In this podcast, Motley Fool senior analysts Emily Flippen and Maria Gallagher discuss:
- Why they’re watching inflation and increased talk of a recession.
- Costco (COST -0.46%) posting stronger results than Walmart (WMT -2.24%) and Target (TGT -2.77%).
- Baidu (BIDU 1.52%) and Alibaba (BABA 3.12%) rising in China.
- Ulta Beauty‘s (ULTA 1.37%) record sales in Q1.
- Snowflake (SNOW 1.37%) trading below its IPO price.
- Farfetch (FTCH 0.50%) fighting on the front line of so many tough macro trends.
- The latest from Workday (WDAY -0.02%), Nvidia (NVDA 0.14%), and Williams-Sonoma (WSM -0.93%).
Motley Fool senior analyst Asit Sharma talks with Georgetown University business professor and author Christine Porath about how Traeger‘s (COOK -1.03%) CEO changed the company’s culture and other takeaways from her book Mastering Community.
Maria and Emily respond to a listener’s question about beach reads for investors with four recommendations, discuss Unilever‘s new drone delivery ice cream business, and share two stocks on their radar: 1Stdibs.com and Doximity.
To catch full episodes of all The Motley Fool’s free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
This video was recorded on May 27, 2022.
Chris Hill: It’s Motley Fool Money radio show. I’m Chris Hill, and I’m joined by Motley Fool Senior Analyst Emily Flippen and Maria Gallagher. Good to see you both.
Maria Gallagher: Nice to see you.
Emily Flippen: Good to be here Chris.
Chris Hill: We’ve got the latest headlines from Wall Street, author Christine Porath is our guest this week. As always, we’ve got a couple of stocks on our radar. But we begin with what appears to be a break in the pain for investors. We’re recording this in the middle of the trading day on Friday. So I do not want to jinx us, but at the moment, it looks like the Dow, S&P 500, and Nasdaq are all going to finish in positive territory for the week. This breaks the streak of 7-8 weeks of falling indices. So Emily, let me start with you as we get ready to head into summer, there are a growing number of narratives in the investing world, the housing market cooling down, the latest inflation data looking more promising. Some companies cutting expenses while others are spending more. What is the dominant headline to you right now?
Emily Flippen: It’s funny you think the dominant headline would be a lot more positive [laughs] after the week that we’ve had. But actually, over the last week and even further, I feel like my headline has just spent the fears alongside a recession. Conversations I haven’t had for a number of years, alongside the fears of what the economy is going to do in the back half of 2022. It’s interesting because those fears are there, but the conflicting data coming across from different sources, I think are causing confusion in the market. For instance, we saw a quarter of negative GDP growth earlier this year. That would contribute to the fears of a recession, but that was after nearly seven percent gain last year so a lot of economists were coming out and saying, all the factors impacting this quarter probably won’t persist into the back half of 2022. Unemployment rates are still very low, less than four percent across the country. But there’s still so much fear. More and more businesses now, planning for a pullback in consumer spending, also pulling back their job listings, even pulling back, reducing their forces, laying people off. So all of those fears I think are just causing confusion in the market this week.
Chris Hill: Maria, what’s your headline?
Maria Gallagher: My headline is just going to be inflation question mark. We saw consumer spending up 0.9 percent in April. Consumers are buying more new motor vehicles, clothing, recreational goods. We’re seeing growth in spending on services and demands, others at this point in the economic cycle, consumers that are still spending a lot, which is helping keep that like recession wind up there, and I think it’s really interesting to look at how much of a recession, how much of inflation is psychological. So if you have people who think their prices are going to continue to rise, they start spending less until then prices have to rise so that people will spend. So you just see that loop consistently, and so I think that’s going to be interesting to watch too of the thing. Well, right now, we still have consumer spending and so hopefully that helps keep those recession and inflation conversations a little bit up there.
Chris Hill: Let’s get to some of the companies that are making headlines this week. Costco’s third-quarter revenue up 16 percent. Profits were up 10 percent. Unlike what we saw recently from Walmart and Target, Maria, looks like Costco is just chugging and running along.
Maria Gallagher: Yeah. So with Costco, we saw net sales up about 16.83 percent this quarter. Comparable sales were up 10.7 percent in the US, 11.2 percent in Canada, and 9.6 percent internationally. Something that I wanted to drill down with Costco on, is they had this one-time $77 million pre-tax charge, which part of that is incremental benefits awarded under new employee agreements. So when we’re talking about inflation and we’re talking about potential recessions, a lot of people are talking about, there’s going to be a cut in spending and either by raising prices, or we’re going to slash employee benefits or sometimes both.
I think Costco is proof of importance in retention, importance in customer loyalty, and importance in treating your employees well. So it has over 200,000 employees, over 17 thousand of them are unionized, their average wage is $24 an hour, they have really nearly unheard of high retention rate of 94 percent, which is almost unheard of in retail and early environments. They have medical, dental benefits, and so 76 percent of their managers start out as hourly employees and have long tenured careers at the company. I think Costco is pretty unique in the retail space in that type of employee treatment. I think that’s going to be a continued conversation as we’re talking more about companies, either stopping, spending, or increasing their prices, and I think Costco is a really great example of being able to maintain good prices and maintain a good treatment of their workers.
Chris Hill: Good week for big Chinese tech companies, Baidu and Alibaba, both out with our latest quarterly reports. Baidu’s known for its search business, but its Cloud division was one of the highlights this quarter, and Alibaba suspended guidance for the rest of the fiscal year, but the market shrugged that off. Shares of both up nearly 10 percent this week, Emily.
Emily Flippen: Let’s add context to why these businesses are doing well, because for a long time, the market has struggled to make sense of what holding Chinese businesses mean, especially for our American investors. That uncertainty provided by COVID lockdowns, that appending delisting in the US and more importantly, just confusing regulatory policies from the CCP themselves, has all contributed to really low expectation. That narrative just within China has been so uncertain that even guiding for what we expect from even some of the largest, most successful tech businesses in China, has been extremely challenging for investors. But despite these challenges, we are still seeing solid results from these businesses. Now lets talked about Alibaba. Mildly low expectations headed into this quarter, but they beat their expectations for revenue growth.
The revenue growth of nine percent was the slowest rate of growth since the company went public, and GMV actually declined year-over-year, largely thanks to those COVID lockdowns and they suspended guidance. It all sounds very negative, but let’s not forget that that growth rate was still faster than Amazon and it’s most recent quarter, so that provides some context here. But here’s the thing that surprised me the most for Alibaba, their Alma business, which is their food delivery business, is near breakeven.
This is critical because I think if Alibaba proves that they can have a profitable food delivery business that has great things for US based food delivery, and even South Korea there are Coupang business there, which does food and grocery delivery. Lots of good positive signs coming out of Alibaba this quarter. Same thing could be said for Baidu. Ad revenue has consistently moved away from its core platform of search, but they have so many different initiatives, one of them being autonomous driving and more importantly, their AI Cloud that has really kept this business afloat as well.
Chris Hill: Am I wrong in thinking that US companies that have a significant presence in China are given a little bit of cover by Alibaba suspending guidance? If you’re US company, can’t you just point to Alibaba and say, “Hey, look, there’s suspending guidance.” So don’t expect us to have greater insight than them.
Emily Flippen: I love that because, I will actually talked about a company that I think is doing just that later in the show. But I certainly think that it gives in out for a lot of companies that drive a large portion of the revenue from China.
Chris Hill: Ulta Beauty posted record sales in the first quarter and shares rose nearly 10 percent on Friday. On top of the results of those giants for the rest of the fiscal year was higher than Wall Street was expecting. This really is an under the radar stand out stock over the past 12 months.
Emily Flippen: Yeah. Absolutely. So based on net sales of $2.3 billion up 21 percent, comp sales were up 18 percent, they increased their guidance to sales growth of 6-8 percent compared to 3-4 percent. Originally guided, they have over 25,000 products from over 600 brands. They have over a 100 Ulta Beauty at targets that were opened in 2021, their e-commerce sales grew by a CAGR of 35 percent from 2017-2021. They’ve 37 million members in their loyalty programs. Definitely under the radar, in terms of stock, maybe if you talk to people who are interested in beauty, they will definitely talk about Ulta Beauty.
This is such a huge market, it’s ended so fractured. There’s about a $91 billion US beauty products market, and it’s really scattered as to where you get each thing. That’s really where Ulta shines is that they’ve streamlined this process, and we talked a little bit the other week about the lipstick effect. So when you’re restricting spending elsewhere, you still have these little indulgences like lipstick. I think Ulta consistently sets itself up with their customer loyalty. Their ease of use to continue to thrive in any type of environment.
Chris Hill: You can add Snowflake to the list of stocks now trading below its IPO price. First-quarter revenue was higher than expected, but the data analytics software companies guidance for the current quarter, was not what Wall Street wanted to hear. Shares of Snowflake down 11 percent this week, Emily.
Emily Flippen: Yeah. For context headed into this report, Snowflake’s market cap has dropped from over a $100 billion at its peak to less than $40 billion today. But this reported South was not bad. Revenue grew 85 percent, customers grew 40 percent. Most importantly, was that customers that are paying over a million dollars a year for Snowflake services, was up nearly 100 percent in the quarter. Largely thanks to that amazing net revenue retention rate of over a 170 percent. This is a really solid business, but it’s more of the same narrative that we’ve heard in this market recently, which is, if you are guiding for slower growth rates, if you are a tech business, then you’re going to see your stock get away often.
That’s what we’re seeing here at the slower growth rate. Up 66 percent for top-line growth at the midpoint was lower than what the market wanted to see. But I have to think that the real story here is what’s Snowflake said about its customers. Guidance has been impacted by the reality that the operating environment these companies are working in, is projected to be more challenging than that but they had expected even just a few months ago. That’s important because Snowflake is a usage-based business model. So if consumption on the platform pulls back, the company will see a quick drop in their backlog, a quick drop in their revenue, and I promise you the stock will see a quick drop in its share price as well.
Chris Hill: [MUSIC] More headlines after the break, so stay right here. You’re listening to Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money. Chris Hill here with Emily Flippen and Maria Gallagher. Workday’s loss in the first quarter doubled and shares of the enterprise software company fell 10 percent on Friday. Maria, at a time when more profitable companies are cutting back on expenses, it’s interesting to see Workday talking about how they want to spend more to increase hiring.
Maria Gallagher: It’s a really interesting one to look at. So they had revenue of 1.4 billion up 22 percent, their subscription revenues were up 23 percent, their total subscription revenue backlog is up 25 percent. But like you said, that operating loss was about 72.8 million compared to 38.3. So they are creating 1,000 new jobs in our European headquarters. In Dublin, they’re building a new European headquarters. They’ve raised their guidance for revenues to be in the range of 5.5 billion with a growth of 22 percent for the year. So I think it’s pretty interesting because if we’re thinking about times with tighter spending, a lot of relationships with these types of Cloud applications is land and expand.
So they’re getting companies on for payroll and then they are growing with them to all these different areas of financial management and that’s great. But when the company’s tightened spending, which of these offerings will go and will that hiring be necessary if that tightening of that spending does end up tightening, so that’s something that I think is going to be really interesting to watch with this company for the next couple of quarters to see those retention rates with their customers. To their credit, they have 9,500 global customers, 50 percent of the Fortune 500 and it’s a real range, so they have anywhere from Chiquita Banana to Etsy to FedEx to Hulu, to Shake Shack. So I think that it will be really interesting to see how those companies continue their spend on Workday in the next couple of quarters.
Chris Hill: NVIDIA’s first-quarter results got a nice reception from investors this week. Profits were higher-than-expected for the graphics chipmaker. NVIDIA said they’re going to work on controlling costs in the near-term. Emily, nice change from three months ago when NVIDIA put up great numbers and the stock got whacked.
Emily Flippen: No kidding. You know when NVIDIA is facing hard times at the market is not doing well and it’s good to see a beat on both the top and bottom lines here for NVIDIA, with revenue rising nearly 50 percent year-over-year in earnings coming in at also a nearly 50 percent increase. So a really solid quarter. It was even a record for NVIDIA’s datacenter and gaming divisions, which grew 83 and 31 percent respectively. For the first time ever, their datacenter revenue actually surpassed gaming. That’s important because their datacenter processing products are actually a little bit more niche than their gaming products, so I like this transition, I guess away from NVIDIA.
Changing from a crypto company to a gaming company to now maybe a datacenter business. It’s good to see that, I guess, resilience and its business model. But guidance, as you mentioned, is where the market got hung up here. The revenue growth guidance of next quarter of 24 percent was up 4 percent less, but the market was expecting. Although a lot of this, again, due to the conflicts that we’re seeing on the global scale here. It’s worth noting before moving on that NVIDIA has always been a bit of a sand bagger. So I wouldn’t be surprised to see them come out and actually surpass these expectations when they report next quarter. But regardless, this is a company that despite its large size, is priced for growth. If that growth faulters the stock will as well.
Chris Hill: Given what the stock market has done over the past six months, shouldn’t every company’s executive team be sandbagging their guidance?
Emily Flippen: You think so? But I tell you what? I think sandbagging gets a lot harder when ran this unpredictable background environment, I wouldn’t be surprised of management thinks that they’re sandbagging. The next quarter comes along and it’s like, oh darn, I guess that wasn’t as overestimating as we thought it was.
Chris Hill: Williams-Sonoma’s proving to be one of the better performers in its industry. This earnings season, shares of the home goods retailer up nearly 20 percent this week. After record results in the first quarter. Maria, what’s stood out to you?
Maria Gallagher: I really like Williams-Sonoma. They had their comparable brand revenue growth of 9.5 percent. West Elm grew 12.8 percent. Pottery Barn grew 14.6 percent. What’s really interesting to me at this overall market, so it’s an $830 billion market and Williams-Sonoma still has less than a three percent share. There’s a 450 billion global home category, 300 billion US home category. So they’re planning to get to 10 billion in revenue by 2024, which is, as of 2021, their revenue was 8.2 billion. So it’s really interesting, I think they’re going to continue to steadily grow their business. In 2021, their business grew 22 percent, which outperformed the growth in the US home furnishings industry as a whole and it’ll be really interesting to monitor. As we shift more to work from home lives, are people still going to end up spending more for their home will continue to be a top priority for people with their disposable income? I think that’s going to be something that will really be important to monitor for this company.
Chris Hill: Anytime we talk about the Williams-Sonoma during earnings season, I’m always reminded of the fact that they owned West Elm and they’ve got that exposure to the furniture business. Do you think they should maybe take a page out of their Restoration Hardware playbook and really go after that loyalty program because that much to my surprise, probably not to others, but I was always surprised at Restoration Hardware rolled that out and made it work as effectively as they have.
Maria Gallagher: I love a loyalty program. I think it’s so smart to always have one. Between Pottery Barn, West Elm, and Williams-Sonoma, I think that you can have that trifecta of people getting different things at different places and I think that it could be really helpful for customer retention. Yeah.
Chris Hill: Bit of good news for Farfetch shareholders. Shares of the online luxury fashion company up nearly 20 percent on Friday. Despite the fact that it’s lost in the first quarter was bigger than expected. Emily, with the rise on Friday of shares of Farfetch, now the stock is only down 80 percent in the past year.
Emily Flippen: Oh, the power of low expectations. But revenue rose six percent to just under 513 million. Let me tell you why that’s actually really good for this business. Because this business is the type that is truly on the front lines of many of very negative macro trends. I could pull out inflation in supply chain as two examples. But also, let’s talk about China. China is Farfetch’s second largest market and we had COVID lockdowns in China. China also has the highest average order value for Farfetch as well, so it’s that 1, 2 punch here when you see the pullback in China. Even the regulatory policies in the country itself given its investor in Alibaba, those uncertainty I think really kept expectations low for this business. It’s hard to look at what’s going on in the world, in China in particular and say, yeah I think demand for luxury goods is going to be higher next quarter.
The fact that revenue rose at all, nonetheless, six percent, I think, was a very good thing for the market here. But I will say, this is a business that is truly trying to do it all. They’re digital retailer of luxury goods, they also have physical retail stores, they’re even building out an ad tech marketplace, in addition to having just a platform that they’re trying to sell to other luxury retailers. So it’s a really interesting business model. It’s a very aggressive business model. You can tell from the management team that they are aggressively going after growth. I will say the stock price has been hammered. They did try to expand in China in the past with JD to not much success, so if you are buying from this point forward, I think you’re really betting on their new expansion into China with Alibaba succeeding in future quarters.
Chris Hill: Real quick before we go to break, should they be streamlining what they’re doing given how challenging the businesses, can you make an argument that they need to maybe cut the ad platform?
Emily Flippen: I completely agree. I think this might be a growth at any cost type of business, and that concerns me a little bit. I will say if they are successful, it’s easy to see this being a great investment from this point forward. But they are trying to do a lot and when they have losses, decides that they have experienced in past quarters, they have to be careful about where they’re spending their capital. [MUSIC]
Chris Hill: Emily, Maria, we’ll see later in the show. Up next, how one CEO came up with a radical plan to improve his company’s culture. Stay right here, this is Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money, I’m Chris Hill. The rise of remote work has led to efficiencies in the workplace. But it’s also led to an increase in co-workers feeling more disconnected from one another. More than ever, companies are trying to figure out how to maintain and strengthen their corporate culture. Christine Porath, is an Associate Professor at the McDonough School of Business at Georgetown University. She is a frequent contributor to the Harvard Business Review, and she is the author of the recently released book, Mastering Community: The Surprising Ways Coming Together Moves Us from Surviving to Thriving. Asit Sharma recently talked with her about key takeaways from her book, including how one public company CEO came up with a radical plan to change his company’s culture. [MUSIC]
Asit Sharma: I was curious about this idea of respect because I’ve heard that respect is something that has to be earned. It’s not granted. In your interviews and your studies, your academic research, what are your takeaways about respect? The place in an organization and how one builds respect as they go along? Whether you’re a nominal leader or just someone who’s playing on a team.
Christine Porath: Yeah. Well, I think if the bottom line is respect really pays and that people that work, for example, for leaders where they feel regularly respected, they are far more engaged. They’re much healthier, much more likely to stay with the organization. Things like that. So it really does pay. The other thing is that a lot of this work stem from the cost of disrespect. When people feel small, or put down, or not feeling a part of the team. What happened also was the idea that over 50 percent of people, when we surveyed them, felt like if they we’re nice at work or respectful at work, that they would be at a disadvantage.
They would appear less leader like. So part of my idea was show how respect pays. In fact, what we found in various groups from biotech firms to very international samples from large global consulting firms was, those that are seen as more respectful tend to perform much better. Part of this is people are more comfortable. They are more likely to seek and share information with you if they see you as respectful. So one of the messages I was just trying to convey was that respect is good for a lot of things and if people don’t feel a sense of respect, I don’t think they will feel part of the team or the tribe that you mentioned earlier on. This idea of psychological safety which, it’s really just a sense of trust and respect.
But are you going to speak up? Are you going to share your ideas? Are you going to point out if there’s a mistake or an error? If there is no those seeds of respect at the beginning, I don’t think that that happens. I don’t think, for example, that idea of Radical Candor where people are challenging one another in a reasonable way, I don’t think happen. Or at least, the outcomes won’t be the same. As if people feel like you’re coming at it with a genuine, at least, base line level of you’re human and I respect you. I might not agree with you. I think there’s a bode of disagreement these days. Whether that’s politically, whether that’s masks, whether that’s around investing ideas, religion, you name it. But I think if there’s a foundation of just even if we disagree, we can come at it with a sense of respect and ideally trying to understand. That will be a huge advantage for not only the individual, they win. They’re seen as more likable, more warmer and more competent, tend to perform better. Though it lifts up those around them, it really tends to pay.
Asit Sharma: In the book you used an example of a culture which seemed to be lacking in respect at all levels. Fun because I had covered this company on a podcast. It’s Trigger Girls. They came public, I believe it was early last year. You tell the story of the new CEO who found himself in a company that was sorely in need of respect at all levels. Could you tell us a little bit about the story? Then I would definitely love to then extend to this idea of Radical Candor and how it’s helpful as well.
Christine Porath: Sure. The trigger story was a dramatic one. After Jeremy Andres took over as CEO, he realized pretty quickly that the majority owner was quite rude, and ended up affecting how he felt and even planting some seeds of fear and things like this. But their dramatic part came when he was driving up to work early one morning and saw that there were a bunch of policemen and fire engines. They’re putting out a fire, a 18-wheel big rig truck was burning to the ground. He was, of course, surprised by this and pretty quickly knew it was arson, and that it was employees that were lashing out because of a recent decision they may need to outsource some of the shipping. Even though employees were taken care of, they were upset and they got even. It was that day that Andres decided that he needed to do something radical.
That the changes he was making to move the culture and this idea of what he picked up on was toxicity. Because as we find leaders and employees for emulating this majority owner, he was role model. So he decided that he was going to have to reboot, basically. He moved the headquarters from Oregon to Utah. Basically, assessed everyone, deciding who fit the culture. Were you against or were you neutral and so forth, and offered positions to those that were neutral and competent, or positive with respect to the culture. They weren’t many. I think there were 15 offers made. I think something like five ended up moving. Really had to start over. What I found so interesting is that never heard of that reboot idea, where they really just had hit start again. He built them up and has invested in the culture deeply for everything.
From meeting with anyone he’s hiring to assess himself and to also provide a little bit of a connection there for the employee. He built the new headquarters with cooking together in mind. So they actually make breakfast every Monday morning. They have a Monday team meeting and then they cook lunch together every Tuesday through Friday. The thing that struck me was that, I think it was 26 years, they were up to about $70 million in revenue. About seven years later with Andres at the helm, I think it’s over $700 million. He spoke to me and said, it’s still the same wood pellet grill, generally. Our marketing, pretty much the same ways. It’s all about culture, as he sees it.
He really highlighted how costly a toxic person is and how it pays to get rid of them sooner versus later. That’s something that he’s learned throughout his career. But I thought a wonderful example about how much culture matters, which you at The Motley Fool know all so well. [laughs] Advice people to take into account, but what you may have to do to make changes and how that can pay off.
Asit Sharma: When I was reading through, I was trying to put myself in those shoes in my daily investing, and I kept coming back to something that we talk about. We have a weekly mindset show which I’m part of, which is the value of doing nothing. In terms of buying and selling stocks, we talk about holding for the long-term at The Motley Fool. So it kept coming back to me that, if I’m in the moment, my next move is probably just doing more research because the market’s down. If I start to succumb come to six place behind or 11 place ahead, I’m just going to sell my stocks and I’m always preaching, don’t do that.
Focus on the businesses. But something occurred to me also, which is I think something that Tom Gardner is very keen on, and some other really great investors that I know, which is about the people in investing as much as it is about the businesses. I think your book drove that home all the way through. The examples that you used of different leaders implementing their ideas of community building. I know I may be making a stretch here. You are the expert. But maybe part of applying a neutral mindset to investing could just be this, an objective state. Maybe you’ve taken afternoon to watch some YouTube videos of leaders of the companies you own. Would you say that’s an OK analogy there for an investor?
Christine Porath: Yeah. I love that and I should give Tom Gardner a lot of credit because I think it’s in the book. But the idea was I actually saw him speak at a Google event and met him there and I was some grateful that he spoke about the idea of culture mattering, in terms of investing and how you weigh that, you at The Motley Fool. I think it’s still important because it’s hard to make that business case. I think you guys have done it in a really great way, and tracking that has been super-helpful. Then also living it, because I obviously used you in the book, Motley Fool, for taking care of each other and member well-being, and things like that. So absolutely, I think that culture pays and you, at The Motley Fool, have demonstrated that, probably more than anyone else.
Chris Hill: [MUSIC] The book is Mastering Community: The Surprising Ways Coming Together Moves Us From Surviving to Thriving. Coming up after the break, Maria Gallagher and Emily Flippen return. We’re going to dip into the Fool mailbag. They’ve got a couple of stocks on their radar. So stay right here. You’re listening to Motley Fool Money. [MUSIC].
As always, people on the program may have interest in the stocks they talk about and The Motley Fool may have formal recommendations for or against, so don’t buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here once again, with Emily Flippen and Maria Gallagher. Our email address is [email protected]. We got a question from Alexandra in California. She writes, I’m looking to understand more about business and investing, so I’m looking for book recommendations. But since summer is almost here, it would be great if they were the beach read versions of investing books. No disrespect to the business professors of the world. But I’m not likely to finish the textbook while I’m at the beach this summer. Great question. Thank you for that. Maria, what do you got that, I identify with this, I’m looking to get smarter, but sometimes it’s like, be nice if the book was a little breezier.
Maria Gallagher: I love a breezy book. I love a breezy story. So I have a couple of recommendations. The first is Money, which is the real history of a Made-Up Thing by Jacob Goldstein taking you through the history of money. The second is called, The Fish That Ate the Whale, The Life and Times of the Banana King by Rich Cohen. That’s through the life of Sam Zemurray and his arc as an underdog to running united fruit and seeing the change in a person as business changes. Then the third is Red Notice by Bill Browder. It feels like a spy thriller, but it’s about investing in Russia at the fall of the Soviet Union. Those are three recommendations from me.
Chris Hill: Red Notice is not the basis for the action movie on Netflix with The Rock and Ryan Reynolds?
Maria Gallagher: No. I thought it was. I was very excited. Then I started watching the movie and I was very upset.
Chris Hill: Yeah. You’re not alone. We all were. Emily, any book recommendations, a little bit on the lighter side?
Emily Flippen: Well. How to compete with Maria. She always has the best recommendations. But the one I’ll throw out there is The Coffeehouse Investor: How to Build Wealth, Ignore Wall Street and Get On With Your Life by Bill Schultheis. I apologize Bill if I’m pronouncing your last name wrong. But, I like this book because it gets at the heart of what it means to be a long-term buy and hold investor, which is, don’t spend too much time thinking about finance. If the role is making it seem more complicated than it is, they’re probably just trying to sell you something. So I like the simple approach to finance and I also might have picked it because I like imagining somebody sitting on a beach drinking a coffee. You were also reading, The Coffeehouse Investor.
Chris Hill: Unilever is a consumer products driving with over 400 brands including Dove soap, Axe body spray, Hellmann’s mayonnaise, and Ben and Jerry’s Ice Cream. This week Unilever announced a new partnership with a drone delivery company called Flytrex. It offers ice cream delivery to residents in Texas and North Carolina. Maria, I have never wanted a market test to be more successful in my life than I am right now with this.
Maria Gallagher: Well, I have some questions because ice cream has to be cold and frozen. But I am really excited about the idea of it. I’m a huge Ben and Jerry’s fan. I recently learned the most popular flavor Ben and Jerry’s is half-baked, which is my favorite flavor. I feel like everyone is on the same page and everyone has good taste when it comes to Ben and Jerry’s.
Chris Hill: Emily, all kidding aside. When you think about drone delivery, it seems the thing that can work for certain items, not all items. When it comes to food. As long as the refrigeration is there, it seems like this one should work.
Emily Flippen: Yeah. Maria has questions, I have answers. One of the things that they’re doing as part of this test is guaranteeing a three-minute delivery time. I appreciate the fact that no ice cream can melt in three minutes. If they can do that, that’s great. But I’m deeply concerned about the fact that there is ice cream that it’s three minutes away by drone. That somebody is ordering on their phone instead of picking up themselves. There’s something deeply concerning about that to me.
Chris Hill: But the fun factor, Emily, just sitting on your back porch or your front steps.
Emily Flippen: Shooting down some drones. Yes, it sounds like a blast.
Chris Hill: Let’s get to the stocks on our radar. Our man behind-the-glass. Dan Boyd is going to hit you with a question. Maria Gallagher, you’re up first. What are you looking at this week?
Maria Gallagher: I’m looking at a company called 1stDibs, which it’s ticker symbol is D-I-B-S. It’s an e-commerce marketplace for really high-quality furniture, jewelry, other luxury items. They have 40,200 sellers across 55 countries. They have 3.5 million users. The median order value is $1,200 and the average order value is $2,500. So I think that is one that I am going to spend some time looking at.
Chris Hill: Dan? Question about 1stDibs.com?
Dan Boyd: Absolutely Chris. Maria, we’re talking about a company, e-commerce, very, very competitive landscape there and the stock is down. Looks like 76 percent all-time. Is this company really going to bounce back?
Maria Gallagher: I think it depends on who their customers are and how much they are willing to spend and how they can get people to continue to spend on the platform. It’s a lot of famous people like it. It’s been talked about on multiple architectural digest YouTube tourist that Dakota Johnson won, she talks about it. But I think it’s going to be interesting to see how people continue to spend on e-commerce places.
Chris Hill: They might need some of those famous people to all of a sudden become investors in the stock. Maybe that helps a little bit. Emily Flippen, what are you looking at this week?
Emily Flippen: I’m looking at Doximity. Doximity, I’ve mentioned before, but it’s essentially a social media platform for physicians across the US. A necessary evil for many of these doctors. However, they actually had a crazy ride here after reporting their most recent quarter. They raised full-year guidance. They beat their earnings and revenue expectations, but guidance for the first quarter was a little less than what the market expected. Stock went down dramatically aftermarket before quickly recovering. When management reminded Wall Street investors that, yes, there is some seasonality in their business, given the demand for pharmaceutical companies to buy app space. So other than that, everything looking really great after this quarter. Definitely one that I think investors should have on their radar, it’s a profitable, strong, growing business.
Chris Hill: The ticket symbol?
Emily Flippen: D-O-C-S.
Chris Hill: Dan, question about Doximity.
Dan Boyd: Not necessarily a question. I just really want to praise Doximity on it’s very clever naming with combining doctors and proximity and also documents. Because they can share cases and tell health stuff and everything through their platform. I just think it’s a really clever name.
Chris Hill: Do you think it’s more clever than Accenture? Combining accent and the future?
Dan Boyd: Yes, much more. Accenture is a garbage tier name for a company. I’m sorry, Accenture shareholders out there.
Chris Hill: What do you want to add to your watch list, Dan?
Dan Boyd: I am going to go with Dibs this time because I really don’t like social media [laughs] when it comes to investing. I really don’t like it at all. I’m sorry, Emily, it is cleverly named company, but I think e-commerce to me is more compelling than social media.
Chris Hill: Maria, real quick, since we have a minute left, we’ve talked about online fashion a couple of times in the show. 1stDibs, Farfetch. Do you see consolidation coming in this industry? Because it seems like there’s a market there. Maybe not a market for everyone though.
Maria Gallagher: Yeah. I have to Imagine there will be. I think it’s a really fascinating space because there’s the rise of consignment luxury. I think it’s really fascinating and the brands are pretty enduring and seeing how people will spend up for those brands. So I think that there is a value to be heard in these companies, but I think that there is some likely consolidation coming.
Chris Hill: Maria Gallagher, Emily Flippen, thanks so much for being here.
Emily Flippen: Thanks Chris.
Maria Gallagher: Thanks for having us.
Chris Hill: Keep the email questions coming. Drop us a note [email protected], that’s, [email protected]. Remember, the stock market is closed on Monday for the Memorial Day holiday. That is going to do it for this week’s Motley Fool Money radio show. The show is mixed by Dan Boyd. I’m Chris Hill. Thank you so much for listening. We’ll see you next time.