The Best One Yet - Waymo’s valuation plummets, RV-giant Thor Industries jumps 16% on global camping, and Budweiser’s Asia IPO

Episode Date: October 1, 2019

Bud had a hefty bar tab, so it just spun-off its Asia beer business — and the IPO proved unsexy business models may be sexy again. Google’s self-driving car division just had its valuation slashed because it’s taking. Way. Too. Long. To. Arrive. And the world’s biggest RV-maker, Thor Industries, jumped 16% because camping is going global.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. And this is Snacks Daily. It is Tuesday. Welcome to October 1st. Yes, the fourth quarter. Fourth quarter game we're bringing today. Good thing because this is the best snacks daily we've ever done in a fourth quarter.

Get this. It's also the best first 75% of the year. Since 1997. The S&P 500 is up 19% this year. Jack, I need like a chalkboard to follow this. In the meantime, can you tell me what the first story is? First story is about Budweiser. A.B. Inbet.

Budweiser's Parent Co. It packaged up its azure business, brewed up an IPO out there. Clever. Five billion dollars. Delicious. It's an unsexy business model. That's sexy too. Second company, Thor Industries. Not sexy. Very intimidating name. The RV company has a publicly traded stock that just surged 16%. And it's because global camping is becoming a thing. Third and final story, Waymo, the self-driving car company, Alphabet's Secret Weapon. It kind of just saw its valuation fall by 40%. Tells us a lot about the state of self-driving cars. We'll jump into that one. But before we hit all that, can we talk about how incredible our Snackers are and how creative they are? This was incredible.

Today is T-Boy Tuesday. We are giving away a free t-shirt to whoever the Snackers think came up with the best name for a rental clothing subscription business. Now, Snackers, remember the last T-Boy Tuesday, we asked you, all right, you got rent the runway out there, you got newly, you got some creative names when it comes to renting clothing. What would you call your clothing rental startup and people got good. We got some great ones. We're going to have a poll on Twitter today to let democracy do its thing. But we're going to come out now and say some of our favorites. How about a block bluster by Alexa Lason? How about Flair B&B by Chubesdrick? We wear. A little too soon for that

joke, but we wear is a good one. Carpe denim by Sean Tiner. That came out of nowhere. I love this one, not apparel spritz. Apparel sprits. That's a way. That one gets me. every time Kelsey you killed it. And then finally, one of my personal favorites here, log in closet by Brian Whip. Check out at Robin Hood Snacks. We have an unbelievable Twitter poll. There's four finalists. Get somebody a free T-Boy t-shirt on T-Boy Tuesday. Or Instagram, we didn't forget about you either. 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 ear candy. They don't reflect the views of the Robin Hood 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 Fenra slash SIPC. For our first story, Jack, Budweiser just spun off its Asian unit to its own special IPO and the stock jumped 4% on the first day of trading. Nick, there's no Bud Lides drank during this pod story. I was wondering where you were going that one. But Budweiser just turned its Asia business like into an entirely separate company here. And they're calling it Budweiser Asia.

Uncreated. Now there's two stocks involved in this story. One is A.B. InBev. That's the global parent company of Budweiser and Bud Light and 498 other beer brands. The other is this fresh new Asian stock listed in Hong Kong. That's a publicly traded company now too. Now they did it because they got to raise a cool, you know, $5 billion in beer money just by like trading the shares of this new separate company, even though it's kind of the same thing.

Yeah, so A.B. Mbev has like an Asian business now, traded in Asia, and then the rest of the world traded in New York. Didn't change anything about the labels here. Again, they're not focusing the creative marketing types on this one. Now, A.B. Mbev tried to list its Asia business in Hong Kong earlier this year, and they tried to raise twice as much money as they did yesterday. But they failed this summer. They succeeded yesterday. If at first you don't succeed, cut your numbers in half and try again three months later. Great lesson. So you got a classic case of your parents dropping off the kids of college situation.

They're all grown up. It's time to move on. They're like a separate person, time to do their own thing. One small asterisk. Here's the thing. The parent company in this case desperately needs that kid to get a great degree. That's highly lucrative so it can make money and send it back to their parents. You're absolutely right. That's because Budweiser has a really big bar tab of 140. billion dollars from a recent acquisition, and it needs to pay this thing off. Pre-med or computer science. Those are your options. But as soon as you get a salary, you're giving it back to mom and dad.

Budweiser is the biggest beer company in the world with 500 brands. Get this. One out of four beers globally is brewed by A.B. InBev. We're talking Goose Island, Landshark, Bush Breckenridge. They're all really owned by Budweiser. There's a beer called Devil's Backbone, which sounds like a triple black diamond. It's actually an A.B. Mbev beer brand. It's like all the beers in the world are just part of it.

some town where like everyone's related and married their own cousin. So the last acquisition that made this company so insanely huge was in 2016. For $104 billion, AB InBe acquired SAB Miller, and now it's got a ton of debt. It's got a lot of IOUs that made that acquisition possible. And that's why Budweiser is IPOing its Asia business so it can pay down some of that enormous debt. So Jack, what is the takeaway for our buddies over at the new Budweiser Asia? Unsexy companies can do well too. Guys, 2019, it's been the year. of the sexy IPO. Uber, Pinterest, Beyond Meat, Chewy, Lyft. But investors just showed some love for like an 100-year-old beer company over here. A beer company that hasn't changed its recipe and whose definition of innovation is like slapping an American flag on the can. A beer company that doesn't have an app-based platform with a B2C cloud solution for enterprise technology strategy. Yet, this is not a plant-based rental clothing subscription company. This is a profitable, straightforward business model and investors appreciate the classic look. are having a moment right now.

By the way, both Jack and I own shares of Beyond Meat. For our second story, Thor Industries, the RV King, just jumped 16% because camping is having a moment. Thor Industries, extremely bold name, no relation to the Vikings. No relation.

No, the Nordics had no role in this one. They're not rolling around doing hot dogs on the weekends. Thor is actually a combination mashup of the two founders, Thompson and Ortwine. But we appreciate their creativity, Jack, camping, you doing it? Are you frequent? Huge, huge camper.

I went in Grand Teton National Park in 2015. 36 degrees it hit. Jack, let's just say body warmth is a hell of a solution. I did glamping a few weeks ago. Fantastic experience. Didn't get as chilly, but I got to tell you, I called the guy to, like, help out because the heated blanket didn't feel like it was heated.

He told me it was working the entire time. I've never felt worse. Nick's college admission essay was when he went glamping and his heated down comforter malfunction. function. You got to wear those like boiling water pads they give you, stick in between your legs. Awful experience. I'll never do it again, but it was fantastic. All right. Let's talk about Thor. It's the biggest recreational vehicle maker in the world. Now, we looked at its earnings report and it's sales in the U.S. for RVs, you know, like the big stuff

there, those sales fell. But its overall sales were up a whopping 23%. Thor sells RVs, which are the giant buses that you can camp in, as well as the towable campers that you can hitch to the back of your pickup truck. It kind of stuff you move slightly to the right of the road when you see it coming along. True. Sales rose because of Irwin Humor, a German RV brand it bought a couple years ago. Now, basically, Thor owns like a whole bunch of RV brands that, like, you've never really heard of.

There's like 30 brands that you see on the highway. Dutchman, bison, Jaco, Buccaneer, Keystone. It sounds like the names of like an Indiana high school basketball team's nickname roster. But the most famous is Airstream, and that has a resurgence of sales right now. because of an appeal to two different customer types. So your dad loves Airstream because it's got that 1950s aluminum paneling, art deco style rocket chip look. That's just classic. And your 25-year-old friend who's getting married early loves it because of the Insta picks during her bachelor's wrap party.

Quick clarifier, by the way, Airstream, they look like vaguely futuristic and old-fashioned at the same time. It's an incredible balance. Our buddy Timmy knows what we're talking about when it comes to the Insta photos. Now, Thor has caught a particular cultural moment in the United States. Camping has been having a comeback for years, and now it's getting innovative. It's even getting venture capitalists to jump in. Like millennials are jumping on outdoorsy. Outdoorsy is the app that you can like Airbnb or RV.

So if you got an RV, you can put it on outdoorsy for a weekend and somebody else can book it. And then there's also hip camp. Which if you go to Yellowstone National Park or Yosemite, those campsites get a little crowded. so you can pay for a private campsite in an Airbnb-type app. So those are the secondary companies that have come out of this cultural moment of clamping. However, we may have hit peak camping. Thor's stock is down 41% in the past 12 months on concerns that the industry has peaked. So, Jack, what is the takeaway for our buddies boldly named Thor over Thor Industries?

When U.S. sales slow down, look to emerging markets for growth. So do sales down in the United States the last few years? Turn to South America, turn to Africa, turn to Europe. turn to emerging markets. U.S. RV sales down, maybe, or going to go down soon? Same thing. Thor is looking abroad. Now, it bet big on Europe by acquiring the German RV maker whose name Jack pronounces so much better than I pronounce it. Avon Humma. Avonhumah. That is after about four. No, no time spent rehearsing on that one. I just want to let everyone know that. No time. It comes right off the tongue with it. Now, Evan Humma also has a joint venture with a Chinese RV company.

So when Thor acquired Irvin Hummer, it acquired Eastern Europe Emerging Markets and Chinese Emerging Markets. Exactly, so that Chinese rising incomes can now access camp mobile opportunities. Emerging markets equal emerging campers. For our third and final story, Alphabet Self-Driving Card Division

just got knocked down a peg or two by the Morgan Stanley Bankers. All right, Nick, I got three questions for you. What is Alphabet? Talk to me. What is Google? Nice thing. And what is Waymo. They sound fancy.

Let's start with Alphabet. That's a parent company. It sounds pretty generic. Yeah, it's got a ticker symbol G-O-O-G, and it's a publicly traded company. The reason it has that ticker symbol for its stock is because it owns Google. Google requires no explanation. Exactly. But then the third name there, Jack mentioned, Waymo, that happens to be the self-driving car demission

with a random name that sounds very Silicon Valley-ish. That is owned by Alphabet. Right. And Waymo just got downgraded a peg or two by Morgan Stanley, who is crunching the numbers trying to figure out how much money Waymo is going to make for Alphabet. Though Morgan Stanley bankers did like a discounted cash flow, Morgan Stanley, the whole team, which basically means they stared at the spreadsheet, threw in a bunch of numbers and said, hey, we think this thing is valued like this.

So Alphabet makes most of its money on ad sales, but some is expected from self-driving cars. But here's the thing. The Morgan Stanley team, they think that a little bit less revenue is going to be expected from that self-driving car division, Waymo, than anyone expected. And a lot more costs than expected. So let's talk about Waymo. It used to be a part of Project X, which is a secret laboratory at Google making Moonshot Save the World projects. First rule of Project X, Jack, you talk about it to some reporters probably. No, you say classified on your resume as to where you work. You stick that at the bottom of every email you sent.

Now, Waymo graduated from Project X in 2016, and now it is a bona fide alphabet business. Right. They've even operated in Arizona, which I hear. is a dry heat, where there are plenty on having a robotaxy service as soon as possible, but we have no idea when. Here's the thing. Waymo makes the brains for self-driving cars to drive themselves, and companies like Chrysler buy those brains so that their vans can be self-driving. Now, the reason why Morgan Stanley doesn't think that Google or Alphabet is going to be

getting as many revenues from Waymo as soon as possible is because there are a couple things they've noticed. One, it's taking way longer than expected for Waymo to make these things commercially operable. and second, it underestimated that safety drivers are going to have to be behind the wheel for years, and that cost money. There's like some ladies sitting in Phoenix right now who's still waiting for that self-driving car to pull up, and she's been waiting a long time. So Morgan Stanley downgraded the value it thinks Waymo is worth from $175 billion to $105 billion.

Let that sink in. Morgan Stanley just said that the self-driving car division owned by Google's parent company is worth almost half as much as they thought. Context, Alphabet is worth almost a trillion, so Waymo's pretty dang valuable. It's worth almost one-tenth of the whole company. So, Jack, what's the takeaway for our buddies over at Waymo, which is owned by Alphabet, which also owns Google? Google is trying to diversify from just ads to ads and other stuff, too. Google's ads are like the 0-6-07 LeBron on the Cavs, Superstar Player, surrounded by a bunch of mooching underperformers.

Right. You think Google's campus is full of geniuses trying to fix the world, but today it makes money pretty much one way. Advertisements. Google is an ad company. 87% of its total revenue comes from ads that freakishly know what you're doing and why you should buy that duvet because he happened to be moving next week. Google search, YouTube, Google Maps, Gmail. It all makes money from online ads. So Google's trying to diversify, and it's doing that with self-driving cars, it's doing that with drone delivery. It's doing that with Nest. Not to mention Google Fiber and other top secret projects from Project X that are just trying to graduate.

Jack, can you whip up the takeaways for us over there? Budweiser just IPOed its Asia business so it could pay off some debt. If you fall, you get back up again, and you try again three months later at like half the money you were trying to get. Thor Industries' growth isn't happening in the USA, but it is happening in emerging markets. When Americans get tired of your RVs, try pushing some camping in emerging markets. Waymo is hoping to become Alphabet's next profit puppy, but it's taking longer than expected. And Morgan Stanley and that one lady in Phoenix, Arizona, they're not impressed. Now, it's time for a snack fact of the day.

This one sent in by John Strong, emphasis on the Strong when you hear this story. Yeah, I don't know where John Strong's from, but he has an incredible fact. Do you want to know what the deadliest animal in the world is, Nick? Now, Jack said hippos, which we decided was probably the most gruesome of that. I thought it was hippopotamus. My second guess is alligator. My third guess is crocodile. I was going with coyotes because they're so wily. Nick, a coyote weighs like 14 pounds. The answer. Deadliest animal. The most deadly in the world? The mosquito. It accounts for over 700,000 deaths per year. And at various times throughout the year,

they can actually outnumber every other animal on earth except for ants and termites. And they can be found everywhere in the world. And the reason John Strong is such a strong guy, he just survived dengue fever brought on by a mosquito bite after malaria. This snack fact is remarkable and instructive. Thank you, John. John, love having you on the snacks pod with us. Everyone else have a fantastic T-Boy Tuesday and check out at Robin Hood Snacks on Twitter

to vote. 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, 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.