The Best One Yet - “Selling cannabis shovels” — Scotts Miracle-Gro’s green rush. Grubhub gets acquired. Wave virtual concerts.

Episode Date: June 11, 2020

Scotts Miracle-Gro is enjoying the pimp yo’ lawn life, but we’re more focused on its other green side hustle. Grubhub was supposed to be acquired by Uber, but now it’s ditching for a European lover. And not-quite-Unicorn-of-the-Day Wave snags $30M to make virtual concerts a thing you take seriously.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 Thursday, June 11th. Let's kick it off with some participation trophies. Nothing more millennial than that. Jack, Apple, Amazon, Facebook, Microsoft, Tesla, all hitting record highs on the same day. They're all like trillion-dollar companies. They're all based in either Palo Alto or Seattle, and they're all winning right now. Kind of helps that the Fed announced no interest rate increases until 2022. Nick, Fed Chairman Jerome Powell, one of the market's biggest saviors right now. Jerry Powell, big time snacker. Jerry, you still owe us a snack fact. Jack, what do we got today? Oh, by the way, Snackers, this is the best one yet. Our first story is about Scott's Miracle Grow.

They're loving the Pimp Yo Cribs trend that has emerged post-COVID-19. Because after you pimp your crib, you walk outside and you pimp your lawn. But the lawn and garden company has a side hustle that's growing way faster than the grass on your front lawn. We're talking selling gear to the cannabis green rush. Second story, Jack? For our second story, Grubhubhub was supposed to be wedded to Uber in an Uber It's acquisition. Yeah. Now Uber's getting ghosted because Grubhubbh

found itself a European lover. Uber's not a company that typically gets ghosted. No. It's getting ghosted hard right now. Just Eat Takeway. That's the real absurd name of the European delivery company that's officially merging with Grubhubbhub as of right of this recording. The problem with this marriage though, Nick?

No synergies. Got to talk about that when you're making the proposal. Third and final story, Jack. Futuristic pre-unicorn of the day is a company called Wave. We're talking to virtual reality company that's virtual reality. and T Swift at MSG. We've just raised $30 million to make concerts at home as good as the real thing. Less sweat, more pixels.

But Snackers, before we get into those stories, June is Pride Month. That is right. 51 years ago this month, police raided an iconic gay nightclub, Stonewall Inn and lovely Greenwich Village, New York City. Christopher Street, New York, I used to ride my city bike to work, pass that bar every day. We know it well. Jack and I live like a few streets down right off that one train, lovely spot. And the Stonewall Inn has a classic New York City situation.

It's a gay bar that was owned by the mafia. The Genovese family likes to own a lot of gay bars. Also, the bar bizarrely has the same name as a famous Confederate general, even though the Stonewall Inn has nothing to do with the Confederacy. Below 14th Street, nothing makes sense, and we kind of love that. Now, back in the 60s, police were raiding gay bars, like on the reg, across New York City, for one shocking reason. It was actually illegal back then to be gay.

That's right. The first state to decriminalize homosexuality was Illinois in 1961. Jack and I jumped and Snacks out, noticed that it wasn't until 2003 that a Supreme Court case decriminalized homosexuality in like the final eight states. It required a Supreme Court case to decriminalize being gay. But many decades ago, fed up about harassment and homophobia, the Stonewall patrons and Joyne Beer became Stonewall activist fighting gay rights. They kicked off a little bit of a gay rights. movement, and let's say it's had some success, it's come a very long way. Lesbian, gay, bisexual, transgender, queer snackers. Happy Pride Month, and thank you for snacking with us.

Let's get to our 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 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. Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member Fenra slash SIPC. For our first story, Jack, peonies are tulips. Pianies. It's peonies season in Vermont. It's beautiful. Trick question, though. It's always both. Scott's Miracle Grow Snackers. The stock is up 35% this year on some lawn love. But we're focused on Scott's other green side hustle, which means Jack and I had to jump in snacks style, which means going to sources like Guard and Center magazine quarterly where they're interviewing the execs over there. Scott's Miracle Grow is one of those

companies that sells things in 50 pound bags that break your back when you're carrying them from the cart to your lung. Here's the secret about Scott's Miracle Grow. Lift with your legs, not your back. Now, Snackers, 75% of Scott's sales are during the spring and the summer. So our Garden Club put this on the calendar when their earnings came out. Scots just announced that they expect 2020 sales to increase by 16 to 18%. That's an update from like, last month's earnings, and it's up from their previous expectations, which were only like six or eight percent growth. That's pretty good. 16 to 18 percent, and we got to ask why the upgrade, what has changed? You know, COVID, which has been boosting gardening aggressively. You're

like yanking tomatoes out of the ground. And if you're pimping your crib, you might as well pimp your lawn. But you know what Snackers fascinated Jack and I a lot more than that? A 51% sales surge at a subsidiary of Scott's called Hawthorne Gardening. That's right. Don't forget the name. Scott's is a company that kills your weeds, but it's also a cannabis company. That's right. Hawthorne is a subsidiary of Scots focused on hydroponics. Yep, which is like fertilizers and supplies for indoor crop and plant growing. That doesn't even require soil. You're just like spraying water on the roots. Boom, no big deal. Hydroponics, they can be used for like any plants, but they're pretty focused on cannabis.

Let's be honest. This is kind of a wink-wink situation at Scots when it comes to the hydroponics. Like saying your bowls for tobacco products, it's not for weed. Dad, I swear, it wasn't, I'm not using it for that. It's, it's, it's, you scoop, you scoop cinnamon with it. Now, Hotthorn has acquired 50 brands that are all focused on the cannabis cultivation. Oh, snackers, you're going to love these names. You got Mother Earth Fertilizer. Super Sprouter.

You got Measure Master. Nothing screams cannabis like a creative alliteration. Just throw a little continent on that thing. Now, all these companies we just mentioned, they're all on. by Hawthorne, which is owned by Scots, and they're all focused on hooking up cannabis producers. In 2019, last year, Hawthorne's sales doubled as the green rush continues, and now they're on pace for 50% sales growth this year. But here's the funny thing when Jack and I were looking at like the whole landscape of cannabis. Scots is pretty much the cannabis grown up among all the

cannabis startups. Aurora Cannabis is like freaking out trying to stick CBD and beer to like sell more products. Meanwhile, Scots pays a dividend is profitable and the stock is at a record high. You're going to want to take Scots on to be your parents and introduce it. So, Jack, what's the takeaway for our buddies over at Scots? In the cannabis gold rush, you can be a minor or you can just sell shovels. That's right, Snackers, Aurora Cannabis, Tillray, Canopy, the biggest names in cannabis stock production are down at least 60% from their all-time highs. They got regulatory worries, like, is Utah ever going to legalize?

Probably not. And then they got demand worries, like, will cannabis ever become a household staple? Honey, make sure the cabinet has salt, pepper, and cannabis. No one's saying that. Hand me the CBD-infused fork. Miners are the ones that are selling cannabis. They're taking the biggest risk and have the biggest potential reward or failure.

Shovel sailors, though, they take a smaller risk but get to sell to the miners no matter what happens. Scott's is selling shovels to the cannabis industry, and let's be honest, mining is dangerous. It'll last until the gold green rush

finally busts. For our second story, just-eat-take-y, yeah, it's a real name, is officially acquiring Grubhub. Even though it would make way more sense if Uber acquired Grubhubh. So much more sense. Snackers, let's travel all the way back to last month

when Uber offered to buy Grubhub. Both stocks jumped. We covered it right here on Snacks Daily. It would have made Uber and Grubhubbub the leader in the food delivery mafia wars. Currently, that's DoorDash, which controls about 45% of the market. Don't mess with the Louis-Giani family.

During this recording, no joke. It just became official that Uber and Grubhubhubb, the deal got canceled. Jack and I were like recording about Skiski. Gott's miracle grow over there, and boom, our phones blew up. We need to reconjugate all the verbs in our heads. Enter Just Eat Takeaway.

That's a company name that sounds more like a command. They're just throwing random food and eating verbs at this thing at this point. Just Eat Takeaway is a Dutch and English food delivery giant that is Grubhub's new lover. By the way, Just Eat Takeaway is already the result of a big food delivery merger itself. Right. Just Eat and Takeaway, which merged. Easiest way to merge corporation name Snackers, just hyphenate. for the hyphen. Now, Uber canceled its engagement with Grubhubbh because of

antitrust concerns from the parents. Elizabeth Warren was like a hobanero pickle when the news emerged about the first merger. Boston has never seen anything as hot as Elizabeth Warren's reaction to this Uber Grubhub news. Things are pretty relaxed in Boston. Now, many politicians like Elizabeth pledged to fight

this merger on fears that consumers would suffer if it went through. Yeah, this deal would leave like just three major players in food delivery. Uber and Grubhubbhub, which like may have merged, DoorDash, and hostmates. And then they'd probably jack up the delivery fee on all of us to like $29.99 so you can get one bond me sandwich. Because there's less competition. But now that a European company is actually the one who's buying Grubhub. Yeah. There will still be four big players in the U.S. like before.

We, we, we, and one is just owned by a European. So, Jack, what's the takeaway for our buddies over at Grubhubhub now part of takeaway? This new merger won't solve the problem of the delivery war. Snackers, every press release about a merger has got to focus on the Syner Like Facebook's press releases are always obsessed with connecting people. We connected all these people last week. But most deals we talk about are focused on cost synergies. Merging two companies lets the combined company reduce costs. Yeah, company A and company B and both have an accounting department.

They merge, so you keep just one accounting department. The food delivery industry, though, they don't have a cost problem. They have a revenue problem. Fees and prices are too low for them to make profits. Yeah, they seem high at all of us, but all four of these companies are unprofitable because of their price war. And Uber and Grubhub is a merger that would have experienced revenue synergies. Yeah, together they could have jacked up prices because there would have been less competition. But now that it's just a takeaway that's acquiring Grubhub, they probably won't be able to do that

because competition in the U.S. hasn't changed. AKA this deal doesn't make that much sense. It won't fix delivery apps. Revenue problem. For our third and final story, Wave, this one's wild, just raised $30 million to make virtual reality concerts a thing. We jumped in snack style to do some research on this story. There's actually, though, a dozen U.S. startups with the name Wave. It's highly confusing. Payment software, group chat, debit card. Wave's the new Zoom. Everyone's calling it Wave. I guess it's got four letters. Meanwhile, Zoom's the old something. We don't know what it was. We couldn't think of it.

But LA-based Wave is actually a virtual entertainment platform. Virtual Concerts with digital fans. Instead of schlepping your cut-off Blink 182 tank top to a nearby stadium. you'll watch virtual concerts online through a VR headset. And this isn't just some COVID-19 business idea they hatched up in the past couple months. No, no, no, no, no, no. This is about concert economics at its core. The concert industry has become exclusive, expensive, and niche. The average ticket is about $100.

So wave concerts will be free or a whole lot cheaper and hopefully just as fun, a little bit of less sweat. Now, what the heck is a virtual concert? Yes. It looks like James Cameron took over the set design for the stage. He popped like Six Adderall, went crazy, and abandoned everything he was doing from like the Avatar series. The experience is not going to be just Billy Joel sitting at a piano, playing piano man at MSG. No, they're testing this thing out with like some low-key musical artist, but she's reaching an entire continent's worth of people. Have you heard of the violinist Lindsay Sterling?

Wait for it, okay, three of you. She just did an event with 400,000 digital fanboys in attendance. We repeat, this small-scale artist. did an event with 400,000 people. The only stadium bigger than that is in Pyongyang, according to a highly censored Wikipedia page. Now here's the thing, Snackers. Jack and I watch how this went down. They don't just like film the person. She wore a suit and like a bunch of wires and sensors so she could act out the experience that then turned into a virtual world. When you're watching this on YouTube or Twitch or with your VR headset, it's not just

a concert on your screen. No. It's like an interactive video game that you're playing. And then because you have a VR headset on, you get to run around the virtual stage watching from virtual angles. You can offer Lindsay a virtual crowd surf, and she may virtually grab you and bring you up on stage. So Jack, what's the takeaway for our buddy over at Wave? The more things change, the more they kind of stay the same. Stackers, think of a concert with Billy Elish on Mars, set in the 16th century, 100,000 fans, feels kind of revolutionary. Sounds insane, but Wave's business model is pretty old school. Yeah, it's actually a lot more old school than you'd You pay $3 for a ticket to the virtual event. Pepsi pays like $2 million for virtual banners so that

they get some advertising love. And then your friend splurges of $20 virtually for a virtual t-shirt. Next up, no joke, you can pay $50 for VIP badge to a virtual lounge where just three other people can watch the concert. They literally took the old business model of live events and just threw a V in front of everything. A virtual VIP lounge with virtual velvet ropes that your virtual self wants to virtually get in on. The more things change, the more they kind of stay the same. Jack, can you whip up the takeaways for us over there. Scott's Miracle Grow is winning and home and garden as you pimped your crib's law. But it's selling shovels to cannabis miners too, and that business is very green. Grubhub will not marry Uber. It's marrying just-eat-takeaway instead.

Walked away at the altar. So the U.S. delivery apps revenue problem still unsolved. For our third and final story, Wave wants you rocking out at virtual concerts. The business model, though, is shockingly the same as the business model for live concerts today. Now, time for our snack facts today. This one's sent him by Jacob Meyer in lovely Naperville, Illinois. There is no federal law in this country that explicitly protects workers from being fired for their sexual orientation or gender identity. So that means it's totally up to the states to make a decision on this.

Right. 33 states and Washington, D.C. have stepped up and protected these people, but 17 have offered zero protections whatsoever. And that means there's like a whole lot of a lot of Americans who could be fired or harassed at work because they're gay and no one's stepping in to help them in this situation. So you can't be fired for your race or your marital status or your age or your gender or your disability status, but you can be for your sexual orientation. That's messed up. Now, Snackers, if you can't kick off Pride Month by jumping into like the Grinch Village Parade, a couple other options we thought of for you. The only option I'm thinking

of is the Birdcage. One of my favorite movies, period, Hank Azaria, Nathan Lane, who deserves the Oscar? Yeah, we think Nathan, deserves an Oscar every year for that role. Before we head out, quick congratulations to Henry Wynn, who's graduating digitally from Drexel, hopefully using Wave VR heads out. He spread his snacks throughout Philadelphia. We've got to ask you, Henry,

hats or Gino's on the cheese steaks, how you celebrate? Henry, anybody you see in Philly this weekend, please ask them if you have a quick second, HY, HYSD. Have you had your snacks daily? We'll see you tomorrow. If you know, you know.

This is Jack. I own stock of Amazon. 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.