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News From Tesla, Chipotle, Netflix, and More

Tesla (NASDAQ: TSLA) reports record profits; Netflix (NASDAQ: NFLX) hits a new all-time high; Chipotle (NYSE: CMG) serves up strong sales; and Buffalo Wild Wings tests a robot cook. Motley Fool analysts Emily Flippen and Maria Gallagher analyze those stories and weigh in on the latest from Boston Beer (NYSE: SAM), Crocs (NASDAQ: CROX), Facebook (NASDAQ: FB), JD.com (NASDAQ: JD), PayPal (NASDAQ: PYPL), Pinterest (NYSE: PINS), Tencent, and Zillow Group (NASDAQ: ZG)(NASDAQ: Z). Plus, they offer up some reading recommendations for investors and share two stocks on their radar.

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.

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This video was recorded on Oct. 22, 2021.

Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill. Joining me this week, Senior Analyst, Maria Gallagher and Emily Flippen. Good to see you both.

Emily Flippen: Likewise.

Maria Gallagher: Nice to see you too.

Chris Hill: We've got the latest headlines from Wall Street. We've got some reading recommendations for investors, and as always, we've got a couple of stocks on our radar. But we begin with the business of apps. On Thursday, Alphabet said it's lowering service fees in its Google Play App Store from 30 percent to 15 percent, starting on Day 1. Under the current model, developers pay a 30 percent cut on subscriptions to Google for the first year before the commission drops to 15 percent. The ripple effect of this news sent shares of Bumble, Duolingo, Match Group and others up as much as 10 percent and higher. Emily, you tell me. Is the future significantly brighter for the Bumble's and the Match Group's of the world?

Emily Flippen: Using the word significant is perhaps an overstatement, but it certainly is brighter for the app developers existing in the Google Play universe. Certainly, when you compare that to Google's universe right now. Google is in the unfortunate position of having to negotiate this from the bottom. Which is to say they're not in a particularly strong position of power because they've been the subject of antitrust concerns in the past. When you see them making these moves, some investors will like it to sticking of Band-Aid over a really bad and complicated situation. Is the move necessary? Yes. They're doing what they do best, which is following in Apple's footsteps. Apple recently took their commissions down, Google is doing the same. But again, this is not going to decrease the concern that legislators have over the power of big tech. We're actually seeing additional news out today that Google's stuck now in another fight with Roku, the app developer who streams directly to people services. Google's YouTube wanted preferential treatment, that's what the report say, on the Roku app. Legislators were debating what this means. Google is saying it's not true. But one way or another, legislators are finding their way into this conversation. It's a great thing for the smaller players in this space because legislators tend to not want to support anti-competitive behavior. But when you are a behemoth, when you are the Googles, when you are the Apples of the world, moves like this are only concerning.

Chris Hill: Maria, what do you think?

Maria Gallagher: I agree with everything that Emily pointed out and I think that it is interesting to see what that impact is going to be for the smaller companies. I know Duolingo specifically has called out that it's important for them to retain members for over a year because then that helps their profitability. I do think that these impact for these smaller companies with that profitability could be pretty big in the next couple of years to see how they get people on the platform and keep people on the platform and how that could impact profitability is something that I think is pretty interesting.

Chris Hill: Shares of Snap fell more than 20 percent on Friday after third quarter revenue came in lower than expected. The company also lowered guidance for the fourth quarter and warned of slowing growth due to recent changes in Apple's iOS privacy rules. There's a lot to cover there Maria, where do you want to start?

Maria Gallagher: It's a couple of different things. You see this concern over the new initiatives with Apple. They have this thing called ATT, which is app tracking transparency. You're probably familiar with it in your phone, it asks you if you want to opt in for tracking. This is going to make it significantly harder for advertisers to track their effectiveness of their digital ads. This has really wide implications for lots of advertising businesses, this is not a Snap alone problem. I don't think that it's going to be a problem without a solution. They're not the only ones affected so Apple has already rolled out something called SKAdNetwork, which is allowing app based advertisers to continue to measure their advertising in IOS. It's not quite as good as it was a couple of months ago, but it is a start of a solution so I don't think that this is going to be a problem with no solution. I think that that's going to be interesting to watch, to see how innovations happen to make it more able to track their users from those advertisers. But I will say that the quarter was still solid. Their revenue was up 57 percent. Their average revenue per user was up 28 percent to $3.49 which is pretty high. Their daily active users were up 23 percent to 305 million. It's a lot of people, over 75 percent of the 13 percent to 34-year-olds in the US, UK, Australia, France, and the Netherlands use Snapchat, and they just rolled out a bunch of new features. One that I want to call out that I think is important, I don't know about anybody else, but I only use Facebook now to check whose birthday it is, but there is a new Snapchat app called Birthday Mini, that you're allowed to see your friends birthdays and send personalized greetings that was used by over 10 million users in the first 21 days. We do think that they're continuing to innovate. They still have retained a lot more customers and a lot more users than I think anyone ever thought that they would be able to, and I think that this problem with Apple is not going to affect them alone. I do think that there will be some innovative solutions that we'll see in the next couple of quarters and years.

Chris Hill: Do you think the stock being down close to 25 percent represents potential buying opportunity for people?

Maria Gallagher: I think if you believe in the future of the app and if your thesis hasn't really changed, yeah, I think it does because I do think that it will have implications. I'm not saying that it's not a big deal at all, it does have implications for them. But I just think that because it's going to be a wide reaching problem throughout the industry and throughout those businesses, I think that there is going to be a solution. It might take a while and it might be a little bit different than advertisers are used to, but I do think that there will be one that is found.

Chris Hill: On Wednesday, Tesla reported record revenue and profits for the third quarter and on Friday, shares of Tesla hit a new all-time high. Always a lot to look at it with Tesla, Emily, but the gross margins in their automotive business are certainly moving in the right direction.

Emily Flippen: That was the most incredible thing to come out of Tesla's quarters looking at their gross margin. I think some investors had expectations that were pretty lofty heading into this quarter in terms of beating, in terms of revenue and earnings, both of which they did just nominally, but they did beat expectations. I think what investors are really responding to today is the fact that their gross margin ticked up above 25 percent. Which is pretty incredible, especially when you not only compare it to existing car manufacturers, but also just the environment we're operating in today. Think about all the headwinds that Tesla is facing. A global semiconductor chip shortage, an integral piece of part into Tesla's equipment. We're talking about labor shortages, increases in costs. This would be a forgivable quarter to miss on the bottom line if you were Tesla. It be a forgivable quarter to have lower gross margins. But margins still improved because Tesla is gaining scale and cost improvements in other areas. The only downside, to the extent that you can call it a downside, is that they reiterated their prior guidance for 50 percent average annual growth in deliveries. I think a lot of investors maybe wanted to see that, get raised after such an amazing quarter, but I am certainly not picking apart what is otherwise a really impressive earnings reports.

Chris Hill: Shares of Netflix hit a new all-time high this week as third quarter profits came in higher than Wall Street was expecting. Maria, we always look to subscriber growth with Netflix, and that was a solid beat as well this quarter.

Maria Gallagher: Yeah, they added about 4.4 million new adds, they have a total of 214 million paid memberships. Their largest contributor was Asia-Pacific with about 2.2 million new adds, which is about half of their total. What this amount of members that we see? It's a pretty penetrated market. People who are going to subscribe have probably already subscribed, so now that shift is going to be, instead of just getting new subscribers, it's going to get subscribers to pay more. There's going to be an increased price, maybe new tiers, things like that. But a couple of things that bode well on that front is first, we're seeing this really exciting cross-cultural excitement for content, that's something that's going to be interesting to watch moving forward. The best example of this is Squid Game. It's a story that started in Korea. It's the biggest TV show on Netflix ever. About over a 142 million members have watched it within a month. It's been ranked as the number 1 program in 94 countries, including the US. This is really exciting for implications about content and the global appeal of their content. Additionally, it garnered the most amuse ever for any single network or series and television with 44. We have things like the Crown and Queen's Gambit winning a lot. Then something else that I think is pretty interesting is they're acquiring Roald Dahl Story Company. You can see that they are trying to also get into that competition with Disney Plus for kids viewership nostalgia, I think that's going to be interesting to watch. It's still getting out really good new content, getting people excited, trying to keep those members as opposed to keep getting new members, even though I would like to formally complain that Glee is leaving Netflix on November 30th. I'm pretty upset about it, but other than that, things are looking OK for them.

Chris Hill: Let's go back to the US and Canada because even though the subscriber number was strong, there were people pointing out this week, US and Canada, they only added about 70,000 subscribers. You don't think that's a concern?

Maria Gallagher: Well, I think like I said, if you own a Netflix subscription, if you were going to, you probably already do. That growth is going to probably continue to come from Asia and Europe in terms of new adds and it's continuing to monetize the users that already exist in the US and in Canada, and continuing to get them to be excited and have Netflix be, "This is the streaming platform we want to make sure we pay for every month. Even if we pay a little bit more," or depending on what they might come up with, a new tiered system or something like that. But I wouldn't be overly concerned. It's just about retaining those members now. I think at some point, you always get to a point where you say, 'We're pretty penetrated in this market and we have to now shift levers of how we're going to increase the revenue from that market."

Chris Hill: Coming up after the break, we've got the business of burritos, beer, and comfortable shoes. You're in the right place. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill is here with Emily Flippen and Maria Gallagher. Shares of Chipotle falling a bit on Friday, despite the fact that third-quarter profits came in higher than expected, revenue rose 22 percent and same store sales were up 15 percent. Emily, I know it's been a great run for the stock, but aren't these type of numbers that Chipotle shareholders want to see?

Emily Flippen: We should all be giving a round of applause to Brian Niccol for this quarter. Maybe expectations were just a little too heightened headed into this report, but same store sales growth of 15 percent in this quarter, coming off the back of a really impressive 2020 is extremely notable. More importantly, there's a 155 percent increase in earnings year-over-year. They beat expectations that are for $7 per share versus the $6.32 expected, a wonderful quarter from Chipotle. But really, I want to focus on Niccol here, because when he came in and took over as CEO of Chipotle, there were two things that he was focused on. The first one was digital orders and we're seeing that explode growth over the last couple of years. They were up nearly nine percent year-over-year, but that's after nearly tripling in 2020. They're also building out a ton of Chipotlanes that's drive for various support Chipotle. Not to mention the fact that they are doing limited time offers like the smoked brisket, and that's really driving engagement. I'm enthusiastic for the prospects of this business.

Chris Hill: Third quarter profits in revenue for Crocs came in higher than expected. The company also raised full-year guidance and shares of Crocs are up more than 10 percent this week, Maria.

Maria Gallagher: I would say that Crocs just continues to astound me. Like you said, revenue was up 73 percent. I'm sorry, if you hear sirens, they're so loud next to my window. It's the downside of living in New York. Their revenue was up 73 percent, like you said, their digital sales were up nearly 70 percent. They have guidance for revenue growth between 62-65 percent this year expecting 2022 to have about 20 percent revenue growth. I think it's really interesting. Crocs is really sure of what their future it looks like, they are really transparent about it. They think their future growth is going to come from a digital-first approach for digital sales to be about 50 percent of revenues by 2026. They are planning to quadruple the growth of sales of sandals by 2026, and they're planning explosive growth in Asia. They're trying to leverage celebrities, influencers, digital growth. Since China is the second largest footwear market in the world, they're hoping that that represents about 24 percent of total revenues by 2026. The brand is making a strong comeback. They have these exciting partnerships. They're leading sustainability initiatives. They're planning to have 100 percent vegan brand by the end of this year. I think that they're just firing on all cylinders and they're very clear and precise in their goals. I continue to be really impressed by them.

Chris Hill: I know that the challenges in global supply chain are going to be a refrain we hear constantly throughout this earnings season. But it seems like in the case of Crocs, they're able to handle it a little bit better than the average company or am I wrong?

Maria Gallagher: They also were talking about that as well. They had to have a closure in some of their Vietnamese factories and they were talking about the supply chain disruption, but I think that they have such a clear vision. Because they have a more limited inventory, they have a couple of shoes, they do them really well, I think that they have a really good plan for how they create them and how they roll them out. I think that they are planning for the supply chain disruptions, and they have a really good plan in place to keep delivering to people their Crocs when needed. As the Christmas season comes, if anyone wants to buy people Crocs, I think you'll be able to.

Chris Hill: On Friday, shares of Boston Beer were as flat as a day old IPA. The parent company of Sam Adams reported a loss in the third quarter. Despite their best efforts, Emily, the growth in their Truly Hard Seltzer brand just is not there.

Emily Flippen: It's been a terrible, no good, very bad year for Boston Beer and management. Really throughout their hands last quarter and said, ''We overestimated the size of the Hard Seltzer market and how much it was going to grow.'' Those woes just continued in this quarter. They had over a million dollars in direct costs associated with the slowdown in Hard Seltzer. The majority of this is obsolete inventory that had to be destroyed. These losses resulted in a new loss of nearly $60 million in the quarter after a profit last year and a decrease of over $11 per share in earnings in comparison to last year. But even if you back out that over a $100 million in Seltzer costs, earnings still would have decreased over 50 percent compared to last year simply because of the slowdown in Hard Seltzer. But I will say, not all metrics were bad and management reiterated that they think Hard Seltzer could increase from around 11 percent to 15-20 percent of total beer dollars over the next few years. Household penetration, purchase frequency, and buy-rate were all up over the quarter, even though they were down in comparison to expectations. Again, this is like a dark cloud that investors should be able to see through. They've gained a ton of percentage points in market share against White Claw. Truly, Seltzer was responsible for over half of all Seltzer growth so far in 2021. Even though the market is smaller, I think management is performing well.

Chris Hill: Part of what we've seen from Boston Beer over the past decade is very strategic smaller acquisitions. Keep in mind, Boston Beer as a company is about a six billion dollar market cap. Five years from now, will this still be a stand-alone company? Because I could see them continuing the acquisition route. I could also see someone coming in and acquiring Boston Beer whole cloth.

Emily Flippen: I would be surprised if Boston Beer was acquired. I think if they were going to accept an acquisition, they would've done so a number of years ago. Right now, I think they are focused on building up partnerships and brands, like with Pepsi and the Hard Mountain Dew. Will that be the next Hard Seltzer? Probably not, but I like to see that level of innovation.

Chris Hill: Buffalo Wild Wings had a long run as a public company before being taken private in 2018, but that does not mean that the company isn't still innovating. Buffalo Wild Wings is testing a robot that cooks wings, nicknamed Wingy. We'll come back to that. The robot is going to be installed at a ghost kitchen before making its debut into an actual Buffalo Wild Wings restaurant in 2022. Maria, I'm less afraid of the rise of the machines if it means robot cooks.

Maria Gallagher: I'm excited about robot cooks. Also, I would say I'm impressed seeing as when Wingy was working, it increased food production speeds by 10-20 percent. I'm just saying if the robot cooks are here, they are more efficient and they're doing a good job and I'm excited for them.

Chris Hill: We're going to do something about the nickname Wingy though, aren't we, Emily? I mean, we and by we, I mean, absolutely everybody, we can do better than that, can't we?

Emily Flippen: For a business that goes by B-dubs, you'd think they would be able to come up with something other than Wingy, but I guess the bar has been low here for a while. I'm all-in, why not? Wingy.

Chris Hill: Drop us an email radio@fool.com. Help us, help Buffalo Wild Wings get a new nickname for this robot. Should PayPal buy Pinterest? How should investors think about Facebook's impending name change? We're going to answer those questions and a lot more after the break, so stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Maria Gallagher and Emily Flippen, as I said before the break, our email address is radio@fool.com. Time to hit the mail bag. From Rachel in Pittsburgh. What do you think about Facebook changing its name? Maria, this comes from a report this week in the verge that apparently next Thursday at Facebook's ARVR event, CEO Mark Zuckerberg is going to announce a new name for the company. What do you think?

Maria Gallagher: Mark keeps saying that Facebook is now going to be a metaverse company. It's not just a social media company in the next five years. They have hired about 10,000 new hires in the EU to be working on this reorienting the entire brand around this idea of the metaverse. I mean, I think it's a pretty transparent effort to try and distract people from the problems that have been raised about the way that they treat their younger audience. For people who don't remember, 22 million teens log into Instagram each day. Thirty two percent of teen girls said that when they feel bad about their bodies, Instagram makes them feel worse, there are more statistics like that. There's been a lot of comparisons for Philip Morris changing their name to Altria. Just trying to say, if you completely ignore everything else, we're just going to change our name but not change anything else about ourselves. It hasn't really impressed many people from the articles I've been reading so far. We don't know what the new name will be, but it seems that most people see that this is a pretty clear transparent way to just try and distract people.

Chris Hill: Although Emily, I will point out whatever one thinks about tobacco, if you bought shares of that company when they changed their name to Altria and held to today, you've done pretty well.

Emily Flippen: I'm weirdly bullish on the idea of Facebook changing its name, and I would like to tell Mr. Zuckerberg, if you're listening, I have some ideas for you. Have you thought about metabook, faceverse, or I remember RadioShack tried to rebrand itself a number of years ago to The Shack. While that wasn't successful, maybe it'll work out for The Book or The Face, so many great ideas out there.

Maria Gallagher: You called him Mr. Zuckerberg and I called him Mark.

Chris Hill: From Drew in Virginia. PayPal is apparently about to buy Pinterest for $45 billion. I own shares of both companies. Should I be excited, terrified, or something else altogether? Emily, you also own shares at both companies. How are you feeling about this potential deal?

Emily Flippen: I do, and I have a different emotion for you Drew. Maybe the emotion you should be feeling as I was is disappointed. I will tell you what, I love PayPal as a business, but it's gotten to the point where it is so large it is acquiring for growth. That's worked out well for them in the past. I think about Honey as a really interesting four billion dollar cash acquisition that PayPal made last year, that actually exposed it to more digital transactions. I can see a world where they actually integrate that well with Pinterest, which has been trying to expand its e-commerce capabilities. Now there's differences in whether or not a cash deal or a stock deal actually results in shareholder returns. But what makes me disappointed is as a Pinterest shareholder, my bullish argument for Pinterest has always been around monetization potential, not necessarily user growth. Just because user growth has tailored off this year, I think the stock has sold off really aggressively, I'd argue too aggressively. In fact, I'm really excited about the future of Pinterest. If I was Pinterest management, I tell you what, I would be telling PayPal to get lost. But the fact that Pinterest management is sitting down and thinking about this acquisition and thinking to themselves, "Yes, $45 billion, maybe we'll do that," I'm just disappointed because in my mind, I think Pinterest is worth much more. But I'll tell you what, if management doesn't agree with me, then maybe my thesis is wrong.

Chris Hill: Maria, you also own shares of both. How do you want this story to end?

Maria Gallagher: I also own shares of both of them. I'm going to echo what Emily is saying, I can see the argument. I don't really like the argument. I think that both of them stand alone or as much better, especially Pinterest. I think that they've just, as Emily said, they've just gotten to the point where they've really acquired such a strong user base and they are working so hard to integrate shopping into their pins, integrate all of these different options. I think it would just be a shame to leave before you can see how they monetize well.

Chris Hill: From Marcus in California. On last week show, Maria's radar stock was Zillow Group. How does she feel about them stopping their home buying service? This comes from the news on Monday when the company said they were, and I'm quoting here, "Beyond operational capacity in our Zillow offers business. " They hit the pause button through the end of the year, Maria, the stock dropped 10 percent on Monday. It has since bounced back from then. What do you think?

Maria Gallagher: I think with the tip of scaling, I actually think it's important to pause. I think I don't like pausing because they've done too much. Trying to think I like a thoughtful pause, but I do think it's such a thin-margin business in such a hot sector, you really want them to effectively scale. When you have the chance that they buy too many houses at above-market offerings, and then the market closed down then they have all this inventory of houses that they paid too much for. You want them to become, because that's such a low margin business and they are going to make their profit from these ancillary businesses, I think it's smart to figure out what's the best way to make offers, how fast can they flip them? They are buying still about only one percent of the entire market. It's such a small part, it's not going anywhere. I want them to scale well and generate profit from those ancillary services. I hope that they're taking time. I hope they're assessing the overall market, where they fit in, how to reasonably scale. I hope they're taking some time to think and then coming back with a really smart and good strategy to scale effectively.

Chris Hill: With that in mind, are you surprised that halfway through the month of October, they said, "We're pausing this for what amounts to two-and-a-half months." I'm not surprised that they hit the pause button. I'm surprised that they essentially boxed themselves in to say, "We're going to start this back up the first week of January 2022," because I know the stock has rebounded from what happened on Monday. But Maria, there's only one of two scenarios here. One is they actually started up in January again, and the other is they don't, and if they don't, that's got to mean another hit to the stock.

Maria Gallagher: Yes. I don't love such a strong ending. I do think that there's a chance that January comes in and they say, "We're going to take some more time." I do think that that would hit the stock, but I think it'd be better to do that and then have long-term returns from taking more time than to say, "We're just going to go back in full-scheme ahead," even if they just maybe in January start by saying, "We're going to build back up to the scale. We're not going to start at a 100 miles per hour. We're going to start at a more reasonable rate and then concentrate in different areas. This is what we've decided." I think they're giving themselves a good amount of time, and so hopefully they'll start at a more reasonable pace starting 2022.

Chris Hill: From Cam in London. What happens when a stock is delisted? I had about five percent of my portfolio in JD.com and Tencent, while I like the companies and would probably continue to hold them for 5-10 years, it occurs to me that if I cannot sell them because they are not listed on an exchange, it doesn't really matter how much they go up. I'm not losing sleep over it, but I'm wondering if I have misanalyzed the risk of these two companies. Emily, we've talked about Tencent and JD.com in the past. It seems like there are a couple of parts to Cam's question here, but let's get to the first part. What happens when a stock is delisted?

Emily Flippen: That's a great question and the answer is, we don't really know yet, because a situation like this hasn't quite presented itself. In the past, when stocks have been delisted, there's been a few options. Either they're moved from one of the major US exchanges into the pink sheets or the OTC exchanges in the United States, or they're given cash values by the companies. The companies essentially buy out their own shares. But this is a totally different situation. In fact, the SEC right now is currently evaluating ways to implement this delisting bill. They have about three years, if the new bill passes through the house representatives, that may be squeezed down to two years. But they're trying to figure out what exactly this looks like. We don't have all the details until the SEC releases them, but we can speculate a little bit about what our options are. I, myself, am a shareholder in a number of Chinese companies that threatened to be delisted as part of this move. One of the first things that you can do, which is what you're doing right now, is actually nothing.

We don't quite know what the implementation will look like. For that reason, it's entirely possible that some agreement is worked out between Chinese and American regulatory authorities around what type of oversight is acceptable to both protect American investors, while also providing a little bit of security for the financials of Chinese companies that don't want to just hand that over to a foreign government. There have been agreements worked out in the past. In 2013, there was an agreement in place, so this isn't completely unprecedented. In that case, you can think to yourself, well, I will keep an eye on the situation. If things continue to go south, maybe I make a move. For the time being, I will hold on. I like these businesses and I like the fact that you say, "I'm OK holding them for the next five or 10 years." But because you also have a long time horizon, one of the things that we see more and more investors doing is actually choosing to buy these shares on foreign exchanges. Both JD and Tencent, as well as the majority of other major Chinese companies, are actually dual listed on the US stock exchanges as well as the Hong Kong Stock Exchange. While their prices may seem different at face value, the value of the businesses themselves should move in tandem. You could sell your shares on one exchange and then go to a foreign exchange and buy the same shares there and then hold them for the long term. Lots of options, I will say it's hard to tell what the future is. But in terms of the businesses themselves, I think you're pretty well protected in the types of businesses that you are invested in. JD and Tencent, which we talk a lot about, are pretty robust, well-respected Chinese investments.

Chris Hill: Well, and also Emily, we talk from time-to-time about allocation. It seems like, at least in this portion of Cam's portfolio, keeping something like this to five percent. One way to think about allocation is if my thesis on this part of my portfolio goes to zero, how threatened am I? If it's five percent, that would be not great, but it wouldn't be awful because it seems like he's doing a good job with spreading out the risk.

Emily Flippen: That's exactly right. Keeping it within your risk tolerance is critical. I will say, Cam, you have a great mentality. You're not losing sleep over it, it is a small portion of your portfolio and you're just wondering. I think that's a great mentality to have about our investments and I wish we could all be quite as calm as you.

Chris Hill: From Matt in New York. Hey, longtime listener here. My girlfriend has recently become interested in investing. I've turned around to your show and she wants to do a deep dive into some introductory literature. Can you recommend any investing 101 books or resources online? Matt, you came to the right place. Maria, what can your recommend?

Maria Gallagher: I have a good amount of recommendation. The first in terms of books, in terms of just understanding the dynamics of looking at a company, you have a series called The Little Book. You have The Little Book that Beats the Market, The Little Book Evaluation, and then there's one up on Wall Street which is a classic. Those are just kind of understanding the dynamics of the stock market, how to look at a company. Then I think what's also really important is understanding the market as a whole and then how it interacts with other markets. Understanding that bigger picture. There's a book called Americana: The 400-Year History of American Capitalism that I would really recommend, as well as Too Big to Fail to really understand the dynamics within the industry and how interconnected a lot of these industries are. Then, I also have some YouTube resources, Aswath Damodaran has good valuation videos, they are slightly more advanced but they are really excellent. Then Money Week has really good simple videos. Then Investopedia will be your best friend. Investopedia for all of those terms that you don't know, put them in with Investopedia and you'll get really good explanations and sometimes those have videos as well. That's my long-winded itemized list of recommendations to get started.

Chris Hill: I'll just add, if you are a subscriber to HBO Max, a few years back, they did a very good film adaptation of Too Big to Fail. I'm not knocking reading, I'm just saying you can bang out the movie version in a couple hours. Emily, what can you recommend?

Emily Flippen: Well, I love the idea of watching a movie instead of reading. You know me too well, Chris. I think Maria has some great resources there. I think it comes down to what you're trying to achieve. I think to become a good analyst, first you have to understand the businesses and then you have to understand valuation. The first part, I think it's critical, which is just understanding how to look at a business. I think the best way to do that is honestly just to read through annual reports. Read through a company's 10K. They're publicly available on the SEC's website, and you can read through the business, Google terms you don't know as you come across them. But get an understanding for what the business does and learn to analyze the structure of a business before you get into complicated stuff like valuation. Then once you understand the business, understand what you're looking for, I love Maria's reference to Aswath Damodaran and he has this entire valuation classes, he's an NYU professor, has this entire Master's course on valuation for free on YouTube. Work your way through it. It's lengthy, but it's also extremely valuable as an introductory course.

Chris Hill: I'll just add one more and this one does have a movie adaptation which I believe won an academy award. But The Big Short, it remains for me one of the best books I've ever read about investing. I wouldn't put it in the category of investing 101, but Michael Lewis might be the best non-fiction writer in America. That book, like most books, it's better than the movie adaptation. Adam Mackay did an amazing job with the movie, I love the movie, but the book version of The Big Short is just so brilliant, one of those things that I find myself rereading every couple of years.

Maria Gallagher: Yeah, it's pretty brilliant.

Chris Hill: We're going to get to radar stocks after the break, so stick around. You're listening to Motley Fool Money. As always, people on the program may have interest in the stocks they talk about that 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 with Maria Gallagher and Emily Flippen. It's time to get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Emily Flippen, you're up first. What are you looking at this week?

Emily Flippen: I'm really excited for my radar stock this week. It's Doximity. The ticker is D-O-C-S, and a lot of people will refer to it as the LinkedIn for doctors. Essentially what they do is they operate a social media platform that's exclusive to medical professionals in the United States. But I really think that actually misses the bigger picture here. What Doximity is, is really catering to pharmaceutical businesses and acting as almost a platform to replace pharmaceutical sales reps. When pharmaceutical businesses need to reach doctors to market or advertise their new drugs for certain patients, Doximity is an amazing platform to do that. When you look at the return on investment that these pharmaceutical businesses and some hospitals get when using the Doximity platform, it's much higher than traditional means. Now there are some obviously concerns with this, business model regulations are very hefty in the healthcare space, but I think that Doximity and its founder, CEO, who is still heavily invested in the company, is setting the company apart.

Chris Hill: Dan, question about Doximity?

Dan Boyd: Absolutely, Chris. Emily, do doctors have time for this? Every time I go to the doctor, it's the same thing. I get in the examination room, I'd say, "Here's my problem," and in five seconds, the doctor is out the door in a cloud of dust. I feel like LinkedIn, while useful, is great for us professionals who have time on our hands, but doctors, they always seem so busy.

Emily Flippen: You're entirely accurate actually, Dan. In fact, doctors necessarily aren't the biggest fan of Doximity. They have to use it for professional reasons. A lot of times it's required when you graduate and go through classes in medical school, they use it for telemedicine, for hiring. It's almost like a necessary evil. You won't see the engagement levels that you'll get with professionals on LinkedIn, but you'll still see doctors heavily using it.

Chris Hill: Maria Gallagher, what are you looking at this week?

Maria Gallagher: My radar stock is not technically public yet, it's called Rent the Runway. It just filed it's S1, the ticker will be RENT when it becomes public, but it's referred to itself as the closet in the cloud, so you can rent designer clothing. They have an average subscribers who wears clothing more than 20 times which she pays for a subscription on an annual basis. They have 18,000 styles, 750 designer brands, and it will be the first ever IPO with a female CEO, CFO, and COO. I think it has a lot of really interesting implications for the way that people want to buy versus renting clothing, and I'm excited to see more about it.

Chris Hill: Dan, question about Rent the Runway?

Dan Boyd: Yeah. Is this something that everybody can use? I've only really heard of clothing for women being featured on Rent the Runway. But could I get like a really snazzy suit out of it?

Maria Gallagher: Honestly, they do only talk about women on Rent the Runway, but I bet that you could. I bet if you looked hard enough you would find a good one. I was saying earlier, I'm now at the age where a lot of people I know are getting married, so I'm getting more and more interested in renting dresses to be a guest at weddings.

Dan Boyd: That makes a lot of sense because that stuff's expensive and a lot of times you're only going to wear it once or twice, right?

Maria Gallagher: Yeah. You can't have multiple Instagram pictures of you at different weddings in the same dress. That's a real no-no.

Dan Boyd: Absolutely not. I know our radio listeners can't see my face, but just know that it's etched with disgust at that thought.

Chris Hill: Dan, LinkedIn for doctors or the closet in the cloud, what do you feel like adding to your watch list this week?

Dan Boyd: I'm actually going to go with Rent, which isn't even listed yet. Because Emily explained that the doctors don't actually like using Doximity that much.

Emily Flippen: Nobody likes to be advertised too.

Chris Hill: Emily, Maria Gallagher, thanks so much for being here.

Maria Gallagher: Thanks Chris.

Emily Flippen: Thanks for having us.

Chris Hill: That's going to do it for this week's Motley Fool Money. The show is mixed by Dan Boyd, our producer is Mac Greer. I'm Chris Hill, thanks for listening. We'll see you next week.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Hill owns shares of Alphabet (A shares), Apple, Chipotle Mexican Grill, PayPal Holdings, and Pinterest. Emily Flippen owns shares of PayPal Holdings, Pinterest, Roku, and Zillow Group (C shares). Maria Gallagher owns shares of PayPal Holdings and Pinterest. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Apple, Chipotle Mexican Grill, Facebook, JD.com, Netflix, PayPal Holdings, Pinterest, Roku, Tencent Holdings, Tesla, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool recommends Boston Beer, Bumble Inc., and Match Group and recommends the following options: long January 2022 $75 calls on PayPal Holdings, long March 2023 $120 calls on Apple, and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.


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