The Best One Yet - Tesla plummets 10%, Dunkin’ democratizes Beyond Meat, and UPS jumps 9% on “do-everything” strategy

Episode Date: July 25, 2019

With another huge day of earnings, Tesla fell 10% because one of its top cars is cannibalizing sales of another. Dunkin’ is launching a plant-based sausage sandwich with Beyond Meat, highlighting how Dunkin’s become the great trend democratizer. And UPS popped 9% as it tries a new strategy for growth: A try every strategy.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. It is Thursday, July 25th. And what are we feeling about this? This is definitely the best one. This one's actually the best snacks. Markets were wild.

This was insane, actually. The NASDAQ and the S&P 500 hit record highs. Boom. The Dow didn't. No, and it's blaming Boeing. Yeah, Boeing had a really, really bad day. Just drag the whole day down. Also, Facebook, like, best profits ever on the same day got its worst fine ever.

There were so many earnings going on. We almost couldn't handle the whole podcast. We decided to break it down to three stories. Tesla announced earnings yesterday. The stock dropped 10%. We've got ourselves a situation of cannibalization. We got ourselves a cannibalization story. The one car is eating the other car, not literally, but it's something like that.

Second story, Dunkin' Donuts and Beyond Meat just partnered up on a breakfast sandwich that reveals the core virtue. Yes, virtue of Dunkin Donuts' strategy. Make exclusive trends accessible to every soul. Third and final story, UPS popped 9% after its earnings reports, but the highlight wasn't anything about the numbers. It was all about UPS's plan, which is just have a lot of plans. It is very busy UPS.

But before we jump into all that, an incredible innovation that was worth talking about here. We finally put our people on smart diapers. It had to happen. No one knew when it was going to happen, but I think the smart money was on smart diapers. Pampers brings us smart diapers. It's called Lumi, and I know what you're thinking. What does the thing do? Well, first of all, there's a wait list, so good luck even getting to it.

There is a wait list. And that's because these diapers have a sensor that can detect a baby's pee. going to have to correct you on this. It's an activity sensor. It's an activity sensor. It's highly formal. By the way, only P. It detects P. And it will alert you on your smartphone app. It also is going to connect to a camera that you put on top of the crib so you can see the baby's patterns. Everything it's doing. It's moving. This is a baby monitor for like the Amazon tech connected world. If you were wondering about the internet of things having limitations, it does not have limitations. Now, Pampers is owned by Procter and Gamble. It hasn't moved the stock yet.

Not quite. But maybe they were just waiting for the wait list to get it. Then again, we're also number 548 in the way of this. You're tuned in the snacks daily. We spoke to the lawyers and we got to get some. The snacks about to hear rain food is air candy. They don't reflect the views of the Robberhood family. It's all informational just so. We're not recommending any securities.

Nope. It's not a research report or investment advice. Not an offer or sale of a security. Right. Snacks is digestible. Business news for you. Robahood Financial, LLC, member FINRA slash SIPC. For our first story, Duncan has a new Beyond Meat partnership and reveals Duncan's core value.

Well, you know you're in a dunk. If you close your eyes, you know, and you're in a... I'm trying really hard right now. You know you're in a Dunkin' Donuts because someone near you is going to order a large regular. And you're going to be like, what is that only in Dunkin? You got to believe in the Dunkin' Donuts to see the Dunkin' Ones. So we're talking about the new meatless sausage sandwich sandwich. It's a...

It sounds bullish. It's a sausage egg and cheese, but no sausage. It's a plant-based sauce. Exactly. It's coming from some pea proteins and like a whole bunch of random stuff. And this is going to debut. It's a test so far only on the island of Manhattan. A city within a city.

It means land of many hills. Get this. There's 163 Dunkin' Donuts locations just on Manhattan Island. We could have whipped that out as a fact of the day for later. That's incredible. We had to double fact check this thing. You know, Brooklyn and Queens are both way bigger than Manhattan. I didn't know how they could fit.

They're like on every corner. Now, this is the biggest chain to add Beyond Meat products. It also has Hardee's and Carl's Jr. Right. And they just got Tim Hordons up in Canada. Right. And actually, impossible. Meats, which is a competitor of Beyond Meets, they have a relationship with Burger King,

which is a bigger chain than Dunkin' Donuts. True. Now, this new partnership is very big for two key reasons. The first one is the Breakfast Wars. Yes. Duncan Donuts is giving Beyond Meat, like, prime time real estate on that menu. They're like, we're going to make you a star, baby. Duncan donut, like breakfast is what Duncan does, and breakfast is also the only growing

segment in the fast food category. So true. Excuse me. The quick service restaurant category. That's what they like to call it. The other reason why this is a big deal is just because of the price. Yes, you might think that this fancy pea protein sausage sandwich is going to cost more than the other sandwiches. You think it's going to be wrapped up all spectacularly.

You're going to pay for extra packaging. There's going to be a billboard outside and some guy's going to hand it to you when he's down on one knee. But no, this thing is 429. The cashier is not going to ask you. You know that's an extra dollar, right? It's not an extra dollar. If you have to ask the price, you can afford it in this situation. Other restaurants that have plant-based meats, they are charging the upcharge, so this is different.

And for our Duncan Donuts faithful over in New England, because that's where the faithful are. That's where Duncan's based. They know that other Duncan breakfast sandwiches are the same exact price. Now, we love this quote from Beyond Meat CEO, Ethan Brown. He nails us on this one. He was actually hanging out with the CEO of Duncan yesterday. It was great gadget. Wonder what they were drinking.

So he was talking about the sustainability angle of Beyond Meat. It's a key angle that doesn't actually get a lot of focus. Yeah, eating like plants is actually better for the environment than eating beef. But he said it costs a lot of money to buy a Tesla. Very true. But for $4, you can act on similar values and ethics with a Beyond Meat sandwich at Duncan's. Basically, he's calling Beyond Meat a model S Tesla for a fraction of the price. So, Jack, what's the takeaway for our buddies over at Duncan?

Duncan is the great food democratized. Not only are we saying that as the takeaway, technically the Duncan CEO, like said that a few weeks ago. Yeah, he said we're all about democratizing trends. And that's key because trends can be exclusive. They can be limited to certain areas. The first trend that Duncan Donuts democratized was espresso. You know what we're talking about here. They're not pulling the like steamed milk leaving messages in you that look like a leaf kind of thing.

That's what you think of fancy coffee shops with little artisanal mugs. No. At Duncan's, you can get an espresso in a paper cup for super chill. Is this barista sending me a message? What is going on here? The CMO took it another step and he said there's no reason at this point to go to Starbucks. Just go to Dunkin. Right.

Duncan's basically saying we're offering the exact same products and same quality. We're not doing it, though, in a way that you're going to take home to mom and dad and show off. Now, I've been very positive about Duncan this whole story, but let's pepper on a little bit of salt here. He is a New Englander. Duncan, you got to get rid of the styrofoam cups, and please don't auto dump all that cream into my coffee. I've thought about this as we researched this story. I've actually never seen a small Duncan cup. They're only coming large.

I've only seen a foam cup in small human-sized. Everybody, this is Jack. Nick and I both own shares of Beyond Me. For our second story, Tesla just reported like a way bigger expected loss. The stock fell by 10%. It was a plummet in this situation. Now, the headquarters... I do.

I visited the headquarters a couple years ago. Don't take pictures. They will tase you. Not physically. Emotionally. The security guard will track you down, take your phone, delete. He will not delete the deleted photos. It's a pro tip right there.

Pro tip. Now, let's talk about Tesla. Well, we all know that Tesla sold a record number of cars in the second quarter. It was 95,000. Now, yesterday we learned that that translated into a loss for the quarter of a hefty $408 million. That's a lot of million dollars of loss, but it's actually half as bad as last year's second quarter. So it is improvement. There was a loss, but things got a little better. Now, Elon Musk thinks that Tesla can actually return to profitability in the third quarter.

Yeah, it actually had two quarters of profitability to end 2018. Only issue here, check your calendars. We're actually in the third quarter right now. We are. But the stock fell because analysts. expected a much smaller loss. Now, here's what Jack and I found fascinating snack style about this earnings report. There's one big problem.

Cannibalization. We're talking like the kind of thing where, you know, you get a little extra Dorito chips on your fingers, so you end up eating your whole hand. You sell one product so well that that eats into the sales that belong to another product. Now, before we jump into exactly how this cannibalization situation went down, which is a wild word to say. We should probably mention that Tesla has three core car models. The OG is the Tesla Model S, which is like...

beautiful luxury sedan. It's like 80 to $100,000. Then they came out with the model X, which is the bigger SUV with the Falcon winged doors. We're both acting like Falcons. But kind of cool. And then finally, a couple years ago, they came out with the Model 3, which is the mainstream, quote unquote, affordable Tesla. Which looks a little bit like the Model S, which leads us into the cannibalization. Finally, one more thing. They've leaked images and they've done a debut of the Model Y, which is a crossover coming soon. So the Model 3, is the new kid on the block. But the Model S has been like a status symbol. Yes. Kids come out of wombs in California and they aspire to have keys to a Model S. I saw a Model S driving a Model S at one point. There's actually Tesla's all over the streets in California. It's pretty wild. In Michigan, you see Ford F-150s everywhere. Right. In California, it's Tesla. And they wink at each other. Like people honk. It's like a thing.

Right. It was an early adopter of Tesla for sure. But the Model 3, that's the new cheaper version that looks kind of like the Model S. And we just learned data from the California Department of motor vehicles. Big deal. Which showed that registrations of Model S's in the second quarter, the original Tesla car declined by 54%. But for the Model 3, they doubled. They searched. That is a big difference between the newer car and the older car. And this is a problem for Tesla because the Model S is much more expensive and they want to sell those to like high-end California people. The reason? The Model 3 may be too good. The Model 3 is too good. It's on Parish, looks wise and performance-wise as the Model S, but it's way cheaper. It's fractional of the price. It actually kind looks cooler in my opinion. It might even be like the one you want to hang out with me. Why would

anybody buy a Model S these days? So, Jack, what's the takeaway for everybody's over Tesla? Well, Tesla is acting like a Detroit car company. Now, that is not a good comparison. No, it's not. Detroit and its car companies. Wonderful city, wonderful industry. They went bankrupt together. Right. The other year. So there's one big reason it's acting like Detroit. It's giving out too many discounts. Tesla has been cutting the price of the Model 3 to hit sales goals, just like Bob's Round Tree 4 down the corner. Right. They got the guy with the sign who's walking around and waiting things, you know, with the balloons and stuff that are fully in the air. Yeah, exactly.

The guy with the hands in the air. So two weeks ago, Tesla announced that he fully loaded Model 3 suddenly was going to be $6,400 less. Yeah. That's a big price guy. Two key things about that. The first is that annoys Tesla owners who had to buy the car at a full price? Imagine if you paid $6 grand more and then suddenly at $6 grand less. The second reason that's a problem, it's really hard to stop discounting once you've started

discounting as a brand. Just ask Banana Republic. Or Jay Crew, I just got boxers for four bucks. You do not buy boxers from Jay Crew until you get a 60% off discount email code. Like $4. And Tesla could have the same problem, and we're seeing the results in the poor profits last quarter. By the way, this is Nick and Jack and I both own shares of Tesla. For our third and final story, UPS's stock just jumped 9%. Not for a UPS of it. Big ups. We had to check this. We had to check this one out.

So it was one of the best performing stocks of the day. Congratulations. It announced its second quarter earnings. The highlight was driven by yours and my and everyone's e-commerce obsessions. We're talking about one key number here, 30%. And we're talking about one key stat. Next day air volume. Next day air is UPS's most expensive option.

And it jumped by 30% of the last quarter. It gets there tomorrow morning. Because sometimes, you know, you need that floral print oven mid. tomorrow morning. Today. You needed it yesterday. You needed it yesterday. You kind of needed it a sec.

And so you bought it on Amazon and Amazon is sending a lot of its orders through UPS and that drove sales higher. It also turns out that Amazon upgraded prime memberships from two-day shipping to free one-day shipping. Yes. The free shipping arms race is going on and Walmart and Target offered similar things this year. So this is all great for UPS. Hicked UPS up a notch. But then we jumped into the earnings and Jack and I noticed something.

there were a lot of other announcements revealed along with that. Well, it's interesting. The UPS is regulated by the SEC. It's a publicly traded company. So it has to tell us every three months, just how it did, you know, three months ago. Financial information. That's all it has to do. We also got to learn about like every other corporate strategy it's doing, which is a ridiculously

long list. It's like that one person in your science class was a little too try hard. There were a whole bunch of PSs on this earnings. A lot of raising hands. Yes, I know the answer. Yes, I know the answer. So the first one, the CEO announced pickup points. Actually, UPS calls them access points.

Technically. We've all been there. You come home excited about your package, and you just have a piece of paper on the door. It kind of feels like a rejection letter. It says, like, go to Tom's hardware. It's a UPS access point. And pick it up some other time.

It's like my mom always says, life is all about timing. Yeah, so they have 12,000 access points already, but they're adding a whole bunch more at everyday stores that you know. CVS, Michaels, and then this one's the kicker. Advanced auto parts. Because he just got to pop by there on your way home.

So pretty soon, UPS is going to have 21,000 access. points. Now, the second key announcement from them was Sunday delivery. The reason for that is the same reason we explained earlier. Your's mine and everyone's e-commerce obsession. Again, that of admit you need it on Sunday night for Dennis. And so you need seven days a week to do that. Honestly, if they could be delivering eight days a week, they'd be done. Now, the third kind of like extra PS situation with this earnings report. This one's big. Drones. Big drones. Not just any drones. UPS created a separate new subsidiary called UPS Flight Forward Inc. Not the sexiest name, kind of a sexy thing they're doing. And with that subsidiary, someone filled out an application for the Federal Aviation Authority, Part 135

certification. Some MBA intern has spent an entire spring on this. Now, 135, that means you can operate commercial drones. We're talking operating a drone, quote, unquote, beyond the line of site at night and at an unlimited number. Now, if you don't add that certification, you can only operate drones that you can see, like within reach, and not at night, and only one at a time. It's like a, it's kind of like a... It's like a remote control car. or what they call helicopter parenting, but your parenting is grown. Now, Google, by the way, first company

to have gotten that accreditation. And UPS better catch up. So, Jack, what's the takeaway for our buddies over at UPS? UPS has to emulate Amazon to survive Amazon. It sounds like a species on like the Planet Earth TV show right now on Netflix. Let's be honest. UPS and FedEx are barely hanging on. They're like a Japanese wood beetle on the edge of extinction.

They're just doing whatever they can. Donate Now situation. It doesn't know what strategy is going to work. It could be drones. It could be seven day a week. It could be nine days a week. It's trying everything because Amazon used to be the customer, the biggest customer. It still probably is the biggest customer.

But now it's also the competitor. We know that Amazon just bought a whole bunch of planes. It set up a whole like air cargo fleet hub in Kentucky. And it's becoming a delivery company. So to match Amazon, UPS is trying to do everything that's kind of Amazon-ish. Meaning work eight days a week. This is Jack. and I own stock of the Amazon.

Jack, can you whip up the takeaways for us? Duncan stock popped by 2% because it's democratizing, fancy, plant-based meat, egg and cheese sandwiches. Now, we don't know what this thing looks like, but if you are in Manhattan next Wednesday, that's when it starts. First of all, good for you.

Second of all, tweet us a pick. If you eat it, we're curious. At Robin Hood Snacks. Second story, Tesla's number of cars sold looked really good last quarter, but it's discounting and that's bad for profits. And cannibalization is in avoidable. problem. Third and final story, UPS is fighting a valiant fight against Amazon's ruthless logistics

efficiency. Here's the strategy. Do a lot of things that are Amazon-ish. Do more of everything. Now, time for our snack fact of the day. This one's kind of like three facts within a single fact. It's like one of those Russian nesting dolls. Yes. Jack. Lay it on me. There are three everyday products that you might use in your home that were developed by NASA. There are actually a bunch. We thought these three were the most interesting. The first one, ear thermometers. Right, like mom used to give you. Yeah, it's definitely part of the, that Pampers ecosystem we talked about. Always a little intimidating.

Second, hair irons. Got to have those. You got to curl the hair. Always got to be there. And third, the Bowflex home gym. We're literally talking about the Bowflex here. There's technology in that Bofax gym. We used to see in those infomercials.

Used to be in space. Came from the space program. Not too shabby. Now, another key story you got to keep in mind today. Facebook officially just got fined by $5 billion. And then on the same day, it announced its best earnings ever. So the stock ended up jumping. Snackers.

Loved having you with us today. As always, it's something really good today. We'll be back, manana. Hopefully that's the best one. 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.