The Best One Yet - Google’s $399 smartphone, Crocs’ comeback, and GM’s robotaxi Cruise snags $1B

Episode Date: May 8, 2019

Google’s I/O event day enjoyed protests, AI tech to screen fake calls, and a $399 Pixel phone. General Motors acquired self-driving car startup Cruise when it was worth $1B — Now it’s worth $19B, and wants robotaxis on streets this year. And Crocs shares have nearly doubled in the past year, so we look at why.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. May 8th. This is the best one yet. I like where you go on that.

Markets had a crazy day. A wild one. Market slipped. But let's get to the first three stories. Let's jump right into that. Google. It had its developer conference. It was very like Apple-esque.

Stole the show. Very nice. They called the I.O. conference. We know what that stands for now. Insider. Input, output. Close enough. We got even better details coming.

Our second story is about General Motors. It's self-driving car division. Just got $1 billion dollars of fresh cash from outside investment. Cruise automation, it is the self-driving car golden girl or boy. Based in San Francisco. And then third and final. Crocks, it announced earnings. They weren't that good, but it does highlight that the stock has come 85% higher than the last year. Thank Drew Barrymore for that. Also, thank you, Robin Hood, Hugg, who owns three pairs of Crocs. Doesn't wear him to work. He knows who he is. But before we get into those stories, I feel like we should have a midweek, week and review.

Are you feeling when I think, could we like sit down on the couch, make like an almond milk latte? Yeah, the Dow, I mean, I need two lattes. Caminole? The Dow fell by almost 500 points yesterday. Talk to me. Because we're mid-trade war with the biggest two economies in the world. I'm going to sit down even lower now. Okay.

Lyft and Uber, they both have driver strikes, like, in seven cities that start today. And then Uber's got to deal with its IPO in just two days. So we had the best first quarter since 1988. And then we just had the worst single day since January 3rd. Because everyone was expecting trade war peace, and it's not. happening. All right. So before we get into our three key stories today, listen to these key words. For our first story, Jack, shave your chest, it is conference season in Techland. Earning season's dead.

It's done. Quarterly earnings are all over. Now the big tech companies are having these developer conferences unveiling, like, epically tech bells and whistles. And it kind of stuff that you have to have one of those passes with a lanyard around your neck. Facebook kicked it off the other day. Last week. Microsoft was two days ago.

Google was yesterday. Big one for Google. You know, it's big when you've got a bunch of protesters. that actually hired a plane to protest you've made it when there's a blimp protest. Google got the protest blimp. So the first thing Google announced was a bunch of bells and whistles to make Google more fun to use. This is the good stuff. This is the juicy stuff.

This is the sexy stuff. All right, talk about, let's talk about Duplex Web. Okay, Duplex was the artificial assistant that in a demonstration last year set up a restaurant reservation on the phone and like pretended to be a person. So what's the new Duplex update? Now it's a web version and it'll be our artificial assistant to fill out forms online. You know those forms. Help you execute that online shopping purchase. It'll do everything.

Yeah. Address, credit card. How many times do you rid your zip code, like a billion times? Too many times. Now, call screening, the other cool feature. That's a fun one, very important because we're getting so many robocalls. Yeah. If you get a phone call and it's not a number.

If a phone call comes in, it's an unknown number, you can send it to your voice assistant. And a voice will come on and be like, hey, this is Jack's phone. And he's not going to answer. Who are you? He's deciding if he wants to answer, what do you want to call about? And then the phone person can actually, like, hang up. Wonderful. Life hack.

And then this one's kind of creepy. Incognito maps. Yeah, you know, maps because you don't want people to know where you're going. When you want to go somewhere and want to keep it secret. And finally, live captions. So when you're on Instagram, a video comes up, you don't have your headphones in. It'll give you closed captioning for the audio. Exactly.

So those are the fun life hack stuff. But then there was the juicy stuff. This is the meat that Google. really wants you to walk away with. The pixel. The pixel, not just the pixel. It's pixelation time. It's pixels's cheaper version of itself. Everybody. Pixel is Google's smartphone. Right. It's really nice, apparently. Now, everyone has, like, that one friend who doesn't have the iPhone and is like, what are you doing with the iPhone? Android life. All right. We get it. Yeah. So my Android friends say that this phone is just as good as the iPhone. They all do. But we're not talking about the Pixel 3,

which is an $800, you know, iPhone priced phone. We're talking about the new Pixel 3, A, which is priced at a discount $39.99. Lowercase A, they'd need to work on the name. A. A couple of tech journalists got their hands on this thing early, and they say it's just as good as the more expensive version, but it costs half as much. So this is like one of those rare times where the tech journalists are saying, you're getting something that has all the features and it actually is cheaper. It's kind of amazing. Like this sounds a little too to be true. And then Google decided it should be a very friendly phone. So now it's compatible with like T-Mobile and Sprint, not just Verizon. It used to be just Verizon. I don't know.

So, Jack, what's the takeaway for our buddies over at Google? This phone is cheap. And even if Google loses money on the actual phone sales, that's fine. Fine. Just fine. It's fine. Major advantage for Google over the iPhone, it doesn't need its phone to drive its profits. Everybody, iPhones are over $1,000 now.

They're crazy. iPhones are the profit puppy of Apple. That's because it's Apple's profit puppy, exactly. But for Google, they can price these phones very inexpensive. And the reason why is because they don't care about the profits. as much as they care about the data. They just want you to become an Android user because they'll get your data. They'll get more Google ads coming to you.

And the Google ads they deliver will be all their money. They actually pay iPhone to like make Google the default browser. So by having a pixel phone in your pocket, Google benefits because it just knows all about you. Even if you paid less up front. Apple claims it doesn't want to know about you. It just wants your $1,000. It's a privacy battle. For our second story, guess what?

Crocs are back. The stock. It's a Wall Street darling. This is insane. Yeah, the fashion is questionable. First of all, can you get the financials are secure? Can you please walk me through before we even jump into all that? What's going on with the new Crocs trend?

Well, Crocs, let's remind our audience what crocs are. Crocs are rubber clogs, like the Dutch, with like large pores. They have holes in them. Yeah. So you can like walk in rivers with them and it's no big deal. So like the new thing is you put a bunch of shaving cream in your pair of crocs. And then you stuff your foot in the crocs. Really quickly.

And the white shaving cream like bursts out of the holes. And it's just satisfying to watch. It's like a popping pimple. But it's also fair to put that image in your head. Pretty disturbing. But we got to talk about what happened to Crocs last quarter because according to the CEO, it was a great start to 2019. Revenues rose by 4%, which was better than analysts expected. And the stock has risen 84% in the past 12 months.

Now, we love jumping into this earnings report. It starts out with like a beautiful set of like goldfish crocs, which are amazing. The color goldfish? No, just like the actual goldfish. Oh, I thought fish lived in the crox. If only, I mean, honestly, Crocs get on that ASAP. Now, what they've done is basically take advantage of the norm core trend. And Normcore stands for normal, hardcore.

So people going really hardcore, it kind of ugly things. Yeah, and let's talk about the ugliness. So what's driving the stock since 2017, by the way, it's been a huge success story since 2017, is the Crocs Come as You Are campaign. A.k.k.a. just kind of do what you got to do. Judgment free. Where are you going to wear? Wear what's comfortable and don't care what anybody looks.

No one cares what you look like. Well, actually, they do. And what they've come out with is a bunch of random products. For example, they had a high-heeled version this pastime. True story. They have the rubber. They look just like Crocs, but they have a high heel. And then, Jack, what is the one that just came out last month?

They've partnered with a Japanese company. Your Crocs can now have a fanny pack built in the front and the back. It's an amazing thing. See, just bend down to get your pocket changing. Now, I'm a proud millennial. But Gen Z, apparently, all over this. The young kids, they love Crocs. Recognition of the Crox brand among Gen Z has jumped in the last three years from, like, number 38 shoe brand to number 13.

Now, they're getting them with a B-plus A-list level celebrity. Number 13. That's incredible. I can't believe it. Right. So some of the promoters are Drew Barrymore, who did an online musical wearing Crocs and had a whole social media campaign. You got like wrestler John Sina and then you got Zoe D. Chanel. And you got Post Malone who voluntarily was wearing Crocs and eventually became a paid

spokesperson. So not like red carpet, more like orange carpet kind of a situation. It's connecting with Gen Z and the stock has been up. And the really strategic move is abroad in Asia. They are getting the local actors and actresses to be the key supporters. Yeah, we looked at the roster of some of its Chinese, Japanese, and South Korean celebrities who wear the stuff. We never heard of them.

But apparently they're a big deal influencers over there. So Jack, what's the take? for our buddies over Crox. Crocs is a story of tightening the belt and streamlining. This company was almost bankrupt in 2009. The stock was down to like a dollar and 20 cents. And just a couple of years earlier in 07, it was one of the high flying stocks of the era. So a private equity company came in and fused it with a $200 million investment and shut down stores. Well, once you buy $200 million worth of a company stock, you can start to demand some things. And they said, shut down these stores, basically tighten.

in your belt, we need to go back to the Crocs DNA, cut out some of these random products and go back to the... So they did, and they said, we're just going to focus on two main things. Clogs and sandals. And since then, it's been magic. That beautiful simplicity allowed them to survive, and now they're doing fanny packs. For our third and final story, Cruise Automation, the self-driving car company, just raised a cool $1 billion. And its parent, General Motors, is very, very proud of it. Very proud. This is a really interesting relationship we got here. GM is raising Cruz to become its robotaxy baby. Now, Cruz is, this is like a cash cab situation.

Somebody called a cash cab. They just raised a billion dollars of new money. From outside companies. We're talking like Tiro Price, Honda, SoftBank. They invested in Cruise. Now, we need to clarify some. Yeah, this is a big distinction we got. GM is a big old school Detroit company.

You know it with like the pistons and the cars and the moving and the gas. GM acquired cruise automation, a self-driving car company a few years ago, but it's invited outside investors. and that's who just ponied up a billion. Come on in, invest in our self-driving car company. Now, guess what? Cruise is worth $19 billion on its own today. With a B, that is half the valuation of Ford. That is one-third the valuation of its parent company, General Motors.

Cruise is like overshadowing GM. Easy Cruise. So, Cruz, let's talk about Cruz. This is a squad of San Francisco Tech. Yeah, you want to jump into like the HR report here? Yeah, back in 16, when General Motors... orders acquired for it. 2016.

2016. Back in 16. It was like three years ago. There were 40 employees of the company, but now there are 1,000. It's a fast-growing division. Now, if you live in San Francisco, you've seen these things. They drive the GM electric cars around the city with like a bunch of cameras all over it. And they're all spinning.

They're like police sirens, but with no lights. Right. That's a sensor on top that's making sure what's going on in the world. There's a hundred 80 of them. And Cruz is mapping the city. They're testing their self-driving cars. and they plan to roll out their own Robo Taxi Division by the end of this year, aka GM wants its own version of Uber and it's using Cruise to get there.

This is a big deal. You're going to be able to download like a cruise app and hail a ride just like you load with Uber, except there'll be General Motors self-driving cars. And if you're General Motors, there are so many synergies here. What's one of them? Well, GM makes cars and so it can supply the fleet with the cars. But also the cars that it like struggles to sell, like maybe cars after they've been leased and then they come back to GM.

Yeah, you'll lease a car for three years and then they don't want it anymore. It's a little dinged up. Put it in the cruise fleet. It's kind of genius. Done. And it plans to have them on the road doing that like later this year, I think. Impressive. So, Jack, what's the takeaway for our buddies over at Cruise and GM?

One acquisition can transform a company. Now, GM and Ford shares, when you look back on it, incredible. Great job jumping into the snack style, Jack. They moved in sync with each other, the stocks from 2012 to 2016. They were perfectly in sync with you. It was harmony. And that's when General Motors acquired Cruise in 2016 for a billion dollars. Remember, it's worth like $19 billion now.

Great investment by General Motors. Since then, GM shares have dusted Ford. But it also means General Motors has basically become two companies, a car company and a self-driving car company. Now, the self-driving car company part, that's like it's future profit. It's not a profit puppy yet, but investors think that's the future profit puppy. Can we say pre-profit puppy? It's a profit toddler.

Now, there are other transformational acquisitions that have happened that we love to talk about. What are a few? Well, a couple eBay acquired PayPal, and that was, you know, PayPal quickly surpassed eBay as the growth store. Or Facebook acquiring Instagram, which has been surging in growth. And let's go back to my home state. When Green Mountain Coffee switched from coffee beans to curing coffee machines, that was a transformation.

So when companies acquire companies, it's not just to add a little IP. It can sometimes be to even replace their existing self. the student has become the teacher. Jack, can you whip up the takeaways for us? Google's new Pixel 3A is priced to sell because Google will make money in other ways. By following you around, basically. Crocs, it almost went bankrupt to No-N-N-I.

So close. Went back to the basics, and now Gen Z is in love. Oh, just, if you can put a fanny pack on your product and sell them, good. Run with it. Let there be fanny pack. Third and final story, acquiring cruise automation was a transformational moment for General Motors.

This company is Blossom Jack. Really impressive. Now, time for our snack fact today. This one from a wonderful snack or snack supporter, huge supporter from Dallas, Texas. Haley. Haley. In Dallas. All right.

So here we go. Facebook is primarily blue because Mark Zuckerberg suffers from green red colorblindness. Now, according to him, blue is the color he sees in the richest variety. Apparently, green red color blindness means you can see blue. You can see blue and you can see a lot of depth. Now, they're getting rid of blue in the app, which is a sad moment for. Mark. Was he not in the room for that one?

It's a little... Now, a couple other great stories we're covering in the Robin Hood Snacks newsletter. Lyft. It reported its first earnings as a public company. Lost a billion dollars, but somehow shares like, went up. And then Dairy icon Dean Foods, which we told you about the other day, it announced earnings and sales fell 9%. Surprise, surprise. Blame the flaxseed, though.

Love's having you on the pod today. We will be back covering everything with you tomorrow. Can't wait. The Robin Hood Snacks podcast you just heard reflects the appearance. 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.