The Best One Yet - “Needed more Lizzo juice” — Snapchat launches TikTok+. Reebok’s $4B fail. Warner Music’s muted money.

Episode Date: November 24, 2020

In the biggest social media launch of 2020, Snapchat zucked TikTok… but kicked things up nine notches (you’re not a viewer, you’re a voter). Adidas bought Reebok for nearly $4B 15 years ago and is now trying to sell it for a quarter of that (what happened?). And Warner Music Group is part Spotify, part Live Nation, part Coldplay. $WMG $ADDYY $SNAPGot 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 Tuesday. T-Boy Tuesday. November 24th. Nick, we just transferred our turkey from the freezer to the fridge. Nick, 24 hours for every four pounds of meat. Jack, did you hear about that guy who shot his own turkey this year? No.

Apparently everyone at the grocery store was pretty freaked. And this happens to be the best one yet when it comes to Snacks. Daily, Jack. First story. Snap rose 2% after launching the most unique social media product. of 2020. So they're calling it Spotlight. Jack and I are calling it TikTok Plus. Tick Talk Plus. Tick Talk Plus. For our second story, Adidas is reportedly trying to sell Reebok. Honestly, Jack, the saddest part about this, Adidas stock rose on word

they're breaking up. That is so awkward. Tough day for Reebok. Third and final story, Jack, what do we got? Warner Music's earnings. Give us a taste about the entire music industry. A little bit flat, a little bit sharp, kind of a little bit off on the music, the base. Love the musicality on your adjectives there, that. It's, sell on the base, but Snackers, before we jump into that wonderful mix of stories, happy T-Boy Tuesday to you. Last week, Snackers, we informed you that Amazon was getting into the pill game with its own online pharmacy. Classic, you know, Jeff Bezos got tired of over the counter, wanted to get like behind the counter situation. It tossed on the white robe so you can get that thytastrasol

in your prime pantry shopping car. You know, to deal with, you know, that thing on your thigh. But we decided we weren't satisfied with the name that Jeff. gave Amazon Pharmacy. Yeah, I mean, it's Amazon Pharmacy. We asked Alexa, and she didn't have any other ideas for us either. So we asked the Snackers, actually, what should we name Amazon pharmacy? And we got some fantastic responses. There were also some consistent, healthy quality ideas that were sent our way. A lot of Amazon plus Prime plus Farm plus Scription combinations. Some solid ones. You got Prime Scripps or Farmazon, good ones. We loved them, got them from a bunch of Snackers. But we're giving honorable mention special credit here to our top four, which we sort of

on Twitter. All right, so get this, Snackers. Here are our top four new names for the Amazon pharmacy. First one comes from Joey Hayes. Fulfillment Center. Fulfillment Center. It's great. It works on the fulfillment center, fulfillment center. It's great. Our second one comes from Paul Goldsmith. Get this. Amzoids are us. Amazon are us. That one's great. That's a combination of the generally medical oid suffix. Yes, it is. Toys are us and Amazon. I like that. Third finalist here comes from Rohan Krishna and Jack, the honors. The Bayes Hospital. The Bayes. It rolls off the tongue, so it works audio, too. And then our fourth, which is both Nix and my favorite.

Can we say that? I mean, full disclosure, this is our favorite. This one's amazing. Dr. Bezos's local pharmacy store and goods. Sounds like something from It's a Wonderful Life. It's absolutely amazing. But Snackers, we want you to determine which of those four is actually the best new name for Amazon Pharmacy. By the way, that last one was a shout out from Alberto Reyes.

So vote on the best new Amazon Pharmacy name on Twitter at Robin Hood Snacks. The winner gets a handwritten card of appreciation from Nick and me. I mean, honestly, what's like better than a card? Is there anything else you want more than a card these days? Let's hit our three stars. 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 ain't food.

It's 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. Right. Snacks is digestible, business news for you.

Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Snapchat, it just completely copied TikTok. But Nick, they also introduced a potentially game-changing differentiator, which is the differentiator about this entire zucking situation. Now, before Snapchat's announcement, quick context on the insanity of the TikTok app in 2020. These are the kind of numbers you're going to want to drop on Thanksgiving via Zoom. Turns out, in just the last year and a half, TikTok grew 800% in the United States.

That's right. From 11 million users back in January 2019, just like the high school and middle school kids. So is tiny, so tiny. To over 100 million this August. Jack, do you want to give your helpful analogy here for everyone? Look left. Look right. One of you is a TikToker. But here's the thing, Snackers, that Jack and I find so wild. TikTok's viral social media feature isn't IP protected. So that's why. keeps on getting zucked and copied by all these copycats out there. Naturally, the zucking extraordinary Facebook, they are aggressively pushing your Instagram app with this Reels feature, which is the same thing as TikTok. Then the other week, YouTube did the same thing. They zuck TikTok by launching essentially the same product. They called it shorts. So yesterday we see a headline. We're like,

we've seen this before. Snapchat is finally launching its own TikTok knockoff and they're calling it Spotlight. Now, here's what Jack and I find so fascinating about the story. When copying is like as simple as coding a simple feature, matching TikTok just isn't enough. So Snapchat's taking it to the next level. They're building a unique feature into Spotlight. We're talking like these aren't just like 15 second clips on Spotlight. This is going to be, get this, like a reality game show within a million dollar prize every single day.

Here's how it goes down. Snapchat will track the engagement of each new Spotlight post, basically counting how many people favorited the post and how many shared the post. And then they're going to add that out off on whichever spotlight gets the highest engagement is going to win cash. They're divvying out a million dollars every day to the top creators of these spotlights. So we know what you're thinking. Jack and I were thinking the same thing here. Kylie Jay and the Rock, they're going to win. They got the biggest followers. Who am I? What am I going to do? How can I? I've got no chance with my 78 followers, 61 of whom are sitting in my direct family tree. Well, we're all wrong because apparently Snapchat is

leveling the playing field here, they're going to show each spotlight snap to a minimum of 100 other Snapchatters. And then if your measly little snap that only your 61 followers saw, if it performs well, they're going to move you to the next level of the tournament, which is a thousand minimum views that your snaps can see. And then the Cinderella story winners from that stage keep moving on and on like the whole March Madness situation. So the best snaps win, regardless of how famous or how insignificant your public profile is. So this means a couple of couple things to Jack and I. The first is we're making a note to ourselves to check the marketing line item in next quarter Snapchat earnings report. Yeah, snaps, who's paying for this? Pretty sure you are

a million bucks every day for the rest of the year? Yeah, that's 37 million this is going to cost at at least. Oh, also, this is the first discovery feature on Snapchat. Usually you're like, you're just seeing friends, not strangers. Now you're going to see strangers. So Jack, what's the takeaway for all these strangers over with our buddies at Snapchat? For the first time on social media, likes are going to matter. Snackers, up until now, the number of likes you give on social media, had one strategic purpose. Ads. Ads.

Yeah. And vanity. Yeah, and a little bit of vanity. But Facebook sees that you liked another beach picture. They're going to start serving you all these Javierna's ads straight out of Brazil. But with Snapchat Spotlike, your likes, they're actually votes that pick the winner of that day's daily tournament for a million dollars. Jack, call up Simon Cowell, your vote is going to determine who moves on who goes home in Snapchat

now. This makes the viewer more than just a passive scroller who's mindlessly clicking like. You're an active participant. in a game show. Which means this new feature spotlight is part HQ trivia. It's part American Idol, and it's got just the tiniest flavor of who wants to be a millionaire. This differentiator could attract creators and viewers on the app,

who may prefer the social media app where their like means something. For our second story, after 15 years, living under parent company Adidas, Reebok is reportedly going to be sold. This is looking like a death situation, so we're looking at the Reebok autopsy. Why didn't this work? Now, Snackers, Reebok is basically, you know, it's the most athletic thing out of England since Beckham. Well, first of all, Reebok, it's a type of antelope, actually.

Yes, not a Springbok, it's a type of Reebok. It is a type of antelope. Yes, the founders of Reebok, they discovered this cool word, this cool antelope while browsing through a South African dictionary. I feel like this is like that old game jack where it's like spin the globe and put your finger on where you want to live in 50 years. Pretty much. So in 1985, it became a publicly traded stock when they, I peoped. And the next decade, the 90s, that was like peak Reebok. Oh, my, you had like, Shaq was wearing Reebok. Alan Iverson was wearing Reebok. Jack, remember the pump. I do remember the pump. And I also remember the answer. Oh, those Alan Iverson basketball shoes, man.

They were amazing. Not talking Dalene, by the way. This isn't like a hazelnut situation over at Duncan. We're talking the shoes that would, pff. Yes. Also, those Alan Ivverson shoes, they were the envy of every fifth grader in Vermont. Alan, send us, tweet us a snack fact already. What's taken so long? Now, even though those were the highs for Reebok. They also experienced some lows around that time. The official apparel provider of the Canadian Football League. Yeah, we don't need to say more on that, but probably not the best. Not the ideal branding move. The reason we're talking about Reebok today, they were acquired by Ediths back in 2005 for $3.8 billion. So here's what fascinated Jack and I about this story.

Reebok is now apparently about to be sold for potentially under $1 billion, according to the financial times. Bought for $3.8 billion. selling for under $1 billion. I believe the technical term Jack is... Ouch. Not a good investment. So Jack and I said, hey, let's whip up the history bucks. We jumped in Snackspile and looked back on Adidas' history,

and we started noticing a pattern. In 1995, Reebok decided to open up a gym in the Upper West Side that was 140,000 square feet and six floors in New York City. It's a Whole Foods market of sweaty meat. Then in 2011, they partnered with CrossFit. as the exclusive apparel provider. And we all have that one buddy who you're like at a wedding and like it's the middle of nowhere.

He's like, oh yeah, I know the CrossFit in this part of Iowa. You're like, what? Then a few years later, they threw on a couple of 45 pounds on each side of the dumbbell and became the official brand of Ultimate Fighting Championship. That's when they changed the logo to look like a submission hold, which was an interesting move. I said, Jack and I have spotted each other many a time.

Now, as a brand, you either need to stand for something or stand for nothing. Stand for something or stand for nothing. Reebok stood for something and it was indoor fitness. That's the pattern we saw. So Jack, what's the takeaway for our indoor fitness buddies over at Reebok? Fitness has become fashion and fashion depends on moments. Snackers, we've talked before about the power of the pivot on this podcast. Well, Reebok pulled off a pivot, but it was in the wrong moment. In the era of COVID, fitness has become like the third of three things that you can do after work and Netflix are done. So when Jack and I are looking at like the fitness apparel winners of COVID right now, we're looking at night. Nike, stock's up 30% this year. Lulu Lemon stocks up 50% this year. Even Crocs, their stock is up 50% this year. Nike stands for style.

Lulu Lemon stands for comfort, and Crocs stands for function. Which is very complimentary of us for Crocs. Crocs is thrilled to be included in this group. That was very generous. We did a rounding up situation there. Now, these brands have to be perfect for this moment in fitness because of the unsocializing, relaxed workout you're going through. Fitness apparel losers during COVID?

We're looking at Reebok as number one. their sales fell 42% in the spring and another 7% last quarter. Because the Reebok brand, it stood for something, working out but indoors. But that something is wrong for this moment. For our third and final story, Warner Music is one part Spotify, one part Live Nation, and completely dependent on stars and content. Completely dependent. Snackers, we're going to have to travel back to June when Warner Music I peoed

and became the first pure play music stock. We called it the Lizzo IPO, because if you own stock of Warner Music Group, you are a partial owner of juice and good as hell. And every other hit put out by Lizzo. So Warner Music just updated us on their earnings to let us know how the summer went for Warner Music. It went great for streaming, bad for everything else.

Yeah, pretty much. Digital revenue rose a whopping 15%. Very impressive. But sales of physical CDs and records, they were flat. Poster, T-shirts, and other like band swag. that all dropped because concerts have been canceled. Now, if you listen to Snacks Daily, you actually could have predicted everything that we just said.

And that's because Warner happens to be a very particular company. Warner Music's business covers an entire industry, so each of its revenue streams is basically like an entire company. So three weeks ago, we learned that Spotify's revenues rose by 14% last quarter. Well, Jack, that looks very familiar to Warner Music's 15% growth in digital revenue. That's because Spotify pays out. a big portion of their revenue to the record labels that own the actual music that's being streamed. So we also found out that the CEO of Warner Music was very excited about Spotify's planned price increases and international expansion.

Because that money is going to come to him and Warner Music is dependent on Spotify. All right, so that Spotify earnings was three weeks ago. But let's check out the Live Nation revenues from just two weeks ago. Right. This is the company that runs concerts and their revenues fell by 95% last quarter. So Warner Music doesn't tell us exactly how much money it made on concerts. but Jack and I are going to take a gander given every concert was canceled that it's roughly 95%. Right. So Spotify and Live Nation, they're proxies for two of Warner Music's business lines. So Jack, what's the takeaway for our buddies over at Warner Music? We could have predicted Warner's earnings, but we also could have predicted the number one Warner problem.

Yes, we could. Stars took 2020 off. Snackers, we've said it before and Jack and I will say it again. Let's go to the IPO paperwork. On page 20 when they IPOed back in June, they warned us, the absence of superstar releases, that's a big risk to our business. So the current, like, roster report over at Warner Music, it's basically stocked with your dad's CD collection. Right.

Warner Music owns the music of Led Zeppelin, Madonna, Green Day. Even John Williams, the brilliant composer from Jaws and Harry Potter and all those other great movies, every time he writes a song I shot it here. It's all Warner Music, Mac. But the revenues for Warner Music today, Jack and I notice they're driven by new superstars releasing new hit albums. Ed Shearin is in Warner Music. No Mars, Coldplay, these are the stars whose music is owned by Warner Music Group. But kind of a big problem here, none of those stars on Warner Music's roster put out new

albums this year. So earnings last quarter, they were devoid of Grammys and they were also devoid of album sales. But Snackers, you didn't have to wait until Warner Music stock fell 3% yesterday to have realized all that. Jack, can you whip up the takeaways for us over there? Snapchat just launched, uh, it's TikTok thing. It goes above and beyond making your likes vote for a million dollar cash prize. For a second story, Rubach went all in on indoor jams in the 90s.

But that was the wrong pivot for the wrong COVID moment. For our third and final story, Warner Music's streaming revenues were good, but concert-related revenues were bad. And we could have expected that if we just looked at some other company's earnings, which I guess we did. Which we did. Which we did. Now, time for our snack fact of the day.

This one tweeted in by Andrew in lovely Mill Valley, California. Jack and I enjoy the tacos over at Ply. I'm just going to throw that out there. More of a smoky mescal guy. Yes, yes. I get him every time I get any one of those. The Tesla just joined the S&P 500. Actually, it's going to join in December. But it is in the meantime, technically the most valuable car company on Earth. Right. Because Tesla is worth $494 billion if you add up all of the shares that are out there of Tesla at today's stock press. That means that Elon Musk's 20% ownership of Tesla means Elon Musk has a about $98.8 billion worth of Tesla stock. Now, if you look at the Detroit competition of Tesla,

you see that Ford is worth $35 billion and GM is worth $64 billion. So that means the value of Elon Musk's stake in Tesla is actually now worth as much as Ford and General Motors' entire company values are worth. It's a story of magnitudes. Now, Snackers, before we go, remember to go to at Robin Hood Snacks on Twitter and vote on the winner of the Amazon pharmacy name. hospital. We'll see you tomorrow. We'll see then. And before we go, be congrats to Snacker Laura from Jacksonville, Florida, just past the bar example. That's huge. And happy birthday to Bree from Nova Scotia. And also up in Canada, happy birthday to Annie in Vancouver. And Darcy Babelob in in Manchester by the sea, Massachusetts. And Mackey Cop over in Denver. And happy 29th to Julia

in Mills, Massachusetts. And David Jensen in Springfield, Missouri. And Eddie Padilla in the Bronx. And Connor Crane in Naperville, Illinois. And M.K. Glenning in Louisiana. And Ari Rubin in Cincinnati. Nattie, Ohio. And Russell Williams in East Lynn, Texas. Noco West. And happy birthday to Ann White in Portland, Maine. This is Jack. I own stock of Spotify and Amazon, Nick on stock of Lulu Lemon. 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.