The Best One Yet - Super Bowl powers Pepsi to all-time high, Wish is Earth’s #3 ecommerce company, and Kansas City Southern Railroads jumps 4% (thank Mexico)

Episode Date: April 18, 2019

Pepsi rose to an all-time high as advertising’s rescued its soda biz. Wish is reportedly raising $300M to reach an $11B valuation as 2018’s most-downloaded ecommerce app. And you haven’t ridden on Kansas City Southern Railroads, but it just jumped 4% and has a special stake in geopolitics.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, April 18th, and this is the best snacks daily we have ever cooked up and served up. Markets inch down on a report from the Federal Reserve Bank that the economy's growth will only be, quote, unquote, moderate. It's the worst word. But we got three great stories for you. The first one is from PepsiCo, based in Westchester, New York. It hit an all-time high, even though sugar and aspartame and salt are all kind of on the naughty list. This is a story about snacks from snacks. Second story, Kansas City Southern Railroad. You've never heard of it. I haven't. You've never rode on it.

Never. But they've got a stock, and it rose 4% yesterday. And it is the Amtrak of industry. It plays a special role in our economy. Third and final story, there are reports that Wish is the third largest e-commerce platform in the world and is now worth $11 billion. It raised $300 million because it is the Amazon of cheap things. Now, before we jump up,

into all that. We were putting in a lot of work, you know, preparing the snacks daily for today. Apparently, Beyonce, great snacks listener, was working harder. Yeah, we had three stories for today's snacks and like one of them or two of them leaked to the press. I took a, you know, I almost took a nap midday. I was exhausted from all this one. Meanwhile, Beyonce, on Tuesday night, rolling into Wednesday night at midnight Pacific time, 3am Eastern time. Very specific. She dropped a new documentary on Netflix about her 2018 Coachella legendary concert. A year from when she actually did it. because Coach Hell is going on right now. And that's not it.

No, she wasn't, you know, she wanted to do a little more. Same moment, she drops a 40-track live music album on Spotify and Apple Music. I'm good, you know, I don't write songs. If I wrote one or two, I'd be happy. Ten is a, is a stretch. Look, everybody. Right now, Beyonce owns the cover of Apple Music, Spotify, and Netflix. And she did it all in one day.

Give me a break. Now listen up to these key words. after hearing 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.

Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Pepsi stock just jumped to a record high, and it's thanks. And I don't want to get weird about this, but it's thanks. the snacks. It had a good soda sounds. It had a pretty good soda sales. Let's talk about soda. Soda? I'm not a big soda guy now.

I drink soda at movie theaters. When you're a kid, you're obsessed wherever you can get soda. I remember the first time I had surge, which is, I don't know if you remember surge. Mountain Dew on steroids. It sounds like it takes three years off your life. My parents, they would treat us to misoda, which is milk and soda mixed together because, I don't know, calcium. It's not called misodeled. It sounds concerning in retrospect. Now, here's what happened with Pepsi. We've been following Pepsi for a while here at snacks. And last we checked,

it's Pepsi Mountain Dew, and Gatorade sales weren't having that much fun. People are drinking water. They prefer sparkling water. They don't want that sugar stuff. But suddenly, these unhealthy soda drinks are having their best life. They look gorgeous. Overall sales for sodas jumped by 5% compared to last year. And the Pepsi family of sodas rose 3%. Now, also Pepsi just bought bare foods, nice health snacks, and soda stream because, you know, it just wants to get in better shape. And it also has Frito-Lay. So Pepsi is a big snack company and a soda company. Everything seems to be up by like 5%. Right. It's Frito-Lay sales jump 5%. It said that was because of the Super Bowl. The CEO then said, what was the word? Well, 5% doesn't sound like much. The CEO said this kind of

sales growth is extraordinary for Fritos. He even then said, it was so good and this was kind of a humble brag, that next year probably won't even be as good because that was just so extraordinary. We're impressed. Investors were impressed. The stock is now at a record high. So snack style, we jumped into it a little closer to see what's going on with these soda sales that surprised us. Turns out it's not the sugar soda sales that are just living their best life. It's actually Pepsi Zero Sugar, which is formerly known as Diet Pepsi Max, formerly known as Pepsi Max, and now it's Diet Pepsi Sugar. It's gone through like a couple of identity. It's a couple of crises, I think we could say. Now, get this, sales of Pepsi zero sugar. Are you sitting down, Jack?

Yeah. Jumped 29%. That's crazy. The sales were so good for Pepsi Zero Sugar that it's launching a new product called Gatorade Zero Sugar. Next up is Water Zero Sugar. Just throw the zero on anything and it works. Another brand doing well is bubbly sparkling water, which is a major LeCroix competitor. Anything that's just sparkling with a hint of flavor is like really. having fun right now. A driver to success this quarter is advertising. Big advertising. Pepsi Zero Sugar. Actually, no, Pepsi in general, got a great Super Bowl commercial. Michael Boubley starred in a bubbly commercial during the Super Bowl. Love that one. Bubbley,

bobbly pronunciation. Canadian jokes. Yeah, it was great. And Pepsi Zero Sugar had an ad campaign all 2018 long. So, Jack, what's the takeaway for our buddies sipping large over at Pepsi's? Old school advertising? I'm telling you, it can still work. Jack, love it. me just back that up. The CFO literally said in the earnings report, quote unquote, advertising is working. Now, Indra New You was the longtime Pepsi CEO. Legend. Retired last year. The new guy, Ramon LaGuarda. He comes in and he says, I'm not going to try anything really extraordinary here. But we're going to pump up the ad money. I'm just going to do more ads because nobody has an urge to like start drinking Pepsi. But if you see a Steve Correll, Cardi B, and Lil John ad,

which we did about drinking Pepsi instead of Coke, you might start to drink Pepsi. He has increased by double digits the spending on ads. Now, it doesn't mean Pepsi's out of the woods yet because the company is still dealing with a turnaround. Yeah. Healthy food is still kind of a trend in America. So Pepsi is cutting jobs, shutting down plants and tightening its belt. But it's not cutting back in ads. For our second story, Kansas City Southern stock just hit a three-year high. And we think you should hear about this one. The not so little. engine that could. And it just did? It just did. Oh my God. I've been waiting to cover this as a history major. Can I throw some dates out here, Jack? Please do. Let me in line. Founded in 1887, same year as the first ever Groundhog Day. Grover Cleveland call. And he was like, let's make this a national thing. This earnings report was probably distributed via inter-office telegram with their chief finance conductor on the line. So Kansas City Southern's core business is freight, moving physical stuff, from the United States to Mexico and vice versa. We're talking about like 6,700 miles of track here.

Now, earnings were announced yesterday. $675 million of revenue was up 6% from last year. Stock jumped 4%. Now, classic snack style, Jack and I jumped into the earnings report, and we found some really funky things. The train biz has some very unique metrics. We kind of love this. It's almost, I'm going to say it's kind of adorable.

Here's one. Gross velocity for Kansas City Southern rose to 12 miles per hour. That's just the average speed the train's moving. They're going. How about this? The train length. The average length of these trains is like 6,000 feet. That's flat from last year.

And that explains why they're only moving 12 miles per hour. Nick, that's almost, that's over a mile long. And then get this. If the trains are going too slowly, there's a problem. People can jump on the trains and steal stuff. The train is a mile long. Like there aren't guards guarding the train. No one knows it.

And it's over a mile. Theft and vandalism is a recorded like, financial metric for this company. They're actually concerned about that and they have to financially note it. Now, this is why Kansas City Southern, by the way, love Kansas City. Great barbecue. Sticky barbecue. Very good. Ketchapy. Made in Mexico is a really big deal right now and that's a really big deal for Kansas City Southern. Kansas City Southern owns a subsidiary that does lots of freight in Mexico. And since 1995, Nick, Mexico has become a manufacturing hub producing stuff for the United States. Except the United States has seen its car production, for example, fall during that same

period of time. Yeah, and Mexico has quadrupled car production. So trade between the U.S. and Mexico, this is Kansas City Southern's core biz. It is their bread and butter, commodities, cars, food construction. If it's getting manufactured one ending up in the other, it is going through Kansas City. So trade with Mexico is this company's lifeline. It's competitor, Union Pacific, which is also from the history books. Great name. It's. It's a very name. It's a not as reliant on international trade with Mexico, it's just focused on the United States. Exactly. So, Jack, what's the takeaway for our buddies hauling along a 12 miles per hour at Kansas City Southern? Some stocks are proxies for politics. Get this. We check this out. The day President Trump took office and U.S.-Mexico relations became a focus, shares hit a low at $67. They plummeted.

Since then, there's been some tariffs here and there, but the U.S., Mexico and Canada actually have a new trade agreement. things are okay. So the shares for this company have doubled. Investors are relieved. But this is what this really means for you as you're listening. Is that some political trends you may be noticing really are reflected in companies related to them. And it's something to keep an eye out for. Kansas City, Southern is one of them for U.S. and Mexico trade relations. For our third and final story, we are dying to talk about Wish because this company just raised $300 million and hit an $11 billion dollar valuation with a B. This story's a shocker, Nick. Wish came out of nowhere. Jack, I had to pull Jack off the floor. This is the number one most downloaded app for e-commerce

of last year. And it is the third largest e-clamers platform on Earth. It's got a hundred million users, mostly American. And get this, its name is Wish. Now, it was founded by two programmers from Google and Yahoo, got together and said, you know what, we're going to build a company around basically two goals. Absurdly low price. That's one of the goals. And then the other is an absurdly obscure variety of things. Now, this company is based in San Francisco.

Right. And they're targeting one particular American demographic. Exactly. The 41% of Americans who don't have quick access to $400 in cash. Right. And to cater to these people with extremely tight budgets, they get 100,000 Chinese low-cost manufacturers to offer the low-cost manufacturers to offer are the lowest price, and then they put those goods on Wish.com.

Exactly. You're thinking of, I don't know, like a kind of doll-themed toenail clipper. They will find a manufacturer to make it and have them bid against another manufacturer to make this happen. It'll be on Wish.com for like 11 cents. 10 minutes later. Now, the thing is, Wish is one of the top 10 valued private companies in America right now. It's up there with like Airbnb, Uber, Slack. And then there is Wish. Now, the website itself, to experience Wish, is a very,

unique experience. It's like an online dollar store that just had a hurricane blow through it. Right. And then it's putting everything on sale from $1. You can get an ab toner. You can get lots of abtoners. You can get as many abtoters as you want for ridiculous price and then throw in a corn shuck. Let me walk you through the customer experience. Please do it. Go to wish.com. They immediately make you sign up for an account. So that might be how it got 100 million downloads, because you can't go there without down. You got to register. You got to be a wisher. Immediately, the first thing I see is a pair of shoes that look like. Adidas boosts.

Shockingly simple. But it says that they're 94% off. They're $11 instead of $200. You know how Adidas shoes have the three stripes? This had like a fourth stripe. This had a fourth stripe. Yeah. Now, in terms of Wish's strategy,

rumor is Amazon and Alibaba both put in offers to buy the company a few years ago. Right. It rejected those offers. Now it's worth $11 billion. The reason Amazon wants Wish out is because Wish is dominating this low-income segment of America. It's getting it hard.

So Jack, what's the takeaway for our buddies over at Wish? If you spend enough money, you will earn customers. Wish is proving, man. Now, we were just talking about Pepsi. They were focusing on big ads, big games, big TV spots. Wish focused on completely unconventional ads. I'll be completely honest with you. The first time I read Wish was on an L.A. Lakers jersey.

They had the advertisement on LeBron James's shoulders, and they paid $30 million to get it for three years. They're going unconventional because they also were some of the earliest adopters Facebook advertising and spent $100 million a year beginning in like 2015. They are all over Facebook advertising. And then the last thing, they let you earn discounts on products if you log into the website like seven days in a row. That's how you get it. They get you to come back and they can get the price just a little bit lower.

By the way, this company is getting a lot of flack for pushing forged and counterfeit stuff on their website. Rightfully so. Toonail clippers. Jack, can you whip up the takeaways for us? Pepsi is back. its stock is at a record high and it is doubling down on old school TV. If something's not selling, just stick the word zero in its name.

Kansas City Railroad Zero shows that some stocks are proxies for politics. I just love that they keep track of the train like speed. Third and final story, wish.com. If you spend enough money and offer enough stuff for cheap, customers will count. Spending $100 million on Facebook ads probably doesn't hurt. If you didn't know about Wish, now you know about Wish. Now, time for our snack fact of the day. This one was a kind of a wild report that came from the financial services firm Black Rock.

It's kind of rocking Wall Street right now. Black Rock believes that by 2060, only a few states in the U.S. will benefit from climate change. It's a handful. And the rest will get crushed. The rest of us, it is not pretty. Now, the potential winners are Maine, Minnesota, Washington, and Oregon. I guess like cold weather is good for skiing, but overall cold weather is pretty rough. It's pretty hard for living.

Florida and California are among. the biggest losers of climate change. Although technically we all lose in that situation. Now, yesterday, lots of big news. Check out our Snacks Daily newsletter to learn more. First, healthcare stocks, health insurers, pharmaceuticals, every healthcare stock seemed to be down yesterday. And then, word leak that Facebook is working on a Alexa killer? Snackers, we got good news for you. You're going to get a three-day weekend. Tomorrow is good Friday. Markets are closed. Snacks is close, too. We will see you again. Monday. Have an amazing long weekend. We will be cooking up some good stuff for you all weekend.

Talk to you that. 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, 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.