorite, take a stand on social issues or donate a certain percentage of profits to charity. That would win some of my loyal. They could start sending some merch stuff out and start wearing Grubhub's shirts because people actually want to interact with the brand. If Grubhub doesn't differentiate on brand, it has to differentiate on price.

And it seems to be losing on price. And that's bad for profits. Not good. For our third and final story, Amazon just triggered the nuclear option. The nuclear option. This is an actual thing. They had two people probably flick a switch. Free grocery delivery to all prime members.

If you live in 20 cities in the United States, you can be getting Amazon free. grocery delivery within two hours of ordering. What's next? An ice cream no melt guarantee? Jeff's going to stand up and turn your chicken into wine pretty soon. Nick, this is wild. You can get grocery delivery via Amazon Fresh, free included with Amazon Prime. Now, this is also going to shockingly include like Whole Foods, Amazon Fresh, and Amazon Prime now. It's like a lot of Amazon. Whole Foods are big deal. They have like 400 Whole Foods grocery stores that are included now for free delivery.

Now Amazon was doing this before, but they were charging $15 a month. now it's going to be free with like a little bit of an asterisk. Yeah, you have to have a minimum order of $35 in most cities or 50 in New York because everything's more expensive in New York. As a native New York, I just don't understand why people think they can just do this. Now, there's a little more fine print. If you're already doing grocery delivery with Amazon, then it's free right now for you. But if you've never done it before and you want to try, you're going to have to wait on a wait list. Yeah, I mean, Amazon's thinking a lot of people are going to be enticed by this insanely good deal.

Right. So we need to assess the demand. and then hire up a ton of delivery people before we can actually offer it. They got like a digital bouncer who's like, name, are you on the list? Who are you with? Who are you with? Amazon's got to hire up. I mean, they're going to hire millions of delivery people. Now, the big question here, though, is will this new initiative from Amazon,

aka the nuclear option in grocery delivery, will it solve grocery delivery? So far, grocery delivery isn't happening. It hasn't really taken off. It's a lot of talk, not a lot of action. Most people are going to their bodega or going to their grocery store once a week in person. We don't trust people. to just give us mangoes. We want to pick out our own mangoes. You got to squeeze that avocado. Full disclosure, Jack and I squeeze an avocado on the daily. Now, this deal, it eliminates the cost

barrier because if I order grocery delivery, I'm expecting giant delivery fees plus a tip for the delivery guy. Right. Now, the question's outstanding. How are they going to handle lateness? Like a logistics question. Yeah, I mean, delivery within two hours. What if it's two hours and 15 minutes? Do we get it free? And what's going to go on there? Also, can dashers add a free snack to the tab? Because this is a lot of physical hard work. They're going to be like running around, bumping shoulders in the grocery. You don't want anyone getting dehydrated on this thing. Two hours. Nick, my personal take, this is insane. We're being spoiled. Jack, I think there should be a lot of electrolytes included on every delivery. So Jack, what's the takeaway for our buddies over at Amazon? Don't try to compete

with Amazon on price because you'll lose. That's the message from this new nuclear option. There has been a price for in e-commerce lately, and it's been focused on delivery. Walmart offers free one-day delivery. Target offers one-day delivery. Amazon's matching that. and has 10 times as many products. Instacart and Good Eggs are both trying to build entire businesses about grocery delivery, and Amazon is crushing them with a better option at a lower price. If there is a price for, Amazon will win at all costs, because as we saw from its recent earnings, profits aren't exactly the priority for Jeff.

The ends for Amazon, getting everyone to become a prime member, justify the means, offering the lowest price no matter what, aggressively. Jack, can you deliver the takeaways for you over there? Gladly. Grubhob stock got slaughtered because delivery customers are promoting. Miscuous. Grubhubh has to win their faithfulness with brand. Lockheed Martin just won a $34 billion business deal from the U.S. Department of Defense.

If you want to invest in Lockheed Martin, you better get an international politics degree making a master's. Amazon just triggered the nuclear option, free grocery delivery for all prime members. Don't try to compete with Amazon on price. Just don't. You can't do that. You'll lose. Snackers, time for our snack fact today. This one's sent by a great guy, legendary football player at Brown, a bear.

Michael Lemons. Mike, great one here. From DC. Great City. Every day, 15% of Google searches are completely new. Google's never seen these searches before. No idea what's going on. The algorithm's like, I don't know who you are.

What is that rash on my skin? That is not one of the unique ones we're talking about. No, we should definitely move on from this. Google confirmed that stat, by the way, in 2017. 15% are unique. It's insane. Wow. Think of how many happen every day.

Snackers, we have to thank you because we asked if you would drop some ratings and reviews last week to drive the continued growth of snacks daily. And you delivered. We got hundreds. 500? Hundreds of new reviews, which helps us grow because that's how Apple, like, puts us up in the feed and people discover us, not even knowing that they were hungry for snacks. No one knows how it works, but we know we love it.

We appreciate it, and we love our snackers. Thanks. We'll be back with you tomorrow. Can't wait. This is Jack. I own stock of Amazon. The Robin Hood Snacks podcast you just heard reflects the opinions of only the 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.