The Best One Yet - “The Tesla of SoulCycle” — Peloton’s new strategy. T-Mobile’s back-to-school effort. Bankrupt brands get eResurrected.

Episode Date: September 8, 2020

Peloton’s announcing something special this week: Peloton+. T-Mobile’s splurging $11B on a back-to-school initiative for students to help crush the Homework Gap. And Retail Ecommerce Ventures is buying up the big bankrupt brands you miss, then digitaling re-launching them.$PTON $TMUSWant 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. Welcome back. It is Tuesday, September 8th. Happy post-Labor Day weekend, everybody. My personal highlight last weekend, Moulon.

Biggest $30 splurge of the three-day weekend. That's right. Disney's like movie theaters are closed. Let's do a $30. 48-hour Disney Plus rental of Moulon instead. Can I assume there's some password mooching over there? Let's just say I accidentally drop my username and password for Disney Plus into my family text chain after the movie.

Key word, accidentally. Jack, I completed surf lesson number six. I was decent to mediocre. Eventually, you'll get to stand on the board. It's a mind game. First story, Jack, what do we got? Well, let me remind the Snackers this is the best one yet, because we're kicking off with Peloton, which thinks it's too fancy for your wallet. So PFWTM say it's about to make the big move down market.

Second story, T-Mobile knows sweaters and binders are out this back-to-school season. So it's a version $11 billion on Wi-Fi hotspots to crush your homework gap. Third and final story, Modell's sporting goods is a New York City classic. They didn't say bankruptcy. Nope, they declared it. Modell stores are gone, but its brand lives on online thanks to retail e-commerce ventures. They're buying up bankrupt brands and digitally resurrecting them. But Snackers, before we jump into those three stories that definitely no one else is covering,

cue the millennial jokes. Mission Produce is about to IPO. Nick and I discovered last week. Jack and I jumped in Snacks style. We looked at Mission's IPO paperwork. Jack, first sentence. What did we see? We are a world leader in the sourcing, producing, and distribution of fresh avocados.

A.k.a. We got ourselves the first ever pure play guacamole company. Ticker symbol? Avo. Keep it simple. AVO. We couldn't make it up. By the way, they should just vertically integrate already and buy a cilantro startup.

I've never heard of just like a fruit company like this. It's bizarre. They should merge and become a little more. interesting, I'm thinking toastitos. Jack, you can't double-dip the chip. Only one merger can happen with this company. Our big question, who's going to be the first Wall Street reporter to drop the obvious avocado toast millennial zinger line first? Every time a company files to IPO, Nick and I jump in snack style to the S-1, which tells you everything you need to know about the company before investing. But Snackers, Jack and I are pretty sure we know what our takeaway would be, Jack, the

takeaway early. Gwok is always extra. Let's hit our three stories. Always. You're tuned into 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. 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, according to PFWTM, Peloton is launching a cheaper treadmill this week. We've seen the strategy of going down market work before for luxury brands. Now, Soul Cycle Snackers' context was the spin cult of the 2010s.

Nick, you know what they say? If you can't tap it back in position three with the tribe, you can't sit with us. So true. Pricing Snackers, it's a powerful tool, and Peloton is about to go two-tier on this thing. According to PFWTM, people familiar with the matter. Peloton is announcing two new products this week. Yep, so we're giving you a sneak peek. A sneak peek here.

You got the current treadmill that they're pumping out. It's $4,300. They're going to rename that the Tread Plus. They're renaming it because they're coming out with a new treadmill that cost 30% less than the Tread Plus. Not the cost of a small car. Meanwhile, their main product, the current bike, that's going to set you back $2,200 if you want to pedal on that thing. But they're dropping the price of that key flagship Peloton bike by $18% to $1,900. Jack, this I think puts it in the realm of socially acceptable to put on the wedding registry.

Nick, it's a reach wedding registry item. You're going to put it on the menu. You don't expect anyone to take it, but put it on the menu and give yourself the chance. You got to write two thank you notes when you get one of those things. Now, Snackers, they're dropping the price because they're launching a new, more expensive, fancy bike that they're calling. Wait for it. bike plus. Nick and I heard this

and we're like, bike plus, is that a new streaming service? Because it sounds like a new streaming service. The plus sign is like the new ampersand when it comes to startups. Now the plus for Peloton means like the upscale version. They could have gone the Uber route

and called it Peloton Black. No. Which is the upscale version. They're going with the Apple streaming version. Now, what's the difference is what you're asking between the upscale and the low end pelotons, Jack? Flexible screens.

Yep. Bike Plus and Tread Plus are trying to become your one and only home workout purchase, the only thing you're splurgeon on for the home. The PFWTMs are telling us that the screen that comes on the treadmill and comes on the bike, it can flip to the other side, the opposite side of the bike, and it can pivot from left to right. Boom, your bike becomes a glorified TV stand so you can do other non-bike peloton workouts on the floor. Layout a yoga left of your peloton bike, and the screen can face you so you can do core on the floor, yoga or tabata, whatever you want to do.

Why would you get a mirror when you can want to? Emma Lovewell's Peloton hit class off the bike plus. All these classes are included in Peloton's library of streaming fitness classes. So Jack, what's the takeaway for our buddies over at Peloton? It's way easier to go down market than it is to go upmarket. Snackers top luxury brands, they establish themselves as exclusive to justify the high price. And then finally, when they want more customers, they can launch a cheaper option because there's pent-up demand from us peasants who've been waiting behind the Velvet Road. And as long as they don't dilute that brand for us, peasants, too much, it's still a luxury brand. Now, the opposite approach would be to start with a cheap product

and then to reach with a higher, more expensive product, aka going up market. Doesn't work, which is why we've seen Pelotan's downmarket moves happened before. Imagine Tesla. They started with a $100,000 roadster, yep, then launched an $80,000 sedan, then an $80,000 SUV, and finally the $35,000 every person car. Look at Tiffany. these classic $10,000 necklaces, now it's spending on a new T-line of jewelry with $100 bracelets. From posh to peasants going down market. For our second story, T-Mobile just announced extremely generous donations to American school kids. It's spending $10.7 billion on Wi-Fi hotspots for every American kid in need.

That headline number is insane. We're talking more than one lift on a single initiative. This isn't your $50 donation to like your campaign. of choice. No. This is 10.7 billion. And Jack and I are calling it Operation End the Homework Gap. We were curious about why they're doing this. Nine million American students can't do homework right now because of insufficient

internet access at home. Julie, can you get off the Wi-Fi? I'm trying to download the attachment. Students shouldn't have to buddy-buddy with the manager at Dunkin' Donuts to get the Wi-Fi password at Dunkin' Donuts. Snackers, it's after Labor Day. That means right now 50 million kids are not going back to school. they're staying at home for school. Reliable internet is the school bus, it's the classroom,

it's the exam this school year. So T-Mobile is like trying to come to the rescue here as like a telecon company that can help out. Here's the headliner. For students in the United States who qualify for reduced lunch, T-Mobile is giving away a bunch of tech goodies. So here's what's in this thing. You get one free Wi-Fi hotspot, which, full disclosure, Jack and I are recording this podcast on Verizon hotspots right now. We're both in places with like unreliable internet. So we got these like power packs from our work that literally connect with satellite dishes and give us the internet. They're incredible. And you're getting 100 gigabytes per year of free high speed data. Right. That can be used for the hotspot or for like your phone if you prefer to just, you know, cast out the hotspot from your phone.

And T-Mobile is selling laptops at cost so there's no markups. They're not making any profit. Feels like a nerdy Oscars gift bag for the students of the United States. Jack, toss in some dongles and this thing is DiCaprio worthy. TeamMobile's goal is to hook up 10 million American students with connectivity to the internet so they can do their homework. But here's the thing, there's some catches here, Snackers. It's not for like binging Dude Awesome on YouTube. It's for zooming into your class and for doing your homework. So students and families can't like directly apply for this.

Right. It might get abused if this was like open on some website for anyone to apply. The school has to apply for this program and then they'll distribute the free grab bag to all of their eligible students getting reduced lunch. Now AT&T and Verizon, they have similar programs like this. this, but nothing as ambitious or at the scale of $11 billion. Team Mobile takes the cake because they're putting $11 billion to American students. Jack, sometimes you've got to toss a lift on it. So what's the takeaway for our buddies over at T-Mobile?

Why is T-Mobile doing this? Nick and I have asked ourselves, it's not just benevolence. I'll tell you that much. Snackers, T-Mobile, it's not UNICEF. We've decided three reasons why T-Mobile is splurging $11 billion on kindness for American kids. So the first one here we got is just it's straight up customer love. There are enough purpose-driven young consumers who might pick T-Mobile instead of Verizon or AT&T because of this awesome move.

All right, but then we go over to D.C. And we're thinking, you know what? Maybe they're trying to appease regulators. Remember, T-Mobile merged with Sprint and regulators were very nervous that they would take advantage by jacking up prices. So T-Mobile tossed on like a pink crew neck and said they'd be good corporate citizens. This is them being good corporate citizens. This is pretty good corporate citizen move.

And then the third and final key why T-Mobile is doing this, get the kids hooked on a free sample. This is Nix and my like own sinister brainstorming on why T-Mobile might do this. Yeah, Charlie, here, get four bars of service and you'll come back for more. Remember, these hotspots are capped at 100 gigs per year. When they run out, the students and the families may have no choice but to upgrade and become paid customers of T-Mobile. Either way, it doesn't show up in the income statement,

but there is good karma here, and we're hoping karma, comes back to Team Mobile for this move. This is a net, net, good move that we're huge fans of. For our third and final story, what is happening with all these bankrupt companies you know and love? Some are getting sold for scraps. Yes. But we noticed others are being reincarnated as e-commerce companies. They are rising from the bankruptcy court. Snackers, we're talking companies that have gone bankrupt since March. There is a long list. GnC. Your protein powder favorite. J.C. Penny, the protein power for your mom. Pier wine imports, where they make things made of fake bamboo.

Joseph A. Bank, 14 suits for one. Modell Sporting Goods. Odell Beckham Jr. Jersey. Snackers, bankruptcy. It's not the end. It's a new beginning of a legal battle. Companies go bankrupt because they owe more money to people they could ever repay. And so they're desperate to sell all their assets just to repay like as many people as they can as possible, including employees. So Nick and I are going to jump into the balance sheet of a. company that has just declared bankruptcy. At the very moment they declare bankruptcy, Jack, can you whip up the least valuable assets that this company has to sell? Yeah, the stuff that they

sell, like the shirts, the pants, the tables. We've all seen 80% off blowout going out of business sales. Their stuff becomes worthless. The signs are like four feet tall. But Jack, can you whip up the most valuable assets the company has to sell? Sure can. Their logos, their brand names, their social media handles with all those followers and the email lists of anyone who's ever bought something from that company. You haven't unsubscribe from all of them Snackers. Now these companies, they're not dead. They're basically just zombies. That brings us to retail e-commerce ventures, aka Reve. Interesting company we noticed, two smart guys who basically buy up those corporate scraps as if they're a private equity firm. The mission of retail e-commerce ventures is to turn bankrupt brick-and-mortar stores

into profitable online-only versions of those stores. Case in point, REV, retail e-commerce ventures, sees Models sporting goods go bankrupt, and then they offer to buy all of Modell's IP. They're like, you guys keep all the jerseys, you keep all the footballs, keep the basketballs. We just want the Modell sporting goods name, the song, and all those commercials,

and your social media handle. That's the IP, the intellectual property that has real value to them. Then they relaunch Models as an online-only store, and announce that they're back on Twitter and Instagram, where they already have thousands of followers because they bought those social media handles. And you recognize Models because of those

gotta go to Mo's commercials we've heard for decades. So then they set up the Shopify account, they build a website, and they start sourcing sporting goods to actually sell. Instead of connecting with customers through a storefront at the local mini mall, Models will connect with you only through social media. And retail e-commerce ventures

has already done this with like linens and things, peer one imports and models. They're much more nimble because they don't have the legacy debt and other baggage that the pre-bankruptcy company was struggling with. You got no emotional, financial, or any other kind of baggage, including literal. So Jack, what's the takeaway for our buddies who are bankrupt companies? A company may die, but the brand can live on forever. Snackers Toys R Us famously went bankrupt 2017. But if you Google buy toys online, guess what shows up right there on the first page of Google.

You got Jeffrey the giraffe showing his big head. People have heard of Toys R Us, and they can't think of many other brands or places where you can buy toys. I can't. So when you see the brand Toys R Us, you know what it actually stands for and what it's selling. Toys R Us couldn't survive with its massive and costly physical store infrastructure. But the brand can relive online managed by new owners focused online. Toys R Us has done exactly that, and they're not the only one. Jack, it feels like a while since I've said this, but can you?

you whip up the Takeways Force over there, please. Peloton this week is debuting a slightly cheaper and slightly more expensive version of the tread on the bike. Going down market, start with the high end, eventually offer lower end for the masses. T-Mobile hopes to connect 9 million U.S. students to the internet. Crushin the homework gap could boost T-Mobile's profits too. Third and final story, bankrupt companies are getting reincarnated online. The problem wasn't the products, it was the costly physical stores, so they're going online only. Now, time for our snack fact of the day. This one tweeted in by James in lovely Boston, Massachusetts.

We just passed the 83-year anniversary of the peak of the polio crisis in Chicago, Illinois. We're talking about a disease that was disabling 35,000 Americans every year, most famously, President FDR. Now, the polio crisis is relevant today because we got a COVID crisis. Back then, they put quarantines in place to stop the spread of the disease. And that was until American scientist Jonas Salk from Michigan, was the first to actually whip up a vaccine. A UMish go blue grad, Jonas Salk, destroyed the polio virus. And the U.S. has been polio-free since 1979.

Snackers, before we head out, congratulations to Federico and Maria Victoria for getting engaged. Got on one knee on the Charles River. And congrats to Kyle McKenna engaged over crab cakes in Annapolis, Maryland. Tis the season to getting engaged. By the way, congrats to Josh Richard Winston, who just joined our. ROTC, the Reserve Officer Training Corps at the University of Maryland. Owen Allen proposed to Anne-Marie in Los Angeles, King's Canyon National Park. Congrats to Marie Davis for getting into her top choice MBA program.

And to Damien and Yvonne just moved in together in San Jose, California. Happy birthday to Stephen Barry 30 in Los Angeles, California. And to Maim Stark turning 60 in Decorah, Iowa. Into Tajun Williams in Philadelphia, Pennsylvania. And to Yusuf in Cairo, Egypt. And Tyler in Rexburg, Idaho. and Dimitri Crowder in lovely Atlanta, Georgia, and Amber Morris in Marina del Rey, California,

and Jessica Stein in New York City, and Nala Luna in San Francisco. And happy birthday Hudson, your sister Sabrina and Mom Marina, we know they're proud to. By the way, Snackers, Nick and I get tons of shout-out requests every day. We can't do everyone, but we're sending T-Boy vibes, even if we don't shout you out. If you want one, just fill out our form right here

in the podcast description of what you're listening to. Happy, not technically, fall, but unofficially fall, everybody. on a cable knit and ask your buddies, HY, HYSD. Have you had your snacks daily? Thank you for helping us grow. If you know, you know. This is Jack, Nicco and Stock of Shopify. 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.