The Best One Yet - Uber Freight’s $200M annual allowance, Starbucks’ 1st pick-up only store, and AT&T’s 23-page love/hate letter

Episode Date: September 10, 2019

Uber is already deeply unprofitable, but whipped up $200M to invest annually in its fastest-growing business: Uber Freight. Starbucks will launch its 1st pick-up only store in New York this fall, but it’s the early sign of American companies copying Chinese ones. And AT&T was smacked with a 23-page letter by a new major hedge fund investor, and it’s calling for huge change.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 Tuesday, September 10th. How are we feeling right now? This is a good one. This is a little better than yesterday. This is the best one.

It's a lot better than yesterday. First story is AT&T. It just got a 23-page love-hate letter from one of its biggest investments. A hedge fund bought $3 billion of the company and then basically said everything it's doing is completely wrong. Finance is weird, but this is the ultimate shade throwing. I hate when people write a letter about me like this. Second story is Uber. Uber freight is now a thing.

And Uber freight is getting $200 million of investment. per year. It could become bigger than the Uber. Third and final story, just in time for pumpkin spice latte season, Starbucks will open its first pickup only store in New York City. But it highlights a key future trend we weren't expecting. Now, Snackers, this is, I hope, our last plant-based introduction in a while. We got to talk about a plant-based tweet situation here. On Friday last week, we mentioned all of those really creative companies. We're talking incognito over here. Incogmito is one of the new plant-based meets. Great branding. So Jack and I were curious and we said, all right, what are our snackers ideas for some plant-based brand names?

The results were wild. This was insane. Midnight, Friday night, I was laughing out loud on Twitter. Jack, two hours before you, I turned to the waiter at the restaurant where Molly and I were eating, and I said, you got to see these things. So we're going to give her top four favorite responses. Should we do the honorable mentions first? Sure. We'll do the honorable mentions first.

All right. First, we had Unmeatable from Lance Recker. And then we got Meatopia from Damian DeVilla. And then we had Stranger Wings from Pepe Vogue. And then almost meat by Terrence. So these were good. These made us chuckle. But these last four were really, really good.

Can we start with Akarsmanauts? Yes. Chicken of the tree. Then we got Miss Steak by Marvin Springer. Miss Dash Steak on that one. And they can't believe it's not me. From Carlos Aguillo. That one gets me every time.

This last one's a little freaky. It never had legs. By Michael Babino. Those are our favorite four. We're going to put those on Twitter and on Instagram. And Snackers, we want you to help us determine which was the best plant based brand name out of all the plant-based tweets. We're going to do a poll.

Whoever gets the most gets a T-Boy shirt. You know it's coming for you. Snackers, thanks for submitting awesome names. You're tuned in the snacks daily. We spoke to the lawyers and we got to get some. Snacks about the hearing food is air candy. They don't reflect the views of the robberhood family. It's all informational just so.

You know, 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, AT&T just had an emotional day. The biggest we've seen a take, the stock ended up. But it was only after like a ridiculous amount of insults. Now, we're talking about an open letter addressed to the board of AT&T. Open letter being, you know, the kind of letter that you read privately, but you're humiliated publicly. They tend to be very negative, and the audience tends to be like everyone else to hate on it.

I feel like before we cover this story for AT&T, we should have kept them on hold for half an hour. The writer, the author of this letter, is the hedge fund Elliott Management, which is led by a billionaire named Paul Singer. It just acquired $3.2 billion worth of AT&T stock. 3.2 billion is a lot of billions, but AT&T is really big. It's only 1.2% of AT&T. AT&T is the size of about, I don't know, what do you say? 20 lifts. Maybe more.

It could be. It's worth $270 billion if you put all of the stock in more. one basket. Now, that's a lot of money to take as an investment in a company, but there's no, like, legally binding requirement that AT&T has to listen to our friends to hedge fund. Like Mark Zuckerberg actually owns over 50% of Facebook's voting shares. This company only has 1.2%. So when we're talking about AT&T and the letter here, Jack and I jumped in snack style, and we read through all 23 pages, world's longest letter. Beautiful cover letter. Incredible. Nice letterhead. Someone definitely spoke with like their college career office on this one.

classic calligraphy signature. You got on the left side who it's addressed to the address, and then it begins, Dear AT&T, board. It started very polite. It says this letter reflects our deep conviction in the extraordinary value opportunity that's realizable at AT&T today. That was the high point. It got very low blow from there on it. Right after that, he's like, in the last decade, the S&P 500 is up 193%. So that's like a measurement of most of the stocks in the stock market. So if you could have just not picked any stocks and invested in the S.P 500, you'd be triple as rich. But AT&T only rose 42% in that 10-year period. Not good.

They say it's time for change, and they have a four-part plan to increase the value of the stock by 65% by 2021. They then spent the next 22 pages of this letter basically throwing insults real housewife style at AT&T. All right. Insult number one was directed at the CEO. I felt like I was in a Bravo show with like Andy Cohen on this thing. Very much implied that the CEO should be fired and that the board should be completely I believe the direct quote is, this is the moment to determine the right team in the next decade. By the way, we read into that. That means it's not the current team. Yes. Now, the next part was kind of a

low blow about the big iPhone F up that AT&T used to have. Basically, remember back in the day when iPhone 3? It came out for the first time. It was only available on AT&T. That was the thing. Every ad was like, only available on AT&T. So that could have been a big deal and a big value driver for AT&T. But AT&T had such bad service at the time that customers were begging for another option. And eventually, iPhone opened it up to the other providers. And then their third big insult was about like an identity crisis here. They basically said AT&T couldn't figure out where it was in the world. T-Mobile and Sprint are clearly low-end. Verizon is clearly high-end. And basically AT&T needed to take a gap of your figure itself out. It never really did. Now, the highlight table flipping issues. I know where you're going

with this. AT&T, I'm really mad right now, was the bad acquisitions of the last five years. AT&T failed to acquire T-Mobile, which was a problem. And actually, since it failed, T-Mobile got a breakage fee, which was like a billion dollars, which it used to become a bigger, bigger deal. Instead, AT&T has splurged. It spent $67 billion to buy DirecTV and then $109 billion to buy Time Warner. Sounds like they spent almost $200 billion on cable companies, which doesn't sound that wise considering cord cut. You served it up so perfectly. They bought a direct TV, a satellite TV company at peak TV time. And now they are one of the most indebted public companies in the world. and number one most indebted in America.

And millions of people have stopped using DirecTV because of the satellites. So, Jack, what is the takeaway for our buddies who are a little wounded over at AT&T? The biggest issue is AT&T's leadership. It is now a tech company led by Landline Phone Guys. The current CEO, he's been at AT&T for 12 years. That's like iPhone 1 era. And the guy they just promoted last week to C.O. John Stanky, terrible name.

Brutal name. Really rough. He has been in telecom for 21 years. Since 1998. Elliot, the management company, the hedge fund. It is disgusted that AT&T is not looking outside at telecom history to find some fresh blood who knows tech. It's promoting from within in the landline industry while it's trying to compete against Netflix. Remember this.

AT&T, it owns HBO, which makes Game of Thrones. They're definitely competing against Netflix. So Elia only has 1.2% of shares, but this open letter could get support and it could lead to changes. So stock rose 3% yesterday. It wants leadership to be more iPhone, less landline. For our second story, Starbucks is planning a pickup-only store. It's for people in a rush. And that's a big deal.

It's for people in a rush. It's for people in a rush who aren't satisfied with the situation right now. Yes, there is a situation already for people in a rush at Starbucks. You've seen this. You walk in. You maybe order it ahead, and then you got to push Joe out of the way. Push Julia out of the way. Yeah, yeah.

You can order on your phone while you're at your desk and then run down and your coffee's there. You mine through like 30 people to get to the front. And then they don't even, you know, you know what I mean. They have a little sticker on. it's not as personal anymore. So clearly we need something for people in an even bigger rush. Good timing for CEO Kevin Johnson to tell Bloomberg that they're developing a pickup-only Starbucks. This is a Starbucks you can't even go into. You can probably request that they still misspell your name. You're thinking Jack with Justa K and Nick, they always spell it A&C.

Now, I'm thinking there will be just a tiny little window near a very crowded subway station. Sounds charming. It's starting in New York City in Manhattan. One flower. That's where it's going to happen. It's going to be this fall. And this will satisfy the people who are like, don't talk to me until I've had my coffee. You will literally not talk to anyone and get your coffee from Starbucks. Basically, this is a vending machine with a pulse. Yeah. The target, according to Kevin Johnson, is people on the go.

Which is hilarious because that is every human being in New York City. Get out of the way. We're not interested in talking. We're trying to get somebody. Right. So this thing is going to be like NASCAR pickup style. You walk up to the place, five seconds later you have paid and had your coffee. You're going to not realize you had the coffee.

It's like the coffee gets you, you don't get the coffee. The thing is, New York already has these. It's those little coffee carts. I love those things. And they come with a little Greek, blue and white coffee mugs. Bodegas on wheels. We got to bring those coffee cups back. That's the competition for Starbucks.

Starbucks, forget like the holiday cup. Do the Greek cup. Now, this is a perfect compliment to Starbucks's already hugely successful mobile app and delivery future. Snackers, Jack and I were blown away by these numbers. No joke, we had to sit down and take a breath when we heard them. 17.2 million. That's how many Americans are using the Starbucks mobile app. But get this.

40%. That's the percentage of Starbucks sales that came via app. So 40% of everything bought at Starbucks in the United States uses that little QR code. Instead of a credit card, instead of cash. That's what they're doing. Instead of Bitcoin. Now, this is key too because these pick up only stores, if they become a thing for Starbucks, these could become profit puppies.

Think about it. Currently, Starbucks is selling a coffee for like four. 50, but they're also taking care of the bathroom. You're also giving free internet space. They're cleaning tables. Very nice. They're playing some lovely soundtrack. Instead, this time, you're getting the same exact coffee, but Starbucks doesn't have to pay for the space, the internet, and the lovely music soundtrack. So the profit margin on these coffee cups could be a lot more than in-store coffee cups. And if all goes well in New York City, you could be seeing these they're thinking next in LA, Boston, Chicago, Seattle, and San Francisco. All the cities where people have no time. Jack, I

Still can't go over that 40% number, but in the meantime, can you tell us the takeaway for our buddies over at Starbucks? American companies are now stealing Chinese ideas. Starbucks tested this pickup only concept, not in New York. It actually was tested over the summer in China. Yeah, it was a store concept called Starbucks Now. It started last summer. Basically, these were like, quote-unquote, express locations. Here's the thing, though. Luckin Coffee did that first in China. And Luckin Coffee is a Chinese company two years old that now has 3,000 stores in China. And now Starbucks is stealing Luckin Coffee's ideas. It's one of the first few examples we've seen of this, but we think it could be a future damn American knockoffs. There is a podcast in China right now venting about how Starbucks is knocking off China. By the way, this is Nick and Jack and I both own shares of Luckin.

For our third and final story, this one was a surprise. Uber is getting seriously serious about its fourth biggest business line. Freight. With a capital F. Yes, Uber now has a fantastic four of business lines. I just like saying freight. Well, I'll tell you, freight is definitely that like orange earthquake guy and fantastic four who can just like stomp. There's always like one football player on the team who's nicknamed Freight.

Yes. Now, Uber Freight is a gig platform launched in 2017. Basically just connects truck drivers with people who need to ship stuff. It's Uber regular, but for huge trucks. Huge, huge vehicles. And if you're in case you're wondering if they've got clients, they've got some actual impressive clients. Legit clients already. AB&BF is shipping kegs across country.

Niagara bottling is shipping water? I think so. I'm not sure. And Land of Lakes is shipping sticks and sticks and quarts and courts of butter and other dairy from the Midwest. We need 5,000 sticks of the good stuff going from Indianapolis to Rochester stat. We're calling Uber Freight. Here is the news.

Uber Freight will get $200 million of cash money from Uber every year as an investment. 2,000 employees are just going to be allocated to the freight division for the next three. years. Yes. And Chicago, Illinois will be the headquarters in the old main post office building. Great building. Right in the loop. Transport Capital of America, from what we understand. Yeah, they have two airports. They're on the water, which is good for transport. You're not selling me here. They got an elevated train. It's a decent resume. Their teams are bowls are fast. Centrally located in Great Deep Dish pizza. That's all you need to be transport capital. So the fantastic four for Uber is Uber, which you all know and you use, Uber bikes and

scooters, Uber eats, and now Uber freight. Now, here's the thing about Uber freight. And we thought this was interesting about what Uber is doing. To boost profits, it's actually spending more money. Uber loses over $3 every time someone takes a ride because it's subsidizing the fare. And it's about to spend $200 million a year on a whole different division. So it's losing money, but it's about to spend money to fix it. It doesn't totally add up, but then you look a little further, and it still doesn't really add up. That money, that $200 million a year, it's going to hire the 2000 employees, Nick mentioned, and then it's going to give new drivers you sign up for Uber Freight, like some sweet perks. Yeah, Jack noticed these details here. They're going to get

discounts on gas. They're going to get new tires. We're talking 18 tires because this is an 18 wheeler. They're going to get bonuses for joining. Cash money bonuses. Not too bad. If only got one per a tire. Now, what happened here was it launched two years ago, and Uber's seeing results. It's the fastest growing division at Uber. And now it's going big. So, Jack, what is the takeaway for our buddies hauling hard over at Uber freight? Will Freight be different than Uber's other businesses? Jack, we got to talk about the Uber situation because there is a game plan here that Uber follows. That seems to be a problem. It's not resulting well. It's like the Uber curse. So it develops a great app. That great app gets copied. And then there's a price and a promo

code war with a bunch of competitors. And then all of the competitors plus Uber end up unprofitable. And the reason this all happens is because Uber has no real barrier to enter. Yes. To become an Uber alternative, you just need to develop an app and sign up drivers with promo. And it has to be a great app. That's really true. And it has to be really good at what it does, but that's about it. Look at Uber. It was first to ride hailing. It was first to food delivery through an app. It has a scooter and bike app. Now there are tons of competitors offering the same product. And Uber freight could easily be followed by Amazon freight, lift freight, or any other name followed by Freight. So we're looking out to see what are the barriers to entry for Uber Freight.

And so is Silicon Valley. Jack, can you whip up the takeaways for us over there? AT&T is getting hijacked by an activist investor, Elliott Management. They want to change the company. They want to change it now. They want a higher stock price. And they want all done by 2021. And a nice letter tells it why. That's a great takeaway. I barely even breathe there. Second story, Starbucks new profit puppy might be coffee windows, not coffee stores. And we noticed that American companies are starting to take ideas. from Chinese biz. Third and final story, Uber Freight is getting a big new budget to become the Uber for kegs and

butter. We know you can only hear this right now. So if you're trying to picture it, picture Uber, but with a really big trunk and non-humans in the back. I'm picturing that Batman scene in Chicago with the Joker. Everything cool happens to Chicago. Snackers, time for our snack fact of the day. This one has to do with the fact that viral food can be viral just like viral offline.

Viral food sales. Popeyes doubled the number of people in the stores with this chicken. chicken sandwich, fried chicken sandwich. Not only that, rivalry. But their sales over the period of time that the sandwich was actually selling were one third made up of chicken sandwich sales. Just go viral. It's that easy. It's like a mic drop situation.

Just go viral. We're going to walk away from there. Snackers, make sure you hit us up on Instagram and Twitter to vote for the best plant-based meat brand. We love what you guys came up with. We love talking with you. At Robin Hood Snacks on Twitter and Instagram. Should we do this tomorrow? Talk to you then.

I'm in. The Robin Hood Snacks podcast you just heard reflects the opinion. 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.