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Activist Investors Are Acting Up

Motley Fool - Wed Jan 17, 12:36PM CST

In this podcast, Motley Fool host Dylan Lewis and analysts Ron Gross and Emily Flippen discuss:

  • The latest inflation numbers and why we shouldn't bank on rate cuts yet.
  • Activist investor activity at Twilio and Match Group, and potential plans to take Docusign private.
  • Big bank updates, a surprising pop from WD-40, and things to watch heading into earnings season.
  • Two stocks worth watching: Despegar and On Holding.

Documentarian Chris Temple talks about his new movie, This is Not Financial Advice and how parasocial relationships are impacting what people do with their money and the causes of growing financial nihilism among younger Americans.

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 January 12, 2024.

Dylan Lewis: Grab your popcorn. We've got three different pandemic darlings in the throes of corporate drama. Motley Fool Money starts now.

It's the Motley Fool Money radio show. I'm Dylan Lewis, joining me in the studio. Motley fool Senior Analysts Emily Flippen and Ron Gross. Great to have you both here. How are you doing?

Emily Flippen: Hey.

Dylan Lewis: We've got the latest updates from the big banks, a look at the forces affecting what younger Americans are doing with their money and of course, we've got stocks on our radar. But Ron, we're going to kick things off looking at the big picture and the big macro fresh batch of inflation data out. What do we got?

Ron Gross: Always love a fresh [laughs] batch of data.

Dylan Lewis: You can smell it. Right out of the idle

Ron Gross: It's slow in the morning. It's actually a little bit of a mixed message between Thursday's consumer focused consumer price index and Friday's wholesale based producer price index. So let's hit consumer first. That came in a bit hot, a bit higher, increasing 0.3% in December and 3.4% a year ago. For context, the annual CPI again in December 2022 was about 6.4%. So we've come a long way despite the fact that this report is a little bit hotter than expected. Housing and rental costs seem to be the culprit here, rising a 0.05% for the month, accounting for half of the core CPI increase. So as most people know out there, housing market remains pretty strong. It's hard to rent an apartment, or buy a house. Now if we turn to the PPI, the wholesale number, those prices unexpectedly declined in December. The opposite of what happened with the consumer number and that index fail 0.1%. So we've got a little bit of a mixed message, but PPI, the wholesale number, is generally considered to be a better leading indicator. So that's where the markets, that's where the traders are likely to be focused over the CPI. We've got a strong job market. Unemployment remains under 4%. Recent jobless claims are unchanged. So the question is this oil boils down Dylan into the question. What does this mean for future interest rate cuts. Future traders still assign a 69% probability that the Fed will start cutting interest rates in March. I think, that that is quite aggressive. I don't think that's going to happen. It probably will now that I said that and you'll see [laughs] what I know. But I think where we're looking at the second half of the year, June or later March, just seems awfully aggressive for me. The Fed does want to make sure we don't fall into a recession, but they also have their eye continuing to be on inflation.

Dylan Lewis: So based on what you're seeing, cuts are in the future, but maybe not the near term future. Maybe we have to be a little bit patient for those cuts.

Ron Gross: I think that is fair.

Dylan Lewis: We have three stories of stocks down big from the pandemic, facing slightly different fates, but all falling into the same theme here and some heavily followed fool stocks at that. Emily, the first to focus on activist investors and there's been quite a bit of interest this week from the activists. Twilio CEO and co founder Jeff Lawson announced he was stepping down this week from the executive chair in his board position, owing largely to pressure from activist and investors that have stakes in the business.

Emily Flippen: Twilio, such an interesting case because the business is sound in terms of demand and servicing for its products. It's had its up and downs, but as we've seen over the past year, what Lawson and Twilio's management team has failed to do, is really get costs under control. So coming out of the pandemic when he's seen incredible growth really sky high valuations for Twilio that have since come down to Earth, it's really ripe for activists to come in and say, hey, we need to change here. An activist defense, Twilio has had the better part of the last year to make those changes. To get rid of underperforming segments, to decrease their cost, improve profitability and while they've made strides in the area, it has been slow going and many investors and shareholders have lost out, on a lot of the potential that I think Twilio has moving forward. So if you're an activist investor, you're looking at this company and you're seeing the turnaround that's just waiting to happen. So it's not overly surprising to see loss and step down, especially with all the activists interest disheartening whenever you have not just a CEO but a co founder or founder, in this case somebody who has fearlessly led the company through so many different changes choosing to leave. I'm hopeful that the new management team will be able to accelerate the pace of change that Twilio has already set up. The business is trading at record low valuation, so it is ripe for a turnaround.

Dylan Lewis: So at issue here, as I understand it, is the company's data and applications business that is one segment in particular that Anson Funds and Leech Partners, the activists have really honed in on. Do you feel like we may be looking at a slimmer Twilio at some point down the road?

Emily Flippen: There's no doubt that Twilio has become a bloated company and these investments, these divisions, made sense again during the pandemic when they were experiencing really high levels of growth, but a lot of these segments have come back down to Earth. So what these businesses are trying to do is, look at what's the fastest growing segment which ones are producing the highest levels of profitability versus which ones are producing a lot of costs. So I think it's fair to look at the state and application segment and say, in general and in some segments within this segment itself have underperformed. What can we cut here and that includes, unfortunately, workforce as part of that to retain growth but also improve profitability.

Ron Gross: We have a similar story over at Match Group. I feel like we could probably borrow some of what we just discussed talking about Twilio. Match was a pandemic darling that has not quite found its footing yet. Elliott Management has reportedly built out a $1 billion stake in the company. We don't know exactly what the plans are, but Emily, I'm curious if you're Elliott Management looking at match right now, what do you have on your checklist for things you'd like to see as part of the plan?

Emily Flippen: As you mentioned, we don't know what their plans are, but I know what I would do if I came into the company. And I'll say this, you mentioned that match group was a pandemic darling. I'd push back on that. Match group, in my opinion, is the type of company that has benefited dramatically from the expansion of tender and yes, the pandemic people were searching for connections. And so more people were probably willing to pay for those subscriptions on tender. But what has happened is they have this aging app, right where people are increasingly using different forms of communication. It's an increasingly older demographic on tender, so they're having to make up for a rate of slowing growth and what is their largest revenue driver for the business? So what I imagine Elliott is doing is coming in and looking at the company and saying, what can we do to reinvigorate tender? And what's interesting about the management team that Match has had and granted, they did not have a CEO of the tender, of the tender brand up until very recently, so I'm sure bringing in some actual management for that app is very critical.

But what I imagine they're doing is looking at the strategy match has taken over the past year and evaluating whether or not that's been successful. And I'd actually venture to say that I think it has been successful and if I'm Elliott, I'm almost looking at match, it's incredibly low valuations low as it's been in a long time. And I'm just saying, I'm here for the ride. Come in. Let's just keep doing what you're doing and what have they been doing so what is that change? They're trying to better monetize the users that do pay for tender. So they've had declining rate of paying users, and instead of trying to lower prices, attract more paying users, they've actually raised prices. That has accelerated the decline of paying users, but it's actually improved monetization. So this isn't a company that has seen a declining top line. They're not losing revenue, they're losing payers, but average revenue per payer has continued to increase. I actually think that's the right strategy, especially as they increase monetization for more popular apps or apps that are growing faster like hinge. So if I'm Elliott, I'm looking at this and I'm like, just keep at it. Let's keep that change, maybe accelerate the pace of change but let's just keep going here.

Dylan Lewis: Ron, you have experience in the activist investor world with these stories and just generally, when you know that a company is taking a very hard look at a business, what do you think some of the conversations might be?

Ron Gross: Well, Paul Singer is a legend in the activist world over at Elliott and he's done AT and T, Paypal, Juniper, Samsung. He's got a large stake right now in sales force along with Starboard Value. He's done many things over the year including recently delving into private equity more and more. In general I like to see when activists are in this. Listen, we're all capitalists. I'm not naive, I get it. We want stocks to go up, we want to make money. I prefer when activists are in it for the benefit of all shareholders, to improve a company for the long term. Meaning they will stick around if they have board seats. They will stay on the board for at least, many years to come. They will continue to support the company. They will give guidance where needed. Many times, boards of directors need a little kick in the pants to make tough decisions. So those are the activists that I think are the most effective and that are more foolish, if you will versus those that just want to get us pop in the stock and are happy to flip. So I think Singer at over at Elliott does a pretty good job there.

Dylan Lewis: Before we go to break, we've got one more story of corporate intrigue. Shares of DocuSign up 10% after a report that the E Signature company has bids to take it private. Emily, it has been a tough two years to be a DocuSign shareholder. I know because it's sitting in my portfolio, I am a [laughs] shareholder and I know exactly what those declines feel like. It seems like the story for this business has shifted pretty dramatically from being a growth story to being a more of a cash flow story and a profitability story. Is that why we're starting to see some interest in maybe taking it private.

Emily Flippen: I think there's a couple of things that DocuSign shareholders can take from this. The first one being that we don't know. These are still rumors, so we don't know what the price of any potential deal could be. But the fact that the stock is up on this news says to the market, hey, we assume the price is going to be higher than we're DocuSign is trading now. So as you mentioned, if you're a DocuSign shareholder, hopefully you know this is a business that has consistently produced a fair amount of cash. So it's not like Twilio in the sense that it has not been burning hundreds of millions of dollars and is trying to keep itself afloat. But you're right that the growth story has changed and that's not necessarily what every investor signed up for when they bought shares of DocuSign, which have declined pretty substantially from its pandemic peaks. But the other thing you take from this is the fact that there are two private equity firms reportedly fighting over DocuSign, which is really interesting because if you actually look at private equity activity over the course of 2023, it was pretty low in comparison to what it has been in the past. As you can assume, largely result of rising interest rates, higher inflation, more concerned about the economy. But now, people are saying, hey, look, we're having this soft landing. This thing nobody thought possible. Maybe it's happening right now, maybe interest rates to Ron's earlier point, maybe they'll come down at some point over the course of the year. I don't know if I agree with that, but I do think it's telling that there's a ton of private equity cash sitting on the sidelines. It's actually up pretty substantially in comparison to where it was even back in 2018. So there's a lot of money to be had for private equity firms that are looking to make a buck and with a business like Docusign, which does produce a fair amount of cash flow, has a lot of room for improvement. It makes sense that there'd be two companies fighting over it.

Dylan Lewis: Coming up after the break, we've got a rundown on earnings from the big banks. Stay right here. This is Motley Fool Money.

Welcome back to Motley Fool Money. I'm Dylan Lewis joined in the studio by Emily Flippen and Ron Gross. Earning season is rolling along. We've got quarterly updates from the big banks, JP Morgan City, Bank of America, and Wells Fargo all reporting this week. Ron, looking at the banks as a whole, what stood out to you?

Ron Gross: A few themes. There was certainly a wide disparity in net interest income results across the board. There were fees related to the 2023 regional banking crisis. Not a surprise. There all the banks continued to increase loan loss reserves to protect against future defaults and there was a fair amount of expense cutting and layoffs, mostly at the City. But to hit the highlights of East, I guess JP Morgan made the most news on Friday because it posted its most profitable year ever and that's despite a 15% decline in quarterly earnings which was caused by those 2.9 billion dollars in fees relating to the banking crisis. But they had strength and net interest income to the tune of $24 billion that's really strong and it's really strong relative to the other players here and that's a big part of the story and they also had the inclusion of First Republic, which they acquired Bank of America. Earnings were down more than 50% for the quarter, again, 2.1 billion dollars of charges for the banking crisis. A lot of other one-time charges. Interestingly net interest income, easy for me to say, fail 5% in contrast to JP. Then you go to Citibank, plans to cut 22,000 jobs to get its expense structure right. Revenue was down 3% We got to keep an eye on City and then we turn to Wells Fargo. Earnings were actually up 9% for the quarter thanks to cost cuts, net interest income was down again. In contrast to JP Morgan's, really strong results and guidance was weak for Wells Fargo. So a bit of a mixed bag with JP Morgan I think standing out.

Dylan Lewis: People are used to hearing us do the bank earnings rundown. Ron, we have a surprise name for our earnings discussion today and that's WD 40 shares up 13% after the company reported first-quarter results and in production, we were talking a little bit about this company and whether it was going to make the cut for the show. Then we saw the earnings press release Steve Brass, the company's CEO. We have started fiscal 2024, firing on all cylinders.

Ron Gross: You think I should sue?

Dylan Lewis: Oh, no. I mean, I think it's an homage. I think you have to take, you know, the props that you're getting there. This is a company, we don't discuss a ton, but it was a market beater last year, up 50% nearly doubling the S&P 500 returns. Does this look like an outperformer going forward?

Ron Gross: Well, this quarter's results were good, but the stock really popped 13, 15% something like that. They weren't that good and the stocks not that cheap, so it was pretty surprising. Now they do have a monopoly in oil and a can.

Dylan Lewis: Yeah but in every household.

Ron Gross: Which is interesting, but there's a lot of alternatives that one could do. It's mostly a brand play here. Oil and a can is not proprietary in that sense, but the quarter was good. Sales were up 12% all regions of the world produced strong results. Most of the growth was due to sales volume rather than price increases. Gross margins really up 53.8% from 51.4% net income up 25%. They did not raise guidance. Another reason I was surprised that the stock really popped. Shares now up trading 50 times, 51 times forward guidance, I don't know. The company produces 65 to $70 million of net income a year.

Dylan Lewis: It sounds like it's a little rich.

Ron Gross: I'd be a little bit careful here.

Dylan Lewis: We'll get off the oil in a can beat and take a broader look at earnings. Banks get things rolling, but we're going to be seeing much more results in late January and in early February. Emily, when we start really getting into the flood of earnings and we see more companies report, what's something you're going to be paying attention to?

Emily Flippen: Well, mine's a company in particular, and thinking about late January, my eyes are going to be on Tesla because we've seen a lot of, there's always a lot of news about Tesla, always a lot of the news around Musk. But one of the more interesting stories that I saw coming out of 2023 was that very recently BYD, which is a Chinese-based competitor who got their start in battery development, who now is producing electric vehicles for worldwide consumption, recently overtook Tesla in terms of the number of cars that they're shipping and delivering. They're larger than Tesla now in terms of deliveries. That's really notable because Tesla has had that spot basically since its inception BYD is able to produce and sell its cars at lower costs than Tesla. Tesla continues to cut costs. Some investors like it, some don't, but the idea is to make it more accessible. I'm really interested to see if this earning season management provides any commentary around how they're perceiving, not just competition within China, but globally, because that could potentially eat into deliveries.

Dylan Lewis: That BYD story might be a little surprising kind of a sneaky one for people that have been following EVs in the US because we don't see any BYD vehicles on the roads.

Emily Flippen: Here in the US, we have really high tariffs on Chinese-made vehicles. Which is part of the reason why you don't see them on the roads is because the cost of getting them here is more expensive than what they make up for in terms of their lower price. But internationally, there are a lot cheaper and there are ways to get around tariffs as well. I wouldn't be surprised if you do continue to see a rise in these vehicles and not that Tesla needs to be the only electric vehicle maker, but it does need to have a plan for how it's going to handle competition.

Dylan Lewis: Ron, what about you as earnings season ramps up, what are you looking at?

Ron Gross: Yeah, I took a more general take. In general, the market's not so cheap. I mean, it's not screamingly expensive, but it's not cheap either. We really do need some decent earnings growth to feel good about current valuations and for those earnings to support current valuations. I worry a bit about the consumer being overextended as they continue to spend, but at the expense of lower savings accounts, higher credit card balances, the key to everything is really the consumer interest rates in the consumer at the end of the day. Let's watch what the consumer does, how earnings come in, and maybe even more importantly, what future guidance looks like. Management is notorious for not being necessarily great at future guidance, but certainly, they have better insights into their business than any of us. I'm very curious to see what they say about the rest of this year. If we're lucky to get some insight into next year, probably not yet, it's a little early for that, but certainly for the rest of this year.

Dylan Lewis: Is that then a focus on retail e-commerce and maybe some of the signs we're getting from the credit card companies?

Ron Gross: For sure all of those things on the retail side, definitely. I want to see how everyone is inventoried. If that shapes up, Target is notoriously been improperly inventoried for quite some time. Their merchandise mix was incorrect. I want to see if companies are starting to get that right and how much promotional activity there has been, is discounting necessary to get things out the door?

Dylan Lewis: Got you. I think there's a couple of other stories we can watch. We've been talking about the by now pay later movement. Interested to see how that manifests and what that does for that stretched consumer as you've been talking about. But we'll see as those results come in. Emily Flippen, Ron Gross. We're going to catch you guys a little bit later in the show up next we've got the inside scoop on the documentary. This is not financial advice and how people are getting their financial news. Stay right here, you're listening to Motley Fool Money.

I met a gin-soaked, bar-room queen in Memphis. She tried to take me upstairs for a ride.

Dylan Lewis: Welcome back to Motley Fool Money. I'm Dylan Lewis. We're past the fever pitch of meme stocks and meme coins from the past couple of years, but still very much sorting through the whirlwind and what it is meant to our financial system. One person that's looking to make sense of it is documentarian Chris Temple. His new film, This Is Not Financial Advice, profiles one Dogecoin millionaire and the growing shift to get rich quick. Motley Fool Money's Mary Long caught up with Temple to dig into how parasocial relationships are impacting what people do with their money, the difference between looking for a financial ladder and a financial trampoline, and the causes of growing financial nihilism among younger Americans.

Mary Long: So the film most closely follows the story of Glauber Contesotto, but he goes by another alias online, who is Pro the Doge? The man, the myth, the legend, the person.

Chris Temple: So Pro the Doge has nicknamed himself the Dogecoin millionaire. Because in early 2021 he made a really big bet of selling all his stocks, maxing out his credit cards, taking out cash advances, and throwing it all into Dogecoin. We began following this story as he was making this bet and going through this moment in his life, about two months later, he turns it into $1 million. Out of nowhere this thing starts skyrocketing. He refuses to sell. The next thing you know, a month later, it's $2 million and now he feels like a genius, that it was $2 million at one told him to sell it one and then a couple months later he hits $3 million, and he feels on top of the world. That's where his brand of the Dogecoin millionaire came from. He started doing a lot of podcasts and was featured on the front page of The New York Times, and I think really showed a potentially a dangerous story around risk-taking until you watch the second half of the film.

Chris Temple: Pro is such a character, and he's very affable is the word of The New York Times. Uses to describe him, and that's certainly true. He's very lovable too throughout the whole film. He loves celery juice and that feels like such an important character trait to be.

Chris Temple: I love Pro. I've spent the last three years with him really embedded into his life as we've to make this film, and that's what it takes sometimes with these documentaries to embed with your characters in that way. I understand why Pro made the decisions that he did, and I think so many of them were systemic. On one hand he's an undocumented immigrant who has had very little access to traditional financial markets, there's been a lot of frustration throughout his life of not being able to go to college, getting fired from a number of jobs because of his lack of status. For him, he felt like there wasn't a ladder to climb to the middle class. So he looked for a trampoline, and I think he isn't alone in that kind of behavior and that you've got millions of Americans who are very frustrated about wealth inequality in this country where 90% of stocks are owned by 10% of people, and I think that frustration is driving a lot of the behavior that we're seeing. It's also being coupled by low interest rates as we all know and was being coupled as well by really this lack of trust in traditional institution I think was a big element.

Mary Long: The film features a number of different characters. You have Pro and you have another character, Sinai, they both have this interest in wealth building, but they have very different approaches to that. Can you tell us a little bit about Sinai and how he views the stock market differently than say Pro.

Chris Temple: Sonai is Pro's Foil character, and the exact opposite in every way you can imagine yet still coming from the same systemic challenges. Son of Eritrean immigrants living in Long Beach in a more marginalized community that hasn't had much access to financial opportunities or financial education. His approach is really the tried and true. He tries to be as boring as possible in everything that he invests in. He tries to look as long term as possible in everything that he invests in, and avoids any emotional attachment to the things that he's participating in. They provide this really funny balance throughout the film of seeing from the same origins how their paths and approach to money differ. We hope that this film has a little bit of everything for someone to watch and understand, well, what is my own relationship to money? How do I feel about risk taking, and what decisions do I want to make?

Mary Long: I think the film asks a really important question about motivation too. Pro and Sinai have similar backgrounds, totally different approaches to wealth building. But I came to find that they're motivated actually by similar drivers. It's not just dollar signs, it's building something bigger than them, and that's really cool to watch play out too.

Chris Temple: Absolutely. I think they're both incredibly entrepreneurial and I think, again, a lot of entrepreneurs are often not looking for ladders, they're looking for trampolines, they're looking to try to build something that can be bigger than themselves and often want it overnight. I think we've seen, something that the film really explores is culturally how social media and our access to seeing people like Elon Musk or seeing wealth and comparing ourselves to others around us has affected how quickly we want to be rich, or how we feel about our own status in society at any given time. The film really talks a lot about how we need to be careful about the role that social media is playing in amplifying this get rich quick culture or making it feel like someone like Pro is out there every day getting really rich. I'll tell you a little story from set one day where Pro went to Costco to buy celery juice because he's a big celery juice fan. He bought pounds and pounds of celery to make himself. In the one hour we were at Costco Pro had made a $180,000 in Dogecoin, just passively in his investments going up. In the 1 hour we were filming. Here I am, sweating, holding a camera as a broke documentary filmmaker and it triggers your thumb up. I couldn't help, but I knew better that this was not the path to long term wealth and happiness for me. But in the moment, of course, I was going to feel that Pomo and that desire to try to get rich quick overnight. So that's why, the film I think really strikes this balance. I don't judge Pro for his decisions. I've made a lot of mistakes of myself as I've tried to be a part of these markets when it feels like the markets are going crazy and it's hard to know how to navigate them.

Mary Long: I think that slow, boring, Sinai approach is probably one that's a bit more familiar to our listeners. But the psychology of Pro, like you said, the film makes it very understandable. But still, I'm watching it, this film and I'm like, why not like cash out? What hits me is Dogecoin starts as a joke, and you've got scenes where even Pro is like saying this. It's funny, it's a bit, it's fun. But then there's also this really poignant scene near the end of the film where Pro's mom is asking him the question that I'm asking of myself all throughout the film. Why? [laughs] Pro goes because very seriously, almost exasperatedly, because Dogecoin is the future. What sparks that shift? When does Dogecoin go from being funny to being the future?

Chris Temple: Yeah. I think again it's for Pro, it was this complete absorption into the community in the world of crypto and Dogecoin. For him, all day every day the only people he's talking to are true believers. Becomes a real echo chamber of conversation and perpetuating each other's decisions. So if the people you know are also going all in believing this is going to be the future, it feels like there's momentum, and there's all momentum trading in that way. It feels like there's this energy coming toward it. The surprise thing for Pro, and I think he was smart about, was he realized that by branding himself as the Dogecoin guy, there was this really unexpected turn for him where he started being able to monetize that. A big part of why the crypto boom was happening to me throughout 2021 was the amount of ad money that was being pushed and marketing spend that was happening from crypto companies and crypto coins. A lot of it VC funded just pushing and hitting us with the word crypto over and over again. We talk about the crypto Super Bowl, where you've got Larry David telling us, don't worry, you don't even need to understand what this is, just invest in it or else you'll miss out. I think that marketing spend was all over the place throughout 2021 and 2022 and still is to be honest. For Pro when he became the Dogecoin guy, he started getting sponsorships from a Dogecoin credit card company. Other Doge related coins that were launching like BabyDoge, and Dogechain, and all these things. The next thing you know, he's making hundreds of thousands of dollars, real dollars, off the back of pushing videos, and tweets, and conversations about these coins. To me that's where there was actually a really dark underbelly to this, that the decision isn't just Pro made a bad financial decision and doing what he wants with his own money. He now has half a million followers online and he is telling other people to buy Dogecoin or to make similar bets. I think it can be very, very difficult for the average investor to understand how to navigate this new world when again, Pomo is really, really powerful.

Mary Long: A lot of the people that you follow in this film, they're the little guys. In preparing for this, I was digging around. I stumble upon this Bank of America study that found that 75% of young investors, and in this case that was people 21 and 42 believe it is impossible to achieve above average returns solely with traditional stocks and bonds. Your film obviously touches a lot on this disbelief, this nihilism in regards to traditional markets as a wealth building tool for the little guy. Based on your conversations with people while making this film, how did we get here to this period of seemingly very deep and broad nihilism?

Chris Temple: Again, a lot of it is rooted in very real struggles that especially young people are facing who have a lot of college debt, or who are unable to buy homes, or who are feeling the squeeze. In a current world where regular income has stagnated, wages have stagnated, and the people who are making money are those who already had wealth. So I think there is a lot of this frustration that I do understand and really empathize with. I was an economics major originally. That was the world that I was coming into for this film. We did hundreds of interviews throughout the process of this film. Obviously, you see a few key stories of these four regular individuals. Then we have a few great experts who provide context throughout the film. Folks like Josh Brown and Morgan Housel and others. I think the frustration is real, but I think to me again, it comes back to this conversation around how social media and the expectations of what a return is, are changing. If you're looking on your phone and you're getting ads about how you can get 1000% return, and it's don't wait, get rich overnight. All of that stuff is continuing to really embed into the brains of young people. I saw a stat recently that 79% of young people, they use TikTok and YouTube as their primary sources of financial information. You're looking then about 80% of young people are turning to social media and they're not reading Bank of America reports and they're not checking Finra's website. They are going through and learning from their friends and others. That's where to me, I think the pro story was so important of looking at the role, that sponsorship and sponsored financial education plays in really damaging the education of young people.

Dylan Lewis: Listeners you can catch This Is Not Financial Advice on Apple TV coming up after the break. Emily Flippen and Ron Gross return with a couple of stocks on their radar. 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 anything based solely on what you hear. I'm Dylan Lewis joined again by Emily Flippen and Ron Gross. The flavor might not last long, but the gum had a pretty good run after over 50 years, fruit striped gum will be discontinued by its maker, Ferrara. Ron, you put this story on my radar. Do you have fond memories of what I would call zebra stripe gum?

Ron Gross: I'm getting that feeling of salvation in the corners of my mouth now because it had such intense flavor for like two seconds and then nothing after that. But the cherry was unbelievable. It was great. I'm sorry to see it go. It's nostalgic. Don't sleep on the wet and wild melon flavor either. That was pretty good. I love all their brands. I'm a candy person rather than a chocolate person. So it's the fun dip in Gob stoppers and Juji fruits and atomic fireballs. Chuckles, I don't think we need chuckles, but pixie sticks nerds, give me all of it. Love it.

Dylan Lewis: Wow, I might have to check for cavities over at the Gross household. Emily, do you have any fond memories of the zebra stripe gum?

Emily Flippen: Are you kidding me? I was more upset when Taco Bell canceled Mexican pizza for that period there. Heck. I was more upset when I stabbed my toe it this morning. I have never heard of this product before. Although I will say learning that this company does indeed own a fair number of brands, I am just so thankful it was not fun dip, they're canceling because a world without Fun Dip is not one I want to live in.

Dylan Lewis: Wow, I didn't know Fun Dip had such a large adult audience.

Ron Gross: It's pretty.

Emily Flippen: It does now.

Ron Gross: Those liquor sticks, the vanilla stick it comes with. Pretty good.

Dylan Lewis: Just amazing, I think those and the pixie sticks, I'm just like, this is pure sugar.

Emily Flippen: Pure sugar.

Ron Gross: There's no masking what is going into this thing. For me I do remember running to the convenience store in town buying a pack of zebra gum. I think in the 15 minute walk back to my mom's house, all of the pack, all of the flavor gone.

Emily Flippen: Should we blame Wegove, all the big weight loss drugs. [laughs] This is the first victim.

Dylan Lewis: That's right. Well, apparently gum sales are down 30% from 2018. So I don't know. Maybe it's consumer tastes, maybe it's that the flavor just didn't last. We won't never know. Let's get over to stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Ron, you're up first, what are you looking at this week?

Ron Gross: Just started looking at Despregard.com DESP, leading online travel agency OTA to you and me, in Latin America, operations in 20 countries covering 98% of the region's population. Biggest markets are in Brazil and Mexico. Generates revenue primarily by charging commissions to travel service providers and collecting volume incentives from airlines and other global distribution systems. They also charge a fee to consumers, which US consumers would likely not put up with, but they can actually get away with it in Latin America. They're tiny compared to folks like Booking Holdings and Expedia, only a 428 million market cap, but they're very strong in their markets. My friends over at the Value Hunters service think it could be worth $18 or more stocks only at $9 now. So it looks interesting to me, but I've got to dig in a bit. So Dan, this is a familiar model, but a new name. A question about Despogar.

Dylan Lewis: Sure Ron. You're going on vacation in South America? Where are you going?

Ron Gross: Really. Argentina.

Dylan Lewis: Ron Gross will be taking a break from Motley Fool Money to be vacationing in Argentina. Emily, what's on your radar this week?

Emily Flippen: So this stock was brought to me to my attention by Sanmeet Deo on our blast off team and that's on holding. So ticker's ON. I still don't like the ticker, but the company is certainly interesting. So this is a footwear business. It's actually been around for more than a decade, but really recently took off since its IPO in 2019. In terms of both popularity and attention from shareholders, if you look at the stock price, that will certainly reflect it. I have to admit this was one I was skeptical on at first because I find footwear to be very trendy. I go back to the crock hype that we're now reexperiencing. Things are in, then they're out, and these running shoes are particularly expensive, particularly trendy. But I've also had a bad habit of writing off brands in the past and much to my detriment, Celsius being a good example of that, the energy drink business. So I don't want to write off this company. What really is getting me sold on it is the increasing amount of sales that are associated, not just with footwear, but athletic wear as well. At a $9 billion valuation. This is a huge company for a footwear business. I think they need to have something beyond running shoes. So I do like the fact that they're pushing into premium athletic apparel as well.

Dylan Lewis: I own three pairs, if that matters.

Emily Flippen: No, you don't.

Dylan Lewis: I swear.

Emily Flippen: I consider myself somewhat of a runner and I don't know if you could pay me to buy a pair.

Dylan Lewis: I consider myself somewhat of a sitter, [laughs] but I own three pairs.

Emily Flippen: That's a lot.

Dylan Lewis: A perfect shoes to sit down. Dan a question about on holdings.

Dan Boyd: Super saturated market, what separates on from the rest of the premium running shoes, celebrity endorsements, any sort of moat? What's going on?

Emily Flippen: They claim to have a proprietary technology associated that makes it feel like for the, I think it's called cloud tech technology that makes it feel a little bit more bounty, like you're running on clouds to help runners run faster. Which is the type of sales tactics that we saw with like the Celsius holdings to help you lose weight. I hate those things, but I'll tell you what, I might hate it. But I am the exception, not the rule. Because if consumers have spoken here, right, with both Celsius and on holdings, they are selling a ton of shoes.

Dylan Lewis: I'd never heard of the name, but as soon as you mentioned it, I Googled it. Immediately recognized the shoes.

Emily Flippen: Exactly. If you go into say, an REI, you will recognize it there too.

Dylan Lewis: Dan, which one's going on your watch list?

Dan Boyd: [FOREIGN].

Dylan Lewis: I love that impressive. Emily Flippen, Ron Gross, Appreciate you bringing your radar stocks. Dan, appreciate you weighing in. That's going to do it for this week Motley Fool Money Radio show. The show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll catch you next time.

Bank of America is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Dan Boyd has positions in Costco Wholesale. Dylan Lewis has positions in DocuSign, Match Group, and Twilio. Emily Flippen has positions in Despegar.com and DocuSign. Ron Gross has positions in Costco Wholesale, JPMorgan Chase, Target, and Twilio. The Motley Fool has positions in and recommends Bank of America, Booking Holdings, Costco Wholesale, Despegar.com, DocuSign, JPMorgan Chase, Match Group, Target, Tesla, and Twilio. The Motley Fool recommends the following options: long January 2024 $60 calls on DocuSign. The Motley Fool has a disclosure policy.

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