The Best One Yet - Kylie Jenner’s makeup exit, Ford’s Mustang e-SUV, and FedEx’s tax-cut-apalooza

Episode Date: November 19, 2019

Coty cosmetics realized it was probably easier to just acquire 51% of Kylie Jenner’s beauty brand than compete (so it did). Ford unveiled its Mustang-looking electric SUV that’s not just a compliance car. And The New York Times broke down what FedEx did with its tax cut money… which highlights what companies actually do with their tax cut money.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 Tuesday, November 19th. Happy to be here. This is the best one. I knew you were going with that. Tea Boy Tuesday. First story, Jack. A wonderful Mick Snack's, by way. This is Ford Motor Company. Just unveiled the Mustang-inspired. Aks-U-V-A-K-A-K-A-K-E. A mock-E-E-A-T-A-T-E-A-T-E-A-T-E-E-KKUKKKKKUKKKKKKK-E. It's an offensive term in that. industry. Second story, Kylie Jenner's makeup brand has a new owner. It's not Kim's mom. She does a lot of things. She's not taking advantage of this one. It's not Mrs. Kay. What are we going with Jack? Cody is the old cosmetics conglomerate now owns 51% of Kylie Cosmetics. If you can't beat them, buy them. Very simple. Third and final story, the New York Times reviewed what FedEx did with its giant tax cut. Reminder, the tax cut boosted company's profitability overnight. There's a little bit of drama with this story, so we're going to unpack it for you. Before we do, though, we've done. We've got to talk because you may have missed out on the six-foot-long sub-opportunity from Subway.

Actually, anybody who's ever had a graduation party has had the six-foot-long meatball man. Even if you've graduated from high school, though, you may have missed out on the Lifetime Pasta Pass from Olive Garden. Yeah, it's like $99 for 99 million calories. Well, apparently the folks over at Papp's Blue Ribbon said, you know what, you've got to quench yourself after eating those things. We're going to up you a one.

The 99 pack of beer is officially a thing. You see this on the shelf, you got to lift with your legs, not your back. I remember when Coorslight came out with a 36-pack. It was inventive. We were wondering how high the numbers could go. Upping the 30 rack by 16.666 repeated. We thought it had to be a round number. Turns out it can be an odd number over here. Now, this is your classic, make one thing and do it in a very large quantity gimmick.

Now, Snackers, you know what we're thinking now for Tea Boy Tuesday. What is the next company that should do a marketing gimmick, which is basically a never-ending blank pass? Jack and I spent an unhealthy. portion of today on a whiteboard trying to figure this thing out. No joke. This pod was delayed because of this. Do you want to hear what we came up with? We're thinking shake shack, build a shack out of shakes for us already. A shack out of shakes. That got me thinking about bigger structures. How about an Airbnb? We're thinking squatter pass, Airbnb. Never ending squatter pass, unlimited Airbnb's for

life never pay rent again. Boop, boop, boop and all over the place. That'd be a hell of a promotion. Snackers, we want to hear what you're thinking for T-Boy Tuesday. What should be the next absolutely insane, absurd huge large quantity corporate giveaway. We will accept at Robin Hood Snacks tweets or at Robin Hood Snacks Insta Stories. Then let's hit our three stories. 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 the hearing food is air candy.

They don't reflect the views of the Robin Hood 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. Right. Digestable Business news for you

Robberhood Financial LLC LLC Member Fenra Slash SIPC For our first story Jack Can you just

Can you plug this in over here? There you go Ford Motor Company Just unveiled An electric SUV They're calling it the Mock E But what is it not?

It's not a compliance car Definitely not a compliance car We mentioned this last week But it's worth covering again Because this thing's a big deal This is the biggest product unveil since the Model T The horses heard about this thing

They're like Oh not again Sunday, Ford showed off the Mustang Mock E and the great grandson of Henry Ford. Ever heard of him? Called it a rocket ship and said, don't mess with this icon. This thing isn't just an electric car. It's got a Mustang logo. It's got a Mustang headlight situation.

It's got Mustang-ish tail lights. But it's got four doors and it's way bigger. This is like your buddy who put on 40 pounds in the off season to switch from like defensive back to noseguard between sophomore and junior year. You're like, Timmy, what kind of combination of? a way protein and pre-eatine you've been doing this summer. This is a giant. Actually, it's not that giant, but it's a big, big Mustang SUV. Ease up on the raw eggs, Timmy.

Now, Bill Ford is the great-grandson we refer to. He said this is not a compliance car. Jack and I got interested in that because we hadn't really heard the term compliance car before, and neither had a lot of people. And I'm kind of a car guy. We've driven cars before. So a compliance car, let's talk about that. There are fuel economy standards that every car company

must comply with. So if you're Ford Motor Company, you've got to have an average standard fuel economy, so like miles per gallon, like 30 miles per gallon on average across your fleet. But it's the thing. If you're Ford Motor Company, you've been selling a lot of these F-150 trucks, Explorer SUVs, Expedition SUVs. We're talking hefty gas guzzlers. And so to offset those gas guzzlers, they basically made electric and hybrid vehicles just so that they would, you know, average it out to 30 miles per gallon. Classic situation. It's like your freshman year, college, party. You tell the school administration you're going to throw it. They're like, great, you can have the cake of beer. You need to have some non-alcoholic options. And you're like, all right, fine.

You're bringing a couple of two liters of Sprite and Dr. Pepper. Look at all the Kool-Aid and it's like, look, Officer Bender, we have non-alcoholic options. Now can we go on with the party? Those have been the electric and hybrid vehicles that a lot of car companies like Ford that haven't really taken electric seriously. They've been compliance cars. The result is these compliance cars, they're kind of terrible cars. They're kind of ugly. If you'll notice, hot week, isn't making versions of these cars. They're higher priced and nobody's buying them and we understand why. So,

there's the thing about the Ford Mock E. It is not a compliance car. So Jack, what's the takeaway for our buddies over to Ford? This could be a Tesla Model 3 killer. This is really a takeaway for Tesla because Tesla built the Model 3 car, the $35,000 kind of cheaper option to be the everyman electric car. Hold on a second. Ford is the OG Everyman car company.

That's why they're like in history books. So when we heard about this Ford Mustang-ish mock E, we thought it was going to be kind of expensive. Yeah, Mustang is a sports car. Turns out it's relatively cheaper than most people expect it. $44,000, which drops to $37,000 out of your pocket after the tax credit you get for driving an electric car. Which is almost the exact price as Tesla's cheapest car, the Model 3. $37,000. Plus, this is an SUV. Which I know what you're thinking.

Americans are obsessed with SUVs. This is Jack. Nick and I own stock of Tesla. For our second story, this one barely arrived in time. Jack and I happened to have overnighted this thing. I signed for it. Thankfully, because FedEx just got ensnared in a fight with the New York Times over its taxes. We dove in snack style.

It was intense. I have a $100,000 economics degree. It's a piece of paper. Which means there's a lot of multiplication tables that went into this. Putting it to work. This story is about tax policy, Nick. There was a tax cut last year, and companies have a lot of cash. Now, here's the thing. When you got a lot of cash on hand, there are a lot of debates about what can happen to that cash.

Liberal economists think that tax cuts just lead to companies putting more cash in the piggy bank and making their investors richer. And conservative economists tend to say that that money, that new cash, will get reinvested into the company's investments that lead to potentially more jobs. Right. So the New York Times did a case study this week and looked at one company, FedEx, and what that one company, FedEx, did with all the money at save. Now, you may remember this tax cut. It passed a tax cut. It passed. December 2017 by the Republicans in Congress and then was signed by President Trump and then companies got a lot more cash. Well, FedEx lobbied for that bill. So they were pumped when it passed and the New York Times calculated that it has saved

$1.6 billion in taxes in just the year and a half since it passed. It's put some of that cash to work. For example, a one-off wage increase for FedEx workers. It was a big celebration right after the bill passed. You remember lots of companies were giving out like one-off bonuses, one-off wage increases. But interestingly, it used the real. rest of all that over a billion dollars in cash to buy back its own shares and pay dividends to its shareholders. In other words, to enrich investors, not create jobs. That's the big take by the

New York Times. If you're an investor, if you're a shareholder of FedEx, a dividend is something that's going to be returned to you because you own the shares. It's like a cash check you get from Nana, you know, for your birthday, except every quarter. And if you're a shareholder and the company buys back shares, that will boost the price of the stock. Okay, so the New York Times recognizes that FedEx used the riches of the tax cut mostly to hook up investors, but it took it one step further. They stuck a specific percentage on this thing. They actually looked at the whole S&P 500 and said 75% of the gains from the tax cut went to shareholders, not for investments like building a new factory or hiring new workers. By the way, Snacker's separate side effect here

because of this tax cut and the money that was given back to companies, the U.S. government's deficit is now at its biggest point since 2012. It's over a trillion dollars. FedEx responded on Monday with one of the most aggressive press releases I've ever seen. This is where the drama actually started happening. The CEO and founder of the company said the New York Times was dead wrong, but it didn't explain how it was wrong. But then he went on a little bit further and challenged the head of the New York Times to a debate, which is intense, potentially entertaining, but really just intense. A tax policy debate. It's kind of like something you'd see in a playground during recess.

Except it's about tax policy, so people probably wouldn't watch it. Jack, what's the takeaway for our buddies over FedEx? Snackers, the tax cut is a huge reason why stocks are at record highs. Companies basically did nothing. And then overnight, because the tax cut, they suddenly became more profitable. They got fresh cash. It was like your tax refund just out of nowhere, tripled in size, and you did nothing to earn. Literally a Christmas gift that you didn't even ask for, and it's worth billions of dollars.

So that's why stock prices are so high because so many companies spent that money to give you dividends and to buyback stocks. But investors are now thinking, okay, now that the tax... The tax cut has happened. The money has already gone back to the companies. What's the next thing that's actually going to move stocks in a big way? Yeah. What's the next catalyst? Could it be something good, like artificial intelligence, for example, just across the board boosting humans productivity? Could it be the actual end of the trade war that we keep hearing drip, drip, drip, dripping about? Because there's a meeting today, there's a meeting tomorrow. It goes this way, it goes that way, just an end to the thing? Those, like, good things could potentially boost stocks overall. Or could it be something bad like maybe a recession that just reduces spending everywhere. Or like a trade war escalation, which would not be good at all.

Not fun. That's what investors are wondering. What's the next catalyst? For our third and final story, Kylie Jenner just sold $600 million of her makeup company to old school Cody. Kylie Jenner. That's me applauding because your paper wealth just became real wealth. And we appreciate you being such a good snacker. You kind of send us a snack fact one of these days.

Kylie is selling 51% of Kylie Cosmetics in exchange for 600 million. If so facto, the value of her whole company is $1.2 billion. Yeah, if half of it's worth $600 billion, the whole thing's worth $1.2B. But we know the whole reality behind all this is lips, liner, and lipstick. This company is all about the lips. Jack, you're more of a velvet or a matte finish with the lip kits. I'm a burpees guy. Original, stay with it, Jack.

Now, Cody is the new majority owner of Kylie Cosmetics. So, if it wants to change name of Kylie Cosmetics, it could hold a vote, and since it's got 51% the shares, it could win 51-49. But Kylie is going to remain the public face of the brand because she's pretty much responsible for where it is right now. And Kylie continues to own 49% of the company. So, like, she gets 49% of profits. So you may know Kylie, you may not know Cody.

Similar sounding name, completely different situation. Yeah, let's talk about Cody for a second. Cody owns a whole bunch of makeup brands, including Cover Girl. Remember Easy, Breezy, Beautiful Cover Girl? Who could forget? Adidas has a cologne, which Cody makes. It smells like not sweat. Clarol is a hair care brand that makes frosted tip highlight

Which just sounds cool And then Ramel makes eyelin it You know, that's just like the only Those are the four that I'd even heard We were trying to excite you with those If you're excited, raise your hand You can't see you, you're probably not raising it right now So it's kind of a depressing story at Cody

The stock is one third what it was four years ago Basically because its brands have become uncool It's kind of like your one friend who's still frosting their tips for example Here's the thing Instagram is where new, cool makeup brands are born. And it's happening with a particular set of entrepreneurs, both the unfamous and the famous. Let's start with the unfamous. Someone named Emily Weiss started a company called Glossier a few years ago. This started out with Insta candy packaging that took off. Glossier is a big deal now,

and Nick's right, its packaging is gorgeous and people love posting it on Instagram. But let's say you already happen to have a few billion followers on social media, so you decide, you know, to monetize it by starting your own makeup brand. You could be one of the famous founders. All right. Kylie Jenner did it with Kylie Cosmetics. Her older sister, Kim Kay started a company called Kim K Beauty. Jessica Alba did it with The Honest Company. And of course, Gwyneth. Goop.

Goop. Yeah, if you want to splurge and spend six paychecks on a gift for your significant other, it's a perfect way to go because it looks fantastic. So Instagram is the great democratizer of famous people-led makeup companies. In the meantime, Cody's stock rose 2.5% on Monday because it's adding Kylie to the mix. But let's be honest, this is a drop of under-eye cream in the under-eye cream bucket. And that's because Cody's sales are worth a hefty, you know, $8.6 billion a year.

And Kylie Cosmetics only pulls in $200 million, but it does hope to grow that. So Jack, what's the takeaway for our buddy over Cody and our friend Kylie? We've seen this story before, except in food, beverages, and razor blades. Blank older companies' brands are going out of style. So blank older company buys a younger company. That's the headline. Like, we could have filled in the blanks here. Baby boomer brands are dead.

Think of it, Kraft, Ketchup, Budweiser, Oreos. We keep seeing their sales struggle. Yeah, nobody like thinks, oh, Oh, I only buy craft. Oh, I only buy Budwash. That's why the owner of Shick Razor Blades bought Harry's razor blades. That's why Kellogg's acquired RX Bar. And that's why Constellation Brands acquired San Diego-based Ballast Point Brewery.

These old-school companies with tons of money, they figure if you can't beat them? Buy them. Jack, can you whip up the stories for us over there? Ford is finally taking electric cars seriously. They're not just compliance cars. And this thing is borderline affordable at $37,000 post-tax credit pre-potentially buying a Tesla instead. thing being the Mustang mock. Second takeaway. FedEx has saved

$1.6 billion in taxes not paid since the big 2017 tax cut. And it spent most of that saved cash hooking up shareholders. Third and final story, Cody's stock rose 2.5% because it has the coolest lipstick company around Kylie Cosmetic. Snackers, you're getting to see the formula and out of touch company acquires it not

out of touch company. Now time for a snack fact of the day. This one sent in by Adriana in Lexington, Kentucky. Full disclosure. She works for wild turkey distillery. Yeah, there are nine million barrels of bourbon, just sitting in musky wooden barrels. It's a beautiful image. Aging. In Kentucky. Just in the great Commonwealth of Kentucky. Now, we know what you're thinking there. That was a poem. It wasn't. There's more to this. That nine million barrels of aging bourbon in the Commonwealth of Kentucky is enough for each resident of the Commonwealth to just take home two barrels of.

of aging whiskey. Which seems like a nice thing that the state of Kentucky should probably do for its residents. That's their Armageddon plan. If an Armageddon or a meteor is coming, everyone's getting two barrels of whiskey. We're getting our way over to Kentucky

as soon as possible. Adriana, thanks for sending that in. Snackers, love to having me with us. For a T-Boy Tuesday, remember to tweet us your idea for a big corporate major number giveaway. Never-ending blank pass. We want to hear your idea,

Snackers, at Robin Hood Snacks. 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.