The Best One Yet - “WE are a real estate company (not a tech company)” — The Wing loses its big investor. Detroit becomes GM’s electric car HQ. Coronavirus messes with stocks.

Episode Date: January 28, 2020

Women’s coworking icon The Wing enjoyed a major investment from fellow coworking pioneer WeWork… which just sold off that stake. GM’s latest moves in Detroit have turned a shutting down factory into its new capital of electric vehicles. And coronavirus dropped stocks big to start the week, so we’re looking at who got hit the hardest and why.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 snacks daily. It is Tuesday, January 28th. This is the best one yet, but Nick. Yes. Markets dipped for two sad reasons. Jack, what do we got? First, Kobe Bryant passed away, which is sad.

We didn't get a chance to mention on yesterday's pod because we're in England. Awful news. But he was 18 years old, his rookie in the NBA. Incredible. Unreal. Also a brilliant business mind. Second story, markets dipped overall because of one huge reason. We're talking about the coronavirus, which is also our first story.

Investors woke up on Monday morning and realized this coronavirus looks worse than we thought. So Jack and I are looking at who's down and why specifically with this virus. Our second story is about the city of Detroit. The Motor City was about to lose its second to last car plant. Sounds like the plot of the next Disney movie. Now that second to last car plant is General Motors' number one boo for its most important electric cars of the future. Jack, the divorce papers were there, but then they decided to renew their vows instead. It's actually romantic.

It's like a Ryan Gosling movie. Beautiful thing. Third and final story. The wing is our not quite unicorn of the day. Worth $400 million, its biggest investor, and its biggest role model just left it. We work ever heard of it. Now, Snackers, before we jump into all that wonderful stuff, you probably should stop using your phone. Yeah, we should all take advantage of the Stop Using Your Phone Challenge of 2020.

Except you should continue listening to this podcast. Now, there's a lot of digital solutions to fight phone. addiction. For example, those apps. Right. The guilt apps. Yeah, basically, you can set on an iPhone. I only want to use Instagram 20 minutes. Anything beyond that, make me click ignore. Update, you've been on Instagram three hours. Do you sure you want to continue? But everybody clicks the ignore them. Then there are like the more old school, like analog answers. Physical options, like destroying your phone or throwing it into the ocean. You walk across the hall, knock on the door and you give it to the lady there and she holds your phone for two hours. Now, I used to have a physical solution to a little weight problem

I used to have. I remember it well. If there was a bag of Doritos in the house, I would eat all of the Doritos. So eventually, I put them in the pantry. That wasn't enough. I had to open the bag and pour all the chips into the trash can to solve my mouth. No joke, Snackers. I was Jack's roommate. We used to hold this guy back in the morning.

It was like breakfast. You had to get two towels, wrap them together. Put them around Jack's waist. He's not going anywhere. So from Google, there's a new physical and digital solution to people who have Android phones and want to stop using those Android phones. Get this. It is a you print it yourself envelope that

turns your smartphone into a dumb phone. That's right. An eight and a half by 11 piece of paper, you print it out and it teaches you how to fold it into an envelope that is perfectly shaped for whatever Android phone you're using. So you use this app to set your phone to a specific setting in which you can only accept phone calls or do phone calls. It's called envelope mode, just like airplane mode. It's a great name. And once you set your Android phone in envelope mode, you physically put it in the envelope. And that envelope has a bunch of outlines for the keypad, if you want to make a phone call. for the camera button and then to tell you what time it is.

Now, keep in mind, you will be walking around with a phone in an envelope, so people will be staring at you wondering what's wrong with you. Now, importantly, the touchscreen still works if you touch this envelope. Yes. The phone will still register, but you can't look at pictures. You can't look at Instagram. The only things you can do is make a phone call, use your camera, but you can't look at the pictures after.

It's the equivalent of during Vignuary when you walk into McDonald's with Jack, and then I put him in a plastic bag and he can't get out. Nick and I are exhausted from trying to explain how this works. It's pretty cool, though, and there's a video that Google put out. Search Android envelope. At this point, we should just hit our three stories. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something legal out the way.

The 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, member FINRA slash SIPC. For our first story, the coronavirus in China is hurting some key stocks more than others. Big. Nick, I'm no epidemiologist, but prior to this research today, I didn't know much about the coronavirus. So let's share our research with the Snackers. Okay, research here. Maybe you've heard of markets.

Maybe you've heard of black markets. Maybe you've heard of wet markets. and then there are Chinese wet markets. Coronavirus was reportedly born in a Chinese wet market. Which is basically a market where they're selling stuff out in the open, perishable goods, fish, food, animals, except sometimes they're exotic animals and sometimes these things are getting in contact with these. Yes, like one bat gets in contact with a wolf puppy and a raw chicken, and boom, coronavirus is created. It is a hotbed for new diseases to be born, and it looks like that's where this virus started.

So the death toll is almost 100 people. who have died and lots more are infected with this coronavirus. So as Jack and I were like deep in research on this, we wanted to know what the coronavirus means for economics, business, and stocks, and we thought you guys would be interested too. The short-term hit is on travel stocks. China has restricted travel for 35 million people living in 15 different cities where the disease is the worst. And this didn't just happen any old time. It happened during the Chinese New Year, aka the biggest human migration of the year. Right. This is the time. time when the Chinese people travel the most and go on vacation. So Marriott, the hotel chain,

its stock is down 3% because it's opening one hotel a week in China right now. By the way, Las Vegas Sands, shares are down 6% yesterday because it's making more money in Macau than it is in Las Vegas. And Macau is a gambling island off of China. And then of course, to get to any of these destinations, you're probably going to fly. And that's why Delta American and United Airlines stocks were all down 4%. Just that's the short term like, definite hit. People are going to travel less and these companies are going to make less money. But the longer term hit is on plain old old school shopping. Right. People in China are freaked out and they're trying to avoid coming in contact with other people. That means Estee Lauder and Nike stocks

both dipped big on Monday. Right. Because nearly a fifth of those two companies revenues comes from mainland China and mainland Chinese people are not shopping right now. Now they're not only shopping, they're not going out and getting their usual mocha lates. So Starbucks stock is down 4% because it has temporarily shut down stores in the province where this disease is happening. Now, Snackers, we know you're also wondering, okay, these American companies are involved in China, but what's going on with Chinese stocks? Luckin, which is the Starbucks of China, and Alibaba, which is the Amazon of China, both of their stocks are down 6% because this is their whole market that we're talking about. So, Jack, what's the takeaway for our buddies who are unfortunately

dealing with this disease over in China? Investors are trying to benchmark this crisis against other outbreaks of diseases. Snackers, when we're looking for a benchmark, something to compare it to, in this case, the closest situation is the SARS outbreak in 2002. In 2002, that disease caused retail sales growth in China to be cut in half. Today, China's economy is way more dependent on consumer spending than it was back in 2002. And in 2002, that disease had a huge impact. U.S. companies, Chinese companies, their stocks are dropping on the risk that this gets worse before it gets better. For our second story, Jack, I feel like we need to go with a feel-good story on this one.

I'm in. This one is so feel-good you're going to want to call Ann Hathaway's agent. It's chicken soup for my engine soul. GM General Motors was about to divorce Detroit. They'd sent the papers, they'd issued the summons, and they'd do whatever else you do with it. But yesterday, they decided to renew their vows instead. Snackers, remember the old cruise origin?

We talked about it last week. It's a self-driving six-person show. shuttle van that looks like a toaster. If you don't remember it, it's all awkward because you weren't listening last week. Shame on you. We covered it in last week's pod. It's not personal Jack. I actually bumped into someone who works at Cruise

at the TSA on the way to London. It was very cool. I asked about the origin and they were like, are you Jack from... Are you one of the snacks guys? It was wild. It was very flattered. Now, the name, by the way, origin has nothing to do with like the

midpoint of a graph. No, it doesn't. I asked that question. It has to do with like the beginning. The origin. Now, this is a self-driving six-person shuttle van that looks a lot more like a toaster that it does. And GM announced yesterday that that car is going to be built in Detroit, remember, with no steering wheel and no gas pedals. It literally

is just going to be like a box you get in and it goes. And it's being produced at the famous Ham Trammock assembly plant where cars have been being made since 1911. It's the kind of place where you'd have a prom. It's a beautiful plant. Dodge, Buick, Oldsmobile, Cadillac, they've all been built at this spot in Detroit. Since 1911. Back when you're horses thought they still had a shot. And now the cruise origin self-driving vehicle, as well as GM's future electric pickup trucks, as well as their rumored electric hummer, and their rumored electric escalate, all of those electric cars are going to be built at Detroit's Hamtramic Assembly. By the way, even though that's a rumor, how happy do you think the GM people are that

we mentioned that? Look, this is a big deal. Detroit is going to be the headquarters of GM's electric car future. We repeat, Detroit is going to be the headquarters of its electric cars. And it's going to get a $2.2 billion investment in 2,200 jobs. Now, this has been an emotional roller toaster. Toaster, because the car looks like a toast. Just three months ago, that plant that is now going to be like the future HQ of all electricity, everything, it was going to be shut down. And Hamtramick was the second to last manufacturing plant in the city. Can you say Hamtramac like six times right now fast? GM planned to close it, but didn't because of the 50,000 worker, six-week employee strike that happened in the fall.

If GM had closed that plan, then Detroit's days of carmaking were over, and Jack and I wouldn't be able to cover this great story. But now, General Motors decided instead to renew its vows and declare Detroit is our HQ for electric cars. Someone get a neon sign and stick it up on the wall. Jack, what's the takeaway for our buddies over Detroit? GM's employee union saved Detroit. Detroit put the world on wheels, but that it's been in basically a 50-year decline since the 1960s. Right. It had a recent renaissance, though, and was really hoping to get Amazon's HQ-2. Everyone thought they're getting HQ-2, including like the entire population of Boston. But it didn't even make the short list of 20 cities, which was sad.

Detroit's General Motors plant closing would have been devastating and awkwardly symbolic. Right. But the worker strike that just ended changed Detroit's course for the future. For our third and final story, this is a wild one. The Wing just lost one of its key investors. We work. We work. The We work.

Now, The Wing is a female-focused boutique co-working space. Don't call it a space check. Don't call it a space. They get angry when you do that. Sorry. Nick likes it when I call it a co-working club. It's an experience. You walk in there.

It's like nothing else you've seen. Now, everybody, WeWork is to wing what Hillary Clinton is to Leslie know. Bigger famous role model. Beautiful thing. Bigler and more famous role model. Now the wing is worth $400 million. It's got 10,000 members. They're in 117 cities and it's only going to cost you $185 a month to be able to brag to everyone. Yeah, you're part of the wing. That's a really good price to have a space where you can go in a nice city and work in a really nice environment anytime you want. Again, you use the S word space. They're not going to be happy out that. Because when you walk into the wing, it looks like a pastel adult millennial playground. It's like a 28-year-old exploded in there. I saw the velvet couches on the website. And you know the first thing I thought of. Velvet couches that have velvet couches on them.

No, I thought of West Elm. Yes. Everything in there is from West Elm's best friend. By the way, Jack had a beautiful wedding in Vermont. I had a beautiful wedding in Nantucket. I got to say, where are you going with this? We had to redo our weddings.

I think I would consider the wing as a venue. Wow. I'm going to go there with it. All right, so it's a co-working club. It has mindfulness classes. It has beauty samples. You can try out while you're looking for a break from work. Of course. And it's got a babysitting service.

Yeah, adorably called The Little Wing just when you thought it couldn't get too cute. The Little Wing is a wonderful name for the Wing's babysitting. Now, the Wing's cap table, its investors include Google, Mindy Kaling of Parks and Rec? No, the Office. Okay, right of the office. Oh, and WeWork, which owned about a quarter of the company. WeWork was an investor until this past week. Right.

It sold off its 23% state. stake in the wing, basically to the existing investors. WeWork is pretty much like, hey, Wing, I'm out. That goes back to October. When We work put together a little presentation that said, oh, by the way, over the next 90 days, we're going to, quote, unquote, divest from our non-core businesses. Let me explain the situation that WeWork was in 90 days ago. Bring us back.

They tried to IPO. It was a traumatic debacle. Jack and I remember. Jack and I remember well. And the company was in crisis, desperately needed cash. It had like a boat. It had a ski house. It had a pair of skis.

It sold off everything to raise desperately needed cash. It's like that time our roommate Timmy went to Trader Joe's, bought all that food, and then had to spend the rest of the weekend, like, selling off his mattress, his radiator, the whole thing. He needed cash fast. It sold team, which was its conference booking software company. They shut down its restaurant, co-working space, spacious. And then, most famously, they sold off like the wave pool company that they bought for no reason.

They bought a wave pool company? They bought a wave pool startup because they felt like. Okay, so the wing, they sold their 23% staken. That is the seventh company that we work previously acquired or invested in that it is now sold or shut down completely. So, Jack, what's the takeaway for our buddies over at the wing? Non-tech companies shouldn't be valued like tech companies. Snackers, we work. It's a real estate company. Yes, it can make profits, but not tech profits. And tech profits. Tech profits are like on a whole other level. Yeah. Tech companies can become wide. wildly profitable because tech's product is software. Yeah, you make software once, you spread it,

it scales, it's downloaded, or it's from the cloud. That's right. You code it one time and you sell it to as many people as you can. Revenues keep growing. Cost don't grow that much more. There's definitely some engineer in a self-driving test. So right now, Jack, who's like, uh, you guys totally oversimplified that and that makes no sense. Real estate, on the other hand, requires huge costs of buying, building or renting buildings, and then, you know, you try to rent them out for a lot of money, but those costs are gigantic. Now, the wing can become profitable, but not tech profitable. Yes, the mistake with WeWork, a similar company to Wing, was thinking that WeWork could become tech profitable. New slogan for WeWork that the Wing can take on to. We are a real estate company,

not a tech company. Jack, can you whip up the takeaways for us? Stocks of companies doing business in China are falling on news of the coronavirus outbreak. Spending a month. among Chinese consumers is frozen, and this could get worse before it gets better. It's all about benchmarks. Second story, GM isn't closing. It's Detroit plant. It's doubling down instead. Hammond track, now the HQ of GM's electric future.

Quick pronunciation fix there? Hamtramic. I could have said anything. I have no idea what this says. Third and final story, the wing is a lot like we work, and it's trying to move on in this post-Wework world. The co-working club can be profitable, but not tech profitable. Now, Snackers, for our snack factors.

of the day, this one's more like a snack-ish fact of the day. This is a snack, probably fact of the day. That's because Jack and I loved this snack fact from Jason Werner in Portland, Oregon, but we just couldn't verify it. We couldn't verify it. But it's so good. We've done a lot of disclosures at this. So we're just going to run with it, Jack. All right. So yesterday we talked about Netflix, disrupting itself by like throwing out the DVD business and focusing on streaming. It turns out that the CEO of Netflix, Reed Hastings, of Boeingrad, by the way, wanted to demonstrate the need for streaming and how critical that would be for the company a few years ago. So he sent a message by banning the executives who were working on the DVD business

from staff meetings. And that was at a time when DVD mail-in rentals were 100% of its business. Bold, bold, symbolic decision by Reid. Snackers. Also, Reed is a Bowden grad. Great name. Polar Bears? What kind of bears?

Polar Bears. NASCack lifestyle. Snackers, have a fantastic Tuesday. But whenever you're in line maybe for lunch today, turn to the person to your left and ask them, H-Y-H-Y-S-D. Have you had your snacks daily? Have you had your snacks daily? We'll catch you guys tomorrow. Jack and I both own shares of Luckin Coffee and Tesla, and I own shares of Alibaba, and Jack own shares of Amazon.

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.