This is the ninth episode of our Rule Breaker Investing Market Cap Game Show. Will Aaron Bush retain his title or will Andy Cross steal it from him this time around? It's a fun game to take our minds off what's going in the world for a moment -- during these difficult times -- while learning some great information on the side, too. Also, get to know what's in store for our next week's episode and much more.
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 March 17, 2020.
David Gardner: Every calendar quarter March, June, September, December, long about the penultimate Wednesday, we've been playing the Market Cap Game Show. Our format is simple, two guest star contestants giving their best guesses at the market cap, the overall value of some of the best-known or most interesting stocks on the market: Alphabet, Costco, Etsy, with you playing along and learning at home. Yeah, every calendar quarter's penultimate Wednesday, which means this Wednesday, which means now. The 11th installment of the Market Cap Game Show this week on Rule Breaker Investing.
Welcome back to Rule Breaker Investing. What a delight it is to have you with us this week, and I say "us" because, of course, it is the Market Cap Game Show and I'm joined by two of my favorite Fools this week. One of them, I think it's fair to say maybe the returning champion of the show. So, I think it's appropriate that we would have Aaron Bush come back and join us, and the other, a new challenger, even though I've worked with Andy Cross, our Chief Investment Officer, for more than 20 years Andy, this is your debut on this game show. And I'm really delighted to welcome both of you guys; in fact, say "hi!"
Aaron Bush: Thank you, David. Hello!
Andy Cross: I didn't know that Aaron was the reigning champion and I was going against a ringer here, so this is a little intimidating, David, when it comes to the Market Cap Game Show, I have to say.
Bush: [laughs] So, here's my thinking, I used to compete pretty heavily in taekwondo when I was a kid. When we would go to tournaments and they would sort us into different groups, different brackets for tournaments, my coach always had one rule, "You always fight up." And so, I figured, what better way to fight up then to challenge our Chief Investment Officer, so I'm excited. Thank you, Andy.
Cross: Aaron, when you say "taekwondo," you're not really instilling a lot of confidence in me to be able to compete. I just have to say, you're not really helping the cause. I appreciate the whole bucking up. Taekwondo is a little scary, and, yeah, you're clearly one of the smartest analysts I know. So, it's a real treat to join, and thank you, David, for having us, and, Aaron, it's an honor to compete against you.
Gardner: You bet. Well, I will just mention that Andy has been at various points in his past, the near-scratch golfer. So, you both have some athletic exploits that exceed my own. I'm delighted to have you both, but you're not here because you're athletes, you're closer to mathletes this week, because, of course, we're playing the Market Cap Game Show. And I'll give the rules for new listeners in a little bit.
But I think it's probably most appropriate, since I have both of you with me this week, to talk a little bit about the stock market and its volatility before getting into the game. Now, even playing the game with the stock market typically going up or down 5% or 10% a day over the last week-and-a-half, even playing this game, the numbers may have all changed by the time our listeners hear this, whether it's on Wednesday, Thursday, Friday or this weekend.
So, a disclaimer upfront dear listeners, these numbers are changing sometimes radically, but we have it locked in at 2:45 PM, Tuesday afternoon, those are the market caps that we are using now.
I want to go to you first, Andy. Andy is our Chief Investment Officer. You've done just a great job over the last week or so. There have been a lot of live chats, I know you've participated, answered innumerable questions from our members. And I really want to call out my brother, Tom Gardner, and the rest of our team for over-the-top great efforts to reach out and speak directly to members, people who are listening this week, who really want to hear what The Motley Fool thinks about this market.
Andy, as we're a Motley Fool, I know each of us may have a different viewpoint, that's part of the beauty of The Motley Fool, but what are a couple of the cardinal points that you've been stating or emphasizing over the past few days for our members?
Cross: Well, thanks, David. And, yes, it's a very tiring, I think, time for so many people, whether you've been through this period somewhat before in prior markets that had gone into the bear market; which is, down more than 20% from its highs and that's happened extremely fast, in less than almost about two weeks this year. So, it's been very rapid and very severe. So, I think whether you've been through some bear market before or you're a first-time investor who bought your first Rule Breaker stock a month ago, you are likely feeling it.
So, for me, it was really about empathy, it's really about letting our members and our listeners know that we're fellow investors and we feel this with you. Many of us own our own recommendations, whether on Rule Breakers or other services, so we feel it too and we're right there with you. And really emphasizing that, as bad as this is, it will at some point, with the right precautions on the health side, the financial side, we're seeing a lot of action this week -- it will pass eventually and, still, really stain investing for the long-term, which is just something we emphasized for 25 years with you and Tom starting and it just one that we can never forget.
Gardner: I'm really glad you led with empathy, because it really is true. I hope it comes across cleanly and clearly this week, as we play a game show, that we're feeling it as much as anybody else. I'm sure we're going to have some laughs in the hour ahead as we think about some of the market cap in these companies and where they were just a month ago, but every one of us participating in this podcast is fully invested in the market. So, in good times and in bad, and they both show up over the course of your lifetime as an investor.
And, of course, beyond mere investing, a lot of the questions that many of us have today, sometimes losing sleep over them or things about human life, not so much about our portfolio. So, we're very cognizant, of course, of where investing fits within the overall scheme. It's definitely a click or two down from some more important questions that a lot of us are trying to answer. So, thank you for that, Andy.
And, Aaron, I want to turn to you, because you're on the other side of 40 now. Andy and I are at the middle of our tether or a little bit past it, but, Aaron, you're clocking in somewhere around 25 years of age, am I right?
Bush: You hit it spot on.
Gardner: Good. So, you know, there's a really interesting, in some ways, bifurcation of viewpoints here. I don't want you to necessarily go there strong to the hoop unless you want to, but a lot of younger people in my life, and I've got a few in my household, are like, this isn't that big a deal. What are your thoughts?
Bush: I think it is a pretty big deal. I mean, it's not every day that you see a global pandemic. And the effect that it will have on lots of individuals, lots of companies, industries, countries, it's going to change the way that a lot of industries function. So, I do think that it is a big deal.
But I would say, from an investing standpoint, yeah, it should be a relatively short-term event. And hopefully, if you're my age or even older that you still are thinking in terms of decades. And you know, if I put my investor hat on, if anything, what's going on right now is a reminder that black swan events -- so, events that are unpredictable, have a massive impact -- those do happen, and it's a reminder to be somewhat conscious of businesses that are fragile in some way, because events like this can affect businesses who are not properly prepared.
But in terms of looking for opportunities, I think now is the time to not even just be thinking about lower prices, but to recognize that events like this pull forward the future in certain instances, and there are companies out there that not only benefit from the disorder, like, Zoom or Teladoc, when people are seeking doctors remotely or trying to work remotely, but there are companies that are building a future that no virus can ultimately stop. And the longer your time horizon is, I think the more clear you can see the sunlight coming through on the other side of today's storms.
Gardner: Well, thank you very much for that, Aaron. And I agree, I think that it'll be interesting to look back from the future to these days, I hope and suspect it'll be a shorter term phenomenon than most people think right now, but that's not much solace for many of us living day-to-day hunkered down in our various ways and contexts, whether it's in the United States or in some other countries in the world that are far more hunkered down at this point. But it is a time that is historic and certainly the stock market and its gyrations setting all-time records in some cases in the last week-and-a-half, something that I would never have predicted, but that's why we don't spend much time trying to time the market.
Before we get started with the game, gentlemen, I'm wondering, next week is mailbag for this podcast, as you know it's the final Wednesday, I'm sure we're going to get a lot of interesting questions. Would you both be willing to come back next week and just hear some of those questions and speak to them?
Bush: Sure, would be happy to.
Gardner: Great. So, it's fun and games this week and then it'll be interesting to even see where the world is next week as we take your questions. Our email address is [email protected], you can also always tweet us @RBIPodcast on Twitter.
Alright, I'm about to give the rules of the game, and I'll just mention that a lot of us who are out there speaking about the markets, and Chris Hill and I did a YouTube Live video last week that's gotten a lot of views. If you're looking for how to invest in a bear market and you're not already tired of hearing from me about 45 minutes every week anyway, there's a half-an-hour video that you might enjoy if you just google "invest in bear market, Motley Fool" on YouTube. So, a lot of efforts, both, for our paid, premium members, those nearest and dearest to our heart, and, of course, the many people who listen for free or are just getting started investing, The Motley Fool is there for you, we're playing the same game that you are, the only game that counts, the long-term.
There's a second game, though, and that's the Market Cap Game Show. And it's even a game that's willing to change the rules from time-to-time; any good game should. And, Aaron, you kind of broke our game a few episodes ago, so longtime listeners will know we changed our format and I liked what we did three months ago.
So, the format, just to recapitulate here, is, I'm going to ask either Andy or Aaron about a stock. We'll talk about the stock briefly, I will then ask the pointblank question, what is the market cap of this company? What is the valuation? Market cap, of course, if you take all the shares of any company and you multiply it by the price per share of that company, you kind of get the full value of that company -- we're ignoring debt and enterprise value for these purposes -- it's the market cap, and we've made a whole game show around it.
And so, that's the game we're playing. I ask Andy or Aaron, what's the market cap? And then the other guy, an easier job, simply says, I think it's higher or I think it's lower. And while you might think this game is about these two gentlemen and their viewpoints on the market and their expertise, it's just as much about you listening at home. So, over the course of our time together, there are ten stocks, the maximum score you could have playing at home is, of course, ten. We'll see which of our talented contestants ends up with a higher score. At the end, we'll give the key money hashtags that you can use after having played the game with us, especially if you rock the game and our contestants.
Well, I think without further ado, we should probably get started. Aaron, Andy any thoughts or questions ahead of time or should we just go right in?
Bush: No questions for me, I think this is going to be the toughest one yet, though, just given how crazy prices have been moving around, so I'm ready.
Cross: It's definitely going to be my toughest, just looking across at Aaron and thinking about the talent there, so. And it's also, so -- but I'm ready, let's jump right in and go for it.
Gardner: And I should mention, as a public service announcement, this is the very first podcast we've ever done for Rule Breaker Investing remotely, it's self-evident to us, but it wouldn't have been evident to you, our listener, until right now, but I wanted to let you know that these gentlemen are operating from their own respective abodes as am I as is Rick, our producer, and we found a way to do this with headphones and some pretty good technology.
I hope the audio is near as good as it normally would be, if it is, I'm starting to wonder, whether we should just always be doing this in our pajamas, guys. [laughs] In fact, it puts me in mind of a New Yorker cartoon that got fired around on Twitter this week. I love this one, it shows a frustrated, I'm going to say, middle-aged man, sitting at his laptop, in his pajamas, presumably in his house, because the caption is, "My God, ... those meetings really could all have been emails."
Stock No. 1, and, Andy, you won the coinflip, you get to call the first number. Now, stock No. 1, I was looking up-and-down the universe of stocks that I oversee here at The Fool and have built up over the course of about 20 years, it's about 240 different stocks under, mostly, active recommendation in good times and bad. And the one that had the worst day on the worst market day in more than 30 years is this company. The ticker symbol is PLAY. Dave & Buster's (PLAY -0.94%) is not having a good time in this market. Andy, have you ever been to a Dave & Buster's?
Cross: I've only been to a Dave & Buster's once. And I just remember getting back into my car and pretty much taking all the Purell that I had in my car and just lathering my hands with it, and this was before the current crisis with the coronavirus and COVID-19. So, I've only been there once, it actually was a lot of fun, for a birthday party.
Gardner: Wow! That did show extra foresight on your part. Now, we want to make it clear, it's really sad what's happening to Dave & Buster's. This is a company that's been a pretty good performer over the course of a couple of decades, a business that's provided a lot of entertainment for people. But when the smoke cleared at the close of Monday's 12.99% decline in the market overall. Dave & Buster's was down 46%. This is an active Rule Breaker, this one took it in the chops along with so many other stocks. And, of course, while we are recording on Tuesday, where the market is bouncing back some, who knows where it'll be by Friday or three Tuesdays from now.
Alright, Andy Cross, what is the market cap of Dave & Buster's, ticker symbol PLAY?
Cross: I think the market cap of Dave & Buster's is $550 million.
Gardner: Aaron, higher or lower?
Bush: That's tough. I'm going to go lower.
Gardner: And, Aaron, you have it. In fact, the market cap would have been about $550 million, Andy, just a couple of days ago, but as of recording this Tuesday afternoon, again, 2:45 PM eastern time, we're stamping out all our prices, $220 million of market cap, which puts Dave & Buster's in a micro-cap situation.
I think a lot of us are familiar with Dave & Buster's, whether or not we've been there or used Purell after it, Andy Cross. But it does really call into question, at this stage in time. A company like Dave & Buster's, and there are a lot of other retail establishments, there are a lot of other restaurants, and Dave & Buster's is, of course, both, a restaurant and a game arcade, in a sense. But we look at these market caps, Aaron, and I'm wondering, does Dave & Buster's make it out of this era?
Bush: I think the first question to really ask is just what does their balance sheet look like? The question really isn't can they thrive, but can they survive? So, looking up after the facts, it looks like their enterprise value, which adds back their debt and subtracts the cash, is nearly $2.1 billion. So, they carry a significant -- and that will be a mix of operating leases and long-term that are pushing that number up. So, I think Dave & Buster's, if this virus situation lasts a longer time, is in a pretty tough spot.
Gardner: Well, certainly, Andy, the market is saying so, having cut the stock in half in a single day and driving it down to microcap valuation.
Cross: Clearly, David, and I think, when you think about the lack of foot traffic now and all the ways that Dave & Buster's can generate revenue that's going to have an impact on their ability to pay off their debt expenses, their operating lease expenses, their rent. And so, investors might be looking at this and saying, "Wow! Dave & Buster's unfortunately is in a very, very difficult spot right now."
Gardner: My hope is that some of those operating agreements, those lease agreements, just commercial real estate, in general, I hope will be more forgiving, there might be a pause, I can imagine. In the end, everybody wants to get paid back and made whole and I think there's going to be some more forgiveness and compassion around these months, but we'll have to see. Certainly, Dave & Buster is priced, as if it looks like it's going to fail, it could be a heck of a buy right now.
Alright, that was stock No. 1, let's go to stock No. 2. And, Aaron, you are in the batter's box for this one. I figured, after looking at a stock that did about as bad as any other stock I've seen this week on, is it fair to call it Black Monday? I feel like we're overusing that at this point. But I wanted to go to one that's a real bulwark and it's certainly one of the best-known companies in the world, and that is Apple (AAPL -0.74%). Apple, of course, has dropped like most companies over the last month, fairly steadily, and yet not nearly as much as many others. Certainly, the financial strength, since you gentlemen were just talking about the balance sheet, you think about how much cash Apple is sitting on top of, a lot more than the GDPs many other countries in the world today, that's how big, stable and successful Apple is. Aaron Bush, what is the market cap of Apple.
Bush: I'm going to guess it's right around $1.1 trillion.
Gardner: Andy, higher or lower?
Cross: David, I'll say higher.
Gardner: And, Andy, gets one back, the score is one-to-one. Aaron, made an outstanding estimation. I suspect, Aaron, who's pretty good at thinking through, someone who's memorizing market caps, I know in this environment it's not easy to do that, Aaron, but you had a good sense of Apple because its market cap is $1.176 trillion. So, you were only off by $76 billion and while that's more than the market cap of most stocks on the market, for Apple, it's not far from a rounding error.
Aaron, I know the shift in our rules for the game hurts you a little bit, because you made a great call there, but Andy had it right, it is higher.
Bush: Well done!
Gardner: Aaron, does Apple have a place in your life? Are you somewhere within Apple's ecosystem as a customer?
Bush: We are recording this right now or I'm recording this right now on my Mac laptop and I'm using my headphones, I got AirPods, I have an iPhone, I have an iPad, I'm all Appled out.
Gardner: You know, Andy, the company really distinguish itself, as massive as it is, the number of products it actually sells aren't that many compared to anything, like, let's say, Amazon or Walmart, it's that focus and it's that ecosystem, once you get your iPhone, you want to get maybe an Apple Watch, maybe you have an iMac, it goes on like that, and then Services these days as well.
Cross: Well, Services is North of 20% of their total revenue now, and their Wearables business is growing. And it really focuses on providing a limited number of products that they have some pricing ability to be able to raise those prices because of the quality. And then, David, as you mentioned, hook them into the system that allows all consumers to benefit from cloud and from other services, like, streaming and music and gaming now that they didn't have just a few years ago.
Gardner: Alright. Stock No.3, and I turned back to Andy Cross. Andy, the stocks we're going to be talking about this week, including the ones we just did, most of them are well down from where they were a year ago. This particular company is actually a little bit higher than where it was one year ago. It's also a large cap company; I hope that's not a spoiler. So, Gilead Sciences (GILD -0.82%), ticker symbol GILD, is frequently mentioned as a company that potentially could help us through the coronavirus. Now, it has its own drug, Remdesivir, which it has been working on toward, specifically, coronaviruses for years now. It's being tested, of course, on an experimental basis right now out there in the field, it's something that the CEO of Gilead is obviously, understandably bullish about.
This is a company that is, by the way, down from where it was four years ago. Ironically, Gilead Sciences which kind of helped cure hepatitis C, started getting dinged for that, because once you cure people, you can't keep selling them the drug that cured them, that was a one-off sale, and that was really the tail that wagged the big dog of Gilead in recent years.
But here it is, this company coming back in the headlines, Andy, increasingly relevant today because of Remdesivir. It'll be interesting to watch that. Andy Cross, the ticker symbol is GILD, Gilead Sciences, what's the market cap?
Cross: David, the market cap of Gilead Sciences is $53 billion.
Gardner: Aaron, higher or lower?
Bush: I'm going to guess, higher.
Gardner: And it is quite a bit higher. It reminds me, by the way, that I'm glad I don't play this game. I like playing Alex Trebek because I'm always right, just like Alex Trebek always sounds like the smart guy. So, it is higher, it's actually quite a bit higher. As of this recording, the market cap of Gilead is right at $94 billion. So, it's a company, that, if you look at the last few weeks of its stock chart, you'll see it's, kind of, doing pretty well in expectation or hope that it might be part of the solution.
Now, I realize, Andy, it can be frustrating to feel like you were a little bit less than half, but it also suggests to me, Andy, that maybe you don't want to buy Gilead, because it was worth twice as much as you thought it was. If it was the opposite, you'd probably want to be a strong bull right now on Gilead.
Cross: Oh, that's probably true, David. But there aren't many companies that are near the $100 billion mark in market cap in the world and in the U.S. So, that's just why I thought Gilead was a little bit smaller. I mean, $53 billion that I guessed, that's still a very large company. You mentioned large caps, so I thought I was pretty OK there, but clearly not.
Gardner: Yeah. And you were closer to than Aaron was on his $1 trillion Apple guess, right, he missed by, like, $70 billion, so. Alright, stock No. 4. Aaron, do you have a pet?
Bush: I do, I have a dog.
Gardner: So, is your dog hunkered down and in lockdown mode with you as well?
Bush: He is. He keeps on walking back-and-forth behind me as we record, trying to figure out who I'm talking to.
Gardner: [laughs] Well, of course, understandably our hearts and our minds are largely sat on our own race, trying to save each other as fellow humans, which I think is the right priority. But a lot of us have an important secondary priority, at least, and that's our pets. And so, I'm thinking a little bit about all of our furry friends with stock No. 4. Now, IDEXX Laboratories has been a spectacular long-term performer for Motley Fool Stock Advisor members. The ticker symbol is IDXX. And, yeah, IDEXX Labs, spoiler alert, is down with most of the rest of the market, of course, over the last month. So, if we covered this one, which we probably did a few shows ago, the market cap is significantly lower right now. I'm going to turn to Aaron. Aaron, what is the market cap of IDEXX Laboratories? One of the leading veterinary suppliers of diagnostics and other support for our furry friends.
Bush: I'm going to guess $20 billion.
Gardner: Alright, Andy, higher or lower?
Cross: I'm going to guess lower, David.
Gardner: And that evens up the scorecard once again: Aaron 2, Andy 2. Aaron was awfully close with his guess, let's be clear on that, because the market cap of IDEXX Labs. Aaron, you said $20 billion, is $19.5 billion. So, a $500 million miss, which in most contexts would be a massive miss. In this one, it's rather small, and yet that's why we play the game. So, Andy, well done IDEXX tipping in just a little lower than $20 billion. Two-to-two. Andy, do you have pets?
Cross: Yeah, David, we have a dog, Cozy, who's about seven years old golden retriever.
Gardner: That is awesome. Well, Cozy is probably happy, because you just tied Aaron which is not a very easy thing to do in the Market Cap Game Show. Four down, six to go.
Bush: My dog, Donut, is looking at me with such disappointment right now. [laughs] That's all I have to say.
Gardner: Alright, stock No. 5, I turn back to Andy Cross. Andy, if you're like me, you're getting a fair amount of stuff, as long as anyone is going to do it, delivered to your doorstep these days. Is that true of you as well?
Cross: It is true, yes. Amazon shows up almost every day now.
Gardner: Amazon has been a powerful bulwark for many of us, and I trust and hope it will remain so. But before that product can get to you, it needs to get shipped and this company, Old Dominion Freight Line (ODFL 1.29%), is one of the leading truckers. Now, Old Dominion Freight Line, which is a Virginia-based company, is a less than truckload company, that's distinguished itself over the years through its logistics, because less than truckload, that means that you're not filling up the cab of the truck with just one thing, like, widgets, you're actually filling it up with a bunch of different things, going different directions. It's a more complex business to run and ODFL has run it very well.
Now, the stock market has sold this stock off, like most others. But in a world where trucks are still moving around and doing important things in this world, I'd say, I like ODFL in this environment. Again, the ticker symbol is ODFL. Andy Cross, what is the market cap of Old Dominion Freight Line?
Cross: David, I think the market cap of ODFL is $6.5 billion.
Gardner: Aaron, is it higher or lower?
Bush: I think it's a bit higher than that.
Gardner: And indeed, it is. In fact, Old Dominion Freight Line is clocking in at $13.8 billion, we'll just call that $14 billion as we go. So, Andy, you came in lower again. I'm starting to maybe see some pattern recognition here, maybe you think the stock market is worse that it's actually been?
Cross: Well, maybe my pattern recognition isn't so good. [laughs] I guess, is what I'm thinking. Yes, I feel like I'm guessing what market caps were about a year-and-a-half ago, so.
Gardner: [laughs] While I'm not looking at Motley Fool Stock Advisor right now, where ODFL has been a stellar performer, I suspect the market cap was somewhere around there when we first found it. And even after a pretty bad sell-off, the stock is down from about $225 to $175 in just a matter of weeks. So, that's about a 20% drop or so. Still, it's done really well over the only term that counts, the long-term. And certainly, we like this stock going forward.
Before we move on to stock No. 6, I should mention, Aaron, as a former analyst of my team, you spent in some ways every day looking over the market caps of these companies whereas we're welcoming in, Andy, as our guest star this time, he's following thousands of companies, not just the ones that we at Rule Breakers maybe might know extra-well. Aaron, I feel like you might have a little advantage, and darn it! I hope you'll press that through for a victory.
Bush: I hope so. And it's very close right now, though, so I'm getting worried.
Cross: His advantage is just in pure intelligence, David. Pure intelligence, that's his advantage; one of many of his advantages, I should say.
Gardner: [laughs] Alright, let's move to stock No. 6. Stock No. 6, Aaron Bush, is a Canadian company, a company that was a universally well-recognized brand name. One of the most successful companies in Canadian history before the iPhone showed up, and all of a sudden BlackBerry (BB 1.56%), ticker symbol BB had to shift its business.
Now, it certainly was caught, I'd say, pants down a little bit by the iPhone. And the company had such a big corporate clientele. So, for years it could kind of still serve up emails to people, like, brokers or, I don't know, corporate executives who are still using their BlackBerries even, let's say, 2012, 2013. But these days, the iPhone has taken over the corporate market as much as any other market. And BlackBerry has shifted its business to cyber security.
So, it remains a software company, but a much beaten down one. And boy! This stock has sold-off in recent weeks. Aaron Bush, and of course, all of our fellow Fools playing at home, what is the market cap of BlackBerry?
Bush: I really have absolutely no idea, but I'm going to guess --
Gardner: That's a refreshing thing for you to say, especially if I'm Andy.
Bush: [laughs] I have no idea, but I'm going to guess $1.5 billion.
Cross: David, I never owned a BlackBerry, so I think I'm maybe not the best to answer this question, but I'm actually going to guess lower than Aaron.
Gardner: Now, we have a degree of separation, because for the first time, Aaron, you got this one right, as well taking a four-to-two lead. Now, you're both pretty close, the market cap of BlackBerry is $2.1 billion, but, oh boy! has this been a bad stock pick for me. I picked it -- it's kind of a turnaround pick -- in July of 2018, thinking Canada would rally behind this company, and I liked the direction it had at the time, it was trading around $10.5, today it's right about $3 a share. So, it's a company that has just nosedived. And certainly, even within the last few weeks, it really has accelerated its down-pacing.
So, we're seeing a once proud Canadian giant down at $2.1 billion market cap. Does either of you have positive feelings or want to give some good karma to BlackBerry?
Cross: Just to clarify the point, we are talking U.S. dollars here, right, David. So, I don't want Aaron to get the advantage of having the Canadian dollar work for him.
Gardner: [laughs] These are U.S. dollars; I'm just reading it right off the New York Stock Exchange tape.
Bush: Honestly, I think it's impressive that BlackBerry is still able to have a $2 billion, mostly software business, given the fact that they weren't able to turn their phone business around. Even though it has been a dog in some way, since it's been on your scorecard, I think it still is somewhat impressive, from a leadership standpoint, to be able to still have a multibillion dollar business, especially in this climate, with a business that's just entirely different from what it used to be.
Gardner: Alright. So, Aaron Bush -- 4. Andy Cross -- 2. We move to stock No. 7. This company is based in Nashville, Tennessee. And even though I have a son who goes to Vanderbilt these days, I didn't realize that HCA Healthcare (HCA -0.69%), ticker symbol HCA, is a Nashville-based company. Certainly, Healthcare is a big thing in the city of Nashville, Tennessee. It was founded by Dr. Thomas Frist. His son these days is a U.S. senator from Tennessee. It shows the power of entrepreneurs starting something big and then future generations of the family, in part, benefiting from that.
But, Andy and Aaron, I was thinking, in particular, about this coming just because of hospitals, and there's that worry that we're all going to get sick at once and overburden our hospitals. And a company like HCA Healthcare, which has been a long-term player, a very successful company, a good stock for Motley Fool Stock Advisor members, would be under fire in that kind of a situation.
In fact, I was just googling, Andy Cross, and I see -- well, this is, as of a Washington Post article a few days ago, the United States has an estimated 924,000-ish hospital beds, many of them are already being used. So, it's a very important and urgent matter. Talk about flattening the curve. Even if a lot of us do end up getting coronavirus, try to get it as late as you can, all of those are key factors. Again, not just for HCA Healthcare, but for all of us.
And I don't know, fun fact, Andy, does this help you out at all in the game? We'll see. The company was ranked No. 67 in the 2019 Fortune 500 list of the largest U.S. companies by total revenue. Although, you'll notice, I'm not giving you the revenue figure. Andy Cross, what is the market cap of HCA Healthcare, ticker symbol HCA?
Cross: David, I'm going to say, I don't really know. I'm going to say, $42 billion.
Gardner: And in this regard, Andy, you are like everybody listening. Most of us don't spend a lot of time trying to learn the market caps of all of our companies. I want to mention, this might be a slight spoiler for Aaron, who doesn't need them, that was a pretty darn good guess. So, closer. But the reason we play this game is to help all of us understand relative sizing and see how this company compares to that one. For example, I find it very interesting that a company like Gilead Sciences is worth about $100 billion, while Apple is worth about 11X that. And IDEXX Labs, a really important company in the veterinary business, is worth about one-fifth that. So, yeah, that's why we play the game.
Okay. So, Andy said $42 billion. Aaron Bush, higher or lower?
Gardner: And sure enough, Aaron has it right. Aaron takes the lead five-to-two. The market cap of HCA Healthcare is $32 billion. $31.7 billion, for those scoring at home. And by the way, I hope you are scoring at home. And right now, if you have five or more, then you're beating Aaron, which is pretty impressive. We'll talk about the hashtag at the end this week, but, guys, let's keep moving.
Alright, stock No. 8. This is a return performer for the Market Cap Game Show, but, of course, all bets are off, all numbers have changed. Although, that doesn't seem to be slowing you down too much, Aaron, I'm aiming this one at you. Stock No. 8. Now, I'm sure people aren't using Tinder quite as much as they did a month or six ago, and I do trust, though -- I bet you do too, Aaron -- that people will resume using Tinder, whether it's three, nine or twelve months from now. But for the time-being Match Group (MTCH) does not look particularly well-positioned in this present market environment.
Bush: Yeah, I think that's totally spot-on. I think that they will continue to struggle for the next few months. And also, just to kind of put on top of that, they're also going through a spinoff procedure right now, where the parent company IAC [InterActiveCorp] which owns 80% or so of the company, is going to spin its portion off. And as part of that, Match is going to be taking on some debt to pay special dividends out to shareholders. So, I think that was weighing down Match a little bit. And what's going on right now is weighing them down even more. So, it's definitely a tough time to be Match, but I agree that the better times, I think, will come back.
Gardner: In, as recently as mid-January of this year, Aaron and Andy, the stock was pretty much right at or near all-time highs. So, it's no longer mid-January, it's now mid-March; very different environment. Aaron Bush, what is the market cap, ticker symbol MTCH, of Match Group?
Bush: I'm going to guess the market cap is $15 billion.
Gardner: Andy, higher or lower?
Cross: David, I'm going to take the lower side of $15 billion.
Gardner: Wow! Well, it was pretty close. I mean, Aaron made another great guess, the market cap of Match Group is $16.8 billion as we printed that price on its timestamp earlier today. Again, by the time our listeners hear this podcast, who knows where the Match Group market cap will be, but that's why we still play the game.
Aaron, you're now up six-to-two. So, pretty good guess, Andy, you were just about $1.8 billion off. It was just the other way.
Cross: Yeah, I thought it was down closer to the $10 billion, $12 billion range. So, clearly, I'm not a Match user, and it shows in my guessing, maybe, of the market caps.
Gardner: Yes. And nor am I, but we have been Match investors and very-well rewarded over time. Although, it's worth noting the stock, again, in mid-January hitting highs around $92. Today, it's right around $57. So. you can see, it's down $35 a share, it's down about 40% in just two months.
Alright, now with the score six-to-2, Andy, I don't think it's mathematically possible for you to win this episode of the Market Cap Game Show, but it is possible for you to get better. Are you ready to get better?
Cross: I just look at it -- I mean, I just need a little respect to earn some of -- I just feel like, I'm losing it for listeners, for you and for Aaron. I'm just holding out hope here, David; holding out hope.
Gardner: [laughs] Alright. Well, a lot of people are holding out hope that they won't have to pay their taxes on time as they have in previous years. And in fact, we've heard from the IRS, there's going to be some forgiveness. In fact, I hear my producer, Rick Engdahl talk in my ear saying, "It looks like about a 90-day delay." That will be welcomed by many of us. And certainly, tax is not top of mind for me, personally, but I'm not sure they ever really are.
I do think it's always been good Motley Fool investing advice, Andy, that tax considerations should really be secondary or tertiary for most of us when we're trying to manage our portfolios and grow them over the course of time. I know, I myself sometimes have been loathed to sell something, because I just didn't want to pay the taxes on it, but, Andy, that's not often the best way to think about things.
Cross: In general, I would say, David, it's not. I mean, in fact, tax deferred investing is one of the best benefits of long-term investing, even with a low capital gains tax rate. If you have money in a taxable account, those tax payments can add up to hurting your returns long-term. So, one of the benefits of long-term investing is ringing up those tax deferred compounding gains.
Gardner: So, this next company, company No. 9, Andy, is a company that I first got to know through its Quicken software, back in the days when people sold software in stores over the shelf. And then, Intuit (INTU 0.61%), the maker of Quicken, would hope that you would upgrade from one year to the next, and enough people did upgrade their Quicken and then later QuickBooks over time, that it built a pretty substantial business. The company acquired TurboTax decade-plus ago, a couple of decades ago now. And has been managing a franchise, helping its customers manage their money and pay their taxes.
And so, Intuit, these days, a very substantial company. I feel like a broken record, stocks substantially down from where it was just a month or two ago.
Bush: The only other thing that I would add about Intuit, is that they're currently going through the process of acquiring Credit Karma, which I believe is going down as the biggest, if not one of the biggest fintech acquisitions of all-time. Credit Karma that provides credit scores and other information to individuals in exchange for their data. So, I don't know too much about that business specifically, but I know that it's a very big deal and it's becoming a very big deal for Intuit.
Gardner: Well, thank you, Aaron. Thank you for reminding me of that. Yeah, that announcement, less than a month ago. So, this is just a few weeks ago, but with all that's been happening in the market, it's almost been forgotten and nearly by me, if you hadn't mentioned that, Aaron. But, yes, I'll put a number out there; maybe this helps my players.
On February 24th, Intuit confirmed it was buying Credit Karma for $7.1 billion, so there's a number for you Andy Cross. And the reason I'm talking to you, Andy, is because I'm about to ask you the question, are you ready?
Cross: I'm ready, David.
Gardner: Alright, Andy, what is the market cap of Intuit, ticker symbol INTU?
Cross: I think it's $56 billion.
Gardner: Aaron, higher or lower?
Bush: Oh, that's tough. I'm going to go higher, just a little bit higher.
Gardner: And sure enough, Aaron has nailed it once again, after a pretty good guess by Andy Cross. Andy, the market cap of Intuit is $64 billion; $63.9 billion, technically. You did say a number a little bit lower than that, within about the 20% range that we used to play this game with, but these days it's just about higher or lower. And so, Aaron, you just put up a seventh point on the scoreboard.
Bush: Alright, I'll take it.
Gardner: Aaron, let me ask you, just pointblank. Are you as good at paying your taxes as you are at the Market Cap Game Show?
Bush: So far so good, I don't think I've screwed anything up yet on the tax front.
Gardner: Do you use any Intuit products?
Bush: I do normally use TurboTax, yes.
Gardner: Nice. Yeah, and, of course, Intuit also owns Mint, talk about being an acquisitive, although not really a growth-by- acquisition company, but nevertheless making some key acquisitions over the years.
Cross: You know, Aaron, if you had to pay taxes on all your winnings from today, I think you might go bankrupt. So, sorry to have contributed to your market cap game tax bill.
Bush: That's OK, I'm making sure that your tax bill stays lower, Andy, so you're welcome. [laughs]
Cross: [laughs] Oh, I appreciate that.
Gardner: And I'm kind of wondering, whether Aaron should be allowed to defer some of his points to next episode, because with a seven-to lead you don't need some of those points, Aaron, but you might be confused, because you might think you're playing against Andy, but you're not. You're playing against tens of thousands of listeners. And I know at least somebody, probably, has a score of seven or higher right now.
I think it's appropriate to mention before we got to stock No. 10. If you find yourself at home excelling at the game this week, the hashtag on Twitter would be, of course, #IBeatAaron. If you're not doing as well as Aaron, but you're still doing as well as Andy or better, it could be #IBeatAndy, or you could rock by hashtag, which is #ILoveToPlayAlexTrebek. Thank you, both, for your efforts on behalf of our listeners this week.
Let's go to stock No. 10. Aaron stock No. 10, is a company you and I have discussed before. I don't know if Andy is as much of a video gamer. Andy, are you a video gamer?
Cross: I am not, David.
Gardner: Have you ever been a video gamer?
Cross: Atari days, but since then it's been -- and maybe in college played a little bit of, you know, Madden, but other than that very little video gaming --
Gardner: And I think about somebody like you, and as productive as you've been in life. And I think about all the hours I could have used to be more productive, but instead I was playing video games. I'd like to think on my deathbed, I won't express regret that I spent so many hours playing not just video games, board and card games. For some of us, it's an approach to life, but I always do admire the people who don't even bother with that, or how about all the hours I've spent watching sports, which I know you've done some more of that, Andy.
Cross: Yeah, clearly, maybe more video game playing would help me in my market cap game calling, because I am leaving a lot to be desired.
Gardner: Yeah. And on a sadder note, of course, it's really March Sadness this year, it's a real bummer. I know, Andy, you're a graduate of the University of Michigan. Michigan had a good basketball team this year. We can't watch them play in March.
Cross: Yeah, that is sad, but the right call in these circumstances, David.
Gardner: True that. But back to video games. Now, this company had some exciting announcements today. One of my favorite games is Hearthstone. I spend a lot of hours playing the digital collectible card game that Activision Blizzard (ATVI) -- more to the point, ticker symbol ATVI -- has brought into the world in the last five years or so. Hearthstone with some exciting announcements about its future, a new year with new seasons, new cards. If you're a Hearthstone geek, and I'm going to guess something like 7.5% of my listeners are Hearthstone geeks. That means most of you probably don't really care, so I won't talk much more about it other than, it's nice to be reminded during challenging economic times that some businesses -- while, I won't say, thrive, some are much more defensible in this environment.
And when you can deliver your products through the air or through the internet to people, and those products give people fun, sometimes needed escapism, satisfaction, sometimes shared fun with friends and families, that's a pretty darn good business to be invested in. Activision Blizzard has been a wonderful stock to be invested in. One of our best performers historically for Motley Fool members.
Aaron, what is the most recent Activision Blizzard property that you have sampled as a customer?
Bush: Probably Call of Duty. And I downloaded Call of Duty: Warzone the other night, I haven't yet played it. But fun facts about this one, Call of Duty: Warzone, their Battle Royale game for the year became the fastest growing non-mobile title ever. They reached 15 million players in only three days, which beats other games like Apex Legends and Fortnite from 2019 and 2018. So, Activision is weathering the storm pretty well, I think.
Gardner: Really impressive. You don't always have to be a first-mover. I think about PUBG, for people who knew that game, that was kind of the first Battle Royale, but it seems like Fortnite came on its heels awfully quickly and exploded in popularity, and then Apex Legends, as you mentioned, Aaron, comes along. But then, here comes Activision Blizzard a year or two later, with its version -- I haven't played Warzone yet, it sounds like you haven't yet either?
Bush: Nope, not yet, probably in the next couple of days.
Gardner: But 15 million of us already have, after just a few days, it's a reminder of the power of brands, because of course, you have a great advantage when you're Activision and you could just take your Call of Duty franchise, built out over a couple of decades, and say, "Oh, by the way, here's our Fortnite take through Call of Duty."
So, to close the Market Cap Game Show this week, Aaron, what is the market cap of Activision Blizzard?
Bush: I feel pretty good about this one. So, I'm going to guess $40 billion.
Gardner: Andy, higher or lower?
Cross: I'm going to say higher than $40 billion, David.
Gardner: Sometimes you don't even have to play the video games to still win the game, or at least win this question in the game. Andy, a really nice way to close it up, the market cap for Activision Blizzard is $44.1 billion as of our time stamp today. Aaron off only about 10%. But that was all it took, you know, sometimes people, Andy, say, you're only as good as your last swing or game or whatever maybe, you're only as good as your last question going out a winner.
Cross: Yeah. I feel this was my own battle royal against Aaron here, but I feel like I saved some, maybe hit a little three-pointer at the end, like, just to kind of walk away, maybe that last putt on 18 that kept coming back. So, hopefully I earned a little bit of respect enough to be invited to come back and try to challenge a little bit better next time.
Gardner: Thank you very much, Andy, you've been on the show many times before and that will happen many times in future, including I hope, next week, because as I talk about it, guys, at the start, we're going to be doing our Rule Breaker Investing Mailbag here in March of 2020, which should be an interesting one, and I look forward to you both joining in next week.
Alright, there you have it, the 11th episode of the Market Cap Game Show. Aaron wins this one seven-to-three. This is an historic episode of this game, because the stock market has never been more volatile, we've never seen such a fast drop. And to even think that from one day to the next, we can't really even know what the market caps are, what's the shelf life of this podcast, the question might be, I think it might be longer than we think. Because I think we'll look back on this one and remember how the market was that week that Aaron Bush, Andy Cross were brave enough to step into the arena and play the Market Cap Game Show with all of us. Guys, thank you very much.
Bush: Thank you, David, this was fun.
Cross: Thanks, David. Aaron, well done!
Gardner: Well, it was fun and games this week. And it was a stiff upper lip, and just keep doing what we do, which I like to do from time-to-time. Certainly, last week's podcast for a lot of people, who're wanting to hear more seriously about where the market is and any feelings I have about it, Thoughts On Our World In 10 ½ Chapters, I hope you'll enjoy that. But I think it was helpful to get back to having a little bit of fun, some levity.
I think before too long; things are going to start to get better; do remember, the stock market typically starts to trade up in advance of what might come yet. So, at a certain point, we might see the stock market end this drop and start to rise ahead of when people might think it does. That at least accords with my own experience watching the stock market over the years, but neither Andy, nor Aaron, nor I has any real sense of what's going to happen in the next few weeks either for the market or the world at large, but that's why, for me anyway, it makes a lot of sense just to keep my money right where it is, and play, as I often say, the only game that counts, which is the long-term game.
Thanks a lot for joining with us this week. We'll talk to you next week, it's Rule Breaker Investing Mailbag. Fool on!