The Best One Yet - “It’s like an invisible smart fridge” — Snowflake’s broken IPO. Facebook’s Ray-Ban deal. NextEra’s renewable monopoly.

Episode Date: September 18, 2020

Snowflake’s business is kind of boring, but their IPO reveals everything that’s wrong with IPOs right now. Facebook is whipping up a Zuck-free Ray-Ban partnership to win Wearables. And NextEra is now the most valuable utility stock in the USA thanks to renewable energy and a hint of monopoly.$SNOW $NEE $FBGot a SnackFact? Tweet it @RobinhoodSnacks @TBOYJack @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. It is Friday, September 18th. I'm looking at you through FaceTime, Nick. Have you showered this week? I didn't shower it. I'm just going to be.

I actually jumped in the canal. I did the saltwater natural shower. Jack, I did the walk outside, walk back inside, brush my teeth. Let's do the podcast kind of a thing. Nick, I don't have time for this. This pod is the best one yet. DV-O-Y. Jack, first story. What do we got over here?

Snowflake is the biggest software IPO ever. Snagger, Jack and I got an overnight. CS double major degree to properly whip up the takeaways on this one. For our second story, Facebook just unveiled smart glasses, and they teamed up with Raybans, and they come out next year. Facebook could have zucked Snapchat, shockingly, chose not to. For our third and final story, next era is the most valuable electric utility in the United States. And that's thanks to a combo of renewable energy with a dollop of monopoly power.

Just a dash of monopoly. Just a little bit more. Remember the guac is always extra. Just a dash of. of unlimited pricing power. Not bad that gauka's always extra. But Snackers, before we jump into all that wonderful stuff, Chuckie Cheeses, known for ski ball, ballpits,

and bawling because of the mouse mascot. Their mascot is literally a cheese rat. It is a lactose, very tolerant, vermin. Now, the entertainment company known as Chuckie Cheeses has 600 family-friendly restaurants, but sadly they went into bankruptcy earlier this year. But here's the funny thing Jack and I nurse. They're trying to make a comeback,

but have seven billion problems they got to take care of first. They're trying to reorganize themselves, but they found seven billion unused and unwanted yellow prize tickets. You know what I'm talking about. Now, Jack, if memory serves me correctly, and I hope it does, if you whack a thousand moles, you get a thousand yellow tickets. If you get a million ski ball points, you get a hundred tickets. Now, Snackers, those seven billion physical tickets are a problem

because Chucky Cheezes is wants to now do e-tickets in order to save costs. Physical tickets was an old Chuckie's day. Yeah, don't even bring that up. But the remaining tickets that are paper are still valid. And if some kiddo accidentally grabs and gets their hands on them, Chuckie Cheeses has to honor them. They are valid currency at Chuck Echise's like Bizarre Restaurant Entertainment Semmers. We're talking 7 billion tickets here.

That could fill 65 shipping containers. And the street value of those 7 billion tickets? $9 million worth of random cheap plastic prizes. Feels like it's almost a lift. So here's what happens, Snackers. Chuck Echiseas asked a bankruptcy judge for permission to spend $2 million in order to buy all those tickets and then destroy them. When you're in bankruptcy, you have to ask a judge to do anything, and those 7 billion tickets somehow cost $2.3 million to destroy. But it's a whole lot cheaper than giving $9 million a tickets away to kids who will then redeem $3 billion poorly made for his visa.

Let's get to our stories. You're tuned in this next daily. We spoke to the lawyers and we got to get something legal out the way. It snacks about the hair 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. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, get this. Facebook and Luxottica are teaming up to make smart glasses happen. It's the opposite strategy of everyone else in Big Tech. Jack, you know what I'm thinking over here.

You ready? Get your badge. It's new product. Conference season, baby. Apple launched a new product. Tuesday, Facebook did it yesterday. Yeah, you got Tesla, Samsung, Google. They're going to have big conventions over the next couple weeks.

And they're all followed by the mandatory networking Zoom happy hour. Just remember to fill out the NPS scorecard, which will be emailed to you after the event. Now, Facebook and Luxottica are partnering up on smart glasses, and they'll be available next year. Turns out this was actually codenamed Orion, Project Orion, over at Facebook. Now, I think Orion is known for his belt, not glasses. Yeah, could have been a smart belt, definitely amissed by the Facebook Constellation Team. Snackers, Luxottica is an Italian sunglasses giant that owns Raybans, Lens crafters, a bunch of other brands. And these smart glasses, they aren't going to look ridiculous.

They will literally look just like Raybans because they are rebands. Facebook and Rayban issued a hype video. yesterday to announce this new product. It's kind of cool. And they say, the future is classic. Yeah, it's going to be Raybans with a camera and a screen inside of an eyeglass lens that lets you access the Facebook app. We're picturing the Kennedys on Cape Cod with those classic wayfares, but like way more techies. Except the Kennedys would be calling our buddy Timmy, vid chatting with them from the glasses, and then would be like scrolling down through like their ants politically charged rant on Facebook. So let's picture this. You'll be wearing the glasses

and you can be like scrolling Facebook on your right lens, like down, down, click, like, like, double click. Oh, I'm like, I'm like, oh. Now, to be clear, these frames are not augmented reality glasses. They're not virtual reality glasses. You're not going to make like Pikachu appear in your peripheral vision. And Facebook's goal is going to offend Apple. They want to replace, not complement a smartphone. Honestly, the highlight for Jack and I was that they've already given these to 100 Facebook employees who are walking around like the streets of San Francisco using these things. If you see someone wearing frames that seem to have a camera built in, guess what? They do.

You can just wave to them down Chestnut Street because Mark is watching. Mark Zuckerberg would love to finally win in smart glasses because all of his tech buddies and big tech have failed. Let's go back to 2013. Google tried to build its own with Google Glass. The result was glassholes. We all remember that fiasco. Not a compliment. Three years later, Snapchat tried Spectacles three times. Name one buddy, though, still wearing spectacles or one buddy who's ever had spectacles. Probably Timmy, Jack. Probably Timmy. I'm pretty sure Timmy's had all three versions. But fast forward, Snackers, the next pair we've been expecting is in 2022. When Apple has hinted they would announce smart glasses.

Apple is working on smart glasses. They've kept it ultra secretive. We think it'll come out in 2022. So, Jack, what's the takeaway for our buddies over at Facebook? The most important thing about these frames, they'll be branded as Rayban frames, not Facebook. Snackers, Zuck could have zucked the whole rest of Big Tech and launched his own Facebook branded hardware, just like the rest of Big Tech did. Instead, Facebook, to their credit, is being more thoughtful on this one. Yeah, because honestly, Facebook, they know that you don't trust Facebook with your photos, so why would you trust it with your real physical face? They're showing humility here, and they're letting their brand sit in the backseat while Rayban sits up front. Honestly, a key reason Jack and I are thinking Instagram is still success,

you don't think about Facebook while you're on Instagram, even though Facebook owns Instagram. We're thinking the only reason you'll buy these frames is if you don't think of Facebook while you're wearing them. Because Zuck didn't Zuck. For our second story, Jack, we've got to address the big snowflake in the room. The biggest software IPO ever just happened two days ago. Snowflakes IPO reveals everything that's wrong with an IPO. Oh, by the way, Snackers, we just told you it was like convention week coming up for tech companies. It's also another key week, Jack, the honors. Enterprise B2B SaaS Cloud Week as well, Nick. That's because J-Frog, Sumo, Snowflake, and like probably a bunch of other ridiculously named software companies all IPOed this past week.

They have brutal business models, which aren't that interesting to talk about, but their stocks do seem to be highly coveted by Wall Street. Case in point, Snowflake, the biggest software IPO ever, which is mainly a database management company. You can't say software. company, Nick, without also saying solutions. No, no, you can't check. And solution, by the way, the solution Snowflake provides is managing corporate data. And to understand this, you need to think of corporate data as like food in your pantry. Yeah, think of corporate data as corporate food, but then think of Snowflake software as a refrigerator

and not just any refrigerator, a super optimizing invisible refrigerator. You got a leftover sandwich of data. Snowflake is going to break that sandwich into the proper ingredients and store the coal slas separate from the bread because if they're together, they'll get soggy. It's optimizing where the data food goes. Data warehouses used to be physical and full of file cabinets. Now, Snowflake does it all in the cloud. And it turns out a lot of businesses really need these super optimizing and visible fridges. That's why revenues doubled to $240 million this year, but they're still making losses. A hundred and seventy million in annual losses and this company's not profitable. The most fascinating part, though, about Snowflare

IMP is what happened to the stock over the course of this week. All right, get this snackers. We're going to do a little play-by-play week action here. Last week, Snowflake said its stock was valued at $80 a share before the IPO. And remember, it's still a private stock we're talking about. So it's not clear what the stock price is. They're just figuring it out. But then, just a few days before the IPO, they up that number and said they were actually worth $100 a share. And then they were getting such big smiles and creepy looks from the investors.

they decided to make their stock $120 on IPO day. And that's when they sold their shares at to institutional investors like other banks on Tuesday. Wednesday, those stocks finally started trading publicly for retail investors like you and me, but they started trading at $240. So it went from $80 the previous week to $240 on the IPO day. And the stock doubled in just one day between IPO and IPO minus one. So, Jack, what's the takeaway for our buddy? over at Snowflake. Companies are seeking alternatives to IPOs like a SPAC or direct listing. Yep,

because of what just happened to Snowflake. Snackers, the investment banks who priced Snowflake stock at $120 before the IPO, they sold the shares at that price, $120. But then boom, the stock price immediately doubled, which sounds really good, but it's not really good for you, for me, for us, or for the company. It sounds thrilling, but regular investors like us didn't enjoy that. price jump. The moment you and I could invest in Snowflake, it had already doubled in price we were too late. So, Jack, can I got a ticket here? Can I buy a share of Snowflake at $120 on Wednesday? No, it's already doubled to 240. Now, the company Snackers, and this is the other key, they didn't get to enjoy that price jump either. They sold $3 billion worth of stock on their IPO.

Yeah. But they could have made $6 billion if the shares were priced correctly at $240, instead of the $120, the investment banks advise them at. So the big winners from Wednesday's big snowflake stock doubling were actually the bank's VIP clients. They were handed a one-day 100% stock gain, gift-wrapped with a grading card from the investment banks that they work with. Snackers, there is a lack of IPO transparency and a whole bunch of conflicts of interest from the very investment banks who guided Snowflakes IPO, among all the other IPOs. And that's why companies are pursuing alternatives to doing an IPO. That's why you're seeing more SPACs, more directives. listings because insiders are who really win most in an IPO. Not you, not us, or not the companies that

are actually IPOing. For our third and final story, Next Era has a monopoly on a whole bunch of Florida's electricity. And now Next Era is the most valuable utility stock in the USA. Snackers, Next Era, this company literally keeps the lights on, or in the case of Florida, keeps Renanhas AC on. Based in Juno Beach, Florida, Next Era owns and operates all the power lines, across the Atlantic coast of Florida. And before Floridians flood Twitter on us, also some in the Gulf of Mexico, Florida too. We know, Naples.

The Gulf of Mexico's water is so pleasant. So Jack and I jumped in snacks style. Turns out, get this, 97% of their power is generated from clean and renewable resources. Now, of course, that includes wind and solar energy, which is obviously renewable, but they're also saying nuclear and natural gas, which they're calling clean here.

Clean-ish, more of a less dirty. Yeah, do less situation. Now, this company also just announced that they think they'll make an extra 20 cents of profit on each share in 2020. Also, they got a problem on their hands. Their stock price has grown too high. Jack must be nice. They're doing a four to one stock split cutting each share into four different tinier ones. And Snackers, because it's 2020 and nothing makes sense, they announced the stock split and yet the stock rose.

Stock splits change basically nothing, Snackers, except optics. Nothing. But the stock has rose 150% in the past five years, and now the company is worth $135 billion. Translation, this company, Nextera, in Florida, is worth 14 lifts. Now, like any company, including Lyft, the goal of Nextera is noble and simple. Boost revenues faster than costs. All right, Jack, let's look on the cost side what is going on there at Nextera. They're spending $10 billion a year fixing and installing power lines and powerpals.

Fun. And then spend another $4 billion generating electricity. And then on the revenue side, how are these guys bringing in the cash? Well, they're making $20 billion in incredibly steady electric bills that it's customers pet. Incredibly steady because nobody cuts their electric cord even for fun. Yeah, you might try out dry January this year, Nick. You're not going to do electric free February. Not a thing.

Unless you're like Walden Pond. Not a thing. So, Jack, what's the takeaway for the non-transcendentalists over at Next Era? Next Era is a monopoly. And that's okay because it's a regulated monopoly. Acting like a monopoly is illegal in the USA unless you're a natural monopoly. It takes so much time and so much money to build a power system. Can you imagine? It's brutal. It's brutal. It only makes sense for one company to do it, aka a natural monopoly.

Governments allow natural monopolies because in return, they regulate them. Case in point, Next Era, which mentioned the term regulated 48 times in their latest earnings report. Control Find is a great feature. It's a paper. powerful analyst tool. Now, Next Era Snackers has to ask the state of Florida permission before it can even increase the price of electricity. We are not making this up. No, they got to go to mom and dad and say, sign off. I'm going to need my allowance now. So since they can't raise prices to boost profits, Next Era tends to focus on keeping cost down and being more efficient. Because it's not just a monopoly. It's a natural monopoly. Jack, can you just, I don't know, unbutton one more

button and whip up the takeaways for us before the weekend. It was getting started there. For you? Gladly. Facebook is launching smart glasses next year that we think have the best chance of success. It's because they're leading with Rayban, not leading with Facebook. Second story, Snowflake has what seemed like an awesome IPO with the stock price double. It wasn't awesome for Snowflake, though, and that's why you're seeing so many companies SPAC and direct list. Third and final story, Nextera is an electricity monopoly on both coasts of Florida. That's okay. because it's a regulated monopoly. Now, time for our snack fact of the day.

This one tweeted in strategically by Jason Blessam in lovely Rugby, North Dakota. Nickname of Rugby, North Dakota, the pitch. And Jason points out that the geographical center of the continental North America is rugby North Dakota. But the geographical center, if you include Alaska and Hawaii, is someplace else. It's Belforch, South Dakota. And then Jack and I jumped in snack style a little deeper. Now, if you're USA-centric and don't care about Canada or Mexico, the geographic center of

contiguous continental United States is a place called Lebanon, Kansas. And if you want to go and head over there, it's actually a destination, but it's on private property. So the monument to the geographical center of the contiguous continental United States is actually half a mile away. It's in Lebanon, Kansas, and it's got a picnic table and a small chapel. Lovely place. Snackers, before we break for the weekend, we got to say congrats to hand. Reddington and Mike Campbell brunch wedding happening this weekend, New York City. And congrats to Jesse for passing the CPA in Berkeley, Illinois. And Austin and Kendall Star anniversary, Denver, Colorado.

Congrats on getting a new job, Ricardo Suarez and Caracas Venezuela. And Jasper and Luna anniversary, West Palm Beach, Florida. Congrats to Ricardo and Jackie for getting engaged in Dallas, Texas. And happy birthday John Phillips in Vegas. And Bruce Gong in Yiu-U-China. And Nate Tinjee in Mesa, Arizona. And Kelly Yao in Philadelphia, Pennsylvania. and Jason Granados in Los Angeles, California.

Jamie Lopez in Atlanta, Georgia. Jake Daniels in New Richmond, Wisconsin. And happy Rush Ashana to Raphael and all the Jewish Snackers out there. Thanks, Raphael, from Tel Aviv, Israel. Snackers, you guys looked incredible this week. I gotta quickly ask H.Y. H.Y. Y, Y, Y, Y, State. The answer to you is yes. Yeah, and Jack and I, by the way, neither one of us has showered while doing this podcast since we began.

Ask your friends, have you had your snacks daily. We'll see you Monday. If you know, you know. This is Jack. Nick own stock of Apple. I own stock of Amazon. 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, 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.