The Best One Yet - Shake Shack’s 18% surge, Disney’s record year, and IAC — the VC-like public company (indirectly) powering Tinder

Episode Date: August 7, 2019

FYI, take the Snacks survey so we can get to know our Snackers better (fun fact: you could win a $100 Amazon gift card): www.listenerq.com/snacks —Shake Shack popped 18% not just because of a new strategic move, but because its leadership was open to changing its mind. Disney’s earnings hit record revenues, but spent $3B more money than it made because of acquisitions. And IAC owns a piece of everybody in the human-connecting-human apps industry, including Tinder and Angie’s List.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, August 7th. And this is the best Snacks Daily we have ever put out there for any. Here we go. This is a big rebound from six days of losses in a row. The Dow jumped by 300 points yesterday.

And that was after its worst loss of the year. It didn't matter. We came in. We had bright eyes. We were curious. We found three wonderful stories. Basically, the freak out, by the way, that happened with the Chinese currency yesterday, it kind of stopped yesterday.

So, Mark, it really rebrand. things relaxed. So Jack, what's story number one? All right, Disney had a record movie quarter, but profits just plunged by 40% because of two gigantic acquisitions. New episode we got to talk about here. What does the company actually do? We'll break it down for Disney. The second story is Shake Shack. The stock surged by 18%. Yes. Yep. Shake Shack. And when that happens, we look into it and tell you why. We're going to hand out one of those buzzer things and it will vibrate when the story is ready. Third and final story, IAC. It reports earnings on Thursday, but shares jumped 11% yesterday.

Strange, Jack, go on. We're going to explain why that all went down. Now, it's an ambiguous name, but you probably interacted with one of their 150 brands at some point in the last 24 hours. But before we get into that, we need to talk, everyone, please. We want to get to know you. Pizza or pasta Coke or Pepsi cupcakes or full. cakes. I am clearly more of a carry. Nick is more of a Miranda. We've been saying it for years, but what we want to know now is a little bit more about you. Check out our snack survey. It only takes two minutes. Go to listener queue.com slash snacks, and you could win a $100 Amazon gift card filling this thing out. We need to be clear about that website because we kind of F this up last time. L-I-S-T-E-R-Q.com slash snacks, the letter Q. We're just going to get to know you a little better. We can't wait to do so. You guys are a lot of fun. We might even make some tweaks to the show based on the incredible feedback you're going to give us in this two-minute survey.

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Rapperhood Financial, LLC, member Fenra slash SIPC. For our first store, Badiya-a-a-a-Higaboo. Disney stock just fell 3%. Basically because all its acquisition sprees have caught up to it. Kumbaya, what are you got to? Oh, man, that was theatrical. But for Disney, they feel like they just are having a hangover right now.

Picture Keanu Reeves, Bill and Ted's bogus adventure. Whoa, dude. I know. What did I do last? fiscal quarter. Kiano, here's what you did. You did a lot of acquisitions. Disney officially spent the quarter walking through, signing checks, closing acquisitions, and paid a lot of lawyers for the whole thing. These are big acquisitions at close. We're talking 21st Century Fox and one third of Hulu that it didn't own already. Now, those new video collections, it's now added to the Disney ecosystem. That improved its revenues up to a record $20 billion. But those acquisitions,

were very expensive. So profits fell by 40%. So that means $3 billion more in cash went out the door for Disney than actually came into the place. So Jack, can we play a little game here? Yes. What does this company actually do? Jack and I worked on that accent for like a good 12 minutes before this podcast. So media networks, that is a third of Disney's total revenue. This is like the historic Disney profit puppies. We're talking like cable TV, ESPN, Disney Channel, ABC, the classic stuff you pretend to be sick, stay home and watch all that. For that big division, revenues jumped by 21%. All right, so then you've got the other third, which is parks, experiences, and products.

That's also a third of revenues, and we're talking Disney World, Disneyland, Disney Toys. For that, revenues jumped 7% last quarter. Now, we know a lot of Snackers or Mathwaizzes out there, and they're like, hey, you guys did a third of one, a third of the other, what's going on with this other third? Great news. We found the other third, and we divided it into two very equal halves. It's not perfectly equal, Nick, but we're just going to call it equal. So one of them is movies, and they have about a sixth of Disney's revenue. Right.

And movie revenue surged a record, 33% for Disney, basically because they're pumping out superhero movies on superhero movies on superhero movies, Avengers, Avengers. Finally, the last one is called Direct to Consumer and International. This is actually a brand new division, so we can't even say how much revenues rose because it didn't exist last year. But what's expected to be the core driver of this division is Disney Plus. It's new streaming service that's going to launch later this year and that it dramatically pulled all its content from Netflix to focus on.

Coming out in November. So Jack, what's the takeaway for our buddies over at Disney? Disney Plus doesn't need to make money. And that's its big advantage over Netflix. Exactly. Netflix is a one product puppy. It needs to charge a monthly price to make a profit, $14 a month, that whoever is password you're bum in on.

off of their pain. Now, Disney, on the other hand, it makes products in four different areas. We just told you about them. So it can charge a super low $7 a month starting in November. That way anybody in the world can afford to fall in love with Disney's characters. So the more people who are easily affording Disney Plus are then easily watching Disney and then they're more likely to easily spend money on more Disney stuff, all the things we just mentioned. Here's the deal. Disney Plus, it's kind of just marketing for Disney. But Netflix is like, everything for Netflix. For our second story, ShakeShack stock just searched 18% because the company recognized a big mistake, fixed it, and now things are looking good. So mature. My therapist

would be impressed by this. The stock was up 60% in the last year, and it just searched 18%. That is significant. The company announced their second quarter earnings and things looked good. There was a 31% jump in sales worldwide for Shakehack. Now, mainly that's because they opened a bunch of new stores pretty much on a bunch of continents. By the way, those stores, those are totally worldwide, Nick. They must be on like three or four continents by this point. It's like a serious passport situation. You got Mexico and China, now they're doing Philippines next and Singapore is coming up this fall. All right. Anybody can build stores around the world, though. Why did the stock surge? For the answer, you got to go back to like the core shake shack experience. Unfortunately,

that is lines. Long lines. Very true. My first date with my wife, we were in, line for a good 50 minutes. I checked the Shack cam beforehand. The Shack cam, by the way, is a live cam feed in Madison Square Park in New York, which was the first Shakeshack. You can see how long the line is, and it's always long. Shake Shack's basically trying to figure out how to either make couples come together or split them apart. You spend a lot of time waiting, making small talk, and then you end up finally eating for like 15 minutes. We talk on this pot a lot about trying to eliminate lines, but Shik Shack doesn't want it because they think it's important for the experience that your burger is cooked on time. It also looks like a little exclusive and looks a little attractive. If you know,

they're like 50 people ahead of you about to eat this thing. By the way, fantastic quote from the CEO about why they didn't want to do anything but have you in line. The CEO said burgers are not supposed to be eaten a half hour after they were cooked. So they make you stand there and wait until the burger is ready, then they'll give it to you. So basically shake shack's saying, we don't want you to like be able to get them in any other way than at the store. So we're not going to do delivery. Jack, what's the takeaway for our buddies at ShakeShack? ShakeShack surged yesterday because its leadership had the guts to change.

Remember when like 12 seconds ago we just said they did never want to do delivery? I do. They also announced in yesterday's earnings, they're now going to do delivery. They're partnering up with Grubhub. It's exclusive. They're doing delivery. Now, Grubhubhub knows that Shake Shack is really big on this like, you know, once the burger's ready, it gets in people's mouths.

Turns out that Grubhubhub has a special technology they call quote-unquote, just in time, great name, to make sure the pickup of the food is exactly at the same time as the food's ready. Okay, so apparently Shake Shack's going to do delivery and give you a fresh burger right on time. We're just mostly impressed that Shake Shack recognized that not doing delivery was hurting its business and changed its decision. Right. Investors aren't just rewarding the pivot. They're rewarding management for thinking differently. Our third and final story is kind of a wild one. Everyone has been talking about Match.com, the dating act conglomerate, but the real winner yesterday was IAC.

Match.com announced earnings yesterday, and the stock rose by 18% because Tinder, OKCupid, hinge, all the other dating apps it owns. Apparently they're doing well. But we noticed that IAC, a completely different company, it stock rose 12%, and it doesn't even report earnings until Thursday. IAC owns huge stock in Match. So when match stock goes up, IAC stock goes up to. That's how it works.

This is basically like the Berkshire Hathaway of tech, except there's no Warren Buffett, and it makes, like, completely different investment decisions. Yeah, Berkshire Hathaway really likes, like, catch-up companies, railroad companies, and insurance companies. Barry Diller, who is the head of IAC, he's got a little bit of a different type of investment strategy. Yeah, by the way, he's also married to Diane von Furstenberg, and he's legendarily mentored like a lot of other CEOs. Last month, remember we told you guys about Turo, IAC invested in Turo. Yeah, Turo is the Airbnb for cars. You can list your car on Turrow. You can book a car on Turrow. So when you jump into IAC snack style, you notice that it doesn't just invest in a few companies. It's invested in 150 brands. A bunch of them are public companies and they're all focused on interactivity.

Yeah, it owns a majority of the outstanding shares of Match. So what IAC says goes when it comes to match. If there's a dating app, IAC is technically somewhat invested in them. It's also got Angie's List in Handy, or like the kind of platforms that are helping connect you to the right contractor or that person who's going to put together the IKEA shelf that you're never actually going to do. True. True. And then it has, you're never going to do it. And then it has all of the bookmark go-toes like bookmarked on your web browser,

like Vimeo, College Humor, and Investopedia. Exactly. So, Jack, what's the takeaway for our buddies over at IAC? Most private equity and most venture capital you cannot invest in. Right. You got to be like an institutional this or that. You got to have a huge net worth and you got to have a crazy income if you're ever going to be investing in venture capital funds. It was frustrating watching Uber go from 2019 founding to like 2019 IPO.

There were 10 years that only institutional investors could invest in Uber. But IAC is a tech-focused public company that behaves and invest kind of like a venture capital firm. That's the key. It's a public company so anybody, any retail investor can buy stock. And if you buy stock in IAC, you're also buying stock and hand. Andy, Turrow, College Humor, Tinder, and a bunch of others. And pretty much any dating app you could ever imagine. Jack, can you whip up the takeaways for us over there?

Disney profits diffed because it's investing hard for tomorrow, which costs a lot of money. It's two big bets, Disney Plus and a mere $7 a month. Shake Shack, changed its policy on delivery. Investors loved it. This was like a growing moment for the management team. People were plotting it, a lot of back slapping, a lot of butt slapping. It was big. True story. Also, buying IAC stock, which stands for, for Interactive Corp, by the way, is like buying a smoothie of private and public tech companies.

This is like the Warren Buffett-style investment that has nothing to do with Warren's Buffett-style investments. Jack, time for our snack factor the day. This one's sent in by a great snacker, Alvaro Guerrera. He's got big prize money on his mind. You remember the Fortnite championship that went down in Arthur Ashe Stadium last month in Queens? Fondly, it's yielded like many a snack fact of the day. Well, the top winner of that tournament got $3 million. That top prize is more than golfs, the Masters tournament, more than the Kentucky Derby for horses,

and more than the top winner of the Tour de France for bicyclists. It should not be for the Tour de France. I don't know how those guys pedal so fast. Now, Snackers, loved having you with us. Why don't we do this again tomorrow? We're not worthy. Kehan Hill. 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. like 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.