The Best One Yet - “Tesla is a 14-year-old LeBron James” — Lemonade goes public. Tesla > Toyota. Walmart’s drive-in movies.

Episode Date: July 6, 2020

Techie insurance startup Lemonade IPO’d Thursday and its stock doubled. That’s actually an unfair problem with finance. Tesla became Earth’s most valuable car company — and then backed it up that milestone with an awesome report. And Walmart is turning 160 of its parking lots into drive-in movie theaters, but it’s not just about kindness and smiles.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, July 6th. Markets rose on some good news about the economy before the three-day weekend we just finished. Jack, before we get into what I got to say, you're looking fantastic. The mask tan line? Sharp power move.

Trying to do my part. Just trying to do my part. Double down on the mask. Two at night, one during the day. Jack, what else is going on? Good news for the economy on Thursday. We learned that the unemployment rate in America dropped to just 11 percent. still historically bad, but better than in May.

And it turns out that was a week before phase number two of wave number one of coronavirus just started hitting. True, those are pre-second phase of wave one COVID numbers. Also, we should point out the question in this econ data, are you employed? Kind of a direct awkward question. It's like my restaurant is kind of open. I'm kind of getting paid. I kind of don't know what my situation is.

A lot of hard answers there, but we managed to whip up the best snacks daily ever. Better than what we've ever done. Our first story. when bankers hand you a lemon valuation, you make Wall Street lemonade. We're looking at what's oh so right and oh so wrong about lemonade's IPO. For our second story, Tesla just became Planet Earth's number one most valuable car company passing Toyota. Not that hard to do. You've got to press the accelerator to pass a Camry. Now, then Tesla backed up the milestone with some absurd numbers.

For our third and final story, Walmart is doing something awesome for the United States. It's pulling a transformer and turned 160 of its parking lots into drive-in, move. V-theaters. That sounds amazing and it sounds very generous, but they're also going to be strategically making a lot of money off this. Walmart is not UNICEF. No, it is not. But before we get into those stories, it's our duty to update you on the most volatile market in financial markets right now. We're talking, get this snackers, the cheese market. This story is not for the lactose intolerant. cheddar cheese just dropped to its lowest level in two decades, but then bounced up to its highest price ever. Get this, like oil.

cheese prices are set at a commodities market in Chicago. This isn't just like any commodities exchange. They have absurdly specific rules because apparently they got to keep things in line when it comes to dairy. It only happens 10 minutes a day at 11 a.m. Chicago time. Every day, they decide what the price of cheese is today. This is like when like the lobster folks come in at the docks in Maine and just dump off the lobster and then boom, they're out of there.

You got like the whole industry waiting in line at the docks for that one moment every day when the lobsters get dumped onto shore. Myra, I got a four pounder here. What do you think the price is? No, there is a huge number of buyers and sellers of dairy, and they only trade 40,000 pound truckloads of young mild cheddar. That is the standard. And the specific unit of measurement for cheese is a 40 pound block of cheddar, which is Wall Street's equivalent of a barrel of oil. Or our equivalent of a lift of market value. Now, it turns out when we jumped in snack style, the price of cheddar is now trading at $2.80 a pound. Prices are all over the place as restaurants like shut down, reopened and shut down again,

and that price volatility is affecting mozzarella and Parmesan too. Yeah, parm prices off the charts. So that means Jack and I are highly objecting to the claim that cheese is just a commodity. It's so much more. A commodity means every single one is the same exact thing, but Cabot cheddar does not equal Domino's mozzarella. Dairy deserves better. Let's hit our three stories. You're tuned in the snacks daily.

We spoke to the lawyers. Snacks about to hear rain food and said candy. They don't reflect the views of the Robin Hood 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, lemonade stock just more than doubled on its IPO day. It's a digital first insurance company that has been covered in a monsoon of millennial branding. Jack, do you smell that? It's the avocado they've spread over the company. The company is four years old, has a ton of pink all over their website and their app. And they use this person called Maya, who is apparently an AI-powered bot that pretends to be an actual insurance salesperson. So Snackers, Jack and I jumped in Snacksd out. We wanted to get a quote. We use the service.

And the first thing you do is you go to the website and Maya starts asking you questions. Yeah, let's say you're trying to get your apartment insured, which is actually a law, I think, in like most cities that have apartments. Appreciate the fine printout. Thank you for that. The first question Maya will ask you is, do you have a fire alarm in your apartment? And then she'll say, do you have a dog? And then they'll say, how big is your dog? And then you'll be like, too many questions, but then she'll ask, how's your square footage? And then they'll be like, can you send me a picture of the dog? Just kidding. We're done with the dog. No, Maya is great, but then she says, boom, 15 bucks a month. That's your renter's insurance. That took five minutes. Right. She basically figures out the value of your apartment, how much it'll cost for them to insure it, and then they make you a quote. It's very quick, very fast. It all happens over the app. And that's the business model. The result, kind of some underwhelming numbers, Jack, what did we see? They made $67 million in revenue last year, but their loss doubled to $109 million. So that means if you're paying $15 a month for your one bedroom and apartment insurance, Lemonade is spending $39 just to get you eliminating.

Yeah, they have way more cost than they have revenue right now. Now, here's what they pitch as their differentiator, that their mission is to maximize trust and social impact. We're talking an insurance company. The best insurance companies are the ones that collect premiums from apartment renters and then never have to pay out when you actually make a claim on it. So they take part of your premium and they donate it to charity because they think then you'll trust them. And when there's like a hole in the wall you need fixed, you won't lie about how big it was. Right. They're hoping to minimize insurance fraud and have you be like honest about how much your damage actually was. But the weird thing here is they're also trusting you to believe Maya is this person who's helping you get insurance on the website.

Right. They're really trying to pass Maya off as a person you're actually talking to. When we all know it's just a bot, it seems pretty dishonest. It feels hard for us to calculate here. But Snackers, we jumped in Snack style also to the S1 IPO filing paperwork because this is a soft bank company and there's some entertaining stuff in here. We've talked about SoftBank. They were the main investor behind WeWork. And so that helps explain Lemonade's astonishing on. unprofitability. They're invested in by soft bank. Yeah, this thing reads like Shia LaBouf started collaborating with Adam Newman and Mary Poppins. Jack, what do we see first? The first words of the S-1 document, Our Lemonade Stand, is a cocktail of delightful experience. Then they gave a history lesson on insurance in the 14th century agricultural age. Nick, they mentioned the word revolution seven times

on the first page. And then they came out this poetry where they literally said, we commit to planning, not plans. We are transparent, except when we're not. There was an abundance of fluff in this financial document. Either a bank wrote this or someone doing a screenplay. But Snackers, throw that all away. Don't worry about the fluff. It all comes down to Lemonade being a gateway business. 90% of Lemonade's customers are first-time insurance buyers, and Lemonade is not making any money off of those first-time small one-bedroom apartment insurance buyers. No, but it knows that after your one-bedroom renting, you may upgrade to like buying a home and then you've got a family with a three-bedroom five years later. They'll lose

money on you today, but make money off you tomorrow when you're worth more. So Jack, what's the takeaway for our buddies over at Lemonade? Lemonade stock doubled on IPO day, and that is a failure in finance. Goldman Sachs, Morgan Stanley, Barclays, those are the banks that handled this IPO, and they did something that wasn't quite fair. They misvalued lemonade. We've all seen IPOs like double in price on IPO day, and that is because bankers actually intentionally set the price too low. They claim they want you to see like some bump in the stock as a company because it's good PR on the first day of trading, like as we just said, the IPO day stock, dub bolts. Yeah. And it sounds nice when we cover that on Snacks Daily. It sounds like it's a good thing for lemonade. But what the banks don't talk about is that

they actually gift wrap up the huge gains for their clients, in this case, who got IPO stock early. On Thursday, you and I could buy lemonade stock because of its IPO at $65 a share after the gigantic price bump that happened right at the beginning of the trading day. But the day before, Goldman and Morgan Stanley clients, who are fund managers, could get for half that price, $29, those same lemonade shares. That's not just unfair that they got to buy it for $29 and we could only buy it for $65. It also hurts the company that is IPOing. Yeah, lemonade could have raised more IPO cash at a higher value, which is the point of the

IPO. If you're selling a piece of yourself like companies do in the IPO, you want to do it at the highest price possible. For our second story, Wall Street just crowned Tesla, the most. valuable car company in the world. And Tesla's second quarter reveals it's a surprising COVID winner. Snackers, if you're an Elon fanboy, 2020 is the year you call up all those people who are bothering you 10 years ago and say, remember when I told yourself. Elon said on May 1st, 2020, the stock of Tesla is too high. He literally said that about his own

company. And then what happened since Jack? The stock rose 59% since then in just two and a half months. Same period of time, his space company ends up sending astronauts to the international space station. No big deal. First time a private company has ever done that and first time America has done that in like a decade. And then third, after an incredible second quarter production report, Tesla just became the most valuable car company on planet Earth, passing Toyota, it's going places. Okay, we got to quickly say, Tesla stock is incredibly volatile. The price was 900 in February and 300 in March. Now it's up to 1,200. This thing's trading like an electronic cannabis company. If you own Tesla stock, it should come with a warning sign.

You might lose a lot of money, and it might really stress you out. Could cause nausea. But it's not just hype for Tesla. They are putting up results. Yes, Tesla's COVID-proofed its rims over the last few months. These results were insane, Jack, what do we get? On Thursday, we learned how many cars Tesla sold in April, May, and June. Yeah.

Which were not good months to sell a new car. Showrooms were closed. Test drives were a public health risk. If you went down to Mike's mega dealership, he was like a super spreader. you don't want to brag about the new car. You just bought when your buddy might not have his car anymore. Although our buddy, Timmy would probably do that. Now, Tesla announced on Thursday a wild number. 90,650 deliveries of its cores occurred over this past quarter. And that is more than the number of cars they delivered last year by two and a half percent. It's also more than the 72,000 cars that were

expected of them. Tesla somehow did a fantastic job in one of the worst quarters for the economy since like the 30s. Our thought on this, Tesla's are for wealthy people. wealthy people are doing fine in this corona economy. I'm so bored at home. I'm going to buy a $50,000 electric car that can self-drive me to restoration hardware. It's the only way to do it. So Jack, what's the takeaway for our buddies over Tesla? Wall Street thinks that Tesla is a young avocado tree or a 14-year-old LeBron James. Snackers, Tesla stock has risen so high, it's now worth $225 billion, again, more than Toyota. Now, bear in mind, Toyota is by far the most profitable car company in the world.

but investors prefer Tesla to Toyota. And that's because investors think Tesla is like a young avocado tree. It's not producing that much juicy fruit yet, Nick. But it's going to grow like 10 times bigger than it is today. And it will be an avocado profit puppy for like a century. Jack, you sound like Dr. Sue saying this. This is incredible. But Toyota is like a mature orange tree.

It's still producing a ton of fruit, still hanging in there, still making the stuff you want every day. But it's not really growing any bigger. No, that's what Wall Street thinks. Tesla's the young avocado tree. Toyota's a mature orange tree. Or is Tesla like LeBron James when he was 14? Michael Jordan just won his sixth NBA final. Would you rather have LeBron stock at 14 or MJ at 34? Wall Street just decided they want LeBron at 14. Trick question, you want Gary Payton at 46. For our third and final story, Walmart is turning parking lots into drive-in movie theaters. In a world where movie theaters are closed and you hate being in your house and would kill

go outside. Starring McConaughey. Walmart is partnering with Robert De Niro's media company to show movies in like 160 Walmart parking lots. Yeah, pretty straightforward, pretty surprising, pretty amazing. First showing, happening in August, it's going to be across the United States.

Honey, hurry, I'm at the register. Fast in the Furious Nine starts in like three minutes. We got to go. You got Moulon starting in like aisle 7. They're going to make an announcement on this thing. If your car has a good seat, can you throw your jacket to the left and your purse to the right and save two parking? spots. People will still manage to get into arguments even though you shouldn't be able to get into

arguments in this situation. Now, Walmart is taking a page out of the Sharing Economy Playbook. Yeah, this has been done before for companies that are devoted to sharing, case in point, Airbnb. You got your house that's free this weekend. Get paid by letting someone use it. You got Uber. You got a car, you got a driver's license. Get paid by letting somebody use your back seat. How about if you got an empty parking lot in the evenings? Do something nice with it and get paid by letting somebody use your parking lot to watch a movie. That's right, KeySecond, part here. Walmart's not a nonprofit. Ipso facto, that's a double negative. It's a profit. So Walmart left subtle hints in their press release about their money making moves.

Yeah, the weird thing here is they were TBD on whether they'll actually charge for tickets. Feels like the kind of thing they should have decided. Yeah, it's like you don't announce you're getting married until you decide who you're getting married to. Commit Walmart, commit. But what does seem clear is you're going to have to probably download the Walmart app to potentially listen to the movies you'll be watching outside. Right. And you'll connect that app to your cars like Bluetooth system and listen to like ET phone home. What we found fascinating is that Walmart did make clear that you can be doing some curbside pickup while you're waiting for the movie to start while you're at the Walmart. And they're going to be selling concessions popcorn, Reese's PCs, Mountain Dew

Style. Now Snackers, if you know concessions, you know that's the profit puppy of the entire movie industry. One third of AMC theater's revenues comes from concessions and 85 cents of every dollar of concession sold is pure profit. Fun back of the scenes fact. In the middle of this podcast, I literally throw juju-bis into Jack so he can him. He's a popcorn guy, though. He's a popcorn guy. I am a popcorn guy. That's true. So, Jack, what's the takeaway for our buddies over at Walmart? You could be 90% old school biz and 10% modern sharing economy biz. Snackers, as a company, you don't have to go full sharing economy startup and, like, change your company dress code to a T-shirt. No, the sharing economy

cutting-edge stuff can be applied to just one of your corporate business lines. Think about some other existing industries out there with existing business models, but having underutilized parts. We're looking at you, banks. You have like 5,000 bank branches that most people dread going to and therefore don't visit. Plenty of good ways you could repurpose a bank branch, turn it into a coffee shop, turn it into a co-working space. A lot of options out there besides ATMs. In that case, banks could connect with the community and have another revenue source. Snackers, if you've got any ideas, tweet us at T-boy Jack, at Nick of New York. We want to know what you're thinking. Jack, can you whip up the takeaways for us to start the week.

Lemonade sells your renter's insurance with a bot named Maya. The banks misprice the stock leading to an insane spike on IPO day. Tesla is a young avocado tree. Investors like it more than the bigger orange tree. Or is Tesla a 14-year-old LeBron whose stock investors want more than a 34-year-old Michael Jordan? For our third and final story, Walmart is converting 160 parking lots into drive-in movie theaters. It's monetizing parking lots because they do absolutely nothing. Except for the occasional drug deal and makeout.

It's a powerful conval. Now, time for our snack fact of the day. This one's ended by Sean in Pittsburgh, Pennsylvania, aka he's calling it the city of bridges. Sean calls Pittsburgh, Pennsylvania, the city of bridges because of a 2006 study, which determined there are 446 bridges in Pittsburgh. Yes. I'm guessing they're all made out of steel. A lot of bridges, a lot of water, although we should point out, technically in New York City

has twice as many bridges, but we're doing a bridges per a capita thing here. Sean, don't take that personally. Nick is born and raised in New York City, and he was actually like trying to kill the snack back. Just want to say I was born on a bridge jack. Now before we go, Snackers, happy birthday out there to Charles Bolt in Zinesville, Illinois, who turned 15 and rose to snacks every day. And also happy birthday to Mark Lynn from Minneapolis, Minnesota. You're working today. We know you are. It's your birthday. You're a great guy and you're a couple that snacks together. And happy birthday to Melissa from just outside Boston because everyone from Boston is from just outside of Boston. She's actually from Bellingham where the Duncan always gives you an extra pump of hazelnut.

Linda, two more pumps, please. One more correction before we head out from Alex Davidson and Craig Carey. They point out that Constellation Brands doesn't own Ballast Point anymore. True, we said they owned them. They bought the company for a billion dollars, but they have since sold it. We're guessing Alex and Kragher from San Diego. Before we go, Jack, I've got to ask you one big question. question. Can you say Wawatosa for us one more time? Wawatusa? And as always before we go,

H-Y-H-Y-H-Y-S-D. Have you had your snacks daily? We'll see you tomorrow. Ask a friend, because if they know, they 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.