The Best One Yet - “It’s a dirty saucy secret” – Domino’s confession. DraftKings’ $500M splurge. Carvana’s wild stat.

Episode Date: March 1, 2021

DraftKings reveals it’s dropped a whopping $500M in marketing to remind you to sports-bet with them. Carvana does online used sales — helps that used car prices grew 14% in 2020. And Domino’s shared a dirty secret about its delivery biz (someone please ask DoorDash to listen to today’s pod).$DPZ $DKNG $CVNAGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Learn 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. Welcome back. It is Monday, March 1st. Jack, it's a March 1st. Wow. This is Alex's and my birthday month. I think you got a birth week. We have a birth week this week. Good call. So I think this means you owe us a snack fact. We'll reserve the snack fact time slot for you, Jack, on Friday. Does that work for you? Yeah. Friday's my birthday. That's the deal. Birthday boy has snack fact. I'll start thinking of Vermont snack facts now. That'll be the best one yet. Today's pod happens to also be the best one. and yet, Jack, first story. Domino's pizza has a confession to make. What you thought was its profit puppy? Actually, it's lost leader. That's the situation. For our second story, it's not just meme stocks. Nope.

Used cars are soaring right now. Carvana is enjoying it like one of those little tree air fresheners. Jack, Black Ice. You want the Spiroman flavor. For our third and final story, on Friday, we told you that Airbnb was in its post-marketing prime. Well, we just checked out Draft Kings, and it is doing the opposite. But Snackers, before we hit those three fantastic stories, Friday's Snacks Daily Pod was good.

Yeah. And Thursdays was solid. But today's is technically the best one yet. Yeah. Tomorrow's TBD, but we think it's going to be better than today's. There is one thing we know this is not. It is not the best one since sliced bread. Right, because if it was, it'd have to be the best one since 1928.

Yeah, Snacker Brett Thorne opened our eyes to sliced bread's spidey origin story. Now, bread has been around since 8,000 BC when the Egyptians invented bread. But technically, the first piece of sliced bread was sliced in Missouri in 1928. That's right. Some sourdough sliver made its global debut and changed the world forever in downtown Chilacothe, Missouri. We don't know the grain, but we do know it was sliced on a row-wetter bread slicer. The bread slicer in 1928 was created by a legendary Iowa inventor. named Otto Roweeder. Since then, Missouri has proposed National Missouri Sliced Bread Day in its honor

on July 7th. Yeah, you'd think it's today, but no, it's actually July 7th. It isn't. But that would be the first National Sliced Bread Day since sliced bread. So Snackers, today's pod isn't the best thing since sliced bread. It is the best one since Friday, so we'll just hit our three stores. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about to hear rain food is 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 Fenra slash SIPC. For our first story, Domino's fell after its earnings, but Jack and I noticed one shocking thing with Domino's. The dominator of the pizza industry.

has a confession to make about delivery. Okay, before we get into the confessions here, congratulations Mazel Toff on the 39th straight quarter of same store sales growth in the United States. That is nearly 10 years to all of you who can't divide by four. I love it when you whip out the whiteboard jack. Now, this excludes new domino stores. So, like, there was no cheating here.

This was the old domino stores. Yeah, the domino's down the block from you probably has 39 straight quarters of higher sales. That's incredible. Thanks to you. But the stock, it wasn't impressed with that news. The stock fell because the pace of sales growth is slowing. Last quarter, sales growth decelerated from 18% in the third quarter to 11% last quarter.

If you were pandemic pizza weeks, you order the meat-free one on Mondays, you order the pepperoni on Wednesdays, eat them all week. Now, you know, Nick and I love a good control laugh. Who doesn't, Jack? Domino's mentioned the word pizza about 30 times in their conference call after the earnings report. But get this. Domino's mentioned the word delivery 47 times on their earnings call after the earnings report. That's because this Ann Arbor, Michigan-based company is famous for doing their own delivery for over 50 years. They don't use one of the third-party apps that you probably get your delivery from.

You see, when they have the cars, how would you describe it, Jack? They got the magnetic Domino's logos they put up there. Well, some drivers drive like Domino's cars. Other drivers drive their own cars and they stick like the sign on top and it somehow doesn't fall off. So Jack and I jumped into that earnings report more snack style, and we heard this shocking quote from the CEO. We have never made a dollar delivering a pizza. We repeat, Domino's CEO said they've never made a dollar delivering a pizza. The reality is Domino's makes money on the product, but not on the delivery. Yeah, think of all the fees. You got the labor fees. Some states, they're paying $7.25 an hour. Some states they're paying $15 an hour. Plus, you have to pay for the gas. Yep. Somebody's paying for the vehicle, and the vehicle needs to be insured.

And until we get like drones capable of dropping Sicilian slices from the sky, financials for delivery don't exactly work. That means delivery is Domino's lost leader. It's the investment Domino's has to make in order to grow the rest of the business, which is profitable. Now, when it comes to like curbside orders and like the in-store eating you're doing, Domino's gets profits of that when you come into the store. But when the store comes to you with delivery, Domino's isn't getting profits. It's just getting your loyalty so that hopefully you come to the restaurant so they can make money in the future. So Jack, what's the takeaway for our buddies over at Domino's?

This whole story is actually one giant takeaway for DoorDash, Uber Eats, and Grubhub. The takeaway here is for them. One company's small individual feature can be another company's like entire business. Now, Domino's is a little different from DoorDash. Domino's actually employs its own drivers. It pays them as employees. They don't use a middleman gig platform. But if Domino's has never made a profit delivering pizza, it's kind of concerning for the gig platforms. Which brings us to DoorDash, which announced their own earnings on Thursday. Revenue tripled in the fourth quarter, which is fantastic. Yes, it is.

But their loss doubled compared to last year to $312 million. We jumped back into DoorDash's IPO paperwork. Get this line. They said they may not be able to maintain or increase profitability in the future. Domino's has been delivering pizzas for 50 years as a side hustle, and they still haven't figured out how to profit. That should kind of freak out the delivery companies that only do delivery. For our second story, used cars, they low-key won 2020. Congratulations. And Carvana is the $50 billion online car dealership.

Jack, used car salesmen, they have been holding the keys to America's hottest chassis out there. According to the Associated Press, the price of a new car, a new car, in the United States, jumped by 6% last year to $41,000. It makes sense. People are afraid of public transportation right now of Uber. They're not jumping into those things. And road trips are like the crucial weekend pandemic activity, so you need wheels. Plus, he got the plant shutdowns, which led to a chip shortage, which led to 3.3 million

fewer new cars, which drove up prices of those new cars. Okay. But Nick, new cars are the JV compared to used car prices last year. Snackers, get this watch. The average used car, so like whatever you're driving in right now, its sale price rose 14% to $23,000 last year. I'm thinking about my Volkswagen, which I'm not planning to sell. And I've already marked it up in my head that it's worth 14% more.

Or are you? And that also makes sense because during an economic crisis with like huge unemployment, people are trying to save a buck right now. Yeah, and $23,000 for a used car is a lot cheaper than $41,000 for a new car. So this price increase for used cars, it is 10 times the rate of inflation. This was a huge change. Now, a few stocks have taken full advantage of this used car. Boom. CarMax. Vroom, Carvana, all three, I'll jump in on this. We've covered stories on all three in this pod, but Carvana announced earnings last week, and Carvana is a publicly traded company selling used cars online. They're doing loans, insurance,

and they got a huge selection from like the 2004 Tacoma to the 2017 Mustang. Don't let the used car thing fool you. This is a Wall Street darling. The stock is up 10 times since March because people are calling this thing the Amazon of used cars. Jack, I'm looking at this right now. Carvana is worth three lifts and the stock jumped another

7% Friday on another strong earnings report. Carvana announced on Friday that they only own 0.7% of the American used car market and yet that tiny little market share makes it the second biggest player in used cars. Used cars are like a

ridiculously fragmented market in a ridiculously big industry in the United States. Jack, what do I got to do to get you into this takeaway? Low-end businesses can still offer high-end experiences. Snackers, we've said this before, and we will proudly say it again, retail isn't dead, bad retail's dead. Turns out Carvana doesn't just sell online. They're offering an incredible experience if you decide to pick up your car physically instead of have it delivered to you.

Oh, you think there's nothing like a new car smell? Have you met the car vending machine before? That's what Carvana calls these things. They have built 27 towers for cars. Real thing. And the middle is opened up because there's a robotic arm that will reach up, grab the car off the seventh floor, and deliver it down to the ground floor for you and your family.

This is insane. This is an option for Carvana buyers. It is good, clean family front on a Saturday, Jack. This is six flags for car dealerships. Jack, here's the math on this. combine a cost-conscious customer with a fragmented market and boom, baby, a spark of joy like a car vending machine can be your differentiator. For our third and final story, draft king stock jumped another 6% on Friday after it's earning. Content isn't just king. No, it's the draft

king maker. I think we could begin with some trivia here, Jack. 12 states is where draft kings is, but they managed to cover one out of every four Americans. Pretty impressive. Not a trivia question. This one is, what is the one? state that Draft Kings made a profit in with their betting app last year. And we'll pause, you can guess. We're talking Jersey. It's Jersey. It's New Jersey.

It's got to be Jersey. It's got to be Jersey. It's always got to be Jersey. Doesn't Hoboken have more betting apps per capita than people or something? I think that's the exact stat in fact, Jack. Now, over at Draft Kings, revenue surged 146% last quarter because legalized online gambling is still ripping across the rest of these 15 United States. Now, they had a scare about a year ago when the pandemic dried up sports.

Okay, in March, they got a boost because all you could bet on was, you know, Russian ping pong. That was it. It was the only thing you could use the Draft King's app for. Yeah, but today, now you got every sports league back in bubble action. This stock has tripled in the last year. The pandemic has taught Americans how to do pretty much everything on smartphones, including betting on sports. But then Jack and I got fascinated with a single stat we noticed in the earnings report. draft king spent a whopping $500 million on marketing last year.

That is 77% of the total revenue they made last year. Okay, context here. For every dollar that Draft Kings brought in, it spent 77 cents on ads to bring more dollars in. And anyone who's used Draft Kings understands why. You download the app, and your first $15 prop bet on Naomi Osaka Shula's color is on Draft Kings. And apparently it's working because the average revenue per user

of Draft Kings was $41 in 2019, but it jumped to $65 in 2020. Nice that Draft Kings made $65 per user last year, but that's only one side of the equation. They spent half a billion dollars on marketing last year, and they gained 457,000 new users. We did the math. That means Draft King spent $1,092 on average, to turn a random person into a Draft King's monthly active user. Okay, so if Draft Kings is spending about $1,000 to turn you into a draft king's user. Then at today's revenue rate of making $65 a year on each user, let me finish this, neck.

It'll take 16 years for draft kings to break even and finally start making profits on each user. So 16 years until you actually mean something to draft king. So Jack, what's the takeaway for our buddies over at draft kings? Content is the kingmaker in betting. Just about every single sportsbook right now, Snackers, they're offering some kind of like $500 bonus if you just sign up. It's a wild amount of bonus cash, and that money, it doesn't even buy your loyalty as a better. It just buys you like three bets for three hockey games plus the Super Bowl.

Yeah, you just jump into the next sporting app that's offering you even more bonus cash right after that. Content marketing is an alternative to these $500 bonus cash deals that big betting companies are pursuing right now. Case and point, ESPN and the athletic both have gambling partners. Penn National Gaming went even further, literally acquiring bonds. Stool Sports, emphasis on the sports. Draft Kings gives away $500 in bonus cash, but it doesn't want to give away $500 in bonus cash. It wants to get you betting on their app through your preferred sports news podcast, sports newsletter, or sports TV show.

Exactly. Jack, kiddo, whip up the takeaways for us to start the week. Domino's confessed they have never, ever made a profit off delivery. Can someone CC DoorDash? Can someone just do that for us? For a second story, Carvana battles against CarMax and Vroom in online used car sales. The car vending machine, it's an offline differentiator for an online company. For a third and final story, Draft King's stock has tripled on surging demand for sports betting apps.

Yeah, they're giving away a huge cash bonus. They could be given away content instead. Now, time for our snack fact of the day. This one sent in by a legendary snacker in Brown Bear, Sean Tyner in lovely Laguna Beach, California. Okay, if you do not digits. You have $1 billion. And $1 billion of single dollar bills laid out would cover four square miles of Earth. Okay, now let's apply that ratio to the current value of Uber. So $11 billion worth of $1 bills. That number of $1 bills would cover 456 square miles. And Sean crunched the numbers on this. That is approximately two full Chicago's, which does logistics. It does Logistics.

And Sean Tyner, did you know that Uber's hub for logistics, Uber Freight, is in Chicago. Whoa. Yeah, I got to sit down, stand up and sit back down again. Snackers, fantastic to start the week with you. Ask your friends, slack it to your coworkers, H-Y-H-Y-Y-S-D. Have you had your snacks deal? If you know, you know. And before we go, congratulations to Jan Bickler and Martin on adopting their first child in Munich, Germany.

And big ups to Section D from UVA Darden's MBA program, which just celebrated the last day of class. Also, happy birthday of Pokemon just turned 25. Pikachu? That Pikachu. And happy birthday to Mar-Holali in Tabarka, Tunisia. Happy birthday, Nick Liu in Taiwan. And Troy Stodzdale in Orlando. And Josh Powell in Boise, Idaho.

And Kelsey vote in Peoria, Illinois. And Mike Big Dog Pollock in T-neck, New Jersey. And Yakiko Soniyama in Irvine, California. and Lena in Greenville, South Carolina, and Faroo Calamoff in Indian Land, South Carolina, and Santiago, Bettencourt in Sanford, Florida, and Sam Goodman and Cheris Bonhom in Columbus, Ohio. Congrats to Denae Dupre for getting promoted in Santa Barbara, California.

Probably so knows. And Nick Cooksey, congrats on the doctorate over in Pittsburgh. And Estefani, congrats on getting a new job in Long Beach. Sergio Zigman, moving to San Francisco. Let's meet a Project Juice. Alexandra, congrats on five years in pediatric oncology in Seattle. Washington. And congrats to all the smiling and dialing SDRs in sales, especially the SDRs at Gong. And to anybody else celebrating anything, make it a T-boy. Celebrate the wins.

This is Jack. I own stock of Amazon and Nick and I both own stock of Airbnb. 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.