The Best One Yet - #️⃣ “Slack — the not WFH stock” — Ro goes full pharma. Market bulls & bears. Slack’s surprisingly weak WFH business.

Episode Date: March 16, 2020

Despite your work-from-home lifestyle right now, office IM’ing service Slack announced a quarter that didn’t live up to expectations, because work software habits take time. Direct-to-patient half-icorn Ro has a new strategy: Launch pharmacies so it can vertically integrate your healthcare experience. And with the sudden end of the bull market, we’re looking at the history and reality of market cycles in the USA.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. Welcome back. It is Monday, March 16th. Snackers, I'm doing this pod with Nick through FaceTime. And we are the CDC recommended six feet away from each other. I guarantee it.

Jack, the light looks great on you right now. I just got to say, I don't know what room you're in, but it's fantastic. Snackers, by the way, follow the CDC on Twitter. Great updates. But we're going to give you an update on the insane markets from last week. All right. On Thursday, the government had offered financial medicine. Loans for banks and big cards.

companies. And markets tank 10%. Then on Friday, the government actually offered medical medicine. We're talking public health measures. And markets rose 10%. And then Congress came up with a package that whipped up two weeks of paid sick leave, paid family, medical leave, and some enhanced unemployment benefits. Not to mention free virus testing, additional food aid for people who need it, and student loan interest payment forgiveness. That all happened before the weekend and we decided to make this snacks pot the best one yet. Our first story. the work-from-home economy. Everybody is talking about Slack right now. And everyone's been curious about its latest earnings report. The stock dropped right after the announcement in a bad way. Snackers,

we've got ourselves another baby Yoda toy situation. Our second story is the half a corn of the day. Not quite a unicorn. It's so close. This company is called Roe, like Bo, my old dog, it was a black lab. R-O. Roe is trying to become the Casper of erectile dysfunction pills. Now it's basically doing like every kind of med you're Googling about because you're concerned you have that thing. Roe is an online telemedicine company, and it's launched 10 new pharmacies last week. They prescribed themselves a nice old vertical integration strategy. Jack, third and final story. Last week, we said goodbye to the bull market for once and for all. Let's introduce you to his friend, the bear market. We couldn't have a better time to talk about market and economic cycles than right now.

If we're a were a werewolf, it's currently full moon situation. We'll get to that in a few. But before we jump into all that, there's one thing that Jack and I love probably more than any. anything else. It's when we have a great takeaway for a story the past couple days, and then that takeaway is perfect for another company and another story. Mind blowing. It's like inception. You get the takeaway within the takeaway within another story. It's wonderful. Now, it's even better when someone else comes up with the idea because it shows that they're paying attention and then they hit us up at T-boy Jack on Twitter, at Nick of New York on Twitter, at Robin Hood Snacks on Twitter with their idea. We love it when Snackers do that. In this case, though, Jack and I found one based on last week's

stories. We talked about big beverage, from soda to alcohol, they're all focused on functional beverages right now. Turns out that hostess, like the packaged ridiculously bad for your dessert company, they're working on their own functional beverage. Yeah, Hostas is known for like six packs of tiny little chocolate covered donuts, but they're getting into beverages. If you had a Twinkie like six years ago, you're still working that thing off. They're getting into dessert infused, to get this, coffee beverages. All right, we got Twinkies iced latte. We got Honeybun, ice Lattees. We got ding-dong ice lattes. Unclear what the function is here other than caffeine and sugar. The function is you'll never fall asleep with ding-dongs, Twinkies, honey buns, and ice lattes.

They're like, we added CBD and melatonin, and then we removed the CBD and melatonin. Also, wouldn't all of these things sound exponentially more appealing if they were hot lattes instead of iced? A lot of room to still grow with them, but Twinkies, that may be the functional superpower. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal. about the way. The snacks about the hair ain't food is 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. Robohood Financial, LLC, member FINRA slash SIPC. For our first story, Slack's earnings show that coronavirus is hurting business right now. You got Clorox Bleach, check, Campbell's Soup. Yep.

Zoom. Peloton. Check. Campbell Soup. Yada, yada. Did we mention Campbell Soup? Snackers, if it involves cleaning or laziness, people apparently are like really excited about the company existing right now.

It turns out, though, Slack is not a company benefiting from the coronavirus. No, in fact, we think Slack is going through another one of these baby Yonat Toy moments. We mean, you think it should have a big moment right now, but it actually can't capitalize. Slack is the workplace communication software that emulation. it's real life and makes it possible to have absolutely no face-to-face interactions with anyone while still getting your job done. There are more emoji on Slack. There's probably like 30 times more emojis on Robin Hood Slack than there are on like an iPhone. Honestly, Snackers, run yourselves a little experiment here, Jack and I like to do. Try not using any English words in a Slack message the entire day just to respond with emoji. Or you could pull a Nick and respond to every text message I send with that one emoji that has a huge right eyeball, tiny left eyeball and tongue sticking out.

I laugh every single time. No one knows if that guy's crazy, silly, what's going on? He kind of looks like he has a mental problem. So you'd think that an indefinite period of work from home for white collar America would be great for slack. I mean, you got to get the corporate and TPS reports out to outside counsel if they're going to be C-C'd for the cross-functional team meeting, Jack. It turns out, though, Thursday's earnings report had super high expectations. We didn't see positive results, though.

All right, Snackers, Jack and I whipped up the old let's go Pepsi Coke on. this thing. Let's compare Work from Home stock, Slack, and Zoom. Yes, these are the two stocks that everyone's talking about with Work from Home. So first, sales growth last quarter, which might I add was pre-coronavirus in America. Slack's were up 49%. Zoom's were up 78%. Zoom wins. Second category. Sales growth expected for 2020. Slack is expecting 35% growth. Zoom expects 46% growth. Okay. Another point for the video communications company. Third category, app store ranking as a Friday afternoon on iPhone. Zoom number one. Slack number 162. Zoom wins again. Fourth category. Stock price movement over the last three months. Zoom up 100%. Slack

flat. Barely budged. Same thing. Now flat sounds bad compared to 100%, but flat over the last three months is actually really good, considering the S&P 500 has dropped by 22% over that period. So true, but it is no Zoom. So, Jack, what's the takeaway for our buddies over at Slack? Coronavirus will probably delay big office changes. Snacker Zoom, the video service? It's way easier to implement. Set up a corporate account, include a link, and boom, it's in your calendar.

You just click and you're using the product. But switching from, like, Microsoft Outlook to Slack require shifting behaviors, overcoming corporate bureaucracy, sales liaising, time, meetings, in-person orientation, sales pitches, a whole lot of stuff. Can we just say that liaising is the best verb ever? And Jack, if you say it one more time, I would be very happy. No, Slack requires training and transitioning away from Microsoft. We're talking teaching Bruce the difference between a channel and a direct message.

And then you got to instruct Wendy about not posting about her lunch plans in the general channel. We've all been there, Wendy. Big office changes like transitioning to slack, it's not really working when everybody's working from home. For our second story, we got our half a corner of the day here. Roe started out selling direct-to-consumer erectile dysfunction meds. Now it's expanded to pharmacies so it can literally put on that white coat and directly put the pills into a jar and send you the pills. Snackers, you know what Casper already did with mattresses?

Direct-to-consumer mattresses. Roe is doing the same thing for Viagra. and has earned a $500 million valuation. Now, Rose actually got two brands going on. First, it's got its men's brand for men's health called Roman prostate problems to hair loss. They kind of cover you. I actually would pronounce it differently, Nick. It's not Roman, which is like gladiators in the Coliseum.

Aggressive. It's Roe. Man, I didn't get that until telling this story. You got to kind of throw a little comma in there. Also, Roman.com was taken, so their get Roman.com. Also, their website looks like Underarmor basically threw up on it. Meanwhile, its women's brand is Rory, which covers everything from like hot flashes to herpes. Rory, they must be Gilmore Girls fans. Also, the website is like six shades of millennial pain.

Now, here's what Jack and I found fascinating about the strategy behind Roman. Roman's core business is unearthing subtle policy and patent situations in the healthcare industry and then exploiting them. Aggressively. First, for example, Roe noticed that the patent for Viagra expired, so it basically started selling the generic version of Viagra. Yep. This is how this company launched with erectile dysfunction pills, but they didn't go with that tiny little blue pill look. No, no, no. And they also didn't have commercials of, uh, who's that coach, Mike Dicca throwing footballs through a tire. No, instead they wrapped up the pill so it basically looked like it was wearing athleisure. What'd they do next? Second was telemedicine laws in the United States have changed. So Roman then started employing doctors. You'd go to their website, describe your

problem, and they would digitally prescribe you a prescription. And by digitally, I think Nick means they would text you what to do, basically. And then the third thing that they notice and jump on was a gag order rule that was slowly going away. It turns out the pharmaceutical industry somehow managed to pass a law that forbids pharmacists from telling you the lowest price drugs unless you ask. Yeah, many pharmacists can only talk to patients about prices if they're asked by you about what other prices are out there. But now there is momentum to changing the law. In fact, President Trump supports it so that Doctors and pharmacists can basically say, by the way, I've got another drug. It's the same drug, but costs like one-tenth as much. And that's what brings us to today's Roan News, that they're launching

their own pharmacies so they can start distributing around the country much lower-priced medications. Now, we don't think they're going to have storefronts like Dwayne Reed or Walgreens, but they will have 10 pharmacies throughout the United States that can distribute directly to customers 500 different lower-priced medications. We're talking like five bucks per month per percent. description, diabetes to high cholesterol. Jack, what's the takeaway for our buddies over at Roe? The next challenge for Roe, manufacturing your own drugs. Snackers, here's the funny thing. Roe's first business is selling the generic version of Viagra. Yeah, this was a crazy story. It does so by putting nice branding and a good online customer experience on a product Viagra that already exists.

But the same company that actually makes Viagra and sells it for 60 bucks a pill also makes the generic Viagra that Roe is selling for only like two bucks a pill. Right. Viagra and the generic version of Viagra, they do the same thing. And they're both ironically made by the same company, pharmaceutical giant Pfizer. Which means that Roe is actually buying its products from Pfizer now. The same company it's trying to disrupt. Roe owns the doctors prescribing the drugs. It owns the retail sites selling the drugs. It owns the pharmacies distributing the drugs. We think the next step is manufacturing the drugs. And that whole thing is called vertical integration. That is what Roe is doing in health care. For our third and final story, Snackers, the bull market is over. We know what you're thinking.

We know what you're wondering. What comes next? The answer is easy. We got another economic and market cycle. We're pretty much like werewolves in this economy. It's a boom and bus situation. Your freaky Jekyll and Hyde going on. That's the American economy in a nutshell. Kind of like Nick's and my run up the hills at the Stanford dish last week. We were sprinting up, exhausted, and then like tumbling down, panting and rolling. That was awful, that final part. Now, Snackers, a bull market, you're probably wondering, what does this look like technically and non-technical? Actually looks like the past 11 years, Nick.

Yeah. Booming times, they're called bull markets, and there's a technical definition. Technically, once the S&P 500 has increased by 20% from a recent low, you're in a bull market. In a bull market, the economy is usually growing fast. and then you've got low unemployment as well. All right. What does a bear market look like, Nicholas? If you're curious about a bear market, you look outside, boom, it's what you're seeing today.

Yes, bad times for markets are called bare markets, and it's got a technical definition as well. Once stocks are down 20% from their most recent high from the S&P 500. Right. And I think we hit that on Wednesday last week. We officially crossed the 20% down threshold. And once we cross that threshold, then you tend to get into the territory where there could be economic recessions and there could be higher unemployment. All right, a recent bear market history run down by Nick and Mate. The first was the dot-com bubble of 2000. When it popped, we got a bare market.

The S&P 500 fell by, get this snackers, 45% over a two-year period. And then way back in 1929, I think Herbert Hoover was president. We had a epic stock market crash, which led to the Great Depression. Get this snacker, stocks fell 83% in less than three years. And of course, we've talked about this last one before, but the financial crisis of 08, you know the story. Nick and I were in bunk beds at Middlebury Cod. It was a wonderful time. And in case you're wondering, snackers in the United States, these bear markets, they tend to be a little bit smaller and shorter than the bull markets tend to be. Now, the government plays a crucial role when it comes to bear in bull markets, because everyone likes bull markets more. And it's the government's job to try to make

bull markets happen more. The government's like trying to cozy up and become friendly with bull markets. Meanwhile, it's kind of like, hey, you can't sit at this table with us, bear markets. So during a bare market, Americans like you and me, we get unemployment checks if we need them. We hopefully get tax relief. And a lot of times the government goes out and spends money to generate economic juice. And during a bull market, you tend to see those unemployment checks. They go down in the mail. And the government is supposed to kind of help out in bad times and try to make that bull market continues. Yeah, you kind of like build up a rainy day fund or like our roommate Dave, you build up like 12 liters of Purell in case things go badly. Definitely not something Timmy was doing.

So Jack, what is the takeaway for our buddies over in the markets who are cycles? If you can zoom way out, American history is actually just one long bull market. Snackers, the U.S. economy and markets, they follow a cycle a lairwolf style. Kind of like a werewolf, and it's currently a full moon because look at the stock markets, we have a ravenous, angry beast on our hands. It's aggressive out there, but things are usually quite pleasant, a lot less volatile. And U.S. stock markets have ups and downs, but the ups tend to be longer and bigger than the downs do historically. The U.S. stock market has risen 10% per year.

Now, Nick, for the last few years, we've had gains bigger than 10% per year. So we kind of should have expected a correction like this and a bare market to come. We're in a bad year now, but we expect a bull market could return, but again, that's never promise and you never know what's going to happen. We're not promising. Jack, can you let me borrow whatever moisturizer you're using, and can you whip up the takeaways over there? My hands are so dry from all the hand washing, man. I need moisturizer.

I know. Slack has been grouped in with Zoom, Clorox, and Campbell Soup as coronavirus winners. But big office changes like Outlook to Slack are kind of hard when everyone's working from home. Our second story, Roe is slowly taking prescription drugs the way of Casper, online, and direct-to-consumer. Ro, your next challenge, make the drugs yourselves. Let's finish this vertical integration already. I third and final story. The U.S. stock market is officially in a bare market. We're down about 27, percent since the last high less than a month ago. Snackers, booms, and busts. It's the U.S. economy in a nutshell. But the booms tend to outweigh the busts historically. Now, Snackers, time for our snack fact of the day. This one is the second half to a sister-sister combo. Becca, sister of Hannah, who lives in Bristol, Tennessee, had to share with us her own snack fact.

Well, Hannah is a snack fact legend, which she sent in the fact about Oreo. It was great. Which I can't recall. It was great. Becca tells us that Camel. Coal, Broccoli, Cabbage, Brussels, sprouts, and collared greens all come from the same species of plant. If you look at, like, you know, the Animal Kingdom family tree. And that plant kingdom tree is the family Brasica, Oleracea, of course. I got to say, kale, broccoli, cabbage, Brussels sprouts. They all, like, if they're all humans, I bet you they'd have, like, calluses on their hands. They're kind of tough.

They should have, like, their own sitcom if they were all humans. It just would be a lot of fun. Okay. Another shout out here, Torek Toto from Beirut-Lamon. You now live in Houston, Texas. Good for you. Yesterday was your birthday. So Nick and I got a message for you.

Well, we wanted to say, happy birthday. This is a great week to share your snacks. Markets are going crazy. We're all working from home. Time to do a little podcasting and ask your buddies, H-Y-H-Y-S-D. Have you had your snacks daily? 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, Past performance is no assurance that market patterns will persist.