The Best One Yet - “Why Tesla is like a young avocado tree” — Visa’s swipe tax. BP’s empire. Tesla’s Elon-sanity.

Episode Date: February 5, 2020

Snackers want to know why Tesla stock has surged a freakish 60% in the last week, and the answer lies in avocado trees and orange groves. Visa is already Earth’s biggest payment processor, but now it’s making the biggest change to credit card transactions in a decade: AKA, “the swipe tax.” And BP’s oil empire is getting harvested by BP.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 Wednesday, February 5th. Holy Toledo, it's almost the weekend. I wonder where you're going to go with that one. It's going to be cold this weekend, though, so we're all just going to be bundled up inside watching movies. So we decided we'd focus on making this the best snacks daily we'd ever done.

Our first story, Tesla stock has gone into ludicrous mode. Is this thing running on the blockchain now? What do they do? The snackers asked for it, so we're delivering. Let me just give you a hint. Tesla is an avocado tree. Ford Motor Company is an orange tree. And you snackers are burned.

We'll explain the analogy later. By the way, Gossling, huge snacker. Just want to point that out. Second story, Jack. Visa is the world's biggest payment processor, and it's made the biggest change to credit card transactions in 10 years. It's disrupting how it makes money off of you and everywhere you shop. It's beautiful.

It's going to make more money. Spoiler alert. They're framing this as disrupting themselves. They're making more profits. They're going to make more money. Third final story. The sun never sets on British Petroleum's Empire. I think you're supposed to say Empire.

But BP is having a tough moment. It's hard out there for an oil company these days. It's really hard. Now, before we get into those three stories, you all know this is the T-Boy Awards. Jack, may ask who you're wearing over there? A little bit of Carhart? No, I'm wearing a 19th century old navy. Not a 10th century.

The sales associate said they were vintage. A hand-me-down of a hand-me-down? Jack's good of his centuries. Actually, yesterday. you voted on the best product in a supporting role. There was a landslide winner. I think two thirds of the vote, myself included, went to Apple for AirPods. We actually, full disclosure, I went with the Seltzer, which was the clear loser beginning

at moment zero all the way through today. No, honestly, Apple AirPods were the no question winner. I mean, it should, it could be its own like Fortune 500 company. Now, for the T-boys for today, we've got a brand new award. this is going to be the best CEO in a leaving role. Right. 2019 was a record year for CEO departures. Leaving.

Leaving, not leading. And think about some of these CEOs who left the company, like, at a pretty high point on pretty good terms. You got Kevin Plank who left Under Armour, which is like trying to rebound. You got Melanie Whalen, who's left SoulCycle, built it from nothing to something. Which is still a thing. Larry Page and Sergey Brin are the co-founders and, like, former CEOs of Alphabet. Which is, it's doing just fine. It's a platinum platopus now.

And then you got Mark Parker, who. I think took over from the original Nike CEO, and let's just say Nike's doing fine. Nike's doing fine. So instead, we decided to focus the best CEO in a leaving role, not on the good CEOs. No, on the good riddance CEO. The nominees, Jack, can you get us the envelope and maybe a flower? I feel like a flower's involved here. Adam Newman, we work.

Steph Corey, away. We know she's back, but asterisk. Now, the first time she left. First time she left. Kevin Burns, Jewel. And finally, Carlos Gown, Nissan, and Renault. Yeah, he's now an international fugitives. Right, so he is actually in the lead for the war.

All right, you know what to do, Snackers. Go to Robin Hood Snacks on Twitter. You can vote for the winner, best CEO in a leaving role. It's the T-Boys. You're tuned in the snacks daily. We spoke to the lawyers and we got to get something illegal out the way. The snacks about the hair ain't food. It's air candy.

They don't reflect the views of the Robin Hood family. It's all informational just so. 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, Tesla stock continues an insane rally because investors think it's an avocado tree. Chrycium stockium. We don't know. It's like magic that's going on here. This is a cultural phenomenon.

People are talking Tesla, Tesla, Tesla. Snackers. Tesla stock is up 60% in the past week. It rose 19% on Monday, and then people were like, oh, it's going to chill. It rose 14% on Tuesday. Thanks to those stock price increases, the total value of Tesla stock, which is called the market cap, has increased by $62 billion in just the past week. In just the last week, Tesla's value increased by the same amount as 4.3 lifts. Increase em stockium.

It just added four lifts worth of value to its company. I'm going to take this camera and zoom out a little bit over here. In the last month, Tesla has doubled in stock price. I think it's tripled in the past like three months. Hey, Snackers, have we slowed down our voices enough and emphasized numbers enough to hit this home? What's happening with Tesla stock is ludicrous. This is insane. Now, there are a lot of positive reasons why this could be happening that we've seen happen over the last month.

First, investment banks have analysts whose job it is is to predict where the stock will be in 12 months, and a lot of them have upgraded their target stock price for Tesla. So Tesla stock price has increased meeting some of those analyst estimates. Now, there's also battery news. You know Tesla's big in the battery industry. Yeah, they got like some good relationships. They have a partnership with Panasonic, which just announced two days ago that its partnership with Tesla is already surprisingly generating profits. And then remember just last month, Tesla announced earnings. What did they deliver, Jack? A surprise profit. For the second straight time. All right. So those are like the positive things. Also, Elon must drop like an electronic dance music track this week, which was kind of a big deal.

We're looking at all this news and we think, you know what? It leads to an obvious conclusion. Yeah, what are you thinking? Tesla is a young avocado tree. We know. Snackers, you were probably thinking the same exact thing. It almost goes without saying. And you know what? General Motors and Ford, those are both mature borderline over the hill orange trees. All right, so here's how this goes down. General Motors and Ford, they produce 39 times as many cars as Tesla did last year. And yet, Tesla's values. value is more than double Ford and General Motors combined value. If so facto, Tesla is a young avocado tree.

Let's explain it. So Tesla is not producing that many avocados yet. No, they're barely a baby avocado. The tree's like six feet tall, you can pluck them all in just like a few minutes. The pit to fruit ratio is very high. But this tree is young. And investors think in the future, this thing's going to keep growing. Someday it's going to be like as big as your house producing a ton of Tesla avocados.

And investors know, there is a lot of demand on a lot of toasts for a lot of avocados in the future. All right. Now, let's look at GM and Ford. Those two are mature, older orange treats. Snackers, when was the last time you had a glass of orange juice? Jack and I were chatting about this? I think the last time my mom handed me the glass. Oranges aren't that in? They're very sweet.

There's a lot of natural sugar, but I feel like I have to brush my teeth after oranges. Remember there's a lot of pulp going on? You get the no pulp, but then it was too much for your face. So even though oranges aren't that in these days, GM and Ford are mature orange treat of producing a... ton of oranges. Yeah. They're over a hundred years old, basically.

They're not expected to grow that much more, but they're still producing these fruits. So these giant orange trees are producing a ton of fruit, but they're expected to decline over the years. And plus, oranges aren't that in these days. So Jack and I are staring at this avocado tree orange tree situation, and we're kind of blown away by how accurate it was. But then we were like, oh my God, this works on a climate change level too. Yeah.

Let's make this analogy a little more perfect. Climate change could hurt orange production because orange trees are just like, wow, It's really hot. I can't pump out for it right now. I am sweating. GM and Ford could struggle in the era of climate change because of their gas goes less. Meanwhile, avocados are like, oh, my God, this warm weather, very conducive to more of me. Tesla is going to do well in the era of climate change.

By way, we're about to get a seasoned desist letter from the state of Florida, Jack. Now, investors are thinking, do I want a young avocado tree in Tesla or an old orange tree and General Motors are Ford? Oh, one second. I think that's the Tropicana lawyers calling us. So Jack, what's the takeaway for our buddies over a Tesla? This could be a short squeeze. Snackers, that could be a key reason why you've seen the stock suddenly jump a short squeeze. Tesla is one of the most hated companies there is.

It's true. Yeah. And there are thousands of investors who have made bets that Tesla's stock will fall. And these investors are short investors. When you typically buy a stock, you're a long investor. You're waiting for the stock price to increase so you can sell it at a higher price. But a short investor sells the stock high. by borrowing it and then hopes that the stock price falls.

They are doing the opposite of what a typical investor is doing. Now, as Tesla's stock price has increased, those short investors have been losing a ton of money and freaking out. Right, because they're like, hey, we wanted the stock to fall, not increase. And so as the price has been increasing, they have to actually buy Tesla stock to end their bleeding and close out their position. So as Tesla stock starts rising, then these short sellers end up buying the stock back. Which causes the stock to rise even more.

Which makes an entire squeeze situation where you see the stock suddenly jump. Kind of like what you've been seeing. And then more and more short investors keep buying and buying Tesla stock to end their position. It's called a short squeeze. It causes the stock price to move an insane amount upward. And we've seen it happen with other companies. It's happened, for example, with GoPro. People thought that the stock would drop.

Short sellers sold off the stock, but then they had to buy it back really quickly. We saw it happen last year with Beyond Meat. Sometimes these inexplicable stock price increases are the result of a short squeeze. For our second story, Visa just made a huge change to the unofficial swipe tax. We all pay the swipe tax daily, and we don't even know it. So you're walking into a bodega. I walk into a bodega, Jack, and we're looking for a snack. We're looking for sign eating, all right?

I'm looking for a vegan version of the RX bar. We pull out an RX bar, and let me tell you, I enjoy the RX bars. Jack, they seem to get stuck on his teeth a little bit. I need a rake to come with my RXAW, but it also has an egg in there. It's like veg. It's a confusing protein bar. But anyway, you get the protein bar. You go to the RX, you count the counter, you pay for the RX bar, and the cash register guy says,

$5 minimum. Can't buy this thing. You got to pay in cash. So you get a second bar and they're like, it's like you're not at $5. You're still 30 cents. You're like, come on, man, we come here every day. What's going on? It's me, Nick, it's Jack.

We'll give you shout on the pot. Now, the reason, yes, the reason for this is interchange fees. Blame interchange fees whenever you see a $5 credit card minimum. That is what the bodega pays every time you swipe a credit card or use your debit card. Now, when it comes to who gets that interchange fee, the bank that issued your card gets it. And then they share some of it with the payment processor, which is like Visa or MasterC. Right. Just look at the corner of your card. You'll know if it's a Visa card or a MasterCard. They're sharing that fee, and they're loving it.

Now, Snackers, Visa is the world's largest payment processor. Stores and merchants pay $100 billion in those interchange fees annually. And get this. Ten years ago, they were paying like half that. And wait, there's more. Premium cards are coming, which is going to eat. increase those interchange fees, aka swipe taxes, even more. You know what we're talking about premium cards.

Like the titanium rare earth metal cards, your buddies whip out whenever you're paying for dinner. Like, boom, hits the table. Those things are so disruptive in my wallet. You try to pull it out and it almost like breaks the cards around it. The great thing about the Chase Sapphire card, doubles as a weapon. So if you're buying a $100 fig tree at anthropology, been there. Yeah, trust me. I've been there three or four times.

Yeah, and these things look great. We have a fig tree graveyard in the backyard. They're really hard to maintain. So you're paying $1.90 with a regular card in the swipe tax, aka interchange fee. Right. But if you pay with a premium card, the merchant anthropology, they have to pay $2.50 to the bank as an interchange fee. Now, I know the Snackers are doing math back there. Yeah.

The interchange fee is typically 1.9% for regular cards, 2.5% for premium cards. But here's the funny thing about that interchange fee that the store ends up paying to the bank. It's actually financing the perks that you enjoy. your premium card. When Chase Sapphire Reserve is given way a trillion points that you can use for a free massage at a hotel. You could spend a whole year at the four seasons if you sign up for the card. Chase is not a charity. They're not doing this to help you get a massage. No, they're getting the money for those premium-powered perks by charging a higher interchange fee, aka what we're calling the swipe tax. So we're all paying for everything with our credit card. This interchange fee is a

modern sales tax, and that tax the merchant pays, and it finances your perks. finances Visa's profits, which takes us to our takeaway. Jack, what's the takeaway for our buddies over at Visa? And what are they doing right now? Visa is trying to fill loopholes and milk a little more money from Amazon. Snackers, here's why we're talking about Visa. Ten years ago, Visa set the swipe tax and inadvertently created a bunch of loopholes until what they announced this week. They're trying to fill those loopholes by changing the interchange fees for the first time in 10 years. That is the news about what Visa is doing. They're changing the swipe tax and they're starting with real estate. Right. Have you noticed nobody uses credit cards when they're paying rent at the end of the month? You look at the option. You're like, hey, I would love a bunch of points by putting a couple grand to my credit card.

But your landlord is going to charge you a $30 fee if you pay with a credit card because they don't want to pay that interchange fee. They're going to pass it on to you. Right. We're not doing this. You're going to do it. You're going to do it. So Visa is lowering the interchange fee when it comes to transactions involving real estate in hopes that some landlords start to accept credit card payments. Now, there are other areas in which it's actually increasing the fee for a, example, e-commerce. Yes. Why is Amazon paying the same interchange fee as Joe's Pizza, which is like, yeah, it's in the West Village. It's just enjoying its life and it's a single shop pretty much. It's making like seven cents per slice. Meanwhile, Amazon is getting all those transactions across the internet,

which are way easier to do with credit cards. So Visa is increasing fees on the big guys of e-commerce like Amazon because it can and because the big guys can afford it. It's the swipe tax. For our third and final story, British Petroleum BP has a global empire. of oil fields. But it's in the middle of downsizing itself. It's so true. BP is downsized itself. Now, BP is British Petroleum. It's based in Britain's capital, London. Most prop a city. But it's in the oil industry. Most dirty industry. Doesn't really fit London in the oil industry. No, but when you think of BP, you kind of picture, and let's be honest, a burning oil rig in the middle of the Gulf of Mexico. Yes. The Deepwater Horizon was one of the

worst thing that happened in all of 2010. Since then, BP has paid up a 65 billion. $400,000 people have sought money from BP to pay for damages of that disastrous oil spill in the Gulf. The largest environmental disaster in United States history, plus 11 people died. It was tragic. For BP, though, you should also picture a vast empire of deep sea rigs, Rusty oil drills, and a fertile crescent. Like describing a family in Game of Thrones. BP has land in six of the seven continents of the world. If there were eight continents,

they'd be on that eighth one too. Well, they're not on Antarctica. No, but no one really wants to be on Antarctica. Speaking of maps, let's talk about all of the land. They have 470,000 acres in oil-rich, Texas and Louisiana. That's the equivalent of 32 islands of Manhattan across those two states. BP has drilling rigs in Trinidad, which is right off the coast of Venezuela. Let me move the compass a little bit further, Jack, West Nile Delta of Egypt.

Yeah, BP is there. The North Sea, which is the frigid waters north of the north of. Her Majesty's Kingdom. She can see it. She doesn't like going up there, but she can see it. BP's there. They've also got some land on Siberia's tundras. They're like dodging Ivan Drago to drill oil up in Russia. Angola. Indonesia. Oh my. India. Australia. Azerbaijan. That friend of yours who's still traveling abroad to like 100 companies so they can max out their passport, that's basically BP. Snackers, the sun doesn't set on British patrol.

And that's because real estate is key to oil. If you've got to get the stuff under the land, it's probably most profitable if you own the land. So Jack, what's the takeaway for our buddies over at BP? BP thinks it's the right time to sell some of its oil land. Yeah, yesterday, Snackers, BP announced its earnings, and unshockingly, profits fell because unshockingly, the price boils down. It's the same reason Exxon, Chevron, and Shell, the three other giant oil companies, their stocks all fell, too.

We got the coronavirus, which is reducing economic activity. Which means less economic activity, less. oil that's used to drive that activity. And there's kind of a mega shift to cleaner energy happening. Yeah, funny thing, the UK just passed a lot banning conventional cars, even hybrids by 2035. After 2035, it will be illegal for the sale of anything except fully electric cars in the UK. BP is the chef cooking up the food those cars eat, and they're like, wait a second, no one's going to be dining at this oil restaurant anymore. I like that.

You may have to shut down chef. BP is looking at its epic portfolio of land across the world. And it's decided to start selling the ones that are like least value. You know, that vacation home and that Siberian Sunderra? Maybe we don't need it right now. Their goal is to sell $15 billion worth of real estate by 2021. And then they're going to take that money and give it straight to their shareholders as dividends. Beach House in Trinidad, maybe we could get rid of that one.

They're literally downsized. They're selling homes. It wants to sell its oil assets while they're still valuable before oil is officially out. Jack, can you whip up the takeaways for us over there? Tesla stock is going nuts. We think there might be a short squeeze. Investors think Tesla is a young avocado tree, well suited to grow in an era of climate change. Yes.

Or climate of change. Yes. Or only the first one. Better suited than oranges. Let's go with the second story. Visa is finally changing the swipe tax for the first time in 10 years. Visa wants a piece of real estate and a bigger piece of e-commerce. Third and final story, BP realizes the oil industry is probably shrinking, not growing.

it's selling off chunks of its oil field empire, maybe a couple of ski houses and a couple of beach places, too. Snackers, time for our snack fact today. This one was actually emailed in. Yeah, it was emailed in by Molly Dwyer. Dwyer Martel. Molly Martel, sorry. Full disclosure, my wife sent this one in. Molly D sent this one in and it is close to home. We actually both met Molly at Middlebury College where Nick and I were freshman near roommates. Wonderful place. Molly attended our first party ever. It was awesome. It was incredible. It was like the first week of orientation. It was like 20. 20 people in a 10 by 20 room. We may have been mostly guys.

Now, Airbnb turns out, makes more money in the state of Vermont than maple syrup. You heard that right. Vermonters raked in a total of $68 million in host income in 2019 by renting out their places on Airbnb. And Vermont produced $54.3 million worth of maple syrup in 2018, which grew by about 7% in 2019. We're still counting the 2019 number. It's an estimate. But it seems pretty clear.

Airbnb is like booming in Vermont. And maple syrup isn't exactly a booming industry. So I don't know if we can do a call to action here, but it may be to consume more maple syrup. No, call to action. Visit Vermont. Actually, take maple syrup. That's great from Vermont. Or visit Vermont.

Great in the summer. You got Burlington. You got the waterfront. You got breweries. You got skiing. Brattleboro, Vermont. Wonderful town. Syrup goes great on ice cream.

Little unknown topping. Well, maple syrup is one of the three natural sweeteners. out there. Jack, fun fact here, maple syrup, big snacker, long-time listener of the pod. Also, that stat came from the Valley News, a wonderful newspaper based in White River Junction, Vermont. Snackers, loved having you with us today. We should probably do this tomorrow. You want to wear the same sweater? I will be back wearing something different. Too much car heart, not enough car heart. See you tomorrow. This is Jack. Nick and I both own stock of Beyond Me. 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.