The Best One Yet - Sprint/T-Mobile dating drama, chip shares plummet, and Mary Meeker invests in our “Unicorn of the Day”

Episode Date: May 21, 2019

Telecom icons T-Mobile and Sprint were supposed to enjoy a $26B merger relationship, but now it may be off — And that halted trading in Sprint stock. Chip-makers like Nvidia and Advanced Micro Devices have fallen 20% the last few months because of one big indirect threat. And Canva is our “Unicorn of the Day” because it was touched by VC legend Mary Meeker.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. This is snacks. Daily is Tuesday. May 21st. And I like this one the most. This is the best one yet, baby. Jack's not even looking. He just did like some fist pump at the wall situation. This one's really good. We like this one more than this. Can I tell you the three stories we're breaking down? Can you please whip this up? We've got to talk about computer chips. We've never done it before, but it's the crazy fast-growing tech inside your smartphones. And they saw a stock drop industry-wide yesterday. Jack, if I were a stock and my second biggest customer in the world, deserted me, I would drop to him. Second story is Sprint. Its stock was halted yesterday.

It was crazy dead. Boom. Pause. Can't go on. First word leaked that the mega merger with T-Mobile was on. People freaked out. Then it leaked that maybe it was off. People freaked out again. Third and final story is Canva. This is the PowerPoint for people who hate PowerPoint. And what is it, check? And it's our unicorn of the day. It just got selected by the queen of the internet, Mary Meeker. She's got a golden touch. the mother of dragons. Before we get into all that, we've got to talk about the big news on campus, can I say?

Yeah, we heard about at Morehouse College the special surprise graduation present from Robert Smith, where he's paying back all the seniors of college debt. You know, some graduation speakers tell you you got to live big and dream big, some pay off all your debt. We all know which one we liked to have. It was quite a finale on Sunday for Morehouse College students, but we noticed a couple other big. millennial like student debt stories over the weekend exactly this was like a ripe time i think because it's graduation weekend people got the hats so the wall street journal did this big like in-depth reporting on our generation yep and they said that we've like fallen way behind on all these adult miles shocker and then they're accumulation buying a home getting married having kids i'm just so tired

of the avocado toast narrative i don't think it's funny and i don't think there's anything wrong with it yeah and then another paper came out that said if you have a lot of student debt it really like limits your career choices right you're going to go into something that you're going to try to make a lot of money and not necessarily that you would love doing, like becoming an avocado toast baker. Right. I've had student debt. It's stressful and it can limit your choices. And that's why we love what happened from Robert Smith at Morehouse College. Right. We know obviously getting rid of debt is a beautiful thing and it's wonderful that he did that. But it's the more nuanced element of this. Now these students, like, without having to pay $400 a month in student loans, maybe they can go become a

teacher even though it pays less. And that means they can be touching the lives of even more people who they never would have touched before. Or maybe they'll become an entrepreneur because they're not saddled with like 20 grand in debt and start that fast-growing avocado toast tech business. I love what happened at Moore House. We're big fans of the nuances behind this story. Now before we go on to our stories, listen to these important words. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something illegal out the way. It's snacks about to hear rain 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. Nope. It's not a research report or investment advice. Not an offer or sale of a security. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, a wild day for that little telecom provider, Sprint. Actually, it's a big one. Ticker symbol S. I'm so jealous of those companies with one letter. Right. It's like Tom on Twitter. How did you get that handle? At Tom. Sprint's stock had to be halted. I stopped. Couldn't do any more business by regulators yesterday. There was that much news. It was crazy.

We broke it down, snack style. Let's get into this thing. Let's take one quick step back. Please. A reminder, the number three and number four wireless companies, T-Mobile and Sprint, they announced that they're going to merge last year for $26 billion. Now, they've got to ask permission from the parents if they're going to go through with this thing. Exactly.

It's a big deal. It's a big deal from the Department of Justice. And the federal communications commission, basically. Now, the last time big wireless companies tried to merge, it was AT&T, trying to acquire T-Mobile? Take me back to 2011 over here. 2011, it got blocked because regulators said, we need competition in this industry. I don't even think I was eating Chipotle then. I just found out about this stuff. Now, Monday, yesterday, the FCC chairman announced he's recommending approval of this merger.

Boom, people find out about it. Sprintstock surges 27%. And T-Mobile rose 6%. This was a big surprise because the word on the street is that this deal is probably going to get blocked. Exactly. So, what was T-Mobile thinking? Team Mobile is basically like, I know that merging number three and number four could be bad for society. They're anticipating that, you know, the parents in this situation are going to say niche, niche. I know you want competition, but I promise I will make up for it and I'll do it in three ways. Right. These are essentially concessions. Basically what they're saying is, look, mom and dad, I want to date your daughter. And to do that, I'm going to clean myself off a little bit.

The Department of Justice and the FCC are mom and dad, and they're both skeptical of this merger. So T-Mobile promised the FCC that it will not increase prices for three years if they approve this measure. It's going to give up smoking, no tattoos. And it also promised to expand its legendary upcoming 5G network to 97% of the United States within three years. Exactly. So not just New York and Los Angeles and San Francisco will get this high-speed wireless. It'll be for America's Heartland as well, which is potentially an unprofitable move. And then they threw in just one more to sweeten the deal and say, hey, look, I'm putting my best foot forward.

I've shaved. I'll clean myself up. I will sell Boost Mobile. That's that final deal ceiling. Which is like, it's okay. It'll keep a little bit of competition in there. There will be a fourth company. Kind of nice. I don't know. It's okay. So the FCC was convinced by that deal, but the truth is, the Department of Justice, a different division of the government actually decides. So this is when the rest of the drama happened. At the end of the day, what's going on here? Well, Bloomberg reported late that Department of Justice still isn't that into this merger and they're still leaning towards blocking. out dad may not be so cool with the whole thing and doesn't think getting rid of the tattoos is enough. So that's when Sprint stock got halted because shares had been up 27 percent and then they

freaked out all the way down to like just 5 percent up. That's when shows got halted and they ended up about 16 percent high. A lot of drama, a lot of burnbook action. So Jack, what's the takeaway for our buddies over at Sprint and Timo? When power gets this consolidated in an industry, consumers tend to lose. Now these concessions we just told you about that the Telecom companies want to make. Those would just be for a few years. They'll only last for three years. And then it's like the Wild West. They can do whatever they want like jack up wireless plan prices. Which consumers like you and us wouldn't love. Right. So they've been competing against Verizon and AT&T. And if there's just a third competitor to Mobile slash Sprint, you know what we're thinking. You got a you got a three op-a.

We got a three-oply. Not a monopoly, not a doopoly. A three-oply. Three companies basically behaving like a monopoly. And the concern is that if there's only three companies for the whole country for wireless, there'll be just no pressure to keep cost down. They're making short-term promises, and that means they've only got short-term goals. Long-term, we could all pay higher prices. For our second story, Jack, I'm going to pull a switcher-ro on this one. What is this casual Friday? I'm bumping this up in the rotation. We typically end with our unicorn of the day. Let's do it second. I like where you're going. Canva just hit a $2.5 billion dollar valuation on a fundraise from the Queen of Tech. Mary Meeker.

She knows who you are, even though you don't even know. You don't know her, but you're about to. The company is Canva. They make graphic design software. Australian-based company. The first Australian-based company we've covered on the podcast. Which is about time. Now, they've got 15 million monthly active users.

And they have 500,000 paid users already. This is a profitable software company down under. Now, this is a unicorn. It's not a brandicorn, which we talked about last year. We spoke about them before. This is a true tech company, and it's worth over a billion dollars, aka Unicorn. And they just raised $70 million in order to reach that valuation from General Catalyst, well-known VC, and another VC that's newer called Bond. Bond is Merrimacres Fund.

But let's talk about the business model. Can you break it down for it? There's two ways you can describe the business model. First, it's a PowerPoint for people who hate PowerPoint. You know who you are because you're probably everyone. And if you think Google Slides is the answer, no. Canva is like two steps above that. And then the other thing that it is is like a do-it-yourself graphic design software.

For companies that can't afford a graphic designer, just get Canva for $10 a month. It's got a full-on toolkit here to make you look like macha-friendly millennial cool. Exactly. Look, if you need to make like a business Instagram post or create a Facebook page or announce an unveiling of a product, this thing, like, sexifies the whole situation. They've got beautiful pastel colors. They've got clear, crisp fonts that you cannot find on Microsoft Office. You use this thing.

People are going to wonder if you interned at Pixar. True. Pro tip for the college students out there. Use Canva for your next presentation in class. The whole class is going to just like applaud. They're going to look at you and be like, what have you been doing? Working on Toy Story 5? It's a beautiful thing.

And they have a free version and that's where they get your foot in the door. But then they would try to upsell you to the $10 a month subscription version. Exactly. You know, when you get that $10 a month, one you can access like their process flowcharts. Jack saw this thing. He started blushing. Gorgeous, gorgeous process flow chart. It made me feel tingling. So the subscription is $10 a month once they upgrade you. And now they're really pushing this enterprise version. Yeah, they currently work with enterprise, just a way cooler version of saying something you're selling to a business.

Yeah. So currently they have like students, entrepreneurs and small businesses. They want to go big. Right. They want to get big companies getting these bigger subscriptions to use for everyone there. So Jack, what's the take? take wait for our buddies looking sharp over at Canva. With Canva, you follow the smart money. We're talking about the key lead investor here who is Mary Meeker. She publishes an annual internet trends report that is like gospel to the tech community. She's got an air game and a ground game. Her ground game is making these investments. Her air game is coming out with this trend report to show that she's on top of the industry. In the past, she's invested in Spotify, Peloton,

Waze, Square. And she's probably made a lot of other investments, plenty of the them that really didn't work out in the company's fell apart. True. But this woman is an Oracle. She's a master of data. She accumulates, like, massive spreadsheet, crunches the numbers, and she draws conclusions before anybody else does. Now, technically, Canva is a private company. So it's not public. We can't invest in it yet. No. In fact, investing is per invite only right now because it's a private company. But Mary Meeker was invited to the table. She invested in the company because she thinks people want to look good online and do it cheap. And when you're looking to,

invest in companies when they're public, you can see who you used to invest them and maybe spot some trends that you want to follow. Or maybe you could borrow Mary Meeker's investment strategy and figure out how you could apply certain aspects to your investments. Mother of Dragons. For our third and final story, American chip companies' nonstop growth is stopping. We're talking computer chips. Not free to lays, not Doritos, not fish and chips for our overseas across the pond crew. Growth in the chip industry is hitting a trade war. speed bump right now and it's a big problem. Because you know what? Smartphones, they need the chips. Without chips, smartphones are really expensive hockey box. That's a Kramer original. Now, we're talking

about companies like Navidia, advanced micro devices, Qualcomm, Intel, Broadcom, okay? These are all semiconductor companies. And they all kind of need new names. Semiconductor is another word for chip. Right. If you want to sound like you know what you're talking about, don't say chip like us. We You don't know anything. Yeah. Pronounce finance and say semiconductor and you'll be part of the tribe. Boom. You just got like $20 extra thousand dollars on your salary if you do that.

Okay. So these chips are like a huge part of the smartphone industry. I think we can stop right there. I think we've explained chips sufficiently. Okay. So smartphones have supercharged the computer chip industry. Now, it used to be just computers that were like eating up all these chips. And now smartphones, like every smartphone has multiple computer chips.

And how many we got globally now? We got 2.5 billion smartphones being used right now by somebody in the world. And on top of that, they're growing fast. China is driving the most of this growth. Right. Remember the Chinese population has gone from like near poverty 20 years ago to like, you know, super tech using mobile paying, like TikTok using complete leapfrog situation from no phone to smartphone. Just like my dad, Ted Kramer, who went from no phone to like iPhone 8XR plus. Jack's dad's that guy.

he still signs off his Apple emails, sent by thumb. My dad loves writing physical checks and mailing them to people. Now, here is the big thing for these chip companies. We just mentioned Navidia and Advanced Microdevices, who are the big ones. Get this number. They have been the winners of this rise in smartphones. Their stocks rose by 10 times in just the past two years. Because they are not making the smartphones, but they're making the essential part of the smartphones.

The chips. And those chips are probably going to get planted in like smart refrigerators. and smart appliances in the future. So everything's been great for these chip companies for the last few years, but then suddenly things dropped across the industry. Last week, President Trump announced that Huawei, the second biggest smartphone maker in the world, based in China,

is being blacklisted from doing any business with American companies. On worries about, like, national security. Exactly. So the executive order says that these American chip companies we're talking about, they cannot sell chips to Huawei anymore. Now, you heard that story in your snacks, But what you didn't hear is this next level of how this has an impact on completely different industries, all ripple effect. Huawei is the number two phone maker in the world, and it currently spends $20 billion a year on chips from American companies.

And as a result of this change, they won't be buying as many chips. And that means stocks of the whole semiconductor industry were down like 20%-ish in the past couple months because of this escalation of the trade war, because China is such an important market. Jack, I'm chip stress just thinking about this thing. So what's the takeaway for our buddies who are making chips? I hate to say it, but Apple could be next. Now, China's smartphone industry has a big problem right now. Their backs are in the corner right now. Not only do they not have access to American chips,

they don't have access to California-designed Android software from Google, which runs those things. So in response to this Huawei blocking by the U.S., China could retaliate by banning an equivalent like Apple. Apple is like the only thing China can still make a threat against the U.S. for, and HSBC announced yesterday, they're downgrading Apple stock on fear of retaliation. So whether it's Apple or chips, you always got to be looking not just what's the direct threat, but what are the indirect threats and repercussions?

The indirect threat to the chip companies are Chinese customers. Chips. Jack, can you whip up the takeaways for us? Sprint and T-Mobile are offering customers short-term concessions, but long-term they're probably going to lose. They got to win over the parents. It's always the key. Second story, smart money just invested in Canva because good, design is important. And Mary Meeker knows good design.

Third and final story, American chip companies just lost their number two biggest customer, Huawei. A bunch of chips were actually heard in the making of this story. Now, time for our snack fact of the day. This one's just straight to the point, and I love it. You can just tell this to anyone. The average Amazon Packer can completely package a package in 15 seconds. See, the real snack fact is that Jack was able to say that in one take.

But it's a great thing to repeat if you can repeat it because it's not easy. You got to work. 15 seconds. That's a lot of duct tape and that's efficiency. A couple other awesome stories we're covering in our daily newsletter, Robin Hood Snacks. Ford Motor Company just laid off 10% of its workers. That's 7,000 people. That's rough.

And then Slack is going to be going public very soon. And it just announced the ticker symbol its stock will trade under. We love it. SLAK? Nope. W-O-R-K. That is a boss move. By the way, perfect timing because I'm pretty sure it's share your stuff.

Snacks Day. Proposed, seconded, confirmed, it's now law. Whoever you're sitting next to you as you're listening to this or walking next to you, just tell them that you're enjoying your daily snacks and get them potting. We would love it naturally that will help us grow. And we think they're going to love it too because we love you guys. Thank you for snacking with us. We will be back for you tomorrow. I'm in. 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.