The Best One Yet - 🧟 “The Shaq SPAC” — WeWork’s ReRise. ThredUP’s IPO outfit. Nike’s China erasure.

Episode Date: March 29, 2021

A year and a half after its IPO died, WeWork is going public (with help from Shaq), but we think it’s a VC bailout. ThredUP jumps 43% at its IPO while tossing the wellness trend on fashion. And Nike faces its biggest boycott in China because it exercised its freedom of speech… about China.$TDUP $BOWX $NKEGot a SnackFact? Tweet it @RobinhoodSnacks @JackKramer @NickOfNewYorkWant a shoutout on the pod? Fill out this form:https://forms.gle/KhUAo31xmkSdeynD9Got a SnackFact for the pod? We got a form for that too:https://docs.google.com/forms/d/e/1FAIpQLSe64VKtvMNDPGSncHDRF07W34cPMDO3N8Y4DpmNP_kweC58tw/viewformLearn 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 Monday. Welcome back March 29th. This is the best one yet. Day 14, still unfunged, baby. What's our first story?

One and a half years after canceling its IPO, we've got the re-rise of WeWork. Yes, we do. Featuring Shaquille O'Neill. It's a bailout for venture capital. That's what it is. For our second story, Threadup, just surged 43% after their thrift store IPO. All right, Jack, you got food wellness. You got fitness wellness.

Welcome to Fashion Wellness. for our third and final story, Nike is getting erased from China's shopping malls. It's happening in China because Nike exercised its free speech ironically about China. But before we hit that wonderful mix of stories you have today, Alex just got the vaccine, right? We went over to the Essex County Fairground, name drops, where they actually ran a surprisingly tight ship. Very nice. These are some of the great perks of pregnancy. Yeah, it turns out antibodies to a pregnant mother get passed on to the baby too,

according to a recent study. Reminder, babies do April 5th. Could be a super baby. Yeah, could be a super baby. Now, I in 33, so I sat in the car at the Essex Fairgrounds. I'm not ready to get the vaccine yet. Yeah, I think actually with our blood pressure, Jack, we're at the bottom of the bottom of the priority list on this. We're relatively healthy dudes. The doctor won't see us. No, apparently though the doctor's seen 25% of the United States because a quarter of the U.S. has got its vaccine. And this means we have a new thing to describe. It's called club vax. Club Vax. Snackers, the number of Perks for the vaccinated these days is like a platinum Amex program. Big business is dishing out more deals to vaccinated folks than like an Oprah rerun. Krispy Cream. They're given out

a free donut a day for the vaccinated. We're not talking about one donut and we're not talking about one day. No, we're not. You fill your face with 274 glazed goodness donuts until the end of this year every day. Now, if Cosmo Kramer had a vaccine, he would go to a different crispy cream location every day and see if everyone would give them a free donut. It's our donut growth hack. It's not just donuts. A marijuana dispensary chain in Michigan is giving free pre-rolled joints to the vaccinated. Boom, pots for shots if you're over 21. Publix. The grocery store in Florida, they're giving employees 125 bucks if they show their vaccination card.

Bolt House Farm saw that smoothie and said, hey, we're going to give out 500 bucks. The takeaway here, crispy cream donuts must be really cheap. to make donuts, the anti-profit puppy. Let's at our three stories. 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 to hear ain't food. It's air candy.

They don't reflect the views of the Robberhood family. It's all informational just so. 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.

For our first story, Threatup, stock just jumped 43% on its IPO, Jack. And we're seeing trend osmosis in the fashion industry. Okay, founded 2009. Threatup, honestly, Jack, the business model, it feels straightforwardy. It's an online thrift store. And as someone whose favorite item in his wardrobe, I know what you're going to say, a Patagonia pullover, I've seen it a lot. I got for 30 bucks at a thrift store.

I'm no MacLamore, but I'm a fan. On the other hand, though, thrift stores are kind of like the worst retail experience. You're like sorting through a dimly lit bin of random corduroys jack. If you're lucky, they're hanging on hangers. If you're unlucky, one lice is going to infest the whole store. Well, Threadup, it is all digital. It's based in Oakland. And they brought in 186 million in revenues last year and a $48 million loss.

They're still unprofitable. Yeah, they are. But this online thrift store decided to IPO anyway. Yeah, sales, they only grew 14% last year. Well, it's not an app. They do have, like, physical warehouse. with their clothes, and it's harder to scale pants. True.

Then pixels. Here's what Jack and I find fascinating about ThreadUp. Typically, there are three players on a digital platform, but ThreadUp has found a surprise fourth player. The first player on the platform are the buyers. There are 1.2 million active buyers on ThreadUp who come back to the ThreatUp website six times per month. I mean, Jack, of course you would.

You got $24 Maggie London rompers for 50% off on the site. Threadup is only girls and women's clothing. For now, we're waiting for them to launch like Aram Pim. Okay, so that's the buyers. But then player two is the sellers. 428,000 people have sent in stuff from their closet and Threadup lists 280,000 new items per week on their website. It's a good feeling. They call it the magic of cleaning out that just feels good.

My wife sees Threat Up a few times. Good disclosure. They send you a huge bag to fill up with a pre-labeled postage to send back to them. Then the third player here is ThreatUp itself, the middleman. they do like a 12-point inspection of the clothes like their jiffy loop. Yes, only 59% of the stuff you send in makes their cut and gets to their website. The rest, I guess, gets tossed out. But here's the thing.

Jack and I noticed there's a surprise fourth player on this platform. Threadup mentioned RAS. RAS. In their S-1 document, 103 times. RAS, as in resale as a service. Threatup mentioned that The Gap, Made Well, Reformation, Walmart. Legends. They are all selling Threatup worn, torn, or returned goods.

to resale on threadup.com. Jack, take the Madewell boy jeans that got returned after someone worn for three months. Madewell can resell them on Threadup and make some money from them. Threadup found a fourth player in online thrift, the apparel companies. So, Jack, what's the takeaway for our buddy threading over at Threatup? Threadup is trend osmosis. A trend from one industry is sliding into another. Snackers, in the last decade, you got food wellness, and then you got fitness wellness.

You got mental wellness. You got skin care wellness. Yeah, and Jack, Zillianiels will sprinkle on wellness. trends to anything. In the last year, we've noticed that fashion is officially having its wellness moment. Secondhand fashion is healthy for your closet cleanout and your wallet and the planet. Well, in the past year, secondhand retailers like ThreatUp have had three IPOs, Threat Up, The Real Real and Poshmark. And here's the wild thing. The brands that actually make the first-hand clothes, like the Maidwells, they're even partnering with the second-hand thrifters.

The wellness trend has arrived at fashion. Yes, it has. Fashion wellness. For our second story, Nike, H&M, Burberry, they all just got partially erased over in China. U.S. corporate profits are becoming sacrificial jams in the U.S. and China Cold Trade War. All right, here's what this comes down to. A boycott among U.S. brands in China has led to a boycott against U.S. brands in China. And, Jack, for this one, we're going to have to travel all the way over to Xinjiang, a province in China. Yes, this is a region in the west of China with a large population of Muslim, ethnic minority people. And according to journalists and human rights advocates, those people are repressed

by China's central government. So Nike, Adidas, and other brands, they have pledged not to use cotton from the Xinjiang region on concerns that they are harvested with forced labor. Now, Snackas, here's the important thing here. This kind of decision, it's not made solo by Carl in Nike's supply chain department. Every sensitive decision about China must be handled with great care, probably up to the CEO level. Probably at the CEO level, Jack. Because China represents 18% of total swoosh sales. And that's growing. And 36% of Nike's manufacturing base happens in China. But Snackers, here's the wild thing about this whole situation. Nike's cotton decision in China was actually made a year ago. H&Ms was made eight months ago. And the reason that these like old statements are causing

all this drama right now, international politics. On Tuesday last week, the USA, the European Union, and the United Kingdom just sanctioned a bunch of Chinese officials for their role in the Xinjiang human rights abuses. Well, days later, news agencies owned and controlled by China's central government, they started trolling all those companies. Okay, they accused Nike, H&M, Burberry, and others of smearing China with lies and spreading false rumors. Funny thing, Jack, because those are the three companies that are from the U.S., the EU, and the U.K. These newspapers encouraged boycotts and nationalistic Chinese citizens are obliging by boycotting those brands. And then this got kicked up a notch because China's e-commerce sites, they started like erasing H&M dresses from their websites. Shopping malls,

with those huge signs by the road saying what stores are in the mall, I can picture it. They removed signs that say Burberry's in this mall. Gone. Oh, and influencers, actors, celebs over in China. They ended Adidas and Nike marketing deals that they'd already signed. So, Jack, what's the takeaway for all of our buddies who are doing business with China? Political risk is the most arbitrary risk, but it may carry the most impact right now. And political risk has become a gigantic one for U.S. and China business. As the U.S. and China become on worse and worse terms with each other, cross-border business between the two is risky. Yeah, and the part CEOs and shareholders honestly just like hate the most, it's the arbitrariness of it all.

Exhibit A, last year, President Trump selected TikTok, and he tried to shut down that app because of its China ties. Jack Exhibit B, you got China's government selecting Nike and trying to gin up a boycott due to its U.S. ties. For decades, American CEOs saw the Chinese market as the number one top growth destination. And now they're seeing the Chinese market as a top question mark. For our third and final story, you can't make this up. We got the re-rise of the WeWork. Snackers, WeWork is actually finally becoming a publicly traded stock. Okay, the best part about this is that this sounds like it could be a six-part Hulu series,

I think it's becoming a six-part Hulu series. A co-working zombie goes public with help from a professional seven-foot tall basketball player. Oh, I see the franchise opportunity here, Jack. Now, WeWork is going to WeMersge with Bow X Acquisition Corp to go public via SPAC. Yes. And Shaq. Shaq. Shaq.

He is an advisor to the SPAC that WeWork is merging. He's doing like Papa Johns, and he's doing WeWork. Now, this sounds like a good headline for WeWork, but let's give a little context. In 2019, two years ago, WeWork was worth $47 billion as a private company. Then in 2020, that dropped and they fell to a $3 billion valuation. And now they're going public at a $9 billion valuation, like less than 25% of two years ago. But all right, so we got to go back to 2019 Jack because WeWork was more me work then. Yeah, it was all about the founder, the charismatic guy, Adam Newman.

Yep. And then the IPO paperwork pretty much exposed that this wasn't a tech company. This is a commercial real estate business is what this is. It's a real estate business with a CEO who tricked SoftBank into thinking it was a tech company. Now, here's the important thing, Snackers. A couple months ago, we mentioned this. WeWork has been reworked. It had some reworked on. It did. And that was all because of the work from home situation. Work from home caused memberships at WeWork to fall by 23% to 476,000 people working at rework. Jack, I am still kind of shocked by this number. WeWork lost $3.8 billion with a bead dollars just last year.

They went through a makeup. Yeah, they did. Cut some jobs. Yes, they did. Untapped the kombucha cags. Why not? And they stopped painting hustle everywhere in their buildings. If it's not in script, then are you even hustling?

And get this, they massively just dropped how much they were spending on their buildings. They spent $2.2 billion in capital expenditures in 2019 on like renovations and like all that hustle paint. And that fell by over 99% to just $49 million in spending on all those buildings last year. Which brings us to the end of the end of. last year where WeWork realizes they could kind of benefit from work from anywhere. WeWork is banking its future on a flexible office culture. Here's what they're thinking. Work from homers are going to want to get out of the house a bit. You're going to want to work from a WeWork sometimes at a new office space.

So revenues have stopped falling for WeWork and they actually expect hope maybe to become profitable later this year. So Jack, what's the takeaway for our buddies over at WeWork? The untold story here, Spacks are really venture capital bailouts. Yeah, WeWorks 2019 IPO. It failed because it went through an IP. process, and that exposed some major issues with the company. The IPO is all about the S-1, the document every company must file to IPO. And for WeWork, it revealed that their unit economics,

two years ago, were fundamentally unsustainable. But here's the thing with SPACs. Spax face a whole lot less scrutiny by investors. That's why you've seen 295 of them so far this year. We're talking for a weekday, Jack. Nick and I have said we like that SPACs let regular investors like you and me invest in companies sooner instead of having to wait years until their IPO. True, but then with SPACs, we see this weakness that maybe they're too easy for companies to actually go through. Let's look at Japanese venture capital firm SoftBank, which is the lead investor in WeWork. It has put $16 billion of money into WeWork, which is more than the company is worth in its entirety today. To repeat, soft banks put more money into WeWork than it's WeWRWRth. And now that WeWork is SPAC 18 months after the

failed IPO, SoftBank thought, finally has the opportunity to sell their stock and get out of this losing investment. So, Jack, basically, the real winner here is SoftBank, and SoftBank is going to be tremendously relieved if the SPAC actually gets done. The losers may end up being the SPAC investors who buy into this new WeWork stock. But don't get the transparency into WeWork you get with a typical IPO. Jack, can you whip up the takeaways for us to start the week? Threadup isn't just online thrift. Nope. They found a fourth player. First-hand retailers are selling their returns stuff on threat up. For a second story, Nike, H&M, Burberry, they're all getting erased from

China's consumer culture. Political risk is greater and greater threat to China-US cross-border biz. We work is finally getting it stock. It's starting as Bo X, ticker symbol. We're expecting them to change to work soon. The happiest person in the room, it's softbanks. Now, time for our snack fact of the day. This one sent in by honestly a legendary OG snacker up in Buffalo, New York by the name of Tony Nash, the Tony Nash. The Tony Nash. Aloha Snackers. Carl Bashir is the first African-American

U.S. Navy diver and the first amputee, U.S. Navy diver. He joined the Navy in 1948 and became a Navy diver the following year. In March of 1966, a salvage operation accident resulted in Bershear's left leg being amputated. Two years later, he was back in the water and recertified as a diver,

and in 1970, he became the U.S. Navy's first African-American master diver. He embodied his matro. It's not a sin to get knocked down, It's a sin to stay down. The 2000 film Men of Honor Sturring Cuba Goody Jr. is inspired by Master Chief Brashear's life.

I remember that movie, Men of Honor. That scuba suit is heavy. I'm stressed just thinking about it, Jack. It's a great movie and a legendary snacker. Thank you, Tony. Before we go, Snackers, we would love to keep growing snacks daily, and we'd love your help with that. So send snacks to your buddies and ask them, H-Y-Y-S-D.

They'll be a little confused to then follow up and say, Have you had your snacks daily? We'll see you tomorrow. If you know, you know. And before we go, happy birthday to Jason L from San Diego. And Ryan Hallowatti in Saskatoon, Saskatchewan. Definitely a hockey player. And Lori Yoli in the Dominican Republic.

And Pat Tuck in San Francisco. And Amin in Jersey City. And Amalini Hassaback in San Francisco. And John Webb in Lake Norman, North Carolina. And Sean Weber in Cedar Rapids, Iowa. And happy birthday, Sammy Hirsch in Boca Raton. Congrats to Ray Robertson for getting a first home in Atlanta. Oh, and Jack, David Aguirre just sold his first home on Long Beach.

Awesome. and David Keller celebrating his first day on the job in Rippin, California. Well, Jack Renata Onman, got a new job over in Brooklyn. Congrats to Swarov, also getting a new job in Toronto, Canada. And Pritha became a professor over at Drexel. Not too shabby. Ryan Allion just registered his LLC, fantastic move in Houston, Texas. And Sarah got into a master's program just outside Providence, Ronaug.

It's better than just outside of Boston. It is, and Mark and Christine just got engaged in Studio City, California. Congratulations, and Gina Shrek is their first year anniversary at the Village Workspace in Centennial, Colorado. And to anyone else celebrating something today, make it a D-Boy. Celebrate the wins. This is Jack, nickel and stock of The Real Real. 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.