The Best One Yet - “Nikola & Theranos. Different companies, same accusations.” — Nikola’s 19% drop. Chime’s $14.5B swipe. BJ’s Costco-fication.

Episode Date: September 22, 2020

Nikola is kind of like Tesla’s stunt double, and its founder just resigned amid accusations of investor deception (CC Elizabeth Holmes). BJ’s is the cinderella story of the Warehouse Wars after its stock almost doubled this year. And our “Unicorn of the Day” is digital banking app Chime, which hit a $14.5B valuation. It wants you to think it’s a bank, but not investors.$NKLA $BJGot 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, September 22nd. Happy first day of fall, or is it the last day of summer? You look like a cableman sweater. Was that yesterday or is it midnight tonight? I'd like a pumpkin spice latte please with one pump, not four pumps. I think it depends if you're in the northern or southern hemisphere. Snackers, this happens to be the best one yet. Let's see what's happening on our T-B-O-Y. Jack, first story, what do we got? Nikola tried to ride Tesla's coattails to billions and to fame. But Jack, they have driven too close to the sun on a car that doesn't exist yet. For our second story, BJs is number three to Costco and Sam's Club in the Warehouse Wars.

But get this, now it's actually beating them at something. For our third and final story, chime, it isn't a bank. Nope. It's an app that's worth $14.5 billion. The digital neobank has grown in value by, get this, 900% in a year and a half. Don't call it a bank. It doesn't want you calling it a bank either. But Snackers, first, happy T-Boy Tuesday to you all.

Before we jump into those three wonderful stories, it's also the fourth Tuesday of September. Which means it's National Voter Registration Day. I wonder about the Septembers that only have three Tuesdays. Those are only an odd number of years maybe? By the way, Jack, we always know this because it's the day after National Pecan Cookie Day. Snackers, whether it's civic duty or just getting your hands on one of those free I-voted stickers. that we all post on Instagram. We feel you, there is no fomo worse than the fomo of Helvetica font stickers. Whatever motivates you, it's time to make sure that you can vote on November 3rd.

So Jack and I checked with some PFWTM, aka the U.S. Census, turns out young people are terrible at exercising democratic rights. In the 2016 presidential election, 71% of Americans 65 or older, voted. But only 46% of Americans 18 to 29 also voted. Americans with literally the most future had the smallest influence on their own future. So Snackers, if you've been waiting, today is like literally the day to go to vote.org. If you watched Hamilton on Disney Plus,

it is rude not to vote this year. You've got no excuse, and your first step to voting is registering. It literally takes two minutes. If we can whip up a takeaway in two minutes, you can register to vote in two minutes. Which we do. Vote.org, Snackers, time to go there.

There are 42 days until the election on a vote. Remember third? If you know, you know. Vote.org. Let's hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get some. 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 FINRA, For our first story, Nicola Stock just tanked 19% and its founder resigned amid a whole bunch of

accusations of fraud. The accusations, make us ask the question. Is Nicola the next Theranos? It's a fair question, by the way, Snackers. The accusation here, Nicola is built on foundations of deceitful statements and exaggerations. You sit on a throne of lies. Nicola is an angry elf. Nicola is the publicly traded electric and hydrogen truck company that was recently invested in by General Motors. Jack, apparently it's sponsored by the periodic table of elements. Rule number one at Nicola, no gasoline. What they do have, though, is a prototype for an electric tractor trailer and an electric pickup truck. Now, the key is the P word here, prototype, not product.

None are on the road and none have ever been sold. Which brings us to two weeks ago when a hedge fund published a report online. essentially claiming that Nicola is one big fat liar. It's a really long report that basically said they tricked investors into handing over money by misleading and exaggerating everything they were capable of. Now, let me make a quick disclosure on the hedge fund's behalf. This is the hedge fund. If Nicola stock falls, we'll make a lot of money. Snackers, the hedge fund is betting here that the stock will fall. And after this report, the stock did fall. Yeah, it's called a conflict of interest that they definitely have. But there was one particular allegation that Jack and I found not only wild,

but basically summed up Nicola's prototypes like a weekend at Bernie's situation. Yeah, the prototypes are Bernie. They're not actually alive, but Nicola has made the prototypes appear alive. They're borderline carting them around some hotel in Miami. It's adorable. Snackers, Nicola has these hype videos of their prototypes like racing down a hill. It's meant to look like the cars can drive and, you know, go up or down hills. But the allegation here is that Nicola found a downward sloping hill and just let gravity pull the vehicle down the hill. Then they like turned their iPhone camera a little bit so you couldn't tell there was a slope making the video appear to be powered by like an engine, not gravity. This is one of those rare

corporate moments where it's like they put sunglasses on a corpse and then had a 48-hour fiesta. Now naturally, Nicola denies the entire report from the hedge fund, but the SEC found enough credibility to decide to investigate the matter themselves. Now that was not a good look. but then on Sunday, things got actually worse. Nicola's founder, Trevor Milton, resigned from the company from his post as executive chairman of the board. Monday morning, you'll wake up and Nicholas stock has fallen 19% on the negative news, and it took some other people down with it. Yeah, GM stock fell 5% because it owns 11% in Nicola after its strategic investment.

So, Jack, what's the takeaway for our buddies over at Nicola? There are some striking similarities, Nick and I noticed, between 30, Theranos and Nicola. That's right, Jack. Snackers, Theranos is the epic blood testing startup that turned out to be a massive fraud instead of changing health care forever. The co-founders of both Theranos and Nicola carefully crafted their public profile in order to remind investors of famous visionaries. Case in point, Elizabeth Holmes, founder of Theranos, admired Steve Jobs so much, she wore

the same black turtleneck every day and even lowered her voice to sound like Steve. Trevor Milton, the co-founder of Nikola, had the same fondness for Nikola Tesla as Elon Musk did. So just like Elon... Yeah, Trevor Milton named his car company after Nikola Tesla. The second key observation here is that both Elizabeth and Trevor convinced high-profile investors to invest billions of dollars before the products were even for sale. Theranos, one day ago, had a $10 billion valuation. They had convinced so many people they were a legit company and not a frog.

Nicola grew to a $31 billion valuation, and you still can't even test drive one of these things. Now, Snackers, General Motors thinks that Nicola is a legit company. Yeah. And the allegations against Nicola are still unproven. That's why GM invested many millions of dollars into these guys. But if these allegations are true, we've seen it happen before with Theranos. For our second story, Chime is the new star of digital banking. It's worth $14.5 billion, which is 10 times more than just a year and a half ago.

Snackers, this fintech company just what out like a triple whammy of shockingly upbeat news. Okay, good news number one. They just got a check for $485 million from venture capital investors. Must be nice. In exchange, they handed over some chime stock to them. Now, the stock is still private. We're sumo. We're straight up missing out here. It hasn't IPOed yet, but Jack, the new valuation, $14.5 billion. That's pretty big. And get this, sprinkle a little context on this thing. That valuation is double what it was for Chime back in December. And it is 900% higher than what it was in March of 2019. So everyone's given Chime like a pat on the bath. They're having fun. They're smiling. And then they whip out the second layer of good news. The CEO of Chime claims that they are actually

profitable if you ignore some costs like taxis and other accounting costs. Full on the all Uber adjusted situation. If you know, you know. But wait, there's more. Chime came out with a third bit of great news, which is that they planned to IPI. within the next 12 months, so we will no longer be sumoing when it comes to this stock. So Jack and I are looking at these three things, and we realize an early takeaway for the PR team over a chime. Spread out your good news. Yeah, they're getting one story on our pod right now. If they just spread this out into three different press releases, they get three separate positive press cycles. Oh, hey mom,

I'm getting married. We're having a baby. And shocker, bold my first three hundo. This is like people whose birthday falls right between Christmas and New Year. Brutal. Three holidays, you only get one present, though. JV., sorry for you, man. Meanwhile, investors are so incredibly fond of CHIME for basically one particular reason right now. Well, they're offering banking in the pandemic and digital era. Yeah, Snackers, Chime is a no-fee. Mobile app lets you manage your savings and debit account all in the app. The app is so like... Appy? The app is so happy. The website isn't even like ever used. Yeah, barely. But the key counterpoint to them is the traditional bank branch, which still offers you coffee with powdered creamer and the occasional fluorescent light bulb.

Traditional banks' profit puppies are like loans, fees, and penalties that really annoy customers. Chime is pursuing a whole different revenue model here. They're making money when you swipe your debit and prepaid card, and that's the focus. That's it. And that's why they can market themselves to us as like free banking on an app. So, Jack, what's the takeaway for our buddies over a Chime? Before Chime IPOs, which is apparently in 12 months, it wants to convince you, that it is not a bank. Snackers, key quote here we noticed from the Chime CEO. We're more like a consumer software company than a bank. With interest rates lower than ever before, it is a really hard time for big banks to make money right now. And the Fed just gave us a heads up this month,

our buddy Jerry Powell, zero percent interest rates through 2023. Which is why Bank of America and Wells Fargo are two stocks that are struggling. They're down 31 percent and 55 percent so far this year. In the meantime software companies living the opposite best lives. If it's got cloud or services on the About Us page, chances are the companies having a really good year. Chime, though, wants investors to value it like a thriving software firm, not a static financial firm. Which leads us to the question, why should we value you like a software firm and not a bank? So Chime's next task, answer that question as it approaches its IPO. Its valuation and its stock price as a publicly traded company will depend on it.

Bold claim by Jack and I here, in the S-1 for Chime within 12 months, they mention the word software more than they do bank. For our third and final story, membership club BJs is shockingly beating Costco. This is the underdog Cinderella company trying to make warehouse wars a thing. Snackers, warehouse retail, the warehouse club retail, we should say. Big word there. You pay an annual fee. Yeah, you do.

And then you buy industrial-sized packages for your non-industrial-sized small. apartment in New York City. Oh, yeah, you do, Jack. Oh, we've all had that one roommate who forces you to store a six-pack, gallon-sized shampoo conditioner combo for the rest of the lease. Oh, perfect. I will never have to buy shampoo or conditioner for the rest of my life. Thank you, Dave. It's not Timmy. It's definitely Dave in this case. But the warehouses that Dave may be going to, it's going to be your Costco's or your Sam's Club, which is owned by Walmart, and they dominate the warehouse clubs. Then, in third place, is way smaller West Westboro, Massachusetts-based BJs.

Martha, two pumps, hazelnut, the big batch. Give me a large regular Dunkin. They only do triple XL over there. But the sales growth for BJs last year, a measly 3%. This company is perpetually in third place behind the other two warehouse clubs. A charming formerly family-owned company

named for founder Mervyn Weik's daughter, Beverland Jean. That's right, BJ's is short for Beverling Jeans. Which sounds like the name for an 100, year old company, but it's actually only 36 years old. Back in 1984, Mervyn Weike, the founder of BJ, he saw Costco, which at the time was an eight-year-old company, and he basically said, I'll have what she's having. That works pretty much in movies and real life. That's why the company offered a $55 membership, similar to Costco's $60

membership. That's why both companies have about half of their customers making under $100,000 a year. And when you jump into the financials, they're both making about three quarters of their money from groceries. And when you jump into Isle 6, they're both selling three-pound tubs of Nesquick for about seven bucks. We did double check that. But Snackers, that's where the similarities between Costco and BJs abruptly end. BJs has just one quarter as many stores in America as Costco does, and it has one-twelfth as much revenue as Costco does. Jack and I got curious, we looked a little further, and we're fascinated to hear that BJs actually sells twice as many labels, twice as many products as Costco does. The store is. The store is,

are physically smaller, but there's more selection in those stores. So Jack and I jumped in snack style and did a search on both websites to see which one we could buy chocolate milk from. We found three chocolate milk options at Costco, eight different chocolate milk options at BJs. You can't beat the chocolate milk test when it comes to retail. Ironically, the three sizes at Costco were huge, incredibly huge, and insane. Do less. BJs do much less. Even though BJs seems to be always behind Costco, BJ's stock is up 80% in 2020 compared to Costco's 15% gains. So, Jack, what's the takeaway for our buddies over at BJ's? The COVID-19 pandemic saved BJs, but only for now. Snackers, so far this year, BJ sales have surged 24%. BJ's curbside pickup has quadruple. They got 500,000 new

members in three months, best quarter ever. But all of those gains are straight up COVID-19, Lucky related, not like executing a strategy. It's straight up COVID location luck because most BJ's locations they're in Florida or New England right now. Two places where there have been COVID flare-ups that have caused BJ's hoarding events. So Jack and I are looking at BJs and it hasn't actually differentiated from Costco. It was just in the right place at the right time. The stock is beating Costco in 2020, but we don't know what'll happen in 2021. Jack, can you whip up the T-Boy Tuesday takeaways for us over there? Nicola wants you to believe that their electric and hydrogen trucks are real and they're fantastic. But then the founder just resigned after accusations, their prototypes don't even work.

Second story, Chime wants its customers to think it's a banking app. And it wants its investors to think it's an app, not a bank. Third and final story, BJ's Wholesale Club is the Ringo within the wholesale wars, Beatles. Its growth was kind of limped long, but the pandemic saved its stock. Now, time for our snack fact of the day. This one tweeted in by Kimia Maven in, lovely Davy, Florida. Snackers, if you've seen an onion volcano with vinegar lava, you've been to a Benihana's restaurant. True story, Snackers. I was with Jack when he almost lost an eye to a shrimp

at an incident back in 2010. Benihannas was founded by a 25-year-old Japanese American chef in New York City, whose name was Heroki Rocky Aoki. Now, this guy wasn't just a chef, he was a straight-up risk taker. He was part of the crew that flew the first hot air balloon across the Pacific ocean, which is the biggest of the oceans, from his native Japan to California. But because he was a brilliant marketing risk taker, he had the Benihana logo printed a crosshead balloon. Oh, by the way, Rocky Ayoki? Yeah, he's in the National Wrestling Hall of Fame Kim. Makes sense. Would be. Snackers, before we go, we got to say congratulations to Phil and Teresa second anniversary, Hayward, California. Same congratulations, different second anniversary

to Nicola Martins and Otto Ramirez over in Florida. Chris and Heather are kicking back with five years on you guys, though, in Cleveland, Ohio. And happy birthday to Habib Roddy in Beirut, Lebanon, and Tandan Park in Chicago, Illinois. And Zach Mewa in Louisville, Kentucky, home of Muhammad Ali. And Lel Bazuba, Miami, Florida. And Ben Katz in New York City. And Colby Dimmick in Atlanta, Florida. And David Rufagan in San Francisco, California.

And happy birthday, Jack McGrath in lovely Palm Harbor, Florida. And Annabelle Baker in Cypress, Texas. Snackers, happy fall. Happy end of summer. cardigan and ask your friends, H-Y-H-Y-S-D. Thanks for snacking. Thanks for sharing snacks. And we'll talk to you tomorrow.

If you know, you know. 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, is not intended to serve as a recommendation to buy or sell any security, and is not an offer or sell. 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.