The Best One Yet - “We did a 5th thing...” — Casper’s 14% nightmare. Southwest’s frugal-ness. Asia’s epic trade deal.

Episode Date: November 17, 2020

Casper’s 14% stock drop reveals a self-inflicted weakness that’s been hidden for years. Southwest Airlines stock rose 2% because it’s pulling the opposite move of every other airline right now ��� expanding. And Asia’s huge trade deal covers 2.2B people & ⅓ of the Earth’s economic activity — but the USA is MIA.$CSPR $LUV $PRPLGot a SnackFact? Tweet it @RobinhoodSnacks @TBOYJack @NickOfNewYorkWant a shoutout on the pod? Fill out this form: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, November 17th. Nick, do you remember when Pfizer had a vaccine that was 90% effective in preventing you from getting COVID? Jack, I think it was last week. Oh yeah, Moderna just showed up with 94.5% efficacy. Epicacy.

Oh, by the way, the Moderna version doesn't need to be refrigerated at absolute zero either. Hey, Pfizer, nice A minus. How do you like my A? Your move, Johnson and Johnson. your move. Stocks jumped up on that wonderful news. In the meantime, Jack and I whipped up our best snacks daily ever, Jack, first story. Why did Casper Mattress Mattress Stock just fall 14%? I don't know, Jack. Someone must have said mattress, mattress, mattress a few times. Or our second story, things are looking good at Southwest Airlines. They're doing the old buy, low, sell high,

but not stock, real estate. And not just any two-bedroom condo real estate, airport gate real estate. Third final story on this TBOY, Jack? China just convinced 14, nations to sign a trade deal, and the United States is not one of those nations. Covering 2.2 billion people, a third of the earth's economic activity, Jack and I thought we should jump in snack style. Jack just elbowed the chair it looked like on enthusiasm for that third story, but I mean, Jack. I got a little over-excited snappers. Nonetheless, despite my bruised elbow, today is T-boy-T-Boy T-T-Boy T-Boose. It is T-Boy-T-Boy-T-E. We're going to have to recover you? What's

going on over there? Ice! Let it! Well, if I needed a gigantic thing of ice, I'd go to Costco. True. Good segue to this intro. Yeah, Snackers. Jack and I heard this, we jumped in Snacks style. Costco, you know Costco.

We know what it sells, but it also has some aggressive offerings out there. You can get a 12-pack of giant Alaskan lobster claws or a seven-pound Nutella tub or a wedding cake, you know, made of cheese, entirely of cheese. That's crazy, Nick, but they also have some crazy, crazy options at Costco. Yeah, it turns out you make a left on aisle six and you can get a casket or a grand p.m. or you can buy an actual engagement ring, diamond included. But we have a new milestone. Costco just passed.

They are now selling private jets. Snackers, we make no joke here. A 12-month subscription to a private jet service, you can buy it at Costco. Isle 6 is now aisle 6 runway. $1,49.99. And you get guaranteed access to 1,500 jets nationwide, and you bought this at Costco.

Yeah, for 17,500, it's a 12-month subscription to a private jet service that also just happens to include a $3,500 Costco gift card. Yeah, Jack, you know, might as well fill up the G6 with 12 liters of salsa and, I don't know, 3,000 Q-tips while you're at it. Now, when Nick told me about this story, I had to fact-check it. So I went to Costco.com, it's literally there. On the website, like beside the tub of pretzels, you can add this to the cart for $17,000.

Oh, by the way, we also check this out. No one has left a review yet mysteriously. So Snackers, if you have a $17,500 laying around and want to violate. COVID travel restrictions by flying, you could leave the first review. Let's in our three stories. How's that elbow? 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 LLZ Member Fenra slash SIPC For our first story Casper stock just fell 14%

after a counterintuitive earnings report This is a self-inflicted wound And the risk has been there Since Casper IPO Full disclosure, Snackers We've said mattress So many times in this podcast

You're gonna see a mattress ad today online You're gonna see one, it's gonna happen Maybe from Casper, maybe Lisa Or Helix. Yep, Tuft and Needle, maybe. Eight sleep? Yeah, Oswell. Keep going.

Temper Peter. I'm following it. Bear. Amazing. I don't have any more, Jack. I think that's it. Now, Snackers, the first thing that Jack and I did here, the origin, the origin of the story. Goes all the way back to yesterday.

We noticed Casper stock had fallen 14%. Nick actually noticed it because he's a big fan of Casper mattresses. I'm texting Jack. I'm like, 12, 13, 14, 15%. The second thing that happened is we jumped into the earnings report to investigate because we do it for you, Snackers. We do it for you. We do it for you.

And honestly, this wasn't pretty. Sales over at Casper, get this, you're like living your life at home. Sales fell 3% to $234 million last quarter. And sales were even worse from the ones that occurred on casper.com from their own website. Yeah, they're direct-to-consumer sales channel, even worse. This is like the Yankees admitting they can't fill up the new Yankee Stadium. It's not good. It's awkward.

It's embarrassing for Casper. DiMaggio is turning over and is great. So those are the first two things we did. That then led to the third thing Jack and I did yesterday, related to Casper. We jumped into the call transcript the CEO had with analysts after the earnings report released. Yeah, we wanted to get more color, more detail, more fun. And honestly, we do it for you, Snackers. Here's what the Casper CEO said. We believe our results from last quarter don't fully reflect the health and potential of our business. Okay, so Jack and I are talking like,

all right, sounds extremely defensive, but he may have a point here. Because it turns out website traffic to casper.com surged to a record high in the last three months. So you have a strange situation at Casper. Seemingly, there's lots of demand because people are visiting casper.com, and yet sales have fallen. The reason the CEO then went on to blame one guilty party here, the supply chain. Specifically, he said there's a shortage of textiles. Textiles, by the way, Snackers, just means cloth. And there's also a shortage of chemicals which turn into the foam of these mattresses.

It's a brutal situation. And again, we need to get rid of the word textiles. Though that led Jack and I to the fourth and final thing that we did yesterday related to Casper Mattress. We jumped into the IPO paperwork that Casper filed right before its stock became public back in January, and we checked out page 38. Here's what Casper said then. Our business will be harmed if we fail to transition our supply chain to a global scale.

They went on. We'll be less desirable than our competitors who have complete control over their manufacturing of the mattresses. So Casper back in January highlighted this huge risk. they aren't vertically integrated. That means they depend on others to actually make their mattresses, their only product. So, Jack, what's the takeaway for our buddies over Casper? When you control the supply chain, you control your destiny.

Oh, perfectly put. Apparently, Snackers, your whole like apartment building was Googling by Casper mattress at some point in the last three months. It was happening. But Casper couldn't sell your whole apartment building mattresses because some Chinese factory ran out of the yarn needed to make them. Jack and I did a fifth thing yesterday. We checked out the IPO paperwork of Casper's competitor, which is called Purple Innovations.

Yes, we did. In their paperwork, Nick, they brag they control their own manufacturing, which lets them adapt and scale globally fast. So Casper sales fell 3% last quarter because their suppliers basically ran out of mattress materials. Purple's sales surged 60% because they supply their own mattresses and didn't run out of them. Casper stock lost half of its value so far this year. Purple stock has nearly tripled this year. Control your supply chain.

Control your destiny. For our second story, Southwest Airlines is land grabbing during the pandemic, Jack. Nick, they got a low-cost culture and it's letting them be opportunistic instead of desperate. So Jack and I jumped in Snacks style because we noticed Southwest Airlines stock had just jumped 2%. And it's shockingly get this, increasing its footprint this year. Yeah, despite the pandemic, rather than that. Airlines. Southwest is adding six new destinations this year. All right. So a few of the options here. That includes Miami,

Telluride, and Palm Springs. Sun, ski, and sun. Exactly. Exactly. Now, this is a major counter move, kind of like when New York City built the Empire State building during a depression. 1929 Wall Street had crashed and they decided to build the biggest thing anyone's ever built. Yeah, in the meantime, kind of a similar situation over at Southwest. They're adding another six local. next year. In Sarasota, Colorado Springs, and Chicago O'Hare, for example. Sun, ski, freeze. Now, other airlines this year are doing it a little different. They're not expanding. They're shrinking, reducing, and just trying to survive and not get bankrupt. Doing the exact opposite of that,

Southwest is growing from 100 to 112 destinations over the next year. Now Southwest, we're thinking, must have had like a grandma or something who lived through the dust bowl. Yeah, totally. Like no extra meatloaf, everyone's getting one ration kind of a thing. Don't throw away that thread. We can use that thread for an entire week to make some socks. That's because Southwest has paid smaller dividends lately. They've taken on fewer loans and they've put aside an entire rainy day fund just in case things get bad. Because of those frugal moves, Southwest Airlines entered this pandemic with less debt than the other three big airlines, Delta, United Airlines and America. And that has let Southwest make some opportunistic moves like buying a gate at a crowd

airport and buying gates at airports right now, like what Southwest is doing, it probably means lower airport fees because the airline industry is struggling so much, which will translate to lower ticket prices down the line. And those lower ticket prices are how Southwest has a competitive advantage on those big three airlines that Jack just mentioned. By the way, Southwest has cash right now when the other airlines don't, and that is a powerful thing. Yeah, funny thing. Jack and I remember Southwest did the same thing in 2009 after the 2008 financial crash, adding for destinations while every other airline was teetering on bankruptcy. Airport gates are cheap when nobody's traveling, so Southwest is buying low here. Which is historically basically the best kind of

investment. So Jack, what's the takeaway for our buddies over at Southwest? Classic Southwest, they reduce costs while the other airlines think about raising prices. Zach, Southwest also happens to be the most famous company that's covered in business school. Their low-cost culture at Southwest Airlines is a case study of case studies. You're not. not in an MBA program unless you've read six Southwest case studies. Chapter number one in this case study, Southwest Airlines since the start, has only used one plane, the Boeing 737, gives them flexibility and makes pilot training really simple. They also only have one class of ticket for passengers to book. Makes booking easier and quicker for you to board the plane. And finally, they use second-tier

airports like Dallas Love Field, not Dallas-Fort Worth. Gate fees, they add up big at fancy the airports like Dallas-Fort Worth. Delta, United, and American, they focused on expensive business class tickets, baggage fees, and change fees. But in a tough economy, like right now, Southwest's low-cost culture is what's winning. That's why Southwest stock is down just 20% since the pandemic hit, while other airlines are down 40 to 60% in the same period. Mattress, mattress, mattress. For our third and final story, while the U.S. continues trade war with China, China just reached trade peace with 14 countries in like the biggest scale we've ever seen. Basically what the USA tried to do with TPP, China just did with something called the RCEP.

A lot of acronyms, snackers. We've got a lot of acronyms for you today. A lot of China too, Chan and Janet, Jack. Now, by the way, TikTok, remember we were covering TikTok? Like two months ago, it was like a whole big thing. Yeah, it was supposed to get banned on November 12th. Didn't end up getting banned. President Trump found something else to focus on. So TikTok, good to go. You're good to go. TikTok, good to go.

Yeah, that's our coverage of TikTok. In the meantime, though, we should rewind back to 2016. President Obama had just signed the Trans-Pacific Partnership, aka TPP. It was an agreement on the rules of trade between some North American and some Asian countries, and they all agreed to stop tariffing each other so much, too. Yeah, Japan, Vietnam, Australia, and a bunch of other countries on the Asian side. And on the North American side, you had the USA, Canada, and Mexico. Basically saying, okay, if we import and export with each other, are we all cool?

Let's follow these rules. Great. were all good on the rules. The USA orchestrated the deal, and China was conspicuously absent. Now, in 2017, President Trump exited the United States from that Trans-Pacific Partnership. To be fair, all the presidential candidates, Bernie, Hillary, and Trump, they all claimed that that deal would be bad for American workers back in 2016. All right, so now we're going to fast forward to Sunday, where a very similar deal happened, except the United States was conspicuously absent this time, not China. This deal needs a branding guy or gal because it was called the regional

comprehensive economic partnership, aka the RCEP. Jack, the old assistant to the traveling secretary situation. This deal actually took eight years, Nick, to finally like come to an agreement and sign. Someone had a really long internship. And this one is including Japan, China, Vietnam, South Korea, New Zealand, Singapore, Malaysia, Thailand, all part of the New Asia Pacific trade deal. It's a big Asian deal and it's the biggest trade deal ever signed. Yes, it is. And it covers 30% of the world. This is the biggest trade deal ever signed in the history of the world.

I love that emphasis, Nick. It also eliminates tariffs and taxes on two-thirds of all the goods that pass between those countries. Now, here's what's important about who's leading this deal is it's kind of like homework club. And everyone is meeting at China's house for homework club. China led this deal. and since it's at China's house, that means China's rules, China's style, and China's choice for finger food. I'm thinking they're thinking Dunker Roos. So Jack, what's the takeaway for our buddies who are in and all these trade deals? You've probably heard why trade deals are bad, but we're

going to tell you why they can be good. Snackers, they took our jobs. That's what you typically hear. First thing you hear. And it is true that the trade deals we signed in like the 90s, it moved manufacturing from the USA to Mexico and China. But trade deals can also create winners like corporations. Instead of Tesla having to make one Tesla for Japanese regulations and one that complies with U.S. laws, they can just make one Tesla with a trade deal. Boom, Tesla saves money, increases sales, and boost profits benefiting the company Tesla. Trade deals can also benefit you and me, consumers. So that Tesla car, it could be cheaper because Tesla didn't need one assembly line version for Japan and one assembly line version for the United States. Oh, by the way,

everything we buy that says made in somewhere besides the USA, you probably saved money because it was made cheaper. So trade deals can benefit corporations. They can also benefit consumers, but they also must benefit workers in order for the trade deal to be successful. NAFTA in the 90s definitely failed on that, but that doesn't mean we should never join a trade deal ever again. Because keep in mind, Snackers, there's one underlying principle of every single trade deal.

Countries that trade together are less likely to go to war against each other too. And that's a fact. Jack, can you whip up the takeaways for us over there? Casper doesn't make their own mattresses, which led to their sales falling last quarter. Control your own manufacturing, control your own destiny. For a second story, Southwest operates as frugal as Grandma Dorothy. Yeah, totally. Thanks to that low-cost culture, it can expand while every other airline's shrinking.

We can use that thread for at least another week. Now, China has a new item to add to its resume. Biggest trade deal ever signed. It's a 15-country deal that shows who can actually win when you have a trade deal. Now, time for our snack fact today. This one's sent in by lacrosse player Chase Campbell over in Baltimore, Maryland, where that's where you're going to play lacrosse. This guy rips some good twine.

He's pointing out that the Thanksgiving Day parade in New York City, which is hosted every year by Macy's, it had nearly 4 million viewers last year. Now, it's still going down this year, but without the spectators. If you go back to 1926, though, it was still going down, but without the balloons. No, they actually used to borrow animals from the nearby Central Park Zoo and mark them through the parade. We're talking a procession of elephants, camels, tigers, and live pooping goats. That is a wonderful image. And then after 1926, they decided to go cleaner with the balloons. Yeah, balloons don't bite you. Yeah, the balloons are probably a good move. Snackers,

you look fantastic today. Happy T-Boy Tuesday. Ask your friends, H-Y-H-Y-S-D. Have you had your snacks daily? We can't wait to see tomorrow. Jack, how's that elbow? It's swelling. If you know, you know. And before we go, Snackers, happy birthday to Grace Nestlin over in San Diego. And David Knapp in Michigan. And Laura B. Turned in 27 in San Francisco. And happy birthday, Tyler Stringham in Portland, Oregon.

And Beth Greeley in Philadelphia. And Annie Campbell in Denver, Colorado. And Alice Martel, my mother, over in New York City, crushing it on the Upper East. Alice Martel once made Nick a homemade birthday cake with the skyline of New York City and the Batman logo in the sky. It's incredible.

She's a literary agent by day, bake her by night. 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.