The Best One Yet - “Rum and Coke, hold the Coke” — Pepsi’s liquor thirst. Bed Bath & reBound. Hims’ public prescription.

Episode Date: October 2, 2020

Pepsi is thinking about entering the alcohol biz — but that’s way more complicated than fermentation. Telemedicine innovator was the 2nd fastest company ever to become a unicorn, but now it’s SPACing itself into a publicly traded stock. And Bed Bath & Beyond is now living the opposite life that you expected.$BBBY $PEPGot 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 Friday, October 2nd. What day, though, is it tomorrow, Katie? October 3rd, Aaron. We're pink, where you can't sit with us. This is our best one yet.

Jack, first story on the TBOI. Pepsi just heard that hard seltzer's kind of got a thing going on in this country. Apparently also just found out how many middle men are in the boozebiz. For our second story, Bed Bath and Beyond, doesn't care that your dorm is on pause. Jack, it is bed, bath, and back, baby. For our third and final story,

Hymns is the second fastest company to become a unicorn worth a billion dollars. Jack, I'm checking the charts here. Could become the first fastest to go public. But snackers, before we hit those three stories, Subway Restaurants is technically the largest restaurant chain in the world. Kind of shocked by this. Apparently, there are subways within the subways.

There are actually 38,000 subways, which wasn't a shocker to me because there's three in my small town of Brattleboro. Vermont. Brattleboro, the sixth borough. Now, you may know Subway as the quiz knows for people who prefer their cold cuts to remain cold. But Jack and I found something fascinating yesterday. Turns out that the sandwiched loaves over at Subway have too much sugar to fit the legal definition of bread over in Ireland. 10% of the loaf is sugar. Yeah, that's five times the legally permissible amount in the kingdom of Ireland. Jack, I'm taking a bite out of this thing. It's basically a syrup.

filled sourdough. Pumpernickel with extra glucose. Two pumps, Deborah! Now, apparently, our buddies at Subway, they were trying to get a tax break from the government in Ireland because they thought that the bread was a staple food that deserves like not to be taxed. So then the judge took a bite of this stuff and actually ended up ruling, you know what? It's is the opposite of staple food. It's too sweet. It's a sweet. And whoever suggested that they apply for this staple loophole in the country of Ireland, We assume they were fired. Brad over an accounting.

Turkey on a loaf of candy, more brownie. Less bagged. Jack, what's our takeaway for our buddies over at Subway? Subway should embrace this Irish ruling and launch a bakery spin-off instead. We're thinking replace the Meatball Marinera with the Bear Claw Baranara. Let's in our three stories. 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 the hair ain't food. It's air candy. They don't reflect the views of the robberhood family. It's all infamination. just so you know we're not recommending any securities. Nope. 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, Pepsi sales have bounced back from the pandemic. But the real story here is that Pepsi has big bar tab ambitions. All right, snackers. Jack and I jumped into this earnings report, Snack style.

true story. We have found the only company on Earth who has a hype video for their earnings report. It's a modestly produced YouTube video. And it got us thinking, they must have too many graphic design people over at Pepsi with too much time on their hands. A lot of time with their hands and like a thing for like Disney Channel music. This thing's intense. A PDF would have been fine, Pepsi. A PDF would have been fine. In the meantime, though, shocker, if you go out during the day because COVID restrictions have loosened and you stay home at night, PepsiCo wins. Drink sales last quarter for PepsiCo jumped 6% because more people are grabbing a soda from the bodega midday. But then it turns out food sales jumped 7% for Pepsi because you're still at home making rice errone once dinner time comes around.

COVID concerns have loosened enough that people are buying drinks, but not so much that they're not making dinner at home still. Just enough for Pepsi. But Snackers, here's what fascinated Jack and I. After 127 years of just doing soft drinks, Pepsi, wants to go into hard drinks. The CEO of PepsiCo said yesterday during their earnings call, they're considering entering the alcohol business for the first time. But here's the funny thing about the alcohol business. It is so intensely regulated, it is ruled by the three-tier system laws of the prohibition. That's right. Alcohol must be produced, distributed, and sold by three

different companies by law. It's on a state-by-state basis. We know Washington, you do stuff differently. We're about to get six snack facts on it, and we love that. Actually, Vermont has a weird lot. No happy hour allowed by law. It's the only thing about Vermont that's not amazing. Jack, I thought in Vermont you just have to leave the bottle by the tree and then you tell someone where in the forest it is. It's actually a milk pail you leave by the tree. So it's got to be produced, distributed, and sold by three different companies. And that means you can't just toss a sans-sera font millennial branding and go direct to consumer like every physical product we're seeing. Yeah, the venture capitalists are really annoyed about that one. Pepsi's arch nemesis isn't just thinking

about alcohol. No, they're not. They're definitely getting into alcohol with a boozy version of Topo Chico Mineral Water. Yeah, that's right. Coca-Cola is coming out with that soon, but they're using Molson Coors to do the distribution while Coca-Cola does the production. And then you'll probably have your local 7-Eleven actually selling the thing to you. There have to be three different parties. Snackers, that's why there's a Canada goose store, but there's no gray goose store. That's why there's a Jack Will store, but no Jack Daniel's store. And Jack, that's why there's a Victoria Secret store, but there's no whispering angel store. You add up all those middleman snackers, and Pepsi would lose a whole lot of profit by getting into alcohol.

So that's why it stayed away from booze for 127 years, but soda seems not to ever be coming back. No, it doesn't. And Hard Seltzer seems not to ever be going away? Yes, it does. So Jack, what's the takeaway for our buddies over at Pepsi? Big corporations aren't nimble. They're behind. Big is late. Snackers of a company of Pepsi size gets in on a trend. it's probably post-trend. It's like the sloth of Zootopia. They're like, love that guy. Hard Seltzer.

Boston Beer Company, for example. They're a lot smaller than Pepsi, and they launched truly Hard Seltzer four years ago. Now they control half of the hard Seltzer market. Four years later, the Pepsi CEO is still asking, do we play an alcohol or do we not? It's been four years. And if they do commit over at Pepsi,

then it's going to be like research and development, two years of committees, a few reviews, seven different focus groups, and then they'll consider launching this thing. By that point, hard-seltzer drinkers will already have picked their favorite hard-seltzer drink. And the more agile companies will already dominate it. For our second story, we got our unicorn of the day. Hymns, the direct-to-consumer prescription biz, was supposed to IPO a few years from now. But they just got a note from the doctor.

Take a SPAC, ASAP, instead. HIMS, call us back if the stock rises for more than four hours. Now, Hymns has a business that's very similar to another company called Roe. Very similar. Both Hymns and Roe, they're opportunistic startups whose biggest strength honestly was timing. They both realized in 2017 that Viagra's patent was ending. It was owned by Pfizer, but now anyone can do it. Then they also noticed a whole bunch of these telemedic laws across a bunch of states, those were loosening. Lo and behold, they both launched telemed prescription companies with spoonfuls of millennialists drenched over the brand.

It is the classic erectile dysfunction drug with a side of avocado toast. The core value proposition of both Roe and Hems is, stop going to the pharmacy, use our lower cost subscription medication instead, and we'll ship it to you every month. And feel millennially doing it. Now Hymns has expanded beyond just erectile dysfunction. Now they're doing hair, they're doing other sex stuff, they're doing skin medications to hold thing.

Right. They have a generic version of Viagra and a cherry gummy hair thickener so that your hair doesn't thin. But they also then went after a female audience, with something called, get this, creative, hers. That's right. They have hymns and hers. And hers is also focused on hair, sex, and skin products. Yeah, it is. You got the generic birth control, sexual drive, medication, acne, all generics. In summary, they have a guy's division called hymns and a gal's division called hers, but Nick, the parent company is called hymns. And the ticker symbol for the new stock is also

going to be called hymns. Huge missed opportunity, Jack and I are thinking, you name the corporate company and the stock, get this, hours. How did they miss that Hems? It's inclusive, it's better, and there's still time. O-U-R-S, just run with it, Hems. So Hymns has expanded into a whole bunch of medications, but it's simply the core business. It's more relevant today post-COVID. The core business here, telemedicine. If you've never chatted with a doctor via Zoom, you've now spoken to a doctor via Zoom. And telemedicine's probably cheaper, too, which is a nice thing during an economic recession. The result is that Hymns was already the second fastest company to get to a unicorn $1 billion status ever behind Byrd last year. And they're expected to double

their sales this year heading into becoming a publicly traded company. So Jack, what's the takeaway for our buddies over at hours? Hymns has reached recurring revenue nirvana. So Snackers, here's how this goes down. You can create a graph right now about a business is revenues. On one axis, you've got frequency. On the other axis, you've got stickiness. A low frequency, low stickiness revenue model is not a good one. No. That's where the customers pay every now and then, but don't really need the product so they eventually like may stop buying it all together. Take Reese's pieces. Jack and I love them, but we only buy them every now and then because our life doesn't depend on peanut butter and chocolate entirely. They're great at the movie theater,

but I haven't been in the movie theater in six months. However, Hymns is a high frequency, more sticky business in like the upper right-hand corner of this graph. Birth control, for example, is a sticky product because you use it for years, and it's frequent because it's refilled monthly. So Hymns has 260,000 medication subscribers, and get this, 91% of them are recurring revenue subscribers. So next, HIMS is going to aggressively pursue other top right quadrant. Love it. Recurring revenue Nirvana products. We're talking sleep, diabetes, cholesterol pills, high frequency, more sticky. For our third and final story, Bedbath and Beyond Stock just awoke from hibernation surged 25% yesterday.

That's because the narrative of this stock has been reset. Jack, we got to call up our buddies over at the 23 and me. Tickr symbol family tree, what do we got? Let's start with ticker symbol BB. That is Blackberry up in Toronto. Tickr symbol BBY. It expands a bit. That's the cousin.

That's Best Buy. You can test out free video games on the Xboxes. And BBBY. B-B-B-Y. That's a third cousin twice removed. That is bed-bath and beyond. In the meantime, bedbath and beyond has been an extra time, down 3-0, and bankruptcy was winning the game. The stock was $77 in its heyday back in 2015, but fell to $4 at the lowest point of this year. Honestly, Jack, you want to share a bed-bath-and-be-on or you want a coat hanger? Which one you want to buy? It's a tough situation. But then yesterday, they scored the equivalent of like two goals with one

kick and were running out of sports analogy. Bedbath and Beyond announced yesterday. Comparable sales for the last quarter jumped by 6%, which sent the stock soaring by 25%. Keyword from Jack right there, comparable means apples to apples. First time they've had an apples to apples. Same store from last year to same store this year, sales gain since 2016.

Every other time they've had sales rise since 2016, it's just because they were building new stores, which will raise your sales, but it'll add a whole lot of cost too. Honestly, it's kind of like cheating. It's like you added a third arm to yourself. Comparable sales growth is the strongest, indication there is of growing customer demand. It's the chicken soup for the retail investors'

soul. And the CEO of Bed Bath and Beyond, he credited the house hype going on in America Randen. Yeah, when Home is Everything, we're really poised to be the epicenter of that. People are stocking up on face masks, patio furniture, even dorm decor over at Bed Bath and Beyond. But then over at Bed Bath and Beyond, they whipped out a whiteboard and gave us a good, clean, family fun list of highlights from the last three months. I would love to kick this off. with the 89% jump in online sales last quarter. Yeah, it must be nice because competition like T.J. Max and Home Goods, they only are doing physical stores.

They're not even caring about the internet. Online sales isn't even an option for Bed Bath & Beyond's competition last quarter. Jack, this is actually, I think this is our favorite one. The coupon expenses fell over at Bed Bath and Beyond. Oh, Jack, you just moved? I got a Bed Bath and Beyond 20% off coupon for you. There are a whole bunch of those out there. People aren't using them.

Your aunt's not cashing them in these days. I heard Bed Bathroom Beyond employees are told to burn them if they see any of those out in the wild. As long as they're not as long as the CVS receipts. And then finally, this was a shocker, a 21% increase in back-to-school products from Bed Bathroom Beyond. Get this, Snackers. Apparently families are emulating dorm rooms with their children's bedrooms if they can't go off to college. It's anticlimactic when the end of the summer rolls around you're 18 and you go back to your childhood bedroom. I mean, honestly, it's not a dorm room unless you've got that one roommate who sticks up the endless

the summer poster. Fear and loathing in Las Vegas, top seller since 2006. Full disclosure, Jack and I had a posterless shared dorm room. But Jack, what's the takeaway for our buddies over at Bed Bath and Beyond? Narratives matter for stocks. A lot. Snackers, Tesla announces products like literally five years before they're actually happening. The reason Tesla does that, it sets a positive narrative about Tesla's future. Tesla's not really held accountable, and the people who work there are like, oh, we're doing that. And the result is a lot of buzz for test the stock. Now, the narrative on Bed Bath and Beyond was that it was following JCPenney's and Macy's really not fun footsteps. Bed Bath and Beyond was knock, knock, knock on bankruptcy's door.

But now investors think maybe it's actually following in Best Buy's footsteps instead. After those comparable sales growth, maybe Bed Bath and Beyond will be one of the few survivors of the retail apocalypse. And last week, investors were thinking that Bed Bath and Beyond stock was headed for like eventually zero. This week, a bunch think there could be. be a bright future for it and that its $4 stock price is a bargain. And that's why Bed Bath and Beyond stock just surged 25%. The narrative has changed. Jack, can you whip up the takeaways for us before the weekend? Pepsi is thinking of entering the booze biz. And if it does, it's going to deal with a whole bunch of middlemen. For our second story, Hymns is going public via a SPAC. Their businesses

are frequent and sticky, but they should change their name to ours. For our third and final story, Bed Bath and Beyond Strong Quarter changes the narrative for the stock. as J.C. Penny, a lot more Target or Best Buy. Now, time for our snack fact of the day. This one sent in by Parth Thacker in San Luis Epispo, California. We've all played the classic party game with buddies cards against humanity. Also good, clean fun. Back in 2016, I don't know how we never heard of the snack until now. It's incredible. They raised $100,000 to dig a gigantic hole as deep as they possibly could. That's right. The makers of a party game raise money to dig a year. huge hole somewhere, somewhere in the United States. And according to the company, as long as money

keeps coming in, we'll keep digging. Oh yeah. Yeah, they will. They never explained why they did this. Now, because before you go for the weekend, we got to say congrats to Hay Ching Huang, who is a new puppy parent over in Chung Cho, China. And congrats to James Higgins and Clara Turina for getting hitched in Portland, Oregon. And to Mariana Sa and Edward James also getting married down in Austin, Texas. And to Stacey and Joseph Kmetz getting married in Houston, Texas. But happy birthday to Jasmine Kemp over in Minneapolis, Minnesota. And Andrew Murphy right across the river in St. Paul. Those twins and Miss Jackie down in Austin, Texas too.

And Shelby Buckner in Augusta, Georgia. And Derek Blankenship in Melbourne, Florida. And Zoe Conover in Atco, New Jersey. And Nick Crystal down in St. Louis, Missouri. And Mark Shevitt's in Miami, Florida. And happy birthday to Brad Bonnet in Seattle, Washington. Have you had your snacks daily? H-Y-Y-H-Y-S-D.

Ask your buddies for us. We'll see you Monday. Have a fantastic weekend. Have a great weekend. Share your snacks. By the way, quick correction. Jack and I are dependent on peanut butter and chocolate. 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, Inc. 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.