The Best One Yet - “You have to be this tall to get in the S&P 500” — Tesla’s profit shocker. Ben & Jerry’s e-ice cream. Microsoft bundle-bullies Slack.

Episode Date: July 24, 2020

Tesla shares hit a record high on its first ever full year of profit. Microsoft was caught bundle-bullying Slack, which is claaaassic ‘90s Microsoft. And Unilever announced earnings, but we’re focused on (and concerned about) its direct-to-consumer ice cream strategy with Ben & Jerry’s.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 Friday, July 24th. Stocks dipped. Yep, we're in the middle of earning season. It's aggressive. It's Friday. Living its best life. So we brought the best one yet. TBOY, Jack, what do we got? First story. For our first story, Tesla just shockingly delivered its first ever profitable year. And for that, Elon gets $2 billion. But there are a whole bunch of maybes and it just hidden underneath the chassis of this thing. For our second story, Microsoft just got caught bundle bullying slack. Jack, grab some Beanie Babies and a tank top. Feels like Microsoft's bringing us back to the 90s.

For our third and final story, Unilever, just announced earnings that were pretty good. But the highlight is a strategy of selling ice cream online direct to consumer. The holy grail of e-commerce. Ben and Jerry's thinks it's figured it out, we think they haven't. Ice cream and online commerce doesn't work. Jack's been shaking his head for like a full three minutes before this thing. But Snackers, before you hit those stories, baseball's opening day just happened. Yep, already behind us 24 hours ago. You got Yankees. You got Nationals. You got Fauci. Did Fauci throw a strike on that opening

pitch? Doesn't throw curveballs. It's a metaphor. But it's not just baseball. Basketball also kicked off yesterday, unofficially, because it was just a scrimmage. They had their first scrimmage in the bubble, which is in Disney World. The food vaguely looks fire festively. You got the Lakers, you got the Mavericks, you got LeBron. All on Disney World. Hockey, meanwhile, unfortunately couldn't book Disney World, so it had to go with their second choice. Yeah. Disney World was booked, so hockey went up north to Canada. Yeah, they say Calgary's like the Magic Kingdom of the North. It really is. And there's a 2014 playoff situation going on north of the border split between Toronto for the East Conference and Edmonton for the Western Conference starting August 1st. Now, football is the fourth and final one here,

and their schedule's kind of TBD. Well, football, of course, is the most unsocially distanced of all the sports, Nick. Very true, very true. You got hands on crotches. You got faces and armpits. And then, of course, you got armpits in crotches. And you got the same thing happening in the locker room, too. A lot of armpits, a lot of crotches.

So Snackers, in honor of the multiple sports coming back next month, we whipped up a trivia question for you. What city is the only city to win championships in three major sports in the same season? No city has ever won championships in all four major sports in the same year. Right. The four major sports being professional hockey, professional baseball, professional football, and professional basketball. But one city won all three in one season.

What is the city with three titles in one season? We're going to drop the answer at the end of this podcast. We may even drop a hint somewhere in the middle of this podcast. We're definitely dropping a hint, so let's hit our three stories. For legal out the way. The snacks about the hair 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. Robohood Financial, LLC, member FINRA slash SIPC.

For our first story, Tesla is now the 12th largest U.S. company by market cap. Tesla stock hit a new high after an earnings report that felt more like a Brazilian meat all you can eat buffet with like the swords and the fillets. Now snackers, you've been doing Pilates like from a closet lately. So who's been buying cars? It is not a good time to buy cars. In fact, look at Tesla last year. In this same quarter, Tesla lost $500 million during a normal spring of 2019. So like during the middle of a quarantine, analysts were looking at Tesla and they were expecting another loss, maybe even a bigger loss. But then on June 28th, Elon Musk sent an email to employees, which of course got leaked. Classic. And in the email, Elon's like, guys, we might break

even this quarter, which would be amazing. Well, guess what snackers? Neither of those scenarios happened. Tesla hit its first full year of profit in its entire 17-year history. That's right. Yesterday, they announced a quarterly profit, which makes it four straight quarterly profits in a row. So while you were staying at home in sweatpants for the last three months, the number of Tesla cars delivered only fell by 5%. Not too shabby. And that means two things. First, key. Elon Musk, the CEO of Tesla, the erratic Twitter monster, gets a $2 billion bonus, which required that two of three things happen. The first key to Elon's mega bonus, the value of Tesla stock had to rise above $150 billion in value for six straight months. Check. That happens. Second, Tesla had to record revenue. of at least $35 billion.

Not check. Awkward. Still a little bit short of that goal. We're coming down to the final third. They had to have an adjusted profit of $3 billion over four quarters for Elon to get his bonus. Cheching. Tesla's earnings report confirmed that two of those three things just happened. Elon gets his bonus.

We're talking billion with a B. Elon got $2 billion in bonus. But Snackers, there's an even more important element of Tesla hitting four straight quarters of profit. Now, Tesla, for the first. first time is officially eligible to be part of the S&P 500. We're talking the club of 500 publicly traded companies that are like a little more diversely representative of the United States economy. Nick, you need to be this tall to get on the roller coaster. You need to be profitable to get in the S&P 500. And the first benefit, Tesla's getting out of this is this is just a classic

legitimizer. There's a lot of companies you'd be shocked aren't in the S&P 500 because they've never had a year of profitability. Uber, lift, snap, not in the S&P 500 club. Now, Elon's basically lifting up the velvet rope and letting all the Tesla Nistas come inside the club for the first time. Uber's sitting outside like Jennifer Aniston saying, why didn't I get invited to the Oscars party? The other benefit of joining the S&P 500 is purely financial. Yeah, this means that index funds that track the S&P 500 will pretty much have to buy Tesla stock to track the S&P 500. Even some like Fidelity fund manager who hates Tesla and has been shorting them forever? There are many. Has to buy Tesla stock now, which could lead to even more gains for the insanely rocketing stock. Oh, by the way, Snackers,

a little PS they threw on at the end of the earnings report, they've decided to give their Tesla rose to Austin, Texas. Tesla's spending a billion dollars in the Lone Star State to make its second American assembly plant to build the cyber truck because Texas loves trucks. One billion dollars, that is half an Elon bonus or one-eighth of a lift. So, Jack, what's the takeaway for our buddies over at Tesla? Tesla stock has more than tripled since March. But Snackers, context is king with Tesla stock. That's right, because if we go north to Detroit, Ford, GM, Chrysler, each sold at least four million vehicles last year. Tesla, meanwhile, is barely even going to make $500,000 this year. I don't think Tesla is going to hit its $500,000 car goal, and that was only one-eighthth of each

of the Detroit three. Jack, let's throw on the financial caps, revenue. What about Tesla's revenues? It actually fell from last year. So you can't even say in that category that Tesla is a growth company right now. And then let's take a little bit closer look at these profits, which have slightly tiny asterisks built into them. Okay, Tesla managed to pull off a profit last quarter because of a classic loophole. It came from environmental credits.

Yeah, other car manufacturers that need to become more sustainable, buy credits from Tesla and give Tesla money because Tesla's so sustainable. Tesla basically snuck into the four straight profits club, like a boxer sneaks into a lower weight class. Classic move. You're like fast for four days and then you step on the scale. You're like, oh, finally give me a protein shake. Joey, why are wearing 12 sweatshirts? Stop asking me questions. Now, investors are driving up the stock price for Tesla now on hopes that it's the car company of the future.

But Tesla's present is astonishingly smaller and less profitable than its Detroit peers. For our second story, Microsoft's ridiculously fun earnings party just got broken up. by like the campus police. That's because Slack is suing Microsoft for being a big, bad tech bully again. Microsoft reported 13% sales growth and over $11 billion in profit. Microsoft's like, what pandemic? Everybody is celebrating Tesla, which just notched $370 million of profit in the past four quarters. We got to sprinkle some context on this. Microsoft just did 30 times what Tesla did and did it in one quarter. order of the amount of time. I think by the rules of math, that means Microsoft is 120 times more profitable than Tesla. The generic rules of math. Now, Microsoft's insane profitability is why its market

value is now at $1.5 trillion with a T dollars. That's behind only one company. Only one company. Apple. This is Nick. Apple. Nick on stock of Apple. Now, just when the Microsoft crew was like ready to download some champagne, they got accused by Slack of being a big bad tech. Bulley. Here's what happened. Slack is suing Microsoft over in the European Union because European regulators are more receptive to complaints about big American tech. Think of European regulators like that one parent who you know will actually always give you that thing you kind of push them to give you. If I tattle up my brothers to dad, that's okay, to mom. I'll be told to tough enough. Big Ted, I'm going to need some backup and Big Ted jumps in. So here's the slackization. Microsoft is

acting like a monopoly by offering Teams for free. That's right, Slack's biggest rival is just a feature that's owned by Microsoft. It's a product called Teams. And they think it's unfair that Teams is available for free to all corporate customers who have like Microsoft Word or Microsoft Excel. Now, Jack and I are listening to the tune of this frustration and we're hearing echoes of something from the 90s when we were growing up. Back in the 90s, Netscape, which was a web browser, complained that Microsoft installed Internet Explorer in every PC that was running on Windows, which was every PC back then. And by web browser, we mean browser on the World Wide Web, which was new. Yeah, we do. Well, guess what, Nick? That lawsuit from Netscape in the 90s bogged down Microsoft

for 10 years in paperwork, complaints, amicus briefs, I don't know what else. Fascinatingly, a lot of critics point out that the 10 years that Microsoft was like bogged down in all these log suits, they missed out on capitalizing all the innovative. that Apple was doing at that time. You'd hope that Microsoft learned its lesson, don't behave like a monopoly because you lose 10 years. Now, Snackers, to really embrace an understanding of anti-competitive behavior, imagine a town where there's only one single restaurant. And imagine you are a hustling entrepreneur and you think to yourself, yep, this town needs another option. I'm going to open up a pizza joint here and become rich. I'm going to laminate some menus and I'm probably going to have

a cake card because that's charming. Now, here's the thing. That one restaurant that you're competing against it sells like all kinds of food, including pizza. So you know, you know, my pizza joint is going to be competing against their restaurant, which also has pizza on the menu. But here's what that other restaurant starts doing. It starts giving away pizza for free whenever anyone else order somebody else. Right. You get a gyro, they're throwing pizza in.

You're getting a burger. They throw pizza in. In response to you opening up a pizza joint, they drop the price of pizza to zero dollars. Now, that would be anti-competitive because no one's going to go to your pizza place when they're getting it for free at the other restaurant. So, Jack, what's the medium-rere takeaway for our buddies over at Microsoft? Is bundling a bully move? Because big tech is all about bundling these days.

We've said it before. We will say it again. Tech gives away things for free that are the entire profit puppy of another company. Google gives away 15 gigs of cloud storage space to anybody who sets up a Gmail account for free. Yeah, you know what that is, Snackers? That's the entire business. of Dropbox. Another thing Google gives away for free is video chat. We've all seen those prompts like, would you like to use Google meets for this meeting? That's a cute feature that about 12

people at Google work on. That's the entire business of Zoom. Snackers, even a big successful company like Netflix could complain that Amazon is unfair because it gives away streaming video for free to anybody who has prime. Bundling tech products ends up being great for customers, but it could squash competition. And the EU is a lot of. about to decide whether it's even legal. For our third and final story, Jack Cuppercone. Oh, dude, you order the cup and then you get the cone and you plop the cone into the cup, best of both worlds.

It sounds like an odyssey and you don't sound that confident in it. The answer is always waffle. Now, Unilever stock just jumped 8% after its earnings report. But we're focused on its stealthy Ben and Jerry's online ice cream business. Now, Snackers, we're talking about British-based Unilever, which makes Lipton T, Vaseline, Dove, and most of the ice cream on planet Earth. Briars, Talente, which is apparently a fancy Jolalo brand owned by Unilever. Klondike, Ben and Jerry's, it's all Unilever.

They're covering all the ice cream for you to wear whether your clothes or just in sweatpants. They got a style for you. Ice cream was actually the most referenced food in Thursday's earnings report for Unilever. Snacks original. That's what we discovered. And ice cream sales, it turned out, fell 30% as soon as the pandemic struck for out-of-home stuff, like, you know, ice cream carts. Like an ice cream car by the beach because no one's at the beach.

But it jumped by 24% for in-home sales, like a pint of Ben and Jerry's ice cream because we're all Netflixing and chilling and wanting Ben and Jerry's. And because I scream and you scream and we all scream for ice cream, that helped the stock of Unilever jump 8% yesterday. Snackers, get this. Unilever is now the most valuable company in the United Kingdom. So here's what Jack and I found fascinating about what's going on with Unilever. driving that whole ice cream rebound was a project that they began three years ago.

It's called Ice Cream Now. That's the corporate name, which is ironic, because I have Project Ice Cream Now every time I want ice cream. They literally came up with the name by asking a five-year-old. There was the extent of the research. Now, if you Google Ice Cream Now, you won't come to a website. In fact, ice cream now.com is not a thing. Not a thing. Doesn't exist. No one's claimed it, but we assume after this podcast, someone will have claimed this. But this is Unilever's corporate initiative, so it brings you to Ben & Jerry's if you Google Ice Cream Now. That's right.

And once you're on Ben and Jerry's Ice Cream Now IDs your location, lists hundreds of places that are selling Ben and Jerry's near you and then gives you a very simple one-click delivery option to get that ice cream. Since you want ice cream now, it'll tell you that the Coconut 7 layer bar is a half mile away at J&H grocery if you want to go yourself. Or if you want it delivered, Postmates will get it to you in 30 minutes. The key here is that ice cream is like the holy grail of e-commerce. It is extremely perishable.

Despite that extreme perishability of ice cream, Ben and Jerry thinks it can go direct to consumer with online delivery of ice cream. And that's why they've invested, it seems like an absurd amount of money in ice cream now, because they not only have an online store, but they've designed these like special, negative 110 degree dry ice delivery boxes.

That's right. Things freeze at 32 degrees, but they gave themselves 142 degrees of cushion just to make sure it stays frozen. It's like they're afraid the ice cream's going to go to Key West for a Bachelor party before it actually gets to you. They figure customers are so rapidly craving ice cream, they'll take the risk that it goes all the way to Key West and becomes a warm, sticky mess. So, Jack, what's the takeaway for our buddies over at Ben and Jerry's? Ben and Jerry's online store is fighting against a megatrend.

Snackers, in April, we reported about Unilever's ambitions to sell direct-to-consumer online. But online grocery will only work if it aligns with this superiors. super important consumer megatrend. It must save you time. That's right. You can't just like order juice from tropicana.com and then order your yogurt separately from Shabani.com. No way. You're not going to do like four different transactions and type in your credit card six different times. No. You're going to go to the store once a week and load up on the stuff you need. For online grocery delivery to work, it's got to be a one-stop shop like Amazon or Walmart or like Instacart. So this summer, during a pandemic, Ben and Jerry's is selling you ice cream directly from its website because it's a

a pandemic and it might work. But long term, we're thinking you probably want to turn to online grocery delivery giants or platforms that save you time. Jack, can you whip up the takeaways for us before the weekend? Tesla's profits mean that it is S&P 500 eligible and, yep, Elon gets $2 billion bonus. But if Tesla's profits don't catch up to its stock price, its stock could definitely fall. Second story, Microsoft is more profitable than ever, but it's getting sued again. And the last time it was sued for this, it lost 10 years of innovation and didn't iPhone. anything. Third and final story, Unilever thinks Ben and Jerry's is direct to consumer online sales doable. We don't because online shopping has to save you time. It's the core rule. Now, time for our

snack fact today, which in this case is the answer to our trivia question from like 12 minutes ago. This one's from Nate Christie out of Detroit, Michigan, kind of just gave it away. Yeah, the city that's the only city to win championships in three major sports in the same season is his hometown. It's Detroit, the Motor City. In 19. In 1935 and 1936, the Detroit Tigers, the Detroit Red Wings, and the Detroit Lions all won championships. And Detroiters like to point out that they would have won the NBA championship, except there was no NBA.

No, there was no NBA. If there was, they definitely would have won. And get this, Detroiters still celebrate Champions Day every year to commemorate that accomplishment. It's a different day because it's not official, but it's still a thing. I actually think some random, like, bar decides what day it is every summer. This feels like what a really nice Midwestern city would do. Now, before we go, happy birthday to Napa Valley winemaker Lisa Barker-Moll.

And happy birthday to Alex Crane in Rochester, New York. Farid Arif, proposed to Susie in Charlottesville, Virginia. We saw pictures. Unreal. On a horse. He did it on a horse. It doesn't get any better than that. She said yes.

Happy Golden 25th to Alexa from Chicago, Illinois. And happy birthday to Valentina Vaccarez in Naples, Florida. Nikki Brofley is turning 23 from Asheville, North Carolina. And happy birthday to Jack. father-in-law and that's someone who's listened to this podcast every single day ever Claudia. Claudio Kravici has listened to every Snacks Daily and Market Snacks Daily before that, a.k.a. Captain Klaugners, before we go this weekend, remember to yell to your buddies,

H-Y-H-Y-S-D. It's just for, have you had your snacks daily? We can't wait to see a Monday. And if you know, you know. This is Jack. I own stock of Amazon, Nick owned stock of Apple. The Robin Hood Snacks podcast you just heard reflects the appeal. 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.