In this podcast, Motley Fool senior analysts Jason Moser and Matt Argersinger discuss:
- How the current macro environment is what the Fed was aiming for.
- JPMorgan Chase and Wells Fargo starting earnings season in a strong way.
- Boeing's latest production challenge.
- Key takeaways from Andy Jassy's letter to Amazon shareholders.
- Warner Bros. Discovery's confusing rebrand of HBO Max.
- Two stocks on their radar: Airbnb and T. Rowe Price.
Motley Fool senior analyst Tim Beyers weighs in on how board games and video games are finding success on the big screen, the future of movie theaters, and why "YouTube has an uncommon amount of power right now."
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 April 14, 2023.
Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill. Joining me in studio, Motley Fool senior analysts Jason Moser and Matt Argersinger. Good to see you as always, gentlemen.
Matt Argersinger: Hi, Chris.
Jason Moser: [inaudible]
Chris Hill: We've got the latest headlines from Wall Street. We will take a closer look at the business of movies. As always, we've got a couple of stocks on our radar. But we begin with the big macro. The latest batch of data showed that inflation in the U.S. has hit its lowest level in almost two years. The Producer Price Index in March showed prices were 50% lower than in February and the Consumer Price Index showed an increase of just 0.1%. Matt, investors welcome the news, the S&P 500, hitting close to its highest point since last summer.
Matt Argersinger: I know and I think shouldn't the Fed be welcoming this news too? [laughs] This is what they wanted. Inflation is rolling over. Jobless claims are ticking up a little bit. We had retail sales on Friday morning that were lower by more than twice than what was expected. We know the credit markets have tightened up. Lending, particularly, I think from small and mid-sized banks is going to slow down if it isn't already. We know we've talked about big risks and the commercial real estate market. Even if you look at the minutes from the Fed's last meeting, they are actually now expecting the economy to enter a mild recession later this year. Isn't this what they were aiming for? I know we don't always want to tie this to what the Fed is going to do, but I think that's what we have to talk about because that's what the markets that some investors are focused on. All the evidence now is pointing to the fact that we probably hit this peak cycle of rates.
Chris Hill: You're absolutely right that this is not what we want to be focusing on, particularly here at the Motley Fool, where we focus on businesses. But it has been so important, particularly over the last 18 months, Jason. To Matt's point, yeah, I think that's part of the reaction that we saw this week in the market. Investors, both individual and on Wall Street's saying, OK, this is what they were gunning for in the first place.
Jason Moser: It's exactly right. It's weird to say this, but as an investor, I'm really pulling for a recession. Let's get there already. We've been talking about this for like a year and a half. There's the question maybe a year ago as to whether we were actually in a recession where we saw two consecutive quarters of contraction and that is what we typically use to define the recession. But there were other economic indicators that told us that maybe we weren't really there. Now we get the Fed calling for recession a little bit later this year. I've pointed this data out before on the show. I'll pointe it out again because I do think it matters. It's just a reminder that on average that stocks perform worse one year before the recession than actually during the recession. Then furthermore, for the two years following the recession, returns are actually positive 82% of the time. There is a light at the end of the tunnel. It's just, can we get there already?
Chris Hill: I agree. It's almost like, can you just look? Can you spot me recessions? Spot me 10% correction in the market. I'll take it right now. Let's get it all the medicine that we need, and we can move on with life, and stop talking about the Fed, and less about the big macro, and more about the big macro with the companies we follow.
Jason Moser: It's been a very difficult year and a half for investors. It's every day you're waking up and just like you're getting punched in the face before you can get out of bed. It feels like at some point the tide turns. I think everybody's looking for some good news or something to be a little bit more optimistic about. It feels like we're starting to get there.
Chris Hill: Well, let's get to a couple of companies then because some of the big banks kicked off earning season Friday morning. JPMorgan Chase and Wells Fargo both out with a first-quarter report. Wells Fargo's results were better than Wall Street expected. JPMorgan Chase, Jason, they probably beat their own expectations because JPMorgan Chase posted record revenue for the quarter which sent the stock up 7%.
Jason Moser: Yeah. I think this is the trend continues on from what we were even seeing last quarter. We're seeing these banks, they're taking a bit of a conservative approach. They're preparing for this potential downturn. They continue to boost reserves to account for that. They continue to see benefits from these rising rates as well. We're seeing net interest income play out very positively for for both of these reports. JPMorgan, net revenue just under $40 billion was up 25% from a year ago. Net interest income $20.8 billion. That was up 49% from a year ago. Clearly benefiting from these interest rate tailwinds. They built a net reserve up $1.1 billion. They do see, I think with the recession coming, credit is becoming a little bit tighter. They understand it's a little bit tougher for some folks to pay those bills and so they're building in a little bit of that reserve there. Benefiting from net inflows, now seeing assets under management of $3 trillion. This is really a bank you want to pay attention to. Last quarter we heard the line with Jamie Dimon last quarter preparing for a mild recession. This quarter that mild has been upgraded to moderate. They're looking down the pike here and see definitely these conditions deteriorating a little bit in the near term. But tangible book value now up 10%, $76.69. That puts the shares at 1.8 times tangible book value. Now that sounds like it might be a little expensive, but historically it's still actually not. Even with the performance of the stock, it actually could be worth a look for investors. I'm thinking he installed some confidence on the call. He did say that while these conditions are difficult to navigate, this is not anything like we saw back in 2008, 2009. That's encouraging, I think for investors.
Matt Argersinger: I think the big financials always kick off earning season and so that's where we're starting. I think here we expect the news to be mostly pretty good or at least not bad. This sets up the next week or two when we start to hit the regional banks and some of the smaller mid-sized banks. I think that's where I don't know if the rubber is going to hit the road in terms of how difficult conditions have become in the credit markets. Because we know the TBTF, the too-big-to-fail banks are going to be fine throughout this, but we know where the trauma potentially is the smaller banks. That's where I'm paying attention.
Jason Moser: I think too, when you look at Wells Fargo, we talked about opportunities in the sector. I do think there's plenty of opportunity out there in the regional side. But Wells Fargo continues, I think, to get their ducks in a row. This is a bank that's really come back to life. Revenue up 17% from a year ago. Net interest income up 45%. You remember Wells recently made the strategic decision to pull back from their mortgage business. That's what they were known for so long. They're seeing these lenders like Rocket Mortgage Loan Depot, saying, hey, listen, you guys take over that business. That's all right. We want to diversify a little bit, not be so levered to one particular part of the market. Granted, it's a very big part of the market. But it's starting to work out for them. They resumed their repurchase program. They bought four billion dollars back in shares over the quarter. With these shares now around 1.1 times tangible book, I think it still represents a pretty good opportunity for folks looking for exposure to that banking industry.
Chris Hill: I want to wrap this segment with something you just touched on, Matt, which is, what are you both going to be watching? Obviously, we've got earnings season really kicking into high gear over the next few weeks and everyone will have their particular companies that they're interested in. But is there a broader trend that you're watching over the next three months or so? Because it does seem to your point, Matt, the regional banks are going to be something to watch, and the data that we get from them, and the ripple effect for small businesses all over America.
Matt Argersinger: Yeah, that's right. I will start with the regional banks because I think next week, when I think of banks like M&T or Regions Financial, are going to report next week. These are some of the larger regional banks. That's where a lot of the commercial real estate lending, the C&I lending is happening, much so more concentrated than in the larger banks. I'm starting there, but then as I've talked about in the past, I think real estate investment trusts are, I'm really paying attention to those. Because if there's any kind of trauma that's happening in the credit markets, it seems like it's already happening in the real estate sector. Because you've seen rates over the past months, especially since the SVB fallout. They've fallen dramatically more than the rest of the market. I'm just very curious to see what some of those managers are saying about the environment.
Chris Hill: That's the second time he's used the word trauma. [laughs] I'm starting to get nervous over here. What do you want?
Jason Moser: Well, a couple of things: Trauma -- that's a bold word. But a couple of things. I'm looking at revenue growth. We saw Walmart recently with their Investor Day presentation. They're calling for tepid revenue growth here over the next five years. They're not really focused on revenue growth as much as they are focused on bringing things down to the bottom line. They expect earnings growth to well outpace revenue growth. I think in line with that too, well, let's pay attention to margins. Particularly when we talk about retail, we talked about consumer discretionary, let's see what kind of pricing these companies continue to maintain. I think margins will tell us a lot.
Chris Hill: Well, and particularly when you think about not just in the last quarter, but really over the last six to 12 months, so much of what we've heard from retailers, major ones like Walmart, specialty retailers like Home Depot and Lowe's, so much of their story over the past 6-12 months has not been about traffic. It's been about the price increases in the stores. If we're now in this environment where prices are coming down, you can look back and say, well it's fine that Home Depot and Lowe's, these major retailers, they're not getting people through the door because the people who are coming in are spending more money. Well, if prices are coming down, you're going to have to get more people in the door.
Jason Moser: I mean, we'd love small caps to those growth ideas, but it really does. Times like these really do shine a light on the competitive advantage that scale gives you. When you look at those Walmarts, and those Targets, and Home Depots of the world, they may not be the most exciting ideas, but I think we're going to see over the course of the next several years here. These are going to be businesses that really prosper because they are able to bring so many of those efficiencies down the bottom line.
Chris Hill: After the break, we've got a new brand to consider. It's not as historically bad as trunk, but the early reviews are not good. Details coming up so stay right here. You're listening to Motley Fool Money.
Welcome back to Motley Fool Money. Chris Hill here in studio with Jason Moser and Matt Argersinger. Shares of Boeing fell 6% on Friday after the company warned it will have to reduce deliveries of its 737 MAX airplane. Boeing has run into a production problem with one of its parts suppliers, 737 MAX is Boeing's most popular model of aircraft, particularly with customers like Southwest Airlines and American Airlines, Matt.
Matt Argersinger: It's big deal, and you mentioned Boeing's down 6% while Spirit AeroSystems, which is the supplier in question, they're down about 20% last I checked. They're facing issues. This is a big deal. You mentioned the 737 MAX being their most popular model. In fact, in 2022, the 737 overall series accounted for 80% of Boeing's deliveries and in fact, last quarter you mentioned Southwest and American, but they got an order from United Airlines for 137 MAX aircrafts. They just gotten their supply chain situation figured out. We've see a trauma again, the trauma in the supply chain side, I should stop using it, but that's been a big deal for them. They finally got that sorted out and then they run into this issue. It just shows you again how sensitive in a way that a lot of these supplier numbers can be if you have one and especially on an aircraft that has a million parts. One or two parts aren't available or aren't up to quality. It can cause a big chain reaction throughout the supply system.
Chris Hill: On Thursday, Amazon CEO Andy Jassy published his second annual letter to shareholders. In the letter, Jassy addressed the recent challenges facing the company, the multiple rounds of layoffs at Amazon and ultimately his confidence that these decisions will pay off down the line. Jason, let me start with you. What stood out in Jassy's letter?
Jason Moser: Well, before we get into this, I need to reiterate. If you listened to Andy Jassy speak, close your eyes and listen to him. That guy sounds like you would think you're listening to Jeff Bezos and I'm sure that's probably a product of them working for so long together.
Chris Hill: You don't think Bezos cloned himself [laughs] and just kept a version of himself?
Jason Moser: If you shut your eyes and listen to him, you would think that could be a possibility. It's bizarre but getting to your question, Chris, I think we're going to see a focus on cost controls start to really benefit this company over the next couple of years in particular, will be fulfillment. Something they noted and he noted in the letter, they do continue to deal with the rising cost of this fulfillment network, ultimately getting products from the store to the consumer. They noted they had a double the fulfillment center footprint they'd built over the past 25 years. They basically had to double that within two years. There was a lot that went into doing that and I think what we're going to see over the next several years is a focus on really maximizing the efficiencies. There's probably a lot of waste that went into that and they built out probably more and more capacity than they ultimately need it. If you look at fulfillment, fulfillment represented 16.8% of total operating expenses in 2022. You go back to 2017, that number was just 14.5%. I think they really want to focus on getting back to efficiency. I know we always talk about AWS and that really is the big moneymaker for this business but let's not forget its roots. This is retail. It's about getting things from point A to point B as quickly as possible. They can do it, and they do it very well, but I think they're really going to focus on that cost side.
Chris Hill: For me, the latter always love reading it, but there's a segment in there about the Amazon grocery business, which stood out to me. I'll just read a few sentences here because I think they're impactful. Jassy says, "While we're pleased with the size and growth of our grocery business, we aspire to serve more of our customers grocery needs than we do today. To do so, we need a broader physical store footprint. Given that most of the grocery shopping still happens in physical venues." He goes on to say, "We're working hard to identify and build the right mass grocery format for Amazon scale, grocery is a big growth opportunity for Amazon." This goes against the conclusion I thought Amazon was going to get to. They've experimented with Amazon Fresh, the Go concept, other concepts that they've been running Whole Foods for several years. I really thought they were going to get to the point where they didn't want to push harder into grocery. They thought it's a low-margin business. It's tough to figure out. It might not fit our overall model. But now they're going right at it and I think that stands out to me and my colleague in Real Estate Winners, Anthony, should point out, there are a lot of real estate investment trusts like KIMCO and Regency that are grocery anchored shopping centers. They own hundreds of them around the country. This must be music to their ears that Amazon is going to go more full throttle into this.
Jason Moser: You know what, I think? I think they have a little Walmart entity. I think they have a little Walmart.
Chris Hill: Amazon has Walmart.
Jason Moser: For the last 10 years that conversation has been going the other way. I think they actually have a little Walmart and they see Walmart status as the leading grocer domestically. They realize, everybody needs grocery. It's the ultimate repeat purchase. They see the business that Walmart has been able to build over the years with that, the benefits that come from that, the repeat traffic. I think they got a little Walmart.
Chris Hill: What's that GIF where the person's mind is blowing up.
Matt Argersinger: That's what I'm thinking of right now.
Chris Hill: Despite all of its success at producing award-winning television shows, HBO has also had its share of branding problems. Just a few years ago, the company caused confusion among subscribers by having not one but three separate HBO branded services. That was HBO, HBO GO, and HBO NOW, they were eventually folded into HBO Max, which seemed to be just fine with everyone except the parent company because this week, Warner Brothers Discovery unveiled a plan to reboot the streaming service with a new name, Max. It will feature the content from HBO as well as some content from the Discovery+ streaming service. The reaction from investors, shares of Warner Brothers Discovery down nearly 8% this week. What are they doing?
Matt Argersinger: Why is there? I'm going to actually leave that question to J Mo because I think he's got some strong opinions about the brand itself. I just wish they'd stick to HBO. I'll just leave it at that, but I get the combination makes sense. They're going to have a wider range of content available to subscribers. That's how you keep churn down. You can appeal to different kinds of audiences, especially kids. But that my one area concern is that Discovery CEO David Zaslav prediction for 2025, is 130 million subscribers, one billion in profit. If I've learned anything about the streaming business, is you don't make predictions like that in the streaming business.
Chris Hill: That's part of what's confusing about this. He's done a real upfront job of trying to control costs. A rebranding like this is going to cost a lot of money.
Jason Moser: Now it feels like a terrible unforced error. Taking such a legacy brand HBO where you just associate so much great content, whether you're changing your name to like, this might as well just be Disney movie about some dog named Max. [laughs] That's what comes to my mind is like some Disney movie. It just feels like an unforced error.
Chris Hill: Drop us an email podcasts@fool.com. We would like your suggestion for a really a better name. We're going to try and help out our friends at Warner Brothers Discovery podcasts@fool.com. Jason Moser, Matt Argersinger, guys, we'll see you a little bit later in the show. Up next, we're going to shift from streaming to movie theaters with senior analysts, Tim Beyers. Stay right here. You're listening to Motley Fool Money.
Welcome back to Motley Fool Money. I'm Chris Hill. Tim Beyers is a senior analysts covering media entertainment and a host of other industries for The Motley Fool, he joins me now from Colorado. Tim, thanks for being here.
Tim Beyers: Thanks for having me.
Chris Hill: I want to start with, to date the biggest movie of the year. The animated film, Super Mario Brothers, in a huge opening weekend. Opening in general, the first five days this is a movie that did over $200 million at the box office here in the US add in another 170 million internationally. Again, Tim, it's an animated movie, which means that a lot of these people seeing this movie in theater are children, and those tickets cost less. As someone who doesn't really have a stake in this, either as a fan who's gone to see the film or anything, just from a business standpoint, this strikes me as pretty impressive. When you hear numbers like that, what goes through your mind as an analyst?
Tim Beyers: I better be looking at the experiences that these movie theaters are executing here because this is very interesting, but we had the narrative of, well, we can just deliver a movie via streaming service and we're good. Clearly, there is something to be said for some of these movies coming together as a community and watching these together and Mario Brothers seems like a communal experience because even old guys like me would remember the [inaudible] That's a terrible rendition of it, Chris. Listener, my apologies. However, apology not really an apology because we all know that tune, and so there's something to that. There's something community-oriented about this that we missed and so as an analyst, I'm very curious to see is there an emerging theme around community in movie theaters and in some of these films that we're going to see funded like tapping into the experiences either that we had as kids or things that are very interesting to us. I think it's fascinating that movies are earning at this level post-pandemic. It is. I don't want to say we're back to normal, Chris, because I don't think there is such a thing as back-to-normal, having said that, to see movies rolling up big numbers like this again and a hit rolling up big numbers like this is a bit reassuring.
Chris Hill: I agree with that and you're terrible rendition of the song aside, you did touch on something that I think is part of the business story here, which is that this is a movie based on a game that has been around for decades and there are children who play it now, but they are also the children of parents who played it when they were children. To a lesser extent in terms of the bucks office, we saw something similar play out with the dungeons and dragons movie, which I actually did see, not because I'm a D&D player. One of my kids is she wanted to go see it as someone who never played the game. It was an entertaining movie and that plus the Super Mario Brothers has me wondering how much more board game and video game IP is going to get levered up in the coming months and years as the holders of these various intellectual properties are looking to monetize them, either in the form of movies in the theater or streaming TV series.
Tim Beyers: Both. If Hollywood is known for anything, Chris, it is imitation. Now that we've seen this, expect that there will be calls to give us your scripts for the games that you think you can build a story around. What is the franchise that we can build around? Name your game. I'll name one that I would expect to be coming at some point. Magic The Gathering, The Card Game that's got to be common, like Chris, that has to be coming at some point.
Chris Hill: Probably and that's another game that's been around for decades.
Tim Beyers: It has a real community around it. It has real stickiness to it. Yes, I expect, just given the nature of Hollywood, you're going to see more funding into franchises that are built around board games, built around video games, anything to build IP that is repeatable IP, because in the movie business overall, you really want IP that has a long shelf life because you're going to have high fixed costs initially to initially build out some IP, but then once you've built that IP and you've built a brand around it, and then you can start repeating it into television series, into even podcast series, or into books, at the movie theater streaming series. It's a type of business that does best when it's built around a franchise that has some known return characteristics to it. This is why Disney has been such a great business for so long. I think seeking the next great set of franchises around gaming is absolutely going to be a thing, Chris.
Chris Hill: Later this month of the annual CinemaCon event is going to be taking place. Back in the day, this was called Show West. This is essentially the movie theater owners getting together and as they get together so are the studios. I'm expecting if you're a fan of movies, we're going to get some bonus content appearing on social media and on YouTube as they start to preview what's coming later this summer and later this year. Was the funeral for movie theaters premature? Because it seemed like a few years ago the funeral was for all movie theaters.
Tim Beyers: Yeah, and I do wonder. Now, to be fair, I haven't been to the theater again recently, but I will say I was enjoying the way the theater was moving toward more of the Alamo Drafthouse model and if you've never been to the Alamo Drafthouse, it is a regional theater chain that's privately held, in which the experience of going to the movie is part of the draw. You go and you can get drinks, you have your food delivered to you. It's like going to the drive inn except you're going to the theater and the food you can order during the movie it's delivered right to you. It doesn't interrupt the experience. It's actually pretty amazing. The experience of going to the theater is different. I don't just go for the movie, I go for the whole experience and so I think that is going to become a bigger part of that business, but it was way too early to write this off. Now, having said that, we didn't need some blockbusters. If you go back to 2022, it is probably not hyperbole, Chris, to say that Tom Cruise and Top Gun: Maverick did some awfully good things for theater operators. That was a very big deal. Just to put it in perspective here, this is from the numbers.com Top Gun: Maverick, 2022 gross in domestic.
This is just US $718.7 million. Number 2 Black Panther Wakanda Forever at 438.3 million. That is a huge difference. Now, having said all that, the numbers has for in 2022, you're talking about $14.5 billion worth of ticket sales. The projection for 2023 is 8.5 billion. Let's not say that everything is rosy, Chris, but let's say maybe on the right track and there's maybe a bit a second wind for movie theaters that gives them a chance to build an experience that people want to keep coming back to. If the franchises show up to play in these theaters, there might be something there.
Chris Hill: This is also an example of in the case of Paramount, a company using a blockbuster like Top Gun: Maverick to get people into their streaming service. But as more people get into more streaming services, we were talking about this during the break, there's this narrative starting to build a little bit about subscription fatigue around how many different streaming services do you need? Do you want? Who should be worried about this? Because I'm not at subscription fatigue just yet, but I understand the case for it. I'm wondering who should be worried? Netflix should be worried, Disney with Disney Plus, Apple.
Tim Beyers: I think those that don't have an inherent bundle advantage need to be a little bit worried. What I mean by that is Disney Plus gets protection from Hulu Plus, and most importantly, both of us being sports ball fans here, Chris, ESPN Plus. Disney Plus gets cover, in my opinion from ESPN Plus. For those that are a little bit outside of the protection of a bundle, that is potentially problematic. I hate that I'm going to say this because the streaming service that I tend to depend on every weekend for Premier League soccer, Peacock, is a little bit outside of that bundle advantage doesn't really have it unless you're part of the Comcast bundle. There's real fatigue around that very expensive Comcast Cable Bundle. Should Netflix be worried? Yes, a little bit. But I think that Netflix is protected by franchises and by its ability to keep being a tastemaker. I think that protects them a little bit. Apple is getting a little bit of that tastemaker advantage here. But anything that is independent, so say like a Paramount Plus, what are they going to do around CBS and how is CBS going to make that work in the Viacom bundle? It seems like there ought to be something there. There's a lot to like around Paramount Plus, but anything that doesn't have the attachment to an attractive bundle, I think is at a little bit risk. Yeah, we need to be cautious, we need to watch it. Disney Plus, if things get a little long in the tooth, be careful around that. But I liked that they get protected by ESPN Plus.
Chris Hill: Because as the subscription fatigue narrative builds, even if it is building slowly and quietly, I'm hearing less about cutting the cord and I know that cord-cutting still goes on.
Tim Beyers: Yes.
Chris Hill: I think if you're in the cable business, you're probably happy to see, as we saw earlier this year, Alphabet coming out and saying, oh, the subscription for YouTube TV is going from $65 a month to $73 a month.
Tim Beyers: You know what, here's what's going to be really interesting, I'm glad you mentioned YouTube TV because that's a company that has an uncommon amount of power right now and I think it's going to be really interesting. Can you imagine YouTube TV saying, hey, you know what? We have a whole bunch of ecosystem partners. We're going to let you bring in your Paramount Plus. We're going to let you bring in your Peacock. We're going to let you bring in, how about this? We're going to let you bring in your Netflix subscription. This is something that Amazon has been doing by the way. I'm not sure that there are a lot of people that trust Amazon to aggregate all of their streaming subscriptions. I think it's not to say that it's a bad idea that Amazon is doing this. I just don't think people trust Amazon and say like, I'm just going to wrap everything under Prime. I don't think people are doing that, but YouTube TV is a brand that can do essentially what Amazon Prime is trying to do to become a source of aggregation for all of your subscriptions and you just pay one bill. Honest to goodness, Chris, I think that is going to be really interesting. I expect YouTube TV to make some gains over the next two years.
Chris Hill: Tim Beyers covers media, entertainment, and a bunch of other industries for The Motley Fool. Tim, always great talking to you. Thanks for being here.
Tim Beyers: Thanks, Chris.
Chris Hill: Up next, Matt Argersinger and Jason Moser are coming back with a couple of stocks on their radar, so stay right here. You're listening to Motley Fool Money.
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 in studio once again with Jason Moser and Matt Argersinger. You can hear Motley Fool Money every weekend on radio stations across America. You can also listen seven days a week on your favorite podcast app. If you're looking for even more stock talk, checkout, our premium podcast, Stock Advisor Roundtable. If you are a member of any Motley Fool premium service, you can listen to the Stock Advisor Roundtable podcast available only on Spotify. The latest episode just dropped and if you've already connected your Motley Fool premium account to a Spotify account, you can start listening. If you haven't done that yet, that's easy, just go to roundtable.fool.com for how to access the show that's roundtable.fool.com. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd is going to hit you with a question. Matt Argersinger, you're up first. What are you looking at this week?
Matt Argersinger: I'm going with T. Rowe Price, ticker TROW. One of the great brands in money management going back, 90 years or so, more than $1.3 trillion in asset management as of March 31. Track record is amazing and the vast majority of their funds outperform their benchmarks over long periods of time, 4.4% dividend yield, which the company has increased 36 consecutive years Dan. Most of all, I think this is a bet on at least a small return to active management. I think, especially coming out this bear market that we just had that we might still be in, I feel like investors are looking for active strategies. This is a great brand and great company in the industry that I think will attract a lot of dollars.
Chris Hill: Dan, question about T. Rowe Price?
Dan Boyd: Matt you are telling me that T. Rowe Price is not just a discount broker?
Matt Argersinger: They are not Dan, they're much more a money management firm that owns dozens of funds, ETFs, wealth management services, etc.
Chris Hill: I didn't realize until recently that it was the founder's name. I just assumed it was a mash-up like JPMorgan Chase and it's like this company merges with that one. I didn't realize Thomas Rowe Price was the founder.
Matt Argersinger: All the way back to 1937, I believe.
Chris Hill: Jason Moser, what are you looking at?
Jason Moser: Yeah. Well, you remember last year I got back through spring break and I had my Uber awakening. We ubered everywhere around France and it was just invaluable and for me it immediately passed David Gardner snap test. This week we just got back from spring break down to the beach in North Carolina and I had another awakening here. I don't know why it took me so long, but Airbnb. Ticker ABNB. We grabbed an Airbnb down on the beach, North Carolina, wonderful week. It's more on my radar than ever before and I really believe this is a business that also passes that snap test. If it went away, it would impact the world at this point because it's not just consumers like us that benefit from it, but these are just small businesses everywhere now. People investing in real estate and utilizing that model to make a little extra money. You look at the fourth quarter of last year and nights and experiences booked increased 20%. They had their highest number of active bookers ever for the quarter. If you look at this business compared to 2019 versus today, their headcount is actually down 5% while revenue was up 75%. They really are continuing to grow and they're getting their sea legs, so to speak, as a publicly traded company. Again, you've got the benefit here for guests, you'd get the benefit for owners. Creating new business opportunities. We know the opportunity in travel. It is massive and it's resilient. Still a young business, with plenty of kinks to work out, but they're on their way and I really think this is one to keep on the radar.
Chris Hill: Dan question about Airbnb?
Dan Boyd: Jason, how worried are you about the laws that could change around Airbnb short-term rentals in the future?
Jason Moser: Well, they think it's a bigger concern before than it is now. I think what we're seeing much as like with healthcare and things like telemedicine. Once it hits this mass acceptance, we do see laws, regulations start to adjust. For me, I think that was a bigger risk in the past than it is something going forward.
Chris Hill: Sounds like Dan might be proposing some legislation just to see where this goes.
Jason Moser: Either that or starting a little small Airbnb business, perhaps.
Chris Hill: Dan, you got a stock you want to add to your watchlist?
Dan Boyd: I got to tell you, I think I'm with Jason on this one, the global impact of Airbnb cannot be downplayed. While T. Rowe Price, as Matt said, is a very staunch and long-term company here. If T. Rowe Price disappeared tomorrow, I don't think I would be scrambling to change vacation plans or anything. Do you know what I mean? But I think Airbnb is this part of the conversation for everybody these days.
Matt Argersinger: Tough but fair Dan. Tough but fair.
Chris Hill: Matt Argersinger and Jason Moser, guys, thanks for being here.
Matt Argersinger: Thanks, Chris.
Chris Hill: That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening. We'll see you next time.
SVB Financial provides credit and banking services to The Motley Fool. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Chris Hill has positions in Airbnb, Amazon.com, Home Depot, JPMorgan Chase, Lowe's Companies, Target, and Walt Disney. Dan Boyd has positions in Amazon.com and Walt Disney. Jason Moser has positions in Amazon.com, Home Depot, and Walt Disney. Matthew Argersinger has positions in Airbnb, Amazon.com, Home Depot, Netflix, Regions Financial, T. Rowe Price Group, and Walt Disney and has the following options: short May 2023 $100 puts on Walt Disney. Tim Beyers has positions in Amazon.com, Netflix, Walt Disney, and Warner Bros. Discovery. The Motley Fool has positions in and recommends Airbnb, Amazon.com, Home Depot, JPMorgan Chase, Netflix, SVB Financial, Spotify Technology, Target, Walmart, Walt Disney, and Warner Bros. Discovery. The Motley Fool recommends Comcast, Lowe's Companies, Regions Financial, Southwest Airlines, and T. Rowe Price Group and recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.
