The Best One Yet - WeWork’s CEO is out, Nike goes for dude-leisure-wear, Nio (the Tesla of China) cancels its earnings call

Episode Date: September 25, 2019

After a crazy week, WeWork’s co-founder and CEO stepped down. Nike’s earnings reveal its next opportunity is really with guys wearing athleisure. And Nio, the Tesla of China, plummeted 22% after another rough quarter that forced it to shockingly cancel its earnings call.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. This Wednesday, September 25th. Snackers, yesterday was a big day of news. Huge news day. Huge news day. Such a big news day that today's podcast is the best one we've ever done.

Now, markets dipped on news that there might be an impeachment in Washington. Meanwhile, you've got a lot of political business stuff going on with our unicorn of the day. Yeah, we'll cover the impeachment stuff if it directly affects markets. But for now, WeWork is the biggest startup story of the year. And a tumultuous week just ended with a big change. Adam Newman, the co-exam. founder Sashiio, he just stepped down. The guy who made WeWork, MeWork, MeWork? It was MeWork. Just stepped down. Basically became me work. Second story, Neo, the Tesla of China just canceled its earnings

call. That's not a good sign. Never, you fell 22%. Never go when he had to cancel this thing. You never want to send out that email. Third and final story, Nike just had a great earnings quarter because of China sales. But we have a bold claim. We think Nike could evangelize the dudes who who haven't tried athleisure to start trying athlete. We're talking about dude leisure wear. And Nike is the Dude, Leisure Wear Whisper. Now, before we jump into that wonderful mix of three stories, Snackers, we got to tell you something because we're going to be in New York. Tomorrow is the Peloton IPO.

And we can't wait to cover this thing. Have you heard of Peloton? Because we're going to be live at Nasdaq to watch the IPO. We are excited about it, but we need your help. We are wondering if Snackers could reach out with the best questions to ask the co-founder of Peloton. That's right. Jack and me, we're going to be sitting down with the co-founder slash C-O of Peloton to talk stories, get into the third's position, and maybe sculpt ourselves.

I know what you're thinking. What's the ticker symbol? And Mr. Co-Founder, why didn't you make it something better? Why not go with spin? You got to go something creative. You got to go with, like, bike. Turns out it's something just like Peloton crammed into four laps. Missed opportunity.

We're going to talk. We're going to hold them accountable. We're going to talk to Peloton. Hit us up at Robin Hood Snacks. Let us know what question we should ask, the co-founder of Peloton. It's snacks about to hear ain't food. It's air 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 FINRA slash SIPC. For our first story, Jack, can you grab some caboge over there by the communal tap? We're not working at a Wii work, but I appreciate the method podcast. But we are talking about a WeWork because co-founder and CEO Adam Newman just stepped down to save the IPO. Snackers, remember, WeWork is the company that. that leases enormous office buildings, makes them millennial A.F. And then cuts them into little cubes and desks for startups and entrepreneurs.

You got to have that hustle neon sign up somewhere. But meanwhile, it's looked a lot more like me work than we work, given what Adam's been going through. Yes, the company issued its S-1, the document to prepare it to IPO. And it's been completely distractions about Adam Neumann, who just stepped down yesterday as CEO of the company. So here's what's happening with him. He's now going to be the non-executive chairman. Doesn't have the same ring to it. No, they're going to have two co-CEO.

instead. And he is going to downgrade the amount of power he has at the company through his voting share. So his stock previously had 20 votes per share. Yes. And because of that, he controlled just over 50% of the voting power. So anything Adam wanted, Adam got. He was

like Texas, New York, California combined. Imagine if he would like super votes. A lot of electoral votes in Adam Newman. Now he's only getting three votes per a share. Which by our math brings it down to seven and a half percent of the voting shares in the company. Now, what's most fascinating here is what happened leading up to this moment because it kind of all hit an inflection point last week with a

Wall Street Journal article. Yes, we work was founded in 2010 in New York City, and in those nine years, it has grown to a $47 billion evaluation, and that's what it planned to IPO at later this year. Now it could be down to like a $15 billion evaluation, but the story really kicked off with the Wall Street Journal on an airplane, a private Gulfstream that was on its way to Israel. We learned a little bit about Adam's personality and Adam's recklessness as a CEO. Turns out that when the flight landed in Israel, the pilots found a bunch of weed in the plane. Yeah, he packed it into a cereal box, apparently, and was leaving it there for his flight home, and the plane had to take off because you can't fly across borders with weed.

That kind of set the tone. And then from there and out, we learned a lot more about Adam. That was a lot to learn about Adam. Eccentric. They say all artists are a little et cetera. Something like that. You put that on a T-shirt, I guess. So, first of all, before we work, he started a baby-clothed startup in New York City where the baby had knee pads because they're crawling around and that kind of hurts the knees. A great tagline of his was like, just because they can't talk doesn't mean they're not in pain. Yeah. He also said in this Wall Street Journal, well, it was reported in this Wall Street Journal article, good point.

Like lots of tech CEOs, he wanted to live forever and had invested in a life-extending company. He also said he wanted to be the prime minister of Israel, but then he set his sights a little higher. President of the World. Yeah, that's what he said he wanted to run for. That's the position he made up for himself. And he also wants to be the world's first trillionaire. And get this, the head of SoftBank, which has invested over $3 billion. in WeWork, they loved that Adam was such a crazy guy. They actually encouraged him to be crazier.

There were also some key stories in this Wall Street Journal article that illustrate the culture that Adam Newman created at WeWork. So get this, on a single day in 2016, Adam asked for 7% of the employees of the company to be fired. And then he had an all-hands meeting where everyone in the company had to come and kind of just mourn about the 7% of employees. Turns out he was also an hour and a half late to this meeting. And then he had to kill the shots handed out to everyone, including people who were getting fired. There's not too much of a point to this, but you had to know this about the Wall Street Journal

article. And then I got to point this out, too. They then had run DMC come in and start playing, it's tricky, it's trick-a, it's trick-a to everyone. A lot of alcohol, a lot of partying at Adam Newman's WeWork. He's also encouraged like 20% of the company be laid off at any given point because he wasn't impressed. He wanted people to be on the

edge of their seats constantly. So that's extremely entertaining, but Jack, what's the takeaway for our buddies over WeWork? Adam Newman voluntarily fired himself as CEO, bold move, but it doesn't fix everything for his company. At snacks, we're always looking for analogies and similarities, and we found one with exactly what happened with Uber. Yes, Uber had Travis Kalanek stepped down. He was the visionary leader of the company who brought Uber from nothing to a multi-billion dollar unicorn. So similarly, the benefit is that your distraction of a CEO is out.

Yes, Adam Newman's out. But your visionary CEO who got you there, he's out too because it's the same person. Plus, WeWork has lots of question marks surrounding its business model and whether it can ever profitable. And this doesn't fix that. For our second story, Neo, the Tesla of China, just plummeted 22%. Very bad stock day. Snackers, if you've never heard of Mio, it's like a $150,000 electric car company based in China. Red pill, blue pill, Morpheus. It's also called Neo, I think is what Nick's getting after here. Kiano. Now, they not only just announced earnings because they IPOed a year ago, but they also canceled their earnings. Yeah, they issued a PDF probably. The PDF said, we lost a lot of money, and they're like, by the way, if you have any questions,

we're not going to answer them. No, they're like, looking at the interns, like, don't pick up the phone. Don't pick up the phone. CEOs typically get on the phone with a bunch of Wall Street analysts to answer questions after an earnings report. Now, like Jack mentioned, the company is based in China. They're based in Shanghai. They're five years old. They IPOed exactly a year ago, and the cars are expensive. People like to call them the Tesla of China, like we already did. That's because the sale of their core product, an electric SUV costs over $100,000. and sales plummeted last quarter. Not only did that, the company is losing $4 million a day. And then get this, the company was in such a cash-tight position. You never want to be in this position.

It called up the chairman of the company. They're like, Dad! And asked him for a personal loan. They're like, hey, I need $200 million. Anything you can do $4 million? Are they been smoking? What's going on over there with the Neo Prize? So the company did say in the press release, we're canceling our call to talk about our

results. Quote unquote on this one. But we will pursue a leaner operation. interesting situation with that leaner operation line. That means they're going to tighten the belt and cut costs. Because they did the exact same thing earlier this year. It's like they tightened and then they tightened a little more. They already fired 2,000 workers.

They already closed their Silicon Valley office just keeping it in China. They canceled plans to open up a new factory and they even delayed their new electric car that was going to come out. And finally, they sold their Formula E racing team. Not Formula One. Nope. Formula A, B, C, D. We think that's for electric. We think that's an electric version of Formula One.

We could definitely double check. this one. By the way, the company also had, like, it got kicked while it was down after it had fallen while it was sick. It had to spend $49 million recalling cars because they were fire start. And then the co-founder stepped down like a week ago. Not a good ear. I'm exhausted. I feel like we should call them just to talk. I feel like, give me an ice pack. I feel like they want to talk. They just need to find someone. So, Jack, what's the takeaway for our buddies over at Neo? Bubbles can happen in any market, including maybe with electric cars in China. So, Fun fact, China is where half of the world's electric vehicle sales happen.

But also a fun fact, a lot of those sales are driven by the subsidies that the government gives to help you buy the electric car. Yeah, the government is intent on being a world leader in future technologies like electric vehicles. So they've been, if the car costs 20,000, they're like, here, let me cover 5,000. They're making it a little bit cheaper for you. Now, those subsidies that China mentioned, they've been scaling those down and they're going to end in 2020. So without the subsidies, the electric vehicles in China, they're going to be higher priced and they won't sell as well. So what's the result when these subsidies maybe are starting to slow down? Neo's sales have fallen two straight months.

This is the time they should be growing. Exactly. Astronomically grown. Life is hard for the Tesla of China right now. For our third and final story, Nike has just become one of the few U.S. companies still winning in China. And Nike could start to get guys to embrace at leisure. All right, let's talk about their last three months.

Yes. Last three months, revenue in North America for Nike rose by 4%. And that's okay. Yeah. It's important because a majority of Nike sales are in North America. How about the profits? Profits rose by 25% to almost $1.4 billion. That's okay.

Shares this year are already up 18%. That's also okay. That's actually very much just okay because the S&P 500. Yep. So the rest of the stock market is up even more than Nike at 20%. Jack, I love when you throw a little context on this. But now you can tack on 5% more stock price growth because of the winning quarter with China. So we got to talk about what's happening with Nike.

in China. By the way, one interesting surprise. Nike doesn't own its own factories. You think after all this time they would have invested in having factories. Also, like, Nike's shoes and Nike shirts, it's kind of core to the business. You might want to handle that age. Right. Because they could potentially save money in the long term if they also own the factories. But Apple also doesn't own its factories in China. Very true. But what Nike does produce in China is about 25% of its goods that you're wearing. And it sells a lot in China too. And guess what? Last quarter, Nike sales in China to Chinese citizens rose by 22%. Now when Jack and I were looking at that number 22% we were surprised. The opposite of what you'd expect. In mid-trade war here, you'd think something like apparel,

which could be affected, would be affected by buyers in China. Well, there might be like a Chinese boycott not to buy U.S. products, right? And what's more American than the Nike swoosh? We're talking the swish here. Makes a noise every time you say it. But this shows you the power of the Nike brand, even in China, a country we don't have great relations. Jack, there was like some poetry you put up on the border earlier. Can you please share it with the crowd? The swoosh Half no boundaries. Nike, run with that, stick it on a t-shirt. So, Jack, what's the takeaway for our buddies over at Nike who are just doing it?

We're going to make a pivot here. Nike's big opportunity is athleisure. Guys, athleisure. Exactly, because Nike's already done well with the brunch athletic crowd that wants to be dressed up post-berries, you know, when they're eating. We're talking about the early adopters that have been wearing stretchy and tight-fitting clothes since like 2006. Now that is kind of stretched out a little further to not just your weekend brunch game,

but also your office wear. Yes. Offices are dressed. down the dress code and letting people dress comfortably instead of wearing a belt so tight, it literally leaves a mark on your body. Now, when you hear Athleisure, you're typically thinking Lulu Lemon, which is try jumping on Athleisure for men by trying to double men sales in the next couple years. I'm telling you, the percentage of a Lulu Lemon store dedicated to men, it's getting bigger

and bigger and bigger. But there's a big strategy difference here. Nike already has a long-lasting relationship with dudes. I've been wearing Nike products since third grade gym class. And then get this. we just announced this the other week. Under Armour has said it doesn't even want to get into Athleisure, which leaves Nike a little bit more alone. So the late adopters who haven't tried Athleisure yet,

because they're not ready, who has more authority than Nike to convince them it's okay to wear athleisure. Jack, and you'll whip up the takeaways for us over there. A suspect S-1 filing for WeWork and a juicy Wall Street Journal profile. So juicy. Ended Adam Neumann's reign as CEO.

Adam stepped down to save the company's IPO, but the problems are still there, the fundamental ones. Neo Stock plummeted 22% because of a huge red flag. It's canceling its call with investors. This is like the equivalent of just leaving the dinner table, yelling, shutting the door and saying you hate your parents. You never want to see him again. And I'm not going to leave my room ever. Third and final story.

Nike stock is singing because China sales are surprisingly soaring. Original snack strategy tip here. Nike, you can get late adopting guys to do a leisure. That's our take. Snackers, time for a snack fact today. This one's sent in by a Long Islander. Nearby Patchonk, he's from Bayport. His name is Ryan.

Ryan lives right next to the Great South Bay, and I think you can see Fire Island. He's a big fan of Blue Point Brewery, but enough about Ryan over here. We've done a little too much on Ryan. So even though there is a ton of sand on planet Earth, we're actually running out of the useful kind. Turns out desert sand is actually useless for most modern uses, and it's actually another kind that's most important. For commercial purposes, you kind of need the river sand, which can be used to make concrete, and you need the high silica sand to make glass up in Corning, New York. So yes, apparently there is a sand hierarchy. You know what I'm thinking here?

What are you talking? Plant-based sand? I love where you're going with this. Snackers, we would love to hear ideas of what we should ask the Peloton co-founder tomorrow at their IP. At Robin Hood Snacks, hit us up. Let us know. We can't wait to see you guys. We're heading to New York in the meantime.

This is Jack, Nick and I own stock of Tesla and Lulu Lemon. 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.