The Best One Yet - “YouTube sells more ads than ABC/NBC/FOX… combined” — Harry’s razors acquisition gets sued. Coronavirus-benefiting companies. Alphabet’s YouTube surprise.

Episode Date: February 4, 2020

Alphabet’s stock fell 5% after its earnings report, but the real highlight was YouTube — the company disclosed financial info for the first time. Harry’s razors was supposed to be acquired by Schick’s parent company, but now federal regulators are trying to block the deal. And last week we looked at the companies hurt by Coronavirus, so this week we’re looking at who’s benefiting.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 Tuesday, February 4th. We got a special one today. This one is particularly good. What are you thinking over there? Well, we're giving out some T-boy Awards.

Also, this is a lot better than yesterday's snacks. That's why I said T-boy Awards. I thought you were going over there. This is the best one yet. Their first story. Nick selected me as a groomsman and gave me a Harry's razor set and said, Get Yourself Groomed. I placed it upon his face.

Now, Harry's razor's got acquired by Shick. Except that just got blocked. Now, this was supposed to happen, but the Department of Justice sued it. Now we're lathering up and looking at the whole razor industry. Yeah, we're trying to figure out where everyone stands in this razor category in your shower. Our second story, Google revealed its quarterly earnings. But this is really a YouTube story, Jack. Alphabet gave us the old, I got some good news and I got some bad news.

Bad news, lower profits. Good news. YouTube. This is a YouTube story. Third and final story, what we got? Coronavirus is a threat to global economic growth, and therefore to stocks. Last week, Snackers, we looked at how it's hurting things like the travel industry. But this week, we're looking at the companies actually benefiting from coronavirus.

We're talking positive side effects. That's our third and final story. But before we jump into all that, what gown are you guys whipping up over there? Who's prepared an award speech that's unnecessarily long? Who's like ironically wearing a really discount, like, unique clothes suit? Who's ready to just make conversation with Ryan Seacrest again? Now, the Oscars are on Sunday, but for T-Boy Tuesday, which is today, we're going to stretch it out for a whole week. Yeah.

And we're unveiling the first annual T-boy Award. This is like taking a three-day weekend and turning into spring break. We're excited about it. Who's going to get their first ever T-Bull? Jack, and we have been hard at the desk looking at all the variables. We've got the envelopes for who's going to win these things. DiCaprio is still waiting to get his first T-boy. But Snackers, we wanted to share with you the nominees every day this week for a brand-new T-Boy award.

And guess what? We're a democracy. You're voting. The snackers get to vote. The first is best product in a supporting role. Now, you can vote for this at Robin Hood Snacks on Twitter. Now, some of the best products in a supporting role that we consider. Can we, and we're not just being politically correct here.

There were a lot of great options. Delta's American Express credit card. Wonderful. Great product in a supporting role. Arguably better than economy seating. Uber eats? Arguably better than Uber. You're eating.

You're not just in a car. And how about podcast, which is a supporting role at Spotter? It's no T Swift, but podcast is pretty strong. We also considered Burger King's Impossible Whopper for this. No beef wopper. True, but it's supporting. And we like the name. Finally, we thought about Brawlit for American Eagle, which is definitely a supporting role, but we're about five years too late on.

Yeah, we kind of missed the trend of that one. So instead, we've narrowed it down to these fantastic four nominees for a T-Boy Award, best product in a leading role, Jack. And the nominees are. Yes. Apple AirPods. Lulu Lemon men's pants Walmart

curbside pickup and Sam Adams truly sparkling seltzer Snackers we need your participation in this democratic process We're also open to feedback on our voices From when we announce these things We didn't really rehearse it

I'm not sure what we were going for We lent ourselves to that Jack and I were just kind of feeding off each other Remember you can vote in our poll At Robin and Snags on Twitter T-Boy Tuesday The T-Boys 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.

Snacks is digestible. Business news for you. Robberhood Financial, LLC, member FINRA slash SIPC. For our first story, do you remember Snackers? mentioned that Harry's razors was getting acquired by Shick? It was big news. It was back in May. I do remember, but it's not happening.

Or it may not happen. It could not. Now that federal regulators are suing to block the deal. Jack and I were in New York City at the time. We had both just crafted our chins. Jack had a little handlebar mustache going on. I had a sideburn situation. I actually have a bald spot right beneath my chin, but no one on the podcast can see.

It's a lot of irony. Nick gets nicks whenever I shave. It's a problem. But to understand this story of consolidates. in the razor industry, we got to clean up this messy razor industry. Jack, throw me the towel, get the after shave over here. Now, according to the FDC's complaint, there used to be a comfortable duopoly with annual price increases in the razor industry.

That duopoly means a monopoly, but with two leaders on top, and they were Edgewell and Procter & Gamble. Procter and Gamble owned Gillette, Venus, Hydrosilk, and combined, that was well over 50% of the razor industry in the United States. stick 50 blades on one of those things and sell it to you, they would then send a 50 first on top of it and sell you that as 12. And Edgewell is a New Jersey-based company that owns Schick, which is famous for the Siette, which is seven blades.

That's a wild one. Now, Schick was number two in the market behind Gillette, and they controlled over 10%. Those two companies, Practor and Gamble and Edgewell, both publicly traded companies, they controlled the majority of the market and they were a comfortable duopoly. Yeah, they were running out of innovation, though, because at a certain point when you had so many blades, you need like a spotter just to shave in the morning. Then the disruptors came in, and they pretty much offered lower prices. Yeah, you saw Dollar Shape Club. Maybe you don't use it. You probably saw the viral video. They ended up taking 8.5% of the razor blade market.

And then Harry's razors came in and took the bottom 2.6% for people who just want to pay like a buck per raise. Serious razor burn for the eraser companies. For the big shave industry, this caused serious razor. You don't want to mess with big shave. Now, Proctor and Gamble recently wrote down their Gillette division by $8 billion because they've lost pricing power. And just before that acquisition announcement last year, Schick announced that its sales had fallen 15% in the previous quarter. Now, besides the disruptors, there is this whole trend going on where guys are just shaven less. Yeah, not shaving as much. I'm not shaving because I don't have dimples. And I think my beard disguises that. I'm not shaving because I don't have dimples,

but I'm hoping they just grow, Jack. At a certain point, they've got to come in. All right. So you know what happens when big, well-financed companies get disrupted by tiny startups. If you can't beat them, buy them. In May of 2019, Edgewell, the owner of Shaq, announced it was acquiring Harry's razors for $1.4 billion. By the way, Snackers, Jack really wanted to say Harry's Shave Club because he wants to make that become a thing. It's not a Shave Club. Also, Unilever happened to have bought Dollar Shave Club for $1 billion just a couple years earlier. And then Proctor Gamble acquired Walker & Co, which specializes in razors for people of color. And right now they're in the process of acquiring Billy Razors, which is a female first razor company,

kind of looks like if your razor walked into a made well. All right. Let me walk you back. It was a comfortable duopoly with two companies. Then a bunch of startups came. Very true. Then those startups got acquired by those two original duopoly companies. Right.

And we're focusing on Harry's right now, which is like the GQ Men's magazine. So finally. Of Razors. FTC, the Federal Trade Commission said those disruptors, that was a good thing. Yeah. And we shouldn't let Edgewell acquire Harry's. Now, in case you're wondering, Snackers, Edgewell stock actually rose on news that this is getting blocked because Harry's is unprofitable.

Harry's is unprofitable. So, although it could help Edgewell, it could also hurt Edgewell. So, Jack, what's the takeaway for our buddies over at Harry's? If the Federal Trade Commission is coming after the Razor industry, it could be a sign that's getting more active. Here's what the Federal Trade Commission thought about this Harry's acquisition. Those startups brought significant benefits to consumers by forcing prices to come down. And by losing startups like Harry's, the comfortable duopoly is creating serious harm for us consumers.

Nobody wants that comfortable duopoly. No one wants some serious harm either, Jack. We got to speculate a little. What could a more active FTC and Department of Justice, those are the two that can break up monopolies? What could that look like? Could they split up AirPods from Apple because those are dominating the wearables market? Could they split up YouTube from Google because they shouldn't be together? Should they split up Instagram from Facebook?

because there's no competition in social media. Snackers let us know at Robin Hood Snacks. For our second story, Alphabet just disappointed everyone with their earnings support. But they told us about YouTube for the first time. The first time. This is like that one cousin you never really spoke to at Thanksgiving, and then you find out one year, they work at NASA.

It's basically Boo Radley. Tell us how you're doing things at NASA. Now, remember, Google is an online ads company. Let that sink in people. It is an online ads company. They sound like they're doing cool things, But it's online ads. 83% of its revenues last year were ads.

And basically, its strategy has been sit back, lay back, watch the world's humans adopt the internet. Relax. And let those humans start Googling once they adopt the internet. Because that is more money for your main business, which again is ads. Now, that is why Alphabet, Google's parent company, is one of five companies in the world worth over $1 trillion, a.k.a. Platinum Platypus. So this is how Google approached this year's earnings.

They got up on the podium. microphone. They made sure everyone had their free Google lunches. And they said, okay, we're going to start with the bad news. We missed our goals for the fourth quarter. We were trying to bring in, you know, a lot of money. We brought in $46 billion, with a B, of revenues. That was $1 billion less in revenues than analysts' hope.

So the stock fell by 5%. Then they were like, wait a second, don't move a muscle. We've got some good news for it. Let me tell you about a little thing called YouTube. Ever heard of it? Back in 2006, two future monopolies merged. Google acquired YouTube for a mere $1.65 billion, aka about one-fifth of a lift today.

Do you internet search monopoly take this internet video monopoly? I do. Since then, we have not known how YouTube is done because it's just one piece of the giant Google financial reports. But now we do. And what we know is that YouTube brought in $15 billion in revenue last year, which we're going to do the math for you on. That's about 9% of Alphabet's total revenue. Okay, people, can we have a reaction? What do you got?

All right, let's give a set, Jack. What do you people? Nine percent. If you're listening with someone in the car, what do you two think? You can chat about it. It's less than we expected. I was disappointed.

We were kind of expected. I mean, I've watched like 75,000 ads where they're like, you can skip the ad in five, four, three, two, one. But they just made a lot of money off those five seconds of patience. When we were watching that Magnolia Cupcake's viral music video from 2008, were we? We were watching it on YouTube, I think. But when Jack and I were just watching that SNL skit about the Queen of England the other day,

we were watching it again on YouTube. You're still watching on YouTube. It's an online video monops. So what we're trying to say is we thought it'd be more of the revenues. But YouTube's $15 billion in ad sales is more than ABC, NBC, and Fox networks combined. Jack, what's the takeaway for our buddies over at YouTube? is the new Google. More transparent. More profits. Less save the world. Again, Snackers Google. It is an online's ads company. But it used to use those profits for moonshot and save the world projects.

Remember their other bets? Those are like top scientists trying to create world peace. They had something called Project Loon, which was like Wi-Fi in a balloon, bringing the internet to every single inch of the world. Now, those wonderfully virtuous projects, those were passion projects of Sergey Brin and Larry Page, the founders of Google and the longtime CEOs. Well, Sergei and Larry have just retired. They've kind of got a new commander in charge. And the new commander is called Sundar. And he's a human. We should point out. We kind of implied he was a robot there, but he is a human. Right. But he is focused on this new Google, which is less about kind of wasting money on Save the World projects that don't have anything

to do with profits. More focus on Google and YouTube profit puppies. And that's why it's telling us about one of those profit puppies for the first time. For our third and final story, coronavirus is messing with markets. But some companies are actually benefiting. Now, Snackers, last week, Jack and I chatted with you about the industries getting hit hard by coronavirus. Travel industry. The oil industry.

Luxury. Tech. Pretty much every industry. If you can name of an industry, it's being affected probably negatively by us. But for every yang, sometimes there's a yang. We don't know. I wouldn't say every year. Is that every time?

It sounds more profound than it may be. factually correct. Now, some companies are actually benefiting from the coronavirus, and let's start with those that are directly benefited. Right. There's some pharmaceutical or biotech companies that are working on a cure, and yeah, their stocks have been jumping, but we don't want to, like, speculate out who's going to come out with a cure here. No, let's talk about the companies benefiting indirectly, not for making, like, way an antidote to coronavirus. Way more curious about who's indirectly benefiting. You know who's not indirectly benefiting? Corona. No, the beer company. Not at all. Now, despite the 2300% surge in global searches for Corona.

What's it called Corona beer coronavirus? There have been a 2300% surge in the term. Corona beer virus. Not a thing. All the limes out there, the limes are safe. No, the company spokesperson says, we believe consumers understand there's no linkage between coronavirus and, you know, find your beach, Corona beer. A Corona, yeah, it may have been an overestimation, apparently.

But the cleaning and hygiene industries are benefiting from the spread of coronavirus. And sanitizer demand surged 70% during the swine flu and during like most middle kids soccer season. This isn't the swine flu or soccer season, but do we expect a similar bump in sanitizer sales. And that's why Clorox, which makes a cleaning bleachers and like a bunch of other products for like cleaning up supply stuff. I think what you're trying to say is bleach. I think I totally botched that, I'm pretty sure. That's why their stock jumped last week. And then two other materials companies, 3M and Honeywell.

they make the masks that apparently, you know, reduce the spread of coronavirus. Right. You can't see a single story about coronavirus without seeing a dozen people wearing the protective masks. Right. Let's talk about another industry surprisingly benefiting. Snackers, Jack. We thought this was fascinating. Get this. Video conferencing software. This is right now like the world's biggest work from home experiment ever going on in China. There are loads and loads of bosses telling their employees not to come in because encountering other people risks the spread of, coronavirus. In the city of Beijing, the streets are just filled with no people. But a lot of bosses don't want people slacken off. So they're telling them to work from home. So for Zoom, a company had IPOed last year in video conferencing, their stock is up 24% in the last week

on thoughts. People in China are going to start testing out the product more. Yeah, maybe they'll get used to working from home and keep working from home after this epidemic hopefully ends soon. Boom, suddenly everyone is a Zoomer. So Jack, what's the takeaway for our buddies who unfortunately is everyone dealing with the coronavirus. As always, a global crisis is when alternative investments get a lot of intentions. Snackers, when things get scary out there, investors tend to look for perceived safe places to put their money. They're actually called safe havens. And one thing that's not a safe haven. No, no, no, no, no. The stock market. Not a safe haven. Because stocks typically fall during times of economic trouble because stocks depend on economic growth. And what's a key thing

being affected right now by the coronavirus, economic growth. Right. And what doesn't depend on economic growth as much? Bonds, gold. They tend to rise during periods of global economic uncertainty. Like a recession, like a financial crisis, like a trade war, like an epidemic. Right. So lots of investors are moving money into these perceived safe havens because they're worried about the coronavirus. By the way, another asset that started to thrive more in chaos? Bitcoin. Bitcoin. Bitcoin is up 31% over the past month, probably partially, because of coronavirus. By the way, this is Nick. I still own one Bitcoin.

His name is Ben. Jack, can you whip up the takeaways for us over there? Edgewell's acquisition of Harry Shave Club, I mean, Harry's Razors. I like what you did there. Is now getting sued by the FTC. They don't want it to happen. Regulators don't like this idea of a comfortable duopoly. We spared you on the uncomfortable joke there.

They don't want it to come back. No one wants it to happen, apparently. Second story, Alphabets, Internet ad sales growth has slowed down. causing the stock to drop by 5% yesterday. There's a new CEO, Sunder Pichai, and he's showing off YouTube, the profit puppy. Third and final story, coronavirus has caused a lot of economic pain and surprisingly some economic winners.

Yeah, we got sanitizing lotion, video conferencing, and safe haven assets. Now, time for our snack fact of the day. This one sent in from James Fox in Aubrey, New York, who did not like how Jack and I completely botched some information in yesterday's pod. This is both a snack fact and the day. a correction. James is actually from,

he lives in the city of angels. He's from Albany, good point. Now, origins. Yesterday, you know that shoe company with that logo that's hard to define? You know, it begins with an ass, ends in a Y, and it's kind of awkward. A lot of older people wear it. I just boldly went in there with confidence and called it yesterday. Sasani. I think I said, Jack, thank you

for teaching me, because I had no idea how it was pronounced. I should not be teaching. I actually try to pronounce it differently every time I see. So James informs us that it's actually pronounced Sockony. And the logo isn't a bird. It's a river. And the three little dots on that river, they're not, they're not eyes. They're not eyes, you idiots.

They're boulders in the river. I felt like an idiot when I didn't notice. And then get this. Sockony Creek is a real creek. So it's not just some river. It's a real river in Pennsylvania. It comes from the Lenny Lenape, which is a Native American tribe, the word for where two rivers run together. It's actually beautiful.

Way more efficient to say Sakani than it is to say two rivers being together. Sokony. I actually have a pair of Sockney running shoes. They're pretty good looking. Don't say Sassoni, people. Don't say Sassoni. Snackers, love being with you today. Remember to vote in our T-Boys Award. Someone's got to take home this prize. Best product in a leading role.

At Robin Hood Snacks. We'll see you tomorrow. Snackers, this is Nick. Both Jack and I own shares of Lulu Lemon and Jack owned shares of Spotify. That is correct. 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.