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Starbucks' Success With Cold Drinks Is Just the Tip of the Iceberg in Market News

The unemployment rate falling to 3.5%. Demand for cold beverages driving Starbucks' latest quarter. PayPal getting back to basics. MercadoLibre's blowout earnings. The latest from Cloudflare, Zillow, and Twilio. They also analyze Amazon's plan to buy iRobot for $1.7 billion in cash, as well as: Simon Property Group's latest results. Uber's record revenue in the second quarter. eBay's surprisingly profitable business. Two stocks on their radar: Procore Technologies and Stanley Black & Decker. 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. 10 stocks we like better than Amazon When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Amazon wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of July 27, 2022 This video was recorded on August 5, 2022. Chris Hill: We've got a hot jobs report, the rise of the machines and a whole lot of earnings. Motley Fool Money starts now. It's the Motley Fool Money radio show. I'm Chris Hill, joining me Motley Fool senior analyst Jason Moser and Matt Argersinger. Good to see you as always gentlemen. Jason Moser: Howdy. Chris Hill: It's another big week of earnings. We will dip into the Fool mailbag to answer your questions. As always, we've got a couple of stocks on our radar. But we begin with the big macro. The US economy added 528,000 jobs in the month of July. The unemployment rate fell to 3.5 percent. This makes nearly six million private sector jobs that have been added in the last year. Jason, let me start with you. The last two recessions saw a huge job losses month after month. If we're in a recession right now, this is unlike any recession I've ever seen or even heard of. Jason Moser: Well, you said if and I think that really is what kicks off this conversation here because I feel like the biggest lesson we can learn from all of this, of course will not actually be put into action, is that we need to come up with an objective definition for what a recession is. Because at this point now, this just becomes a political football. Aren't we? I don't know that it really matters. At the end of the day this jobs report is good news. But it is good news in a world where there are signs that there may be some small cracks forming that we need to pay attention to. It's weird because when you look at what led the way here in leisure and hospitality, leisure hospitality sector saw the most jobs growth. Close to 100,000 payrolls added in July. As a consumer, you don't feel that way sometimes. You go places, there are long lines or canceled flights. It feels like the service industry, the hospitality industry, is hurting a little bit, is lacking a little bit. It's weird to see that, but it's good to see wage growth. It's not quite keeping up with inflation, but that's something. By the same token, you've got this interesting dichotomy of businesses wanting to do more with less. We're seeing a lot of companies out there cutting workforces. Good news, but still makes you scratch your head a little bit. Chris Hill: I was just going to say Matt, the backdrop of some of the comments of CEOs of the biggest tech companies out there, Alphabet Meta Platforms, talking very openly about not only freezing hiring, but also they may be cutting some positions here or there. Matthew Argersinger: I think a lot of analysts would argue that, this number was fantastic, but it doesn't reflect what you just said, Chris, which is you have these tech companies who have announced hiring freezes or at least slowing down their hiring. That slowness isn't really reflected here. But I do want to go back to GMOs comment about the hospitality and leisure industries because I think that's a key point and I think Steve Leseman said it almost best this morning. He said the difficulty of finding labor is overwhelming the fear of the actual slowdown. In other words, and I think the hospitality industry is perfect for that, which is everything I read, looking at hospitality reads or looking at even individual hospitality landlords and developers, they can't find labor. They can't hire fast enough, and they're offering bonuses, big wages, incentives, and it just can't hire and that's why you have those long lines. I think the job number is outstanding in that industry, is they're still looking for a million jobs. It's a weird economy we're in. In certain industries, there's so many job openings they can't fill them in certain places like Big Tech, as you mentioned, Chris, we're seeing a slowdown. We're seeing too much capacity. But overall, I think it's really hard to argue. I don't know where the football lands on this, but it's really hard to argue that we're in a recession with these numbers. Chris Hill: Let's get to some of the big companies reporting earnings this week. Starbucks same-store sales in China fell 44 percent, but US demand for cold beverages in the third-quarter helped make up for lower results overseas. Interim CEO, Howard Schultz said Starbucks' pricing power helped push the average ticket higher Matty. Matthew Argersinger: Yeah, Chris. I don't know how you feel about ice coffee, but I like mine hot. Chris Hill: Not a fan. But as a Starbucks shareholder, I appreciate the people who are out there buying the cold beverages. Matthew Argersinger: That's right. Well, I think my takeaway is thank goodness Starbucks is still mostly a US story. Because if you look at the US comparable stock sales they were up nine percent, really strong. The international comparable stock sales down 18 percent, and that's because of our 44 percent drop in sales in China. Obviously the COVID lockdowns playing a big role there. Starbucks still has roughly tripled the number of stores in the US than they do in China. Meanwhile, profit side earnings per share were down 15 percent. Coffee prices are higher, wages are higher, and Starbucks is raising prices, but not enough to offset those increases. You got operating margin come down, came in at about 16.9 percent versus 19.9 percent a year ago. But even if you think things will level out on the inflationary front, and maybe China's starts to reopen the economy, those sales come back to those stores. I'd still worry about having roughly 16 percent of my stores in China. I think going back a few years, we would look at Starbucks China position, say that's a position of strength, its position of growth, and that's where the growth is going to come from for years ahead. Howard Schultz, Starbucks executives, they built these long-term relationships in the country. But I think China-US relations aren't exactly great at the moment. I'm a Starbucks shareholder just like you, and I'm looking at North America comps that were great. I'm looking at actual Starbucks Reward memberships that were up 13 percent. But I'm not banking on making money in Starbucks, if I think China is going to be the growth story going forward, I think there's just a lot of risks there. It really does have to come from the domestic business, the North American business, and it is, which is great. I think their core reflects that. Chris Hill: Three months from now when we get the next quarterly report, do you think part of that is going to include an announcement of who the new CEO is going to be or do you think it gets pushed off a little bit further? Matthew Argersinger: I think given the current situation, I'd say it gets pushed off. I think Howard Schultz is in this top spot for at least the remainder of this year, if not maybe into next year by a meaningful amount. I think they recognize that his 10 years at the company have been really great for shareholders, really great for the business. For whatever reason, they just haven't been able to find that great successor and he's always been had to come back. I think he sticks around a little longer. Chris Hill: Shares of PayPal up 10 percent this week after second-quarter results were better-than-expected. An activist investor, Elliott Management has taken $2 billion stake in the company. Jason, it seems like PayPal is getting back to basics. Jason Moser: Yeah. That's good news. It does feel like the good news here for investors as far as PayPal's consumers, that Management perhaps has some self-awareness of the unforced errors they've committed over the last several quarters. Ultimately they're doing what they said they would do to rectify the situation. If you remember back in April, CEO Dan Schulman said on call that they needed to get back to, like you said, basics and focus on three things. Reassessing the thought process behind forecasting ultimately, don't get out over your skis. It's better to under-promise and over-deliver. Do fewer things and do them well. PayPal started spreading itself a little thin and then ultimately getting the teams room to run and innovate and own the successes in the business. We saw signs that the business is getting back to good order here with revenue of $6.8 billion. That was up 10 percent on a currency-neutral basis. Earnings per share down a little bit from the year-ago, 93 cents versus a dollar and 15 the previous year. But they are starting to talk about whittling down the cost structure, becoming more efficient. To that end, we should see as investors, $900 million in cost savings that should be realized this year. I think what was encouraging with the Elliott Management side of things is that's helping management and get their eyes back on the ball. They announced $15 billion share repurchase authorization and they should execute around four billion dollars this year, and they will continue to work with Eliot there in finding the best ways to return value to shareholders. It did seem on the call. If you listen to it, there was a level of contrition in Dan Schulman's voice that he felt like, listen, we're going to own up to some mistakes and get this thing back in order here. The priority is going forward, are going to be on checkout. Venmo and PayPal digital wallets in the Braintree operations there. Good example, there are no longer going to be sinking money into that stock trading capability they were talking about building out. That was just one small part of it. But to me there's no reason to ever do that. If they're million brokerages out there already, there's nothing that really differentiates them. It's just nothing but pure expense, risks and opportunity cost involved with that. It's nice to see them focusing backup and I expect we'll see that continue. Chris Hill: Another blow-out quarter for MercadoLibre. Second-quarter revenue for the Latin American e-commerce company rose 57 percent. Their gross profit margin expanded and shares of MercadoLibre up nearly 30 percent this week, Matt. Matthew Argersinger: Yeah, gangbusters there, right? I think the story here is that most e-commerce companies reported really extraordinary results in 2020, 2021, yet a result of the pandemic surge in online shopping. Now that we're in 2022, things have reopened, people are shopping a bit less online. Those year-over-year comparisons have gotten lot harder. If you look at results from Etsy, eBay, Shopify, even Amazon to certain extent, looking at their retail business marketplace businesses growth has slowed way down this year as you'd expect, not the case for MercadoLibre, which is incredible. If you look just at their commerce business, gross merchandise volume was up 22 percent in US dollar terms. Their biggest market, Brazil was up 28 percent, Mexico up 30 percent, and they reached a record 40.8 million unique buyers in the second-quarter. That breaks the record in Q4, 2021, which of course is the seasonal holiday shopping season where you have a lot of people shopping. Really incredible results. Of course, millions a lot different today than when I was talking about it a long time ago on the show, it's not just a marketplace business anymore. It's got a fast-growing advertising business. It's got third-party fulfillment business. Most importantly, it's got a payments business that saw volumes reach over 30 billion, 72 percent growth year-over-year. You've got point-of-sale transactions, money-transfer credit offerings. I think in a region like Latin America where you have different currencies, many of them very volatile, customers and businesses that don't often have access to traditional banks, MercadoLibre is filling that role, and looks like they're executing really well. I think when in the US and other places where shoppers have that brick-and-mortar infrastructure to go back to, they don't necessarily have that in a lot of places. I think a lot of sellers, especially who joined the MercadoLibre marketplace and their payment system over the last couple of years, they're sticking to it and using it even more. Chris Hill: After the break, we've got the latest in cybersecurity and we will check in on the homebuying market. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Matt Argersinger, shares of Cloudflare up 25 percent on Friday after the cybersecurity firm's second-quarter revenue came in higher-than-expected. Maybe Wall Street should start adjusting their expectations, Jason, because this was the eighth-quarter in a row, that Cloudflare's revenue grew by more than 50 percent. Jason Moser: Yeah, it's been a tough year for Cloudflare and companies like it, growth stories that are still working their way to profitability and perhaps Cloudflare, the share price got a little bit ahead of itself earlier on in the story there, but you can make the same argument that the pessimism is a little bit overdone as well. To your point there, 54 percent revenue growth is just nothing to sneeze at. Now, it's worth noting they did make a small acquisition of a company called Area 1 recently and that did contribute a little bit, but not much. This was mostly organic growth, which is really encouraging. I think one of the big parts of the story here really is large customers. The customers that spend more than $100,000 a year with the company. That's a nice indicator for Cloudflare. It says that they're doing something right because they're bringing these big customers and in growing the relationships with them, that becomes very sticky over time. But the numbers there, they now have 1,749 total large customers, that's up from 1,888 a year ago. They represent 60 percent of total revenue now versus just over 50 percent a year ago. Ultimately that results in a dollar-based net expansion rate of 126 percent versus 124 percent a year ago. Again, it speaks to growing that relationship with meaningful spenders, and as a business that's what you want. They are continuing to win versus their competitors and zero-trust, and they're relatively new to that zero-trust security games, so that's really encouraging as well. Some modest improvement gross margins. They're guiding for 48 percent revenue growth for the full year. This is a really strong business doing a lot of great things. Back to the big macro and just the conditions on the ground in regard to the economy. I will say the noted enough call and I quote, "In Q1, our pipeline generation slowed, sales cycles extended and customers took longer to pay their bills. We've watched those metrics closely throughout Q2 and saw them at least stabilized. They're not where we throw parade yet, but the metrics are trending in the right direction. Chris Hill: Well, and we've talked on this show about companies looking to pull different levers to save money, and one of the big ways that a lot of companies do that is by pulling back on marketing. I have a hard time believing companies are going to be ramping, really pulling back on their cybersecurity. Jason Moser: I fully agree. It's a top priority of any and every business out there today. Chris Hill: Zillow second-quarter results took a back seat to its lower guidance for the third-quarter and the fact that after getting out of the iBuying business, Zillow announced a multiyear partnership with Opendoor Technologies, which meant really seems like a way to get back into the business of iBuying. Matthew Argersinger: That's right. I think the market hated when they got out of it last fall. I thought that was the right move. I'm pretty skeptical of the iBuying business in general, the model, and I thought Zillow stepping away from it, probably proved fairly smart considering what we've seen happened to the iBuying industry this year. But it's big news and I think you're marrying Zillow of course, which is the biggest brand, biggest website, biggest mobile app in real estate, certainly in the US, 234 million average unique users, and Opendoor, which is the leading iBuyer by volume, now that Zillow's exit the business. There were many details on the conference call about the deal, but it's an exclusive deal, goes for many years apparently, and I think at the base level what it does if you're Zillow customer, you now have the ability to get a cash offer on your home through Zillow, or you at least have another potential buyer in the marketplace for your home even if you do the traditional way of using a listing agent. I liked the idea of Zillow using its reach, its brand and going back into iBuying, but in a capital-light way, they're not going to be in the business of actually buying and selling homes like they were, they're going let Opendoor handle that. I feel like it's a win from both, but I think for Zillow, it's a great capital-light way to get back into it. I'll have to say, even though Zillow's business is hurting right now, their premier agent revenue, which is their largest revenue item line now was down five percent. As you mentioned, Chris, they gave bad guidance for the quarter, but you do have a business that has almost two billion in net cash. Pretty big with a market cap of just nine billion dollars now, and you're shifting the business to more of a capital-light business model which worked really well in the past. I can't say whether Zillow is going down the tubes, which it has been going for a year now, but it's a right step in the direction of the business. I liked the deal with Opendoor. Chris Hill: Twilio, second-quarter revenue grew by more than 40 percent, but guidance for Q3 was weaker than Wall Street was hoping for, and shares of Twilio down 15 percent on Friday, Jason. Jason Moser: Yeah, sell-off not withstanding. I think you need to look at the bigger picture and note that management still remains very confident in their growth trajectory and profitability goals for 2023 and beyond. The stock is certainly feeling the impact of at least one big downgraded today. That happens. It's much more short-term in nature, so for investors like us that take the longer view you need to get used to that stuff happening. It's not a testament to the business into that point, organic revenue up 33 percent from a year ago, easily surpass their own internal guidance and second-quarter, revenue dollar-based net expansion rate 123 percent. That was down a good bit from 135 percent a year ago. That is due to a few things, a little softness here and there with some customers and also bringing in some new business, so nothing terribly concerning there. They did sign their largest Flex deal ever in the second-quarter, an eight figure deal with a Fortune 100 retailer, and Twilio Flex is a cloud-based context center, it essentially enables our customers to create the omnichannel contact center experience they want. That's encouraging. Modest gross margin weakness as they take on new business. Still calling for organic revenue growth here around 30 percent for the current quarters. I think you need to be optimistic about this business for a number of reasons, but I'd put the market it serves right there at the top. It's in communication, like security. Communication is just essential and Twilio does it really well. I think that again, so I've notwithstanding yet I feel pretty good about this. Chris Hill: We are one step closer to the rise of the machines and right after the break will explain why. Stay right here. You're listening to Motley Fool Money. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Matt Argersinger. Amazon is buying iRobot, the parent company of Roomba, the robot vacuum cleaner. It's an all-cash deal to the tune of $1.7 billion. Shares of Amazon down a bit on Friday, while shares of iRobot up nearly 20 percent, close to the buyout price of $61 a share. Jason, we were talking before the show, you're not a fan of this deal? Jason Moser: Well, I'm not. It's like the Larry David, that gif, Larry David, like, maybe. I'm not sure. Listen, I've been an Amazon shareholder for years. It's been a tremendously rewarding investment. Their acquisitions always leave me just on the fence, I guess. I'm still there with this one. This is clearly another shot at the grander vision of owning the smart home. I get that. I think this is the best outcome for iRobot shareholders. Absolutely. Which is a shame really for those who bought it as it was on its way close to $140 per share, just about a year-and-a-half ago, but their growth has hit a wall. It could be argued that they've not really delivered on innovating beyond the vacuum cleaner. Now with that said, going back to the smart home, earlier this spring, I will quote myself because I needed to make sure I check myself on this, I called the smart home a cluttered, incoherent mess. It turns out the light switch and just a modicum of accountability are a bit tougher to disrupt than people thought. Part of that just comes from my frustrations of telling Alexa to turn on my light and it didn't work and I'm like, what's your point? What are you even here for other than to play podcasts? Now, you fast forward to what they're going to try to do with Roomba, with iRobot, you feel like they're going to incorporate this into their Amazon ecosystem. They'll probably connect Alexa to it. You can control your vacuum cleaner with your voice. It sounds great until it doesn't work, which is probably going to be the case. I think you need to get your expectations in order here. I think the other thing to keep in mind too, there are competitors out there in this space that I think produce better products, and I can speak from personal experience. We have a DEEBOT robo vac at our house, and that's made by Ecovacs. I view these vacuum cleaners as not necessary and not essential. They're nice to have. If you have pets, they can help keep ahead of the mess, but I dug up some reviews online here that they really supported my experience. It's just that DEEBOT is a far superior vacuum cleaner to the Roomba for a number of reasons. I just wonder, maybe this is something where they can play a little bit on the pricing and really start selling a lot of these vacuum cleaners. Perhaps there's some IP there where they can innovate and expand that product line. Again, probably the best-case scenario for iRobot shareholders, but for Amazon, at least for them, it's just a drop in the bucket. Chris Hill: Lost in all this, Matty, is, you go back to last year, Amazon comes out with Astro, the $1,500 robot, which I just looked at and I thought this looks like Alexa on wheels, but to Jason's point, it does seem like another move by Amazon toward the smart home. Matthew Argersinger: Well, it just occurred to me as you said that that wasn't Astro, The Jetsons' dog. Chris Hill: Yes. Matthew Argersinger: I have, like Jason, trouble wrapping my head around this except on the idea of what you said, your last point, Jason, which is just it is a fairly well-known brand. It's popular. There are a lot of people with smaller apartments where they love their iRobot, they set it to go. I'm wondering if this is just a way for Amazon to enter that market in a more direct way, get some patents, some technologies, and some expertise, and then maybe flood the market with cheaper products. Although the Astros certainly isn't a cheap products. I have trouble seeing, with Amazon, I think every acquisition they make, we think it's this grand vision that they might have. What are they building toward five or 10 years from now and this is one of those key stepping stones? I have trouble seeing that this is a stepping stone other than maybe they feel like they can do a little better job on the marketing and product and cost side of things and really grab a lot of market share in what they still think is this emerging market of automated tools and cleaning supplies and things like that. Chris Hill: Just to wrap up, Jason, as you indicated, Amazon is not buying this business at its peak. [laughs] They are arguably getting a nice discount if this is something they've been looking at for a while. I don't know, it's not going to shock me if a year or two from now, they come out with an upgraded version of Astro and it's like, hey, now Astro is also going to vacuum your home for you. Jason Moser: They're getting this thing for essentially one-time sales. It is a business that it needs Amazon more than the other way around. Again, this is a nice bailout for iRobot shareholders. I'm sure that given Amazon's expertise in this space, they'll be able to do something with it and they'll be able to attract I think more customers on the pricing side, but I don't think it's going to be anything meaningful to the business. Chris Hill: From robots, we go to commercial real estate. Simon Property Group's second-quarter profits came in higher than expected, and guidance for the full fiscal year was increased, but even with that, Matt, shares of Simon Property Group down a little bit this week. Matthew Argersinger: Down a little bit, but I think what's not down and not dead by any stretch, Chris, is the mall. The mall is not dead. I know the stock price is down, but I think it was an impressive quarter by Simon. Net operating income across their entire portfolio was up seven percent year-over-year. Occupancy across its properties was 93.9 percent as of June 30th. That's up from 91.8 percent a year ago. That might seem like a small number, but you're talking hundreds of millions of square feet, and to see an uptick in occupancy, especially for primarily a mall owner is really impressive. You mentioned they raised guidance for funds from operations per share for the year. They increased their dividend, by the way, by three percent and you now get a nice six-and-a-half percent yield on the stock. Stock is down, but you're certainly getting a nice dividend payment, which is more than sustainable. I think investors might want to start thinking a little bit differently about Simon. Yes, most of its properties are traditional shopping malls, outlets, but they are far away the highest end and most profitable malls on a square foot basis in the country. There's just no second to Simon. These are a lot of malls that people still want to go to. I think on the newer development side, it's much more of a mixed-used a variety of properties are going for. It's not just retail shopping that Simon is buying or developing, but you've got properties and that will now have residences, hotels, experiential properties, so where people can live, work and play. I think this is one real estate company just, I was really doubting, especially after the pandemic, but now coming out of it, I think it's their competitors that have gotten a lot weaker. I think Simon is now in a position of strength just with a great portfolio of assets. They can now develop those assets now really targeting more of experience services angle with a lot of their properties. I think things look pretty good from here. Chris Hill: Based on the size, as you said, they have so many properties across the country, do you get the sense that they are also somewhat nimble? Because it seems like they could test different concepts in different areas, see if they work, and then start to accelerate them in other parts of the country. Matthew Argersinger: I think that's a good point. I wouldn't say they're probably the most nimble of companies when it comes to real estate development because to move the needle, their properties have to be fairly large. They take years of planning, it takes years of permitting and zoning, and then construction of course is a process as well, but I think Simon, their management team is really smart. They've proven that they can know how to maximize the profitability of any given development and target those markets where their properties are going to do the best. I think if there's one retail REIT out there that you want to bet on, I think Simon is probably the one. Chris Hill: Uber posted record revenue in the second-quarter, and despite losing money on its investments, shares of Uber up 35 percent this week. Jason, is this company actually on its way to becoming profitable? [laughs] Jason Moser: Well, they are free-cash-flow positive asterisk if that makes any sense. I'll get to that in a minute. What says Uber part to me, from its competition at least? Its ability to piece together multiple complimentary business lines which make the entire business stronger. As the world becomes more digital and more connected, this basically opens up Uber's market opportunity on all fronts. Ultimately, they're playing a big role in helping transform transportation, so it's a big deal. To the numbers, revenue, $8.1 billion, gross bookings up 36 percent, and constant currency to $29.1 billion. Now operating on an annualized run rate of $116 billion. Now, a lot of that growth is coming from mobility gross bookings. That's what we like to see. That was up 57 percent from a year ago. Delivery gross bookings, up 12 percent. Trips during the quarter grew 24 percent to 1.87 billion. Now, going to the actual business at hand, yes, still losing money. No question there. Working toward that profitability target, but they are on their way. Free cash flow is really a metric you want to target with a business like this because as you noted, the investment side of the business really does play out on that net income even when you talk about the actual losses this business chokes up, net loss of $2.6 billion. That includes $1.7 billion in the form of headwinds relating to their equity investments in companies like Aurora, Grab, and Zomato. I don't know about all those names. [laughs] Maybe they deserve. Chris Hill: What are those companies do? [laughs] Jason Moser: Because I'm not sure. But when I said free cash flow positive asterisk, it is worth remembering that stock-based compensation does play into that metric. If you account for that, they're still working their way to it. Free cash flow is a good metric to judge this business by and stock-based compensation is something that continues to come down as a percentage of revenue, albeit slowly. I'd like to see that speed up a little bit. One last thing to watch this business is membership. A lot of people don't think about this, but if it's successful, this could be a very nice long-term driver. They're at about 10 million members now. They've got this Uber One program. It's been launched in seven markets globally. About 23 percent of their overall gross booking come from members, and it's around 32 percent for delivery. Ultimately, members have about 2.7 times more gross bookings on Uber than non-members. I think that's an interesting lever they can continue to pull, but all in all, a business that keeps on progressing. It's nice to see. Chris Hill: eBay's second-quarter profits and revenue came in higher than expected, but growth is slowing for the online marketplace. Matt, when you look at eBay's business, what leaps out at you? Matthew Argersinger: Well, I think with eBay, it's not so much about the top-line growth anymore really. They'll be able to grow, and they've made, I think some smart acquisitions that'll pay off down the road, but I think what eBay it's really about, you've got a high-margin capital-light business, generates a ton of cash, on a normalized basis, they expect to earn roughly four dollars a share in earnings this year. That's an incredible earnings power and that makes the stock traded for about 12 times forward earnings, which is just seems like a bargain to me. We spoke about MercadoLibre earlier, where they're not seeing those year-over-year down comparisons that a lot of e-commerce companies are. Well, eBay is, the revenue was down nine percent, gross merchandise volume was down 18 percent. Active buyers still strong at a 138 million, eBay is still a pretty big marketplace, but that number was also down about 12 percent. It's a business that's not growing. It's not going to be near the market share champion in e-commerce that we thought they might have been in the previous decade. But it generates a ton of cash, pays a growing dividend, which I like to see. I think that is probably as investor which you want to focus on the most with eBay going forward. After the break, we will dip into the Fool mailbag, plus we've got a couple of stocks on our radar. Stay right here. This is 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 or sell stocks based solely on what you hear. Welcome back to Motley Fool Money. Chris Hill here with Jason Moser and Matt Argersinger. You can email us a question about stocks podcasts@fool.com is the email address, or you can call them Motley Fool Money hotline 703-254-1445. Let me go to our man behind-the-glass, Dan Boyd. Dan, we've got a question. Kyle: This is Kyle from Minneapolis. My question is, they always talk about inflation as being transitory and I feel like everything has been played out on that. We all get that point. But my question is, when you see a company raise it's prices, is there ever a chance in the future, even given all other supply chain issues, is there a chance that they'll lower those prices in the future? My thinking is that they wouldn't, but I'm curious to see what your guys take it. Thank you. Chris Hill: Thank you, Kyle. Jason, what do you think? Jason Moser: I love the way of a Motley Fool Money hotline. That's like the coolest thing ever. Kyle, great question. I think that you're thinking about this the right way. Now it does depend on the company and the nature of what they're selling. Generally speaking, no, you're not going to see those prices come back down. For example, I mean, if you look at consumer-facing businesses and I'll just use Chipotle and Starbucks as easy examples, they've passed along some price increases here recently for obvious reasons, they are not likely to bring those prices back down in the future, even though the commodity inputs for the products they're ultimately producing might come down over time. Because you've got to think of everything that's tied to those price increases. Primarily, you look at something like raising wages along the way too. They're paying their employees more. Well, you definitely can't take that back. But one thing these companies do, they're very clever, they give them room to pull levers on offers. You look at Starbucks, they've done things with like the treat receipt or Chipotle's free Queso or BOGO offers, so the consumer at some point or another, they feel like they're getting something, we're very quick to forget those price increases that they pass through. Jason and Kyle hit it, which is on the commodity side. If you're shopping for gas or maybe you're at the home depot buying lumber, you're going to see prices come down there because those prices will adjust, and they're not based on value-add activities that companies like Starbucks and Chipotle are doing with products and services. You'll see that the commodity level, it's really rare to see it at the consumer retail level if you're buying something. Chris Hill: A quick word about FoolFest, our annual investing conference, it is a two-day event on August 29th and 30th. We've got a lot of breakout sessions, different investing strategies. We're going to be going over and we have an awesome lineup of speakers, including Trex CEO Bryan Fairbanks, Motley Fool co-Founder David Gardner, best-selling author Morgan Housel, venture capitalists Jenny Abramson. FoolFest is free if you are a Motley Fool member, and if you're not yet a member, that's easy. You can just sign up for our Stock Advisor service and get a complimentary digital pass to the event. Just go to fool.com/foolfest for more details. That's fool.com/foolfest. Jason Moser, what's on your radar this week? Jason Moser: Yes, sir. A stock that my colleague, Tom King and I reasonably recommended to members really proud of this one, and I've talked about it here before. Dan, you may remember Procore ticker, PCOR, construction management software earnings came out this week on Wednesday aftermarket close, very positive reaction to what was a good quarter. One hundred a million dollars in revenue that represented organic growth of 34 percent well above what they guided for a quarter ago. They ended the quarter with 13,403 customers, that was up 20 percent from a year ago. They did see some increases while these are pressures on the cost side, I think it's nice to see at least increases in business travel. Chris, people are getting back out their, I love to see it. Some increases in cloud hosting expenses as well that give them a little pause. I think they try to be a little conservative as far as the guidance goes into a material financing program that I've mentioned is still in the very early stages that are learning from that. But expecting revenue between $690 and $694 million for the full year business that is on its way, I think. Chris Hill: Dan, question about Procore. Dan Boyd: We're heading back to Carpinteria, California with this one. [laughs] Can't wait to visit. Jason, I don't know anything about this industry. Software for construction companies, what does this even look like? Or you know Carpinteria, Dan? That's just where we got to leave it, I think. Now hats off to you if forgetting that one. Matt Argersinger, what are you looking at this week? Matthew Argersinger: Dan, I think this one you'll understand a little better. I'm going with Stanley Black & Decker tickers SWK, they make tools for customers and various industries. You probably know some of the brands like Stanley Black & Decker craftsmen, BOSTITCH. If you've renovated home like I've done in the past. Dividend Aristocrat, 55 years of consecutive dividend increases, they've actually paid a dividend for 146 consecutive years. It's remarkable dividends, 3.4 percent. They recently slashed guidance, stocks came way down. I think it might be a bargain, so that's on my radar right now. Chris Hill: Dan, question about Stanley Black & Decker. Dan Boyd: Stanley tools are pretty expensive, Chris. You'd think that the stock would be pretty expensive too, but with the recent dip it might be at a discount right now. Chris Hill: Hey, I love that, Dan. I love that thinking. What do you want to add to your watch list, Dan. Dan Boyd: I'll tell you, Chris. Again, I don't know anything about Procore. That's seems [laughs] like a complete black hole of an industry domain. But I do know a thing or two about power tools, so I think I'm going to go with Stanley Black & Decker this time. Chris Hill: We'll leave it there then. Jason Moser, Matt Argersinger, guys, thanks so much for being here. Jason Moser: Thank you. Dan Boyd: Thanks, Chris. Chris Hill: That's going to do it for this week's Motley Fool Money radio show. The show is mixed by Dan Boyd. I'm Chris Hill, thanks for listening. We'll see you next time. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. 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. Chris Hill has positions in Alphabet (A shares), Alphabet (C shares), Amazon, Chipotle Mexican Grill, Cloudflare, Inc., Etsy, MercadoLibre, PayPal Holdings, Shopify, Starbucks, Trex, Twilio, and eBay. Dan Boyd has positions in Amazon, Chipotle Mexican Grill, Zillow Group (A shares), and Zillow Group (C shares). Jason Moser has positions in Alphabet (C shares), Amazon, Chipotle Mexican Grill, Cloudflare, Inc., Etsy, PayPal Holdings, Shopify, Starbucks, and Twilio. Matthew Argersinger has positions in Alphabet (C shares), Amazon, Chipotle Mexican Grill, Etsy, MercadoLibre, Opendoor Technologies Inc., PayPal Holdings, Shopify, Starbucks, Trex, Twilio, Uber Technologies, Zillow Group (A shares), and eBay and has the following options: short July 2022 $2,000 puts on Alphabet (A shares) and short October 2022 $40 puts on eBay. The Motley Fool has positions in and recommends Alphabet (A shares), Alphabet (C shares), Amazon, Chipotle Mexican Grill, Cloudflare, Inc., Etsy, Grab Holdings Limited, MercadoLibre, Meta Platforms, Inc., Opendoor Technologies Inc., PayPal Holdings, Procore Technologies, Inc., Shopify, Starbucks, Trex, Twilio, Zillow Group (A shares), Zillow Group (C shares), and iRobot. The Motley Fool recommends Simon Property Group, Uber Technologies, and eBay and recommends the following options: long January 2023 $1,140 calls on Shopify, short January 2023 $1,160 calls on Shopify, short October 2022 $50 calls on eBay, and short October 2022 $85 calls on Starbucks. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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