The Best One Yet - Roku’s 8% jump, Rent The Runway’s new mega (co-working) store, and TripAdvisor’s “experiences” bet

Episode Date: May 9, 2019

Roku is Netflix’s little cousin and the CFO is just happy the dongle is winning along with Disney. Rent The Runway is opening its biggest store ever in San Francisco, featuring a coworking space and a new target customer. And TripAdvisor’s growth is slowing, but one division is expanding fast: Experiences.Learn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

This is next. This is Jack. And this is snacks daily. It is Thursday. May 9th. And this is the best snacks daily. What do you think? Well, it's better than yesterday. Best one yet. Third down day in a row for markets. So not as good for markets. Snacks daily, though feeling good. No. Markets were freaking out again about the trade talks. They start tomorrow in D.C. Big one. Chinese officials, American officials. Everyone arrived. Let's shake it out. Reading at the airport. Someone's getting a rose. We'll see what happened. Now, three fantastic stories we found two. Really cool mix we got today. First one is Trip Advisor. It's Experience Booking Division. is growing really fast, but it's trapped inside of a non-growing company. Growth company trapped inside a shrinking body. It seems like a nice Disney movie company.

Second story is Roku. This is the tiny baby little streaming company. It's adorable. It shares jumped 8%. Very adorable. Because of one key real estate that owns. It is all about your living room. Third and final story is rent the runway.

This is no longer just a subscription app or website for gowns. It's got a new look, new makeover. It's going physical. It's a retail story. but it's more than just a store. It is a big retail store, literally, and it wants to be a part of your day, daily day. So, TripAdvisor Roku Rent the Runway. Before we hit those three great stories. Oh my God, a little history lesson here? Yeah, let's talk about hybrid leisure wear. Can we please? It's been like a little too long. New fashion department, you and I just coined that

category. I think we should run with it. Let's give you the history. It started with Snuggie. Oh, that was legendary because that was like TV commercial days. Yeah, it's a downcomforter slash poncho. Then in 2017, you had an evolution in hybrid leisure wear. The romp him. Very true. Which is a man version of the romp her, which is pants slash shirt built into one. For him. And then third.

Now, for the first time ever, we're seeing what's going to be the hybrid leisure attire of summer 2019. It's called the Beach Blazer. And it's the perfect marriage of towel and suit. This thing is like a suit that is freakishly absorbent. It's like a smoking jacket, but it's thick cotton and can absorb wire. So you wear it on the beach. It can absorb all the water you spill. It absorbs a lot of rosé.

So if you want to look like James Bond on Montauk this summer. But you don't want to have to actually wear something that your dry cleaner is going to kill you for. You should check out this $325 beach blazer. So we looked at this thing. My issue is the price. Exactly. That's really expensive. We know this thing's going to get a little sloppy.

Considering Memorial Day weekends coming up, I think somebody could make a one-and-done version. I think there's someone on Alibaba right now thinking two steps ahead of us today. You know, like a $20 version of this beach blazer that will just be for, The rock star Instagram party animals And then you throw it away and the cranberry juice never comes off. No one knows any better. It'll have a moment just like Ron Pymn last year. Now, before you end up ordering one, let's listen to these keywords.

You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. It's 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.

offer or sale of a security. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Tripi Fizer stock just felt 11% because only one part of its entire business is growing. One small part of its division is growing. And it's the part that's based in Needham, Massachusetts. I guess it all is based in New Amsterdam.

The whole company is based in Needham, which is classic one of the many suburbs of Boston. We all like had that friend from Boston where you're from. just outside of Boston. Newton. Needham. Revere. Waltham. Deadham. Deadham. Weston. Newton. Wellesley. We're kind of ripping off the Seth Myers hit on SNL, but I'm going to roll with it. I don't even know we're doing it. Yeah, it's all good. That's great. That's great. It's great. TripAdvisor is basically the Yelp for travel. Yelp just does restaurants. TripAdvisor does everything you do on vacations. Now, with stock peaked in 2014. It was great. Things were great. And then it basically, the stock turned into one of those, like, family vacations where everything goes wrong. It's been a vacation from hell. Since 2014, it's been five years of stock decline. Revenue was flat last quarter. And that's what they announced yesterday. TripAdvisor said our first quarter revenues were flat, but we're still profitable. And we'll give them credit for that because not all tech companies are profits.

So we jumped into the earnings report here, classic snack style, and we noticed some things that were a little different about the numbers. The company has a beautiful earnings slide deck. I mean, you open the thing up. I feel like I'm on a honeymoon. They went the extra mile. It shows the Amalfi Coast. They had like roses as we entered the room. You know, that And they've like sprits the place that kind of smelled. It didn't really, but we kind of felt that. So the first thing we see on this slide deck is that revenue growth is 14%. That sounds good. Sounds great. But an exclamation point on. Read the fine print. I would. That is the average growth rate from 2008 to 2018.

So we're not talking about just over the last year. They're talking about the last decade. Yeah, we told you growth was really good until 2014, but it's been a trip from hell. It's like when you book that hotel and find out they were the hotel of the year in the 19th century. Nick's been disappointed by some hotels we see. I've had some issues. We're opening up some wounds. We don't have time. Then hotel booking.

It bragged that profits in the hotel booking division were up 36%. Again, really big number. 36, I like that. But the top line number, the actual sales they had in hotels. The revenues was flat. Again, kind of one of those situations where you get to the room and that hot tub you were expected isn't there. TripAdvisor went to great lengths to like spruce up its earnings report and highlight the best parts.

We're talking like when the towels are folded to look like a swan on the bed. But the underlying parts are that revenue was flat and profitability is not grown fast. So, Jack, what's the takeaway for our buddies over TripAdvisor? TripAdvisor needs to invest in the one thing that's growing. And if you're not growing, you're dying. It's a classic old Wall Street phrase, but it's true. You can't just let your company decline. You need to push money into that one group.

Now, one key thing they're doing is they're breaking down how their business is doing by its different business lines. And they've highlighted the one group that's doing really. Well. Now that one division? It's experiences. Experience is classic millennial style. It's when you can book a tour, like, you know, a boat cruise around Manhattan or activities. This is romantic. Keep going. Or restaurants. I'm almost wooed. Keep going. Millennials are liking experiences. This is the one division trip advisor is doing well. And if we look back on a check, I got to tell you. I don't know if you know I did this. I clicked to see what we could have done for your bachelor party two weeks ago. In Key West? Yeah, we didn't look into this. Were you second-guessing our activities? Could have been ghost tours all weekend, and we could have visited the oldest house on the island. Nick, I sweat into that agenda for days. We could have done a ghost tour.

You should have shared the Excel sheet. Trip advisor needs to keep doing that. For our second story, Roku shares jumped 8% basically because what did the CFO do? The CFO is just loving the whole cord-cutting world. Professed his love on this kind of a thing. It was like outside with a boom-box saying cord-cutting, come out of John Cusack. Totally. So, if you don't know Roku, you need to know Roku.

It's the little cousin of Netflix. And, wait, this is perfect because it, like, literally is kind of like a little cousin. It doesn't have as many trophies as Netflix. It's not as rich. Mom's... It turns to like it. Its arm isn't as good as Netflix. Not the favorite channel.

It literally lives in the old building that Netflix used to use. I love that. They're, like, channeling the Netflix. In Silicon Valley. Now, this is basically, the other way to put it, Roku is a dongle that you'd stick in your TV, and it makes money three ways as a don't. All right. The first is hardware.

It does. have a don't have a dongle. You jack that little HDMI thing into your TV and you can stream internet stuff on it. Sounds inappropriate. What else? How else is it? It's got smart TV tech. So a lot of the smart TVs you buy today, they're built in with Roku technology. So it sells the hardware. That's one way it makes

money. The second way is through ads. It has a Roku channel where you can watch free movies, free TV shows with some ads. And then the third way it makes money is subscriptions. And it's kind of similar to the App Store on your iPhone. You can download HBO go for your Roku or Netflix. If you pay for it through Roku,

it'll take a little cut. So it's basically like a platform for accessing all this stuff. Exactly. It's a lot like Apple TV actually. And it's a dongle. So it announced its first quarter revenues yesterday. Revenues jumped by 51%. And then here's the other big number. 29 million people are active Roku users. That means 29 million televisions in 29 million households. And that's up 40% from the same period last year. And that's why the stock jumped by 8%. So but this is what fascinated us at Tanax Daily was the CFO and his very particular take on the competition. I already told you that Apple TV kind of does the same thing as Roku. Pretty much. So does the Amazon Firestick. So does Google Chromecast. So where does it sit in this dongle world? Well, it's much smaller. It's a tiny little guy. But

you might make a mistake and think that Disney, which just announced Disney Plus, is also a Roku competitor. Right. Disney Plus being the new Disney streaming program. Exactly. But that would be wrong. The CFO actually said he loves that. Disney is getting into streaming. Exactly. Because it's just going to create more cord cutters. And the more comfortable people get with cord cutting, the more likely they're going to need a dongle. The CFO said, when they win, we win. And that's why shareholders are so excited. So more business for Roku when there's more cord cutting. There you go. So, Jack, what's the takeaway for our buddies over at Roku? Roku owns the most valuable real estate there is.

The living room. The living room. TVs are still where like most Americans are spending a disturbingly large amount of their time. Yeah, we're going to get more updated data with the new census thing coming out. Can you hit us with some numbers right now? The average American over 18 spent four hours and 10 minutes in front of the TV in 2018. 15 minutes listening to snacks daily and then the other four hours, that's what you're doing. Four hours a day in front of the TV and only a few companies are delivering content through the TV. Cable is one and Roku is the other. Exactly. And the more people who cut the cord, the more Roku steals market share from cable. What a dongle. Since we covered Roku, I got to let you know. I own Roku stock.

For our third and final story, Jack, can you zip me up over here? I will always be there for you. Rent the Runway is going to keep its epic year going with a giant San Francisco transformative store. Back up, backup. I got you. San Francisco store for Rent the Runway? Yeah, this is happening.

I remember Rent the Runway as an app slash website where you can go to prom or go to a wedding and basically a dress that you can't afford. And you can look gorgeous. For like 70 bucks, you get a $700 dress. wear it one night. That's what the story has been for like the last decade the company's been around. It was a glorified dry cleaner. Okay. Where you can basically steal other people's clothes. Yeah, you wear it once, you give it back, they clean it, they give it to someone else. And it basically has been a huge year for this company because it started to evolve from them.

Well, it hit a $1 billion valuation. Huge amount of money raised. It's expanded into furniture rentals with West Elm. Right. Which you've got a thing for. It hasn't officially launched yet, but I can't wait until it's got like this mid-century modern vibe going on in this living room that he will not stop telling me about. And then I'm impressed by the user number. It has 11 million users, and it's transformed from one-off dress wearing to a subscription-based Netflix for gowns. $89 a month, you get to wear four items, whatever you want.

Right. And they've got a bunch of these subscription options now, so you can kind of like pick your own fantasy situation. So you get to jack up your wardrobe for $89 a month. Now, this was online only until a couple of years ago they started adding these small stores around the country. They have the stores on the coasts, including. including Chicago, which is the mid-coast. A lake is still a body of water. And now, let's get to this

fifth start. What's the strategy with the fifth store? So this is big, because the fifth rent-the-runway location is located in San Francisco, and it is using the Starbucks strategy. Which is, of course, being your third place. And third place coined by Starbucks founder Howard Schultz as not home, not work, that place you go in between. Right. And Starbucks makes it your third place by giving you free Wi-Fi and free bathrooms anytime. Well, rent-the-runway's kicking this up a notch with its like mega store situation. First of all, rent there one way, offers 8,000 options of like clothes and jewelry. That's how many items are in its closet. Eight thousand. But this individual store, a single store, is going to offer 3,000. So like over a third of

these clothes. That is a giant wardrobe. It's insane. It's a whole logistical nightmare. It's a communal closet for the city of San Francisco. And you basically can just steal stuff from it. Now, that 3,000 is going to be curated every day. So let's say the weather in San Francisco is shocker, a little rainy. You get some trench coats. They're going to stay. They're going to start changing what's available every single day. You get those rubber boots. I love those. Now, they also have optimized it.

So, like, they got 20 fitting rooms that can double to 40 at peak times because no one like sharing that fitting room situation. But to make it a third place that you like to actually hang out at, they have Blue Lane coffee carts, which is like six bucks per cup. Everybody who's wondering. They got beauty barns. They have beautiful green succulents everywhere. Succulents everywhere.

The succulents are like in the clothes, I think. And they're also making this a co-working space. Yes, this is a big move because the big women's focus coworking based the wing just entered San Francisco. Now they got a competitor from Rent the Runway. Now, naturally, this is a billion dollar unicorn. It's going to be teched up. So you can check out with your app. There's no line you have to go through. You just walk in. So they want you to go to this Rent the Runway store after work on a daily basis. Before your date, hang out with friends and get a few emails done. And like put on a new top. Eventually go to that

date and return it in the morning. Exactly. And it's going to be super emailless. No lines in the middle. So, Jack, what's the takeaway for our buddies over Rent The Runway? Rent The Runway knows its customer, and it continues to get to know the customer. It gotten to know how the customer has evolved. Because back in the day, Rent the Runway was all about those one to two special occasions customers. Prom and the wedding, like I mentioned. And now its customers sometimes want to rent up to 120 days out of the year. That's incredible. Also, its customers have grown up. 90% of them are working professional women. They're not just college students anymore. That means working people, they want to, to be able to actually get some work done and shop at the same time, you can't do that in most

places. You need a third place. And that third place is the new rent-the-runway. Ambitious business plan. Jack, can you whip up the takeaways for us? Gladly. TripAdvisor is investing what's growing, which is experience booking. Bachelor party Ghost Hockey. Roku. It owns the most valuable real estate in economics, which is the living room. Cable versus Roku, the Dongol. I like that showdown. Third and final story, rent the runway. It's growing up just like its customer. It's giving you a third place where the coffee costs as much as you probably should have spent dinner on. Exactly.

Now, time for our snack fact of the day. This one's ended by a great snacker. We've actually got a great number of submissions from this guy. Yeah, I suppose he's from Arizona. He hasn't told this if there's a shot. Scott, we don't know if you're from Arizona. We're just doing a guessing game here. So Scott Ferreira told.

Great snacker tells us that Southwest Airlines was the first airline to serve Dr. Pepper on board because the founder slash CEO, Herb Keller, was obsessed. I love these kind of facts days where the reason a giant corporate decision was made with millions of dollars on the line. Just personal preferences from the top. It's great. It's like George Steinbrenner banning facial hair on the Yankees, which is a little more controversial. It's a sharp move. Now, a couple other fantastic stories you got to know we're covering in the Robin Hood Snacks newsletter.

Disney just announced its earnings. Avengers aren't included in them, but we'll break them down for it. And then Walmart decided to up the age at which it'll sell tobacco products to 21 from 18. Voluntarily. Big move. I like them. Snackers, it was great, as always, potting with you today. Can't wait for tomorrow.

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.