In this podcast, Motley Fool host Dylan Lewis and analysts Emily Flippen and Matt Argersinger discuss:
- Chipotle's status as big burrito, and how things look as the stock hits all-time highs.
- Spotify's and Uber's impressive combo of growth and efficiency.
- Earnings updates from Roblox, Simon Property Group, and Enphase.
- Two stocks worth watching: Starbucks and Snap.
Motley Fool host Deidre Woollard caught up with Scott Rick, a marketing professor at the University of Michigan and the author of Tightwads and Spendthrifts: Navigating the Money Minefield in Real Relationships.
To catch full episodes of all The Motley Fool's free podcasts, check out our podcast center. To get started investing, check out our quick-start guide to investing in stocks. A full transcript follows the video.
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This video was recorded on Feb. 9, 2024.
Dylan Lewis: Peak burrito is coming. Well, the good times keep rolling for Chipotle. Motley Fool Money starts now.
It's the Motley Fool Money radio show. I'm Dylan Lewis. Joining me over the airwaves, Motley Fool Senior Analysts, Emily Flippen and Matt Argersinger. Fools, great to have you both here.
Matt Argersinger: Dylan.
Emily Flippen: Good to be here.
Dylan Lewis: We've got updates on big burrito, big music, some tips on how to talk about money with your partner, and rate our stocks as always. But we are picking up with the earnings beat. It was a big week for big names. Matt, we're going to start things off with Chipotle. Shares up after earnings, there was an extra serving of guac for investors. Strong beats on the top, and bottom line with company results.
Matt Argersinger: Big burrito. I almost think they should call it like standard burrito [laughs] standard oil back in the day. This company is getting bigger, and getting bigger in a very profitable way Dylan. Look at 15% sales growth, 8.4% comps, which were way ahead of expectations, that's very impressive. More impressive though, actually, is that the sales Chipotle is making are increasingly more profitable for the company. If you look at the restaurant-level margin, that was up 140 basis points year over year in the quarter. Chipotle's overall operating margin was also up 80 basis points year over year. Adjusted earnings for share up 25%. The company opened 120 restaurants in the quarter. That was a record, and it included 110 Chipotlanes, which if you don't know that's Chipotle's word for stores that have drive-through, [laughs] but they call them Chipotlanes. Those have been very successful and very profitable for the company. They only started in 2019. These Chipotlanes have really contributed to the company's digital sales, which were up 36% in the quarter, really impressive. If you're a Chipotle shareholder, I'd say 2024 and beyond is looking pretty bright. On the conference call, CEO Brian Niccol, he reiterated the five key strategies he has for the business. One of those is accelerating store openings. So last year, 2023, they opened 271 restaurants. That was a record. This year, they're targeting between 285 and 315 openings, mostly in North America, and 80% of those stores will include a Chipotle. Long term, the company believes they can get to 7,000 stores, which is more than double that they have today. If each of those stores is more profitable as they continue to be, Chipotle is going to be a much more valuable company in the future, bigger burrito.
Emily Flippen: Chipotle has held up so much better than I ever expected it to over the last couple of years when so much of their sales growth was driven by things like price increases. I almost can't help but feel like, Chipotle is the burrito version of Icarus, who is just flying a little too close to the sun, and at some point, consumers are going to step back and say, I can't afford this anymore. To Chipotle's credit, that has not happened yet. Their ability to launch new products that upsell people, so you get the cheap chicken burrito if that's your thing, or you can pay for the carne asada, which is their special menu item at the moment. Their ability to upsell people who can't afford it is great. But I try to keep my expectations a little bit lower with Chipotle, because things have been so hot for so long, and we've seen other food establishments really struggle over the course of the past couple of years. So I like this stock, it continues to be a Motley Fool recommendation, but I always, as an investor, just try to temper my near-term expectations.
Dylan Lewis: I think the burrito that flies too close to the sun might be a case idea if you really want to get into the tortured metaphor. [laughs] I think that's where it starts to trend. One of the things that really jumped out to me just in an all-firing cylinders type quarter Matt was, you talked about the same-store sales growth, 8%, it wasn't price hikes, 7% growth in foot traffic. It seems like everything seems to be working for this business, is there anything that you're concerned about?
Matt Argersinger: Well, yes, I think Emily made a great point. Restaurant concepts come and go, Chipotle has proven to be really just sustaining in its success. I would say one thing that stands out to me if I could be Armchair CEO for a day, they've done a lot of share repurchasing lately. Last year they bought back about 600 million, they've got another 400 million, they've earmarked for buybacks. But stock at all-time high, hey, those buybacks which came at lower prices, they've worked out so far. But if you look at the share count for Chipotle, it's down less than 1% over the last five years. It's a lot of money invested, shareholders really haven't got a huge benefit, and it's an expensive stock. Talk about flying close to the sun, it's over 60 times earnings. Just for context, and I know this isn't apples to apples, but take Starbucks, which also happens to run a pretty successful restaurant concept with similar margins to Chipotle. It has ten times the number of restaurants that Chipotle has, yet its market cap is only 40% bigger than Chipotle's. If I were CEO Brian Niccol, I'd stop the buybacks, and I'd consider paying a dividend. That's coming from me, of course, it's not surprising. But if Chipotle pulled a Zuckerberg, and just paid a 0.5% dividend, it would only cost them around 340 million a year. That's just over half of what they spent on buybacks last year, and the earnings per ratio would still be less than 25%. I just think Chipotle is a mature, established business, it's got great earnings disability. Dividends also have a wonderful way of exerting a little discipline on capital allocation over time. That would be my one message to CEO Brian Niccol, great job, start paying a dividend.
Dylan Lewis: Dividends are the new growth, that's the story we're trying to sell in the marketplace.
Matt Argersinger: In my world, that's definitely true though.
Dylan Lewis: One company that's probably not going to be issuing a dividend anytime soon, Spotify. We got results from the music streamer this week. Emily, I think the story with this company for a while has been beat a little bit by the growth monster and some of the restructuring that's been going on in the market, and adjusted expectations. But man, what a great past year for this company as you look at the financials and the stock performance.
Emily Flippen: Dividends are the new growth. Please, growth is the new growth.[laughs] Spotify saw Chipotle's quarter, and said, look, hold my burrito, let me show you what I can do. [laughs] It really was a 1, 2 punch for Spotify, which is to say two things have always been held on hold over them. Which is can they be profitable, can they expand margins, or can they grow fast enough? And the market has always either punished them for one or the other. Your revenue growth wasn't fast enough, your user growth wasn't fast enough. Or if the user growth and your revenue growth there, well, your profitability is not fast enough. If you're Dan Ek, the founder and CEO of Spotify, you're probably just scratching your head like, what do you want for me? Well, this is the quarter that investors wanted. They wanted to see, on the gross side, that double-digit growth of both monthly active users and paying subscribers, which both beat expectations, growing double digits in the quarter. Revenue growth was up 20%, largely due to a massive turnaround in their ad base business which is what investors wanted because the gross margins on their music streaming business were great are capped somewhere around 30% or so. They need those margins on the ad business to expand, to drive profitability, and they actually saw ad revenue reach an all-time high in the quarter, which was up 12% quarter over quarter, that is not year over year. Great execution on both sides, they continue to see strong engagements from their customers. Spotify wrapped, for anybody who's a Spotify listener, they had a 40% increase in engagement year over year. So a crazy amount of adoption there. Big picture, I still think that's going to be hard for Spotify to continue this all of execution. They've certainly been benefited by the recent turnaround and ad revenue. But if the economy stays strong, there's no reason to believe that Spotify won't either.
Dylan Lewis: Emily, you talked about the user engagement there and one of the things that Spotify did over the last year was unveil Audiobook offerings as part of the member benefit, the subscriber benefit for the service. The company now claims the title of Number 2 Audiobook provider behind Amazon's Audible. Are you surprised with how quickly they've been able to rise in the space?
Emily Flippen: Not at all. Not to mention that they're providing 15 free hours of listening or free, theoretically, to people who are already paying subscribers. It's easy to understand how they got that adoption. But if I was Audible, I'd be shaking in my boots right now because Spotify was a decade late to the podcasting game after Apple, and they are the largest podcasting platform in the world. In my opinion, there's no reason to believe they can't repeat that magic with Audiobooks.
Dylan Lewis: We'll stick with the consumer-facing names and wrap the earning segment here with a discussion on Uber. Matt, this is not your older cousin's Uber. The days of growth at all costs are gone, the company reported Q4 results and its first-ever full-year profit.
Matt Argersinger: Yes, just like Meta, I think, early 2022, Amazon, and a few others, Uber said, you know what? We're done with the growth at all costs, as you said. It's really all about efficiency and profitability, and man, those efforts have really paid off. Last year, they paid off in the fourth quarter. Uber surpassed expectations on every front. If you look at revenue, mobility revenue, the core business, delivery revenue earnings, active platform customers grew 15% year over year, trips were up 24%, bookings were up 22% up 29% in the core mobility segment, which is really impressive. You mentioned the profitability. Income from operations 652 million, and for the first time on a full-year basis, Uber generated positive operating a gain of 1.1 billion, and positive gap earnings as well so really awesome, the only real negative in the report that I saw was there was a 17% decline in the freight business, which is very small. It's a relatively new business for Uber. It's not costing the company very much right now, but you wonder if that segment is ever going to get off the ground and how much it's going to cost to get there. Uber also has about 5.7 billion in net debt. I was surprised to see that number as high as it is. Interest expenses is eating into profits, if they get paid that debt down a little bit or if interest rates come down, they'll actually be a lot more profitable. Unfortunately, Uber generates a ton of free cash flow now, so they have room to pay that debt down if they want to.
Dylan Lewis: I want to take this to a similar spot that we just did with Chipotle. It's easy to look at a company at all-time highs and start to say, are we getting a little close here? Is it getting a little rich? Uber is at a $140 billion valuation at this point, people who have bought in early are now seeing the results, and seeing some gains. Matt, what do you make of the company at this point?
Matt Argersinger: I think good companies, of course, are meant to make new all-time highs. I think Uber is selling off a little bit this week because it's had such a big run into these earnings. But this is what you want to see, and I think this is a situation where the turnaround is real, and this company is very dominant in what it does. I wouldn't be surprised to see higher highs in the near future.
Dylan Lewis: Coming up after the break, we're checking in on virtual gaming, and what the retail mall situation looks like. Stay right here, this is Motley Fool Money.
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Dylan Lewis: Welcome back to Motley Fool Money. I'm Dylan Lewis joined over the airwaves by Emily Flippen and Matt Argersinger. We're going to keep the earnings focus going. A strong response in the real world to results from virtual world, gaming company Roblox. Emily, this is a business that has been bite a bit by the growth whims of the market and by some user trend issues. Is it back on track now?
Emily Flippen: I think Roblox has been on track a for a long time and I feel like investors who thought that Roblox got off track were enthralled by its abnormal performance during the pandemic and then thought that they could extrapolate that level of engagement and trend out for the foreseeable future, even when kids weren't sitting on their computers at home or x-boxes at home all day and obviously that wasn't the case. But Roblox has been executing, in my opinion, in every way that they have been able to in their control since the pandemic ended and you'd be shocked if you weren't somebody who follows this company to see just how well engagement and user growth has stayed up. In this past quarter they saw 22% increase in their daily active users. That brings them to just under 70 million. That's an insane number of I'd say kids, but the audience has gotten increasingly older, but users who are actively playing on this platform every month and a lot of that growth has come internationally. Last quarter, most of that growth was driven by expansion in India and Japan. But even in North America, which is their highly monetizable user growth here in the United States and Canada, that was up 17% year for year. So there are still people who are flocking to this platform to engage and play games and that has created a really profitable cycle for Roblox. They had a 25% increase in bookings in the quarter, 20% growth in operating cash flow, which is big for them because as part of their investor day last year they said we're going to focus on profitability, still drive that growth, but you're going to see more cash flow and that's exactly what investors got.
Dylan Lewis: You mentioned the user count they're checking in at around 70 million at this point. We got some interesting total addressable market updates from management and some of the commentary, I want to go check them with you. CEO said we enter 2024 with even more conviction of being able to achieve our long term goal of attracting 1 billion daily active users with optimism and civility. Emily, I feel like anytime we get a total addressable market figure from management, we have to discount it a little bit. How much are you discounting that 1 billion?
Emily Flippen: I'm discounting it pretty significantly, especially when it makes that 70 million feel so tiny and if you're a management team, I understand you want to have a big vision for your company moving forward. But I do think that investors should never just take the word of management, but do their own research, that is part of the investing process. Now, to be clear they don't need to have 1 billion users and I don't think they're going to get to a billion users but they don't need to have that many users to be a good investment from this point forward and I do think a lot of these hiding expectations actually come from the integration of things like AI onto their platform which as an investor doing my own research, I feel a lot more conviction and because of the immediate use cases that GPTs and other large language models provide for things like coding and development. To help people get their Pot games from idea in their head onto a platform where they can actually monetize them. We're seeing real ways that's executing today even without 1 billion active users.
Dylan Lewis: From the worlds built by ones and zeros to the ones built by brick and mortar. Matt, when we were talking about Chipotle earlier, the story was foot traffic is back, this week we got results from mall and outlet with Simon Property Group. How are things looking in that space?
Matt Argersinger: Things are looking pretty good. But let me ask you, Dylan, when was the last time you were at a mall?
Dylan Lewis: Over the holidays for about 20 minutes and I regretted the choice immediately.
Matt Argersinger: Emily, how about you? When's the last time you were at a mall.
Emily Flippen: I go to the mall every single weekend. I'm awful.
Matt Argersinger: Really?
Emily Flippen: I like to get my coffee and walk around and maybe shop a little bit, but mostly look at people.
Matt Argersinger: Well, OK, that's interesting. I visit my mom up in Massachusetts pretty regularly and don't ask me why, but she loves to go to the mall, so when I'm with her, we will go to the mall and I visited one back in November. Granted, it was during the holiday shopping period, but it was packed. In fact, a few of the stores felt like fire hazards truly and yes, it was a Simon Property mall. Simon, and when I say Simon I mean the company and its CEO David Simon, have been desperately trying to tell us over the past few years that despite e-commerce, despite this global pandemic that we had, malls are in fact not dead and Emily just confirmed that they are not dead because Emily's in her '20s and she's going to the mall every weekend. But you can see it in Simon's results. I mean, occupancy across Simon's portfolio, 95.8% at the end of 2023, up from 94.9%. Simon's base minimum rent was $56.82 per square foot. That's up from a year ago and then if you look at retail sales per square foot, these are Simon's tenants, the sales, they're reporting $743 per square foot for the full year. Just slightly below where they were in 2022 so the consumer is holding up really well. If you look at the company level earnings funds from operations, which is a REIT metric for cash flow up 8.5% to $3.69 in the quarter. To top it off guys, Simon raised its quarterly dividend by $0.05 to $1.95. That is the ninth time, the ninth time that Simon has raised its dividend since 2020, just four years ago, so really impressive all around. Somehow this stock trades for 12 times FFO per share, pays a 5.5% dividend. I don't think it stays that cheap for long, especially with Emily Flippen going to the mall every weekend, so check out Simon Property Group, cheap stock cheap.
Dylan Lewis: We're going to wrap up our earnings takes by looking at Enphase Energy. Emily, a massive post earnings move from the company. Immediately after the company posted earnings, shares were up 20%. What had the market so excited about the solar stock?
Emily Flippen: Well, I don't know if it was the 70% decline sequentially in Europe or the 35% decline sequentially in the United States that had investors very excited. I'm saying this very tongue and cheek. Obviously, those are not strong numbers but the commentary that management provided around the demand structure for Enphase which does create micro inverters for things like solar panels as well as batteries for stolge storage, the commentary was to say that the market is going to stabilize. So now a lot of this demand is driven by external factors, so we're talking about government incentives, conflict globally, as well as things like interest rates because a lot of people choose to finance their installation of solar projects. All of those things have these kind of external factors that have pushed down demand and sell through for the company over the course of the past year. But that management that things may be normalizing alongside that expectation, that maybe interest rates come down a bit over the course of the next year I think has the market a bit more excited after a year of pessimism.
Dylan Lewis: So maybe the outlook isn't quite as cloudy, is that the take?
Emily Flippen: Yes, and a lot of their near term outlook is because their partners or distribution partners are working through existing inventory levels, so they're not shipping through new products. But that doesn't mean the actual sell through on the other end is as bad as it initially looks this quarter. So I do think that the expectation is for a little bit of normalization heading into 2024.
Dylan Lewis: Emily, this is a name that I'm not super familiar with, and so I was getting up to speed before we headed into taping. You mentioned a whole host of different macro factors there, is this one of those companies that investors just have to understand, there are some larger whims that are going to sweep up the adoption and sell through on the product?
Emily Flippen: Yeah, the biggest thing to understand for somebody who's not familiar with this space is that solar is by far the cheapest form of electricity and energy is expensive especially for areas like Europe for instance, and only getting more expensive over time. So the long term tailwinds should be there for the demand and installation of solar projects, even if the near term is extremely lumpy, as you mentioned, due to these external circumstances, so don't write off this business just base out those headline numbers.
Dylan Lewis: Emily, Matt. We're going to see you guys a little bit later in the show up next, we've got tips for handling money issues, whether you're a tight wad or spendthrift stay right here, you're listening to Motley Fool Money.
Welcome back to Motley Fool Money. I'm Dylan Lewis. Valentine's Day is coming up and in fact, this is your PSA. If you don't have anything planned yet for the person in your life, you still have time. Go get after it to help our listeners in all matters, gift giving and money and relationships. My colleague, Deidre Woollard, caught up with Scott Rick, a marketing professor at the University of Michigan, and the author of Tightwads and Spendthrifts, navigating the money minefield in real relationships, they dug into the two major camps of savers and spenders, how payment salience is making things a bit tougher for everyone, and Rex for great gifts.
Deidre Woollard: Well, this book was really fascinating to me. I think I learned a little bit about myself and in the process, but let's start with the basics. What is a tightwad and how does it compare to someone who maybe is just a little frugal?
Scott Rick: They will look quite similar on paper of a tightwad and a highly frugal person. But a tightwad is someone who often has money to spend and they know there are things that would make them and the people around them happier. But the prospect of spending the money makes them very anxious and they just can't make it happen. The thought of spending the money keeps them from buying a lot of the stuff that they realize would be in their best interest. This can be very frustrating for them, and the people around them can lead to a lot of internal conflict. Again, it can look good on paper, but it's not always a pleasant internal situation. Whereas a highly frugal person that's quite different. Frugal people, they save a lot, they're happy. They believe in saving. They love reusing items until they're just completely worn out. They're not overburdened with a lot of desire for new material objects. They're just living very conservatively and loving it. Frugal people tend to be quite happy whereas tightwads, that's a little trickier.
Deidre Woollard: It sounds like there's some anxiety about the spending that, that sort of defines what a tightwad is.
Scott Rick: Yes. Anxiety, distress. Those are the key feelings that keep them from spending what they think they should.
Deidre Woollard: Now on the other side, the flip side, this spendthrift people think of this as maybe compulsive shopping, but this is not just someone who doesn't just spend, but it sounds like they almost don't think about money at all. Is it the opposite of the anxiousness about money?
Scott Rick: Well, I think they realize they're not kind of doing what they should be doing. If you ask them like, oh, here's like a fun new product, when do you think you'll get tired of this? They're actually better at knowing when they're going to get tired of something than a tightwad is. They just care less about those future outcomes. They're very present oriented, living in the moment, they're aware of implications and negative implications of their shopping today. They're just not so constrained by those thoughts, that awareness of what happens later. They're living in the moment where a tightwad will sometimes they don't shop for things that they know they need. Spendthrifts will shop for not only what they need, but also what they might need some day, I'm at the store, I'm buying clothes for work. There's a fun velvet jacket that might be fun for a fancy party. I'm not invited to such a party, but what if I am some day? I'd rather be looking at it than looking for it, is the spendthrift ideology.
Deidre Woollard: In terms of how that works with like a compulsive shopping or hoarding, it sounds like it's slightly different because they don't need to amass as much stuff, they just don't think about it as much.
Scott Rick: Things like compulsive shopping. There's research showing that is often related to depression and can be treated with anti-depressants and therapy. There is a more therapeutic approach to tamping down compulsive shopping. I think hoarding is in that ballpark. Whereas I don't think something like an anti-depressant would have much of an effect on spendthrift. That doesn't seem to be what's driving them to spend so much. It's just someone cut the brakes on the car, they just don't have the stop signal so good.
Deidre Woollard: It sounds like the spendthrift is happier than the tightwad overall.
Scott Rick: Well, they're both conflicted. That's what they have in common that they're both torn. There are people in the middle of this distribution, we call them unconflicted consumers, and they are in the Goldilock zone, and not too little, not too much, and they're happy with what they spend. But it's the two extremes, the tightwads and Spendthrifts. There's a lot of regret there. They're kicking themselves, but for very different reasons.
Deidre Woollard: We've got a quiz in the book. I don't want to go through the whole thing, but if you're trying to assess where you might fall on that spectrum, what are some quick questions you can ask yourself?
Scott Rick: Well, imagine you go to the mall and are you kicking yourself afterwards for either not buying something that you thought you should, that's a tightwad thought or are you like, well, I probably shouldn't have bought, that's the spendthrift. The scale has questions like that. Who do you relate to more? What perspective? I see this in my own life. I'm a spendthrift. I'm married to a tightwad, and my wife used to come home from shopping, what she called shopping. But she would tell me about the things she wished she bought and I was like, why didn't you buy the thing? My goodness you could use that. Those regrets is what the scale tries to tap into.
Deidre Woollard: Well, on either side you've got these ways that you can mitigate your own tendencies. One of the things you talk about in the book is the way that spending has shifted and just the way that it's frictionless. You talk about this thing that I thought was really interesting called payment salience, which is just this awareness of the fact that you're spending, even when you're just swiping a card or tapping something on your phone. How can you reduce or increase this to mitigate your natural tendencies?
Scott Rick: Certainly retailers are doing everything they can to reduce payment salience and the emphasis, and they're artists like Amazon, it's amazing. If you're a tightwad, it's just putting yourself in those places where you can distract yourself and not pay too much attention to the money leaving your possession. The real challenges for the spendthrifts, they're on their own to ramp up payment salience, but it's doable. It's possible. When I was in grad school and I had no money, I had to turn myself into a temporary tightwad. I would pay with cash whenever possible, I would make sure I felt pain at the ATM reducing my account balance and then pain at the store when paying with cash. Just trying to put up these speed bumps, all this friction like paying attention to the money I was spending. When I would spend with a card, I would get the receipt, take it home, and go into my Excel file and keep track of each purchase. That was painful to look at all this money being spent. I was just trying to ramp up how obvious it was, the money leaving my possession and so that's the challenge for spendthrift. You're on your own, retailers are not looking to help you.
Deidre Woollard: [laughs] Definitely not. I think it's interesting that we all have these tendencies and then we have to work against our own nature to get us more to the middle ground.
Scott Rick: Yes, exactly. But we can learn from people trying to influence us. I think there are things we can do to influence ourselves, to reshape how we think about choices and what reminders or speed bumps we put in our own environment so we can become like self marketers, so to speak.
Deidre Woollard: Well, you mentioned that you're the spendthrift, you're married to the tightwad, I think I might be the tightwad, married to the spendthrift. You've done some research on whether or not these different types are likely to marry. What did you discover? How does some of this play out?
Scott Rick: Normally, we marry ourselves. We like most things about ourselves and we look for that in other people. But if there is something we don't like about ourselves, we're not necessarily looking for that in someone else. It can really shine a uncomfortable spotlight on the issue. If I see someone who approaches money the same way I do, and I don't like how I approach money, it's like, is that what I look like? Is that what I act like? It can really be a real turn off at first, we find that indeed tightwads and spendthrifts are more likely to marry each other than they are to marry someone like themselves. We think that's fun at first, but there are lots of things that are fun at first, that are less fun in a marriage when the decisions are more important. When there are higher stakes. It is one of these so called fatal attractions. If I'm a shy person, I might find someone really outgoing, fun and exciting at first. But eventually I do need my quiet time and it might get old over time. This seems to be one of those patterns.
Deidre Woollard: What happens if the two alike types marry each other? If a tightwad and a tightwad get together, is it just a big grim and if a spendthrift and spendthrift get together, do they just bankrupt themselves?
Scott Rick: Well, I would say that the two spendthrift pairing is the most dangerous and it can be financially explosive. But certainly if they have the money to spend, that could be quite a fun life, but that is a very precarious pairing. Now to tightwads, if you're just looking to maximize the money in the home, you want to put as many tightwads in the home as possible, for sure. They are usually living a pretty stable comfortable life. It's not necessarily an exciting one or filled with much adventure, or novelty, or fresh experience. They can work at that but left to their own devices, it can be, not for everyone, let's say, a little quiet. I do think a mismatched couple has the most potential for happiness, because I think this balance can work but it takes some efforts.
Deidre Woollard: Sounds like it may also take some self awareness too. If you don't know which side you're on, then the other person's spending attitude can just seem wrong and stupid.
Scott Rick: Oh yes. It's good to do things like take this scale, the tightwad-spendthrift scale, or there are other questionnaires, things to reflect on what you're up to, and try to think about what your partner, how they might respond, see if you can guess their responses. But yeah, it's good to know where everyone's coming from. Like I might get a gift from my spouse that seems really cheap and like, "Oh my God, you don't love me, do you?" But I need to keep in mind like, "Oh, you really find it painful to spend money." It's not your feelings about me, it's just your nature, it's in you. It helps me interpret how you spend and what you think about me. It's good to keep in mind where everyone's coming from.
Deidre Woollard: We're recording this near Valentine's Day and this is one of those gifting land mines. This is worse than Christmas, in my opinion. You talked earlier about tightwads and spendthrifts and understanding each other's gifting language. How do we get through this holiday and give appropriate gifts without causing ourselves a little bit of pain?
Scott Rick: Well, first of all, I suggest don't ask the other person what they want.
Deidre Woollard: Oh, yeah. Never works well.
Scott Rick: Well, yeah and it can hurt their feelings. You can ask in like the night before, like, "You want something, are we doing Valentine's this year?" No, we don't. But really, the gift giving is a chance to show the person, "Oh, I see you, I know you, I understand you". Giving a good gift, it takes time. You got to be curious about your partner and, and take time to learn about them and ask them what are they excited about? What are they worried about? What are their hopes and dreams? That kind of thing, so there's that. Also, I would say that a good gift requires sacrifice. I need to know that this wasn't super easy for you to find or think of or obtain. I want to get the sense that you didn't just pick this up at CVS on your way home. If a spendthrift wants to sacrifice, it's not going to be through spending money because if I'm married to a spendthrift, I know they find spending money, it's no big deal. Oh, they get me an iPad. It's nice, but they just got themselves the new iPhone. They do this kind of stuff all the time, it's water off their back. They have to do something that takes time and effort. They got to plan a weekend. They got to track down a rare Taylor Swift album autograph or something that is hard to find. They got to put in the efforts. A tightwad, it's a little different. If I know a tightwad doesn't like spending money and they spend a bunch of money, that's a sacrifice. They've endured something painful. Now, it still has to be a thoughtful gift, but for them, spending money can be a real act of self sacrifice. Yeah, I would just say keep in mind the gift will be interpreted based on what the recipient knows about you and how you approach money, so you have to sacrifice accordingly.
Dylan Lewis: Listeners, you can catch Scott Rick's thoughts on money and relationships on X. He is @ScottIanRick. A special shout out to the person in my life who makes me a little bit less of a tightwad, Jess. Listeners, we hope everyone out there has someone that loves them and makes them revisit their own money habits. Coming up after the break, Matt Argersinger and Emily Flippen return with a couple of stocks on their radar. Stay right here. You're listening to Motley Fool Money [MUSIC] As always, people in the program may have interests in the stocks they talk about and the Motley Fool may have formal recommendations for or against. Snow buyers, anything based solely on what you hear. I'm Dylan Lewis joined again by Emily Flippen and Matt Argersinger. Matt, Emily, we're going to talk radar stocks in a second. But this week's interview ahead of Valentine's Day was all about savers and spenders and the relationships with money within relationships. I'm going to force you both to put yourself into one bucket, tightwad or spendthrift, Emily, which one is it?
Emily Flippen: This is so hard because I think the world is created of grays. But I guess if I have to choose, I would maybe put myself in the tightwad bucket and that bucket. But that's not because I don't like to spend, I think in my relationship, I'm actually the bigger spender of us. But it is because I keep a spreadsheet of all of our finances. I know where every penny is constantly and if that's not the definition of an anxious attachment to money, I don't know what is.
Dylan Lewis: Matt, what about you?
Matt Argersinger: I also have spreadsheets, but I am very much a spendthrift, especially these days, since I've had a son. I realized that experiences are very important. We just got back from a really expensive ski trip, but we loved every second of it. Really, when it comes to experiences, life events, things like that, I'm doling out the money as fast as I can. Tightwad in other places but not when it comes to that.
Dylan Lewis: Let's get over to stocks on our radar. Our man behind the glass is going to hit you with a question. Emily, you're up first. What are you looking at this week?
Emily Flippen: Snapchat is on my radar this week. Now, look, when you talk about radar stocks, there's lots of reasons why a business could be on our radar. Sometimes we're buying it hand over fist, sometimes we're interested in a factor. At this case, Snapchat's on my radar because it's down more than 30% after their fourth quarter results. It's certainly worth talking about because that's a pretty massive reaction to what it's otherwise a pretty decent quarter from Snapchat. They had strong user growth, they had decent cost of management executed on a lot of the vision that management had communicated earlier this year. But I think the reason why we're seeing this massive reaction is just because the ad business for so many other companies has been so strong and to see that weakness coming out of Snapchat, and especially attributing a lot of that to global conflict while other businesses are just not saying the same thing, could highlight just a systematic weakness that exists in Snapchat's platform. Which I've always said, I think reduces their ability to monetize as effectively as other platforms. A little bit of the Twitter problem facing snap chat today, so it's on my radar for that reason alone.
Dylan Lewis: Dan, a question about a maybe bearish, maybe careful watch stock on Snap?
Dan Boyd: Emily, can somebody please take this company private so we don't have to hear about how crappy it's doing ever again?
Emily Flippen: I don't know, that Snapchat+ subscription. There's something there.
Dylan Lewis: [laughs] It doesn't sound like Dan's going to be signing up for that one. But we'll see, maybe we can convince him. Matt, what's on your radar this week?
Matt Argersinger: Well, I think Dan likes coffee. I think he does and so Starbucks is on my radar, ticker SBUX. Company is off to a bit of a slow start to its fiscal year. They hit the low end of their comps and revenue growth in that first quarter. But I think there are three things happening that are pretty compelling. One, really focused on efficiency these days and it's really paying off,290 basis point improvement in operating margin in the quarter, operating profits were up 25%. Second, this is still very much a global growth story. China is still a big market for them, they're just getting started in India. I think there's a viable path for them to double their international stores within a decade. Then third, Starbucks bought back almost $1.4 billion worth of stock in this quarter. That was more than they were purchased in all of fiscal 2023. Management thinks the stock is cheap, I think it's cheap as well. I don't think it stays below $100 for a share for too long. We just recommend the stock in our dividend investor service, I got to give that a shout out. Starbucks is one that I'm paying very close attention to.
Dylan Lewis: Dan, a question about Starbucks.
Dan Boyd: At risk of alienating all of the listeners I haven't already alienated yet, Matty, I actually prefer tea to coffee.
Dylan Lewis: Oh my gosh. That's a shock to the dozens of listeners.
Dan Boyd: Yeah. But what a different company than Snap. Starbucks, they seem to be doing really strong, it's something else. Host Emeritus, Chris Hill was always talking about how coffee isn't going anywhere and it looks like that's the truth for Starbucks.
Dylan Lewis: Yeah, I think you're right. I think the addiction thesis is a strong thesis, when it comes to people's daily habits and caffeine. That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Dylan Lewis. Thanks for listening. We'll see you next time.
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Dan Boyd has positions in Amazon and Chipotle Mexican Grill. Deidre Woollard has positions in Amazon.com, Apple, CVS Health, Meta Platforms, and Simon Property Group. Dylan Lewis has positions in Spotify Technology. Emily Flippen has positions in Spotify Technology. Matthew Argersinger has positions in Amazon, Chipotle Mexican Grill, Simon Property Group, Starbucks, and Uber Technologies and has the following options: short February 2024 $90 puts on Starbucks. The Motley Fool has positions in and recommends Amazon, Apple, Chipotle Mexican Grill, Enphase Energy, Meta Platforms, Roblox, Spotify Technology, Starbucks, and Uber Technologies. The Motley Fool recommends CVS Health and Simon Property Group. The Motley Fool has a disclosure policy.
