The Best One Yet - LIVE from NYSE for Uber’s IPO, Rihanna’s LVMH luxury launch, and how the newest tariffs affect you (they will)

Episode Date: May 13, 2019

We hit the floor of the New York Stock Exchange to cover Uber’s IPO for you — Here’s what we saw. For the first time in over 30 years, luxury design powerhouse LVMH is launching its 1st house from scratch: Rihanna’s Fenty. And the next rounds of tariffs will actually start affecting products in your daily life, so we looked at what’s vulnerable.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. And that's the Uber IPL. That is the ringing bell at New York Stock Exchange. It's Friday morning right now, but we're coming at you Monday morning. It's live, baby. This is an exciting day.

Uber's opening at $45 a share. We're going to break down everything for you. We just saw Dara walk by. We saw Travis walk by. We're watching them doing this. Ringing it. Trading hasn't actually occurred. We'll get there.

We're also going to cover two great other stories for you. This is like a ceremonial bill. This is, you know, the bell before the bell? It feels like, I don't know, Facebook in 2012, Uber in 2019, these are monumental market moments. Let me tell you, the one thing we're seeing consistently, there's a lot of clapping. There's nonstop clapping. If you're an IPO in company, you will not stop clapping. You're tuned in the snacks 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. Nope. It's not a research report.

investment advice. Not an offer or sale of a security. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member Fenbra slash SIPC. And we're back for our first story. Uber's IPO was kind of a flop. It was crazy.

We were there. That was Friday. We were on the stock exchange. Investors are nervous. We got out of the exchange. Now we're back uptown. We survived. Yeah, we got out of there live.

We're back up town. We're at our hotel now on Sunday. We had a chance to digest this thing. kind of took off our nice shirts, put on more loungeie wear. I'm totally apleasured out right now, which would not have flown on the stock exchange. No buttons on me right. Now, it was a flub. Investors are nervous about the future of Uber, and we'll tell you why.

Now, the actual event itself packed. Let's go back to the floor. It was a day of selfies. You've got to be, first of all, you get there, you're dressed up. Yeah, no jeans allowed. No jeans, no sneakers. Security was tight. Right.

They wanted one ID. I would not be shocked if they asked for a second. Outside of the stock exchange, they had an Uber Eats truck handing around like granola buyers. Yeah, and then we got inside and they were handing out bagels. It was a little bit of Uber eats everywhere. Supposed to be a big celebration for Uber, but it turned out to be a little awkward. Right. Tension is mounting as we get there.

Now, check out Robin Hood Snacks, Instagram at Robin Hood Snacks because we have a whole story that kind of gives you the behind-the-scenes scoop of what it's like at a stock exchange on an IPO. Now, what we watched was the team of Uber walking. You got the CEO, Dara, go through, and then you got the shorter than we expected. True, but still, very strong stature. And then a couple minutes later, Travis Kalanick, who is a co-founder of the company, longtime CEO. Right.

He was left in a little bit of disgrace. In 2017. So what you ended up having on that top of the podium for the bell ring, which you just heard, you had the CEO, Dara, and you did not have the co-founder traps. But you did have employee number four. Her name is Austin, and she got the job by tweeting at Uber, like, when they had just launched. Yeah.

Check out our Insta. We have the whole bell ringing as well. But it took like two hours for the initial trades to be sorted out. So for a long time, there was this big TV screen all over the exchange. Everyone's focused on it. It said $45. It's supposed to be the share price for Uber. We're all waiting.

We actually, Jack and I ended up doing an interview with Cheddar that day. We're talking about the S1 report that we've shared with you guys. And the S1 is what everybody needs to check out before investing in a pre-IPO company. Exactly. And at that point, still, we're midway through the trading. and like nothing's happened. Finally, we were getting ready to leave, and trading finally began. Now, this is typical of an IPO.

It's not like trading begins all the time right at the open. Uber is one of the most highly anticipated IPOs like ever. So clearly there was pent up demand, and it took a while for the brokers to figure things out. The New York Stock Exchange, which is an amazing place to be. You feel like you're in the center of the world. George Washington was like sworn in a block away a few years ago. Right.

So classic Uber, the ETA was much later than expected. Exactly. So shares finally started. trading at $42. That's $3 less than $45, so it's already off 5%. Right. Now, its valuation, at the end of the day, $76 billion. It fell by 8% on day one. Like, all the smiles and all the selfies went away, because that is not the way a company wants to start. Keep in mind, the bankers who were guiding the IPO had initially said like a year ago that this was a company valued at $120 billion. That was incorrect. Now, there's a bunch of things a little bit beyond

Uber's control that they were suffering from. It was a busy week. First, you had all its drivers strike, or a lot of them strike on Wednesday. Now, that's actually kind of within Uber's control. I wouldn't say that's beyond Uber's control. Outside, though, you've got like the rainy day factors. You got the trade war escalation that happened on midnight right like eight hours before the IP. Boom, fresh tariffs on China hit and everyone been waiting all week to see if that could have been avoided. And then Lyft's shares were down like 40% from the peak.

And, you know, Lyft has a similar business model to Uber, obviously, so it's making investors nervous. So, Jack, what's the takeaway for our buddies? over at Uber. Private investors are different than public investors. Now, Uber will spend whatever it takes to win, and they've been doing that. It has been spending billions and billions of dollars. And who has enabled that? Its venture capitalists have like required that. That's, it's private investors. Everyone who invested before the IPO, they were basically subsidizing growth. Right. So every time Lyft increases the promo code to like download Lyft for the first time, boom, check your Uber. It may have done the same thing. Uber was matching it. And it resulted in Uber in the past

12 months losing $2 billion. That's such a big number. You wouldn't know how big it is? It's actually the most any company has lost going into an IPO ever, by far. And number two was Lyft. So these two companies are by far the biggest loss makers ever to do an IPO. VCs were cool with it. Public markets, maybe not.

For our second story, I found this one in a hopeless place, Jack. LVMH, the luxury brand, just added Rihanna to be the founder of its newest fashion. There's a lot of firsts in the story. There's a lot of words we can't pronounce in the story. You want to start it off with Maison, my friend. Maison means house in French, and LVMH has 70 house brands. LVMH, four great letters really make it easier to say because the official name, Louis Vuitton, Moe, and Nisi. I left that one for you, Nick.

That was pretty well done. He studied in Quebec for nine years. Nick took one class in French in seventh grade. I didn't. LVMH has like 70 brands here. They divide them into houses. You know a few. them, Celine, Dior, Chandon, if you have to ask, you cannot afford it.

They are packed in those magazines that are like too expensive for you to even open. Right, which the magazines are basically just ads for LVH, whatever. And now apparently there's 71 brands and that's led by Rihanna. Now, LVMH itself, the stock is just as expensive as its products. Not going to get that thing off the shelf at a bonnet. The stock is at an all-time high. Very close to it. Because luxury retail and like $3,000 bags.

Doing just fine. That's a good industry right now. Now, we got to talk about our friend, I don't know if she listens to the pod, maybe Robin Rihanna Fenty. You just know her as Rihanna. She is getting her own house at LVMH. Going by the last name here, Fenty, which she hasn't used too much before. Yeah, Fenty is her official last name, right?

Official. Her like real last name. From Barbados, the real deal. There you go. Now, she started Fenty a couple years ago in an LVMH startup incubator. Exactly. They had one for beauty brands coming out. Rihanna partnered with them on one, basically built this thing from you.

scratch. You might have heard of Fenty or maybe even used it. They have cosmetics products and they are super inclusive. In fact, they've got like 40 shades of foundation here. I could find something perfect. You know, they could probably match something to my wrist and then my like cheeks are a little different tone. Nick might be able to use Fenty's cosmetics, but he cannot use Fentie's lingerie. There's also a lingerie brand called Savage by Fentie. That's also super inclusive. When it comes to the Fenty brand, though, in just its first year out of the incubator, what a start. How much do they bring in in sales? 562 million in sales in its first year.

So that's a pretty good sign. It's a lot of success. But now it's going to get amplified under LVMH's like Steward. Right. They're making this their 71st essentially house. Sounds a lot like Beyonce's Ivy Park. Yeah. Tag teaming with Adidas, which we reported a couple of weeks ago.

Now, this is a bunch of first for LVMH. First, it's their first homegrown brand since 1987. They typically just acquire brands, but this was born in an LVMH incubator. It's the first. originally created by a woman. And naturally the first by a woman of color, of course. But here's the key distinction and why this is partially so important, because this is the first time LVMH has had a celebrity create the fashion brand.

Not just endorse it. We'll explain by contrast here. If you look at a Dior ad in, and let's say Vogue right now, smells great. You might see a picture of Jennifer Lawrence of Hunger Games fame. She's just collecting checks from Vogue because she's just endorsing the brand. She doesn't actually own it. Right.

On the other hand, you've got... Rihanna now who's shining bright like a diamond because she's able to go into this venture with like a 50-50 split. Yeah. So whatever profits that Fenty generates under LVMH, 50% will go to LVMH, 50% will go to Rihanna. So Jack, what's the takeaway for our buddies over at LVMH and now Fenty? The new age of marketing is celebrity founders. Now, technically Rihanna is an influencer. How many followers she got here? She is absolutely an influencer. 70 million followers on Instagram, 91 million on Twitter. But the focus here, especially in the news was announced was that she's an entrepreneur. Yeah. The chairman of LVMH said she is a true

entrepreneur, a real CEO, and a leader. He said it with slightly more of an accent, but we're just going to leave it at that. She is leading this cultural way of entrepreneurship we're seeing from performers like Jay-Z, Kanye, Beyonce, LeBron. So the expectation now isn't just as a celebrity that you endorse something, it's that you are a founder growing the company. You own the company, you build it higher, and it's driven by your massive social media following. For our third and final story, The trade war is here to stay. Yep. Big changes on Friday mean the tariffs are things you're going to start noticing.

We are going to finally start noticing. I'm already starting to feel like. Jack's like his left arm's twitching a bit over there. I'm shaking. I get this guy in Advil to Coke. So, U.S. and China trade negotiations were going down last week. There was a big dinner, Thursday night. Always.

Three courses. Don't know what was a dessert. But there was no deal. So tariffs hit Friday morning. Right before that. And that caused markets to have their worst week since 2000 or since the beginning of the Yeah, since things started. Now, here is the key difference between prior tariffs and the new tariffs.

The pain is shifting from businesses to you and me. Yeah, we're going to start feeling this now. So far, the tariffs have intentionally been placed just on business stuff from China. Yeah, we're talking the tariffs have been on steel, plastic, chemicals. When was the last time you went to the store and bought some chemicals? Yeah. Oh, my God. Can I get a couple more pounds of the lithium ion batteries?

We don't buy this stuff. But Ford, Boeing, pharmaceutical companies, they do. They do. And they've lost a lot of profits already from tariffs. Okay, enter new phase of the tariffs, which are on things that you are wearing using eating off of right now. Yeah, the administration has run out of like business stuff to punish. So now it's electronics, kids toys, furniture. Okay, silly putty.

The chemicals that go into silly putty are all being tariffed. Silly putty prices expected to rise. Let's get specific. The next round of tariffs are going to affect things in this room we're recording in right now. I'm wearing this nice t-shirt. It happens to be made by a company that makes it in China. Yeah. I'm drinking from a swell bottle.

He's got his mouth all over this thing. It's made in China. Enjoy it. That thing's allowed to get more expensive. The device, we're recording this podcast. This pod. Let me pick this thing on. It's made in China.

All of these things are going to be jacked up by 25% with the next round of tariffs. Predictions right now are for the iPhone XS to increase in price by potentially $160. Yeah. The next round of tariffs is all Apple products. They'll all be 25%. We need to come up with. like a name for this round of tariffs because it's highly personal. We'll get that for the next pot. I'm feeling to my soul. Now, can we just back up a second here and just talk about tariff life

style in general? I think we should. What is the point of these tariffs? What is the goal of a tariff? The goal is to make Chinese imports more expensive so that you and I buy less stuff. So that we start buying American-made stuff instead. Because get this, about half of our imports are now 25% more expensive because of these tariffs. So Chinese stuff is more expensive, but Are we buying less? The answer is no. No. Since 2017, tariffs have not been working.

And we're still buying. So in 2017, the United States imported 505 billion imports from China when there was no tariffs. Okay, now get this. In 2018, that number increased. The amount we imported from China rose to $540 billion. And that was with the tariffs. So we're buying more stuff from China as a result of these tariffs. And by the way, this money, it's going straight to the Treasury Department.

Right. We're paying 10% and 25% tariffs. And it's going straight to the trend. So, Jack, what's the takeaway for our buddies who are everyone listening? Punishing China is costing U.S. citizen dollars. Now, technically China is the original economic wrongdoer here, and the United States is reacting to that and trying to get the trade deal. Right. They have these bad practices of stealing American secrets and unfair play, basically. But Americans are paying the real cost of this trade.

Now, the good news here is that the economy is doing so well, it can handle some of this pain. And that's why you're seeing spending it. Yeah. This is a good time to be having a trade. more, to be honest. The reason why this is bad news is that it's just, there's no sign of this ending. Consumers are going to keep on paying a higher price. We had a whole three-course dinner the other night. They couldn't come up with the deal. Profits are going to keep on getting hurt. It can feel it in our bones. Jack, can you whip up the takeaways for us? Uber's IPO was a flub, and it shows private investors are different than public investors.

But we got some great bagels and snacks from the Uber Eats team on the floor. Second story was Rihanna. Her partnership with LVMH shows endorsements aren't as cool as funding and founding your own company. We didn't get to mention this, but the N and Fenty, by the way, backwards. These are the details you come to snacks. And it kind of looks like some kind of a Greek letter. We don't really know. Finally, tariffs aren't doing what they're supposed to do yet. Businesses have already been hurt.

Now you and I are getting hurt. Not a fun story, but it's true. Silly Puddy, which is the, like, real victim in this entire situation. Now, time for our snack fact of the day. This one just released hot off the press from the Social Security Administration. We will tweet this link out. This is a really fun interactive list. Very interesting.

You want to be the best person in your next dinner party. Most popular baby names of 2017. All right. We got this. We got it nationwide and we got it by state. But we could break it down any way you want. Nationwide, Emma wins for the third year in a row on the female side. Which is big.

And then on the male side, the number one name in the United States and in New York State, Liam. Now, New York State is cool, but what about Vermont? I know everyone's thinking yet. Yeah, how many? Vermont's top guy and girl names for babies in 2017 was Wyatt and Evelyn. What is this like the 1800s? Loved potting with you today. I just felt like there was a nice connection.

I kicked off live on the NYSC. I'm still kind of sweating a bit. Finished here in the comfort of our hotel. Thank you for spending this pod with us. We'll talk to you tomorrow. Can't wait. 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.