Into the Metaverse, and an Earnings Roundup

Booking Holdings (BKNG 1.41%) hits a new high as Airbnb (ABNB 1.03%) posts record revenue. Peloton (PTON 0.66%) takes a hatchet to its guidance, so investors take a hatchet to the stock price. MercadoLibre (MELI 0.87%) bounces back with a strong third-quarter report. Motley Fool analysts Andy Cross and Ron Gross analyze those stories, discuss the latest with Zillow Group (Z 1.00%) (ZG 1.15%), Pinterest (PINS 1.02%), Square (SQ 1.68%), Under Armour (UAA 0.74%) (UA 1.39%), Etsy (ETSY -0.46%), and PayPal (PYPL 1.41%), and share two stocks on their radar: Axon Enterprise (AXON 0.07%) and Titan International (TWI 0.26%). Plus, Motley Fool analyst Asit Sharma talks with futurist Cathy Hackl about the business potential of the metaverse.

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 Nov. 5, 2021.

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.

Ron Gross: How are you doing Chris?

Andy Cross: Chris, how are you doing?

Chris Hill: We've got the latest headlines from Wall Street. We will dig into the metaverse with our guest, Cathy Hackl. As always, we've got a couple of stocks on our radar. But we begin with the big macro. The US economy added 531,000 jobs in the month of October. On top of that, the reports from August and September were revised to add another 235,000 jobs. The unemployment rate dropped from 4.8 percent to 4.6 percent. Ron, we still have labor shortages and supply chain issues, but this was a great report.

Ron Gross: Oh, yes. The stock market likes this report as do I. Investors hoping that the labor shortage could be getting better. We're not out of the woods yet, but this is a positive report, as you say, with the unemployment rate falling to 4.6 percent, that's a new pandemic low. Leisure and hospitality, I'm happy to say, led the way adding 164,000 jobs, as Americans got back to restaurants and bars, and we started traveling and taking vacations again. Really great to see. That sector has reclaimed 2.4 million positions that were lost during the pandemic so far. Another bright spot, wages did tick up a bit year-over-year they were 4.9 percent. That's a pretty big number that's reflecting those inflationary pressures that I think are causing some concern. We'll keep an eye on inflation, we'll keep an eye on wages. Labor force participation rate held steady 61.6 percent, that's still 1.7 percentage points below the February 2020 level. It would be good to see some people reentering the workforce. Finally, I'll mention that U-6 unemployment number we sometimes talk about, which is a broader gauge of unemployment that includes discouraged workers and those holding part-time jobs for economic reasons, that fill the 8.3 percent from 8.5. Seven percent was prior to the pandemic. Still some work to do there but moving in the right direction.

Chris Hill: Andy, Ron mentioned the reaction from the market that Dow, the S&P 500, the Nasdaq all hitting new highs on Friday.

Andy Cross: Yes, it's been an impressive run here over the past week or so. Stocks, there's a lot of excitement, a lot of buyers still on the market, and a lot of excitement about where to go when you think about the market and where you think about investing the stocks continue. US stocks mostly continued to really be the excitement, especially the small-cap we've seen a really nice bounce back in the small-cap market and the Russell 2000. That's really indicative of the cyclical play as people are getting excited about the economy reopening here.

Ron Gross: I think probably important to mention that earlier in the week, the Fed said that job growth was strengthening enough for it to begin tapering their monthly bond purchases. Their quantitative easing program. Chairman Powell also said that he needs to see continued improvement before the Fed starts raising interest rates. Hikes are expected within the coming year. But I think the market kind of like that balance, time to start tapering. Interest rates remain low for the time being. I think the strength in the stock market is kind of reflecting that balance.

Chris Hill: Let's get to earnings and we'll start with a good week for a couple of big travel stocks. Third-quarter profits and revenue for Booking Holdings came in higher-than-expected, sending that stock to a new all-time high. Airbnb's third-quarter revenue was not only higher-than-expected, it was also a record for the company. They also had record bookings and shares of Airbnb up 17 percent this week. Andy, let's start with Booking Holdings, just another great quarter.

Andy Cross: Yeah, travel grew. The gross travel bookings, Chris, as you mentioned, at a really nice rebound up 77 percent to almost 24 billion. Room nights booked were up 44 percent, seeing some sequential improvement, which is really nice still down from where they were two years ago, but seeing some nice growth from where they were in the past year. September was the strongest month, so they're seeing that momentum continue through the year. Revenues were up about 77 percent to almost 4.7 billion. That was down from the third quarter two years ago, Chris, but double the quarter growth from the last quarter of this year. The agency revenues continue to be the big driver as you would expect with bookings up 66 percent. Merchant revenues up 94 percent and ad revenues up 133 percent, Chris. That really reflected in the strong performance at the operating cash flow and operating profits with their earnings before depreciation amortization, and interest and taxes, EBITDA up to a 45 percent margin. Really seeing a nice rebound as Booking continues to see their consumers come back to the marketplace, especially in booking with the flight business Chris, which is relatively new but still seeing some really growth there with 25 percent of total customers now new to that platform. Booking overall, a really nice quarter as they continued to rebound especially internationally.

Chris Hill: Andy, Airbnb I mentioned the revenue. The thing that is amazing to me about the business of Airbnb is how little they need to spend on marketing. Ninety percent of their traffic is essentially free traffic.

Andy Cross: Yeah, Chris. Their gross bookings, as you mentioned, really strong, up almost 50 percent, up 23 percent from the 3rd quarter two years ago. They're seeing even better performance now than pre-COVID that really showed some really nice growth in the revenue line. Something we're very proud of, their hosts earnings were almost 13 billion in the third quarter of this year. That's up 27 percent from the third quarter two years ago, the hosts who are hosting their customers at their homes, wherever they are doing, they are making more money and that's a real proud point for Airbnb. They're seeing the most growth in stays on Monday and Tuesday nights, interesting to see more and more growth from outside of the major markets as we've talked about before. On the top 10 cities are now six percent of revenues versus where they were 11 percent two-years ago. You're starting to see more and more travel outside of those major markets, they continue to innovate in the platform with their May release, made it easier for host to join the platform and get started. They continue to innovate, it's a $110 billion company now, sells at a price of sales multiple of more than 30. It continues to be one of those elevated multiple stocks. But you think about the rebound, you think about the market saturation and the fragmentation, sorry, in this market, it's owner-led the CEO and the founder really has a really great purpose for Airbnb. They're starting to show more and more of the profit as they scale out the business and that profit picture improving, so overall a really nice quarter from Airbnb after obviously a very tough year. But I really like the direction they're heading, and the stock here seems reasonable.

Chris Hill: After the closing bell on Thursday, Peloton issued its first-quarter earnings report. The loss was bigger than expected. Peloton took a hatchet to their full-year revenue guidance, and on Friday shares of Peloton fell more than 30 percent. Ron, a stock falling like this, it is natural to ask if it's a buying opportunity. But in this situation the company itself is basically saying, the next few quarters are not going to be great.

Ron Gross: Yes. It's hard to get a handle on where this business model shakes out post COVID. I bought a Peloton right in the heart of COVID and my usage has waned. My decision as to whether to keep paying the subscription price month after month is a real question in my mind. I think they're seeing a lot of that across the board. Management said it is clear that we underestimated the reopening impact on our company and the overall industry. Yes, it appears that they did. CEO John Foley also said that Peloton has seen traffic toward their website taper off faster than they were anticipating. Shopper visits to their brick-and-mortar stores also were relatively weak. We have weaker demand, we have lower prices due to price cuts on its most popular bike, and we have higher marketing cost. Not a great algorithm with a great equation for profits there. A couple of bright spots, I guess I would have to say, subscription revenue did increase 94 percent, that's looking in the rear view mirror. Now we have to see where we go in the future. They ended of the quarter with almost 2.5 million subscriptions, but sales were just up six percent on that. Hurt by the recall of their tread product, 17 percent decline in their connected business segment as a result of fewer bike deliveries. As I said, they're cutting the price by $400 on their most popular bike. They're trying to reach younger, less affluent consumers, they're trying to take away the thought that this is a luxury product. It's still quite expensive, however. Operating expenses up 140 percent year-over-year as they try to market the heck out of this thing to try to bring business and bring demand back. But they were hurt by the chip crunch and supply disruptions, rising freight costs as many of our companies that we talk about have been. They reported a loss of around 300 million, they cut full-year sales forecast by up to one billion. They expect about a $425 million adjusted EBITDA loss going forward, this is going to take some time to work out and to see where the business normalizes. It's still a business and there's still going to continue to sell a very strong product with a very strong subscription, but we need to see where it normalizes.

Chris Hill: After the break, we've got global retail, digital payments, and a lot more. Stay right here. You're listening to Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money. Chris Hill here with Ron Gross and Andy Cross. Mercado Libre's 3rd quarter report was highlighted by strong profits and payments volume rising nearly 60 percent. Shares of Mercado Libre up nine percent this week, Andy.

Andy Cross: Really nice quarter for a stock that's been frankly really just up and down throughout the year. Active users crossed or almost hit 79 million, almost three-and-a-half percent. The gross merchandise volume, Chris, was up 24 percent, 30 percent if you just look at the local currencies. It was up 1.4 billion from the third quarter, a year ago. Now mobiles is almost three-quarters of all the GMV, the gross merchandise volume across the platform. Increased their transactions per buyer. You mentioned the payment volume through the Mercado Pago was up almost 60 percent local currency. Their shipments, the NVO shipments business was up 32 percent. They now shipped almost 250 million products during the quarter. Then shipment in payments is really exciting to be the fuel of the stickiness to the Mercado Libre story. Their credit portfolio was crossover one billion so now they have 1.1 billion in personal loans and credits for purchases. They reached 36 million people with credit offers up from 27 million earlier this year. Revenue, that all reflected in revenues, Chris, up 66.5 percent. The US dollar is up almost 73 percent ex-foreign currency. Commerce was up almost 70 percent. Fintech, the Pago business up almost 62 percent. That shows some really nice growth in the gross profit margin up over 43 percent versus 43 percent last year. Operating expenses, they continue to invest across the business. But they're having the success, they are building out their network, they're making the acquisitions. Really like what you're seeing from Mercado Libre and it's not that expensive of a stock for the leader in the Latin American e-commerce space.

Chris Hill: Real quick, before we move on. You mentioned the stock is basically flat for the year. The investments that they've been making, is that something that maybe pays off down the line, but is a little bit of a hindrance to the stock in 2021?

Andy Cross: Well, Chris, I think it is. I think also just the currency effects and just the Latin American economy is continuing to unlock a little bit more slowly. They acquired Kangu. It offers 5,000 pick-up and drop-off spots across Brazil, Mexico, and Colombia. They're just making these acquisitions through adding planes to their network. Shipping is becoming more and more of an important part to their business. I think to make that all work, as we've seen with the likes of Amazon and others, you really got to put the investments behind it. I think that's a long-term investment, but always with Mercado Libre, it's always been a long-term thinking investment and a forward-thinking businesses. As an investor, you really have to invest with that perspective.

Chris Hill: Zillow Group's third-quarter results were completely ignored by Wall Street. That's because Zillow also announced it is shutting down its home-buying business and laying off 25 percent of its staff. Shares of Zillow down more than 35 percent this week. Ron, look, it's still a $16 billion company, so they're not dead. But this was a train wreck.

Ron Gross: Oh boy. This was not good and it wasn't handled well and the communication was poor. They probably had no choice. You've got to do what you got to do, but it just wasn't handled well. Management highlighted the unpredictability in forecasting home prices. They basically blamed a faulty algorithm that caused it to overpay for homes. The wind down is going to take several quarters. They've got lots of homes on the books still. As you said, reduction in the workforce of about 25 percent. They're going to take more than a $550 million loss on the homes that they bought. I saw that a KeyBanc analyst estimated that 2/3 of the company's homes are currently listed below the purchase price that they paid. Recently this is one of the problems that I think was the communications and the discussion with investors. Management said the business was suffering and would be paused as a result of problems with materials and labor capacity. Now we find out that it really was more broken than that. Lots of class action lawsuits will sort that out. I won't do it here. iBuying was supposed to be the future of Zillow. The company moves forward with its legacy ad business. That business reported a 16 percent increase in revenue for the 3rd quarter, 130 million pre-tax profit. We've got a business here. It's just not that exciting of a business from a growth perspective, that profit was down seven percent from last year. Not great, very poorly handled on the part of management.

Chris Hill: The number of people using Pinterest on a monthly basis fell, but third-quarter profits and revenue came in higher than expected. Shares of Pinterest up a bit this week. It's been a rough 2021 for shareholders. Andy, is this signs of life?

Andy Cross: Hey. Chris, over which I'm one in stocks down at around 45 is down about half from its highs earlier this year. Revenue up 43 percent, which is really nice ahead of the estimates. Nice growth in the US, which is the largest market at 33 percent. International almost doubled so that's good. A lot of a slowdown from the rapid growth we saw earlier this year. Like you said, it is starting to see the normalization, a little bit of Pinterest. But we are seeing some nice growth in the revenue per user. That was up 37 percent. US was up 44 percent, international was up 81 percent. International much smaller. US is $5.55 per user international only $0.38. Still a lot of work to make that normalize in the growth rate international. It's just a smaller base, not too surprising. Ben Silbermann, who is a large owner, at 6 percent of the shares and the CEO talked about the different switching out-of-home and in-home. They're seeing growth in the engagement platform for out-of-home like fashion and beauty when you're outside your house obviously. But that's really the growth there has really been held back by the slowdown in-home that has really driven so much of the Pinterest interest. They don't believe that's a permanent change. They think that will start to return back over time. But that's the big question. They talked about that in the call. They just don't know when that might change. When you look at the innovation Pinterest's making, they start testing out a seamless checkout experience, trying to tie in the commerce part, not just advertising but commerce to their business. That's a big push. Their forecasting revenues for the upcoming quarter in the high teens, so a little bit of a slowdown, but probably about where the analyst expected. I think you've seen a nice quarter from Pinterest still a lot to show, to be able to turn it back into the growth story that we really want to see.

Chris Hill: Square's 3rd quarter revenue was lower than expected due to Bitcoin demand slowing down. Ron, is this a speed bump for Square or cause for ongoing concern?

Ron Gross: Jack Dorsey, who's a big Bitcoin fan, really has tied fair amount of Square's fortune to Bitcoin here, and so I think we're going to continue to see volatility. It's hard for me to predict where that shakes out. I think volatility will be the name of the game and we'll just have to wait and see how Bitcoin gets adopted and adapted in various places. As time goes on, I would tend to say is as if I had to pick one, I would say it's a speed bump. It's not something that is permanently hurting the business. Even with that weakness in Bitcoin, overall sales were up 27 percent, which yes, it was a bit lower than expected. Gross payment volume for merchant customers up 43 percent. Gross profit overall 43 percent. Now that was down slightly from the previous quarter. We have investors a little bit focused on that as they should be. But adjusted EBITDA of more than $200 million. The company seems to be doing just fine.

Chris Hill: All right guys, we'll see you later in the show. Everybody pack your bags after the break, we're going to the metaverse. This is Motley Fool Money. [MUSIC] Welcome back to Motley Fool Money. I'm Chris Hill. If you've listened to the show over the years, you may have noticed recently we've been talking more about things like virtual reality, augmented reality, and yes, the metaverse. Cathy Hackl is an expert on these topics. She's worked with everyone from start-up AI companies like Magic Leap to tech behemoths like Amazon Web Services. Recently, Motley Fool analyst, Asit Sharma set time to talk with her because with all the talk in the past couple of weeks about the metaverse, figured it'd be helpful to ask someone with her experience and expertise, what is the metaverse?

Cathy Hackl: The metaverse in essence, is the successor to today's mobile internet, it's kind of the future of the Internet, where we're going. So for people to understand it beyond just the term and the hype, you have to think about Web 1.0. So Web 1.0 connected information and we got the internet that changed a lot of things. Web 2.0 connected people and you got social media that changed a lot of things as well, right? Now we're at the end of this Web 2.0, we're all going into Web 3.0, which connects people, places, and things and sometimes these people, places, and things can be in a fully virtual synthetic environment or it can be in the real world with some level of augmentation. In this Web 3.0 world that we're going into, the metaverse is being constructed and enabled and pretty much the metaverse is convergence of physical and digital. You have to look at it almost as your digital live catching up to your physical life in some ways. It has to do with persistent content. It has to do with a lot of different enabling technologies that allow us to get to that metaverse and the metaverse is being built right now. It's not something that necessarily currently exist in that bigger vision of the metaverse. It does come from a sci-fi term [laughs] it was coined by Neal Stephenson in 1992, Snow Crash. I come from having worked, like you said in a lot of these companies, internally. I was the VR Evangelist at HTC Vive, during the partnership with Spielberg's adaptation of Ready Player One, then worked at Magic Leap where our Chief futures was Neal Stephenson who coined the term. So it's just been really exciting to see the evolution of the term metaverse and what's coming. I don't think people should over-index on the term issue. They should really think about it as the future of the Internet or what comes after social media, mobile phones, etc.

Asit Sharma: Wonderful. So can you give us maybe an example or two, of a real-world place online that a viewer could go to who's watching today to get an early example of how the space is being built out.

Cathy Hackl: Yeah, there's many different components to it. At this current state, not one company really has all the infrastructure possible to build that greater vision of the metaverse. You can go to different places. It depends on whether you want to go into a centralized platform or a decentralized platform. But for example, you go to Roblox. Roblox is a great example of an experienced platform that has been using the term, that is very community-driven. So where people will go and create games, community-driven people go and play games with each other. They are doing a lot of advancements when it comes to avatars, when it comes to social shared experiences, virtual social shared experiences. They're doing a lot of different things with voice. Soon they're going to be doing a lot of things related to limited edition. So not quite non-fungible tokens and I know we're going to be talking about that, but they are starting to embrace some of that limited quantity scarcity perspective. You can start to see some of the glimpses of this metaverse, let's say in an activation like Gucci garden, where it was created with one of the creators on the platform. It's a special world, let's say a special virtual world created for that brand where people were able to engage. You could also talk about the concerts that happened on the platform like Lil Nas X, 21 Pilots. I always say my son had his first concert experience in Roblox. It was during the pandemic and it was in a virtual space and just because it wasn't at a stadium like you and I probably had their first concert. [laughs] For him it was in a virtual space, but just because it was virtual didn't make it less real. So I think that's one of the platforms that a lot of people, if they want to get a glimpse of what's the come, a good place. If you look at fashion, the world of fashion is embracing a lot of what I call direct to avatar. In some ways, direct-to-consumer. One of the next phase's, not the only one, but one of the next phases of direct-to-consumer is called direct-to avatar. Where you're going to be creating products and even services for your avatar and how they're going to look in some of these virtual spaces. So yeah, look at some of the things that are happening in the fashion space. Ralph Lauren, for example, launched a fully virtual fashion line, inside Zepeto, which is a 3D Avatar app and game. It's pretty popular in APAC, but gaining popularity here and yeah, I think there's glimpses all over whether it's music or fashion or culture. If you want to get more immersive, you can go into something like VR chat. If you want to get more decentralized, you can go into somewhere like Decentraland, for example, where companies like Republic Realm have bought pieces of land for $900,000 to create a shopping district. It really depends on where you seek to go and try to see these glimpses of the metaverse.

Asit Sharma: Mark Zuckerberg is hiring 10,000 employees for Facebook's metaverse project. Extremely interesting there. They certainly get it. They understand just what you've said. You need talent acquisition at a strategic level, but also on a subject matter level and I'm sure you need lots of great software engineers, if you're going to go into this space in really big way. Are there examples besides Facebook, Kathy, of companies that you think really get it? Hopefully some publicly trade example would be awesome.

Cathy Hackl: Yeah, definitely. Obviously I mentioned Roblox. I think Roblox is one of those companies. A lot of growth, really good roadmap. They really have their eye on the next 10 years, which I think they are playing the long game, which is great, Unity. Very important in order to enable this future of the Internet. Those underlying technologies that are able to create these experiences when they're fully virtual or even augmented but for example, the game engines Unity, for example, is a great example of a company that I think is very well-positioned, obviously epic, but they're obviously not publicly traded. But I think there's different companies. I would even look at even companies that do what's called lighter scanning. There's lighter on your phone and you're able to scan different themes to create 3D assets. There's some publicly traded companies that do that. Even starting to look at potentially some of the hardware companies that are creating glasses. I think it's Vuzix. There's other companies that are smaller players in the game. But eventually, if things accelerate and we get to that point where we move away from the phone, there's not going to be very attractive potential acquisitions for bigger companies. [Snap's] Snapchat, I think Snapchat is to be honest not necessarily something that a lot of people mention when they think metaverse because they're very focused on using the term augmented reality but I do see them as a major player because they're setting up not only very young demographic that's kind of growing up with them and getting used to living on the camera. But I think that they are setting up a great teams and great leadership that gets the vision. They don't use the term metaverse I do have to say that, but in essence, what they are doing is part of the future of the metaverse. Those are some of the companies, I think that there is obviously the big buys, FAANG. Obviously, all of them are involved in some way, shape, or form. Whether it is Facebook saying that they're going to be a metaverse company, that's a big signal for the market or Microsoft in their meetings, talking about enterprise in metaverse. But yeah, I think all of them in some way, shape or form are trying to figure out what their role is and how they enable the metaverse in the future.

Chris Hill: If you're interested to learn more, you can hear Cathy Hackl every week on the Metaverse Marketing Podcast. Coming up after the break, Andy Cross and Ron Gross return and if you're looking for investing ideas, good news, they're coming back with a couple of stocks on their radar. Don't go anywhere. You are in the right place. You're listening to Motley Fool Money. [MUSIC] 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. Don't buy or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here with Andy Cross and Ron Gross. You can hear the show every week on your favorite podcast platforms, Apple, Spotify, Stitcher, Amazon music. You can also catch us on radio stations across America, including our brand new affiliate, WKXL in Manchester, New Hampshire. Shout out to the granted state. A couple of more earnings stores before we get to the stocks on our radar. Shares of Under Armour up more than 15 percent this week after 3rd quarter profits and revenue came in higher than expected, they raised guidance for the full fiscal year. Andy, CEO Patrik Frisk, turnaround plan looks like it's starting to bear a little fruit.

Andy Cross: Yeah, Chris. It started off with higher demand for the Under Armour brand. That seems to be driving a lot of the growth , the wholesale business was up 10 percent. Revenue overall was up eight percent. The wholesale business was up 10 percent, direct-to-consumer was up 12 percent. I will note, Chris, that the e-commerce business was actually down a little bit, down four percent. In their stores, that was really where they saw a lot of the growth and they saw improvement in the average selling price. They didn't have to discount nearly as much. They didn't have promotions as much. They really saw some growth drive through and they attribute that to strength in the Under Armour brand coming back. International was up 18 percent to 510 million, but North America continues to be the bulk of the driver of the sales and the growth story overall, that was up eight percent to more than one billion. I mentioned reduced markdown to lower off-price sales. Continuing to drive on, as you mentioned, Patrik Frisk, driving the turnaround on Under Armour. They did talk a little bit about the cost and the supply logistics, but forecasting some nice growth for the next quarter, 25 percent versus 20 percent they were expecting at the last quarter that helps to improve a little bit on the gross margin side as well as the operating profits. Overall, you continue to see some nice growth in Under Armour and across their businesses, but really particularly in North America, it's a big growth driver for Under Armour.

Chris Hill: Just like Under Armour, Etsy's third quarter profits and revenue came in higher than expected. Etsy's revenue guidance for the holiday quarter was a little lower than Wall Street was hoping for, but wrong, this really looks like a business that's only getting stronger.

Ron Gross: Yes. You nailed that strong report investors keeping an eye on the cautious guidance for the holiday season, that's the headline for sure. For the quarter gross merchandise sales up 18 percent. If you exclude face masks, interestingly, which are on the decline, gross merchandise sales were up 24 percent as they anniversary a very strong pandemic fueled corridor. Net income was actually down slightly, but there's some acquisition-related expenses there, so if we strip them out, you see an adjusted EBITDA of 174 million, which was up 15 percent. Turning to guidance, relatively tempered for the holiday quarter, expect $660-$690 million of sales, that would be about 10 percent increase, which is fine, but not amazing. Comparisons to last year's holiday season will be tough as the CEO, last time the company saw revenue more than double compared with the pre-pandemic year. We we're all locked down, many of us turned to Etsy probably for the first time. Stimulus checks also boosted spending at that point. They're being cautious. Also, there were some very strong numbers in October. There is some concern that maybe some holiday season buying was pulled forward and a lot of people got to it earlier than normal. I think they're being cautious I still think it's a very strong business, one quarter whether it comes in a little light, little heavy, they're going in the right direction. I think they'll continue to be strong for many years to come.

Chris Hill: Just like every quarter with Costco, when we grow through Costco's earnings and it comes up like, well, you need to strip out the gas. Are we going to be doing this with Etsy every quarter? It's like well, if you strip out the masks sales, I'm hoping that's just a pandemic thing we're doing.

Ron Gross: When we stop anniversarying pandemic I think we'll be done.

Andy Cross: Yeah, it's not just Etsy and Under Armour. Their accessory business was down 13 percent lower sales of sports masks.

Chris Hill: Real quick, our email address is [email protected] question from Sean Williams who asked, "What's going on with PayPal? It's been on the decline since July. I know the possible Pinterest acquisition scared some investors, but that only seems to exacerbate what was already happening with the stock." He is not wrong.

Ron Gross: He is not wrong. If I had to point to one major event that has occurred over the last several months, it would be that eBay has decided to transition off of PayPal's payment platform to their own. The loss of eBay is pretty big, resulted in an eight percentage hit to PayPal's payment volumes for the last quarter. Is the writing on the wall that others could do that even if they don't, the loss of eBay is rather big deal. I would imagine investors shied away from the stock as a result.

Andy Cross: Still in the fintech space, PayPal is just one of the leaders on the consumer side more and more across the entire ecosystem. I'm actually glad the Pinterest acquisition didn't quite work out, but I think that is a little sign that they are going to continue to expand both their brand name and their business into lots of different parts of the entire e-commerce platform.

Chris Hill: To your point, Ron, it's a nice reminder of eBay size and influence. I know eBay gets short shrift from a lot of investors, but you are looking to move like this, it has an impact.

Ron Gross: It certainly has an impact to a very large customer who was responsible for a fair amount of business there and they'll be able to shake it off, but it is meaningful.

Chris Hill: Keep the emails coming [email protected]. It's time to get to the stocks on our radar. The original man behind the glass, Steve Broido with us this week.

Steve Broido: Hello friends.

Chris Hill: Hello Andy Cross. You're up first, what are you looking at this week?

Andy Cross: Steve and Chris, I'm looking at Axon Enterprise develop, makes, and sales conducted energy weapons under the TASER brand so the old company TASER devices, body-worn cameras, emerging Cloud-based evidence management platform is some really nice growth and with more calls for transparency and help for security in police officials who are using weapons for community protection, I think Axon and its TASERs and body cameras will likely be more relevant in the world going forward. They do show that their solutions can help reduce use of force and they've saved more than 250,000 lives over the years from death or serious injury. Has relationships with 17,000 of the 18,000 US law enforcement offices across the US, it's a dominant and best positioned brand in the space. When I look at the overall business growing at 40-50 percent serves a very large market, pushing into the international growth. As I mentioned, that Cloud business that it's starting to expand away just from the products; Axon Evidence, Axon Records, and Axon Response, I just like the overall business they're serving, and a need for more transparency for officials in security and police and I like Axon's opportunities going forward. I'm still looking at it, still researching it, but overall looks pretty impressive.

Chris Hill: The ticker symbol?

Andy Cross: AXON.

Chris Hill: Steve, question about Axon Enterprise?

Steve Broido: I'm a shareholder. I'm a huge fan of this one. My big question is, is there a next big thing for Axon? The move from just that TASER model to body-worn cameras huge, is there a next act?

Andy Cross: Overall, yeah, that Cloud, the Axon Evidence, which stores and analyzes data from the cameras and the records which uses AIs to help generate police report, I think that push outside of just the core TASER and body cams is really the next spot that the founder and CEO Patrick Smith is pushing into.

Chris Hill: Ron Gross, what are you looking at this week?

Ron Gross: Steve, you know what time it is. It's time to revisit an old friend, Titan International just for you. TWI, micro-cap manufacturer of industrial wheels and tires, long-term holding of mine that has admittedly struggled, but shares are up 185 percent over the last year, but they are down 30 percent from their 52-week high, still only a $500 million market cap for Titan. Latest quarter shows some light, maybe at the end of the tunnel, the strongest third-quarter results since 2013. Net sales up 48 percent. Agriculture leading the way with an increase of 59 percent year-over-year, earth moving and construction segment up 36 percent year-over-year. Those are strong numbers for those of you who follow Titan out there, you don't see that every day. Gross margins wide and 13.4 percent versus 10.3 percent. Bringing more money down to the bottom line, adjusted EBITDA of 35 million, expecting full-year adjusted EBITDA of over $130 million. Remember, we only have a 500 million market cap company, balance sheet is a little concerning, 95 million in cash, 450 million in debt, keep an eye on it, but selling at 6.5 full-year EBITDA, pretty and expensive in my eyes.

Chris Hill: Steve, question about Titan International?

Steve Broido: Well, the obvious one is, have they reinvented the wheel, Ron? [laughs] Is this what's going on? What you're telling me, it sounds like a true reinvention of the wheel. This company sells wheels, how are they doing? You explained it I guess, but I don't understand.

Ron Gross: I will say actually, it's funny you say that there is improvements in technology with respect to wheels.

Steve Broido: More roundness?

Ron Gross: [laughs] They're more around than they used to be. But they do have technology that helps improve the farmers and the earth moving and construction segment to do their jobs more efficiently and more economically. That is leading the way.

Chris Hill: What do you want to add your words on Steve?

Steve Broido: I'm adding Axon. [laughs] Definitely.

Chris Hill: Ron Gross, Andy Cross, guys, thanks for being here.

Andy Cross: Thanks guys.

Chris Hill: That's going to do for this week's show, it's mixed by Steve Broido, our producer is Mac Greer. I'm Chris Hill. We'll see you next week.