Earnings Roundup: Peloton, Activision Blizzard, Cloudflare, and More

Peloton (PTON 0.33%) shares fall, and its CEO apologizes for not recalling treadmills sooner. Activision Blizzard (ATVI), Cloudflare (NET -2.53%), PayPal (PYPL 0.06%), and Square (SQ -1.78%) deliver stronger results than their stock movements indicate. Beyond Meat (BYND -1.98%) slips, Match Group (MTCH -0.06%) connects, and Etsy (ETSY 0.30%) tumbles. In this episode of Motley Fool Money, Motley Fool analysts Emily Flippen and Jason Moser discuss those stories and share a couple of stocks on their radar: Bill.com (BILL -0.62%) and Fiverr (FVRR -1.87%).

Plus, Matt Argersinger, lead advisor of Millionacres, a Motley Fool investing service, shares why he believes the housing market will stay hot and what he's watching in commercial real estate.

To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.

This video was recorded on May 7, 2021.

Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill. Joining me this week, Senior Analysts Jason Moser and Emily Flippen. Good to see you both.

Jason Moser: Howdy.

Emily Flippen: Good to be here, Chris.

Hill: We've got the latest headlines from Wall Street. We'll talk about real estate investing with our man, Matt Argersinger. As always, we've got a couple of stocks on our radar. But we begin with one of the darlings of the stay-at-home stocks, and that's Peloton. Third-quarter revenue grew 141% for Peloton. That would be the headline if not for the fact that on Wednesday, Peloton announced the recall of all of its treadmills after reports the devices have caused dozens of injuries and one death. CEO John Foley publicly apologized and said the company made a mistake in not reacting more quickly to the Consumer Products Safety Commission's calls for action. Emily, how bad is this right now for Peloton?

Flippen: Well, it's bad enough to say, Chris, are you sure you want to start with this story? [laughs] They are wasting no time here. This is probably the biggest news story of the week. One that lots of investors are losing a lot of money over. Peloton shares have lost nearly $5 billion in market value since the announcement of the Tread Plus and Tread recalls. It's so true that if you had just looked at this quarter without hearing any of the news about the threads and their recalls, it actually looked pretty good. They drove up connected fitness memberships by over 400,000 members. They had the lowest net monthly churn rate that they've seen in 6+ years. Truly an outstanding quarter in virtually every engagement metric, but really overshadowed by this poor management issue, I think is the best way we can describe it. The recall itself is probably something that hearkens back to Chipotle and the E-coli. It's hopefully something that's going to pass for this business. But the way that management handled this situation, coming out with aggressive statements and then only days later, really backtracking, doing a complete 180 and issuing a full recall for both treadmills, it really is something that I think has shaken a lot of investors.

Hill: Yeah. I can't decide if Foley's admission that they didn't act quickly enough is a good thing or not. But it still seems like beyond the recall of the threads, they still have some work to do in terms of their messaging, their marketing, and how they're going to make this better.

Flippen: They certainly do and they are coming out with some software updates that's going to make the treadmill harder to turn on without an approved adult in the room. Hopefully, it'll decrease the risk to pets and children, so they're making those improvements. But you only get one chance to make the improvement. If Peloton says they've improved the design, whether that be adding a slat underneath the treadmill itself, whether that be doing software updates, you cannot have any more injuries. You can not have the Consumer Product Safety Commission coming after you a second time. Investors and consumers will not forgive that more than once.

Hill: PayPal's first-quarter results were unsurprisingly strong. Profits, revenue, and payment volume were all up. About the only thing that wasn't up was PayPal stock, shares down about 2% despite this glowing report.

Moser: Well, I mean, it depends on your timeline. It is up technically, I mean, if you're talking about one day, all right, I get it. But this is a $300 billion company now, which is just astounding really to think about it, and even more amazing to me. At this point in the game, Chris, this one, it is not too big to own. This is still one that you need to own and this is a company that is coming now off of its strongest first quarter ever in the company's history. Just to sum up the numbers that you mentioned, total payment volume, $285 billion, that's up 46% excluding currency effects. This is a company operating on a $1 trillion rate now through that total payment volume network. Excluding eBay, it starts to look even better. I mean, if you look at eBay now, it's just 5.5% of total volume and that'll be 3.5% by years in. That just means they are basically eliminating that eBay risk from the business model. Revenue up 29% to just over $6 billion, non-GAAP earnings per share almost doubled to $1.22, 14.5 million accounts added. They now have 392 million active accounts bringing up 4.4 billion transactions for the quarter, up 34%. Take rate continues to feel a little bit of a pressure there as costs come down, as Venmo becomes a larger part of the business. Again, that's not a surprise, something we fully expected.

Raised guidance across the board, looking at close to $26 billion in revenue for the full year and earnings of $4.70. Now, that puts shares at better than 50 times full-year estimates. Again, a proven business brings in plenty of cash, very profitable. I mean, it seems to me to be one of those high-quality businesses that every investor needs to consider keeping in their portfolio. One final note, because this is still such a new offering, but the buy now pay later space, which is really starting to take hold, PayPal has done a tremendous job of introducing this feature to their model. They've processed over $1 billion in total payment volume with their BNPL offerings. They did note some interesting statistics here, 50% of the customers who have used BNPL have repeated that within three months, and 70% of them have repeated that offer within six months. Clearly, a new feature they've introduced that PayPal users are very fond of.

Hill: Just real quick. CEO Dan Schulman teased out this next-generation digital wallet. Do you have a sense of when that's going to happen because it seems like it's later this year?

Moser: It's difficult to say, I mean, they've been talking about this for a while. There's this term coined Super App between analysts and even PayPal management. I mean, they are working on something big. I think we'll start to see the signs of how this is taking shape, yeah, later in the year, but I suspect it will be something that rolls out more fully in 2022.

Hill: Shares of Activision Blizzard up a bit this week after first-quarter profits and revenue both came in higher than expected. The video game maker also raised guidance for the full fiscal year. I know Activision Blizzard makes a lot of games, Emily, but the Call of Duty franchise just continues to deliver for this business.

Flippen: Let's talk about that for a second because every single time I look at Activision's quarter, I ask myself, "Okay, when are the Call of Duty people dropping off, because you can only play one game for so long." But Activision has managed to continuously engage this audience, provide updates, and provide expansions on this Call of Duty line. They had a record 150 million monthly active users just for Call of Duty last quarter, which I still have a hard time wrapping my head around. I don't mean to take away from Activision's quarter, it was absolutely amazing. It's one of the few companies that is actually being rewarded this earnings season. But I always ask myself, what are they going to do with Blizzard? It feels like Blizzard is this problem child for Activision Blizzard. It's really going to need to do a better job of bringing in lapsed players. There's been a lot of focus on World of Warcraft, the classic relaunch, in particular Burning Crusade, which is coming out soon. Looking at that, they need to do a better job of bringing in the customers the way they have a Call of Duty back to the World of Warcraft and Diablo franchises. They have some stuff in the pipeline that can make this happen, but that's what I'm watching for the future.

Hill: From video games to cybersecurity, Cloudflare's first-quarter revenue was 51% higher than a year ago, but shares are still falling more than 12% this week. Cloudflare is growing, Jason, but they're not growing quite as fast as Wall Street would like.

Moser: Perhaps, but let's also be fair that share drop was based on Fastly's earnings and I think some sentiment regarding the general space. The stock actually responded nicely to these quarterly reports. Let's give them a little bit of credit here, Chris. Yeah, I mean, true to your point, Wall Street always wants them to grow a little bit at a faster rate, especially when they're not making a whole heck of a lot of money. But for me, when you're looking for leaders employing that Jeff Bezos mindset of constant innovation, it's impossible for me to imagine not having Cloudflare at the top of the list. To me, this is a team that never stops working to create. Very impressive, the numbers tell us that what they're doing is working. If you look at revenue of $138 million for the quarter, that was up 51%. Dollar-based net retention, 123%, that was up 600 basis points. They added 600,000 paying and free customers. Now, they have a total of over 4.1 million total customers free and paying, that's up 46%. Just over 119,000 paying customers, that's up from a year ago.

Now, I think the key is looking at large customer growth because this is a metric that really matters for this business becoming more and more important. Large customer growth, those customers that are paying $100,000 or more a year for Cloudflare services. They now stand at 945 versus 556 a year ago. But if you dig into a little bit more of that data there, it's those large customers, the $1 million large customer cohort continues to be the fastest-growing cohort of that large customer cohort. When you talk about those enterprise customers, those large customers, that's more than half of the business's total revenue now. This is becoming a more and more important part of the business. When you're signing on large customers like that, that means you're doing a lot of things. That's really what makes Cloudflare, to my mind, such a good investment; its diversity and offerings from application management, content delivery, security, edge computing. I mean, they just do a lot of things and they do them really, really well. I suspect that's going to continue. Matthew Prince, just one of the co-founders of the business, CEO, a great follow on Twitter because you'll learn so much of what he's thinking about. But all in all, I mean, this is a business that's doing what I hoped it would do when I recommended it several months back.

Hill: Beyond Meat's loss in the first quarter was more than double what was expected. Throw in the fact that management is not offering guidance for the year, and shares of Beyond Meat down more than 10% this week, Emily.

Flippen: You make it seem so bad, Chris, and maybe [laughs] I'm a Beyond Meat apologist, so bear with me. But I didn't think this quarter was that bad. A lot of the negative news that Beyond Meat's getting is a bit out of its control, especially as it applies to its foodservice revenue from the pandemic, and the part that is within its control, I actually think they are executing really well on. Despite missing in both terms of profit and in revenue, I do think foodservice turning around over the next year could be a genuine catalyst. Pre-pandemic food service, that's your restaurant, your fast-food chains, etc., it was nearly half of Beyond Meat's revenue. That's fallen now to a quarter. That gives you some perspective about just how much the avenues for distribution fell off as a result of COVID. But even with this retail revenue, so that's individual people buying it from their grocery stores, it was up 26% domestically and 189% internationally over the last quarter. The demand for meat alternatives is still there. You'll see people pointing to heightening competition. Tyson Foods announced recently that they're making their own plant-based burger. But that just says to me that even Tyson sees the writing on the wall as it applies to plant alternatives, and Beyond Meat and Impossible Foods for that matter, have the edge, because they have businesses solely focused on serving this market. In addition to initiatives for plant-based chicken coming up hopefully over the near future, the Beyond Burger 3.0, there were a lot of things coming out recently, that make me excited to be a Beyond Meat investor.

Hill: Square's first-quarter report was a lot like PayPal's, strong profits, revenue growth, increased transactions. Just like PayPal, Jason, Square stock's down a bit this week.

Moser: We can beat or argue as to why that would be the case. Clearly, a lot of growth has been pulled forward in both of these companies. We talked about PayPal being now a $300 billion company. It's really impressive to see that Square is a $100 billion company. I mean, again, these are companies that made very early bets in the way that money is moving, in the way that commerce is being transacted. These bets are really starting to pay off. When you look at Square, this is really about sellers and it's about the Cash App. It's about their merchant partners, these small businesses all over the country, in the world really, to an extent, they're providing just a valuable service. If you look at the numbers, it's just very impressive. Net revenue for the business, it was just over $5 billion, it was up to 266%. That's a WOW number.

Now, let's pull that Bitcoin revenue out first though, Chris. That gives you a little bit of a more realistic picture. I think net revenue without Bitcoin was $1.55 billion, that was up 44%. Still very impressive. Gross profit, $964 million. That was up 79%. Gross payment volume of $33.1 billion through their networks. That was up 29% as well. Speaking of that seller ecosystem in the core, the seller ecosystem generated just a little bit over one billion dollars in revenue, $468 million in gross profit that was at 19% and 32% respectively. Then looking at Cash App again, I mean, they just continue to find new ways to monetize it. It's a sticky app that keeps people in there. They introduce new services to it. Cash App net revenue just over $4 billion, with $495 million in gross profit. Now, let's, again, pull out the Bitcoin because that does matter. You exclude Bitcoin, and now we're talking about $529 million of revenue. That was up 127%. They generated around $3.5 billion in Bitcoin revenue in Cash App for the core. What does this business look like without Bitcoin? I'm not really sure, we've framed some numbers there. I think that Bitcoin really is just an ancillary part of the story. It goes back to ultimately, all of the different things that you can do with Cash App and the value that they continue to provide to that seller network. That's going to be the story for this company for the foreseeable future which makes me very encouraged.

Hill: First quarter profits and revenue from Match Group were higher than Wall Street was expecting. This is the parent company of Match.com, Tinder, and other dating apps. CEO Shar Dubey said that as more people get vaccinated, she is, "looking forward to a summer of love." Emily, how excited should shareholders be?

Flippen: I think shareholders should be really excited. I could point to the 23% growth in revenue for the most recent quarter, a 12% growth in average subscribers, in the most recent quarter, all of those things are great, but I think the big question is, OK, well they had a really weird 2020 that ended up being wonderful for their business as people flooded to online dating apps to get any sort of social connection in the pandemic. Do people continue to pay for many services that Match Group offers, even as they go out more and more often? I think both of those numbers, in addition to the average revenue per user, rising over their most recent quarter, is a resounding yes.

Hill: Shares of Etsy down more than 15% this week. Despite the fact that first-quarter profits and revenue were both solidly higher than expected. Jason, you look at Etsy's revenue, the number of buyers on the platform, the number of sellers on the platform, all of those numbers are going in the direction you would want if you were a shareholder.

Moser: They are. As a shareholder, I remain very pleased with what the business is doing. I think this is a time where you really need to remain focused on the business. Don't worry so much about how the market is reacting to what was clearly a very good report. I mean, when we look at the numbers, I think, that tells you all you really need to know. But consolidated gross merchandise sales, $3.1 billion. It was up 132% from a year ago. Gross merchandise sales per active buyer grew 20% revenue better than 140%. They now have 4.7 million active sellers in 90.6 million active buyers in their net worth. Those numbers were up 67% and 90% respectively. This is becoming a mobile story, Chris, it is able to really make that pivot to the mobile environment, mobile gross merchandise sales, that's up to 63% of the total now, that was from 58 just a year ago. Then you've got the other little parts of the business that are starting to become more meaningful. Etsy payments, that revenue was up 156%, they processed 92% of Etsy stand-alone gross merchandise sales through Etsy payments in the quarter. They're not offering any full-year guidance that probably has the market on edge. The stock is trading around 46 times full-year street estimates. Not cheap, but a very high-quality business, and one more thing and onto.

Hill: Whether it's rising home prices or the focus on which businesses will be going back to their office buildings, real estate is one of the hottest topics in the financial world these days, and there is no one, I would rather hear from than Matt Argersinger, he's a Lead Investor for Millionacres, The Motley Fool's real estate investing service, and he joins me now from, where else, his home. Matt, good to see you.

Argersinger: Hey, good to see you, Chris.

Hill: There's a lot of things with commercial real estate I want to get to, but I have to start just quickly with residential real estate. Because I don't know about you, but I am talking to and hearing from friends all over the country who are running into or dealing with an incredibly hot real estate market. What is going on with home prices right now? Is this going to continue for the rest of the year or, at some point, this has to cool off, right?

Argersinger: [laughs] Chris, I've been hearing the same things and reading about the same things and I don't know if it ends anytime soon just because I think what we're dealing with here is really a demand-supply imbalance of really epic proportions. All the way back to the previous housing boom. Sort of 2005, '06, '07 era. We were building about 1.5 million new homes in this country every year post-crisis. So we had the financial crisis and recession. The last decade we've been building about 600,000 a year. You can make a credible argument. Now, maybe we were overbuilding in our last boom, but we even undoubtedly underbuilt over the last 10 years during this current economic cycle. You can make a credible argument that we should have about five million more houses in existence today than we actually do. As you're seeing report after report of just every market, it seems record low inventories and a house comes on the market, it's on the market for maybe two or three days, it gets 10 offers. You're speaking of conversations with friends; I have a friend, he and his wife, they're having their second child, and they're looking to buy a larger house in the DC area. They currently live in a two-bedroom condo and they've been making offers pretty much the past six to nine months. They made an offer the other day on a house that was 10% above asking with no contingencies attached. Their offer wasn't even in the top five [laughs] according to their agent. That's where we are with the supply side. We've just underbuilt homes.

On the demand side, why are people looking for homes? Well, you have record low interest rates. You have a huge cohort of people now in their late 20s, early 30s who are looking to buy their first home. Maybe they're having a family and looking to settle down. Then on top of all that, of course, we had the pandemic. You had this huge surge of people looking for larger homes or homes with yards and maybe outside of the city. There's just not a lot of those homes out there. There's the demand side and you kind of asked me when it's going to stop. I don't know if this stops anytime soon because one of the solutions is, well, how do you fix the supply problem? You build more homes. Most of the home builders are building homes as fast as they profitably can, and that's the key word, I want to emphasize profitably. What's happened when you look at lumber prices, copper prices, cement prices I saw the other day are at historical highs. Can they build a home profitably and right now and a lot of markets, they actually can't. You even have the home builders who are pulling back from building houses, and so I just think this demand-supply imbalance will remain for a while.

Hill: Let's move on to office buildings. Where do you think we are now? Because you've got some large companies coming out and saying they are getting their people back to work as close to 100% as possible. So it doesn't seem to be the crisis that a lot of people predicted 12 months ago, but I'm curious how much you think it's going to bounce back.

Argersinger: That's right. I think we were in a much better place with the office today. There's a lot more clarity in the market. I think 12 months ago, it was just, "We'll never go back to the office." Everyone's going to work from home, and now you're going to have vacant office buildings everywhere in all these cities and that's not the case. A lot of big companies have decided they're bringing a lot of their workforce back or at least are bringing them back in kind of a hybrid three days on, two days off or some other flexible nature. I actually don't think the demand for office space, the space itself is actually going to decline as much as people thought. I think it's more of a question about how we're going to be using office space in the future. Is it more of a collaborative space? Is it more open? It's certainly going to hopefully, in a lot of places, be a lot more safer and sanitary. I do think the office mark is going to bounce back. I think there are some places like New York City, for example, where it just went down too fast.

A lot of the office valuations went down and a lot of that occupancy that went down so much, it's going to bounce back. I think it's led by a lot of the companies like Goldman Sachs or JP Morgan's of the world or Googles [Alphabet] of the world, they are saying. There's just a collaborative culture aspect of being in the office that is superior to being at home. That doesn't mean there's going to be 100% return to the office for all the company, no way. But it's going to bounce back, I think a lot stronger and probably almost get back to where we were pre-pandemic. Not quite, but almost.

Hill: One of the big stories in the investing world over the past 12 months has been not just the rise of e-commerce, but the ways in which traditional bricks and mortar retailers, including Walmart and Target and Costco, have ramped up their delivery and digital sales. When you look at malls, when you look at the retail landscape, what do you think we're going to see over the next five years?

Argersinger: Yeah, this might be a boring answer, but I think the next five years is going to look very much like the last [laughs] five years, which is so irrespective of the pandemic and what's happened there, we're already seeing a sort of slow-paced evolution from pure retail to what I would call your experience-based retail or your mixed-use retail, which it's no longer the idea of I'm going to the mall, just to go shopping. Or I'm going into that department store, I'm going to that strip mall. I need a real reason to go to places like that now. This was already happening. More people are adopting online shopping and getting comfortable with online shopping. That just accelerated last year and into this year. There's just millions more people now they're shopping really extensively online to include buying fresh fruit and groceries, and getting restaurant-quality food. I think what you're going to see is in order for traditional retail to exist, it's got to sort of coexist with other offerings. Services, entertainment venues, mixed-use properties that have multi-family apartment buildings and hotels and also retail. Or there's just drastic transformations, and this is happening to where you're seeing entire malls turn into data centers or warehouse space, because that's just a very efficient use for that type of real estate. You've got lots of parking. You've got structures that are very easy to adapt and utility systems that are easy to replace, and so there's no surprise that companies like Amazon or your Digital Realty Trust of the world or even your FedEx and UPS are taking over law of that real estate and transforming them into data centers or logistics places.

Hill: Last summer, you were on the show and one of the things you mentioned was the rise of warehouses for all sorts of industries, including restaurants with ghost kitchens and how there are now real estate investment trusts. There are REITs that are focused on warehouses, is this trend continuing?

Argersinger: It's continuing, and last year has to be probably the best year ever for that type of real estate. In fact, one company that I followed for a while, it's called EastGroup Properties. They're primarily a warehouse distribution owner in a lot of places around the Sun Belt of the country, which of course is a lot of those markets. Think of your Dallas, Texas, your Tampa Bay, Florida, just seeing a tremendous amount of population growth and elsewhere. People are flowing to those places, and therefore, the need for e-commerce, the need for more warehouse space is just ballooning. These REITs, Eastgroup Properties is one, Stag Industrial. You mentioned the food and restaurant. There is a REIT called Americold Realty, which is focused almost exclusively on cold storage warehouse space which we need more of. I like this stat I read recently from the CBRE which said that in the United States, we actually need 400 million more square feet of warehouse just to handle returns. In other words, so many more people are shopping online now that we actually need 400 million more square feet of warehouse space just to handle returns that people are making. You can just see that if you're looking at that particular type of real estate, industrial real estate, it's booming. It has been booming, and I see that booming for several more years at least.

Hill: Last thing and then I'll let you go. What are you watching these days? I know you are a very curious investor. You love to dig into all manner of real estate and the stock market. What is under your radar these days?

Argersinger: Sure. Well, one of the things I mentioned was the Sun Belt, and what you're seeing is across the country and you can look at really great data like U-Haul data for example, and you can see where people are moving to and from. You're just seeing in this country a mass migration away from the coast into the inner parts of the country. Funny, Boise, Idaho, is one of the cities that's seeing huge demand. A city like Indianapolis, which I'm sure doesn't show up on anyone's top 10 list of destinations or places they went live, but it's seeing incredible demand. Then the obvious ones like your Austin, Texas of the world, Tampa, Florida, Charlotte, North Carolina. Those cities are really seeing just a big inflow of population and companies also. I like to say real estate follows people and money, and so real estate is really flowing to those places. We mentioned warehouses being underbuilt but so is housing. One of the most fascinating parts for me of the market right now is the rise of single-family rental REITs. Single-family rentals have a new class in residential real estate where you have these fairly large companies that own thousands, if not tens of thousands, of single-family homes that are rentals. Of course, you can imagine post-pandemic, those are in demand because they're affordable but also someone can get a place that doesn't share walls with someone else or a ceiling or floors, and you get a yard in a lot of cases. There's a company called Invitation Homes, for example, which just went public a few years ago. They own tens of thousands of homes in places you want to own them like your Phoenix-es, Arizona, your Texases, your Florida; places where they're seeing a tremendous amount of demand. That part of the market, I think, is a little bit hidden right now and underfollowed, and it's one of those areas that I think is pretty exciting for investors.

Hill: If you want to read more from Matt Argersinger and his team, just go to millionacres.com. Matty, always great talking to you. Thanks for being here.

Argersinger: Thank you so much, Chris.

Hill: Our email address is [email protected]. We got a question from Collin in British Columbia. He writes, "Is tech entering value territory? I was waiting for a pullback, but now I'm nervous to jump in and add up. Stocks like Teladoc Health, Unity Software, and Snowflake are not cheap since they have no earnings. But are we happy with the valuation compared to more average times?" Jason, I don't know that tech is getting into value territory, but we've certainly seen a pretty dramatic pullback in Nasdaq stocks over the past couple of months.

Moser: Yeah, we absolutely have, and I've said it recently. Honestly, I'm relieved, actually, believe it or not, to see some of this pulling back here. To me, it makes me think that maybe things aren't completely unhinged because you can't get away with 40 times revenue being the normal forever, and we've seen this for a while. There are so many businesses, they don't make any money and yet they're trading at 40 times revenue because, apparently, they're all going to change the world at the same time in their own way. We're going to have some that win some that lose, but for me, again, I go back to what I was talking about with Etsy. Just remember, the stock price isn't the business, and when you talk about companies like Snowflake and Teladoc, and what was the other one, Unity, valuation is going to be one of the bigger risks in the near term with companies like these. They're working toward profitability, investing at a rapid clip, and trying to take as many shares as they can because they have a vision of what they're trying to do. But time will tell whether that vision is correct and they're making wise investments. But that's ultimately the way I approach this. I mean, I agree with you. I don't know that I'd say value territory necessarily. They definitely look a little bit cheaper, and based on the way that businesses are performing, I'm a bit more interested in these businesses to be honest with you because it seems like the businesses are continuing to perform very well. It's just that the valuations are coming a little bit back down to earth.

Hill: Well, and Emily, I definitely identify with Collins, the emotional part of his question, which is, "Oh, good, they're getting cheaper," but then the nervousness of, "Wait, are they getting cheaper because the valuations are more normal or is something wrong here."

Flippen: I think if you're looking at just what a normal valuation is, let's say something like a price to sales ratio, something that you can look back or price to earnings ratio, that you can look back at a historical average. A lot of these businesses could still see contractions of 30% or 40%. I think it depends on what you mean by value businesses. If you have a long time horizon, and I'm 26, it's a cheap shot for me to say this, but I'll say it anyway. If you have 30 or 40 years to be investing, then I worry much less about what an average price to sales ratios, what an average PE ratio is because, to me, value is becoming a bigger business, a more relevant business over the very long term. When I look at businesses like Teladoc, and lots of the businesses that we talked about today, like Etsy or Square, great, wonderful businesses that have seen significant haircuts, I view them as value businesses because I have very little doubt in my mind that they are going to be bigger and more relevant over the long term. Now, over the short term, these businesses could certainly see bigger pullbacks. I don't know if they will, but they definitely can.

Hill: We got just a few minutes left. Let's get to the stocks on our radar. Our man behind the glass, Dan Boyd, is going to hit you with a question. Jason Moser, you're up first. What are you looking at this week?

Moser: Man, let's stick with the war on cash. Chris, taking a look at Bill.com, the ticker is B-I-L-L. Remember, this is cloud-based software that digitizes and automates back-office financial operations for small and mid-sized businesses. Just reported earnings. Terrific response to the quarter. Total revenue up 45%. Served 115,600 customers as of the end of the quarter, that was up 27%. Processed $35 billion in total payment volume on the platform. But I think the big news for them, a really big acquisition here, they're going to acquire Divvy for approximately $625 million in cash and almost $2 billion in Bill.com stock. To see the stock performing the way it is after the announcement of such an acquisition, I think is a bit telling, but if you know and like this company called Coupa Software, which we talked about before, then I think you see the potential for this deal in business spend management. It's a massive market opportunity with profound network effects.

Hill: Dan, a question about Bill.com?

Dan Boyd: I don't know if it's a question, Chris, more of a comment. But man, what a great URL. Bill.com, unbelievable. How did they get that?

Moser: I love Dan's not questions but comments. To me, I like this, I like the direction we're headed.

Hill: Emily Flippen, what are you looking at this week?

Flippen: Well, if history says anything, Dan is going to have a savage comment for the company I'm looking at today. That's actually Fiverr. The ticker is F-V-R-R. Investors will be familiar with it as a marketplace for a distributed workforce. Imagine it like Etsy, but instead of selling handmade goods, you're selling your own skills. They had an outstanding quarter. Revenue up 100% year-over-year. Active buyers up 56% year-over-year. Definitely one to keep your eye on.

Hill: Dan, question about Fiverr?

Boyd: Yeah, absolutely. I've used Fiverr a couple of times, and I know this isn't their fault, but every time I try to get something like graphics or something from Fiverr, they're terrible. [laughs] Just god-awful quality coming out of that company. Again, I know it's not their fault, they're just the platform, but I don't know, Emily.

Flippen: I have no words, Dan, other than to say I knew that was coming. I guess I should have known that was coming. I should have been prepared for your answer, but I guess I'm not. I have no response.

Hill: Dan, one of those two you want to add to your watch list?

Boyd: Listen, I am actually a fan of Coupa Software. I'm a stockholder of Coupa. I'm all about the software as a service model, especially for stuff that people just don't want to take care of like bills, so I'm going to go with Bill.com.

Hill: All right.

Flippen: I'm shocked.

Hill: Emily Flippen, Jason Moser, thanks for being here.

Moser: Thank you.

Flippen: Thanks, Chris.

Hill: That's going to do it for this week's Motley Fool Money. The show is mixed by Dan Boyd. Our producer is Mac Greer. I'm Chris Hill, thanks for listening. We'll see you next week.