The Best One Yet - “The tech 5 and the 495 others” — Impossible Foods’ $200M differentiator. GM’s divorce. Why S&P 500 hit record highs.

Episode Date: August 20, 2020

Apple is now worth $2T and the S&P 500 hit a record high, despite the economy getting crushed. We’ve got the 3 reasons to explain why/how. Impossible Foods has now raised $1.5B to scale its plant-based meats, but it also just found its differentiator from Beyond Meat. And General Motors is tired of being so general, so it could strategically split into a 2 companies.$AAPL $BYND $GMWant a shoutout on the pod? We got the form for Snackers to fill out right here:https://forms.gle/KhUAo31xmkSdeynD9Learn 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, August 20th. Snackers, this is the best one yet, and our first story's insane. T-B-O-Y, Jack, what do we got? First story? Apple is the first company ever to hit a $2 trillion valuation. Mazel toad, nice job. The S&P 500 just hit a record high yesterday. Oh, that too shabby looking good over there. And Death Valley, California, just hit 130 degrees Fahrenheit. We're going to focus on the first two because we found three reasons why stock, are living their best lives while the rest of the economy is kind of sick. For our second story, Impossible Foods is the top rival to Beyond Meat, and it just raised $200 million in fresh funding.

Unicorn of the day over here, now it's taking the opposite strategy of its publicly traded rival. It's opposite day. We're checking it out. Third and final story? For our third and final story, General Motors is tired of feeling so general. It's a very vague term. So it wants to be potentially split into two different companies, Jack, the honors.

A boomer GM? Okay. And a Gen Z GM. Oh yeah, we got names for both those ones. But before we jump into all that good stuff, Snackers, full disclosure, Jack and I, 1988-188 babies. And Fuller Disclosure Snackers, from 1992 to the year 2000, I was wearing 16 Husky and munching on Dunkeroo's every day after school.

Jack actually had his own personal food pyramid. Now, the reason we wanted to focus on this is that Dunkeroo's aren't just a classic throwback. They are one of the great food business mysteries of all time. Gen Z, you've got to listen up because you weren't even alive. for this. It was a tub of vanilla frosting. Yes. And then you dunk a cookie into that frosting, and it was marketed as like a healthy after-school

snack. Sometimes you used a finger, sometimes the dunking thing. Doesn't matter. Turquoise was big back then. And the dunkeroo's logo was a vaguely offensive thing in Australia, because it was like this active kangaroo with like a headband and sunglasses. It was like doing a leisure before that was a thing.

Now, sales started declining in the mid-1990s because new regulations said, you know, you couldn't market this directly to eight-year-old. They're basically like if the food content is 140% added sugar, you need to put it on the top shelf so the children can't even see it in the grocery store. So Dunkeroo's got discontinued in the U.S. in 2012, but then were strangely still sold in Canada by General Mills. And naturally, when something's available north of the border and illegal south of the border,

a little slot in the Customs and Border Control right around Vermont and Canada forms, and Dunkeroo's flowed south into the states. People began smuggling the calories across the border until they disappeared from Canada in 2018. Okay, so then we had a two-year drought from 2018 until today with no Dunkeroo's nationwide, borderline worldwide. But then Jack and I noticed this summer, Dunkeroo's magically returned. They hit 7-Eleven store shelves for the first time. The high fructose corn syrup is back, baby.

Snackers return to Dunkeroo's officially the best thing to happen in 2020, but it took something from the 1990. Let's hit our three stars. You're tuned in to 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. Robahood Financial, LLC, member FINRA slash SIPC. For our first story, we just hit a milestone moment. Actually, a few of them. The SMP 500 hit an all-time record high in the middle of a global pandemic and the worst economic crisis in a century. The stock market right now, it's kind of like your buddy Timmy's Instagram. It's living the glam flamingo float lifestyle in like a Montauk pool.

Definitely sipping on some kind of alcoholic shelter. And then the real life for everyone else is like another Friday night on your couch. Yep, frozen pizza. Same frozen pizza, same sweatpants. Getting text from Timmy to come out. Now, the S&P 500 is like a giant scoreboard for the entire stock market. That's how you got to think. And there are 500 players in this game, which are the 500 most valuable publicly traded companies in the United States. And that one number, the S&P 500 indexes number that we get to see every day, it is a weighted average of all 500 of those stock prices. Now, during the peak COVID-19 freak out, the S&P 500 was falling like, 10% per day. Yeah. And hit a low down 34%. But since March 23rd, when things were really ugly,

the S&P 500 is now up 50% since then. Since March 23rd, it has been a steady climb to the top of the mountain with no backtrack. Now we're at the top of the mountain and yesterday we closed at a record high for the index. Snackers, we need to emphasize this. Stock prices have literally never been higher than right now. Which means, Jack, we should probably do like an economic pulse check here. how is the rest of things going in the economy? COVID-19 is ravaging the earth. America's GDP is down 33%. That's true.

Our unemployment is worse than like decades. 10%. And we have no vaccine for it. No, we don't. Winter, by the way, Snackers? Like literally coming. Not some kind of 2019 joke with Game of Thrones. So Nick and I put our heads together

and we have three reasons to try to bring sense to this disconnect between the stock market and the economy. Disconnect is like the least we can say on this. The S&P 500 at a record high, everything else feels depression-ish. All right, the first reason, most of the corona economy losers we've talked about on this pod are not publicly traded stocks, so have no impact on the SMP 500. Your go-to local burrito joint around the corner next to the bodega could be going bankrupt.

But that is not going to affect the S&P 500 because Tocaria Cancun is a private company owned by literally Mom and Pop. And unfortunately, Mom and Pop's loss is Chipotle's gain. And Chipotle's gain means the S&P 500, is actually going to climb because of these burrito bankruptcies. All right, so the first is that you don't have like a publicly traded mom and pop situation go on. But the second is that there are trillions of free money being handed out by the government. All the airlines got a bailout.

Yep. The unemployed got an extra $600 every week on top of what the states were given out. Yes, they did. Plus, small businesses could apply for PPP grants. Evictions have been banned and student loans have been reprieved. And then America's Central Bank stepped in, which is basically the watchful guardian, Bruce, Wayne style for the whole economy. Fed chair Jerry Powell, huge Batman fan. Thanks to the Fed

stimulus efforts, if you need money in this economy, it's probably available at like zero percent interest from some rescue program. So we got the mom and shop pop problem. We got trillions of free money. Jack, for the third and final reason, let's just go to the takeaway. Nick, am I allowed to say the takeaway without whip up the takeaway? I didn't say you up as we typically would, but I feel like this is a takeaway moment. The S&P 500 should rename itself. It's really the Tech 5 and the other 495. Snackers, the five big tech companies represent a whopping 20% of the stock market's total worth right now. You got to go back to 1950 to a time in America when one industry dominated the stock market like it is now.

We actually don't know what that industry is, but we're guessing it was like rail, steel, or oil, something hard. I think Pittsburgh and Detroit were big in the 1950s. Now, the S&P 500 is weighted based on a company's market. cap, its value in the market. And tech is like really heavy right now. Yeah. When Apple's stock price moves, the S&P 500 moves a lot because Apple just became the first company ever to be worth $2 trillion. That happened yesterday, right when this S&P 500 high kicked in. And look at Apple's compadres, Amazon, Alphabet, Microsoft, and Facebook. Those are the five biggest publicly traded companies in America by far. Their stocks rose 37 percent in the first seven months of 2020. Just

those first five. And the other 495 companies in the S&P 500, they are down 6% this year. So the S&P 500's is at a record right now, but without those five tech stops, it's not even close to a record. For our second story, Impossible Foods, the plant-based meat company, raised another whopping $200 million. Now we finally see the strategic difference between Beyond Meat and Impossible Foods. Finally. Now, this company, Snackers, founded in 2011, they've gone through a have to be 12 rounds of fundraising at this point. They're unlike their series L and their initial investors were Jay-Z, Serena Williams, Katie Perry, pretty much the whole A-list crap. They're not to round alpha, gamma, beta. They're going to the Greek stuff next.

Now, nine years later, they have raised a total of $1.5 billion to scale this business, but their latest investors are pretty much just the sharks on Wall Street. Little less Z-100, a little more. Little more Brooks brothers. But here's the thing Jack and I find fascinating about the $1.5 billion impossible has raised over nine years. Half of that money came in 2020 this year. Yeah, that's like new stuff they got going on. This company's an overdrive.

The Impossible Foods moves from the past two months are insane. This is wild snackers. Here's what Impossible Foods has been up to while you haven't been up to that much. If you're nervous to try your first plant-based meat burger, yeah, maybe you are. They partnered up with Starbucks and Burger King because it pairs really nicely with a latte or a spray.

If you're still nervous about trying someone plant-based, they partnered up with a company called Home Chef to do Impossible Meal Kits. You can whip up the takeaways right at home with Impossible Foods. Wanted to try it at a restaurant, but restaurants are closed, boom, they launched a Trader Joe's Walmart and Public's grocery stores. Can't find your N95 mask? They launched a direct-to-consumer e-commerce setup at Impossible Foods.Eat so you can get a chip try to your home. Kind of feels like we should issue a restraining order against Impossible Foods. They're trying to meet you everywhere you happen to be.

Speaking of trying, do you want to try out Impossible stock? No. Unfortunately, Impossible is still a sumo stock. Straight up missing out private company. They still have an IPOed after nine years. So unless you're Jay-Z, Serena Williams, or Katie Perry, or one of those sharks, you're sumo. The theme here, though, Snackers? Distribution.

Well, Impossible made an impossible pivot because COVID-19 upside-down, their business. Yeah, back in the day, you wanted to try Impossible's Impossible Burger. You were going to like Bear Burger in Greenwich Village if you wanted to actually get it. They were pretty much only available in restaurants. In fact, back in March, there were only 150 grocery stores nationwide that carried impossible foods like ground meat so you could make your own burger. So COVID-19 killed Impossible's restaurant sales. So Jack and I noticed they've shifted basically everything to grocery stores. They basically ripped off the shipping label that was sending it to like a bunch of restaurants and slapped on like fairway, Safeway, Publix, Kroger. Now Impossible is in

9,000 grocery stores. Jack, can we do the math on this one? No lifts included. They 60xed their presence in grocery stores in just five months, Nicholas. Impossibly fast pivots. So Jack, what's the takeaway for our buddies who are just doing a lot of things right now over at Impossible? Beyond Me and Impossible are now betting on two opposite strategies for their plant-based meat. Snackers, we got a duopoly. situation here. First, beyond meat. Jack, their strategy. They're focused on one product, which is faux meat, but pursuing broad geographic expansion worldwide. They got a new factory in China. They got a new factory in the Netherlands. They're in 3,300 Starbucks in China. They're everywhere. Apparently,

Impossible doesn't have a passport because it's pursuing multiple products, but focusing entirely in the United States. Great quote we found here from the CFO. Their mission is to create plant-based upgrades. We love that they said upgrades. I love that they say an upgrade. For For every major category of animal-derived food products. First it was beef next month they're launching plant-based sausage. And next, now that Impossible has another $200 million in fresh cash, they're launching pork and plant-based steak and plant-based milk. They might as well acquire Oatley, Nick,

and I'm assuming next on their list is eggs, cheese, and fish. Snackers, when you're looking at the plant-based industry, Beyond's going broad, Impossible's going deep. For our third and final story, this is kind of wild, General Motors might split up the general from the motors. And the idea of divorcing GM into two separate companies could make the stock worth more. Conscious uncoupling here. Now, General Motors, Jack, we should actually, let's bring out the whiteboard over here.

General Motors is trying to do everything. We got a classic do less message that we need to scream to the executives in Detroit. Do less GM. We're looking at your numbers right now. Jack, they got four brands. Chevrolet, GMC, Buick, Cadillac. Jack, they got three motors. Gas powered, electric powered, and a hybrid in between. Jack, they've got two drivers. Homo sapien drivers and robotic drivers. We're talking self-driving. But we also noticed that GM has one analyst issue, and that's an analyst who says it's time to stop doing everything and just focus on one thing.

General Motors is basically the double major playing like three sports, also trying to learn Latin for some reason, because that's going to be useful. Yeah. Lauren, you don't need to do all that. You're not proven anything. Investment banking analysts have now officially started pressuring the 111-year-old Detroit car company to split into two companies. So Jack and I got to like Owen Wilson and Vince Vaughn this thing. We're just a couple of divorce lawyers. If you want to throw us a couple frequent fly our miles, we'll take a couple frequent flyer miles. We can help you out, General Motors. Now, if the company gets split into two, it'd be like really easy to decide what's actually going where.

Nick, it is such a clear decision on how to split this company up. Clean slate. You got the old company, which you could honestly just call General. Yeah. General has trucks and SUVs, gas powered cars, and the headquarters will definitely be in Detroit. And then you can add this new company, and you could just call that motors. All electric, self-driving everything with the headquarters in San Francisco. Or you could call one of them General Motors and one of them specific motors. They're like a lot of options here. The hardware, too. Now, if you split GM's assets up, just like we just described,

it would be a very clean breakup. Plus, here's what's so interesting. This could actually unlock new value for both the new company and the old General Motors. Analysts at Deutsche Bank and Morgan Stanley have both recently predicted that GM's market value could rise from today where it's $40 billion to $100 billion after the split. And Snackers, Jack and I have seen this before.

You saw eBay split up with PayPal and then Marlboro actually used to be owned by Kraft Foods. Now, actually, Nick, Kraft. I know you think. Craft, single American cheese has a lot in common with Marlboro cigarettes, now that you mention it. They say it's the cigarette of the lower intestine, Jack. Now, some companies just are worth more separated. And GM CEO just said that all options, this is a direct quote, are on the table. The sum of the parts is more than the sum of the combined. Something like that. So the stock jumps 7% on Monday. So Jack, what's the takeaway for our buddies over at GM? General Motors stock is a product too, and customers just don't want it.

Yeah, Snackers, the most valuable stocks are those where people want to own a piece of the company. Yeah, we're talking about investors. And General Motors is trying to target every type of investor, and that's a strategy that just doesn't work. It just gets too confusing. Half of its business is like dirty, huge old school trucks and SUVs. The other half is futuristic, clean self-driving tech. It's like a smoothie that's part pork belly and part like flaxseed assay. Pork belly, good, flaxseed asae, good, pork belly and flaxseid ase? Not good. No, only people drinking that are like in L.A. Not that many investors on Wall Street want the ham-handed investment smoothie. That is General Motors. But there are tons of customers who want a gas-guzzling SUV stock. And a ton of other customers who want a self-driving electric car stock. Jack, can you whip up the takeaways for us over there? The stock market is at a record high, but that's mostly thanked to just

five tech companies. The economy's hurting really bad, but that hasn't translated to stocks yet. Second story, Impossible Foods is still a sumo stock straight up missing out. But it's finally clarified how it is different from Beyond me. Beyond's going broad geographically, impossible's going deep foodically. For our third story, General Motors is under pressure to divorce itself. The sum of general and motors might be more than General Motors. Now time for our snack fact of the day. This one sent in by Steve Ropeppy at the University of Dayton. Lovely. All right.

Michelle Obama fought real hard from 08 to 16 to improve kids' nutrition in America. Classic. The lawyers over at Big Pizza found a little bit of a loophole going on in there. Yeah, they determined that two tablespoons of tomato sauce technically qualifies as a vegetable. So then the R&D department over at Big Pizza got a couple emails and decided to change the recipe for pizza. Since then, guess how many tablespoons of tomato sauce have been in kids' cafeteria-style pizza? They're just nailing it. The kids are having two tablespoons.

Now, before we head out, we want to give a quick happy birthday to Anuke in Cyprus, California. And Martina Montemora in Milan, Italy. And Zach, out in Malaysia. And Tina Young in Irvine, California. Emily, a snacker in Tacoma, Michigan. And happy birthday, Elizabeth in Santa Barbara, California. Liam Moriani. Happy 10th out in San Antonio.

Antonio. And happy engagement to Happy Musanda, first name Happy, just went down outside the Milwaukee Art Museum. Snackers. For a shoutout, check out the link to a Google form right in the episode of this podcast and you'll get on the pod. It's right there. In the meantime, tell all your friends, H-Y-H-Y-S-D. Have you had your snacks daily? We'll see you tomorrow. This is Jack. I own stock of Beyond Meat and so does Nick. Nick own stock of Chipotle, Nick own stock of Apple, and I own stock of Amazon. If you know, you 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 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.