In this episode of Rule Breaker Investing, Motley Fool co-founder David Gardner is joined by Motley Fool analysts Maria Gallagher and Tim Beyers for the 13th installment of the market cap game show. You can guess along and also discover interesting facts about 10 great stocks.
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This video was recorded on September 22, 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. Oh, and there's a third contestant, a very special guest star, and that is of course you, my dear listener, playing along and learning at home.
Yep, that's right. So, it's time to gather the kids and the in-laws, invite your neighbors over -- physically distanced -- and put your market cap hat on. Well, maybe your market cap thinking cap for this, the Baker's dozen, 13th installment of the market cap game show. This week only on Rule Breaker Investing.
And welcome back to Rule Breaker Investing. Thanks for spending a very special week with us, yep, once a quarter, it's the market cap game show. I'm so excited to be joined shortly by my guest stars this week, but few housekeeping notes in advance. The first is, we have an extra podcast this week. It's something that happens from time-to-time for Rule Breaker Investing. And I'm really excited to be joined by Whole Foods Market Founder, John Mackey, who, full disclosure, also happens to be a member of The Motley Fool Board of Directors. These days Whole Foods, as many of us know, is owned by Amazon.
Well, John has a new book out called Conscious Leadership, and it is an outstanding read. And I'm delighted that he'll be joining me this weekend for a conversation about that book. So, if you're already subscribed to this podcast through iTunes or Spotify, Google Play, wherever you find your podcasts, you're going to see an extra one, you have a weekend treat in store, John Mackey joining me to discuss his book, Conscious Leadership.
And then just looking back on the month that was, I'd like to mention again last week's podcast, so much fun with my friends Kara Chambers and Lee Burbage talking about company culture tips, how to work from home better. Something on a lot of our minds, whether we are employers or employees, it's really a part of worldwide culture here in 2020. And Kara and Lee had some wonderful tips, some creative and smart ways to do the working from home better. So, if you didn't get a chance to hear them last week, I think you'll love that.
Also, earlier this month, we did a lot of reviewing a past 5-Stocks Samplers. And I picked my newest one the first week of this month, on September 2nd: 5 Stocks Indistinguishable from Magic.
So, that captures where we've been on Rule Breaker Investing this month. And of course, with John Mackey this weekend, where we're going. But most immediately, where we're headed now.
Well, I'm really delighted to welcome, for her Rule Breaker Investing market cap game show debut, my friend, Motley Fool analyst, Maria Gallagher. Maria, welcome.
Maria Gallagher: Hi, David, thanks for having me.
Gardner: Thanks so much for joining in, Maria. And I'm wondering if you could just briefly introduce yourself, give us a little bit about your background and maybe share your favorite market cap, whatever that might mean to you.
Gallagher: Hi, everyone, my name is Maria Gallagher. I have been at The Fool for a little over two years. I started as an intern two summers ago. And I've been on the investing team a year-and-a-half now. And my favorite market cap, I would say is probably, $1 billion because then it can be a unicorn. And I think that's a fun term, and I like that we can call things unicorns, if they are companies that are valued at $1 billion before they go public. I think that's great.
Gardner: That is pretty great. It has happened with increasing rapidity in recent years. I'm pretty glad that companies are starting to come public again, Maria. It did seem like for some years there nobody was coming public. And it's not quite as fun to be a Rule Breaker when new Rule Breakers aren't showing up in the markets.
Gallagher: Yeah, I agree. It's interesting because unicorns are seen more often than you would think they would be, but here we are. [laughs]
Gardner: Yeah, does that mean they're not unicorns anymore; if we're seeing unicorns all over the place, are they no longer unicorns?
Gallagher: Are they just horses?
Gardner: Yeah, maybe they're just horses. [laughs] All right. Well, thank you for that deep insight, Maria. That very much fits with the style and pace of this show, the market cap game show, a gamey thought. And your fellow contestant this week, yep, he's coming back from his appearance on last quarter's market cap game show; Tim Beyers, welcome back.
Tim Beyers: Thanks, David. Good to be back.
Gardner: Tim, you had a great run of it. I think you tied Dan Kline 5-5. Yep, there are no tiebreakers for the market cap game show. So, I think it's fair to say you are our returning champion. I could have had Dan back, it's just he's so busy doing Motley Fool Live every hour, it's hard to schedule him or really, frankly you, Tim. Both of you are doing yeoman's work on Motley Fool Live.
Tim, could you briefly reintroduce yourself to our audience and share your favorite market cap?
Beyers: Sure. So, I'm Tim Beyers. I've been working on Rule Breakers with David since 2005; April 2005. So, it's been 15 great years. I really love working on Rule Breakers. I'm also the Lead Advisor for Cloud Disruptors 2020, which is a real-money portfolio at The Motley Fool. And up my favorite market cap, David, is roughly $225 billion. I'm not Aaron Bush, so I'm not going to go down into the second decimal, [laughs] but what I will say is that $225 billion is roughly the market cap for Salesforce.com, which is a stock I've held for a really long time, and has been a pretty significant winner for me personally, and hopefully for a few of our members. We like that stock a lot at Rule Breakers.
Gardner: Great one. And Tim, it has been a spectacular performer, a company that really is an exemplar to so many others. The 1-1-1 approach that Marc Benioff self-styled as he founded his company, 1%, Tim, of revenues go to charity; 1% of employees time goes in volunteer form to wherever they want to volunteer, and then the last is, I think, 1% of their product given for free to those who would not otherwise be able to afford it. And that's something that I'd love to see catch on across a lot of other businesses worldwide. That's kind of a conscious capitalism vibe, do you agree?
Beyers: I completely agree. This is a company that really does an incredible job of building a culture of employee connectedness. It's a great culture. They literally use the word Ohana, Hawaiian for "family," to describe their culture. And then a key part of that culture is giving back, and everybody gets in on the game. And I think that is amazing.
Gardner: It is amazing. Almost as amazing, Tim, as the cost basis that you brought [laughs] that stock to Rule Breakers, as you mentioned, in 2009, $6.89, today trading around $245. It's been a 35-bagger spectacular. Now, spoiler alert, Tim, Salesforce is not among the 10 for this market cap gameshow, so.
Beyers: I figured.
Gardner: Yeah. We did have it for you last time, gave you an opportunity to tell some of that story three months ago, but nope, no Salesforce this time. We might have a cloud disruptor or two, though, we'll have to see.
All right, so here comes the market cap game show. Yep, if you take the price per share of any stock in the world, let's go with Roku right now, which is trading around $188, and you multiply it times the number of shares. Let's just pretend that Roku had 10 million shares; it doesn't, but let's just pretend it did. The market cap would be 10 million shares times $188, and if I'm doing my math well, that's something like $18.8 billion. And that's not a bad guess at the market cap for Roku; I'm checking it right now, it's at $24 billion. By the way, Roku being used as an example, because it's also not on this episode of the market cap gameshow. So, price per share times the number of shares gives us, as investors, a quick read on the market cap, on the value, the price tag you'd have to pay for that company.
Now, asterisk, it's actually enterprise value that you're paying, because if a company has a lot of debt and you're buying it, then you're technically buying that debt too, so you add that debt to the market cap to determine the enterprise value. But that's not nearly as fun as talking about the market cap, it's not quick math. And I think most of us have just gotten familiar and comfortable with the market cap as a quick read on seeing how much something is worth.
In conclusion, before we start the game, why do we play this game? We play this game because it's a wonderful way to think about a company going forward when you buy some shares. For example, Roku today is worth about $24 billion, could you ever see that being $250 billion one day? I don't know, but if you did, then you would see that you could make about 10X your money. You're projecting for the possibilities. If you for some reason thought Roku could never get above $100 billion, then that kind of caps, in your own mind, how much that stock could go up, since it could really only go up about 4X in value. There is ultimately no limit. The sky's the limit for any company, and yet, for many different companies, they're limited by their own brand or their own focus or niche or industry or possibilities. Every stock is different. When you know the market cap, you know a lot more than most other investors who do not know the market cap.
You can simply say "higher" or "lower" and score yourself at home. And in fact, if you want to share in social media how you did, we always love to see how you're doing at home too. We're @RBIPodcast on Twitter.
All right. Well, Maria, we drew lots; actually, I just randomize this on my phone, and you are up first, you're going to make the first call on this first company. Now, Maria, are you working from home today?
Maria Gallagher: I am working from home today, yes.
Gardner: And roughly how long have you been working from home?
Gallagher: Since early March.
Gardner: And indeed, so have I, and probably so is Tim, and probably so have so many of us hearing me right now. And when we're working from home, Maria, do you find yourself using a particular video platform?
Gallagher: [laughs] I do. I'm a big fan of Skype.
Gardner: Excellent. Well, Skype, [laughs] and I love the head fake there, Skype, not a directly tradable public company itself. There is a competitor to Skype, I think some people might say it's become better known than Skype in something like six months. And that is the stock I'm thinking of right now. Maria, what stock do you think I'm thinking of right now?
Gallagher: Maybe Zoom.
Gardner: Exactly. One of the biggest ticker symbol mistakes most people have made in 2020 thinking that Zoom's ticker is ZOOM. But I know Tim, you know that Zoom's ticker symbol is.
Gardner: Exactly. And that is stock No. 1. Maria, I bet you've got to know Zoom awfully well. We're all about to get to know the market cap of Zoom awfully well. I'm glad I don't have to make a guess at this myself, because this stock just keeps making new highs, and it's astonishing. Maria, your best guess, the market cap for Zoom Video Communications, ZM?
Gallagher: My guest is $133 billion.
Gardner: Tim Beyers, that's a pretty good guess. I know you probably have spent some time looking at this company. This would be one of those cloud disruptors, I think. Tim, "higher" or "lower?"
Beyers: It's so close to that. And boy! I am very tempted to say "higher," but I think it's slightly lower than this. So, I'm going to say slightly lower.
Gardner: And wow! You're right. Maria, made a great guess, and it was just a little lower. So, we are recording, of course, Tuesday afternoon, as we want to do, where the market cap of Zoom trading just over $490/share, is $125.5 billion, just a little lower than Maria's $133 billion. Tim, would you buy Zoom today?
Beyers: I would. I own two shares of Zoom. And I think that this is one of the defining companies of the current generation we're in. I don't think I'd pay a lot and buy a huge number of shares, but yes, I would be interested in adding to my incredibly large two share position.
Gardner: [laughs] Maria, do you own any Zoom?
Gallagher: I do not, no.
Gardner: It has been an amazing stock. My brother, Tom, picked it last Summer, so a year ago. I don't even know how far it's up for Tom, but I picked it earlier this year in March and it's up to 278% since then. This has been one of those companies that has truly shot across the night skies, a Starshot stock and one that I don't own personally myself, but I sure am glad that Tom and I have picked it and so many Fool members and no doubt a lot of our listeners have owned at least a share, if not two, Tim.
All right. So, we'll leave Zoom right there. Tim 1, Maria nothing. Even though I feel like Maria deserves at least a half point for that excellent guess, but that's not how we score the game. How are you doing at home? We hope you've scored a point as well.
All right. Let's go to stock No. 2. Tim, have you ever spent much time on TikTok?
Beyers: Oh, my gosh! No. [laughs] I probably should know more about this, because I have teenagers, but, no, I have never actually tried TikTok.
Gardner: Have you seen any of your teenagers dancing in front of their mobile phone recently?
Beyers: [laughs] No.
Gardner: All right. Well, nor have I. Maria, you are admittedly about a half generation younger than we are, if not a full generation. Maria, is TikTok part of your life?
Gallagher: I don't have a TikTok, but I have learned dances on TikTok and I have watched many TikTok videos that my friends have sent me.
Gardner: Excellent. Maybe that'll give you a little bit of an edge here. Now, TikTok, as many of us know, is not a tradable stock, a public company. It certainly is under fire from the Trump administration. There has been a lot of reporting around what should happen with TikTok, should it be bought up by an American company, the American side of it? Should it be banned from America? How should we think about TikTok?
Well, we can't think about TikTok the stock on this podcast, but we can think about the companies that are setting themselves up to become part owners of TikTok. And, Tim, one of those companies was started by Larry Ellison a long time ago.
Beyers: Yeah, Oracle (NYSE: ORCL).
Gardner: Exactly. Oracle, ticker symbol ORCL, has been, for the most part, an amazing company on the stock market for decades. The world's leading database company in many ways, but especially in the pre-cloud era, Tim, when Oracle could come up with its new version and sell that. And when the cloud showed up, Oracle got a little disrupted, is it fair to say that?
Beyers: Oh, it's very fair to say that. In fact, true story, I sold my shares of Oracle before I bought my shares of Salesforce.
Gardner: That is awesome. So, that means you've avoided some underperformance which we've seen from Larry Ellison's company in recent years. And yet it's still a pretty big company. Tim, have you followed TikTok, Oracle, etc., is that part of your focus or is this not on your map?
Beyers: I followed Oracle a little bit because of the disruption. And I have to say, I've been maybe a little bit unfair with Oracle in terms of how well its own cloud platform performs. You know, the big three are Amazon, Microsoft, and Google Cloud, but Oracle is in there too. And they like to say so. And interestingly enough, they serve Zoom. So, the Oracle Cloud serves Zoom. So, I've probably been a little bit harsher on Oracle than I need to be, but I would also say, they are still getting disrupted.
Gardner: Fair enough. And you know, I have to say, looking at the 10-year chart now, which I am for the first time in some time, Tim, I'm seeing Oracle -- I mean, it's not been a bad stock, the company, 10 years ago, was trading around $27, today it's $60. So, it's about doubled over the last 10 years. And you know, in general, a lot of sideways movement, a little bit down here and there, but I have to say, it is at all-time highs now, it's just that so much of the growth happened years ago.
Well, I'll stop beating around the bush. Tim Beyers, what is your best guess at the market cap for Oracle?
Beyers: So, one thing I think is true is that Salesforce passed Oracle a little while ago, like, to become a bigger market cap company, but I don't know the exact market cap of Oracle. So, my best guess here, David, is about $191 billion, but I don't know.
Gardner: We're about to find out. Maria, $191 billion, Tim said, "higher" or "lower" for Oracle, ticker symbol ORCL?
Gallagher: I'm going to say lower, because I think it's $183 billion or $182 billion.
Gardner: Wow! I am impressed. Somebody was doing her homework. $184 billion, it is lower. I feel like turnabout is fair play, since each of you made a great call and the other person just got to say "higher" or "lower" and got the point. Maria, you get the point here now. Maria, you, Tim, and I all know that neither of you was given any list of stocks or access or sense of what was coming, you were in the proverbial soundproof booth, and yet you were still preparing some.
Gardner: Which I think is smart. Do you want to share any tips for preparing for the show, not just for Tim, who may or may not need it, but for so many of us listening at home?
Gallagher: Well, I get the benefit of working with a lot of really smart people who have participated in the market game show before, so I did send out two slacks that started with SOS to Emily Flippen and Aaron Bush, and said, I've never done the market cap game show before, do you have any tips? And they both said, study. [laughs] And they both said, think about companies you think David might ask about, and remember the company's you've brought to David, because you don't want to be embarrassed if he asks [laughs] you a company that you have brought.
Gardner: Well, that is spectacular, Maria. So, not everybody at home, unfortunately, can slack Aaron Bush or Emily Flippen and ask them for tips, but we can hear from Maria her best tip. And, yeah, I think that's pretty spectacular. I myself didn't know I was going to be asking about Oracle until about 15 minutes ago, but I just decided why not, it has been in the news and that is often a reason it might show up on the market cap game show. Sounds like, Maria, you had studied that one. Well played.
Gallagher: Thank you.
Gardner: All right. Next one up, stock No. 3. Maria, when it comes to sports, are you a fan? Let's just start there.
Gallagher: I don't really get sports, so I'm not not a fan, I just, I like the Yankees, but that's just more loyalty to New York than anything else.
Gardner: [laughs] And that reminds me to ask you, you are indeed from New York City, Maria, born-and-bred?
Gallagher: Yes, a little bit outside the city, but born-and-bred New Yorker.
Gardner: So, strongly identifying with Manhattan, with the Greater New York Area. You're a Yankees fan, I guess, how could you not be, right?
Gallagher: Yeah, the greatest team in baseball history. It's an easy team to be a fan of.
Gardner: Does that translate to caring about the New York Giants football team or the New York Jets or anything else?
Gallagher: My uncle Frankie really likes the Jets.
Gardner: All right, good. Well, I'm glad he got a callout on this week's podcast. Hey, Frankie. All right. Well, let's stick with sports a little bit longer. Maria, when it comes to buying sports clothing, I'm sure you run or you do something active, you seem in good shape to me; do you consider yourself an athlete?
Gallagher: I really like, in workout classes, when they call me an athlete, I wouldn't actually [laughs] consider myself one, but I appreciate it when they say it to me.
Gardner: Do you have a particular brand that you find yourself buying off the rack, sometimes mechanically without even thinking about it because you just have such affinity for that brand?
Gallagher: If I'm in a splurgy mood, I will go to Lululemon. If I'm not in a splurgy mood, I will do TJ Maxx.
Gardner: But it doesn't sound like you've spent a lot of money on Under Armour products.
Gallagher: I have not, no.
Gardner: And unfortunately, neither have many other Americans, both real athletes and, like me, fake athletes, because Under Armour has been sucking wind for some years now. Tim, this is a stock that we've had in Motley Fool Rule Breakers since, my golly! it goes all the way back to 2006, it was a monster winner that first decade or so. Do you remember those days?
Beyers: Oh, my gosh! If only it had continued to be what it was, what we thought it could be, it would be a monster right now.
Gardner: [laughs] And we would wish that for all of our stocks, some of our stocks actually do deliver that kind of performance, and Under Armour was one such stock, and then came something like 2015. And I think at the time, Kevin Plank, the Founder and CEO, started to think that the world was moving toward Fitbit and wearable technology, and made some big bets there that didn't pan out so well. And then we started learning more about Under Armour's culture, not necessarily the most wholesome corporate culture. And one thing led to another, and Under Armour is a faded giant.
Now, of course, we're about to ask what the company's market cap is, but before I do, Maria, when you see an Under Armour logo, does that do anything for you?
Gallagher: I recognize it.
Gardner: I guess that's worth something.
Gallagher: But I wouldn't say that I am -- I actually will say, I don't really like the performance wear shirts because I think that they're not as comfortable as just regular shirts to work out in.
Gardner: Fair. Well that wick-wear, a lot of us associate Under Armour's initial innovations there, right? With that wearable garment that, kind of, got your moisture off of you and was very thin. And I have to admit, these days when I buy t-shirts, I almost never want the 100% cotton anymore. Do you remember those days, Tim? I mean, back in the day, those big, thicker t-shirts, but now it feels like this cumbersome thing that I'm wearing, I much prefer some poly mix or something. I don't know if you share the same ...
Beyers: Well, you know what, I'm getting old, so I figure like, you know what, give me the thick shirt, I'm all for it. Give me the thick shirt, I'm going to embrace my inner old man.
Gardner: All right. Well said. Well, I will give Maria this hint, Under Armour five years ago this week was at $40, today it's around $10. In fact, it's a little bit below $10. But more to the point, Maria Gallagher, what is the market cap of Under Armour? In this case we'll use the ticker symbol, UA. It has a couple of different classes of share.
Gallagher: I'm doing the thing that I do when I play trivia, where I don't know the actual answer but I'm thinking of all of the random facts I know about Under Armour. Like, I know they acquired MyFitnessPal for $250 million, but that's not relevant, [laughs] I just want to say it so when I get this wrong people know that I know something about Under Armour.
Gardner: That sounds already very convincing to me.
Gallagher: Thank you. So, I'm going to guess, this is a guess. I'm going to guess, like, $6 billion maybe.
Gardner: Tim Beyers, $6 billion. Tim Beyers and players at home, "higher" or "lower?"
Beyers: I think it's slightly higher than that. I think it's closer to $10 billion, but I might be wrong about this.
Gardner: And indeed, this time you are, Tim. Maria, the point goes to you. The market cap of Under Armour is now $4.2 billion. So, much lower.
Gallagher: I was going to say $4 billion, but then I thought that that was too low.
Gardner: Turns out you didn't need to, because Tim said higher anyway.
Beyers: Nice. That's a good pull, I like it.
Gardner: It is a good pull; it puts Maria up 2-1. It's just astonishing to me to think of the loss of value that we've seen there. And it has remained a Rule Breakers recommendation all the way through. So, it's been in-and-out of the penalty box in recent years. But boy! What was once a multi-bagger; well, actually, we're still up about a double from 2006, but that doesn't feel so great when you've held the stock [laughs] for 14 years.
All right. Let's keep going to stock No. 4. So, Tim, in its own way, Under Armour tries to be an upscale brand, at various points it has been perceived as a premium brand within its category. The next company continues to have that positioning in its own very different industry. Tim, when was the last time you went out and bought a jewelry of any form?
Beyers: It's been a long time.
Gardner: I mean, maybe this is a reminder, and I'm saying this as much to myself and any other husband out there, but, you know, for those with wives, I do feel as if this particular brand has a special sparkle to it. Its boxes are, kind of, an off-blue color, a light blue color, kind of, robin's egg blue. And the company Tiffany & Co., ticker symbol TIF, has been in the news in recent months. Because, Tim, I don't know how carefully you follow this, Tiffany is not exactly a Rule Breaker, but the company had agreed to merge with a French company, LVMH Moet Hennessy Louis Vuitton, [laughs] one of the longer corporate names in the entire world. I believe, LVMU (sic) [LVMUY] might be the over-the-counter ticker symbol, for those who might want to buy it, but it is a much larger company than over-the-counter would suggest.
And these companies said they were going to merge months ago, and then recently it seems, Tim and Maria, LVMH has been backing out of the merger, trying to in Tiffany's words, slow down and not request some of the steps that you would expect to have in order to, with proper governance, acquire another company, and it's all been kicked, it seems, into the new year. And earlier this week, we have a judge favoring Tiffany a little bit, saying this needs to be fast-tracked, ideally that they would negotiate a settlement before the January 5th trial date next year. We don't need to get too much down in the weeds on this one. This is not a stock we have under recommendation, but it is an interesting company. And I'm curious, Tim, what your guess is at the market cap for Tiffany & Co., ticker symbol TIF.
Beyers: So, just like Maria did her guess last time here, I am 100% guessing here. So, what I do when I'm guessing, when I'm playing the market cap game show, is to throw out random numbers that are super-specific to potentially throw off my opponent here. So, I have two completely randomly super-specific numbers, I think it's somewhere between $16.7 billion, David, and $18.5 billion. So, I'm going to go with $17.1 billion.
Gardner: All right. $17.1 billion. Players at home and Maria Gallagher, "higher" or "lower" Tiffany?
Gallagher: I'm going with -- I have no idea; I'm going to say lower.
Gardner: And, Maria, you just took a 3-1 lead at the market cap. And, Tim, a pretty good guess. I have to admit, part of the reason I never play the game, I just get to be Alex Trebek, is because I'd never get embarrassed, and I probably would have had an embarrassingly low number here. The market cap for Tiffany is $13.9 billion. The stock is at about $116 today. It makes some spasmodic lurches higher or lower based on the headlines like the one I mentioned earlier this week, because this is now as much about the courts as it might be about how you or I might fairly or unfairly value Tiffany. So, it's in a really odd position. The stock, for example, dove from $135 down to $110 in one day in June based on developments around the LVMH merger.
It's funny, thinking about that French company, you have so many luxury brands packed into just the corporate name. Maria or Tim, do you have any associations with either Louis Vuitton, Moet or how about just Tiffany itself?
Gallagher: I own a Tiffany necklace that I got when I was a flower girl at my cousin's wedding. And my gift for being a flower girl; I was less than 10 years old; I got this pretty flower necklace and I still have it and it still fits.
Gardner: That is awesome. Well, I think that people who bought and held Tiffany's stock have been very well rewarded. I'm not sure what year you were nine, Maria, but I can tell you that the stock in 2009 was at $15. So, to see Tiffany up at $116/share today reminds me that it's been about a 10-bagger, if you really picked it well in the darkest times a decade ago. I would not have expected that, I have to admit myself. I would have thought it gets disrupted, Blue Nile was the stock pick we had in Rule Breakers, Tim, for quite a while there. Not a great stock in the end. But you would think, wouldn't you, that maybe a retail bricks-and-mortar company would be more disruptive than that. And yet, Tiffany, it's positioning for, especially for engagement rings, that's not that much of an online market, probably, as we discovered with Blue Nile.
All right. So, Tim, your work cut out a little bit for you right now. Maria, 3; Tim, 1. Maria, back to you. All right. To stock No. 5. Maria, do you like beer?
Gallagher: No. [laughs]
Gardner: I don't like beer either.
Gallagher: [laughs] I don't really like sports; I don't really like beer.
Gardner: [laughs] And, Tim, you're not a beer drinker, I don't think, are you?
Beyers: Not too much of a beer drinker; no, not anymore.
Gardner: And part of the reason I remember that is because we talked about this very company three months ago. And spoiler alert, Tim got this one about as wrong as anybody did that particular show, which is why I thought it'd be fun to bring this one back ...
Beyers: Ah! I know what's coming ...
Gardner: You know, in the early days [laughs] of the market cap game show, Etsy was an example stock that we would use and then we'd play with it on the show. And Matt Argersinger, who was joining us for multiple shows at that time kept getting it wrong every time even though he knew it was coming back. And so, it kind of became a thing, but it also became another thing, because Etsy frequently surprised Matt at how small its market cap was. And so, the point I was making at the time was, you know, if you're guessing a company's market cap, and you say $20 billion, and you find out the truth is it's just $5 billion, that kind of suggests that you think it has a lot of room to grow, because you thought it was $20 billion and it's only $5 billion. And so that, to me, looks like a pretty bullish indicator. So, that's one way to have even more fun with the market cap game show.
And indeed, Boston Beer was one that Tim got pretty dramatically wrong. Now, I'm not going to say what the market cap is, because I'm about to ask that question of Maria Gallagher, but I would like to point out what happened three months ago. Tim said a number. Dan Kline, his competitor, said "lower." Turns out Dan was right. Tim guessed a number way higher. And this company, Boston Beer, ticker symbol SAM, in the last three months has gone up more than 50%. In other words, that indicator that if you think something is quite big and you find out it's a lot smaller, maybe you should buy the stock, would have worked really well in just the last three months for Boston Beer, ticker symbol SAM.
So, it sounds like none of us three fellow Fools really spend any time drinking the product here. And yet, here I am asking you, Maria, what is the market cap of Boston Beer, ticker symbol SAM?
Gallagher: I think this is going to be embarrassing, [laughs] because I think I'm going to say a number that is horribly wrong. I am going to say $36.4 billion.
Gardner: Tim Beyers, "higher" or "lower?"
Beyers: Oh, dear Lord! I hope I'm right about this. Slightly lower.
Gardner: Wow! All right. First of all, Tim, you got it right. It is lower. But friends, lower by quite a lot, which reminds me again of what we just talked about, [laughs] which is, Tim and Maria, and everybody listening at home, maybe you should be buying some more SAM stock, because the market cap for Boston Beer is $10.8 billion, that is up more than 50% since we last did this show three months ago. This is an Etsy-like indicator that I'm now tracking. So, yup, market cap for Boston Beer $10.8 billion. Jim Koch, the Founder, longtime CEO of this company, is probably smiling all the way to the bank with his company, which you know initially was, sort of, a craft beer. And a lot of people that's how they thought about Sam Adams, and then this company began to invest in the whole idea of craft beers as a platform and almost turned into a VC for other craft beers. And yet, these days it operates in the strange space where it seems too big to be cool, like craft beers are, but nothing compared to the size of something like Anheuser-Busch.
And so, Boston Beer, which has been operating in, sort of, that nether space, that middle space for all these many years. First picked, it was Matt Argersinger who actually brought it to me in Stock Advisor in May of 2010. And it is up exactly 1,400% as I look at it as we're speaking today, a 15-bagger. Spectacular performer. And yet, Maria and Tim, yeah, the company just $10.8 billion today.
Now off-air, earlier, Maria asked Tim, what did you guess last time? And, Tim, what was your response?
Beyers: I have no idea, but I will say, I'll make a guess now, I'll make a quick guess now. I think I probably said, like, $25 billion.
Gardner: And that is a pretty good guess at what you guessed back then. My good friend, Malena Butler, who runs the numbers for us and keeps track of all our market cap game shows of the past, let me know earlier today that Tim you guessed $27.1 billion on that show three months ago, it was actually just then at $6.65 billion. Here we are now at $10.8 billion. Well, we'll just keep following this story going forward.
All right. We're going to call that halftime.
Team, I'm going to accelerate our pace here. We had a lot of fun with those first five stocks, but this podcast would go way too long if we had that much fun with our second half. So, we'll accelerate our pacing a little bit for our players at home as well and go right to stock No. 6.
Tim Beyers, do you run at all these days, do you get out on the road, maybe join some of these 5K from time-to-time?
Beyers: I don't, but I do try to do somewhere between three- and five miles of walking per day and throw the headphones on for podcasts. That's what I like, I don't like to run, but I do love to walk.
Gardner: Wow! I mean, a lot of doctors, I think, these days say, they are kind of equivalent to each other. And running can really wear on the knees, so I think you're doing it right. Maria, are you a runner?
Gallagher: No. I can run three miles, and that is it. [laughs]
Gardner: And that's about where I am these days, I'm sort of like a three-mile runner, a couple of times a week. So, none of us, like we're not really drinking that much beer, we're not really running that much, but Tim is walking ... I'll say Tim is walking and listening to the podcast, Motley Fool Podcast, we're hoping, and that's awesome, Tim. So, let me stay with you, Tim, because one of those running brands that we've had in Motley Fool Rule Breakers for some years now, the date was September 23rd, 2015, I recommended it for Motley Fool Rule Breakers at $47.57. I'm sorry to say five years later, just about the five-year anniversary, September 23rd, 2015, it's $29.34. So, down 38%.
I did decide it had gotten crushed and I rerecommended it in Jan. of 2019. It is up 18% from there, but oh, my golly! we're still behind the market on that one. So, Skechers, a two-time rec in Motley Fool Rule Breakers, twice a loser. But that's all the past, right now we're not even going to talk about the future, that's really what matters to investors, no, we're talking about the present, because this is the market cap game show. Tim Beyers, your best guess, the market cap for Skechers, ticker symbol SKX?
Beyers: I'm going to say $2.29 billion. And I'm not going to give Maria any clues as to whether or not that's a specific head fake or if I actually know that, because we did consider Skechers for Odyssey 2, which is a Supernova portfolio that I led for a little while, David. So, I'm not going to say which one it is. I may know it exactly.
Gardner: Wow! Tim, you may be playing the role of puppeteer here. It seems like you're bringing a new aspect where you could even be playing with your opponent on the market cap game show, which I guess is fair. Maria, do you want to play, is Skechers higher or lower than $2.29 billion?
Gallagher: Tim is coming in with some psychological warfare. I am going to say lower.
Gardner: And unfortunately, Maria, even though she was a psychology major in college and can certainly wage just as good warfare on that battlefield, blew that one. Nope. Skechers, Maria, is $4.8 billion. Tim, the point goes to you. I believe, friends, we are tied 3-3. Does either of you own Skechers in your wardrobe?
Beyers: No, but my --
Gardner: One of your teenagers?
Beyers: Yes. Well, I guess he's not a teenager anymore, because he's 20. He may still own some Skechers.
Gardner: What do you call him now, Tim, an adult?
Beyers: Yeah. Look, I mean the kid is more mature than I am. So, of course, he's an adult. [laughs]
Gardner: All right. Well, if you didn't get him any Skechers shares, well, that's been a good thing for him, because it's been a market underperform the last five years, but we're, of course, now back to only thinking as investors, the future is all that matters, we'll see how Skechers works out.
Let's go to stock No. 7 now. Earlier, Maria, you mentioned as part of your prep for the show that sometimes I'll ask people about stocks that they brought themselves to our services and you were right about that. Good intel from Aaron and Emily. So, the date was January 23rd of this year, 2020, so just about eight months ago. Maria, what was the company you suggested we consider for Motley Fool Rule Breakers?
Gardner: Ticker symbol PINS. Maria, what was it at the time that caught your attention about Pinterest?
Gallagher: I just kept hearing a lot about it, and I understood where they were in their lifecycle of monetizing their platform. And I thought it was a really interesting time as they started to ramp up that monetization and I was impressed by them.
Gardner: And since I'm speaking now to the analyst that brought Pinterest to Motley Fool Rule Breakers, and it's up 63% since. The market, by the way, is flat from that day. So, this has been a market crusher in its first eight months. Give us a little bit more, Maria, what are your thoughts about Pinterest going forward?
Gallagher: I continue to really like it. So, Pinterest has reached a lot of people in the U.S. and as they continue to increase monetization in the U.S. they are still in the beginning stages of that monetization internationally, and they have more international users then U.S. users, so as that monetization increases internationally, I think it'll just become more and more profitable. And I've also said "monetization" more in the past three minutes than I've ever said in my life. [laughs]
Gardner: [laughs] Well said, though. And I would like to point out as well something I like about Pinterest. And I like it as well about Lululemon and some other stocks. Companies that sell directly, mainly to women, to females tend -- in the Wall Street-driven sometimes machismo world -- tend to get overlooked. I always feel like there's a little bit of a premium that we should be attaching as analysts to companies that either have female CEOs, still a minority today, and usually if they're there, that means they're amazing that they got to that, and companies that are public companies that primarily have women in their clientele. Now, I would be the first to say Lululemon now has men buying too; which is a great strength of that company. But Pinterest is also a little bit of a female energy company, and I like that too.
Well, I feel like I'm asking the oracle. Speaking of oracle, the oracle herself, Maria, what is the market cap right now of Pinterest, ticker symbol PINS?
Gallagher: $22.14 billion.
Gardner: Players at home, Tim Beyers, "higher" or "lower?"
Beyers: You know, I mean, I feel like that was some psychological warfare right there, so I'm going to give -- so, here's the thing, though, I'm going to give two quick thoughts on this. First, I know that around the time it came public, it was around $17 billion, I know that it's moved up since then. So, some math tells me, it's slightly higher than that, David, closer to $24 billion, I think. We'll see. I might be wrong on this one but I'm going to guess closer to $24 billion, higher.
Gardner: Oh, man! I mean, you were both close, of course. And, Tim, I love that you were aware of it at IPO, and thinking about its market cap back then. So, the market cap for Pinterest is $21.97 billion, but we would round to $22.0 billion. Of course, Maria was off [laughs] by something like 0.1.
Gallagher: You might say that it was $22.14 billion at 9:46 this morning. [laughs] When I sort of looked at --
Beyers: Nice, that's great. Well done.
Gardner: Exactly. And I will say, I mean, we're never about intraday trading here, we do however record this podcast during market hours. Stock is up 8% as we speak today, the afternoon of September 22nd, so a very fine day for Pinterest and a fine day, in this case, for Maria, who takes a 4-3 lead. Friends, we have three stocks left, let's get to them.
All right. Stock No. 8. Let's just go right to the ticker symbol. This is one of those companies where the ticker symbol is the corporate name, we've had it before on the market cap game show, it's one of those sleepy companies, people tend to forget about a sleeping giant. Well, you tell me Tim Beyers. The ticker symbol is EBAY. Tim, have you bought anything on eBay in the last five years?
Beyers: In the last five years; I'm not sure. I mean, if you go back five years, maybe, but it's definitely been some years since I bought anything on eBay.
Gardner: This is great. So, all of the stocks that I somewhat randomly picked for this episode, none of us is really using or buying any of these ... [laughs]
Beyers: Right. It's all an old world, and that's OK.
Gardner: [laughs] That, I guess, was the unintentional theme of this, the 13th episode of the market cap game show. But let's go right to it, Tim. I think most of us know what eBay is, whether or not we're using it. Tim, what is the market cap of eBay today?
Beyers: I think it's right around $63.8 billion.
Gardner: Maria, players at home, "higher" or "lower?"
Gallagher: I'm going to say it's a little bit lower.
Gardner: And sure enough, it is. Although it's a little bit more than a little bit lower. eBay's market cap today is at $35.1 billion. So, Tim and Maria, I feel like you're both willing to accord it more value, this might be that Etsy buy indicator that we've talked about already once on this show. Yep, eBay, friends, at $35 billion. Just as we talked about Oracle being at all-time highs, it is interesting to note that eBay here right around $50/share today is not that far from its all-time highs. Friends, I feel as if PayPal, which it spun out years ago, and has become much, much larger than eBay, sometimes overshadows eBay so much that we tend to think it's been kind of a loser. But if you look at a 10-year stock chart, it's gone from $10 to $50, that has not been a bad 10 years for any company, eBay included.
Maria, we found out from Tim, he doesn't exactly use eBay that often, do you?
Gallagher: I don't think I've ever bought anything on eBay. Oh! I think I bought a cassette tape for my grandma. I did buy something for my grandma on eBay. It was a Frank Sinatra or something.
Beyers: That's the perfect eBay use case right there; that is perfect.
Gardner: [laughs] And you know, it's funny as we move on to stock No. 9, to think about how, I guess, we're telling old school stories about old school companies. But whether we're talking about Skechers or Boston Beer or Oracle, or in this case, eBay, these are all very vital, pretty large successful corporations today. We don't want to write them off too quickly, do we?
Now, we're about to shift to a horse of a different color, because this particular company has been on fire. Let me now turn to Maria. And ask, Maria, if you were to seek, and I hope you haven't had to in 2020, medical help today, would you think of going to a doctor's office or might you do a little telemedicine?
Gallagher: I'd be all-in on telemedicine.
Gardner: And have you had any experiences that you'd like to share, with telemedicine at any point or not?
Gallagher: I have never had to do telemedicine, but I will say that my sister had surgery on her teeth right before quarantine, and they told her that she could take her own stitches out while her doctor was on facetime with telemedicine.
Gardner: Oh, my! Wow!
Gallagher: [laughs] She did it. She decided to not, but she could.
Gardner: That is remarkable. Well, whether we've had to use telemedicine or not, increasingly, we find it's a corporate benefit, and one that people really appreciate here during the COVID era, which we all hope ends yesterday. We'll see how things play out. In the meantime, Teladoc has been a spectacular performer. And I'm not just going to say, in 2020, where it's done quite well, but in the years leading up to COVID-19 as well. One of the bigger headlines of the Summer was the proposed merger between Livongo Health, which was a Rule Breaker stock pick, and Teladoc, which has been a Rule Breaker stock pick. So, we have two of our favorite companies planning to merge.
But here we're just going to stay focused on Teladoc, the ticker symbol is TDOC. Maria Gallagher, what is your best guess at the market cap of Teladoc?
Gallagher: I'm going to say $18.8 billion.
Gardner: $18.8 billion. So, I feel as if sometimes I've been rushing it, not giving our players at home enough time to really think about that for a few seconds before right away I ask, and I will now, players at home, Tim Beyers, the market cap of Teladoc is it higher or lower than $18.8 billion?
Beyers: This is hard. And if I remember right, you're going to have to remind me, David, the last time when I was playing Dan, was I down 5-3, and I had to get the last two to tie? Is that right?
Gardner: [laughs] It's really close. In fact, you were down Tim. But the last two, you and Dan split, so you caught back up 4-4, and then you each got the last one. But, yes, you were playing from behind as you have been on this show as well.
Beyers: Man! Always playing from behind. Okay. I think, so a couple of things here. I mean, Teladoc has been through the roof this year. I think year-to-date it's been something like a 6-bagger, it's been absolutely amazing how much this stock has moved. So, I'm going to say, even though I think Maria is super close here, I think it might be slightly higher.
Gardner: And I'm sorry to say, Tim, that it is slightly lower. Again, another fine guess. I mean, for a lot of us playing at home, we have to be impressed by the guesses that both Maria and Tim have brought to the table this week. Now, they are professionals, they are analysts, they're not expected to follow any of these companies. We're all following our different groups of -- Tim, you're following cloud stocks, and I'm asking you about Boston Beer. I mean, I'm never going to make it that fair. But I think it's worth applauding silently at home these two players for, again, their courage to come on the show and also some excellent guesses. So, Teladoc's market cap is $16.3 billion, not far off the $18.8 billion, but in fact lower.
Gallagher: Well, that was pretty good. That was a really wild guess I gave, and I'm impressed with how close I was.
Gardner: Tim was right, though, it has been a pretty spectacular stock. Now, it's not up quite as much as Tim thought, which is maybe why he missed this one, but at the start of the year, team, the stock was right around $80/share, and it's $214 today. So, I mean, that's up almost 3X in value, which I would take every nine-month period, if I could get it. But in fact, some other companies, for example, Zoom are up substantially more in this year, even though you'd think this would be the year of Teladoc.
But I guess I get to brag a little bit every episode, and I'd like to mention that we brought Teladoc Health to Rule Breaker members on November 22nd, right around Thanksgiving of 2017. So, our cost of $34/share, is up more, like, almost 6X in value today. So, it is interesting to note ...
Beyers: You mean, I didn't say from a cost basis when I said 6X in value? [laughs]
Gardner: [laughs] There you go. That is what you should have said. It is worth noting that, it's not just been a great stock during COVID, it really was a wonderful performer the several years leading up. As the world does increasingly go digital, it does seem, Maria and Tim, as if we've accelerated our move toward digital, but a lot of these things were happening and in place years before.
Before we go to our final stock, Tim, I would like to know two things. The first is, unfortunately, you are not going to win this particular episode of the market cap game show, Maria has taken a commanding 6-3 lead. Maria, it seems to me you were somewhat apprehensive before playing your first game, you thought you wouldn't be very good at this. I think you're better than you thought you were going to be.
Gallagher: I like to under-promise and overdeliver, [laughs] that's how I like to live.
Gardner: And that's what we like in our management teams, companies like Teladoc. Tim, do you have any experience with Teladoc?
Beyers: Not with Teladoc, but, you know, we have really great benefits at The Motley Fool, and we have telemedicine benefits. And so, I've used it twice. I had this weird, like, it was a, I don't know, like an infection on my finger and they came in, we used the camera on it, they gave me some meds. The first meds didn't work, [laughs] I went back, and it was awesome. I mean, I am all-in on telemedicine. So, I find myself, even though I got this one wrong, I find myself more interested in Teladoc. And I was already interested.
Gardner: Well, and combining itself with Livongo Health, that's something that as a Rule Breaker member, anybody can go on to our site, read more about our thoughts there. But let's push on to close here team. The score, again, Maria, 6; Tim, 3. How are you doing at home? Let us know on social media, @RBIPodcast how you scored this show. Again, thanks to my guests ahead of time, but here we go to stock No. 10.
Now, this is one of the three stocks this episode that are not active recommendations in either Stock Advisor or Rule Breakers, I'm pulling from outside our universe, this is known as the Aaron Bush rule. We began to change our game when Aaron broke our game; longtime listeners will remember that. So, I began to pull stocks outside of the seemingly un-memorizable, but to Aaron, memorizable, Supernova universe, which numbers around 240 stocks. So, this is one outside that group. And yet, Walmart, is certainly not just one of the biggest companies in America, but one of the biggest companies in the world. And a company that until recently you would have thought, I don't know, Amazon would badly displace. And certainly, Amazon has dramatically outperformed Walmart over the years, and yet, Walmart is still there and it's Walmart. I think it's been one of those companies we're grateful to have, to have in business here in the year 2020 as we're casting about for anything from toilet paper to, I don't know, a ring doorbell; actually, I think that's owned by Amazon, so maybe that's not my best example.
Let me turn to Tim for this stock No. 10. Tim, before you guess the market cap of Walmart today, do you have any Walmart stories of your own?
Beyers: I don't think so. Again, we're going old school here. I'm such an Amazon customer, like, should I be more of a Walmart customer? Now, you've got me thinking, right. Like, should I be looking at Oracle, do I need to be going back to Walmart? Should I be, like, going back and getting the Winterfest Boston Beer? Like, I need to reexamine my life now, David. So, boy! No, I can't remember the last time I was at a Walmart.
Gardner: Well, one thing to note is that Walmart is the other half of the partnership with Oracle to take over the TikTok North American operations. So, Walmart is looking for more relevance. I mean, I wouldn't have expected that months ago. I don't think I ever could have predicted that Walmart would be taking over a portion of TikTok. Maybe that shows a new kind of a company going forward, but we're talking not about the future again, but here about the present. Tim Beyers, what is the market cap, your best guess, for Walmart, ticker symbol WMT?
Beyers: Man! This is for pride. So, I've got to give this one a good shot. All right. So, let me talk this one out for a second. I do feel like there was a moment where this stock was, like, well over $500 billion in market cap. And I don't think it's moved a lot recently, but then again, they've been doing a lot of things right as a business, so I'm going to give them some extra credit here, David, and maybe too much credit, and I will say, $613.6 billion in market cap.
Gardner: Little bit of psychological warfare there for you, Maria, as he goes with the single decimal. Maria and players at home, "higher" or "lower?"
Gallagher: I think it's lower, I think it's around $388 billion-something; $388 billion, $390 billion. If we're going to do it specific.
Gardner: [laughs] Is there a 9:49 AM timestamp around that one?
Gardner: [laughs] Yeah, they're all -- have you looked at it earlier today? I would say, maybe it was around $388 billion.
Gardner: Wow! That's a pretty great guess. It is much smaller, Tim, than you were guessing or than I would have guessed, I have to admit. I did not know that the market cap of Walmart is $392.4 billion. I would have thought it was in the $550 billion club, something like that. But sure enough, one of the world's largest retailers. And unless you're comparing it to Amazon, it looks big compared to almost anybody else, but $392 billion for Walmart.
Beyers: I really thought this was bigger, David, because, you know, they're actually working with Shopify, they're working with another Rule Breaker that I really like, Fastly. They're doing so much e-commerce, and they're building, essentially, their own competitor to AWS. So, you know what? I think my takeaway here, David, is like, maybe the world is completely underestimating Walmart, maybe I've underestimated Walmart, and I need to go back and take a look.
Gardner: Well, fair enough. And anytime you guess a much larger market cap than the actual market cap, that to me is a watchlist item for you, me, all of us Fools at home, nota bene. Now, I would like to point out before we shut it all down here, team, that Walmart really has been a pretty good stock. I have to admit, I've never recommended it, and I don't really follow the company, I'm more interested in the companies that come along and disrupt companies like Walmart. But the stock is right around all-time highs as we speak. And if you were looking at WMT at the start of 2016, you were looking at, like, a $60 stock and today it's $137.
Tim, you're mentioning some of the plantings, the future bets that they're putting in, and they're all technology bets. So, in a world in which Warren Buffett is pre-buying IPO shares of Snowflake, it seems not unfair at all for Walmart to turn into a so-called tech stock, a phrase I rarely use and generally do so humorously. But Tim, thank you for that reflection.
And I want to thank, both, Maria and Tim, for being wonderful, gracious players. History will note that Maria won this game 7-3, which is an outstanding rookie performance. Maria, I hope you had a lot of fun.
Gallagher: It was very fun, thank you. It was cool today to think through, I was like, if I was David, what stocks would I ask myself? [laughs]
Gardner: It seems like you did a pretty good job imagining if you were me, so I'm flattered and honored and grateful that it translated into your score. Tim Beyers, thank you for your effort as well. And, Tim, I know you're overseeing some of our cloud stock service these days. Do you want to throw out a cloud reflection or a stock tip before you go?
Beyers: Sure. I mean, there is going to be so much investment in this space. David, you know, I'm bringing as many tech stocks as I ever have for you to consider at Rule Breakers. The valuations are pretty insane, but this is going to continue for a while. The amount of investment that is in this space is unprecedented, and I say that today, and I say it's unprecedented today, wait five years from now and we were going to say again, wow! The level of investment in this space is unprecedented. So, for saying it again, and we're going to say it again in five years, I think that tells you a lot.
Gardner: A really good point, Tim. Well, again, thank you to Maria and Tim, thank you to my players at home. I hope you did well. Most of all, though, I hope you got a little smarter, little happier, and maybe a little richer too, because that's what we're trying to do every day at The Motley Fool.
Well, again, coming up this weekend, a special weekend extra, my interview with John Mackey of Whole Foods fame, on his book, Conscious Leadership. That will be appearing I think on Saturday morning, thanks to the extra efforts of my Producer, Rick Engdahl.
In the meantime, thanks for suffering Fools gladly. Fool on!