Disney Dominates Media, Market Notices

Disney+ helps the content king out of its years-long slump; plus, earnings updates from Lowe’s, Target, Splunk, and more.

Chris Hill
Chris Hill
May 28, 2019 at 1:19PM
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In this week's episode of Motley Fool Money, host Chris Hill and Motley Fool senior analysts Jason Moser and Andy Cross chat about some of the week's market news. Target (NYSE:TGT) popped big on a solid earnings report in spite of tough competition from Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT). Traditional retail isn't faring nearly as well. Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) reported earnings and continued to play out their sibling-drama story. Autodesk (NASDAQ:ADSK) tanked, but investors shouldn't worry. Plus, the guys share some stocks on their radar this week. Also, Chris Hill chats with special guest Nell Minow, corporate governance whiz and film critic, about Boeing (NYSE:BA), Disney (NYSE:DIS), and the best/ worst movies on the summer slate this year.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. A full transcript follows the video.

This video was recorded on May 24, 2019.

Chris Hill: It's the Motley Fool Money radio show! I'm Chris Hill. Joining me in studio this week, senior analysts Jason Moser and Andy Cross. Good to see you as always, gentlemen! We've got the latest headlines from Wall Street. We'll get a summer movie preview with our guest, Nell Minow. And as always, we'll give you an inside look at the stocks on our radar. 

But we begin with retail, and up first is Target. Same-store sales looked good in the first quarter. E-commerce sales looked really good, Jason, and shares of Target up 12% this week.

Jason Moser: They did look very good. In a world where Amazon and Walmart are really dominating a lot of the conversation, I think Target is holding its own. And we should at least recognize that. I mean, it's not been a straight line up, of course. But I think a lot of the investments that CEO Brian Cornell has been making are really working out. You mentioned the comps -- 4.8%. That was strong, particularly when you tie it to the 4.3% growth in traffic. I mean, anytime you see that growth in traffic, you know that's going to trickle down to the bottom line. And it did for Target. Eighth consecutive quarter of comp growth. And I think really, to me, the most interesting part is the way that they've been able to evolve in this e-commerce world. They now put the stores at the center of fulfillment, and those stores handled over 80% of the company's digital volume for the quarter. So that's just really a sign that the investments they're making in e-commerce and omnichannel are starting to really pay off. 

Andy Cross: We're going to talk a lot about this, I think, when we talk about retail and the success that some of these stores and companies are having with the omnichannel, Drive Up at Target is now available in more than 1,200 of all the 1,800 stores. Jason mentioned the 80% stat. That's just really impressive, when a company is trying to position themselves to compete not just against Amazon, but all the other e-commerce players out there. A brand like Target has to be able to be more and more relevant. And they certainly are doing that. And that really is showing up not just in the comp store growth but in the e-commerce growth as well. 

Hill: They've made a lot of smart investments, although it is interesting when you compare them to what Walmart, just from a consumer-facing standpoint, you look at the marketing messages from Walmart over the past six months have first and foremost been about that pickup option. You're not really seeing that yet from a marketing standpoint with Target. But clearly, they've made the underlying investment. 

Moser: Yeah, they have. Same-day fulfillment services, where it's order, pick up, drive up, get it from the store, those really did perform. They drove over half of the company's digital sales growth. But we talk about that digital sales growth, it was up 42% for the quarter. But when we look at it bigger picture, it's only about $5 billion to $6 billion of the overall top line, which is $76 billion-$78 billion. So yeah, it's not that big of a deal today. But by the same token, you can see there's a lot of opportunity for them to continue picking that up in the coming quarters and years. I mean, I think you have to be at least encouraged by that. 


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Hill: Shares of Best Buy (NYSE:BBY) falling a bit this week despite a solid second-quarter report and expanding their gross margins, Andy, which is not something you necessarily think of with a business like Best Buy.

Cross: Yeah, I think a lot of talk on the call has been about some of the tax issues as well, some of the trade issues that are going on now. But really Best Buy continues to deliver. We mentioned omnichannel with Target. They have done a fabulous job. They acquired GreatCall, which offers technology for seniors, both phones as well as health services. That's helped boost their gross margins a little bit. Comp sales for the quarter were up 1.1%, that was at the high end of their guidance. Revenues were basically about flat, but a little bit higher than some of the estimates there. But thinking about where Best Buy is going, they talked a lot about this Best Buy 2020 initiative to be able to reduce costs, grow earnings, focus on omnichannel, make the right investments, and that has been paying off. And I suspect going forward, that will continue to be a benefit for Best Buy and for Best Buy shareholders, too. 

Hill: After seven years as CEO, Hubert Joly is going to step down next month. He's done a phenomenal job turning around this business when you think about seven years ago and how challenged Best Buy was. Coming in, remodeling the stores, investing in high-margin things like the Geek Squad. Corie Barry, who is currently the CFO, is going to replace him, going to be the first female CEO in the company's history. 

Cross: And she's been there since the late '90s. But when you think about Best Buy, again, Chris, to that point, 40% of their online revenue now is done through in-store pickup. So they are making those initiatives. I expect those initiatives with Corie to continue. Clearly there's a lot of excitement. She's the fifth Best Buy CEO in its history. A lot of excitement about transitioning over to her into the new management team there and continue to make the investments that they have been making and that they will continue to make. As you mentioned, Hubert turns into the executive chairman, to be able to stay involved in overall strategy thinking with Best Buy. 

Hill: From general retail to home improvement, Home Depot and Lowe's both out with first-quarter reports this week. Home Depot's profits came in higher than expected. Lowe's is dealing with higher costs, and they cut guidance. Shares of Home Depot basically flat this week, Jason, whereas Lowe's, down about 12%. 

Moser: Yeah, I mean, there are not many retailers that can say they've actually strengthened their competitive position here in the age of Amazon. But I think Home Depot can definitely say that, because it really seems like they're doing nothing but getting better. I mean, the numbers are all pointing in the right direction. But we look at specifically during the quarter, a couple of things that stood out, big-ticket comp sales, which are those sales of over $1,000, that metric was up about 4%. That matters, because that's about 20% of the overall business. Another thing that really stands out is where Home Depot is executing on the pro customer. That pro customer is turning into a very lucrative one for the company. It's becoming close to half of the overall revenue stream for the company. And what they're doing also on top of that is really building out this rental business that several years ago, maybe 1 in 10 of those pros would rent tools from Home Depot. Now, that metric is about 1 in 4. And that's important, because if they're going back and just renting those tools as opposed to buying them, that's a pretty reliable revenue stream. But then they're also buying stuff along the way too, all of the consumables that go with those tools that they're renting.

When we look at Lowe's, Lowe's is like the younger sibling, always compared to the older brother or sister that graduated med school -- they can't ever quite nail it. And even when they do OK, the market really just takes it to task. I think that's what happened here. It was less about the quarter, I think, and more about the guidance for the year. They did pull back on earnings guidance a little bit. Gross margin with Lowe's took a nice little ding of about 165 basis points. A lot of that has to do with the restructuring that CEO Marvin Ellison is doing on the merchandising side of the business. He's coming up on his one-year anniversary, and the stock actually just dipped back below where it was when he started. That has to hurt a little bit, given that he had a nice first year. 

But listen, when you're going up against Home Depot, you've got your work cut out for you. One place where they're not even coming close to executing is on that pro customer. I think that's where Home Depot has been able to really differentiate.

Hill: Small silver lining for Lowe's, their online sales seem to be going in the right direction.

Moser: No question. They are looking at that as an opportunity. And you're right, that's a point where the business is getting better.

Hill: Stepping back and looking at retail writ large. You look at the store closures that have been announced so far. When you look at companies like Gap, Victoria's Secret, Payless Shoes. This week, we saw Ascena Retail announce that they're shutting down all 650 Dress Barn locations. All told, that's more than 6,000 store closures that have been announced in 2019. That's more than we saw for all store closures for all of 2018. You combine that with the fact that this week, we've seen Kohl's, Gap, Macy's, Nordstrom, Foot Locker, they're all hitting 52-week lows with the stocks. Where should investors be looking when it comes to retail? Because I could see some investors looking at those companies I just mentioned, hitting 52-week lows, and thinking, "Maybe that's a value." Those seem like value traps to me.

Cross: You have to be careful about that, Chris, because they can be value traps. The United States has been over-retailed for a long time. We have more retail locations and real estate per capita than in Europe or the rest of the world, as consumers continue to look to spend more money online. You have to make sure, if you're investing in [retail], I think you have to go to where the growth is going to go. That's e-commerce. Looking at these omnichannel players, those companies that are continuing to make the right investments. We've talked about Walmart, doing a great job with this, into the e-commerce, connecting the physical retail locations with their e-commerce space. Companies that do that well will continue to do well in the marketplace. 

Hill: Shares of Intuit (NASDAQ:INTU) up this week after a strong third-quarter report that was followed by the software company raising guidance for the full fiscal year. Intuit's kind of getting it done, Andy.

Cross: Yeah, Chris, this was my radar stock from last week. And if you recall, the things I was looking for were their small-business ecosystem revenue growth continuing to thrive. And they have a goal of making that more than 30%. That's really tied to QuickBooks Online for small businesses. That was up 38%. That matched what it was last quarter. So overall, the business continues to do well. Revenues up 12%, that was a little higher than the estimates. That included 10% in the consumer group, which is you and me using QuickBooks or using Turbo Tax. That was two-thirds of sales. 19% growth in the small-business category. Across the board, their Turbo Tax business continues to do well, their ecosystems are growing, they're getting more and more people to the platform. They're managing their costs well. They continue to generate high profit margins and lots of growth in there. So overall, the Turbo Tax story, the QuickBooks story, the Intuit story, continues to do well. I think going forward this business, as it continues to evolve into more and more services for both corporate clients and individuals, will continue to do really well. 

Hill: This is a $65 billion company. Do you see them making any sort of acquisition? They've done such a good job of building these businesses, and as you said, managing smart growth. It seems like, if they wanted to, they could go out, make a tuck-in acquisition, and just add to their ecosystem.

Cross: Yeah, I think so, Chris, but I think overall, continuing to build out that and get more and more people into the platform, offering higher and higher revenue, higher and higher margin services for all those clients, different opportunities for them to connect into those ecosystems. I mean, that continues to really show. They have more than 14 million registered users on the platform. That's up from 5 million on the Turbo Tax platform. That's up from 5 million last year, and that allowed them to generate higher profits and raise the dividend 21% this quarter. So overall, whether it's acquisitions or continuing to grow the business organically, Intuit's doing really well. 

Hill: Not every software company having a great week. First-quarter results for Autodesk were weak and guidance was not exactly inspiring confidence either. Shares have had a good 2019 so far, Jason. Do you look at this as a speed bump? Or do you think they've got some legit problems on their hands? 

Moser: Oh, I would say speed bump. I mean, I don't know that I would qualify that quarter as weak. We can talk about that after the show, Chris. You can be forgiven if you really don't know about the business. I mean, it certainly does keep under the radar. It's not one we talk a whole lot about. I think that the market that it serves is becoming more and more relevant by the quarter. I've talked recently about the work I've done in the augmented reality space. I will say that Autodesk is one that I have high on the list of great opportunities in that space. Autodesk makes and sells 3D design and engineering and entertainment software. They have helped customers build virtually anything, whether it's a car or a building or a movie with cool special effects. 

Now recently, they did make a bit of a change to the business model. They went from selling essentially perpetual license software to a subscription model. We talk about subscriptions all the time on this show. We like them. I think it was a good move. It threw a little bit of a...

Cross: A wrinkle?

Moser: Maybe a wrinkle. 

Hill: A curveball?

Moser: A curveball, that's a good one. Yeah, threw a curveball to the analysts, I think. It made the financials a little bit tough to model out there. But ultimately, I do think it is the right move. A key metric they have in annualized recurring revenue for the quarter was up 33%. And management does recognize that the real competitive advantage for the business stems from the suite of offerings that they have. So they continue to invest in that software and bringing new products to their customers. 

If you look over the last five years, the stock has absolutely pummeled the market. It's up over 200%. I think that given the size of the company, around $36 billion today, similar to another competitor, Dassault Systemes, a recommendation in Stock Advisor that's done very well also. It's a great market, I think, and a company that investors should really have on their radar. 

Hill: First-quarter revenue for Splunk (NASDAQ:SPLK) was higher than expected, but shares of the data analytics company falling nearly 15% this week. Andy, Splunk is not profitable. Do they have a cash flow problem?

Cross: No, they actually generate free cash flow, Chris. So it's one of those companies that's not profitable, but when you add back some of the non-cash expenses, they actually make some money. To Jason's point about Autodesk, there's been some changes in some of the billing techniques and some of the solutions that they're offering, which has caused a little bit of questions about some of the cash flows expected for this year. I think some analysts are trying to make sense of that. Also, while they added 400 new clients, now have more than 18,000 in total, that's down a little bit from last quarter. Splunk is a kind of cool company, man. It takes all this data that companies generate from all their apps, all technology, and helps those companies make sense of that data and provide better solutions internally, solutions for their customers. It's machine data learning and helps their clients get smarter. So when you take in all those numbers, adding clients maybe a little bit lower than last year, analysts still a little bit lukewarm on what this means for some of the cash flow this year. Even though the company grew revenues more than 36%, Chris, higher than estimates this quarter. Just some concerns on maybe what the growth prospects for the year may mean. I think long-term, it's a $20 billion business, generates some free cash flow, playing in a very fun, dynamic market, and Splunk is taking market share and doing well.

Hill: Any concerns about the lack of profitability? Obviously, they've grown the business to this point. But at some point, investors and particularly Wall Street is going to want them to start generating a profit.

Cross: Yeah. They also invest a lot in R&D. More than 25% of their revenues go into research and development. They are making progress on both gross margins and operating margins. They're getting there. I can see the profitability curve going the right direction over the next couple of years. So I'm not quite as worried about that. As long as they continue to add more clients. I think that is the thing that we have to watch. What are the client number additions looking like each quarter?

Hill: In July, Netflix unveils season three of Stranger Things. The show has been a hit, in part because it is set in the 1980s and has a certain nostalgia factor going for it. But season three is bringing back something that absolutely no one asked for: New Coke. The Coca-Cola Company (NYSE:KO) is producing half a million cans of New Coke to go along with this launch of season three of Stranger Things. Do you think the people at Coke are unaware that New Coke was one of the all-time debacles in terms of a new products, Jason?

Moser: It really feels like there's a lot more that can go wrong with this move than can go right. That's just a personal opinion. And I'll leave it at that. 

Hill: Well, and we were talking about this before the show, Andy, I think this is long enough ago that people will be forgiven for not remembering that Coca-Cola in 1985 didn't just roll out New Coke as an option. They basically said, "Oh, this highly successful product we've been making since the late 1800s? We're stopping production of that altogether. There's no longer an option. Here's New Coke, you're welcome." And it was, I believe, less than three months later, they had to just take it all back. 

Cross: Yeah, I think 80 days it was basically on the market. I was a fan of New Coke.

Hill: Oh, you're the one! [laughs] 

Cross: Maybe I was the one person out there who liked it. I was a fan. I had my parachute pants on, drinking my New Coke, it was great. I actually liked it. But clearly, a marketing and innovation mistake there.

Moser: Given Mac's love of Stranger Things, I do feel like we're probably missing out on a pretty sweet holiday gift if we don't get a case and put it aside for him a little later. 

Cross: Put that order in for him now, JMo.

Hill: Let's go to our man behind the glass, Steve Broido. Steve, do you remember the New Coke debacle? 

Steve Broido: Vaguely. I vaguely remember it. Yeah. Didn't it come out in a different can? The can looked different, if I recall. 

Hill: It did. You'll have a chance to see that new can.

Broido: I won't be buying it, though. No siree, Bob.

Hill: Alright, Andy Cross, Jason Moser, guys, we'll see you later in the show. 

Cross: Thanks, Chris!

[...]

Hill: The summer movie season officially kicks off this weekend, so of course, we turn to Nell Minow. She is the film critic known as the Movie Mom. She is also an expert in corporate governance, and the vice chair of ValueEdge Advisors. She joins me now. Nell, always good to talk to you!

Nell Minow: Thank you!

Hill: Before we get to the movies, let's talk some business. We have to start with Boeing. The 737 MAX remains grounded after the two crashes that killed more than 350 people. We've seen reports now that Boeing was trying to get this new model certified as quickly as possible. Engineers were under pressure from managers to limit safety testing to keep down costs. Bizarrely, to me anyway, over the last 12 months, shares of Boeing are basically flat, whereas this seems like the sort of thing that would really sink an aircraft maker's stock. Where is Boeing's board of directors in all this? 

Minow: First of all, I'm going to say that I have some stock in Boeing. I spoke to the person who bought it on my behalf and said, "What is going on?" And I'll tell you what she said. She said, "Where's the competition? People don't like Boeing, where are they going to take their business? Airbus? Go to the back of the line, a very, very long line, before you get your new plane?" The customers don't seem flustered, and therefore, the investors don't seem flustered. 

I would expect, however, we may see some real corporate governance changes there. The board doesn't seem to be on top of this at all. The fact that they ignored the warning signs is very, very troubling. The fact that safety doesn't seem to be factored into the set of compensation is also very troubling. I'm hoping that we see some changes there. But I don't anticipate any changes in the stock price for a while. 

Hill: I get that this is basically a duopoly between Airbus and Boeing. And yes, it's not an online advertising platform. You can't just stand up a business like this. But it also, by the same token, seems like the sort of thing whereas, yeah, if you're Southwest Airlines, and you're looking for new planes, you don't necessarily want to get in the back of the line at Airbus. But it also seems like the longer this drags out, the longer the ripple effects become. So maybe Boeing's stock isn't affected now, but as this continues to slowly drag on, it could be troublesome down the line. 

Minow: Oh, I absolutely agree with you. However, I also have confidence that there will be enough customer and investor pressure that they will make some changes before that happens. 

Hill: Housing is obviously such a big industry. D. R. Horton (NYSE:DHI) is the biggest home builder in America. They've been making headlines recently for some deals, not necessarily on the up-and-up. What is going on with the children of the chairman at D. R. Horton. 

Minow: The children are doing fine. I'm not sure the shareholders are doing so well. It reminds me, I grew up in Chicago, under the original Mayor Daley, the first Mayor Daley, who gave a lot of the company's insurance business to his son who was just out of school. And he said, famously, if you can't do good things for your children, what's the point of being mayor?

And that's kind of how I feel about this. [laughs] The problem is, in a public company, hello, you're supposed to be acting on behalf of the shareholders. There seems to be no evidence that that's the case here. What you want to see in any kind of insider transaction is, you want to see the company bending over backwards to show you that it was an arm's length transaction, that they shopped it around, got the best price. That doesn't seem to be the case here. There's all kinds of stuff going on with sweetheart deals for the kids, guaranteed returns, and personal loans from the dad. Once again, this is yet another company that wants the access to capital of a public company, but they want the control and the insider bennies of a private company. And that can sustain itself very long. 

Hill: Shares of Disney recently hit an all-time high. The early reaction to the Disney+ streaming service seems to be positive, especially when you consider it's not going to launch until sometime time this fall. CEO Bob Iger is making $65 million a year. Abigail Disney, who is the granddaughter of Walt Disney, is not at all happy about this. She called that amount of pay insane. I know you're a fan of Bob Iger's leadership. I'm curious what you think of this compensation.

Minow: Well, I'm a fan of both Bob Iger and Abigail Disney, who herself is a very fine filmmaker, has made some excellent documentaries. She also puts her money where her mouth is. I spend my time getting upset about people get paid too much for doing a bad job. I put people who get paid too much for doing a good job on another level. I also do own some Disney stock. I want to point out that they've done quite well this year with a little movie called The Avengers and buying the Fox content. So yeah, he is getting paid too much. I do think it is bad for the employees as a whole. I don't think it's good for the company to have the CEO get paid that much. On the other hand, he's getting paid too much for doing a really good job. 

Hill: Since you mentioned Avengers: Endgame, which at this point has made more than $2.6 billion worldwide, are you at all surprised at the success either of this one film or the entire package that Disney has put together under Kevin Feige's leadership going back over the last 11 years starting with Iron Man?

Minow: I'm really happy that you mentioned Kevin Feige. He deserves to go down in Hollywood history with Irving Thalberg and some of the really great producers. Everybody tried to make comic book movies before that. Some of the worst movies ever made were people's attempts to make Fantastic Four movies. And still, they haven't quite figured out how to make a Fantastic Four movie. It was really Kevin Feige who brought in the vision, the love for these characters, the understanding of the symbiotic relationship between bringing all the characters together. This was his real genius -- he had the wisdom to allow each of the franchises to develop their own personality. You've got something like Thor: Ragnarok, which is hilarious; you've got something like Captain America: Winter Soldier, which was a throwback to the 1970s movies of political paranoia; and yet, still make them all cohesive. If you're going to watch Avengers for the third or fourth time, you will be able to tell that each of the individual musical themes for each of these characters come together just as the characters themselves do. So, yes, I was surprised, but very pleasantly surprised. There has never been a franchise like this in the history of movies. And I don't expect ever to see anything like it again. 

Hill: Well, and add to Kevin Feige's list of accomplishments, and you touched on this with Thor: Ragnarok, his selection of directors. The fact that someone like Taika Waititi, who to that point was just known for these small --

Minow: Quirky, little --

Hill: Yeah, almost cult films. And then he gets handed this enormous budget with Thor: Ragnarok

Minow: Yeah. And that worked out really, really well. Captain Marvel worked out very, very well. It really is astonishing, what he's been able to do, that he's been able to give, particularly these young directors, as you said, their own imprint, and yet keep it as a cohesive whole. Imagine if they did the Harry Potter franchise, and Hermione had her own movie, and Professor McGonagall had her own movie, and yet they kept bringing them back together. It's just mind blowing!

Hill: I want to go back to the Disney+ service for just a second. One of the things we're starting to see in the wake of, obviously, the rise of Netflix, but also Disney rolling out their streaming service, is almost a land grab among these different companies. Comcast with NBC, CBS this week reportedly looking to buy Starz from Lionsgate Entertainment.

Minow: And Disney is taking over Hulu.

Hill: What do you think are the prospects for Disney+, and how nervous should the brain trust at Netflix be? 

Minow: Well, Netflix really surprised us all with the strength of their content. As long as they keep that up -- they've really abandoned their original business plan completely, which is heartbreaking to me, because what I loved about them originally was that the most obscure films that I wanted to see were always available on Netflix. And that's just not true anymore, I guess, unless you want to do DVD. But they have more than made up for with creating original content. They've gone from being, Blockbuster to being MGM. They're going a different way. Disney, of course, is now going in the opposite direction, from being a content creator, to the streaming service. 

The thing that Disney has is the built-in perpetual audience. They can just keep putting out the original Lion King, the original Cinderella, and they're going to have a new generation every seven years. That's a really solid basis for them. They're very, very good on content. I'm pretty impressed with the way they're going. All we need now is, each of us, an extra 40 hours a week to watch all this stuff. 

Hill: [laughs] Let's get to the summer movies. I'm curious what you're looking forward to with all of the options this summer. 

Minow: Well, as usual, we have a lot of sequels, a lot of blockbusters. I have to say the guilty pleasure I'm most looking forward to, doesn't Hobbs & Shaw look amazing? The spin-off of the Fast and Furious franchise. That looks incredible! I mean, anytime that you've got car chases, Jason Statham, The Rock and Helen Mirren, you're pretty much good. 

Also, we just talked about Thor: Ragnarok. The two stars of Thor: Ragnarok are teaming up for another one of my favorite franchises, Men in Black. The trailer looks absolutely amazing! We've got Godzilla. Toy Story 4 looks wonderful! I'm very excited about that!

And then, every summer, what I look forward to are the little surprising indies. We've already got one opening up this week. It's called Booksmart. It could not be more adorable. It is about two very, very, very bright high school seniors. It's the last night before graduation. They've done everything right. They have given up all fun and just done all their homework. They've gotten into their dream schools. And on that last night, they decide to go out for the last time and have some wild adventures. And they do. If it sounds a little bit like Superbad, then let me tell you that the star of Superbad, Jonah Hill, his sister is the star of Booksmart, but this is a much sweeter story. And yes, it's very raunchy, but it's absolutely great! Looking forward to having everybody see that!

Hill: Well, I was going to ask you if there was an under-the-radar movie that we should be looking for. Sounds like you've already answered that. I'm curious, of all the big movies you mentioned, and certainly some of those are on my list, one you didn't mention, I'm curious if you have any early sense of this movie, particularly in the wake of the Academy Awards, any buzz on Rocket Man, which is the Elton John movie?

Minow: Yeah, the buzz that I've heard so far is that it is not a straight biopic, and that it goes off and uses kind of fantasy sequences, which sounds appropriate for what it's doing. There is one other little neglected indie that I think everybody will be talking about this summer. It's called The Farewell, with last year's breakout star, Awkwafina, who stole the show in Ocean's Eight and also in Crazy Rich Asians. This year, she plays a young woman whose grandmother, with whom she's very close in China, is going to die. But they decided they're not going to tell her that she's going to die. They're just going to pretend that they're having a family wedding, so that gives everybody an excuse to come see her before she dies. And it's about what happens then. It's called The Farewell. It is absolutely great! That's another one I want everybody to be on the lookout for. 

Hill: I and all of our listeners will forever be indebted to you for the conversation you and I had this time two years ago when I asked you, is there a movie this summer that we can skip? And you told us yes, you don't need to go see Tom Cruise in The Mummy. Thank you from the bottom of my heart!

That's both time and money that I saved, and apparently based on the box office receipts, time and money that lots of other people saved as well.

Minow: Everyone listened to me, thank you!

Hill: With that in mind, this summer, they can't all be hits. What is something we're probably better off skipping? 

Minow: I have not seen it yet. Take that under advisement. But I have to say the new Aladdin looks awful. After all of the things I just said about Disney, yeah...

Hill: Wow, OK! I'm clearly shaken by this one, but not as shaken as the Disney people are going to be.

Minow: I hope I'm wrong!

Hill: Last thing, then I'll let you go. Roughly 40 million Americans are going to have some type of road trip this Memorial Day weekend. I know you're going to be traveling back home to Chicago. With that in mind, what is a road trip movie or two that you enjoy? 

Minow: Well, you cannot beat Midnight Run with Robert De Niro. I always say that road trips are the oldest story of all, going back to Odysseus. They always work because they take people out of their milieu and they get to know each other. Midnight Run is a classic. And then, of course, the greatest road trip movie of all time, The Wizard of Oz.

Hill: One of the best reasons to be on Twitter so you can follow Nell Minow and get her thoughts on movies and corporate governance and so much more. Nell, have a wonderful time with your family this weekend!

Minow: Thank you! Bye-bye!

[...]

Hill: It's Memorial Day weekend. We want to help you get ready for your summer vacation, not just with the awesome summer theme music that our man behind the glass, Steve Broido, has been playing. Also by encouraging you to check out The Motley Fool's podcast swag shop. You can get T-shirts, ball caps to keep the sun off your face, coffee mugs, and a lot more. Go to shop.fool.com

Time to get to the stocks on our radar this week. Our man behind the glass will hit you with a question. And you know what? You can hit him back with one if you want. Jason Moser, you're up first. What are you looking at this week? 

Moser: Sure. Well, perhaps we have listeners tuning in to this week's Motley Fool Money via my radar stock, Spotify, SPOT. Obviously, as we've discussed before, the economics of the music business are pretty brutal. But when we get back to the whole content-is-king thing, let's also remember that distribution plays a very important role as well. And I think that's actually where Spotify is starting to show they have a leg up on everyone here. Recent quarterly results came out. Monthly active users grew 26% to 217 million. Premium users grew 32% of 100 million. Where I think they're starting to differentiate themselves is they're going beyond just music. They're building out, I think, a platform of all sorts of different content, and that includes podcasts. The acquisitions of Gimlet Media and Anchor will help them build out those offerings. An interesting Samsung partnership, which is going to result in Spotify being pre-loaded on all these new Samsung devices coming out. I just think there are a lot of opportunities in the future here for Spotify to become that default operating system for folks' entertainment on their mobile devices. Obviously, Apple Music will play a role. But when we look at Android's position there, that's the dominating operating system, and that's where Spotify, I think, can really exploit that advantage there. 

Hill: Steve, question about Spotify?

Broido: If you ask 10 people on the street if they knew what Spotify really did, do you think they'd be able to answer correctly? 

Moser: Sure, I think so. I mean, I can ask my daughters what Spotify does, and they can answer it. I give credit to people just walking the street. Most people have a Spotify account now, don't they, Steve? Don't you?

Broido: I did. I don't now. They all blend together. There's so many of them! 

Hill: Andy Cross, what are you looking at?

Cross: Workday, a human resources software company, and provides finance solutions as well, reports earnings next week. It's a $46 billion company, so very large. It was founded by Dave Duffield and Aneel Bhusri, who worked at PeopleSoft, that was acquired by Oracle years ago. It's a company that serves more than 2,600 clients, including 40% of the Fortune 500, and, Chris, half of the Fortune 50. So it's really a growth story, it's been able to grow more than 30% per year. So I want to see if that growth is slowing and what they are seeing with the client additions. That's an important factor for them to be able to continue to grow the business. So symbol is WDAY.

Hill: Steve?

Broido: How would a company like The Motley Fool use Workday in our day-to-day?

Cross: There's a lot of competitors. How you interact with payroll, it handles a lot of the things that client and client employees need to be able to interact with to basically just do their everyday work job. So I think it's an important software solution for lots of different clients out there. 

Hill: What do you think, Steve? 

Broido: I think I'm going with Spotify. I'll give it a shot! I don't know if I understand it, but I think I'll go with it.

Hill: Alright, Andy Cross, Jason Moser, guys, thanks for being here! That'll do it for this week's show. Our engineer is Steve Broido. Our producer is Mac Greer. I'm Chris Hill. Thanks for listening! Have a great Memorial Day weekend! We'll see you next week!