The Best One Yet - The Taser CEO gets $246M in stock comp, Beyond Meat surges 163%, and Wayfair drops 7% because you’re expensive

Episode Date: May 3, 2019

Axon Enterprises is the company behind the taser, and it just awarded its CEO $246M in compensation — So we look in to how it’s set up to incentivize him. Beyond Meat surged 163% on its IPO day. And Wayfair is the biggest online furniture platform whose stock fell 7%, but it’s got a fascinating relationship with 80 “house brands.”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 Friday, May 3rd, and this is the best one yet. Markets fell, but this is still a T-boy. Why did they fall? Oil prices. Yeah.

Oil prices fell. Markets were sensitive. Very safe. It's like they take it personal. Yeah, oil companies in Houston weren't happy yesterday. We're a little tougher than that. Three fantastic stories we found for you guys. You want to hear the first one?

This is a wild mix. The inventor of Taser. Yes. It announced that its CEO got the best compensation package we have ever seen. We're still trying to. I'm going to count this thing. It is a long number. Two, four, six, and then a lot of zero. So we're looking at incentives built into this thing and the body camera trend. Second story is Boston-based Wayfair. This is the largest furniture-only e-commerce company in the U.S. It shares drop 7%. We'll tell you why. Now, sales jumped 39%, but there's one specific statistic we're going to focus on. And there's 80 house brands you should probably know that. And we've run out of numbers to talk about with this thing.

Beyond me is the third and final. This was a bonanza. This was insane. It's IP. is yesterday, shares jumped 163%. Is this a food company or is this a technology company? One day, 163%. Again, a really big number. So before we jump into all that, we got to talk about what's going on with Tinder's new feature. Tinder's innovating. Yes. Now, they are going to let you find people who are single who are attending the same music festival as you. Now, Jack and I are not living the Coachella lifestyle. Jack paints his face occasionally, but it's not for Coachella. Well, I'm actually about to go to Balor Rock in Napa, but I will not be using this feature because I'm I'm happily engaged.

Now, Tinder's making it so when you sign it the app, you say three weeks before the event, you know what, I'm going to be a governor's ball in New York. And I'm single. And then it will let you start chatting with other people who are also going to be a governor's ball. Now, the reason they did this is because Tinder notices that events like this, Tinder usage surges. They probably noticed from the 18 Olympics in South Korea. What happened? Usage of Tinder spiked by 348% in the Olympic Village.

At Bonneru last year, it jumped by like 300 times. I'm all about this app because I met my fiance at a beer festival in Vermont. Tinder on assistant. Before we jump into the rest of the stories, let's listen to these key messages. You're tuned in the snacks daily. We spoke to the lawyers and we got 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 Rapperhood Financial LLC

Member Fenra Slash SIPC For our first story The CEO of a Taser Company Got one big paycheck That's bigger than any paycheck We're talking

$246 million Yeah, no big deal Round Up, Round Down Nick and I were thinking Of different ways You can incentivize someone To perform well Right, risk of death

Is like a great one Back in the medieval days The Court Jester Make Me Laugh or Guillotine I'm pretty sure like every Lord of the Rings character was motivated because they were going to die. This company, on the other hand, goes with stock options. Exactly. The company itself is called Axon Enterprise. The CEO, Patrick Smith.

The customers are police departments, and the products are things you don't want to be on the other side of. No, we're talking tasers and body cameras. So there's also a technology aspect here. Axon Enterprise sells software that lets you upload your video footage. Like a GoPro for law enforcement. Well, anyone who owns a GoPro knows you don't want to edit your own video. That's the worst. So the software makes it like perfectly ready for court, courtroom evidence. Perfect.

A couple clicks and you're done. And the pay context, get this, that sum of $246 million. How did that compare to other CEOs? That is 20 times more than the average CEO of a huge American company. That's a little awkward. So Smith is the co-founder of the company. He goes way back. He's been around since like 1993.

In Scottsdale, Arizona, where he started the company with his bro. Now, the company has managed to find like the perfect cultural moment. This is its moment. Right. Because unfortunately, police killings have created huge protests and scrutiny is very high for how police handle citizen content. So there's a real push which makes sense for police to use non-lethal force. That's where the tasers come in. Exactly.

And a incentive to record what's going on so that it's not one word against the other. Boom. Axon's two main products happen to cover both of those. In the hardware and in the software department. Incredible combination. So, Jack, what's the takeaway for our buddies over Tays and people at Taser? Stock incentives are a powerful motivation. They are so powerful.

His salary right now, it is a mere modest $24,000. That's a little less, I think, than the average American. That is not much. That's like a Facebook intern. Yeah, but less free ping pong. True. So the $246 million that he's getting, it's actually just paper income so far. It almost doesn't exist.

It's not real money. It's just accounting. It's like the monopoly stuff. These are stock options. They only have value if they vest. And vesting is like, it's like going through a video game like, you're like hitting the coins along the way as you go. And you're unlocking prizes as you go. So the levels, to use Nick's video game analogy, let's run with it. There are 12 stock price level.

So as the stock price rises, some of those options unlock and they vest. There are eight revenue targets and eight profit targets. So what is that? Eight plus eight plus 12. There's 26? 26. 28? We're not getting that. There are more than 20. There's a lot of vesting opportunities for these stock options to become real money. And if he does hit those, there's me or money to be it along the way. If the company succeeds, he'll make a ton of money. If the company doesn't succeed, he's just got his 24K salary. For our second story, Beyond Meat shares just jumped 163% on IPO. Have you heard about this company? You've probably heard about this company.

We covered it earlier this week. We did. Beyond Meat awkwardly broke up with one of its investors. It was Tyson Foods. Tyson Foods. And now they're IPOing and things went crazy. We were interested. We thought, you know what?

That's an interesting story. And it's about IPO. We're covering it a second time. Now, let's talk about the company and the IPF. They sell plant-based meats. Very nice. You can find them in the grocery store. They have, like, plant-based sausages, plant-based ground beef.

Is it in the produce section? Is it in the meat section? Frozen food section? It's kind of curious. We don't know what aisle. They need their own aisle. Isle nine and three-quarters. I'll nine-and-three quarters is where you can find this meat.

They're also selling to restaurants. So Carl's Jr., the burger joint? Yeah. They signed up so that you can get a plant-based burger or a beef burger. Now, you may have heard that this week, Burger King made clear they're expanding their Impossible Whopper, which is a partnership with Impossible Foods. Impossible Foods is the biggest plant-based competitor we've heard of Beyond Meeps. But there's actually lots of startups. They're all doing the same thing. They're trying to make vegetables taste like meat.

But this is the only one that's IPO. It's Beyond Meat and all the magic happened on Thursday. Things went crazy. It was insane. First of all, let's go to the floor of NASDA. They had a couple of celebrities. They didn't have Leo. Cleo DiCaprio was not available. He's an investor. He's an investor. Just a Jessica Chastain was there. She was there. She was hanging out with Ethan Brown, who's the CEO and founder. So Nick and I bumped into each other in the vegetarian line. I know, is that like several times? I only meet a dinner, full disclosure. Yeah, full disclosure. I'm a reducerarian. I meet like once a while. We looked at each other and we thought, is this going to be our first IPO stock buy? And then we said,

you know what, let's just both jump in. We like jumped in together. But honestly, it was crazy. Extra full disclosure, Jack and I owned the stock. That's true. Share started at $25. But the first moment they hit the floor, They'd already risen to $46. Boom. And then they kept going up from there. It hit like $67. Demand was crazy high and the stock ended up 163%. So then Jack and I were like, you know, we're going to look a little further into these numbers.

And there's some really interesting things here. First of all, the revenues for the company, for Beyond Meat, were $90 million last year. And it generated a giant loss. It is not profitable. However, the company is now worth about $3 billion. We need to impress on you. That is incredibly expensive. shares, that valuation, it's bigger than Shake Shack.

Yeah. Even though Shakeshack has way more revenues in like 163 stores. Like physical stores. So when you look at other food companies too, again, the valuations compared to the revenues are not as big. Now, shareholders would tell you that Beyond Meat is not just a food company. It's going to like disrupt the whole meat industry. So one of the reasons why the valuation is so high right now.

They're expecting huge growth. They're expecting these vegan burgers to be taken over the non-vegan world. And they think this is just the star. So, Jack, what's the takeaway for our buddies over at BeyondMe? The CEO of Beyond Meat must be livid right now. Now let's talk about Goldman Sachk, which was the bank. That was the lead investment bank for the IPO yesterday. They've been telling Beyond Meat the whole time before the IPO.

You know what, guys, you're really worth about $25 a share. Don't get too greedy. You're not worth more than $25. Let's keep it at $25. Turns out investors, the whole market, thinks they're worth about $70. So Beyond Meat sold a bunch of shares to investors on Thursday for $25 each. They probably could have shoaled them for $60 each. It made a lot more money.

Now, what that means is that when a company IPOs, they raise money through when they first issue their stock. So the investment bank's job is to tell the company how much their shares are worth and to have an understanding of what investors think. Turns out investors had a different thought than what Goldman thought. Goldman must be full of carnivores. For our third and final story, Wayfair, the e-commerce company, it just saw its stock fall plus 7%.

But it's quarterly earnings. They look kind of good. Sales jumped by 39%. That's a big number. So this is the largest online-only furniture company. Now, furniture, selling furniture online, it ain't easy. You got to test it out. Yeah, that's the big issue.

You've got to sit on the love seat with your loved one, watch an entire season of Game of Thrones and make sure it's up this number. You're not just spontaneously buying a chaise. These things are also expensive. If you get the wrong one, you don't want to return it. And if you're the company that's sending these things out, you got a whole warehouse. You gotta fill with, like, furniture? Furniture's hard.

It's got to be a big furniture place. So, this company has an interesting backstory. They're based in Boston, Massachusetts. Founded by two Cornell guys a few years ago, and they basically started out by getting super niche, freakishly random websites. This is a bizarre origin story. Basically, have you guys ever been to, I don't know, everyatomicclock.com? CuckooClocks.com, cookware.com, strollers.com.

Racks and stands. They found all these customers that wanted very specific things. They even had one who, like, was really into rooster furniture. So they bundled up the rooster website and acquired customers in this weird starting way. So then in 2011, they said, you know what, we've got all these random weirdo websites for really arbitrary parts of your home. Let's rebrand and let's call ourselves Wayfair. And then they IPOed three years later in 2014. Now, here is the fascinating difference between Wayfair and Amazon, because we know you're thinking it.

Amazon has its own warehouses. But Wayfair does not. Wayfair is just kind of the customer-facing front that manages all of the shipping and the buying that's happening in the back. So you don't have to worry about what's happening on the back end. It's covering everything on the front end. Wayfair's furniture actually comes from 11,000 different suppliers that are making furniture, probably in low-cost countries. But if you go to the Wayfair website and are like, hey, I need some sconces over here, you think that it's coming from these 80 brands with names that feel, I don't know, close to America. Jack was getting really comfortable with like the Andover Mills, what was it, desk lamp? Yeah, I was checking out the website.

I also saw Winston Porter. Seems like a nice brand. Lots of different furniture. Turns out these aren't real brands per se. No, they're actually just fake brands that have been totally created by Wayfair but look like separate companies. Yeah, so instead of some commodity table that was manufactured in Vietnam and made by who knows what company, they call it an Andover Mills table. And we're not talking about like the Martha Stewart line over at Pottery Barn where it's clear it's from someone who's just a separate person. Yeah.

These are made to seem like they're actually different companies. Wayfair has 80 brands. They don't really advertise that they're their brands. They also have five different websites that are all owned by Wayfair. So you feel like your comparison shopping. You feel like you're in a whole marketplace. But it's really all Waiper. Wayfair owns the world.

In fact, we're all just living in a Wayfair system. So, Jack, what's the takeaway for our buddies over at Wayfair? Google Ads. That's why sales jumped by 39%. And it's a problem. So it turns out it costs Wayfair about $88 to acquire a new customer. And that's up from last quarter when it was $70. And that's mostly from advertising.

So they need to spend a ton on advertising to get a customer to push shipping cart, fill it up, and to purchase. So get this. Only 9% of customers of Wayfair actually go to Wayfair.com and intend to buy from Wayfair. But just as a comparison, about 70% of the buyers of William Sonoma stuff specifically looked for William Sonoma stuff. So they're only getting there because they're stumbling into ads on Facebook and on Google, and it's extremely expensive.

The company spent $244 million on Admoner. advertising last one. And that's how they have 16 million customers. Investors are nervous. They think it's too expensive. They think it's not sustainable. Jack, can you whip up the takeaways for it? Axon Enterprises. It's paying its CEO, $246 million in stock options, but no salary. Stock incentives and death. Very powerful motivators. They are. Beyond meet CEO right now is probably pretty upset at his bankers. He's got to whip out that Where's the Beef campaign. Bring it back. Bring it back. The third and final story was Wayfair. Its sales are growing really fast, but it's all thanks to expensive advertisers. If Tom Brady ordered furniture, he's probably doing it from Wayfair.

Now, we have a great snack fact of the day from Miguel Ortiz in Baxter, Tennessee. Baxter, Tennessee, home in Putnam County. Is it? Great County. The Lego company was founded in 1932 by Ole Kirk Christensen, known as O K-KK. The name actually has a meaning. Lego is an abbreviation of the two Danish words, Leg and Gaut. Yeah, which we're going to guess on the pronunciation there. The meaning of those two years, words are play well in Danish, which the company says is both its name and its ideal. It's a beautiful, beautiful, Fanchway. Parent approved right there.

Love that. Now, a couple other awesome stories you got to know, and we're covering them in our Robin Hood Snacks newsletter. Fox Sports TV channels, they actually had to be sold by the new Disney, and it got acquired by an old school cable company. And then Shake Shack shares jumped after its sales, beat expectations, and apparently it's opened its first locations in Rhode Island. Wonderful Providence, Rhode Island.

And China. China. Impressive. Both big great. growth markets. Snackers, thank you for snacking with us. If you got a snack factor that I, hit us up at Robin Hood Snacks. We can't wait to read them. Thanks again, Miguel, for this 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,

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.