On today's episode of Market Foolery, Mac Greer is joined by Motley Fool analysts Bill Mann and Emily Flippen to go over some of today's headlines.

  • Bob Iger is stepping down in 2021 as CEO of Disney (NYSE:DIS), and his successor, Bob Chapek, has caught Wall Street by surprise.
  • Co-CEO of Salesforce (NYSE:CRM) Keith Block is also stepping down. We take a look at some past co-CEOs in retrospect.
  • Lowe's (NYSE:LOW) reported weaker-than-expected earnings.
  • Virgin Galactic (NYSE:SPCE) stock price fell. We take a look at its business model and why it is so compelling for investors.

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.

This video was recorded on Feb. 26, 2020.

Mac Greer: It's Wednesday, February 26. Welcome to Market Foolery. I'm Mac Greer, and I am joined in studio by Motley Fool analysts Bill Mann and Emily Flippen. Happy Wednesday! How are we doing?

Bill Mann: This is my daughter's 18th birthday. So happy birthday to Ally. So we had a very kind of happy morning. And, yeah, so we're doing great.

Emily Flippen: You didn't kick her out yet? You didn't immediately -- "Wake up, happy 18th, get out of the house"?

Mann: She's got one more day.

Greer: That's a big birthday -- 18, that's big. She's what, like, four or five years away from being able to rent a car or -- I don't know why I said that. We've got lots to talk about. We've got big news at Disney. I would say, surprising news at Disney. We're going to talk some Lowe's and Virgin Galactic, space travel. Who doesn't love space travel?

Mann: So far, I'm not convinced.

Greer: Okay. Well, we're going to get to that.

Mann: I mean, for me, it's an experience, like, you know.

Greer: Okay. Well, that's a good tease for what's coming up. But we begin with the coronavirus. Now, the market opening up on Wednesday. So a refreshing change. Now, we're taping this midday --

Mann: We're cured. It's done. [laughs]

Greer: [laughs] ... we're taping this midday Wednesday. President Trump and the CDC will hold a news conference tonight. But on Tuesday, CDC officials urged the public to prepare for the spread of the coronavirus within the U.S. Bill Mann, what do you think?

Mann: Isn't it amazing how many people seem to have gotten their masters in epidemiology over the last couple of weeks? I mean, like, there are --

Flippen: [laughs] Ourselves included.

Mann: Sure. There are expert takes coming from everywhere. Like, literally if you are to get into a room and talk about coronavirus, the responsible thing to do would be to shrug and say, "You know, I don't know." But, you know, as market commentators, we know that the market hates that. It really, really does hate any kind of uncertainty. And for me, the real uncertainty is the impact that coronavirus is now having on the supply chain. So companies around the world are really starting to question how much dependence they had on China and how much -- and so we're about to learn about -- it's great, a radio word -- the nonlinearity of supply chain disruptions.

Greer: All right. The nonlinearity of supply chain disruptions.

Mann: Isn't that great radio? So for example, Procter & Gamble came out last week, and they said they have 387 different suppliers in China making 9,000 materials that go into 17,000 different products. So any disruption at any one of these suppliers could really, really harm Procter & Gamble. So these things are going to come up from anywhere, and we don't necessarily know where it's going to come from.

Flippen: Yeah, I'll just reiterate that. I mean, I guess the responsible thing to do is to shrug and say, "I don't know." But it's interesting, because the companies and the industries that can forecast some change as a result of the coronavirus are largely coming out and they're adjusting their guidance and essentially saying, "We have no demand from China. Everything in China, you could say, gets shut down for the rest of the year, this is what we're looking at." But the reality is that companies like Procter & Gamble, even companies that have moved their supply chain from China to countries like Vietnam, will still see impact.

Mann: ... That's a huge pool.

Flippen: Yeah, I know. And it's like, some people don't realize the impact that's having on all of Asia and the entire world. It's not China at this point. And it's a testament to just how connected we are as humans.

Mann: Yeah, it's really interesting. There was a process that started this last year with the trade sanctions that companies started moving away from China. And this is accelerating it. So at the end of the day, China is not going to go back to what it was before. And I think that that's a really, really important thing for people to think about.

Greer: But uncertainty is the only certainty right now. Well, let's move on to Disney. Some big news: Disney CEO Bob Iger is stepping down as CEO but will remain executive chairman until 2021. Now Bob Chapek will take over. Chapek was the chairman of Disney Parks, Experiences and Products. He's been at Disney for a long time -- 27 years. And we knew Iger was going to step down. But still, this is a bit of a surprise; and who the new CEO is?

Mann: Yeah, a lot of people -- you know, Bob Iger came out last year, and he put something out called The Ride of a Lifetime, and he basically forecasted, he was at the end of his time as CEO of Disney, that he would be stepping down. It was not in the middle of the ride of a lifetime; this was kind of a foreshadowing.

The timing is really odd. Again, given the coronavirus and Disney parks worldwide are about 30% of the total profitability of the company. Like, it's a big deal. And a lot of people didn't realize, thought that the next leader would come maybe from Disney+, from the video side, and they didn't, they went and tapped a guy who's been at the parks.

Flippen: Yeah, I happen to think it's all a big conspiracy, you know, just to keep the Bobs in power. It feels like a snub, it feels like a snub to someone like Kevin Mayer, who's been heading up Disney's streaming service. And Disney for so long has been saying streaming Disney+, it's the future of Disney. And to bring somebody in who has experience running the park side, the experience side of Disney, is an interesting choice.

And the market doesn't seem to like it, but I kind of do, minus the Bob-Bob thing. It's all strange. But I think it's a good thing, because as you said, it's the parks and it's the experience that [have] been driving Disney throughout its entire history. And you don't want to put everything on streaming and ignore the extremely profitable, important aspects that is the Disney culture that's created from experiences like parks.

Mann: It's interesting to me that when Bob Iger became the CEO, I don't know if you remember this, but it was not a popular pick at all. It was not. You know, he was thought of as being the wrong guy, coming from the wrong industry, but what he has been, he's been a master capital allocator, he bought Pixar, Lucasfilm, Fox Studios, Marvel --

Greer: Marvel. Tuck-in acquisition. [laughs]

Mann: [laughs] Yeah, exactly. I mean, transformational acquisitions. But people did not give him the credit in advance that that was what he was going to do. And I think that one of the reasons that they went in the direction that they did is the thing that Bob Iger did that people were surprised about is he really cracked the code on direct-to-consumer for Disney.

Greer: Yeah. And Baby Yoda. Finally, we're going to see some Baby Yoda merchandise. In other high --

Mann: ... That's not going to sell. [laughs]

Greer: [laughs] In other high-profile turnover news, we also had news out of Salesforce, the co-CEO, Keith Block, stepping down after only 18 months -- that's a year and a half. Now Marc Benioff will be the sole CEO.

Mann: That's good math.

Greer: Thank you. So what do we think about the Salesforce news?

Flippen: Who? Keith Block? I mean, come on. Salesforce has always been about Benioff; that's kind of been their guiding light -- I guess you could say as a company. So I'm not sure this really changes the needle at all. The co-CEO thing really never works.

Mann: I actually went back. I went back -- because I ask myself the question, when has Co-CEOs been a successful idea? Like, give me some examples. So I went back and I looked and I did a search on the Google machine and I got an article from Chief Executive magazine -- which is a real thing -- from 2012, talking about Research in Motion's [BlackBerry Limited] decision to get rid of their co-CEOs. And they listed a couple of successful ones. Keep in mind, this is from 2012. So one of which was Chipotle. Right, turns out not to have been so great. One was Whole Foods, turns out not to have been great. Smucker was one, which we can grant them, but it's a family-run corporation. And the other was Amway, and you know, with Amway, who can tell.

Greer: Okay. Well, let's move on and let's talk some Lowe's. Lowe's reporting weaker-than-expected earnings, missing expectations for same-store sales and revenue. Now, Lowe's is doing some renovations. They're revamping their website. They're focusing much more on professional homebuilders and contractors. But, Emily, the Lowe's story is a bit different than the Home Depot story.

Flippen: Oh, yeah, just a little bit this time around. As you mentioned, they beat on the bottom line, but they missed on the top line. And, more importantly, their same-store sales growth, which was expected to be just under 4%, came in at 2.5%. So it's a big miss in terms of their same-store sales. And I think this is also been catalyzed, because Home Depot reported yesterday and they had really impressive same-store sales at 5.2%. So this is to say that both companies have been buoyed by the same strong housing sector that we've seen over the past five or so years.

But the reason why, in my opinion, Lowe's is not performing as well as Home Depot is. It seems Home Depot makes a concerted effort to invest in their technology, to invest in the Home Depot experience. And maybe I'm overly skeptical of Lowe's new CEO, Ellison, but I didn't like his time at JCPenney, I mean, he came --

Mann: ... How could you? [laughs]

Flippen: Yeah. He was there for what, less than a year? I mean, he did nothing.

Mann: [laughs] ... definitely from dying longer, I mean.

Flippen: [laughs] ...but I wonder if he's doing the same thing at Lowe's.

Greer: -- If you love what I did at JCPenney... [laughs]

Mann: Hold on!

Flippen: Yeah. It's an easy kind of cop-out to say, Lowe's is turning around. But it's hard to beat a company like Home Depot, which for so long has been trying to invest in changing the experience. I was at a Home Depot this past weekend and I was so impressed by the technology that the company had rolled out. It had been awhile since I've been to one, and it was kind of mind-blowing.

Mann: It is amazing to me, because when you think about the differentiation between Lowe's and Home Depot, really it comes down to Home Depot has always been geared a little bit more toward the contractors and Lowe's has been a little bit more toward, if you call them, the hobbyists, the do-it-yourselfers. It is weird to me, and I've never understood why Lowe's would try and go after the teeth of the competitive advantage of Home Depot. I feel like they should have pushed the other direction and built their moats around, like, if you don't know what you're looking for, we've got you. Which is what Lowe's always seemed to be and do better than Home Depot.

Flippen: But pros in the know shop at Lowe's, I thought.

Greer: Nice. Pros in the know.

Flippen: Okay. We can talk about all the things Lowe's has done wrong, but come on, that catchphrase is wonderful.

Greer: As opposed to "Let's do this," which is I think Home Depot.

Flippen: Which is so --

Greer: No, I love that.

Flippen: Oh, really?! I think that's horrible.

Greer: Yeah. No, no. Because it gives me confidence, and I'm like, "I've got someone working with me." I love that.

So let's do this: Let's talk space. Shares of Virgin Galactic falling on earnings. Now, Virgin Galactic is the space tourism company founded by Richard Branson. And by space tourism, right now we're talking more space planes that fly tourists to suborbital space and back. And that hasn't happened yet. But that's phase one. And we should add, Virgin Galactic losing loads of money, but the stock has nearly tripled this year.

Mann: It's been all right, hasn't it?! The first in-orbit flight they have is probably their share price.

Greer: Nice. Okay, so what do we think about the business?

Flippen: Yeah, I'm getting such a good chuckle seeing the stock fall on "earnings," right? Like, what are they reporting? And there's not much to say here. The business hasn't proven itself out. And honestly, nothing that Virgin Galactic said in this call really should move the needle for anybody who is buying Virgin Galactic stock at this point, because what you're doing is, you're buying a belief in the future of space travel. It could be 5 years in the future, it could be 15; we don't really know. But Virgin Galactic said they had almost 8,000 people who have expressed registrations of interest in potential commercial spaceflight. What they're doing is --

Mann: ... literally the only statistic. [laughs]

Flippen: Yeah. And they're trying to accept, like, $1,000 deposits, it's fully refundable, but for people who are looking to potentially take that space flight. It's almost a Tesla strategy, except for that Tesla cost $250,000.

Greer: Okay. Well, speaking of $250,000, let me add this: Since 2004, Virgin Galactic has said that more than 600 people have reserve flights ranging from anywhere from $200,000 to $250,000. I guess, $200,000, that's coach, I guess.

Mann: Yeah, I guess, no snack.

Greer: And I can't use points, right?

Mann: No snack. You know, on a price-to-awesomeness ratio, I think that Virgin Galactic is pretty cheap, but that's literally -- that's the only metric I can think of that matters at this stage in their growth. I mean, you either believe in the future of space travel or you don't. And 8,000 people who have signed up; you know, that's interesting to me, but otherwise, I don't know what they would report. They don't have revenues; they certainly don't have profits. All they have is interest.

Flippen: It's the definition of speculation at this point.

Greer: And they've got some pretty stiff competition, right? You've got Elon Musk over at SpaceX, and you've got Jeff Bezos at Blue Origin. Now, both of those are private. So is the name of the game here that you really want to be private, or is there an advantage to being public?

Flippen: Well, clearly the advantage being public is getting your name out there in front of a lot of people. And being the first publicly traded commercial spaceflight company has a lot of weight to go with it. But the downside is it doesn't give you as much time to figure things out. Now, the CEO, George Whitesides, did say that their focus this year was going to be on safety, not revenue. And is a testament --

Mann: ... by not having flights.

Flippen: Exactly. But the thing is, Blue Origin or SpaceX, they could potentially have a disastrous launch, and it would be bad, it would be a step back, but they could continue as companies. Virgin Galactic, they mess up once, they will be destroyed for that.

Mann: The difference between them. I mean, you've got Branson's backing. But he doesn't have the pockets that Musk has, he doesn't have the pockets that Amazon has. So I think that they are public for a reason. I mean, companies go public so they can tap the public market for additional equity, which all of these will need, but they've got a different funding strategy than the other two.

Greer: Okay. I'm going to count you as both, cautious -- no, very pessimistic, not even cautious but pessimistic.

Flippen: I have totally misled everybody listening, then, because I love the company. I'm so sorry. Look, I'm 25 years old. I did a poll in the Rule Breaker Investing podcast a few weeks ago, and I asked them, "In my lifetime, somebody who's making a good living, say, more than six figures, but not ridiculous, not $250,000. Somebody making six figures, will they be able to, in my lifetime, reasonably buy a vacation into space?" And every single person said yes in that room.

And you know what, I'm not sure if I know what to think about the stock price right now, but as a company, when I think about the future, I can't help but picture that. It might be foolish, but.

Greer: Okay. So that's a fair distinction. I mean, we all get excited about the potential here, but that's different than saying that you should invest in the stock right now. I think that it's speculation. I said it before. If you're buying shares of Virgin Galactic, you're not doing it based off some fundamentals of the company, you're doing it off a belief.

Mann: You're almost not buying a company.

Flippen: Yeah, you're almost buying faith.

Mann: Yeah. Exactly. And that sounds, very like, very trippy, but it's true. And by the way, I just actually gave credit to Amazon for Jeff Bezos's investment in Blue Origin, so I'm sorry about that. This is not a new subsidiary for Amazon, but yeah, that's exactly right. I mean, the fact that those two are also in the game in some ways gives a little more credibility to Virgin Galactic as a concept.

Greer: Okay. Last week, Emily, you talked about using a Groupon to go skydiving. So I want to -- in a similar vein, OK -- and the big category is high-risk adventures. Emily, Bill, are you interested in going to space? What would it take?

Mann: 100%. It would be fantastic. I don't know that I would pay $250,000 to do so. So that feels to me like money that could be better applied elsewhere.

Greer: How many people do you need to see go into space successfully before you would be comfortable --

Mann: At least one, definitely at least one. No, I think I would even be willing to be on the maiden voyage.

Greer: Wow! Okay, Emily.

Flippen: I think it would probably take, at this price, a coupon for, like, $100 off from Groupon for me to take Virgin Galactic up on this offer.

Greer: I like it. [laughs] $249,900.

Mann: [laughs] $249,900.

Flippen: Sold.

Greer: You are making money. Okay. So let's wrap up with a desert island question. You're on a desert island and you have to own one of these stocks for the next five years. We're going to leave Salesforce out of it, because we didn't really hit Salesforce. So let's go: Disney, Lowe's, or Virgin Galactic?

Flippen: You know what? I want to come back to this in five years, and I'm going to say Virgin Galactic. And like, if you tweet at me in the next year about Virgin Galactic's performance, I will not respond, but five years from now, I think Virgin Galactic could be something great.

Mann: I think that's the answer too. Although, since you're on a desert island, you really could end up with flat nothing with Virgin Galactic, which for the other two is extremely unlikely.

Greer: Okay. Well, we'll keep an eye on it. Bill and Emily, thanks for joining me.

Mann: Thanks, Mac.

Flippen: Thanks.

Greer: As always, people on the show 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.

That's it for this edition of Market Foolery. The show is mixed by Dan Boyd. I'm Mac Greer. Thanks for listening, and we will see you tomorrow.