The Best One Yet - “Roku — The People’s Champ of streaming” — JPMorgan is Paul Revere. Thrasio’s 43 Amazon-trepreneurs. Roku is 44% of America.

Episode Date: April 15, 2020

Big bank earnings season just kicked off, and JP Morgan is yelling a bankruptcy warning throughout the land. The Streaming Wars are enjoying primetime love, but Roku’s latest numbers prove it’s truly the platform of the people. And startup Thrasio just hit a $750M valuation in less than 2 years by hunting down and eating up Amazon-trepreneurs.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 Wednesday, April 15th. We are back on this hump day. Stocks jumped, which is good news. And it's also good news because today isn't tax day. You got an extra three months.

We decided to make this one hour best snacks daily yet so much better than yesterday. There is only one thing that the big banks are channeling right now, and it's Paul Revere. The defaults are coming. The defaults are coming. We're looking at that one critical term. in J.P. Morgan and Wells Fargo's earnings reports. One if by land, two if by sea, three if bankruptcy lawyers are involved. For our second story, on Monday, we told you you shouldn't compare Quibi with Disney Plus because they're kind of different streaming species. So today, we're

looking at the latest numbers from Roku, which is the flora to Quibi's fauna, and how it's truly the people's streamer. Our third and final story is Thrasia. Great name. This is our almost a corn of the day. Congrats on hitting the 750. million dollar valuation. You're going to want to round up on that one. He got to round up on that. The ratio is pretty much in the business of scouting Amazon reviews, then buying their best reviewed companies, not the best reviewed products, companies. The big paydays come for the Amazon entrepreneurs. I love that word Amazon entrepreneurs. It's going to be a real thing. Now, before we jump into all that Snackers, we got to talk about the snacks madness brackets, which are in the

final stretch. This is the Twitter poll determined tournament that tells us what is Snackers' favorite profit puppy product, you know the products we talk about on snacks daily every day. We started out with 32 of them. And spoiler alert, we're down to the final eight. We have a winner, asterisk, in the food and beverage division. We're going to have to sprinkle asterisk on this entire thing. We're talking about the matchup between Domino's takeout versus Popeye's fried chicken sandwich. Exactly. Michigan's famous pizza versus Louisiana's famous fried chicken. Now, here's where things get freaky. Yesterday, as we were recording this podcast at 4.37 p.m. Eastern Standard Time, there was a very particular voting situation.

Our stat guy is telling us that the polls are at 50.4% for Domino's, 49.6% for Louisiana Project. We're channeled air in New York Times on this. This thing is too close to call. Nate Silver just pinged me. He said, you cannot call this. There's still two more hours of Twitter polling to go. Nate's a great snacker, but he basically lost complete respect for us because we're saying this is that close. You can check out Twitter and you'll find out whether Domino's or Popeyes won. But today, we also have another division and another matchup that is epic. We're talking about retail and fashion.

We've got Costco's annual membership versus Nike's Air Jordan brand. Nick and I have never grown up in an area that has a Costco, so we can't really vouch for that. True story, they're basically not allowed in Vermont, and you can't actually fit one in Manhattan. And neither one of us can dribble with our left hand, so you shouldn't take basketball shoes recommendations from us either. Jack is voting for the Costco brand because it pays its employees well, and basically his mother-in-law is kind of sponsored by Kirkland. Maria loves Kirkland brand. It's a phenomenal product. Nick is voting for Nike's Air Jordan. True story. Because naturally, Michael Jordan was born in New York City, and Nick always votes for New York City. And on the other hand, I've also been eliminated by every single team I bet on in this story.

It is time for you to vote in Snacks Madness. Who is getting your love, Costco or Nike? Or Nike or Costco. Vote at Robin Hood Snacks on Twitter. Jack, should we hit our three stories? Let's get to our three stars. You're tuned in to 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 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. Robahood Financial, LLC, member FINRA slash SIPC.

For our first story, the big banks are all reporting earnings like right now this week. And it's basically a Paul Revere-style warning from the first ones we heard yesterday. Now, here's the thing about earnings report, Snackers. If you're going to look at them, you've got to turn around and you've got to look backwards. How you've been the last three months? Jack, you look great. You look better than expectations is what an analyst would say. How is your start to the year, Ben?

Let's go over the last three-month period, Jack. But these ones yesterday weren't backward-looking, they were forward-looking. And you just don't see that enough, so Jack and I decided to jump in Snacks. Investors want to know how banks will be doing in the coronavirus spring, summer, and fall, aka the rest of the year. So we jumped into the two first big bank earnings reports of this quarter. We're talking J.P. Morgan and Wells Fargo at the number one and number four biggest banks in the United States. They just updated Wall Street on January through March, aka the first quarter.

Yeah, and basically both had revenue dips, slightly from last year. That wasn't that important, so we're going to go on to the meaty stuff. The big headline was profit declares. lines driven by one really weird line on the income statement that we never talk about. This is going to be like branded on some first year interns butt somewhere. Loan loss provisions. That is a fancy word that means planned losses in the future when customers don't pay back these banks loans. Now here's the thing about not getting paid back for loans you've made. It's kind of the white collar version of the old dying and dash. It's not a good luck.

Nope. But desperate times call for desperate measures. The banks hate. not getting paid back, but it's kind of part of the business, kind of maybe when you bought all that shampoo for your roommate Timmy back in 2013 and both used it in the shower. He never paid you back for it, but it was like six months before the shampoo. Mick, not paying back loans happens, and banks, you know, it's part of the standard business. Now, J.P. Morgan Chase and Wells Fargo announced $7 billion and $3 billion

of this new loan loss provision. Let me break that down for it. They expect losses on loans, so they're taking provisions now. A lot of air quotes thrown in there. And that's because of the coronavirus. And in the coronavirus, individuals like you, us and a bunch of other people, they could default on credit cards and mortgages. Businesses could default on loans and miss rent payments. And then individuals, businesses, cities, states, they could go bankrupt. That could happen in the coronavirus. Every one of those money problems we just described means that some banks aren't getting paid back

for loans that they issued, which means losses for the banks. And so JP Morgan and Wells Fargo are taking those losses today because they expect those loan losses may happen tomorrow. So Jack, what's the takeaway for our buddies over at the big banks and their loan loss provisions? You know, Nick, we could do what the banks are doing, which is plan for the worst and then hope for the best. Snackers, the banks are taking losses right now before those losses have actually happened. And we could do the same thing because that way you don't hold out on false hope. True. And you're not sad later when like the thing that you thought could happen actually. actually does happen. As Adam Grant would say, happiness is reality minus expectations. So take that

honeymoon to Italy that Jack was planning that we were all excited about. That sounded incredible. Yep. My wife and I were planning to do our honeymoon one year after our wedding. We've pretty much written that off because guess where it was? Italy. Not exactly a good place to travel right now. And then how about all these other weddings and trips and tickets and maybe a few hockey games that we were all planning to go to this fall? That's the thing. We all have this issue. We're mentally starting to write things off in the future because we don't think they'll actually happen. So if you're a bank, you're so critically important to the economy that you can't just lose money and wait to see if it happens. Right. That's why they're assuming today that they will lose money tomorrow when they don't get paid back.

And then CEO Jamie Diamond is keeping his fingers crossed, hoping for the best, but kind of planning for the worst. We could do the same thing in our personal life. This is probably the first time someone's told you to act like a big bank. For our second story, Roku is the people's champ of streaming. And it's got so many tailwinds. can't even count anymore. It's also kind of like your buddy who just, you know, they just, she can't keep a secret. She just can't keep a secret. Roku was so excited to share its first quarter, January through March business update.

Yep. That it had to give a preview on Monday. This is like when you hear the, the Batman movies coming out and you're waiting for the trailer and then they drop the teaser and it's like, Where is He? And that's it. That's the entire teaser. They had to give a teaser for the trailer, which is a teaser for the movie. And that all happened yesterday and the full results are going to come out on May 7th, but in the meantime, Jack and I found some headline numbers when we jumped in snack style. Okay, three million new Roku accounts were added last quarter. And that means you either bought one of their little purple dongles and stuck it into your TV, or you bought a Roku smart enabled TV.

Another stat, 49% more hours of video were streamed on Roku devices last quarter as people started to stay at home at the end. Add those two beautiful stats up, and the stock rose 10% yesterday because those were much better than anyone expected. And Roku is now worth $12.8 billion total. Which is 1.5 lifts. Or if you look at how much lift was worth like a year ago, it could have been one lift. True, but now it's 1.5 lifts. Now, Snackers, we told you on Monday that the streaming wars are very interesting right now

because they're actually made up a very different streaming species. And just about every species in the streaming universe is fancier and richer than Roku. It's so true. You would register for most of them for like a wedding, but you're not doing that with Roku. Think about this Snackers. To watch Netflix on TV, you could buy an Apple TV. True. You could use an Amazon Firestack. Sexy. You could use a Google Chromecast, or you could buy a fancy smart TV that has everything built in. Or you could save your budget and buy Roku's little dongle. That's only $30. Or you could buy a built-in cheaper TV that has Roku in it.

Now, the thing about Roku, it doesn't function as smoothly if you're like an iPhone guy. No, it doesn't. It doesn't integrate perfectly with Amazon Alexa. like Firestick would, which is kind of a problem. And if you're a Google person with Google Home and Google everything, it's not going to like perfectly sync up. Basically what we're saying here is it's not quite perfect. It'll pretty much get the job done regardless of your circumstances and that's why so many people like it. Oh, and by the way, stackers, get this. Forty-four percent of all streaming hours in the United States are on a Roku device. That is an incredible stat and that is why we call it the people's champ of streaming. So Jack, what's the take with?

for our buddies lounging over at Roku. Tailwinds are great for your business, and Roku is riding three of them, and facing one headwind. This is Rangier, your captain speaking. We're cruising at 35,000 feet. We just crossed the Rockies, and expect to land at Liguardy

in 45 minutes to do his strong tailwind. Nick, when a big economic trend is aligned with your business, that's called a tailwind, and Roku's got three of them. The first one is the streaming wars themselves. HBO Max, Peacock, Disney Plus, those are three new reasons

to get a streaming device like Roku. Reason number two, live sports, they aren't happening right now. That means you got another reason to cut the cord and replace it with a streaming device like Roku. And then third and final reason, critical for Roku, the economic recession and rising unemployment. 30 bucks for a Roku dangle, not bad you might want a streaming device like Roku. Now, we should point out that there is one pretty major headwind here that you don't want to forget about. Roku makes 63% of its revenue on ads that it places on its free video channel called the Roku channel. Ad revenue could decline with the ad apocalypse of the corona economy.

Tailwinds are great for your business, and Roku is riding three of them, also facing one headwind. Snackers, we're a little past halfway in the pod right now, so if you're on a run, doing a Snacks Challenge, time to turn back home. For our third and final story, this one's wild. We're calling it our three-quarter a corner of the day. Thrashio, just raised another $100 million to hit a $750 million valuation. It's three quarters of a unicorn and it's obsessed with the random things that you and we buy on Amazon. Also, a funny thing we noticed kind of sounds like Metallica's third choice for a band name.

Judas Priest, Slayer, Megadeth, Black Sabbath, Thrasio. You go to the Thrasio board meetings. You can only get in if you're wearing black leather and a lot of makeup. It's highly recommended that you wear a helmet to a Thrashio board meeting. Rumor has it that the CEO bit a head off a bat. I don't know. I heard that somewhere. I don't know. I don't know. Thrasio's business is all about being an aggressive customer on Amazon.

But instead of buying like Luna bars and Crest Toothpaste, it scouts out and buys the sellers. The entire company that's selling the Crest Toothpaste. All right, Snackers, here's how this wild business model goes down. First, Thrashio finds the top selling best reviewed everyday Amazon Essentials only on Amazon. The world's number one foam roller. The last can opener, you will ever buy. And then it buys the small business that's selling those products. on Amazon. We repeat, doesn't buy the product, buys the entire business. So the business owner,

aka an Amazon entrepreneur, gets a nice big payout. And then Thrasio takes the company, optimizes the business so that it can grow into something bigger and more profitable. But Snackers, here's what Jack and I thought was so wild about Thrasio. It's not just what it does, it's how fast it's done it in. In less than two years, it is now raised $250 million, and it buys entire companies for $1 million each. in cash. In fact, it's bought up 43 Amazon Entrepreneurs Company so far, and now it's doing $200 million in revenues itself. Every one of those 43 companies probably had five-star rated, like number one Amazon recommended products on the website. Snaggers, if you bought a top-reviewed hiking pole

or a pet deodorizer, whatever that is, it's probably a Thrasio company at this point. Let's be honest, it's definitely a Thrasio product. So Jack, what's the takeaway for our buddies with this fancy new business model over Thrasio? business model can be innovated on, even old school ones like finance. Snackers, you tend to think of innovation in tech or consumer products. That's where you see it. Oh yeah, I'm creating the Airbnb of Ubering for B-to-B business solutions, cloud services SaaS. Jack, are you going to throw an enterprise solution to that or what? But innovation can happen in finance too. And thrashio, we notice, is basically blending elements of private equity and venture capital into one single business in a creative way.

They borrow money, then they scout out small businesses on Amazon, then they buy the business and make the business better. Sounds a lot like elements of private equity and venture capital. The kicker, though, is how it scouts out the companies to acquire. It's creatively using reviews and sales data straight from Amazon. It's publicly available. Anybody could have done it. Thrashio did it. Jack, can you whip up the takeaways for us over there? The big banks are booking losses now for COVID-19 default to. loans that haven't even happened yet. It's planning for the worst, hoping for the best, and we should probably do all that just like big banks. Basically be like a big bank.

Second story, Roku is the people's champ of streaming. It's cheap and it works for most people. It's got a few tailwinds, one big headwind, and we want to emphasize that the people's champ of streaming. Third and final story, Thrashio, scary name, cool business. It's found a new and efficient way to scout for companies to invest in Amazon ratings. Bratio! Baseball scouts look for a breaking ball. It looks for a good Amazon rating. Time for a snack fact today. This one sent in from a legendary snacker over in Potomac, Maryland, Mr. Manish Parique.

As part of the economic lockdowns that are happening to fight COVID-19, you got less industry, you got less travel. True. You got fewer commuting vehicles. All of that added all up, less air pollution. So in certain areas, you're really starting to see this. For example, the Himalayan Mountains are 100 miles away from the Indian city of Jalindar. But air pollution is down to like 30-year lows, so people in that city can actually see the mountains for the first time. For the first time in 30 years, makes us want to go there, but again,

we're kind of stuck in place right. Snackers, that was a great pod. Make sure you take part in Snacks madness at Robin Hood Snacks on Twitter. It's Costco versus Air Jordan, you decide. We'll talk to you guys tomorrow. Thank you for snack. 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, 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 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.