The Best One Yet - “TikTok refuses to sell TikTok” — Oracle’s TikTok-uisition. Pepsi’s dream drink. Delta’s frequent flyer fundrais

Episode Date: September 15, 2020

The winner of the TikTok sweepstakes is officially oracle — even though they’re technically not buying it. Pepsi whipped up a drink to help you fall asleep because it’s part of the beverage trend of 2020 — functional. And Delta is raising money in the most creative and airline-ish way possible: Frequent flyer miles.$ORCL $PEP $DALWant 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 Tuesday, September 15th. Nick, we don't have time. We have to get right into this T-Boy. You have to. This is the best Snacks Daily we've ever done.

Jack, first story. The wait to see who will be TikTok's U.S. parent company is over, and it's anti-carmactic. And Microsoft dropped out of the old TikTok sweepstakes over the weekend, and Jack's and my bid got rejected. Nick Jack got rejected. Now, Oracle is walking away with TikTok kind of sort of.

It's weird. It's actually not really an acquisition. We'll get more to that in a second. Second Story, Jam. The company that makes Mountain Dew just unveiled the anti-Mountain Dew. Pepsi is launching a beverage to help you sleep, which is all part of the real beverage trend of 2020. For our third and final story, Delta needs to fly somewhere, but it's doing what you do when you're low on cash and you need to fly somewhere. Jack, it's using its frequent flyer miles.

Yeah, about 6.5 billion worth. But before we jump into all that good stuff, Snackers, happy Tea Boy Tuesday to you. Nick, this quarantine's been going on for a while. your hobby might have been finally figuring out how to nail the headstand. Yeah, week 46. Congrats, by the way, don't stay inverted too long. Jack and I are in doctors, but that doesn't seem good. Nick and I have been working on something else,

and it's called Robin Hood Snacks Video. A little thing called Robin Hood Snacks Video. Drops today. We're talking one video a day, two stories in that video, three minutes of stuff. Fewer words than Snacks Daily, which you know and love, but more our faces in this video product. Could be a good thing, could be a bad thing, kind of a thing.

Nick and Ivo are filmed. in this whole thing from our living room. So we expense from Robin Hood a camera that's like it could handle that crazy highway scene from the Matrix 2. Everyone's wondering why all those Sephora boxes showed up to our homes. We also got a production team adding enough visuals to like enter the streaming

wars. Yeah, we expend some facial products too because we're in front of the cameras now. We're not going to throw a plus sign on this though. We're keeping it simple. J.T. would approve. We're simply calling it Robin Hood Snacks. Video. And best snacker in a supporting role goes to you if you check it out and give us some feedback envelope, please.

Follow us on Instagram at Robin Hood Snacks and see this video every time it drops. Or subscribe on Robin Hood's YouTube page, YouTube.com slash Robin Hood app. Robin Hood Snacks video, it's a thing. Now a thing, let's hit our three stories in the meantime. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way.

It's snacks about the hair ain't food. It's air candy. They don't reflect the views of the Robin Hood family. It's all informational just so. We're not recommending any securities. Nope. It's not a research report or investment advice. Not an offer or sale of a security.

Right. Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, Microsoft gets denied by TikTok, which refused to sell itself to them. Instead, TikTok is offering to let Oracle be like it's data chaperone instead. This is getting kind of dramatic over there. but the big answer means we got to go back to August.

Yeah, this is one of those stories that require some context. In August, President Trump said he would ban TikTok because it's owned by a Chinese company. It's a social media platform that he doesn't fully understand. So there's a lot of confusion here. And many of his buddies in the government think that TikTok would hand over data on U.S. TikTokers if the Chinese government asked it to.

So like based on that whole national security concern, President Trump sent September 15th, calendar's marked as the deadline to ban the app from the U.S. The only way TikTok doesn't get banned is if a U.S. company takes over TikTok instead. This sounds like the beginning of like a young adult novel. It's kind of trailer-ish, yeah. Set the scene perfectly, which is why Microsoft emerged suddenly to make the most sense as the most interested buyer to acquire TikTok. Yeah, they were publicly interested in acquiring

TikTok. Walmart made less sense than Microsoft as a buyer of TikTok, but they were the most interesting buyer that we talked about on this pod. There was a lot of entertainment around that. Then on Sunday night, Jack and I are like wrapped up, pajamas on, teeth brushed, and we get a notification on our phones. My phone ignored, do not disturb mode, and told me that Microsoft sadly confirmed that its offer to acquire TikTok was denied by ByteDance, the company that owns TikTok. So the first thing Jack and I think in these moments, Snackers, full disclosure is, is there something we just recorded on our podcast that we now have to re-record? Yes, we're like, do we need to go back to the microphones and edit something out?

Unfortunately, we did not. Instead, though, we waited a day and then what happened yesterday was the even bigger news. TikTok said, we're not going with Microsoft, but we are going to give Oracle a rose. Yes. Kind of. It's a beautiful thing. But instead of a rose, we're kind of going to give them the stem of a rose. Instead of selling itself to Oracle, TikTok has come out and said, we want Oracle to become our trusted tech partner. Yeah, awkward way of friendship there. Now, it's like if the bachelor ended, but instead of the couple getting married, they just became roommates and one of them promised to always do the laundry. Yeah, TikTok is needy, and it needs a ton of computing power for its app to run on 100 million Americans' phones. Now, currently,

all that information, all that data, all that computer work, that's happening on Google servers. But as part of their proposed like kind of acquisition deal to appease Trump, this will now happen on Oracle servers instead, aka an old school tech company with top marks and enterprise security, because enterprise means business. Now, because when we heard Oracle might acquire TikTok, we were like, Oracle would have no idea what to do with TikTok. Now, honestly, Jack and I were whiteboarding this thing, the best option we came up with for an Oracle acquisition of TikTok was Larry Ellison turning his private Hawaiian island into an influencer island?

Larry Ellison founded Oracle. He's the current CEO. He's really rich, but has no clue how to use TikTok. Taylor Lawrence, run with that idea. Let's please make that happen. So TikTok's new proposal, instead of having Oracle become its parent company, Oracle will be more of like a guidance counselor for TikTok that it only has to see a couple times a year. Is she all but you're like, should I be an econ major or a finance major? I don't know. They're like, I don't know. Come back next to It seems the most substantive part of this deal is that it's going to move TikTok's precious user data on Americans from Google servers to Oracle servers. Oh, and just a little thing they threw in for fun, TikTok promises it's going to have a new U.S. headquarters and add 20,000 jobs to it. True. That's the cherry on top. So, Jack, what's the takeaway for our buddies over at TikTok? Will President Trump acquiesce and accept this non-deal? That's the question. Snackers, President Trump was adamant back in August and then as recently, is last Friday, that TikTok must sell to a U.S. tech company or it gets banned.

And this deal is not a sale to a U.S. tech company, so it must get banned, according to Trump's words. And that's because China reportedly refused to sell its crown jewel tech to an American company. And it's kind of TikTok to make a counteroffer, but this deal doesn't even solve the original national security concern that got us talking about the ban in the first place. It basically doesn't answer the question. But despite all that, Jack and I think there are a few specific reasons why President Trump might still accept this quasi-semi-halfway deal. First, the founder of Oracle and its chairman of the board is an outspoken Trump supporter. Second, President Trump will be able to brag that he leveraged his power to get 20,000 new jobs, all those TikTok jobs.

And third, if he accepts this deal, President Trump will not annoy 100 million TikTokers who will be super bummed if the app gets banned. maybe take that bumming into the voting booths. Nothing annoys a TikToker like shutting down your app. TBD whether Trump accepts the deal or not. If he doesn't, the app gets banned September 29th. For our second story, Pepsi just revealed its first drink to help you sleep. And this drink is the capstone to the beverage trend of 2020 that we're seeing. And snackers, to truly appreciate and jump to this story, we're going to travel back to January of this year when Casper had its IPO. Nick and I jumped into the IPO paperwork for Casper, the mattress company, Snacks style, which said it was supporting the third pillar of the health and wellness

trail. It was a bold statement. First pillar being fitness. Second pillar being nutrition. Jack, the third pillar. Sleep. Both Casper mattresses and now Pepsi are tackling that pillar of the wellness trend. So here's what's coming in December.

Interestingly, direct to consumer. It's Drift Well, the first Pepsi drink that promotes relaxation. Now, background, this was an idea that some worker at Pepsi came up with through an internal pitch competition that was like emailed to the whole company. Sue Sharks, who wants to invest $500 at a $20 million valuation? Driftwell is a seven and a half ounce mini can. It's adorable with non-carbonated water and hints of blackberry and lavender. It spent like six months hanging out in a Swiss spa. But the key ingredient here is L-theonine, which is like a calming compound found in black and green teas. The second key ingredient is magnesium,

which helps you sleep, but once again, Nick and I are doctors, so like, be careful with the magnesium. There's definitely one Snacker Jack who's going to do a headstand and then take a bunch of magnesium, and then we're going to get sued for the first time. Hints of lavender, L-thian, non-carbonated water, and magnesium. Did Snape brew this up in his dungeons? Yeah, you get a five-point slithering situation going on here, but the branding itself, a little bit more modern. They're going with the minimalist lowercase, not a seraph in sight completely sans-serra. They can, though, looks identical to the endless, summer movie poster you saw freshman year at every dorm room. Every freshman year movie poster. But Snackers,

Pepsi itself, they're famous for their caffeine. Now they're making a drink that has the opposite impact of caffeine. Now, this feels like the circle of life of every marketer's dreams. You're too sleepy, have some of them caffeine. Oh, shoot, you're too awake now. Have some of our other drink to help you sleep. Which is perfect, Jack, and I call it the problem solution life cycle, and it's the goal of every marketer's best intentions. You win twice if you sell one product. that causes another problem, which you can solve with your other product. Double the success. But the real insight here, Snackers, is that consumers are demanding more premium drinks, and Pepsi loves premium prices. Pepsi's main product is a 10-pack of Pepsi,

and for the little 7.5 ounce cans, that's $4 for that 10-pack. We noticed though that lavender drift well, that same 10-pack of mini-cans, it's four and a half times that price. Driftwell looks like a profit puppy waiting to be born. 18 bucks a pack. So Jack, what's the takeaway for our buddies over at Pepsi? The beverage trend for 2018 was Spike Seltzer. For 2019, it was CBD-infused drinks. For 2020, it's functional drinks. Snackers, functional beverages, drinks that provide some key benefit for your health from one key ingredient. The market for functional beverages grew by 7% last year, and it highlights the power of wellness in drinks. And in the last year,

things have been kicked up a notch. Look over at Coca-Cola, Pepsi's rocket. They just introduced Coca-Cola energy, which has B vitamins. And AHA Sparkling Water, which is Sparkling Water with caffeine. But it's not just the soft drink companies, because Molson Coors also now has Visi Alcoholic Seltzer, which includes antioxidant vitamin C. So you can get tipsy while concurrently fighting off the common cold. Again, we're still not doctors. But Pepsi has laid the groundwork in 2016 by buying a probiotic-packed kombucha company called Kavita,

and they've been innovating on functional beverages from there. Just four years later, functional beverages is the fastest growing segment within PepsiCo's balance sheet. Now they're launching Drift Well, which solidifies functional beverages as the drink trend of 2020. For our third and final story, this one's wild. Delta has a cash crunch. So it's mortgaging off its frequent flyer program to raise $6.5 billion. So like the Delta execs got around a table, opened up some peanuts, and they're like, all right, guys, all right, guys, recline a little bit. Let's look at these numbers. Ed, we've raised $16.5 billion of emergency funds since the...

pandemic started, but we're still losing $27 million every single day. We have enough cash runway right now to survive another 611 days. I just said runway. We need cash fast. We can't call JG Wentworth. What can we pawn? Basically, that's the situation. So Delta just announced it is borrowing money and it's using its Sky Miles program as collateral.

It is the same situation as doing a mortgage on a house. You can borrow at a lower interest rate if you've got something big as collateral. So Delta's borrowing $6.5 billion. And if it can't pay back those $6.5 billion in loans, the lender's not going to take home like a brand new 737 Delta airplane. And no, they're going to keep themselves the Sky Miles program, Delta's legendary frequent flyer program. If you want to throw Nick and me some miles, we'll be happy to take them off your hands.

Frequent flyer programs, by the way, Snackers, we jumped in snack style. Turns out they really became a thing in the 1980s and now we're like an intricate web of relationships. Airlines make money by selling your miles to banks and retailers that need those perks for their credit card holders. And you may see them come up as points, not miles. But Chase Sapphire, for example, they may offer you 60,000 miles if you sign up for their card. They're not just giving away those miles to Delta Airlines for free. J.P Morgan Chase is paying Delta for the right to offer their flights as perks for their credit card holders. We said it before. We'll say it again, Delta isn't UNICEF. It never stops being funny. It never gets old. But,

If you use a co-branded Delta MX card, the airline wins even if you never go to an airport. And we see it in Delta's earnings reports. Travel bookings are down 60% this year because of COVID. But spending on Delta's MX co-branded credit card is only down 5%. And every one of those swipes leads to cash for Delta a total of $2 billion in the first half of this year. AKA frequent flyer programs are incredibly valuable right now. So United Airlines and Spirit Airlines, have both just raised money similarly using frequent flyer miles as collateral.

So, Jack, what's the takeaway for our buddies over at Delta? Delta is a credit card company now more than ever. Snackers, few things drive loyalty like the vanity of a metallic status. And Jack, I don't make this awkward, but where are you out on the spectrum here? Oh, Nick, you just made this awkward. Let's support it this way. I'm not at bronze, because that's a relationship killer if the other side finds out. Tinder, make this a thing on the profiles, and then you won't have the awkward relationship

status and balance. We've actually got a metal inflation problem because I think Delta's lowest status is gold. What about silver and bronze? They completely ignore the carrot situation. But here's the thing, Snackers. Banks love partnering with airlines on these co-branded credit cards because of that loyalty. Just before the pandemic, Delta renewed its epic partnership with American Express for the co-branded credit card. And Delta projected that the cash it would make from that card would double to $7 billion by 2023. has a lot of partnerships, including historically that Costco one, but the Delta partnership is Amex's biggest by far. Get this Snackers, 20% of spending on all Amex credit cards happens on their

Delta branded credit cards. Before the pandemic, Delta was becoming a credit card company. And now, with its whole travel business gone, Delta is basically a credit card company. Jack, can you put on a shirt and whip up the takeaways for us over there? Tick-Tac's parent company refuses to sell Tick-Tac to an American company. Snack is it's given its rose stem to Oracle, though, and it hopes that's enough to avoid a Trump ban. For our second story, Pepsi used to sell carbonated water with sugar, syrup, and caffeine. Now it's focused on functional beverages, the big trend of drinks in 2020, we're calling it. For our third and final story, Delta, like all airlines, is struggling with lost travel demand due to COVID-19. So it's posting its frequent flyer miles as collateral,

because it's basically now a credit card company. It is a credit card company. Now, time for our fact fact of the day, this one tweeted in by a snacker who goes by Robin Hood Snacks Reviewer, aka they are a fan or critic and or both. True story. Someone created an account called Robin Hood Snacks Reviewer. We don't know who he, she, or they are, but they usually praise us, sometimes criticize us. Yes, that's what he or she does. Now, he or she pointed out that separate S-E-A-R-A-T-E is the most commonly misspelled word in Google in 2020. In fact, the misspelled version of the word, which I do the time, S-E-P-E-R-A-T-E, was searched 92,000 times in May alone from Google.

We buy a vowel. Now, Google's predictive text feature indicates that separate but equal was the reason for these searches. Separate but equal being the segregation doctrine from Plessy versus Ferguson that got overturned with Brown versus Board of Education. Feels kind of like Sherlock Holmes here, but this all now makes sense as the Black Lives Matter movement was growing. More people were searching separate but equal.

Shout out to Thurgood Marshall, who helped. helped overturn Plessy versus Ferguson. Now, Snackers, before we go, big congrats to Snackers Han Bay and Jesse Niebrez, a husband and wife team who just launched a business in L.A. Happy first anniversary

to Eric and Kimberly Newman in Oak Park, California. Well, Shali and Emmett want to double that. They're in Brooklyn, Massachusetts for their second year. Happy eighth anniversary to Kathy and Jason

in San Francisco, California. And a happy birthday to Elio Valenzuela in Santiago, Chile. And Aaron Lair in St. Louis, Missouri. And Helene Johnson turned 25 in Costa Mesa, California, and TJ in Guangzhou, China,

and Derek Fung and Brannan in Brooklyn, New York, and Jane Tarkamo in Newark, Delaware, and Lars Crowner in Hyattesville, Maryland, and Bruce Trout in Ellicott City, Maryland. All for the north, Aaron Woodhouse and lovely Lebanon, Pennsylvania. Snackers, H-Y-H-Y-S-D on video. Oh, this acronym is getting long jack. Follow us on Instagram at Robin Hood Snack Snack Snack Snack.

You're going to want to check out this daily video. Subscribe on YouTube at YouTube.com. Robin Hood app. 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.