The Best One Yet - “We have to talk about ‘cult stocks’” — Plug Power’s stock jump. Lyft’s ad-cquisition. Equinox’s coworking/bikes.

Episode Date: February 24, 2020

Equinox snagged a fresh round of funding to push the luxe gym chain into coworking and at-home spinning bikes. Plug Power shares have popped because it’s become a “cult stock”. And Lyft’s latest acquisition is in response to #profitpressure, so it’s sticking ads on top of its cars.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 Monday, February 24th. Welcome back. We are ready to hit this one hard. Jack, can you start us off? Let's go right to the first stories on this.

Our first story is a company called Plug Power. Have you ever heard of it? Definitely not. No one has that idea of what we're talking. Plug power shares have searched 76% this year. So we're talking hydrogen fuel cells and cult stocks. If you have a charismatic CEO, a revolutionary business model, buzz on Reddit, and you add a little bit of water, you might be a cult stock.

cult stocks. We're talking to it. Our second story, Equinox gym memberships are expensive and exclusive. If you have to ask, you can't afford it. But we are talking it's expansion to co-working spaces, hotels, and at-home spin bikes. It wants to premiumify your life, MX platinum style. Third and final story, Jack.

Lyft is feeling the heat to make profits right now. You feel the pressure to get married and have kids? They're feeling the pressure for profits. So it's made a big acquisition to basically create a media arm out of nowhere. Completely new business model, completely same business. Now, before we jump into all that wonderful stuff, Snackers, we got to talk about Blue Monday,

a.k.a. the third Monday of January. This is totally news to me, but apparently the third Monday of January is considered typically the most depressing day of the year for the whole world. Yeah, the weather makes that a problem in a situation, but the data actually shows otherwise. Yeah, I basically want some proof.

Is Blue Monday really Blue Monday? really Blue Monday. So we checked out an article in The Economist, which looked at Spotify, which is basically the world's record player at this point. Right. They got 50 million tracks, 270 million users, and they're in 70 plus nation. So a good little barometer of how the people are feeling and what they're all listening to. So Spotify checked out 50 million tracks that were played on Blue Monday and rated each song on a happiness scale from one being like super depressed, to 100 being like, this is the best day of my life. We're talking, Aretha Franklin's respect, boom, 97, super happy. Radiohead's landslide, that fell all the way down to a 10. You don't want to

be listening to that. Now, in northern hemisphere countries, the mood of music streamed was the least happy, basically like right now, like this week. This week's the least happy. Mid to late February, everybody is just playing the scientist by Coldplay on repeat. You're right. Yeah, fast forward a few months later to July, that's the perkyest month, according to Spotify data. That's when you get like a lot of Farrell Williams singing Farrell Williams remixing Farrell Williams. So in other words, the economist concludes, based on Spotify data, Blue Monday is not the least happy time of the year.

Late February is the least happy time of the year. That's why we're going to try to cheer you up with the best one yet snack style. Jack and I decided to make this snacks way better than the snacks we did yesterday. Let's hit our three stories. out the way. 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 you know. 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. Robohood Financial, LLC, member FINRA slash SIPC.

For our first story, Jack, ETA 5 minutes or 25 minutes? Whatever Lyft tells me, multiply it by three. That's the ETA. Our first story is Lyft, which just made a key and fascinating acquisition. The acquisition is a company called Halo, which is Lyft's new media arm. Yeah, apparently those like triangular ad tops that are on the top of every New York City cab, they're like an exciting tech business suddenly. If you've ever been to New York City and seen a yellow cab, you know what we're talking about.

They're literally big giant billboards slapped on top of a taxi cab. and I think Lion King has been the advertiser for like 20 years. They've had like a Lion King musical ad on top of those cabs since before the Lion King, the musical even came out. All right. So the billboards atop taxi cabs have been in New York for a while, but Halo is taking these taxi billboards into the 21st century. So the co-founders of Halo met at Warden and they started testing out like a dynamic top of taxi ad situation

in the lovely streets of Philadelphia by Riddenhouse Square. They've expanded nationwide now, and they're solving one specific problem for one specific industry. Uber and lift drivers only make $7.50 an hour on average, not enough. So Halo reaches out to Uber and lift drivers and offers them an opportunity for a side hustle to make a little bit of extra cash by sticking that digital billboard on top of their Honda Civic. Boom, that dynamic digital billboard boosts their wages by like three or 400 bucks a month, aka 20%, and they've got a nice side hustle income while they're not driving you around. Now, the rival of Halo is a company called Firefly.

We've actually covered it on this podcast before. They're doing pretty much the same thing. And they're probably going to get acquired by Uber now that this happened. But wait, there is a ridiculously ironic situation here when it comes to the side hustling of lift drivers using Halo. Right. Lyft just acquired Halo pretty much because it needs its own side hustle in like a corporate way. It needs to make a little extra money. Boom.

Exactly. And by the way, you can't install like ad blockers on your eyeballs. So these top of taxiats, they pretty much have your face the entire time. It's brilliant. They're ad blocker proof. So Snackers, the reason Jack and I were fascinated with this is one of the reasons why you're probably curious why they even did this random acquisition. The reason is profit pressure.

You've all got parents wanting to know when you're getting married. When are you're going to have the grandkids? One of the grandkids are going to have extra grandkids. Lift and Uber are feeling profit pressure in the same way. They're feeling similar pressure. It's all the same except for profits. Grow up, move out of the house and stop losing a billion dollars every quarter guys. So Lyft and Uber have both updated investors that they're really focused on cutting costs.

They're trying to make profits by the end of this year, and they're doing it by adding extra revenue streams as well. Right. So now, if you're like a Lyft driver driving around in the Marina District of San Francisco, which has a disproportionately high number of pets, boom, you can get a chewy.com ad in your Halo advertising portal. Yep. And if you sign up to get one of those halo things on top of your car, if you're driving around the Burnell Heights District of San Francisco, you're more likely to have a lot of, to have a Gerber baby ad right on top because these things change dynamically depending on the neighborhood so that the ads are better targeted. So Jack, what's the takeaway for our buddies over at Lyft and Halo? Media companies are struggling, but the media business model isn't.

Snackers, newspapers, magazines, old school traditional media, they're having a hard time right now when it comes to selling ad space. Back in the day when magazines were big, Vanity Fair could go to advertisers to say, I got a million affluent 40-year-olds who love shopping at Bloomingdale's. Hey, Gucci, you want to advertise in this magazine. But their viewership has dropped, and they can't target that specific community in the same way. But other companies, like Lyft, they actually have a captive audience, and they're putting that business model to work by sticking ads wherever you're looking.

Lyft has the attention of pedestrians, so you might as well like stick an ad on top of their faces. At this point, Lyft literally has a media division. Halo will probably become a part of it. Oh, and by the way, Uber already has a media team, and they're selling ad space in the Uber Eats app. Whatever you're looking at, chances are a company's trying to stick an ad on it. For our second story, Plug Power is the latest cult stock jumping 27% last week on hydrogen fuel cell buzz.

Every financial news publication had a headline last week for Plug Power. Oh, my God. It was some version of, we don't know why the stock is up, but here's our best guess. Boom, and then you end up reading the story. and that's because everybody is talking about electric cars these days. Battery electric, Tesla, it's not for everyone. No, battery electric isn't for everyone. For consumers, a Tesla can be great because, like, 95% of your drives,

it's got enough battery for, and then you charge the car overnight. But if you're a business, battery electric, not that great, because you've got like forklifts, buses, delivery trucks, they kind of need to operate 18 hours a day. And they can't take two hours off during prime time business hours to recharge the battery that's not going to work. Unless these forklifts start. getting artificial intelligence and then unionize, and then we've got a robot problem that's a

serious situation, and Will Smith makes a movie about it. And then we're forklifting the forklifts. Snackers, that is a future that's freakishly not too far off potentially. Now, enter plug power based out of wonderful quaint Latham, New York. They have found a way to basically create renewable electricity without the two-hour charging thing. Here's how it goes down, Snackers. Instead of charging your battery, you just fill up your tank with, you know, a couple gallons of hydrogen. I know some snacker is like, finally, they're talking about hydrogen fuel cells on the pie. They're like in their backyard right now, pumping the hydrogen tank being like,

no one knows what I'm doing, but this is a cool thing. Let's talk about the chemical process here. Hydrogen and oxygen go into a fuel cell engine and water and electricity come out. I got you. It's beautifully clean. The result is no direct greenhouse gas emissions just like battery electricity. The key advantage for fuel cell, which makes them, you know, better than a Tesla in some cases, charging takes just a couple of minutes to recharge that hydrogen tank instead of a few hours like your phone

recharging overnight. But here's the key disadvantage. You have a power outlet in your house that you could charge a car with. You definitely don't have a hydrogen tank. No, but companies like FedEx and a bunch of other Fortune 500 companies, they've actually installed hydrogen pumps because, you know, it's worth it for them. So Snackers, here's why the stock of plug power actually. rose in January because they just got a huge order. An order was so big that they're going to actually

match all of last year's sales with this one order from this one customer, which is anonymous, but it's in the Fortune 100. This is the kind of order you get and you print it off, you show it to your boss and you're like, I think we need to check our internet connection here. I think we better check my compensation package too. It's especially surprising because this company has been going through huge losses for like two decades. Two decades of consistent and pretty huge unprofits have been going on at Plug Power. Which made Jack and I wonder, why is the stock up 150% in the last five months? Why is it up 27% in the last week?

So Jack, what's the takeaway for our buddies over at Plug Power? We need to introduce the Snackers, actually, to a new term. It's called cult stocks. Snackers, we've seen the inexplicable rise recently of some very particular companies that fit a very particular profile. We are crediting these stock jumps to a little bit of cultishness. Right, you got Tesla, which is the only major electric car stock. You got Virgin Galactic, the only major space tourism stock. And now you got Plug Power, which is the only major fuel cell stock.

Each of these three stocks had inexplicable, gigantic stock price jumps already in this year. But Jack and I noticed they each follow a very specific cult formula. Jack, can you lay it out for us and please stick it to my epic. Curious app. To become a cult stock, you need to have some combination of a charismatic leader like Elon Musk, a revolutionary product like Virgin Galactic space tourism.

Check. And a ton of buzziness going on on very particular Reddit pages online. Right. We're literally talking about like blog websites that are driving the stock. CNBC even credits plug powers rise last week to campaigns on Reddit. Financial Times noticed

some coordinated buying. Those are my quotes. coordinated buying going on online from like communities of investors. Snackers, when you see people highlighting a stock like that one guy at a college party who's like desperate for attendees and sends a hundred texts, that's kind of a red flag. That might be a cult stock. It might cause the stock to go up, but beware of them falling once they're no longer like fetch because fundamentals determine long-term stock price. For our third and final story, Jack, you need a private spotter over there?

Equinox, it's more than a gym. It's the new Amex Platinum Club for living, working, and exercising based on what we're noticing. Nick, you know I only do free weights. No Nautilus like you. We actually noticed three headlines about Equinox over the past three weeks, and then we started piecing these things together. Jack and I were very industrious about it. Little Hansel and Gretel situation. Ooh, a piece of candy.

Ooh, piece of headline. Ooh, piece of headline. It was really charming. Now, Equinox Snackers, is the $200 a month gym with towels so soft. You want to steal them and bring the shampoos home. Shampoo is so good you actually stole them. You probably are going to want to get this thing too because it is a fancy statement piece. If you've ever been to an Equinox gym, you know, it's pretty much the Apple iPhone to Planet Fitnesses like Nokia flip phone for $30.

By the way, some snaggers definitely listening to Equinox right now and definitely feels a little uncomfortable but really proud. Turns out Equinauts is expanding from gyms to a co-working space. They just announced Industrius, a co-working space for teams up to 50 employees. You walk into one of these Equinox industrial spaces, and it basically looks like a we work, went to a dry bar and got to blow out with Gwyneth Paltrow. Of course, this new location is in Hudson Yards, the most expensive development in New York City history on the west side. Snackers, if you haven't been to New York recently, Hudson Yards is the part of New York that all non-New Yorkers are curious about, but New Yorkers are like totally over already.

How many times have you seen Instagram pictures of that? What is it, a pine cone that structure? No one is any idea. It's basically like a blown-up art piece. It's incredible. It's wild. It's just a lot of steps, actually. Now, the problem being solved here by Equinox, they think people are working five to nine,

not the old school nine to five hours. Right. They're picturing you get out of your 45-minute yoga, cardio, H-I-I-T, Pilates class with Andre. And then you're going to want to get to work ASAP, so you just want to walk downstairs to the industrious co-working space. I think they call it a hit class, not H-I-I-T, but they also... They want to finish with you in the gym as well, so offer you a steam and a shower before you go out. From five to nine, you can be with Equinox. And now this is all going down in a 72-story building in Hudson Yards that has an Equinox gym in addition to an industrious space.

There's actually another Equinox thing at that building. The first ever Equinox Hotel. It's all going down in that 72-floor building in Hudson Yards. You walk through this thing, and the irony here is that you actually feel guilty if you're sweating in an Equinox. It's actually a great space. Now, there's a reason it's at Hudson Yards. I believe that's the headquarters of the related companies, a major real estate power, which owns Equinox.

But Snackers, here's the fascinating thing about Equinox. It also owns SoulCycle, and it's putting some of this fresh new funding it just got into SoulCycles brand, too. Equinox is creating spin video content for at-home spin bikes so you can do third position at home. Right, sound a lot like Peloton Snackers? Sounds exactly like Peloton.

And it's basically Peloton. So that's why Peloton stock dropped 5%. Because it sounds like a well-funded, real estate-backed fitness giant is coming into its case. Right. SoulCycle just got pumped up with a bunch of steroids. So, Jack, what's the takeaway for our buddies over at Equinox? Equinox seems to be creating a premium ecosystem just like Apple. Snackers, we got Apple's ecosystem here.

You're listening on an iPhone while you have your ICloud photos set, while you may jump into some Apple music through your AirPods when you're watching on a MacBook. You're binging on the morning show on Apple TV Plus. You're getting your news from Wall Street Journal through Apple News Plus and you're paying for everything with either your phone or that titanium new Apple credit card. They're all

top of the line expensive. They're all top of the line quality and experience and they all work better when they're synced together. Equinox is chasing a similar high-end affluent client with a similar premium ecosystem, but it all starts with real estate. Right, because maybe you're

working out at the Equinox Gym or a SoulSy cycle, but then afterwards you go and do your actual work over at the industrious co-working space. And then when you're traveling, Equinox has your back there too with the new Equinox hotel or your sole cycle bike that you could do from home. Apple and Equinox, both creating premium ecosystems, both benefiting from a flywheel effect. Only one of them is sweating and stealing towels. Jack, and you'll whip up the takeaways for us over there. Lyft needs a side hustle to make money and hopefully become profitable, so it acquired an ad company.

And it's borrowing the business model basically from media companies. Sticking an ad on everything. Second story. The fuel cell company plug power seems to be the latest cult stock. You got charismatic leader, you got revolutionary product, and you got buzz from investor communities, aka Reddit. Third and final story, Equinox is expanding from gyms to hotels to co-working spaces. The Equinox ecosystem.

There's definitely $4 symbols in this review aggressively. Now, time for a snack fact, courtesy of our... buddy Isaiah LaBeay over in Qualicum Beach, British Columbia. Qualicum Beach sounds like a magical place and probably where Qualcomm wishes their headquarters were. It's basically where like you'd think a ship would take off in a Star Trek series. Jack, turns out in Canada, Tim Hortons is like Dunkin' Donuts, Starbucks, McDonald's all rolled up into one coffee chain. Yes, Timmy Hose is a big deal north of the border. Turns out eight out of ten coffee cups sold in Canada are Tim Horton's coffee, which is making us wonder, where are those other two coming from? We've got to find this coffee.

Yeah, whoever it is is an underdog. Now, Jack, before we end the evening, I think we got to say HY-H-Y-S-D. Have you had your snacks daily? If you know, you know, Snackers, if you know, we'll see you know. We'll see you tomorrow. Cannot wait. This is Jack. I own stock of Spotify and an option of Peloton. The Robin Hood Snacks podcast you just heard reflects the opinions of only the host 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.