The Prof G Pod with Scott Galloway - Office Hours: Will Vuori Be a Good Stock Pick?, Disney’s Next Move, and How to Set Your Kids up for Success

Episode Date: March 6, 2024

Scott gives his thoughts on whether the athleisure brand Vuori is a good stock pick ahead of its supposed upcoming IPO. He then talks about one of his stock picks of 2024, Disney, and why he believes it’s heading in the right direction. He wraps up with a conversation on how to set your kids up for success, especially when it comes to supporting them financially.  Music: https://www.davidcuttermusic.com / @dcuttermusic Learn more about your ad choices. Visit podcastchoices.com/adchoices

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NMLS 1617539. Welcome to the PropG Pod's Office Hours. This is the part of the show where we answer your questions about business, big tech, entrepreneurship, and whatever else is on your mind. If you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. Again, that's officehoursatprofgmedia.com. First question. Hi, Prof G. This is Tyler in New Brunswick, Canada, originally from Alabama. I have an investing question for you. I love the company Viore and see they might go public this year. I know you do some Viore ads on your show, and I'm wondering if you have any thoughts on investing in this company. My partner and I are mostly invested in index funds, but it might be fun to buy stock in a

company we really like. I find their clothes are super comfortable, versatile. When I'm back in the States, I notice a lot of people, especially young people, young guys, wearing Biore at the gym or just out and about in my parents' nice upper-income suburb. Seems like they could be a real player in the athleisure world and possibly a competitor for Lululemon. Thanks, and I'd love to hear your thoughts. Alabama to New Brunswick, Canada? What the fuck is going on, Tyler? What is going on? How did that happen? How many people are you? You're literally, I think, one of three people that have moved from Alabama, I bet, to New Brunswick, Canada. There's a life story in there. Was that school? Was that someone? Was that Roma? Like, what? I'd be very curious how that happened. And if you're happy. Anyways, hope you're happy there. Alabama? I have never been to Alabama. I have never been. I'd like to go to a football game. Anyways, Viore. So competition is just an incredible thing. And arguably the best performing specialty retail stock of the last, I don't know, 10 years, maybe 20 years, is Lululemon.

Athleisure has just been a phenomena and the gift that keeps on giving. And Lululemon does an amazing job. Canadian company, by the way. And so what happens when that market gets big enough and ripe enough and they have these unbelievable margins and unbelievable stock performance? It's like blood in the water, sharks sense the water, and you have new entrants. Not only is there Viore, but there's also Aloe. So some background on Viore. It's an activewear brand that rivals Lululemon and originally set out with a focus on selling

high-end athleisure for men. That's kind of their differentiation. In late 2021, the company's valuation hit $4 billion following a $400 million investment from SoftBank. Viore currently has over 50 stores and plans to reach 100 by 2026. There's not much sales data publicly known, but in 2021, the CEO told Retail Dive that Viore had been growing at 250% compound annual growth rate. Wow, that's wild. And Bloomberg reported that Viore is considering an IPO as soon as mid-2024. Okay, so I've told you nothing you don't already know. Should you buy? I think you take a small portion of your portfolio if you're inclined and you find this stuff interesting and you put it in individual stocks. You might get outsized returns, you might get undersized returns, but it's fun

and you learn about companies. And I think it's interesting. And I'm not suggesting everyone do it. I think the majority of people probably shouldn't because they have better ways to spend their time. But if you and your partner really like the company, what I would say is look at it. And the only thing I would try and be mindful of is Viore, to me, it might be one of these companies that gets a pretty big pop out of the gates and maybe does or does not grow into its valuation for a while. As a retail investor, you're probably not going to get to participate in the IPO itself. You'll probably have to buy after the first trade. So what I would do is if you're interested in the company, use it as an excuse to understand

more about the company and look at a few things. Look at its revenues, look at its EBITDA, look at its growth rate, and then take those multiples. If it's going public at a valuation things. Look at its revenues. Look at its EBITDA. Look at its growth rate. And then take those multiples. If it's going public at a valuation of, say, $5 billion and it's doing a billion in revenue, that's a five-to-one sales to market capitalization. What is the same market capitalization for other athletic apparel companies? On Running is probably kind of an interesting one to look at because it's another hot brand that's growing really fast. Look at Lululemon, obviously. Right? Look at Nike. Look at some of the others and get a sense for Birkenstock

recently went public. I would look at them, look at it, price to sales, and just get a feel for where you think the valuation is. Because, for example, Birkenstock has not performed that well. It's a great brand. It's growing. They do a great job, good management. But quite frankly, it's valuation. At some point, every management. But quite frankly, it's valuation. At some point, every stock is a buy, unless it's going out of business. And at some point, every stock is a sell. I think NVIDIA is an incredible company, an incredible company. I wouldn't get near it right now because I just have trouble buying into companies that are that richly valued. So what am I saying here? At what price would you buy in? And at what price

is it too rich? And then if it hits those metrics and you like it, take a little bit of your money. I don't like to put more than 3% or 4% of my net worth in any one thing. And I don't like to put more than, say, a third in any one sector, whether any one asset class, whether it's stocks, bonds, real estate, private companies, because I'm at a point where I want to be really, really diversified because I don't have time to make it again. It sounds like you're younger than me. But sure, have some fun. Look at it and use it as an excuse to understand the market better, understand valuation, and

then maybe jump in. And you don't have to buy a ton. Maybe dip your toe. Maybe buy a little. If it goes down, buy some more. If it goes up, maybe wait a bit. Any dollar cost in. But sure, have some fun.

I think it's a great excuse to learn more about the company and learn more about investing. Thanks for the question and congratulations on your relocation from Bama. Question number two. Hey, Scott. Disney is an interesting and perhaps undercover business case right now. Iger retired as one of the best CEOs of his era, and the world seemed to move a lot in the couple of years that he was out. His job seems harder than ever, and he appears to admit as much. Overproduction of movies,

a battle with the Florida governor, a big bet on hard-to-profit streaming model, and probably the most public strife with woke. What is next for Disney? It wasn't too long ago that it was one of the best safe blue-ship stocks in every portfolio. Today, it feels like a risky bet. Will Iger stabilize? Just wanted to hear your thoughts on this. Thanks. Thanks, Anonymous. So I pick three stocks every year for fun. And 2023, I picked Chinese internet

stocks. Oops, that was down. They were down. I think the index I recommended was down 22%. I picked Meta, Disco, Champagne and Cocaine, you know, quadruple. Then I picked Airbnb, which I think was up like 60 or 80%. So my stock picks for one is we talked about Alphabet, two, Warner Brothers Discovery, because it's trading at, I think, distressed prices. By the way, I think it's off 15 or 20% since I picked it. And my third was Disney. And the reason why I'm going kind of old school here is I think tech is a little bit overvalued and it scares me right now. And Warner Brothers Discovery and Disney are trading at 10-year lows. Now, let's talk specifically about Disney. It has this juggernaut business that's underreported, specifically the parks business, it's a duopoly. And that is Universal has got some great parks. My kids, the teens kind of like Universal more now. When they were kids, they liked Disney.

But you have incredible moats. Netflix cannot build a park in 10 or even 20 years that rivals these parks. And all you need to do is go. And if you have kids, you have to go. Otherwise, they call child services on you. And it is need to do is go. And if you have kids, you have to go. Otherwise, they call child services on you. And it is the seventh ring of hell. You are waiting in lines for hours. It is bad food. The rides are okay, but they're two or three minutes. And it is thousands of dollars. They are literally, these things are cash gushers. In addition, you have the streaming business, which has been challenged because there's been overspending and everyone's been chasing Netflix, who had the unique advantage

of similar to Amazon, that the market was providing it with cheap capital because they kept on growing and delivering against their subscriber growth numbers. The market appears to be rationalizing and streaming. Specifically, it's consolidating. Netflix for the last two years has not raised their content budget. That's the first time they've done that in history, and they've raised their prices. So what does that mean? It's given every other player permission to cut costs and increase prices, which means that that market should get a lot better or a lot less worse. Activist investor Blackwell's is urging Disney to come up with an AI strategy to increase

shareholder value. That seems like a bit of a reach. Estimating that Disney shares could see a 129% increase if they do so. I don't even got that number. Yeah, he's trying to turn Disney into a technology company. I don't know if that's going to work here. I think that is kind of AI washing, but I don't think they need to. Another activist fund, Trion, has criticized Disney's sports strategy, including its recent investment in Epic Games.

I actually think that's a great investment. This is Nelson Peltz, who's been kind of heckling from the cheap seats, if you will, here because the stock is so cheap and he says it's been mismanaged specifically around their succession strategy, which has kind of been non-existent. Disney's told shareholders that it plans to reject the nominations from Tryon from Nelson Peltz. They reported earnings per share of $1.22 for the recent quarter, surpassing Wall Street's expectation by 23%. Its earnings per share for the entire fiscal year would grow by a minimum 20% compared to 2023, according to Disney. Their streaming service was predicted to lose $400 million in the quarter, but the loss ended up being less than expected at $138 million, which is good news.

That's a quarter of a billion dollar surprise to the upside. Iger believes Disney Plus will be profitable by the fall, seeing above the economics of rationalizing. And despite its challenges, Disney has projected it will bring in $8 billion in free cash flow this year, nearing pre-pandemic levels. In sum, I think this stock, if you look at the fact it's at a 10-year low, it's trading like a distressed company right now, as far as I can tell in terms of its valuation. It has singular intellectual property, everything from Star Wars to the men in tights and capes that they own. I mean, it's been a great acquirer for the most part. It's had some flubs, but for the most part, it's had good acquisitions. Its latest acquisition of the Fox assets was kind of a giant thud. But in sum, I just like this a lot. I think they have moats

the size of the Amazon here, the parks, the IP. I think the streaming business is going to distill down to a few players. YouTube, Netflix are kind of going to be the 10-ton gorillas in the space. And then I think the niche players are going to be HBO for kind of artisanal stuff, HBO's culture. They continue to produce kind of the water cooler content. And also Disney+, because I think it has a great positioning. It's sort of the streamer you have to have. You have to have it if you have kids. In addition, when they consolidate around Hulu and other stuff, I think it'll be a pretty decent offering.

Daddy like. Daddy like. We have one quick break before our final question. Stay with us. Welcome back. Question number three. Hi, Scott. I'm a happily married 60-year-old man with a three-year-old son. I don't know how I turned 60 so quickly, but I think the fact that my nose was buried so deeply in running my business, that time got away from me. Anyway, I sold my business a few years ago, and I'm now retired and sitting on a pile of cash, which is mostly good, but I spend way too much of my time thinking about how I can set my son up for success after I'm gone. I know a handful of people who grew up with trust funds, and none of them are very successful people. And by successful, I don't mean financially well off. I guess I would define success as being a good person who is a functioning member of society. I know you're working on a book about boys, and I wonder if you have any insight into what I can do to give my son what I had, which is the opportunity to go out into the world and slay a dragon of his own.

I love this question. And the honest answer is I barely even have a view, much less the answer. This is something I struggle with every day. You know, whether or not to buy Viore stock, I can answer that. How do you instill character and grit into your kids and your sons such that they live happy, rewarding lives after you're gone? I think that's, you know, or while you're alive. I have so many friends who are struggling with their adult children, and it takes over their lives. We're under this illusion that once our kids are 18, they're kind of out on their own. And maybe if you're wealthy, you pay for their lives. We're under this illusion that once our kids are 18, they're kind of out on their own.

And maybe if you're wealthy, you pay for their college. But, you know, all this whole bullshit about once they're out of college, they're on their own. I don't know anyone that just kind of turns off their kid's tap. I mean, A, you're going to be there for them emotionally. Generally, what happens after college with the majority of wealthy people I know is their kids are, generally speaking, good kids, but can't afford to pursue their dream of fashion or tech and live in New York or San Francisco, respectively. And so mom and dad help them out. And then you want them to live near you. And then when they have kids, they need a house. And things have gotten so expensive for young people that it is very difficult for wealthy people not to continue to support their children. And I see it across all of my friends. I, like you,

had kids later in life. And then it kind of turns into, you know, at what point is it no longer, you know, it's no longer a safety net, but a hammock, if you will. This is really a tough one. What I would say is that in terms of trying to teach your kid's character or your son character and how to be a good person, I think a lot of it is in the batter. And I'm not suggesting it's kind of how I look at boards. A bad board can fuck up a good company, but a good board can't save a bad company. And if you want to believe nature over nurture, just have two. Have a second, because the only thing I can guarantee, whenever I speak to people who are having their second kid,

I tell them the only thing I can guarantee is it'll be nothing like the first. My oldest walks into my room, or used to walk into my room when he was living with us. He's at boarding school now. He would, no joke, walk in on the weekends and say, already be dressed, holding a bear, like his favorite bear. And he would say, dad, let's make a plan. And I'd be like, where are the cameras? It was like something out of a Hallmark commercial. He was so polite, so sweet, so loving. And I joke that my youngest is a terrorist, constantly assessing the household for vulnerabilities such that he can strike when we're at our weakest. I mean, he's joyful and so interesting and so curious and so just fucking hilarious, but he's tough.

He's difficult. They're just so different. And the reality is we haven't treated them that differently. So first, what I would say is a lot of what happens with your son isn't up to you and isn't your fault. And it's frustrating that you're not going to have as much impact on him as you'd like to think. But also, if he doesn't, I don't know, if he has some hiccups or he isn't the person you'd initially thought he was going to be, forgive yourself. What I would say is key, and the studies show this, to raising

successful boys, you are doing. And that is the key to a successful boy in terms of what we can control is the following, having a male role model. And you don't have to be virtuous. You just have to be present. You have to be a man that's trying to be righteous, that's trying to do the right thing, that sets a great example by being loving and generous and supportive and affectionate with his mom or your partner that works hard, that treats neighbors well. You know, people say, well, what do you tell your kids? You can't tell your kids anything. The only thing you can do is model, right, and hope they pick up on some stuff and just be there for them.

I love that notion that, you know, when your kids leave, you tell them, all right, what happens when the bills become too much? You come home. What happens when you're, you know, someone breaks up with you and breaks your heart? Come home. We'll always be here for you. At the same time, that trying to strike that balance between what to give them such that they can get a good start, but not enable them such that they become dependent upon you and never have the motivation to build, as you said, to slay their own dragon. The only reason I have what I have is because I didn't have what my kids have, and I wanted it. And it sounds like you come from the same background. So some of the things we try to do, and when I say try, I mean, we're not great

at it, chores. Connecting the value of money, we get them set up on this credit card thing called Greenlight, where we put money and they save. I'm working with my son on buying sneakers. He downloaded this AI app and he does these sneaker drops and we try and sell them at a profit. And we use Shopify. I'm trying to get him to connect money with effort and profit. And by the way, on one, we bought a pair of $300 sneakers and we couldn't sell for $200. I'm like, well, that sucks. And by the way, on one, we bought a pair of $300 sneakers and we couldn't sell for $200. I'm like, well, that sucks. And it was really disappointing and it was really upset. But that's a life lesson, obviously doing well in school. But I'm blathering

on a lot of this. A lot of this, my brothers, you love them, you're there for them. But a lot of the, you know, it's like being a pitcher. Once the ball's out of your hands, it's kind of, it's a little bit out of your hands. But you have already checked the box that for boys is the box to check. And that is your son has a loving, caring, and what sounds like impressive man involved in his life. And that, that every study across ethnicities, geography shows that that is the key to raising successful young men. Thanks for the question. That's all for this episode.

Again, if you'd like to submit a question, please email a voice recording to officehours at propgmedia.com. This episode was produced by Caroline Shagrin. Jennifer Sanchez is our associate producer. And Drew Burrows is our technical director. Thank you for listening to the PropGPOD from the Vox Media Podcast Network. We will catch you on Saturday for No Mercy, No Malice, as read by George Hahn, and on Monday with our weekly market show.