Amazon's cashier-less tech arriving at Terminal 2, Gate B7

Tuesday, October 1, 2019 by Robinhood Snacks | Disclosures

Practicing contact-less transactions at Amazon Go stores

Dow Jones
26,917 (+0.36%)
S&P 500
2,977 (+0.50%)
Nasdaq
7,999 (+0.75%)
Bitcoin
$8,228 (+2.31%)
10-Yr US Treasury
1.671%

Hey Snackers,

California wants NCAA athletes to start getting paid post-practice, pre-class, for endorsement deals (think Peyton Manning in Papa John's commercials, but sophomore year).

Investors were busy celebrating the market's best first-3-quarters-to-start-a-year since 1997 as September wrapped itself up.

Happy 4th quarter.

Downgrade
1. Alphabet's self-driving car company loses 40% of its value (but is still worth over $100B)

50% lower price than Uber, 100% less driver... That's the service Waymo wants to offer in the next few years. The self-driving car unit of Alphabet leads the race to offer up futuristic, no small talk, tip-unnecessary transport of the future. But Morgan Stanley just downgraded what the bank thinks Waymo is worth: From $175B to $105B.

Discounted cash flow modeling... Young bankers learn to wield the valuation method like it's the Patronas charm. Morgan Stanley tossed Waymo's numbers into some spreadsheets to determine how much profit Alphabet will make the next couple decades. They decided Waymo's self-driving dreams could experience less revenue and more costs than previously thought for 2 reasons:

  • It's taking too long. Waymo missed targets to roll out a commercial robo-taxi service, currently still testing them out in Arizona (Waymo sticks its software into Chrysler minivans).
  • Humans are expensive. Waymo will have a backup human safety driver behind the wheel for a while before it's safe enough for those minivans to cruise sans-driver.
THE TAKEAWAY

Don't ever forget this: Google is an ad company... but it's moving to diversify. Google actually made 87% of its revenue last quarter by infiltrating your Google search, Youtube, Google Maps, and Gmail with online ads. Saving the world wasn't a revenue source. But it's got a breed of young businesses it hopes can become healthy profit puppies someday:

  • Transport "Other Bets" (that's what Alphabet calls them): Waymo for humans and Wing to drone-deliver packages.
  • Other "Other Bets": Google Fiber (internet/phone service) and Verily (health data).
Retail

1 bucket of popcorn, 1 large DP, and don't miss the previews... CNBC reported that Amazon is in talks with airport convenience stores (CIBO Markets), movie theaters (Regal Theaters), and stadiums to license its Amazon Go cashier-less tech. Scan your phone when you enter, take what you want, leave — your Prime account gets charged, you don't miss the touchdown.

Amazon is the master of customer adoption... This tech is freaky (we've tried it). Cameras and sensors are all up in your space (and humans aren't). But Amazon's rolling this out to customers thoughtfully and gradually, first to those most-likely to adopt:

  1. Early adopters: Amazon's got 16 of its own "Go" stores, visited by city-dwellers eager to brag to friends about the lack of lines.
  2. People in a rush: If your flight already started boarding, you'll love not waiting 10 minutes in line for a pack of gum.
  3. Mainstream: Amazon could add thousands of "No-Go" stores (that's what we're calling non-Amazon stores using Amazon Go tech), making friends out of would-be retail competitors. Amazon wants hundreds of these by 2020.
THE TAKEAWAY

Software is way more profitable than physical stuff... Amazon's ecommerce operation ships a massive 10B products per year. But its way-smaller Amazon Web Services is the profit puppy, making over 50% of company profits through cloud services. Two tech companies in today's Snacks are following similar strategies:

  • Driver brains: Waymo is selling its self-driving software to carmakers (but not actually making cars itself).
  • Cashier brains: Amazon could sell human-less cashier and payment software to retailers (but not actually making stores itself).
Camp'd

Bold name... Thor Industries is more camping than glamping as the biggest RV-maker on Earth. It boasts a team of recreational vehicle brands that sound like desperate Eagle Scout nicknames: Bison, Jayco, Buccaneer, Keystone. Leading the fleet is Insta-worthy throwback Airstream. But here's the name that drove its overall sales up 23% last quarter: Erwin Hymer.

  • Thor splurged $2B on the German RV brand earlier this year.
  • Now Hymer's helped Thor push RV'ing across the pond deeper into Europe.

Camping is the new ironic Millennial thing... We're teased for juice cleanses, but our generation powered RV sales to record highs in 2017 getting heavy traffic to National Parks. That snagged entrepreneur attention: Outdoorsy ("Airbnb for your RV") and Hipcamp (private campsite booking site) solved camp problems totally unrelated to toilet paper. But in 2017, US RV sales peaked and Thor stock is down 65% ever since.

THE TAKEAWAY

When US sales slow, look to emerging markets... That's what soda companies did, candy companies have done, and Thor is now doing. Thor's new German RV-maker, Hymer, happens to have a joint venture with a Chinese RV company and pursues Southeast Asia. Now Thor can reach millions of middle class Chinese who are down-to-backpack as American ex-RVers return to their cities. Emerging markets = Emerging campers

What else we’re Snackin’
  • Out: Forever 21 files for bankruptcy — and it could signal the end of fast fashion (fyi, 2nd-hand fashion will be bigger within a decade)
  • Over: WeWork officially withdrew its IPO paperwork as it begins a period of financial mindfulness and reflection
  • Overheard: Spotify now lets you mix podcasts in with your music playlists
  • Snatched: Verizon is buying up all the cool tech from a virtual reality startup
  • See ya: BP's CEO is reportedly retiring really soon — he oversaw the $65B the British oil company shelled out for its Gulf of Mexico mess a decade ago
Snacks Daily Podcast

Budweiser spun-off its Asian business into its own company with its own IPO — but it's really because Bud racked up a $100B-dollar bar tab as it became the world's biggest brewer

Tuesday
  • Earnings from Stitch Fix
  • The 70th anniversary of the founding of the People's Republic of China

Disclosure: Authors of this Snacks own shares of Amazon and Beyond Meat

Correction: In Friday's newsletter, we mentioned that Match Group was getting sued by the FTC for misleading ads from Tinder, which Match owns. The ads weren't from Tinder, they were from Match.com. The corrected article is here.

ID: 967880

Our Editorial Principles
Robinhood Financial LLC and Robinhood Crypto, LLC are wholly-owned subsidiaries of Robinhood Markets, Inc. Equities and options are offered to self-directed customers by Robinhood Financial. Robinhood Financial is a member of the Financial Industry Regulatory Authority (FINRA) and the Securities Investor Protection Corporation (SIPC), which protects securities customers of its members up to $500,000 (including $250,000 for claims for cash). Explanatory brochure available upon request or at www.sipc.org. Cryptocurrency trading is offered through an account with Robinhood Crypto. Robinhood Crypto is not a member of FINRA or SIPC. Cryptocurrencies are not stocks and your cryptocurrency investments are not protected by either FDIC or SIPC insurance.

Getting “early access” to options or Web is defined as signing up with a valid email address for a spot in Robinhood Financial’s respective waitlist queues for Web or for options. Getting “early access” to Robinhood Crypto is defined as signing up with a valid email address for a spot in Robinhood Crypto’s waitlist queue. Early access to the waitlist for Web, options, or Robinhood Crypto should in no way be construed as confirmation that a brokerage account with Robinhood Financial has been opened or will even be approved for opening. Priority may be given to Robinhood Gold subscribers and existing customers of Robinhood Financial.

Free trading of stocks and options refers to $0 commissions for Robinhood Financial self-directed individual cash or margin brokerage accounts that trade U.S. listed securities via mobile devices or Web. Relevant SEC & FINRA fees may apply. Please see the Fee Schedule.

Robinhood Financial is currently registered in the following jurisdictions. This is not an offer, solicitation of an offer, or advice to buy or sell securities, or open a brokerage account in any jurisdiction where Robinhood Financial is not registered. Additional information about your broker can be found by clicking here.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information please see Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Investors should consider the investment objectives and unique risk profile of Exchange Traded Funds (ETFs) carefully before investing. ETFs are subject to risks similar to those of other diversified portfolios. Leveraged and Inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Although ETFs are designed to provide investment results that generally correspond to the performance of their respective underlying indices, they may not be able to exactly replicate the performance of the indices because of expenses and other factors. A prospectus contains this and other information about the ETF and should be read carefully before investing. Customers should obtain prospectuses from issuers and/or their third party agents who distribute and make prospectuses available for review. ETFs are required to distribute portfolio gains to shareholders at year end. These gains may be generated by portfolio rebalancing or the need to meet diversification requirements. ETF trading will also generate tax consequences. Additional regulatory guidance on Exchange Traded Products can be found by clicking here.

Options transactions may involve a high degree of risk. Please review the options disclosure document entitled the Characteristics and Risks of Standardized Options available through https://about.robinhood.com/legal or https://www.theocc.com to learn more about the risks associated with options trading.

The cash management program is expected to be offered by Robinhood Financial LLC. The cash management program, when operational, will be an added program to Robinhood brokerage accounts and will not be a separate account or a bank account. Robinhood Financial will provide additional information on the cash management program once it is operational to help customers, including those with “early access,” to determine if they want to add the program to their brokerage account.

Robinhood Snacks newsletters and podcasts reflect the opinions of only the authors who are associated persons of Robinhood Financial LLC and do not reflect the views of Robinhood Markets, Inc. or any of its subsidiaries or affiliates. They are meant for informational purposes only, are not intended to serve as a recommendation to buy or sell any security in a self-directed Robinhood account or any other account, and are not an offer or sale of a security. They are also not research reports and are not intended to serve as the basis for any investment decision. Any third-party information provided therein does not reflect the views of Robinhood Markets, Inc., Robinhood Financial LLC, or any of their subsidiaries or affiliates. All investments involve risk and the past performance of a security or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk, it does not assure a profit or protect against loss. There is always the potential of losing money when you invest in securities or other financial products. Investors should consider their investment objectives and risks carefully before investing. The price of a given security may increase or decrease based on market conditions and customers may lose money, including their original investment. Robinhood Financial LLC, member FINRA/SIPC.

Testimonials may not be representative of the experience of other customers and are not guarantees of future performance or success. Robinhood Financial LLC, member FINRA/SIPC.

Third party information provided for product features, communications, and communications emanating from social media communities, market prices, data and other information available through Robinhood Markets, Inc., Robinhood Financial LLC or Robinhood Crypto, LLC are meant for informational purposes only and are not intended as an offer or solicitation for the purchase or sale of any financial instrument or cryptocurrency or as an official confirmation of any transaction. The information provided is not warranted as to completeness or accuracy and is subject to change without notice. Any information about Robinhood Crypto on any Robinhood website (including www.robinhood.com and blog.robinhood.com), the Robinhood platform, e-mails, or any other communications, are meant for informational purposes only and are not intended as an offer, solicitation, or advertisement for Robinhood Crypto or any goods or services offered by Robinhood Crypto. The Robinhood website provides its users links to social media sites and email. The linked social media and email messages are pre-populated. However, these messages can be deleted or edited by users, who are under no obligation to send any pre-populated messages. Any comments or statements made herein do not reflect the views of Robinhood Markets Inc., Robinhood Financial LLC, Robinhood Crypto, LLC, or any of their subsidiaries or affiliates.

Investors should be aware that system response, execution price, speed, liquidity, market data, and account access times are affected by many factors, including market volatility, size and type of order, market conditions, system performance, and other factors.

All investments involve risk and the past performance of a security, or financial product does not guarantee future results or returns. Keep in mind that while diversification may help spread risk it does not assure a profit, or protect against loss, in a down market. There is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not currently backed nor supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. Trading in cryptocurrencies comes with significant risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. Cryptocurrency trading requires knowledge of cryptocurrency markets. In attempting to profit through cryptocurrency trading, you must compete with traders worldwide. You should have appropriate knowledge and experience before engaging in substantial cryptocurrency trading. Cryptocurrency trading may not generally be appropriate, particularly with funds drawn from retirement savings, student loans, mortgages, emergency funds, or funds set aside for other purposes. Cryptocurrency trading can lead to large and immediate financial losses. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a particular cryptocurrency suddenly drops, or if trading is halted due to recent news events, unusual trading activity, or changes in the underlying cryptocurrency system. Several federal agencies have also published advisory documents surrounding the risks of virtual currency. For more information see, the CFPB’s Consumer Advisory, the CFTC’s Customer Advisory, the SEC’s Investor Alert, and FINRA’s Investor Alert.

Robinhood Crypto, LLC has a seller of payment instruments license in Georgia, with reference number 61417.

Robinhood Crypto, LLC has a money transmitter license in New Jersey, with reference number 1803456-C22.

Please note that an Alaska money transmission license does not cover the transmission of virtual currency.

Check the background of Robinhood Financial LLC and Robinhood Securities, LLC on FINRA’s BrokerCheck.

Robinhood Terms & Conditions    Disclosure Library    Contact Us    FAQ

© 2019 Robinhood. All rights reserved.