Merck (MRK -0.03%) shares pop on encouraging results from its COVID-19 pill study. Alphabet (GOOGL -0.96%) (GOOG -0.95%) and General Motors (GM -2.78%) move one step closer to getting self-driving ride-sharing services on the road in California. Amazon (AMZN -3.31%) unveils Astro, a $1,000 robot for your home. Warby Parker (WRBY -7.71%) makes a strong debut on Wall Street. Zoom Video (ZM -1.90%) and Five9 (FIVN -2.69%) call off their marriage.
Motley Fool analysts Andy Cross and Ron Gross analyze those stories and the latest from Bed Bath & Beyond (BBBY 0.28%), McCormick (MKC -2.70%), Dollar Tree (DLTR -2.22%), and Sherwin-Williams (SHW -1.61%). They also share why PubMatic (PUBM -5.56%) and Editas (EDIT -4.10%) are on their radar.
Plus, CNBC's Melissa Lee discusses the intersection of online betting, stock trading, and gaming in the upcoming CNBC primetime documentary Generation Gamble.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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Chris Hill: It's the Motley Fool Money radio show. I'm Chris Hill. Joining me this week, senior analysts Andy Cross and Ron Gross. Good to see you as always, gentlemen.
Andy Cross: Hey, Chris.
Ron Gross: How you doing, Chris?
Hill: We've got the latest headlines from Wall Street, we'll dig into the rise of sports betting and stock trading with CNBC's Melissa Lee, and as always, we've got a couple of stocks on our radar. But we begin with a rough month for the market. The S&P 500 fell nearly five percent in September, the worst month of the year, so far. Andy, all three major indices are still up double-digits for 2021, but I don't blame any investor who's just a little bit rattled after the past few weeks.
Cross: Chris, it was a hard month for investors, especially growth investors. We've had such a really nice rebound off the COVID lows from last year. This year, like you mentioned before, the stocks were up, the market was up more than 20 percent. Now, it's at that mid double-digits, like that 15 percent range. We're back to where we were in July. It's still not horrible. Overall, we still have seen pretty [...] , not much volatility into the market so much. We still haven't seen those big, really dramatic pullbacks, north of five percent on a daily basis in a long period of time. But certainly, I think this is one reason why we constantly really talk to our members, and to listeners, and to viewers of our shows and talking about, listen the markets have been really calm over the last 18 months, and we don't expect that going forward. We know markets historically fall, 10 percent every year or 13 months or so, as far 15 percent every couple of years, 20 percent every four years. As an equity investor, Chris, you really have to expect that volatility. We haven't seen it. So this past month is not unexpected. There's still a lot of positive takes in business and equities and stocks, but we have seen a pullback in the markets, and we still have markets that historically are at fairly high levels of valuation, especially for the large-cap companies and especially for the technology companies.
Gross: I agree with what Andy said. Listen, the markets can't go up forever. They have to take breathers from time to time, and we have to, as long-term investors, understand that and expect it so when it happens, we don't get too freaked out about it. The market is, as Andy said, somewhat pricey here. If you just want to look at a PE ratio for an example, S&P 500 PE ratio is around 31. Even if you look at a forward PE ratio, it brings it down to 22, more reasonable, but still historically high. That's a relatively high price to earnings multiple. Yes, earnings are a little bit in fluctuation right now, influx as a result of COVID. But still, there's many other measures you can look at to see that the market is pricey. We have rising interest rates, 10-year note hovering around 1.5 percent. That's higher than certainly, we've seen over previous years. We have inflation concerns that we're seeing actually show up in the earnings results of our companies. It's just not this innocuous, amorphous thing. It actually is impacting profitability. Macroeconomic fluctuations happen from time to time. Don't have money in the market that you need over the next three years. If you follow that guidance, you can take a lot of the pressure off of yourself, a lot of the stress when markets get weak.
Cross: I have a little cash on the sidelines. I think that's important for individual investors. But I will note, when you look at the S&P 500, that's generally a large-cap index that is so much dominated by technology these days. When you look at the small-cap index or even the mid-cap stocks, those are far more reasonable on an index basis. The market overall is, as Ron said, on the pricier side, when you look at that large-cap popular index like the S&P 500, but going to the small-cap index, and some of those small-cap stocks, you might be able to find some more reasonable valuations there that could be more beneficial to the more cyclical plays that come with continuing reopening of the economy that, hopefully, we'll see over the next year or two.
Hill: Let's get to some of the stock news of the week. Shares of Merck up 10 percent on Friday and hitting a 52-week high after the pharmaceutical giant announced promising results in a late-stage study for its COVID-19 pill. Merck says it plans to file for emergency use authorization as soon as possible. Ron, good day from Merck shareholders and good news for public health.
Gross: Yes, good news for us all, and I like it a lot, exciting COVID news. As you said, Merck and its partner Ridgeback Biotherapeutics, I haven't heard of them before, announced an oral antiviral medicine that they have developed, significantly reduced the risk of hospitalization from COVID-19 by about 50 percent in a Phase 3 study, and zero patients who received the drug in the study passed away. Obviously, positive news there. Recruiting people into this study is being stopped early due to these positive results. As you said, they'll plan to submit an application for emergency use authorization to the FDA as soon as possible. They'll also submit marketing applications to other regulatory bodies worldwide. So this is really great news. Now, we've heard of other antivirals. Gilead's Remdesivir is probably the one that is most talked about in the news. But Pfizer, Novartis, others, have antivirals also under development. There's a lot of great stuff on the horizon, I think, both with vaccines and antivirals. Interestingly, companies, that are focused on vaccines, share is a little weak today on the fact that there is something you can take after the fact if you do get COVID. But still, the combination of vaccine and antivirals is very positive for society. As you said, Merck shares 52-week high, maybe even at near all-time highs or close to it. Not too expensive at 14 times forward earnings with a 3.5 percent dividend yield to low. Not too bad if you want to take a look at Merck.
Hill: Back in July on this show, we told you that the Zoom Video was buying Five9, a Cloud-based call center operator in an all-stock deal worth nearly $15 billion. On Thursday of this week, the deal was rejected by Five9 shareholders. On Friday, Andy, shares of both Zoom Video and Five9 were up on this news. Was this just doomed from the start? Are they better off apart? [laughs]
Cross: Both stocks are up 12 percent or so. Looking out after the deal was announced, so there were some excitement around what this combination of Five9's Cloud-based contact center solutions combined with Zoom's video business. There were some excitement there, even though it wasn't all-stock deal. There were some risk in there with the stock price of Zoom. Clearly, Zoom stock price is down almost 30 percent since the deal was announced. That's pulled Five9 stock price down. There has been some concerns about some of Zoom's connections and business operations in China. The Justice department and the FTC have been investigating that part of their business. Some of the big proxy advisory services like Institutional Shareholder Services and Glass Lewis had recommended voting against the deal for Five9 shareholders. I think when you add that all together, but most of the stock price and the fact that Zoom was probably not going to raise the offering price for Five9 at that $15 billion mark, even though Zoom is very profitable, and has lots of cash on their balance sheet. It looked like the deal was just starting to get doomed over the last couple of weeks, and clearly, Five9 stockholders voted against it. Then both companies mutually agreed not to pursue it any longer.
Hill: Shares of Bed Bath & Beyond down nearly 30 percent this week after second quarter results were much lower than expected. The company also cut guidance for the full fiscal year, and CEO Mark Tritton said supply chain problems have been pervasive. Ron, I want to start by offering my condolences since you're a shareholder of Bed Bath & Beyond. [laughs] How bad is this? Tritton is someone who doesn't really pull his punches.
Gross: I know you'll recall that Bed Bath got caught up in that meme-stock madness, stock went to 53, now we're back at 16. I will disclose that I sold most of my shares except for 100 shares when the stock popped as a result of the meme craziness. So I still have a little piece so I can keep an eye on it. Company has been attempting to execute a turnaround under the guidance of Mark Tritton, formerly of Target. I'm a big fan, actually. I think he does great work. He sold non-core assets. He introduced a much heavier lineup of private-label brands to the stores. Now, this quarter, there was a bit of a stumble on the way to the turnaround. Two main issues, demand and supply. I'm no economist, [laughs] but I'm told that one of those would be bad. If you do two at the same time, you get a stock that's down 20 or 30 percent. First, demand got whacked in August due to the Delta variant which caused shopper traffic to slow, especially in big states where they are Florida, Texas, California. Comp sales down one percent, total sales down 26 percent. Then the company, as you said, experienced supply chain issues and cost inflation that hurt margins. They lost 73 million for the quarter. If we allow for some adjustments, they were slightly profitable. Then not surprisingly, the company also lowered its guidance. Stock is interesting to me. At $16, I've got to say is a potential entry point back in. I personally have been to Bed Bath store several times over the last couple of months. The dominance of the private-label merchandise is a negative to me. It's all over the place. That gives me a little bit of pause, but I'm doing a little work here myself.
Hill: Coming up after the break, we've got another new public company, some spicy earnings, and the sexy world of house paint. Stay right here. This is Motley Fool Money.
Welcome back to Motley Fool Money. Chris Hill here with Andy Cross and Ron Gross. McCormick had nice sales growth in the 3rd quarter, but it wasn't good enough. Apparently, shares of the spice maker downed five percent this week and hitting a 52-week low. Ron, am I the only one that looking at this as a chance to buy shares of a solid business like McCormick at a discount?
Gross: It could be a nice entry point here as a result of the fact that shares are up about 15 percent year-to-date this week as you say contributing to that. I feel like I'm stealing Jason's thunder here, but since he's not here this week, I'm going to carry on and talk McCormick. Results for the quarter, they actually weren't too bad. Sales up eight percent, mostly driven by restaurants coming back online. Consumer segment grew too, but only by about one percent, facing tough comps when we were all home pretty much cooking, and all of us not go into restaurants a year ago. The main concern from an investor focus is that the company's comments about cost pressures were a little bit concerning, and they're not alone. Obviously, we are seeing that across the board. Inflation hurt margins, hurt profitability. Adjusted earnings-per-share were still up about five percent, but things could have been much stronger if it wasn't for those pressures. The company intends to raise prices when necessary. I do think they have some ability to do so. There will be a limit to what they can do there, but certainly there's some room, I believe. They guided sales to the high-end of the range. That's interesting, but they lowered the outlook for operating income because of the pressure here on margins. The business from a demand perspective still remains strong, which is great. To your point about the stock, 28 times, not necessarily cheap, but growth could accelerate as restaurants continue to come back online. They've made some solid acquisitions like Cholula, which I use almost every day. That should add to the bottom line. So if that growth accelerates, the 28 times won't seem as expensive, perhaps, as it does, and it has a 1.7 percent yield, which dividend investors will like.
Hill: This week, Warby Parker went public via a direct listing. The online eyeglasses retailer started at $40 a share and closed its first day at $54. Andy, a lot of enthusiasm for Warby Parker right out of the gate.
Cross: I think their direct listing is really interesting, Chris, because to do that direct listing, they weren't raising money for the actual business. They are just basically offering their shares out there from existing shareholders, just basically adding liquidity into that business. But they didn't get any money from this. They weren't raising any capital from it. Now you've got a six-billion-dollar business. Very interesting, founded in 2010 by some Wharton students. Interesting, the name comes from a couple of characters from a Jack Kerouac novel, which has really interesting. It does, Chris, as you mentioned, it's known for its direct-to-consumer online business. But really it's basically half-and-half between online and offline, and they have 145 of these retail outlets. I think that's what's really interesting and also a little concerning when I look forward at the stock, again, at $6 billion a market cap, a stock that is doubled from the private value earlier this year. They do probably about $400 million in sales. They don't have a very large part of a very fragmented market, and they are a very small player in that large market. But they're going to have to continue to build out that store base, Chris. They're going to add 30-35 stores. Now those stores are very profitable. They're not like Apple levels when you look at the sales per square foot, I should say, but still very healthy. They do generate a lot of sales per square foot, but they are still investing a lot back into the business. Not very profitable. They're not as unique as they used to be, maybe a few years ago when they were selling those $95 or 100 pair of glasses online with the try-on apps you can use. Now more and more players are doing that. There's a lot of good, healthy expectations baked into a stock price. I love the fact that they're trying to simplify the eyeglass buying experience. I think all three of us and four of us, when you add Rick in behind the glass, wear glasses. That whole process of buying that is really, I think, subpar. I appreciate that. They've high-growth ambitions, but it's definitely baked into the stock price. I'm pausing on this one, not acting right now, just watching to see how they go along.
Hill: Shares of Dollar Tree up more than 10 percent this week. The discount retailer increased its share buyback plan from $1.5 billion to $2.5 billion and said they're going to start selling some products at a price point higher than one dollar. You tell me, Ron, which of these two things is more responsible for the stock moving up?
Gross: It's both, but I think the dollar initiative is more impactful here. On the heels of their Dollar Tree Plus initiative, which previously introduced higher price sections. In small percentages of their stores, they announced they will begin offering products at price points above one dollar at Dollar Tree Plus stores and that higher prices will allow them to offer different merchandise such as frozen meats, yam, and seasonal items, other products that cost more than a dollar. They said they are on track in 2021 to have 500 Dollar Tree Plus stores by the end of the year, another 1500 are planned for fiscal 22, and at least 5,000 stores are expected by the end of fiscal 2024, so a very large growth initiative for them. I think these higher prices were likely necessary as a result of rising supply chains and labor costs as we're seeing across retail. It puts them more in line with what Dollar General has done from a price point perspective. Dollar General is a much larger company from a market cap perspective than Dollar Tree. Now you said they also boosted their stock buyback program, authorizing an additional $1.05 billion in share repurchases that totals the authorization to 2.5 billion at a market cap of 21 billion. That's 10 percent that they are signaling that they're going to at least attempt or be authorized to repurchase. Now that is a meaningful number and that can be certainly part of the movement in the stock this week. It's both Dollar Tree making some interesting moves.
Hill: On Tuesday, Sherwin-Williams lowered its guidance for 3rd quarter sales. Shares downed a bit as the company cited persistent problems with raw materials and said they don't expect issues in their supply chain to improve in the next few months, Andy.
Cross: Chris, it's the second time this month they've lowered the guidance, so now expecting sales guidance to be flat to down in the 3rd quarter. They've nicked their profit guidance, and that's really impacting the forecast, and that's starting to show in some of the earnings guidance the analyst are putting now on some of the stock price. Again, they just, as Ron mentioned earlier in the show, continue to see these impacts in supply channel as well as raw material costs. With Sherwin-Williams, you're seeing the Hurricane Ida that really hit heavily down in the southern part of the United States, are more severe for suppliers and will actually last longer, so they have those impacts, as well as costs, just continuing to increase across the board. The improvements they expected to see in the key resins which go into their supplies to produce their paints and coatings, the production improvements they were expecting in September, have not come through, and those will be pushed out now. Here you have a stock at about $280 per share, it's a $73 billion market cap, you have a nice little dividend yield in there. Stocks up about 20 percent this year, a little bit ahead of the market. Their price earning is around 30 times, Chris. It's a very steady business. It generates a lot of cashflow they use to buy back stock, pay back their dividend. So when you look at it overall, it's still a pretty good business at a reasonable stock price.
Hill: Guys, we'll see you later in the show. After the break, CNBC host Melissa Lee on the potential and pitfalls for the new generation of stock traders. You're listening to Motley Fool Money.
Welcome back to Motley Fool Money. I'm Chris Hill. In 2020, money that might have gone toward trips to Las Vegas, instead started pouring into sports betting apps. Revenue for the stock trading app Robinhood more than tripled over the previous year. The intersection of online betting, stock trading, and gaming is the focus of a new CNBC documentary; Generation Gamble. It premiers Tuesday, October 5th at 8:00 PM Eastern. It's reported and hosted by Melissa Lee. She joins me now from New York City. Melissa, thanks so much for being here.
Melissa Lee: Thanks for having me, Chris.
Hill: You've done documentaries on cybersecurity, AI, consumer goods. Was the sheer amount of money pouring into these industries the thing that got you interested in this topic, org was it something else?
Lee: That was definitely part of it. Hardly a day goes by on my show, Fast Money, where we don't talk about the rise of sports betting, the increasing popularity of trading on apps like Robinhood and Webull, crypto like Doge. It really gets you thinking. It's not only a growing business, but the other side of it is who are these people who are devoting the hours and the dollars to these businesses, the time involved in placing the bets or making the trades. I really thought this was something that was going on in society that could really change our outlook going forward toward money and the attitude toward taking risk. I think, that's a change that we are in the midst of right now, Chris.
Hill: Let's talk about the sports betting part of this first. I knew or, at least, would've guessed that a lot of money was going into sports betting because I watch sports and I've seen all the commercials. All of the commercials are for DraftKings, and FanDuel, and all these different apps. But the revenue that they are getting in return, which is something you get at in the documentary, whatever they're spending on advertising, it looks like they're doing a good job of getting revenue back.
Lee: When you take a look at the sheer numbers when it comes to sports betting and iGaming because iGaming is also a booming business, just in the first half of this year we've surpassed the total [...] in the total of last year. This is really a growing part of the mindshare of this generation. You go into any sports bar, Chris, or college campus, and everybody is talking about betting. I'm clearly far away from that generation. That's for the demographic. But that is going on, and this is just in the fabric of what this generation does. It's not a big deal to place a bet. For us, we grew up remembering what it was like to have to wait on line to do a transaction, whether it be retailer or whatnot. This generation, they only know transacting on their cellphone, and so the friction to use money, whether it be for trading, or for betting, or for spending in any way, it's zero. They just reach into their pockets and they do it. They don't have to leave their bed. They don't have to leave their dorm. They could be in a class and placing a bet. It's a generational change here.
Hill: Another thing you get at is, as you said, it's so easy to do. We grew up at a time where if you wanted to place a bet, you had to get on a plane and fly to Vegas. You had to go to a casino. There were so much more work involved, and it's so much easier to do now. The incentives that the sports betting platforms and iGaming platforms are throwing out there are ridiculous, but they seem to be working.
Lee: Absolutely. You can just take a look at the numbers in terms of the users and the engagement. Gaming away a sure bet for your first bet place, basically, the odds will be in your favor for sure for that very first bet. It pays off because the lifetime of that new user far surpasses what that company had to spend to get that new user in that first trade. It just gives you a glimpse into how much money, if you can hook that person, so to speak, with their first trade, and it checks all the boxes when it comes to the rush, the adrenalin, the money in your account, you've got them.
Hill: One of the thrill lines in your documentary that connects these industries is the psychology at work here. You talked to young investors who take comfort in knowing that, as they're starting out as investors, they're not alone. They are part of a larger movement on Reddit. But you also get at the flip side of that, which is, you talked to a university professor who's doing one of the first studies on the connection between online trading and gambling behaviors, and it sounds like the early results aren't great.
Lee: I'm glad you brought up the study, because that was absolutely shocking to me. He surveyed 400 retail investors, just random retail investors, 400 of them. He asked them if they held GameStop, AMC or Doge. Fifty-one percent said they held at least one. Can you imagine, if that's just a random sampling of retail traders and more than half owned one of those securities, that just tells you what the psyche is of these new traders. To be sure, they may have other money set aside that is more longer-term. But they are more than willing, Chris, to take a gamble because they can check that out ten times a day and see that stock go up 10 cents, $1, double. I mean, in the case of GameStop or AMC, double or triple over the course of a matter of days. That also gets at that same adrenalin rush. We're talking about all the same physiological triggers that get activated when you're "winning", whether it be a sports bet or a trade. That's what really fascinated me in terms of the connection between the two.
Hill: Robinhood declined to sit for an interview for this documentary. I'm curious, from a business standpoint, how bright you think the future is for businesses like Robinhood, and Webull, and other trading apps that gamify investing because it really seems the SEC is taking a long hard look at the way they do business, which is different from how other regulators seem to be looking at the sports betting industry.
Lee: I think that's a really good point. I think that the demand for zero-cost trading is always going to be there. Clearly, people want to trade and I think that not having to pay 999, or 799, or whatever it is, that makes it all that much more likely that your trade is going to pay off. People have just been conditioned to think that trading should be free. Particularly this generation, I think they'll never go back to paying for something. But in terms of, I mean, the core of the business model for Robinhood, in particular, is payment for order flow. They receive payment for order flow for sending those retail orders to market-makers like the Citadel or Virtu. Most of their revenue comes from payment for order flow. That's what the SEC is going to take a look at. What's interesting is that, it's funny, I'm working on another documentary that deals with the AMC phenomenon, and there's a lot of overlap between the two. But when it comes to these younger traders, they want to take a look at the structure of Wall Street and if they are being taken advantage of. So while many traders use Robinhood, there are a significant number who question whether or not there is a conflict of interest, whether or not they are being treated in the best way possible when it comes to getting the best price for their trade, or if Robinhood has a conflict of interests sending it to the firm that will pay them the most, as opposed to the firms that we'll execute the trade for the retail investor in the best way possible. I think it's a double-edged sword for Robinhood. I think they've certainly changed the game when it comes to the overall industry. When you think of how many other brokers now offers zero cost trading, I don't think that we're going to go back. But I do think that the retail investor is smarter and they ask questions. I wouldn't be surprised if eventually, there are some change involved in the business model of Robinhood and some of the other brokers.
Hill: I was going to ask you where you think all of this is going, but in the documentary, you literally go to one of the places where this is going. You go into the metaverse. You go to a place called the Central Land, and you played Blackjack in a virtual casino, like something out of Ready Player One.
Lee: That's the extrapolation of all this. If things aren't real, if this generation is comfortable with operating in this virtual world where money is frictionless, then why not have an avatar that you can dress up in virtual clothes, that you buy for significant sums of cryptocurrency, and operate there, and gamble there, and bet there. That's the next step. Money is frictionless. Operating in a virtual world is a lot easier. We are talking about having to go to a casino physically. A drive to your casino to place a bet. This is one step beyond. You don't even have to get dressed. You don't have to do anything. You could stay near bed, and literally dress your avatar, and go and place a bet. All of these companies are looking at operating in the metaverse. This is just the next step to all of this.
Hill: Every weekday at 5:00 PM, she is the host of CNBC's, Fast Money. But when she's not doing that, she is working on things like Generation Gamble. The new documentary premieres Tuesday, October 5th at 8:00 PM Eastern. Investors are not going to want to miss it mostly. Thanks so much for being here. [MUSIC]
Lee: Thank you so much, Chris. A pleasure. [MUSIC]
Hill: Get ready to take some notes because coming up after the break, Andy Cross and Ron Gross return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money.
As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy yourself stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here, once again, with Andy Cross and Ron Gross. Guys, before we get to Radar stocks, I just wanted to touch on two stories that are related because this was a really good week for anyone who is looking forward to the inevitable rise of the machines. [laughs] First, the California DMV approved autonomous vehicle deployment permits for Waymo, which is owned by Alphabet, and Cruise, which is owned by General Motors. They still need approval from the California Public Utilities Commission, but these companies are now one step closer to offering driverless ridesharing services. Ron, [laughs] are you getting in one of these or if you live in California or you're like, "No, I'd like a human person driving my Uber or Lift.''
Cross: Are you paying for it? That's a big question too. Are you paying for it?
Gross: Chris, you used the word exciting at the lead-in and I would replace that with nervous, very nervous. I'm not an early adopter of things that could cause severe harm. It's really interesting. It's going to be the future. This allows them, as Andy said, to charge a fee, receive compensation for these autonomous services they'll offer to the public, ride-hailing, being one of the bigger ones. We're still in the infancy here. It's going to take some time. They're going to have to develop a track record. I'm OK with Domino's delivering pizzas in Ann Arbor this way, but I'm not sure if I'm getting in the car.
Hill: Andy, you just raised an interesting point. Obviously, they want to charge for this. Any chance, particularly if it's Waymo, which is backed by Alphabet, which has enormous piles of money, any chance that once they finally get approval for this, they just, for a few months say, hey, we're just going to offer this for free just to get people like Ron more comfortable with this [laughs] idea.
Cross: Yeah, very much, maybe. I think that just to start to bill because I think there will be a lot of nervousness from the consumer side. I will say the Cruise permission is for the vehicles are approved to operate between 10 PM and 6 AM. I'm usually asleep by then,[laughs] so I won't be hopping or paying for a Cruise vehicle. The Waymo ones are authorized to go up to 65 miles per hour at certain parts of San Francisco [laughs] and San Mateo counties. That's really interesting, the Cruise ones up to 30 miles an hour and operate in light fog and light rain. It will be interesting to see what they do with this. How much demand they get. Is there interest to be able to pay to go this certain mileage? Then certainly what does Waymo do? They are building on their lead with so many miles in California and Cruise this year. That's dropped a lot this year, with a lot of the testing in 2020 because of the COVID pandemic, but lots of continued testing and consumer interest to determine.
Cross: Chris, you're seeing I could potentially save tens of dollars in order to risk my life. [laughs] You've sold me.
Hill: Also this week, Amazon unveiled Astro, a robot you can have in your home for only $1,000. Astro is the size of a small dog. It moves around on three wheels and has a 10-inch screen. It can play music, TV shows. It also has a camera that can be used for home security and video chat. Ron, obviously, this is version 1.0. Among my thoughts on this is, I'm a little surprised it's Amazon with this and not Apple or Google.
Gross: That's interesting. I didn't think of it that way. I love stuff like this in general, and I eventually, at some point, will be a consumer. I think when it does a little bit more, for example, my wife said, that's interesting. It could bring you a bottle of water from the fridge.'' I'm, like,'' Not really. It doesn't have hands.'' Somebody would have to be there, put it in the little pouch, and then it could recognize your face, and it will be able to map your house. Pretty cool stuff. It'll have obviously an Alexa built-in. This is going to be the future, for sure. We're going to have many robots in our house. We're early on here, and I'm sure you'll see competitors like from Alphabet, like from Apple, as you said. So we will have our choice of $1,000 little mini-robots to choose from. The future is here, Chris.
Cross: A little too much wally looking for me. It is interesting [laughs] it continues to Amazon. They announced a whole bunch of different stuff with cheaper thermostats, and more Rings, different Echoes. So it really does just represent Amazon's desire to start to serve what's going on inside your house. The whole Ring security system that they are building out. More and more evidence that Amazon is really pushing into places where consumers are sitting to be able to order more stuff, whether it's through Alexa, or through their computers, or tablets, or iPhones.
Hill: By the way, Amazon denied that the device is named after Astro, the dog, in the animated show the Jetsons. It's like, "Come on, we all know that you named it after the dog."
Gross: The review I read said, "This is no Rosey the robot. [laughs] We're still early stages here."
Hill: Let's get to the stocks on our Radar, our man behind the glass, Rick Engdahl is going to hit you with a question. Ron Gross, you're up first. What are you looking at this week?
Gross: Rick, I'm revisiting Editas, E-D-I-T, a stock I have talked about many times before. I own it as part of my personal nine-stock biotech basket. They're an early stage gene therapy company focused on the CRISPR-Cas9 gene-editing technology. Now the reason I'm revisiting it, is that earlier in the week, they released initial clinical data from an ongoing trial that's focused on treating blindness due to a rare disorder of the retina. Following the release of that data, the stock fell 20 percent, but [laughs] that drop seems like an overreaction to me. The trial did show the treatment was effective for patients that received medium dose. I'm scratching my head a little bit about the stock reaction here. Prior to the release, the shares had doubled since May. So this is either a buy on the rumor, sell on the news situation, or there's something in the data that I'm just not understanding right now. I need to dig in more to determine if I stay put or maybe even buy more.
Hill: Rick, question about Editas.
Rick Engdahl: Gene therapy looks very promising, looking into the future. My question is, am I going to be able to live forever or only my kids?
Gross: Interesting. I think in your lifetime you will see this used to treat certain diseases. It won't be widely adopted quite yet, but for our kids, that could be really interesting.
Hill: Andy Cross, what are you looking at?
Cross: PubMatic, Rick and Chris, P-U-B-M, a very small-cap stock, $1.325 billion, $25 stock price, $100 million of cash in the balance sheet, offers a digital sale-side ad tech platform that more than 1200 independent publishers and App developers use. So they use the technology to basically encourage clients, ad clients, and other brands to be able to advertise. They served 46 trillion ad impressions last year. They handle one trillion requests per day. It's really profitable for a small company. They have growth rates of estimating to be 38-40 percent this year. They had a wonderful Q2, really benefiting from the push to be omnichannel, connected TV, Rick so when you think about using all your devices and that's supported by advertising. PubMatic is a small-cap growth company that's really innovative and building out that business. I really like it.
Hill: Rick, question about PubMatic.
Engdahl: I'm a little disappointed. I thought PubMatic was going to be some kind of robot that brought me a beer. [laughs].
Cross: That is a good business to have though.
Engdahl: But do we really need another online advertising platform? Come on [MUSIC]
Cross: I think we do. It's a big average, with huge space and they need a lot of innovation to be able to support those businesses.
Hill: What do you want to add to your watch list, Rick?
Engdahl: I think I don't want my kids to live forever, I'll go with that one.
Hill: Nice. Andy Cross, Ron Gross, guys, thanks for being here.
Cross: Thanks, Chris.
Hill: That's going to do it for this week's Motley Fool Money. The show is mixed by Rick Engdahl. I'm Chris Hill. Thanks for listening. We'll see you next time.