The Best One Yet - Uber lost $543,478 per hour last quarter, Walmart launches alcohol pickup, and Under Armour plummets 18% on sneakers

Episode Date: November 5, 2019

Uber lost a shocking $1.2B last quarter, but now it’s hoping/planning to hit profitability in 2021 (same as Lyft). Under Armour is suffering from a sudden accounting investigation, but the real issue is with its core business, and its sneakers. And Walmart launched alcohol pickup (and some delivery) across 2,000 stores because it can’t beat Amazon on price.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 in November 5th. Yeah, we're one year away from the election. Get ready for a lot of ads in your face, probably. Get ready for some in your face terrible hate ads. In the meantime, Jack and I decided we should make this the best snacks daily we've ever done.

Well, markets are at a record high. That's what I heard today. We're kicking it off with Under Armour, who is not feeling good right now. No, not at all. Or a CEO stepped down the other week. Earnings were bad. That was a trouble. There's a borderline scandal brewing over.

All of it happened yesterday. Some of it broke on Sunday. night. We're going to break it all day. Yeah, we're going to do this story. Second story is Walmart. It just launched alcohol pickup at 2,000 Walmart locations. For one single reason. Amazon can't do that. Nope, this is a bring your own pickup truck situation. They'll put a keg in the bed. Third and final story, Jack, what do we got? Uber versus everybody. First the world. For some people versus most people. No, first everybody. Uber announced its third quarter earnings yesterday. They were actually not bad. Not too shabby. But the stock fell 6% because everyone is just hating on Uber.

We're going to break down Uber's big three revenues in the meantime. But before we hit those three stories. Can we talk about the four-day work week situation? This is kind of my idea. I've been talking about this for like 12 months. Tim Ferriss has got like the four-hour work month or something going on. I like the four-day work week because honestly, what do we need more in this country? Happiness and what makes everyone happy a three-day weekend.

Right, but I have always been a fan of the four-day work week-to-week-weekend situation. You got Monday, Tuesday, work? mini weekend Wednesday? Thursday, Friday, work, and then a weekend. So Microsoft is experimenting, just like Nick and I wish we could experiment. Apparently they heard about us talking about this kind of a thing. So they're doing this thing called Work Life Choice Challenge at Microsoft's Japan Offices.

The name needs a little help. It may have been a translation thing. We're not sure, but, you know, they're working on it. So in Microsoft's Japan offices, you can just do a four-day week if you want to try out this challenge. Plus, they're like encouraging you to have fewer meetings because, you know, meetings are the worst. Now, Microsoft is a tech company, and tech companies record data on everything.

Aggressively, apparently 2,280 employees said they were, quote-unquote, impacted by the new four-day workweek situation. Good, bad? I don't know. Where are they going with this? Well, Microsoft says productivity at these offices by these participants in the four-day week. Boosted by 40%. 40% productivity boost because of the four-day workweek. I'm guessing that means 40% more TPS reports. Microsoft, you can either do the four-day work week, You can do two-day weekend.

You can do a two-week, four-day work week. Play with the options. You'll work harder in four days if you know that you got three days off. Bottom line, everybody wins. Let's hit our three stores. 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 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 Right Snacks is digestible

Business news for you Robberhood Financial LLC MEPA SIPC For our first story Under Armour just dropped 18% yesterday

After announcing earnings And an issue with its sneakers And yes A federal investigation Into its accounting practices None of this is like good stuff For starting a Monday Well I peaked out

As an Under Armour customer In high school I remember well we'd wear the lacrosse version was everyone more size, medium, extra skinny, tight. The only workout I cared about was bench press, and Under Armour made me look huge. The only reason why it wicked sweat is because it was so tight you had to sweat in this thing. Your body was screaming. So the Wall Street Journal reports on Sunday when Under Armour's supposed to be resting.

Jack and I are trying to get ready for bed, and boom, we get an alert that Under Armour's got some kind of investigation going on. Federal investigators have been looking at Under Armour's accounting practices. They busted into the Baltimore headquarters and said, Show me the files. Stop playing wallball. Everyone put down the lacrosse sticks. We've got to talk accounting. Now, a shocker, Under Armour's been cooperating with investigators for two and a half years.

So we know what you're thinking. How come they didn't disclose this to investors already? I guess the CFO said this wasn't important enough to disclose. Technically, they can make that call if they don't think it's material to the stock. So the investigation is whether Under Armour is fudging when they're recognizing that revenues are made for, like, clothing that's being sold. So this kind of situation where, like, the CFO comes in and says, Hey, you know, I don't know if this pile of shirts that came in came in on the first or the 31st. Well, that might really matter because let's say the first and the 31st is the difference between the third quarter and the fourth quarter.

It means they could allocate it to a different quarter, which means those costs may have come in at a different quarter, which means their profits may have been affected. So if they're nervous about like not hitting their Q3 numbers, the CFO might say, hey, Jenny from controls. Jenny, we got to talk. You know that pallet of cold gear headed up to Vermont? It arrived on the 31st. She'll be like, no, it did? Yes, it did. And that's manipulation.

Jenny doesn't know what to do. It could result in the stock price jumping up, but that's like just not true and not reflective of reality. So that was the issue that kind of surprised everyone on Sunday night. But on Monday, they released the earnings. And there were a couple interesting trends in this earnings call that Jack and I noticed. We noticed the management was just really trying to distract you from the things that happened in the past. Great quote here. To focus only on the future.

Jack and I heard this quote, we couldn't sit down. We thought this was hilarious. Here it is, quote unquote. So now we're focused on 2020 and beyond. The CEO made many references to the next chapter. Jack's doing air quotes on this thing over here. It's like a couple that's in a fight. And one side's like, hey, I know we made mistakes.

Hey, it's in the past, baby. We got the future out of us. It's all us. We're going to out why. We're going to open up that restaurant. Under Armour has had hard time since 2017. So, Jack, what is the takeaway for our buddies over at Under Armour? Under Armour stock plummeted at 18%.

Not because of the scandal. Because of its core business in the third corner. Snackers, Jack and I have talked about this with you before. Under Armour's gone hard on being more aath, less leisure. It decided to become a louder brand, quote, unquote. Want it to protect this house so hard. That's what they keep by saying. A louder brand.

Go to the website right now. It'll say performance gear, performance. They're trying to hit you over the head with performance. Here's the problem. There is a trend towards ath leisure, and people are not trying to be like pounding their chest like we were in high school. And we can see this now in the earnings report because Under Armour sales, in its home market, North America, home turf. We're talking like the Knicks at Madison Square Garden, fell 4%.

That's where Under Armour is supposed to be doing well, and it's not. And even more damning, sneakers, which is like the heart and soul of any sports apparel company. This is their bread and butter. Sales of sneakers fell by 12%. This is like going to cats' deli and finding out the pastrami sandwich actually is only mediocre. If you're a Bears fan and the team's like having a losing record, that stinks. But if the Bears' defense stinks, that's even worse. I'm embarrassed. Don't even get me on it.

Under Armour sales declines in shoes is reflective of the heart and soul, like, just not beating red. If you can't do sneakers, then you can't really do apparel. Nice. For our second story, Walmart just launched alcohol pickup at a whopping 2,000 stores nationwide. And delivery. Alcohol delivery. In some stores. At some stores. We know what you're thinking.

You've tried to do alcohol delivery before. Jack and I tried this last year. It's a huge pain in the butt. We wanted to send a buddy of ours a gift of whiskey. It wasn't our friend Timmy. We tried to send him Whistlepig, that Vermont distilled situation. Meanwhile, we're looking. We see it online.

Not available right where he is. Well, the worst thing is we tried to surprise this buddy with Whistlepick. And you can't surprise deliver because to deliver, you have to have a 21-year-old there to sign for it. You're like, can I use Postmates for this? Do I use Drisley for this? What do I use? Can I go Instacart? The whole thing's fragmented.

The whole thing's confusing. All right. So there has been an arms race in delivery and grocery delivery specifically. It's aggressive. And alcohol pickup and alcohol delivery is. like the ICBM Intercontinental Ballastic Missile. You only want to touch this thing, but you want to be all over it. So 2,000 stores in 29 states are now letting you pick up alcohol at the curbside,

or you might have to run in and pick it up at Walmart. And 200 stores in two specific states are going to get it delivered. California and Florida. Just what California and Florida need. More alcohol, quicker. Now, of course, an adult's got a sign. Yeah, you need to be 21. You need an ID.

The hilarious thing here is that Walmart actually has its own brand of alcohol under Sam's Club. Well, it has its own brand of like everything. Pretty much. Under Sam's Club. Yep. The brand is called Maker's Mark. Oh, sorry.

Members Mark. But they love that you made that mistake. They do. So they have a members mark brand like, you know, whiskey. Whiskey. They got a members mark brand sangria and they've got a members mark brand Praseca.

A couple other details about this alcohol pickup. This isn't crazy willy-nilly shenanigans here. They've got rules when it comes to Walmart alcohol pickup. For example, you can't pick up more than 20 gallons of alcohol on one pickup. Did anyone know how much that is? I do. How much is it?

It's a keg and a third. Everyone's got that one friend from college, the frat starts like, it's a keg and a third that's technically a pony keg. There's also no discounts allowed on this alcohol, because alcohol is like serious stuff. And you can't order this stuff if you're already drunk, which I don't know how they're verified this. I used to sell alcohol at the Alv Garden, actually. It's like your discretion.

We're talking about the Kianti salesman of 2011. Now, Snackers, there is one key reason why alcohol delivery is such a, focus for Walmart right now. It's groceries. Walmart wants to win groceries. Walmart thinks that groceries are the key to its future. If it has your groceries, Nick, yes. It has your foot in the door to all of your spending. Because if you're buying groceries, you're probably doing that every week, if not every two weeks, so you probably should be. And you want to do a one-stop shop situation. So you want to get the chicken and get everything else. You don't want to be in that situation like, honey, I got the chicken and now I've got to go schlep and get them or low.

So for grocery pickup to work, which is like how it's trying to be Amazon, it needs to include booze. Right, because grocery delivery and alcohol delivery, that is the Batman to the others Robin. Is that an SAT question? This is the ying to the yang. It's the other half of the others' avocado. So, Jack,

what's the takeaway for our buddies over at Walmart? You can't beat Amazon on price. You have to beat them on anything else. Exactly last week. Jack and I were chatting with you on Snacks Daily about how Amazon had just launched free grocery delivery. Our takeaway, at the end of that story, where

Amazon offered free grocery delivery to any prime member was, you can't beat Amazon on price. Amazon will do whatever it takes to be the best price in the market. Apparently, the Walmart execs heard that because they're not going to beat Amazon on price. They're not even going to compete on price. So we're picturing a war room in Bentonville, Arkansas, where Walmart's headquarters is, where everyone is just getting around and figuring out, how can we do something that Bezos can't do? They're like, all right, Todd, give me the marker.

Give me the marker. Right. 90% of Americans live within 10 miles of a Walmart. True. Amazon doesn't have that. I'm on to something here. Yeah, what else? Here we are we on.

For years, we've been working with local governments to make sure we comply with liquor laws. True. We have a track route. All right, we got some momentum. You got an idea? I'm holding out to the market. I'm going with this thing.

Why don't we beat Amazon on boo's convenience? Like pickup? Let's do it. Oh, we got. Let's do it. Let's do it. Let's do it. And that's do it.

And that's how. Walmart played this. Walmart found a way to do something Amazon can't do and it's not price. This is Jack. I own stock of Amazon. For our third and final story, Uber just did better than Wall Street expected, but it still got spanked by investors. The stock's down 6% right now. It's been a rough time. And actually, can we check out the clock, Cinderella? The clock has struck midnight. The carriage is now a pumpkin. The unicorns are technically getting slaughtered. Unicorns are getting slaughtered. It hit a peak unicorn slaughter situation when we work canceled its IP.

Treat yourself to some unicorn meat now on sale at Walmart. Uber used to be a unicorn. Now it's not technically because it's a public company. It has publicly traded stocks. And yesterday it announced its third quarter earnings or lack thorough. Jack, can you give me the highlight number from the earnings report? $1.2 billion. Jack, can you give me what that was?

That was their loss. That was how much money Uber lost last quarter, $1.2 billion. Now, that was in its quarter. How many days were in the quarter? They were two months with 31, April, June, and November. So, 92 days. Okay. How many hours in a day?

Well, according to Tim Ferriss, four, but 24. Take $1.2 billion. This is Nick's math, by the way. I'm plagiarizing. Jack Fax checks me. He's an angel. $1.2 billion. He's an angel.

Divided by 92 days, divided by 24 hours in a day. How much money did it lose each hour? Uber's losing $4. $543,478 every hour. Snackers, that is so much money. They need to add a feature into the Uber app that says, hey, your ETA of the ride arriving is six minutes. By the way, Uber just lost $123,000 while you're waiting. Now, last quarter, the loss was even worse.

$5 billion, but that was a one-off connected to its IPO in which it gave out a ton of stock compensation. But you had this all up, technically Uber's on pace to lose $8 billion this year. That is really upsetting if you're an investor. And that's why the stock dropped 6% yesterday, and that's why the stock is down 35% since its IPO in the spring. As Nick and I read through the quarterly earnings report analysis from yesterday. Oh, yeah, it was tough. It struck us that everyone seems to be for rooting for Uber to lose.

Pretty much ever. I mean, the competitors have wanted Uber to lose. Nick, a few years ago, like 2015. I remember it well. It was like it was yesterday. Lyft like wasn't even a thing yet. I was actually an early adopter because I liked the pink. We were like petty catting.

But people thought that Uber, was going to be the world dominator of rat house. It was on its way to crush the world. It was. And now there's competition everywhere. Uber is still giving out all those promo cards. You got regulators now that are all up against Uber. California law just classified Uber drivers as full-time employees.

That's going to make the loss situation even worse. Even restaurants that are tied into Uber eats, they're revolting against Uber. This was a great article in Reuters. They interviewed the CEO of Bear Burger, which is, I think, based in New York. Fantastic. They've got a great impossible burger. Bear Burger gets 20% of its sales from the delivery apps, not just Uber, but also DoorDash and

Postmates. But the CEO of Bear Burger has gone out to say that these delivery apps, like Uber Eats, they're just a necessary evil. He's not even a fan of them. He has to pay Uber Eats money to show up high in the rankings when someone searches Burger in my neighborhood. And that eats out like 15% of his profits.

And he's paying delivery fees too. And that 15% fee that he's paying on all of these burger sales, that's one. wiping out Bear Burger's profit, so they're planning to, like, get off the acts. Everyone seems to be against Uber. So, Jack, what's the takeaway for our buddies over at Uber? Uber promises that it will stop paying for growth in 2021. Snackers, we know what you want to know, which is we keep talking about how unprofitable these unicorns are.

So when are they going to become profitable? I mean, that's the hope that they become profitable someday. Apparently, 2021 is this golden year for Uber and Lyft? And to these unicorns credit, Facebook used to be unprofitable, and now it's insanely profitable. So that's the role model they're going out. Conveniently, Lyft mentioned that it plans to become profitable in... 2020. And Uber just mentioned it plans to become profitable in...

2020. Magical year. So there's some solidarity between Uber and Lyft. They're both telling investors, wait for 2021. That's when we'll be there for you. That's when we make dollars. But here's the thing about the rest of Uber's numbers. Its profit problem has been shielded, guarded, protected by its growth.

If you just look at the sales growth, you'd see that rides rose 20% in last quarter. It's pretty sharp. Eats delivery rose 71% last quarter. That's significant. Makes me judge my time. Freight, which is like tractor trailers for Uber. How big is that? 81% growth last quarter.

But to fund all this growth, Uber is paying for it with discounts, with promo codes, throwing you 15% off here and there. Nick, I'm not a good lawyer, but I could probably get people in my office if I gave out promo codes and like paid them to take advice for it. Technically near those or even lawyers. If you're paying for growth, is that really growth? Jack, can you whip up the takeaways for? The investigation into Under Armour's accounting practices, those could become fines someday.

But its underlying business is shrinking in its homemark. Yeah, that's not good. That's never good. Walmart is rolling out alcohol pickup at 2,000 locations. It's doing what Amazon can't do because it can't eat Amazon on price. And Uber's results show that it's still paying for all that growth. But it promises, it's going to stop paying. It's going to start profiting by 2021.

It promises. I just want to talk to you. Snackers, time for our snack fact of the day. This one's sent in by William Alexander. Adams in Memphis, Tennessee. The price of a bottle of Coca-Cola, Nick, stayed at five cents. One nickel for 70 years. As a result, like all these vending machines, they only took nickels.

Yeah, for 70 years, nickels was all you needed to take. But before they raised the price to become a dime, 10 cents, eventually, the president of Coca-Cola had a aggressive ask for the president of the United States President Eisenhower. Can you please create something between the nickel and the dime? Coca-Cola literally asked the United States to create a 7.5 cent coin so that it would be better fitted for its vending machines. Well, also, because they didn't want to double the price, but that was kind of the only price increase that was on the table. We're kind of limited in the coin.

It's like a dollar store. Hey, we need to make more money. Uh, $2 store. William, we loved this one. Thank you for sending it in. And remember, Snacks. You can send us your snack facts at Robin Hood Snacks. Before we head out, did you know we're on Spotify? We're also on Spotify.

Snacks Daily is there right next to Beyonce, right next to Ariana Grande. They're all listeners to Snacks Daily. Elton John's there, too. It makes sense. He enjoys Snacks Daily, too. So you can follow us on Spotify by clicking that little follow button. Literally, go to Snacks Daily on Spotify, click follow, and listen to us there. No matter what, we'll be back tomorrow, and I can't wait to Snack Daily.

We can't wait. It's going to be awesome. 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.