The Best One Yet - “The Bruno Mars IPO” — Warner Music goes public. AMC Theaters’ sequel moment. Campbell Soup’s soup cockiness.

Episode Date: June 4, 2020

The biggest IPO of 2020 is Warner Music, which just surged 20% on Day #1 of trading. Campbell Soup is thinking your corona-conomy soup-binging is (shockingly) here to stay post-virus. And AMC theaters used a moment of honesty to admit it actually may not survive unless movies come back fast.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, June 4th. Nick, it's a pleasure hearing your voice again. Also, the Dow, longest winning streak since February somehow. Jack, you look fantastic. And by the way, apparently the Dow hasn't been listening to Snacks Daily.

I mean, do they know what we're reporting on lately? No. Investors are so excited about this economic reopening. They're just completely ignoring domestic and international major crises. Snackers never forget it. Put it on a pillow, maybe a tattoo. Wall Street is not the economy. I'm pleased to announce this is the best one yet. I'm going to second this one straight up T-boy. Jack,

what's our first story? Bruno Mars is a publicly traded stock? Kind of Warner Music Snackers just went Midtown, funk you up. Midtown, funk you up all over NASDAQ stock exchange floor. Nick, I love your style. Shares are up 20% for the biggest IPO of the year. Also kind of the only IPO of the year. For our second story, the only movie news we've heard recently is Tom Cruise. DM'd Elon Musk because he wants the next mission impossible to be in space. Yeah, until someone produces that thing, the lack of movies is a major problem for AMC theaters. AMC theaters last three months were more apocalyptic than the next Jerry Bruckheimer sequel. So true.

And AMC just hit a major inflection point. The stock moved from critical condition to the ICU. Hold the popcorn third and final story, Jack. Campbell's Soup. It's kind of what's for quarantine dinner. Tomato Bisk made a U-shaped recovery after years of decline. Campbell's CEO, who loves extra sodium and everything he eats, just said that the iconic canned soup, sales are higher and they're here to stay.

Anti-Fresh is the new fresh. Snackers, before we get into all that, SoftBank is the major Japanese venture capital firm that you know for backing WeWork, Uber, Slack, and all the other apps you had on your first iPhone ever. And yesterday they announced that they're launching a new $100 million venture capital fund, Jack and I got curious, we jumped at Snack style. SoftBank said that they will only invest this money in companies led by founders and entrepreneurs of color.

Surface level, this sounds pretty good. 100 and million are both really big numbers. That sounds pretty good. I like 100. I like a million. Except 100 million is literally only one, one thousandth of the size of their main venture capital fund. That's the context we have to underline here at Snacks Daily.

the SoftBank Vision Fund, their main venture capital fund, has $100 billion, not $100 million. Feels like a nice move in the right direction targeting entrepreneurs of color. But it also sadly reveals the wild extent to which black founders are excluded from entrepreneurship opportunities. So Jack and I wanted to promote this snack fact up to the intro from Kyle Fitsy in lovely Orham, Utah. And special thanks to data from backstage capital and Arlen Hamilton. Turns out snackers that get this, get this, less than 10. 10% of all venture capital deals go to women, people of color, and LGBTQ founders. One reason is pretty obvious. Only 1% of the venture capital investors in the senior positions

making these decisions are black. As Mia Panser, a snacker from lovely Cohass at Massachusetts pointed out, 92% of these senior venture capitalists are actually men. So it's mostly white dudes making the investment decisions at these venture capital firms who have all the money. And the entrepreneurs who get the hundreds of millions of dollars are who we end up reporting on on this podcast and you end up hearing about. This is critical because owning stock of a pre-IPO future unicorn

is one of the best pathways to American Dream-style business money success. Founders of companies who get these big venture capital checks, they build wealth and they enable entire generations of their family to participate in the economy. And the data clearly shows

that the opportunities to do all that are hugely lopsided toward guys and white people. And away from women and people of color. Think about that. with every unicorn of the day we cover. Thank you, Mia, thank you, Kyle, and thank you Arlen Hamilton, for that trifecta,

three musketeer-style snack fact of the day. Well, let's hit our three stores. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way. The snacks about the hair ain't 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. For our security. Right. Snacks is digestible.

Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Warner Music stock, IPOed and jumped 20% on the first day of trading. Last year we were doing IPOs like every day. Yep. This year we do IPOs like once a quarter. And this was the biggest one of 2020 because you got Ed Shear and Cardi B, Bruno, and Lizzo. You also got David Bowie, Pink Floyd, Madonna, the classics.

Snackers, you've been paying for music for years. This is the first time where music could end up paying you. That's right. All those musicians are repped by Warner Music, and they could be paying you dividends. No guarantees. The stock could fall, but if it goes well, you might get paid. Now, Snackers, you've probably been doing a lot of the digital Zoom meetings lately for like, you know, every meeting. This was the first Zoom IPO we've ever heard of.

Yeah, none of the analysts were schmooze in the investment bankers over at Nobu for the afternoon to get them to buy the stock. Hey, Mr. Fidelity Fund Manager, let me tell you. you about a thing called music and the sound of money. This was an 100% video virtual roadshow to get this Warner Music to an IPO. And it looks like it worked, considering the stock jump 20% on the first day. Now, Snackers, to truly understand the artist that is Warner Music, you must know the whole music industry genre. All right, the music industry is dominated by three record labels. We're talking Universal Music, Sony Music, and Warner Music. And the first two that Jack mentioned are owned by way bigger companies, the Vendee and Sony. And the third is Warner Music, which now has its own publicly

traded stock. Now, first rule about being a major music label, you got to sign the artist. Kind of like venture capitalists sign entrepreneurs and European soccer clubs sign like little 14-year-old kids. Yeah. Record labels spot talent early, and they buy the talent. This guy can kick, let's take him from his parents for the next decade. That's right. When a record label signs a musician like Taylor Swift, they basically own Taylor Swift's music and then pay Taylor Swift, royalties, depending on how many people listen to the music. And get this, Snackers, turns out the royalties that the artist actually end up getting paid is only like 12% of the total revenues according to Rolling Stone. That's because the record labels kind of go to work for the musician.

They negotiate with the distributors and make sure that a big chunk of that $999 that you and I are paying for a Spotify monthly subscription, it goes to the musicians. That's the second responsibility of the labels. And the third is to straight up market, monetize, and manage the talent. Events, tours, merchandise, tank tops, Ed Shearren, spectacles, all that stuff needs to be available for musicians. Well, Warner Music just took a DNA test and turns out just made a highest quarterly revenue in the last 16 years at the end of 2019. Stealing music isn't cool anymore like it was when I was in middle school and high school. And in the first quarter this year, they enjoyed a 12% jump and recorded music streaming literally thanks to one album driving the industry right now. The music industry is looking strong in the latest star driving.

signups and digital album sales, do a lepa with future nostalgic. Do a leapa. Don't do a less, do them more. So Jack, what's the takeaway for our buddies over at Warner Music? Music is now COVID-proof. Snackers, Jack and I are looking at this. He got Live Nation, you got Event Bright. Their stocks have plummeted in the Corona economy because of live event cancellations. So you'd think Warner would be plummeting too because live music is a pretty big deal. But we jumped into Warner's S-1 IPO report, and it turns out a whopping 86% of their total revenues come from a line item called, quote, unquote, recorded music. Recording music basically means streaming music like Spotify and Apple. True.

And digital album sales, which believe it or not, you can still buy on iTunes these days. And that recorded music jumped 42% last quarter and is dominating the money that this company is taking in. Think about it in the era of COVID-19. You're stuck at home, perfect for playlist after playlist after playlist, once you finish Netflix's entire video library. Short term, you could even argue Warner's like a stay-at-home stock because that's what your ears are doing lately. Long term, it's hoping you're not just staying at home.

It's banking on concerts happening again. Not Zoom concerts. For our second story, Campbell's Soup is winning right now big. Because fresh food has become something we actually are avoiding. You got Red Bear and Frozen Pizza. You got Bumbobee tuna. You got Dejorno, or was it delivery? It was Dejorno, and then you got Campbell's Soup.

Those were the go-toes of our parents. when they were feeding us when we were kids, but now they become our go-toes too. That second part deserves on packing, we were a little shocked by, and that's because Campbell Soup Snackers just announced their best quarter in generations. This is a canned soup company, so when sales jumps 17 percent, that is a shockingly large growth. Their soups jumped a shocking 35 percent. Jack and I saw the stats.

Jack choked on his quinoa. The CEO described the whole situation of the last quarter very nicely. COVID-19 was the equivalent of a blizzard in every city in the country. Honestly, Jack and I just, we don't see that kind of poetry in most earnings reports. It was, it was beautiful to see. Nick, when I checked the weather and saw I was going to get three feet in Brattleboro, Vermont, you're stocking up on canned soup. Because if you want fresh, organic, or artisan, good luck right now.

Well, you can't get any of that because the farmers markets have been closed for months. Yep, you're getting a V8 canned vegetable drink instead of the fresh celery press juice from around the corner at juice press. Prego Red Pasta size, goldfish crackers, swans and canned chicken. All of those are Campbell's soup products. They're all non-perishable. They all expire in like 2042, and they're all selling right now. This is a major change for Campbell's soup from the past seven years when U.S. soup sales were declining each and every year. Now, Snackers, Jack and I weren't shocked that soup sales went up in the coronavirus. What we were shocked by was analysts predicting a 20% sales jump in soup over the next year. In other words, they don't think that soup sales was a one-time fad for the past few months.

They think it's a continued long-lasting trend. Kind of reminds us about Clorox thinks that sales of sanitizers are going to stay up now that everyone's like permanently terrified of germs. But are people permanently excited about high sodium canned condensed soup? Jack and I are both more solids, guys. So what's the takeaway for our buddies over at Campbell's? The future could be sticky with Campbell's soup. Snackers, we jumped and snacks out of the conference call around.

the earnings for Campbell's, and the CEO delivered more poetry. He highlighted four trends that he thinks will achieve customer stickiness. In other words, these first-time Campbell Soup buyers, they're going to stay sticky and keep buying Campbell's Soup. All right, we whipped up the first one for you. It's that there's a slow return to away from home occasions. That's a quote from the CEO. He basically thinks restaurants and offices aren't going to open soon. His next and second point, quote, growing cooking skills. You learn to make meatloaf in the coronavirus, you're going to keep on making meatloaf and buying Campbell's. And you'll probably do it with hamburger helper when you hear the next point, which is a continued desire for low-cost meal solutions. Remember, snackers, we're in the

beginning of a deep and hard recession. People like low-cost stuff. And then the fourth and final Campbell point about why soup sales are kind of a bigger deal thing, accelerated adoption of e-commerce for groceries. The CEO thinks that people will be buying groceries online more, and fresh food doesn't deliver well, but Campbell's tomato. Obesk does. Canned soup is the new juice cleanse. For our third and final story, AMC's first quarter is intense, dramatic, apocalyptic thriller stuff. And it could end in sad, sad tragedy. Which means we need to rewind this movie all the way back to mid-March when AMC closed its theaters worldwide. Can't believe we're used to have to actually rewind movies before you like return

them to the video store. How absurd is that? You'd get very bad looks. A month after AMC theater shut down worldwide, they banned Universal Pictures from all of their theaters as punishment for cheating on the movie theater industry. You can't blame them, Universal's Trolls World Tour movie went direct to living room streaming instead of to theaters. Then a month later, there were rumors that Amazon would acquire AMC theaters, which we were highly skeptical. Extremely skeptical and at the same time, excited to have covered that wild story on this podcast. Then finally this week, they got some good news. Movie theaters will finally and slowly start opening up next month in July. Now, Stackers, remember when we said that publicly traded

companies were legally required to tell the truth? For AMC, the truth hurts. And it came out yesterday in a current report, the impact of COVID-19. That was the title, no artistic flair. This is probably a one-hit kind of wonder thing. It's loaded with scary quotes about AMC theater's current situation. Yeah, unexciting, but extremely revealing. Case in point, during this period, we are generating effectively no revenue. Then they basically said, even if the shutdowns end, studios might not release movies to our theaters until there's a vaccine. Studios don't want to premiere the 47th Marvel movie of the year to 25% full theaters. They might wait till next year. But then came the climax of AMC theaters update to investors. Whether we survive or run out of money depends when things return to

normal. But due to these deeply uncertain factors, substantial doubt exists about our ability to continue as a going concern for a reasonable period of time. Let us translate what all their lawyers just came up with. They're freaking out about potential bankruptcy. It was the most honest update I've ever read from a publicly traded company. It was the truth, kind of the thing that Kylie Cosmetics would never have put out there. So Jack, what's the takeaway for our buddies pumping corn over at AMC? There is no guarantee that when a company gets bailed out, that it'll actually survive. Snackers, AMC borrowed money in April and said it was enough to survive. through Thanksgiving of this year.

But then we got more truth in the current report. We were wrong. We miscalculated our cash situation. You know who else took out rescue funds? Airlines, and they also may have miscalculated their positions too. Think about it. Delta, Southwest, American, and United Airlines, they each took out $2 to $5 billion from taxpayers to survive.

AMC might go bankrupt, and there's no reason why the airlines couldn't do. Just because they got bailouts from the government doesn't mean they're going to survive as companies. Jack, and you'll whip up the takeaways for us. over there. If you own Warner Music stock, you own like a fraction of one second of one of Bruno Mars' albums. You're basically like friends with Bruno, because listening to music is COVID-proof. Going to a concert, COVID-c cancelled. Campbell's Soup thinks its recent popularity with millennials isn't a fad. It's cheap. It's available on Amazon and you know how to cook it.

All trends in the Campbell favor. Third and final story, AMC theaters thought it had enough money to survive until Thanksgiving. It was wrong. Could run out by this summer. They were really. Really wrong over there. Now, time for our snack fact tweeted in by Robert Mann in Union, New Jersey. According to data from American public media, black Americans are about twice as likely to have died from COVID-19 compared to Americans of all other races. And you got a whole bunch of variables going into this. For example, just straight up access to health care. Another reason, inability or ability to work from home. And that's affected by ridership on public transit, maybe for certain jobs. And finally, higher levels of chronic health conditions among black Americans. Snackers, tweet us your snack

facts on injustice in the economy. We want to hear them. We want to get them on snacks daily. But before we go, happy birthday to Kavon from Blackwood, New Jersey. Technically, this is a belated birthday for a very specific reason. You've been hustling with your co-founder, Mike, because of COVID-19, keeping the company afloat, and Mike wanted to give you a big birthday shout out. Yeah, he didn't get to celebrate his birthday on April 5th, so consider this like a slightly late birthday and a really early birthday for next year. Happy birthday, Kavon, and good co-founder, buddy, Mike. Snackers, we loved being with you today, but remember, ask your friends, HY, HYSD. Have you had your snacks daily? We'll see you tomorrow. If you know, you know. This is Jack. I own stock of Sony, Spotify,

and Amazon. 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.